NCUA's Second Shot at Foreign Branching Better, according to CU trades

ALEXANDRIA, Va.-The two national credit union trade associations have told NCUA that its second go-round with the international branching proposed rule is an improvement over the first proposal. CUNA and NAFCU applauded NCUA's efforts to provide federally-insured credit unions greater flexibility in foreign branching while balancing safety and soundness. NASCUS on the other hand wanted to preserve as much autonomy as possible for individual state regulators. All three groups expressed concern about potential micromanagement by NCUA regarding credit unions' business plans for overseas branching. NASCUS recommended in its official comment letter that each state should determine business plan requirements for its state-chartered credit unions. NAFCU supported parity with state chartered institutions concerning international branching. It also approved of the process proposed by NCUA and agreed with the agency that the National Credit Union Share Insurance Fund should not insure accounts in local currency or where accounts are required by the host country to be insured. NCUA based this provision on the Federal Deposit Insurance Corporation's relevant rule. CUNA's comment letter advocated that the federally-insured credit union should have some say in whether accounts at a foreign branch should be insured. CUNA also wrote that NCUA's regulation should be more in line with the Federal Reserve Board's Regulation K, which requires only a 30-day prior notification to the regulator for the branching approval process. The trade organization also suggested NCUA clarify that federal credit unions' incidental powers extend to the overseas branches, as the Fed's Regulation K does. NASCUS made two main requests regarding the proposal: that the final rule recognize state's authority to determine branch locations and that state regulators and the NCUSIF work closely together on unforeseen problems for rapid resolution. NASCUS also commended NCUA on its clear and concise rule.