WASHINGTON—In a letter to NCUA, CUNA said it generally supports the agency’s corporate credit union proposal but has concerns with several proposed changes.
NCUA proposed the rule at its February meeting to update, clarify and simplify its provisions pertaining to corporate credit unions
As CUToday.info reported, specifically the NCUA proposal would:
- Permit a corporate credit union to make a minimal investment in a CUSO without the CUSO being classified as a corporate CUSO and subject to heightened NCUA oversight
- Expand the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union’s board
- Remove the experience and independence requirement for a corporate credit union’s enterprise risk management expert
- Clarify the treatment of an investment in a subordinated debt instrument of a natural person (NP) credit union
- Codify the current list of permissible activities for a corporate CUSO
The Concerns
CUNA said it is worried the proposed change stating the corporate credit union aggregate investment and lending limits apply regardless of whether a corporate credit union’s investment or loan is to a natural person CUSO or corporate CUSO.
“We are concerned that this provision of the proposal could result in reducing access to funding for NP CUSOs as combining loan and investment balances in determining compliance with aggregate limits reduces the ability for corporate credit unions to continue to provide existing levels of funding to NP CUSOs,” the letter reads. “Therefore, we ask the NCUA to reconsider this proposed change to avoid such a result.”
CUNA also asked NCUA to refrain from moving the list of permissible activities from the NCUA’s website to an appendix to part 704 over concerns the proposed change could decrease flexibility and hamper the ability of the agency to quickly consider new activities for corporate CUSOs to engage in.
CUNA also encouraged the agency to pursue changes aimed at reducing regulatory burdens on corporate credit unions, including examining the benefits and risks of permitting corporate credit unions to pursue non-CUSO investments.