WASHINGTON–Prior to a Senate Banking Committee hearing on oversight of financial regulators, both CUNA and NAFCU sent comment letters outlining additional policy changes both groups want NCUA to make.
In his letter, CUNA CEO Jim Nussle stated,
“Uncertainty has been pervasive since the outset of the COVID-19 pandemic and continues to be one of the greatest challenges facing us now. It is impossible to forecast precisely the duration of the crisis or the depth of its economic and financial impact,” Nussle wrote. “For credit unions that need to remain open to serve all their members, and in a position to help those in need, the uncertainty factors into every decision they make.”
CUNA Recommendations
CUNA said NCUA should:
- Review its existing Prompt Corrective Action (PCA) regulations and offer forbearance to credit unions that may temporarily fall between the 6% and 7% net worth leverage ratio
- Further delay implementation of the risk-based capital rule to, at earliest, Jan. 1, 2023
- Understand and consider credit union’s good-faith efforts regarding Regulation B (Equal Credit Opportunity Act) notices for new credit products intended to assist members during the pandemic
- Issue an interim final rule on Payday Alternative Loans (PALs) to ensure credit unions have the flexibility to meet members’ needs during the pandemic
- Expand the borrowing ability of the Central Liquidity Facility to 25 times the paid in capital, extend the expanded borrowing authority until the end of 2021 and make permanent the ability of corporate credit unions to act as agents for credit unions
- Temporarily reduce the level at which credit unions are considered well capitalized from a net-worth ratio of 7% to 6% and adequately capitalized from 6% to 5% during the pandemic
CUNA said Congress should pass legislation to exempt credit union business loans from the member business lending cap until one year after the end of the COVID-19 emergency declaration. As CUToday.info has reported, bills have been introduced in the House and Senate that would provide that exemption.
NAFCU Letter
In its letter to the Senate Banking Committee hearing, NAFCU Vice President of Legislative Affairs Brad Thaler called on NCUA to:
- Provide relief from the member business lending (MBL) cap
- Increase the 15-year general maturity limit on loans under the Federal Credit Union Act
- Allow all credit unions to add underserved areas to their fields of membership
- Make changes made by the CARES Act to the NCUA's Central Liquidity Facility, which allow credit unions easier access to the facility, permanent
- Provide temporary relief on par with community banks as it relates to credit unions' capital standards
- Grant the NCUA authority to waive requirements of a net-worth restoration plan for credit unions that are less than adequately capitalized for up to 180 days
- Grant the NCUA greater flexibility to make decisions related to credit unions that are experiencing a fluctuation of capital levels as a result of the pandemic
- Make statutory changes to the "reasonable proximity" requirement to permit flexibility for members to join a credit union
Additional Recommendations
Thaler also offered additional legislative recommendations, such as providing credit unions with relief from the current expected credit loss (CECL) standard, more funding for the Community Development Financial Institutions (CDFI) Fund and Community Development Revolving Loan Fund (CDRLF), and modernizing outdated governance provisions in the Federal Credit Union Act. He also cautioned against granting the NCUA third-party vendor authority as the agency already has tools in place to get access to information about vendors.