(March 12, 2021) Clear communication to federally insured state credit unions (FISCUs) of which regulations do and do not apply to them – and also providing a clear chain of regulatory citations applicable to any given issue being communicated – are among the recommendations NASCUS made this week to NCUA about its communications and transparency.
In a comment letter on the agency’s requestion for information (RFI) about its communications practices, NASCUS placed strong emphasis on how the agency communicates information about regulation and compliance relevant to the state system. NASCUS wrote that, often, the agency’s communications “fall short in clearly communicating to FISCUs what applies and how.”
The association pointed to NCUA’s annual (and recent) regulatory review, which identifies provisions of agency rules under review – but without identifying to FISCUs which of those provisions apply. Another example, NASCUS stated, was a May 2020, NCUA Letter to Credit Unions (20-CU-16, “Low-Income Designations: Qualifications of Military Personnel”). NASCUS noted that the communication cites the agency’s low-income designation rule, 12 C.F.R 701.34, but fails to provide FISCUs the corresponding citation applying that provision to state credit unions (12 C.F.R 741.204).
“There is simply no reasonable justification for preserving an organizational framework for compliance guidance that requires FISCUs to spend time searching through the regulations to determine if the information being evaluated applies to them and how it applies to them,” NASCUS wrote.
In order to clearly communicate compliance obligations, the association urged NCUA to reorganize its regulations to consolidate all rules applicable to FISCUs, a long-standing goal of the state system. NASCUS stated that doing so would “much more clearly communicate compliance obligations and reduce the regulatory burden of FISCUs constantly having to search through dozens of NCUA rules to identify references to rules that apply to them.”
NASCUS also recommended that all NCUA communications applicable to FISCUs should contain all relevant regulatory and statutory citations, including the reference to Part 741 of NCUA’s rules that applies the subject matter of NCUA communications to FISCUs. “Going forward there should never be an NCUA compliance communication applicable to FISCUs that does not contain a reference to Part 741,” NASCUS wrote.
In other comments, NASCUS recommended:
- The agency maintain a list of interagency statements and guidance on the NCUA.gov website where other regulatory and supervisory guidance is presented, rather than only as a press release or a “letter to credit unions.”
- On credit union mergers and conversions, that the agency provide both an individual transaction data set as well as systemic data (as was done prior to 2018). “The aggregate systemic data is valuable to stakeholders thinking strategically about the effect and implications of trends in consolidation and charter conversion on the system as a whole,” NASCUS wrote.
- Creation of a dedicated page on the agency website to provide information for de novo state credit unions seeking to apply for federal share insurance (and referred the agency to the FDIC website (FDIC.gov) for an example of a deposit/share insurance application page). Additionally, NASCUS recommended, the agency should provide a link to NASCUS for parties seeking information on conversion to a credit union charter. “NASCUS can provide additional information and contacts for state regulators were NCUA to provide a link to NASCUS,” the association wrote. “Providing a link to NASCUS for additional information would be similar to NCUA’s webpage dedicated to Financial Literacy and Education which provides helpful links to various non-profits dedicated to financial literacy.”
- Clarification by the agency of what publications and guidance can be expected to be communicated by way of the “NCUA Express,” an e-mail information delivery service of the agency. “NASCUS has experienced an intermittent inconsistency in receipt of email communications from that otherwise excellent service resulting in our resubmitting credentials from time to time,” NASCUS stated. “In addition to the interruption in receipt of notices, NCUA Express does not always appear consistent in communicating all guidance documents issued and published on NCUA.gov. For example, NCUA Legal Opinions are not communicated by way of this platform.”
- More clear delineation between data for FISCUs and FCUs.
LINK:
NASCUS comment letter: NCUA RFI on communications and transparency
(Feb. 26, 2021) Comments are due March 9 on NCUA’s request for information (RFI) on how the agency can improve its communications and improve transparency. A NASCUS comment letter is in the works; see the link below for the NASCUS summary of the RFI (available to members only) … NCUA joined federal and state banking regulators this week in encouraging credit unions and banks to alter loan terms, ease regulatory reporting requirements, and take other actions to help borrowers in Texas affected by bitter cold temperatures spawned by recent winter storms which led to widespread power outages and water shortages throughout the state. The regulators released a joint letter outlining actions institutions could take “to meet the financial services needs of their communities” … The White House this week announced several measures to ensure the smallest firms have access to loans made through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). The measures include an exclusive 14-day application window (starting Feb. 24) for firms with fewer than 20 workers, a revised loan calculation, and funding set-aside for sole proprietors and self-employed individuals and new eligibility for businesses owned by those with certain felony convictions.
