WASHINGTON–CUNA and several its affiliated state credit union leagues have sent a letter to NCUA urging it to work with Congress to pursue additional tools to aid credit unions facing prompt corrective action (PCA) and other capital challenges.
While it acknowledged the recent interim final rule OK’d by the agency that provides two temporary changes to the NCUA’s PCA regulations, the trade groups said the coronavirus pandemic has “exposed what has been has been clear for a long time: NCUA lacks the statutory flexibility it needs to help credit unions navigate certain capital situations induced by natural disasters, public health crises, other emergencies, and the governmental responses thereto.
“While credit unions entered the crisis extremely well-capitalized, the impact of the ensuing economic crisis has and will put stress on capital,” the letter continues. “Among other things, credit union capital levels have been impacted by much needed economic assistance sent by the government to consumers through credit unions and other financial institutions. These payments, in many cases, have been deposited into credit union accounts and have presented downward pressure on otherwise healthy capital levels.”
‘Not the Case’
Saying NCUA should have the tools to accommodate and assist credit unions facing PCA solely because of temporary circumstances caused by a crisis or the government’s response thereto, the groups said, “that is not the case.”
“In fact, the rigid requirements and prohibitions regarding PCA in section 1790d of the Federal Credit Union Act severely hamper the agency’s ability to assist credit unions, and by extension hinder credit unions’ ability to improve their members’ financial well-being and advance the communities they serve,” the letter states.
The groups said they believe it is “critical” Congress provide the agency additional authority to adjust capital requirements or forbear prompt corrective action for credit unions impacted by the current crisis and future crises.