ALEXANDRIA, Va.—The NCUA board is set to meet today and will discuss a proposed rule related to public unit and nonmember shares. Separately, CUNA is calling on NCUA to adopt a floating interest rate cap.
Earlier this year, the agency's Regulatory Reform Task Force elevated the issue from a tier two to a tier one priority. In its original report, the task force recommended raising the non-member deposit limit from 20% to 50%, while noting that the change will "parallel the ability of credit unions to borrow from any source up to 50% of paid-in and unimpaired capital and surplus per Section 1757(9) of the Federal Credit Union Act," CUToday.info reported earlier.
The Federal Credit Union Act permits credit unions to accept nonmember deposits in limited circumstances.
Also on today’s agenda:
- Share insurance fund quarterly report
- Board briefing, update on the Office of Credit Union Resources and Expansion (CURE)
The meeting is set to begin at 10 a.m. ET. CUToday.info will provide complete coverage.
Video Recording Available
Separately, the agency announced the video recording of the April 18, 2019, open meeting of the NCUA board is now available on the agency’s website.
The NCUA posts archived videos of past board meetings on its Board Meetings, Agendas, and Results webpage, and each video remains on the page for one year.
At the April open meeting, the board unanimously approved an advance notice of proposed rulemaking requesting public comment on modernizing the NCUA’s regulation on compensation in connection with loans and lines of credit to members.
Brooks Named Assistant To Chairman
Separately, the agency announced it has appointed H. Lenwood Brooks, V, to serve as Assistant to the Chairman and Director of External Affairs for the NCUA.
Brooks joins the NCUA from the Securities Industry and Financial Markets Association, where he served as Vice President of Communications and led the trade association’s external affairs activities. He will report directly to the NCUA chairman and will manage the agency’s Office of Public and Congressional Affairs as well as intergovernmental and stakeholder relations.
“I have known Lenwood for nearly a decade, and I look forward to him being an integral part of my team,” said Chairman Rodney Hood. “He has significant public policy experience and combines it with a deep understanding of public affairs.”
Brooks previously worked on Capitol Hill for Senator Roger F. Wicker (R-MI). He advised Senator Wicker and counseled him during his service on the Senate Banking Committee.
CUNA Calls for Floating Interest Rate Cap
Separately, CUNA has requested NCUA "explore the idea of adopting a floating interest rate cap for federal credit union loans instead of its traditional fixed interest rate (currently 18%." CUNA made the request in a letter to NCUA Chairman Rodney Hood and board members Todd Harper and J. Mark McWatters.
“The NCUA should conduct outreach to the industry—preferably through an advance notice of proposed rulemaking (ANPR)—to gather information on the potential benefits and concerns associated with replacing the existing fixed interest rate cap with a floating cap,” the letter reads.
CUNA noted the board is permitted under the Federal Credit Union Act to increase the interest rate cap above 15% if certain criteria are met, including consultation with the appropriate Congressional committees, the Treasury and federal financial regulators if the prevailing interest rate threatens safety and soundness of credit unions. This increase can be in place for no more than 15 months.
The current extension to 18% was approved at NCUA’s August 2018 meeting, and will be in place until March 10, 2020.
CUNA went on to point out the board has flexibility in how it determines the interest rate cap, which has been at 18% since 1987. "In order to continue the current cap, the board must revisit it prior to its expiration in March 2020,” the letter reads. “While it is critical that the board at least maintain the current cap of 18%, we ask the Board to examine the potential benefits associated with a floating interest rate cap, such as the enhanced ability of federal credit unions to manage interest rate risk.”