Credit/AdobeStock
The NCUA on Tuesday unveiled its eighth round of deregulation proposals, targeting long-standing limits on credit unions' indirect auto lending activities as part of its broader effort to reduce regulatory burden.
The proposed rule would eliminate provisions in federal regulations that cap how much in indirect vehicle loans a credit union can purchase or participate in when those loans are serviced by a third party. Specifically, the agency is seeking to remove sections § 701.21(h) and § 741.203(c), which currently impose concentration limits tied to a credit union's net worth.
Those rules, first implemented in 2006, restrict credit unions to purchasing indirect loans from a single servicer up to 50% of net worth, rising to 100% after sufficient experience, and require waivers for higher exposure levels.
The NCUA said the framework has become overly prescriptive and no longer aligns with a principles-based supervisory approach. The proposal would instead shift responsibility to credit union boards to establish appropriate risk limits based on institutional size, complexity and risk tolerance.
The agency emphasized that safety and soundness oversight would continue through the examination process, even as specific regulatory caps are removed.
If finalized, the change would give credit unions greater flexibility in managing indirect auto lending programs, a key growth channel for many institutions, while reducing compliance complexity and administrative costs.
The proposal is now open for public comment following its publication in the Federal Register.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.