ALEXANDRIA, Va.–When the NCUA board meets Thursday both CU trade groups will be watching to see if the agency issues an interim final rule that takes into account the effect of stimulus payments on many CUs’ assets.
At its meeting the NCUA board will discuss the applicability of certain asset-based regulatory thresholds using asset data as of Dec. 31, 2019, if the credit union’s assets as of that date were less than its assets on the date as of which the applicability of a given threshold would normally be determined.
In other words, both CUNA and NAFCU are asking NCUA to not hold credit unions accountable for certain regulations if the only reason the regulation applies is stimulus payments boosted its assets or affected a particular ratio.
“We have been asking NCUA to consider alternatives to the $10 billion threshold (for certain regulations and oversight),” said NAFCU EVP and General Counsel Carrie Hunt. “Rather than measuring a moment in time we are asking NCUA to take the approach of other regulators and use an average” for certain data points, such as assets, over the last eight quarters, for example.
“All these deposits have the potential to flow back out should consumers spend like some are indicating they will spend,” continued Hunt. “It’s not fair for a financial institution to trigger new regulatory requirements if the (asset-based trigger) goes back down.”
Hunt said flexibility around capital ratios, an accommodation which NCUA had been providing before allowing it to expire, would be helpful to a number of credit unions, especially those at risk of approaching Prompt Corrective Action because deposits caused a decline in capital ratios.
“These credit unions do not need detailed capital restoration plans,” Hunt stated.
CUNA Shares View
CUNA’s Luke Martone, senior director of advocacy and counsel, shared similar sentiments.
“We have asked NCUA to follow the lead of the banking regulators and allow CUs to use asset data from Dec. 31 of 2019 for requirements involving asset thresholds,” Martone said during a call with the media. “The increase in share growth related to government stimulus during the pandemic increased the balance sheets of credit unions, and we feel this relief could be beneficial for a number of credit unions.”