(May 28, 2021) Comment letters on NCUA’s interim final rules on asset thresholds for reporting purposes, and for conforming existing NCUA’s Central Liquidity Facility rules with new statutes, were submitted by NASCUS this week. The state system supported both interim rules.
Under the asset threshold rule, NCUA set March 31, 2020, as the date for determining the applicability of regulatory asset thresholds for such things as capital planning and stress testing at larger credit unions for the remainder of this year and all of next. The new rule affects about 10 large credit unions, NCUA said in March when it issued the interim rule, including those with state charters. It is meant to mitigate the impact of the influx of savings to credit unions, particularly larger ones, during the coronavirus crisis, according to the agency.
Even though it was an interim final rule, NCUA called for comments, which NASCUS and others supplied by this week’s deadline. NASCUS wrote that the March 31, 2020 date is an appropriate measurement date to use. “Many credit unions have experienced a surge in deposits during the pandemic and some level of post-pandemic run-off is expected,” NASCUS wrote. “Utilizing March 2020 data is a practical way to avoid subjecting credit unions to the additional compliance costs associated with the stress testing tiers that would, but for the pandemic inflation of their balance sheets, not otherwise have qualified for stress testing under Part 702 (of NCUA rules) at this time.
“Under the IFR, NCUA would only use the March 31, 2020 date to determine whether a credit union qualifies for stress testing and capital planning in 2022. We agree that providing this regulatory relief initially for one year is a prudently measured approach,” NASCUS told NCUA.
The second letter looks at the agency final interim rule updating its regulations for the agency’s Central Liquidity Facility (CLF). The changes grew out of the passage in December of the Consolidated Appropriations Act, 2021. That legislation extended several enhancements to the CLF (such as more flexible memberships) made in last year’s Coronavirus Aid, Relief, and Economic Security (CARES) Act. The new rule amends the NCUA’s CLF regulation to reflect these extensions. NCUA also sought comments (even though the rule is already in effect).
The state system told the federal regulator that it supports the interim rule, and noted that NCUA should “interpret its own authority broadly to make as many of the CLF changes permanent that it can and seek Congressional action for other changes as needed.
“A more flexible, responsive, and robust CLF is good for the credit union system,” NASCUS wrote. “It is also sound public policy.”