NCUA Board Meeting Recap

Sept. 22, 2022 — NCUA held it’s first in-person board meeting since the start of the COVID-19 pandemic.  The board thanked the NCUA staff for all of their efforts.

The Board unanimously approved two items:

  1. A notice of proposed rulemaking, NCUA Part 701, Appendix A, Federal Credit Union Bylaws, Member Expulsion
  2. A notice of proposed rulemaking, NCUA Part 702, Subordinated Debt

Proposed Rule, NCUA Part 701, Appendix A, Federal Credit union Bylaws, Member Expulsion

  • On March 15, 2022, Congress enacted the Credit Union Governance Modernization Act of 2022. Under the statute, NCUA has 18 months following the date of enactment to develop a policy by which a federal credit union (FCU) may be expelled for cause by a two-thirds vote of a quorum of the FCU’s board of directors. The proposed rule would amend the standard FCU bylaws to adopt such a policy. The 18-month period to adopt a final rule enacting a policy on member expulsion ends September 15, 2023.
  • NCUA Chairman Todd M. Harper Statement on the Member Expulsion Proposed Rule

Proposed Rule, Part 702, Subordinated Debt

  • The proposal would make two changes to the Subordinated Debt rule (Current Rule) related to the maturity of Subordinated Debt Notes and Grandfathered Secondary Capital. Specifically, this proposal would replace the maximum maturity of Notes with a requirement that any credit union seeking to issue Notes with maturities longer than 20 years demonstrate how such instruments would continue to be considered “debt.”
  • This proposed rule would also extend the Regulatory Capital treatment of grandfathered secondary capital to the later of 30 years from the date of issuance or January 1, 2052.
  • The proposed rule would also make four minor modifications to the Current Rule to make it more user-friendly and flexible. Specifically, the proposal would:
    • amend the definition of “Qualified Counsel” to clarify that such person(s) is not required to be licensed to practice law in every jurisdiction that may relate to an issuance.
    • amend two sections of the Current Rule to remove the “statement of cash flow” from the Pro Forma Financial Statements requirement and replace it with a requirement for “cash flow projections.”
    • revise the section of the Current Rule on filing requirements and inspection of documents.
    • the proposal would remove a parenthetical reference related to grandfathered secondary capital that no longer counts as Regulatory Capital.
  • Read: NCUA Chairman Todd M. Harper’s Statement on Amendments to the Subordinated Debt Rule

Each proposal will have a 60-day comment period upon publication in the Federal Register.

June 30, 2022: NCUSIF briefing

Read all Board Member statements from this meeting.

  • The Board was briefed on the June 30, 2022 – NCUSIF
  • The Equity Ratio – as of June 30, 2022, the Equity Ratio remained the same from December 2021 at 1.26%.
  • The NCUA projects the NCUSIF equity ratio to reach 1.30 percent for period ending December 31, 2022.

Each board member stressed that while the fund is stable with an increase in the ratio projected,  the board must proceed carefully when making any decisions about the share insurance fund due to inflation and increased operating costs. They also stressed the importance of monitoring and managing liquidity issues in the industry due to the significant increase in interest rates.

The board also discussed the expiration of CARES Act relief and the need for Central Liquidity Facility agent membership. The board stressed they will continue to work with Congress.