ARLINGTON, Va.–The National Association of State Credit Union Supervisors (NASCUS) has told NCUA it cannot support the agency’s fidelity bond proposal, arguing it
will burden federal credit unions and federally insured state-charted credit unions, confuse directors’ understanding of their proper role, increase operating costs, and discourage qualified candidates from serving on credit union boards.
In short, NASCUS said, the proposal will adversely impact the dual charter system and credit unions, generally.
“NASCUS is concerned that the rule as proposed by NCUA is an unnecessary overreach by the share insurer with respect to state chartered credit unions that will weaken the dual charter system by preempting state laws related to fidelity bonds,” NASCUS Executive Vice President and General Counsel Brian Knight wrote in a comment letter. “The prescriptive nature of the proposal also runs counter to the current approach to mandatory bond coverage of federal bank regulators. If finalized, the proposed rule would likely increase costs for credit unions, insert the credit union board into matters best handled by management, and possibly encumber a credit union’s ability to recruit board members.”
Support for One Aspect
Despite the NASCUS view that the proposed changes have “limited supervisory utility,” the state regulators did express support for the codification of the 2017 NCUA Legal Opinion allowing for joint fidelity bond coverage between a credit union and its CUSOs in certain limited circumstances and for the 10-year review of approved bond forms.
While NASCUS cannot support the rule as proposed, the trade association said it is “ready to work with NCUA to identify a better supervisory path forward to address NCUA’s concerns with fidelity bond rules and the issues raised by this proposal.”