The NCUA held its third open meeting of 2023. Chairman Todd Harper kicked off the meeting further, reinforcing his statement from March 13, that the credit union system remains well-capitalized and on a solid foundation. He also reiterated the many liquidity sources available to credit unions. Vice Chair Kyle Hauptman and Board member Rodney Hood echoed Chairman Harper’s comments.
A single agenda item was considered, a final rule on subordinated debt, which the board voted to approve. The final rule makes two changes to the current subordinated debt rule that was finalized in 2020. Specifically, the rule replaces the 20-year maximum maturity of Subordinated Debt Notes and Grandfathered Secondary Capital (GSC) to the later of 30 years from the date of issuance or January 1, 2052. Second, the final rule extends the regulatory capital treatment of any credit union seeking to issue notes with maturities exceeding 20 years and must demonstrate how the instrument would continue to be considered “debt.”
The final rule also includes four technical amendments from the current rule, which include:
- Amending 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
- Amending two sections to remove the “statement of cash flow” from the Pro Forma Financial Statements requirement and replace it with a requirement for “cash flow projections”
- Revising the section of the current rule on filing requirements and inspection of documents
- Removing a parenthetical reference related to GSC that no longer counts as Regulatory Capital
The final rule will become effective 30 days after publication in the Federal Register.
Courtesy of Sarah Stevenson, Vice President, Regulatory Affairs, NASCUS