Summary: Letters to Credit Unions 20-CU-09 Temporary Regulatory Relief in Response to the COVID-19 Pandemic

Letters to Credit Unions 20-CU-09 Temporary Regulatory Relief in Response to the COVID-19 Pandemic

April 2020

NCUA’s guidance reviews actions the agency has taken to provide “temporary regulatory relief” to federally insured credit unions (FICUs) during the COVID-19 crisis. Many of the relief provisions were approved by the NCUA Board during its April meeting.

  • 701.36 FCU Occupancy & Disposal of Acquired Premises [FCU only]

FCUs cannot retain premises that are not being used to conduct credit union business unless they are granted a waiver from NCUA. NCUA has amended the timeframe for calculating the need for such waivers so that delays that fall within the date of the temporary final rule’s publication in the Federal Register and December 31, 2020, will not be counted for purposes of determining a FCU’s compliance with § 701.36(c).

  •  701.23(b) Purchase of Eligible Obligations [Likely FCU only]

Part 701.23(b)(2) permits well-capitalized FCUs with a composite CAMEL rating of 1 or 2 to purchase eligible obligations, without regard to whether they are obligations of its members, from another FICU or a liquidating credit union. NCUA has expanded the eligibility to include composite CAMEL 3 FCUs. NCUA will also allow FCUs to purchase eligible obligations pursuant to § 701.23(b)(1)(i) or § 701.23(b)(2)(i) without regard to whether the purchasing credit union is empowered to grant such loans.

Loans purchased under this broader authority will not count against the § 701.23(b)(4) limit of 5% of the unimpaired capita/surplus. This authority expires on December 31, 2020, at which time any purchases made under this authority will be grandfathered.

For FISCUs, § 701.23(b)(1) is referred to in Part 741.8 as a classification of loans not requiring the pre-approval of the NCUA for purchase. Although NCUA’s rules are a bit ambiguous on this point, it does not appear this affects regulatory relief effects FISCUs.

  • 701.22 Loan Participations [Benefits FISCUs]

NCUA is raising the § 701.22(b)(5) limit of a FICU’s aggregate amount of loan participation purchased from any one originating lender to $5 million or 100% of the credit union’s net worth, unless a waiver is obtained from the NCUA RD. NCUA has temporarily increased the limit, until December 31, 2020,  below which a waiver is not required to the greater of $5 million or 200% of the credit union’s net worth. Part 701.22 applies to FISCUs by reference in § 741.8.

 NCUA notes in its guidance that additional relief available to FICUs includes:

  • Annual Supervisory Committee Audit Reports – In 2019 NCUA eliminated the requirement that annual audits be delivered within 120 days of the end of the year. NCUA will take into account that COVID-19 may delay audit delivery beyond the time established in the retention letter for NCUA mandated audits.
  • Late Call Report Civil Money Penalties – The NCUA will not take action against any credit union for submitting the March 31 Call Report after the respective filing deadline as long as the report is submitted within 30 days of the April 26, 2020, file date. SCUs should contact their state regulators if delayed.
  • Miscellaneous Policy and Review Requirements – NCUA will not take exception to policy changes that are made in the long-term best interests of a credit union and its members or if credit unions may need to make exceptions to their policies to assist members affected by the pandemic.

 

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