ALEXANDRIA, Va.-CUNA and NAFCU pointed out several regulations that could use some tweaking in NCUA's statutorily mandated 10-year review of regulations. The federal banking agencies recently launched their reviews of their regulations as mandated under the Economic Growth and Regulatory Paperwork Reduction Act of 1996. NCUA requested comments on regulations dealing with `applications and reporting' and `powers and activities.' In their respective comment letters, CUNA and NAFCU included a long list of regulations that could use some updating, including the recently updated member business lending rule and Chartering and Field of Member Manual. CUNA Assistant General Counsel Jeff Bloch wrote, "A number of years ago, CUNA would have had a longer list of recommended legislative and regulatory changes. However, in recent years, NCUA has greatly enhanced its efforts to minimize regulatory burden for credit unions and to provide increased flexibility for well-run credit unions within the bounds of safety and soundness." Regarding field of membership, CUNA and NAFCU both asked that NCUA review the provisions regarding voluntary mergers, permitting select employee groups to remain part of the FOM after a community charter conversion, and reasonable proximity, among other items. Most will require statutory change, which the EGRPRA review also encompasses, and are included in the Financial Services Regulatory Relief Act (H.R. 1375) currently stalled in Congress. Both groups noted the agency's efforts to reduce expenses and continue to operate with that in mind, as well as maintain an equitable fee structure. "In connection with this, NAFCU supports the agency's efforts to accurately calculate the appropriate overhead transfer rate and encourages NCUA to maintain a rate that is equitable to FCUs given they are funding the remaining agency expenses through operating fees," stated the group's letter, signed by NAFCU President and CEO Fred Becker. CUNA and NAFCU also supported many of the same investment and deposit activity expansions for credit unions, specifically, asset-backed securities and short-term commercial paper. CUNA also recommended corporate notes and bonds and shares and stocks in other institutions, while NAFCU named derivative authorities and interest rate swaps. Even after the recently approved final rule regarding member business lending, aimed at broadening credit unions' opportunities in this area, CUNA asked for more. The trade association asked whether additional flexibility could be provided in the area of residential mortgage lending when the borrowing is basically for personal investment rather than truly for business enterprise purposes, a dollar ceiling on unsecured MBLs is necessary or an aggregate limit on unsecured MBLs, and if NCUA can go further with loan-to-value limitations for MBLs. CUNA also suggested the agency better align its regulator requirements with the Small Business Administration loan programs. Both CUNA and NAFCU are seeking to raise or eliminate the MBL cap for credit unions, eliminate loans to nonprofit religious organizations (at a minimum) from the MBL cap, and increase the minimum MBL to $100,000 from $50,000 (this allows credit unions to not count loans for business purposes under the limit as MBLs). Another recommendation included eliminating or increasing the 12-year maturity limit on loans. Again, some of this is in H.R. 1375. But not many of those recommendations are really news to credit union observers. However, CUNA did reveal its position on a recent NCUA proposal, championed by NCUA Chairman Dennis Dollar, to expand upon the current disclosures for credit unions converting to a mutual thrift institution. Though CUNA has not yet formulated its comment letter on the proposal, the association did provide a peek in their EGRPRA comment letter. "While we recognize that the board and members of a credit union have the right to choose for themselves the type of charter their institution will have, CUNA staunchly believes that consumers' financial interests are much better served by credit unions than by other types of financial institutions," the letter read. "CUNA supports the approach of providing members with more disclosures to ensure that they have sufficient knowledge in order to make an informed decision. Not only does CUNA support more disclosure to credit union members, but we also support a return to the pre-1998 rule providing that a conversion must be approved by a majority of all of the members of the credit union." Under CUMAA only a majority of those voting are needed to approve a conversion. "This can lead to absurd results," CUNA stated. NAFCU did not comment on the disclosure proposal in this comment letter, but promised to in the comment letter specifically on that proposed regulation. [email protected]

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