LINKS:
NASCUS Summary: NCUA Request for Information, Communications & Transparency
(Feb. 5, 2021) Three summaries of recent NCUA proposals were posted this week by NASCUS, dealing with the addition of a new component to the examination rating system, lending by CUSOs, and the agency’s communications program.
More specifically, the summaries (which are available to members only) outline:
- A proposal to add an “S” (for market sensitivity) to the CAMEL rating system. At its January meeting, the NCUA Board voted unanimously to issue a proposal (for a 60-day comment period) to add the component to its rating system — an addition long supported by NASCUS for the federal regulator – especially since 24 states have already incorporated the component into their own exams. The proposal would also redefine the “L” (Liquidity Risk) component in the existing rating system. According to NCUA, if adopted, the rule would likely take effect in the first quarter of 2022. The agency said that the proposal would provide greater clarity and transparency regarding credit unions’ sensitivity to market risk and liquidity risk exposures once adopted. “The proposed addition would make the NCUA’s rating system more consistent with the other financial institution regulators’ ratings system both at the federal and state levels,” the agency said. NASCUS President and CEO Lucy Ito said, when the proposal was issued last month, that state examiners have observed for some time that the extended low-yield environment may encourage greater risk taking by financial institutions. “We urge the agency to finalize this proposal as soon as possible following the comment period and as soon as practicable following necessary technical re-programming,” she said.
- A plan to allow CUSOs to make any loan a federal credit union (FCU) can make. Also at its January meeting, the board issued a proposal (for a 30-day comment period) that would add to the agency’s list of permissible CUSO services the expanded lending powers. The proposal expands the list of permissible loans by CUSOs from only business loans, consumer mortgage loans, student loans, and credit cards to any type of loan an FCU may originate, including, for example, automobile and small-dollar (payday) loans – the two types NCUA said would likely draw the newest involvement by CUSOs.
- A “request for information” (RFI) from credit unions on NCUA’s communications methods. Earlier last month, the NCUA released the RFI (for a 60-day comment period) on its communications processes in an effort, it said, to “promote efficiency and increase transparency.” Specifically, the agency said, the RFI “seeks public input on how the agency can maximize efficiency and minimize burdens associated with obtaining information on federal laws, regulations, policies, guidance, and other materials relevant to federally insured credit unions.” The RFI contained questions about the effectiveness of its press releases, social media content, and the timing and frequency of agency communications. There are also questions related to improving the agency’s websites, online data resources, and the delivery and format of supervisory guidance, NCUA said.
LINKS:
Summary: Proposed Rule, CAMELS Rating System
NASCUS Summary: Proposed rule, CUSOs (part 712)
Summary: Request for Information, NCUA Communications & Transparency
(Jan. 8, 2021) NCUA’s communications methods are up for comment in an effort, the agency said this week, to “promote efficiency and increase transparency.”
In a release, NCUA said it is seeking public input through a “request for information” (RFI) on how it can streamline and improve its communications with its stakeholders. Specifically, the agency said, the request for information “seeks public input on how the agency can maximize efficiency and minimize burdens associated with obtaining information on federal laws, regulations, policies, guidance, and other materials relevant to federally insured credit unions.”
The RFI, the agency said, contains questions about the effectiveness of its press releases, social media content, and the timing and frequency of agency communications. There are also questions related to improving the agency’s websites, online data resources, and the delivery and format of supervisory guidance, NCUA said.
“Outdated or duplicative regulatory and supervisory information adds to the overall regulatory burden of credit unions as they must devote time and resources to sorting through this information,” NCUA Chairman Rodney E. Hood said in the release. “We recognize that the amount of information the NCUA provides to credit unions can create challenges and may impose unintended burdens. This request for information addresses this concern and continues my mission to ensure NCUA’s regulation of credit unions is effective, not excessive.”
Comments will be taken for 60 days following publication of the RFI in the Federal Register.
LINK:
Request for Information on NCUA Communications and Transparency