NCUA headquarters. Credit/NCUA
The NCUA has unveiled another broad package of deregulatory proposals, moving to eliminate or scale back several long-standing requirements affecting federal credit union directors, compensation packages, loan transactions and service contracts.
The six proposed rulemakings, filed in the Federal Register on Tuesday, continued Board Chairman Kyle Hauptman's push to simplify the agency's rulebook and shift toward what he has described as a more principles-based, risk-focused supervisory approach.
Among the most notable proposals was the elimination of the financial literacy requirement for newly elected federal credit union directors.
Current rules require directors to obtain a working knowledge of basic finance and accounting principles within six months of election. The NCUA argued that the mandate is overly prescriptive and that director qualifications should ultimately be determined by members and assessed through the supervisory process rather ant through a fixed regulatory timeline.
The agency also proposed to modernize compensation rules that have historically restricted incentives tied to lending. The change would clarify that loan-related metrics, such as loan growth or portfolio performance, may be included in incentive plans, provided they are tied to overall financial performance and do not encourage unsafe or unsound practices.
Other proposals focused on eliminating what the NCUA views as duplicative or unnecessary regulations. The agency would streamline its "eligible obligations" rule by removing detailed prescriptive requirements governing loan purchase and sale polices, instead relying on board oversight and risk management standards. The NCUA also seeked to repeal its regulation on refunds of interest, saying it merely restates statutory authority already contained in the Federal Credit Union Act.
In addition, the NCUA proposed rescinding its rule governing federal credit union service contracts, arguing that contract authority is already addressed through general statutory powers. Another filing would simplify statutory lien provisions by removing language the agency considers redundant.
Collectively, the proposals signaled one of the most comprehensive regulatory reduction efforts. Public comments on the proposals will be accepted following their publication in the Federal Register on Wednesday.
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