Mid Year Look at NASCUS Priorities

A special message from Mary Martha Fortney, President and CEO
July 2012

As we move into the second half of 2012, I'd like to review some of NASCUS ongoing priorities for our members and the state credit union system. Again, I express my appreciation for our members' support in these efforts to defend and advance the state credit union system.

Protecting State Authorities
As the only organization dedicated to the advancement of the state credit union charter, NASCUS continues to represent the interests of state-chartered credit unions before the National Credit Union Administration (NCUA) and other federal agencies. Recent NCUA proposed rules regarding credit union service organizations (CUSOs) and loan participations encroach upon areas traditionally governed by the states. In comment letters and discussions with NCUA leadership, NASCUS strongly encourages the agency to reaffirm that state credit unions look to state law and regulation in these areas. While NASCUS and state regulators share some concerns with the NCUA about loan participations and CUSOs, we believe risk can be mitigated by focusing on strong underwriting, adequate program contract review and effective third party due diligence.   

It was inevitable that pressure would build on regulators to respond to the national economic crisis with additional regulations. However, NASCUS wants to ensure that a homogenization of the credit union system is not the result of these additional regulations. Dual chartering and differing laws and regulations are integral to the credit union system. The inherent tension between the state and federal regulators highlights that different approaches might indeed work for a specific concern. This benefits all. NASCUS and state regulators are diligently working with NCUA both in public and confidential forums to ensure that the interests of the state credit union system are represented and protected. While we generally don't discuss these confidential regulator-to-regulator working groups, rest assured that we are working hard to ensure that state authorities are protected and enhanced and the state charter remains a charter of choice for credit unions. 

Regulatory Relief
Last fall, NCUA Chairman Debbie Matz announced a Regulatory Modernization Initiative aimed at providing regulatory relief for credit unions. NASCUS is supportive of NCUA's efforts to provide regulatory relief as well as its pronounced support of supplemental capital for credit unions. However, NASCUS continues to work with NCUA to identify a forward-looking approach to regulatory relief and to provide specific relief to federally insured state-chartered credit unions (FISCUs).

NASCUS has encouraged the agency to ease the regulatory burden on FISCUs in particular by changing the format of its rules in Subpart B of Part 741. Unlike Subpart A, Subpart B does not state the text of rules applicable to FISCUs, but merely incorporates by reference the rules outside Part 741.  The complicated nature of NCUA's rules makes it difficult for FISCUs, as well as for state and federal examiners and other interested parties, to easily discern which insurance rules, or in some cases which portions of such rules, apply to FISCUs. We also pointed out that NCUA could relieve the burden on healthy FISCUs of multiple examination contacts in a single year by re-emphasizing the agency's statutory reliance on state examinations, thereby providing regulatory relief for FISCUs.

Further, a forward-looking regulatory relief approach would establish risk-focused rules identifying the material risk and requiring that material risk be mitigated. Credit unions would have flexibility to mitigate that risk in a manner that makes sense for their particular business model and specific circumstances. Credit unions with de minimis activities within the identified risk area would have minimal compliance obligations. NASCUS believes that there is a place for regulatory discretion, as well as for regulatory diversity, in our new financial institution landscape.  We will continue to work with NCUA to accomplish regulatory relief for FISCUs.

Education and Training
NASCUS remains committed to providing superior, quality training and education to state credit union examiners and state credit union managers and staff. In addition to examiner training and education, NASCUS continues to hold its Board of Director Colleges. Since 2008, in partnership with our state regulatory agencies, and often with state leagues, NASCUS has provided training opportunities nearly 2,000 credit union directors in 17 states. Given the heightened attention to the manner in which boards carry out their responsibilities and duties, training for directors will remain a NASCUS priority for NASCUS regulators.

NASCUS also continues to bring targeted education and training to state agencies for their examiners. Most recently, we've held schools in Washington State, California, Michigan and Ohio on a number of topics including asset liability management, troubled debt restructuring and collection policies. Upcoming programs at state agencies will focus on commercial lending, information technology and consumer compliance. We encourage you to contact us if you are in need of specific examiner training. NASCUS will work with you on developing a program and bring it to your state.

In addition, NASCUS continues to hold educational events during our annual State System Summit. This year’s Summit will take place Sept. 12-14, 2012 in Denver, Colorado. The Summit is the only national opportunity for state-chartered credit unions, regulators and system leaders to dialogue on ways to strengthen and advance the state credit union charter. NASCUS Credit Union Advisory Council members can bring a colleague for half price with a paid registrant and first-timers to the Summit can join us at no cost. See this link for more information.

If you have any questions or feedback on NASCUS' continued work for the state system, contact me directly at marymartha@nascus.org or by phone at (703) 528-8688.