ALEXANDRIA, Va.—The NCUA board has approved two issues before it: changes to its emergency merger rule and the renaming of certain offices within the agency as part of its reorganization.
The NCUA's emergency merger rule, which is the same rule as proposed in July of this year, amends the definition of "in danger of insolvency" in the agency's chartering and field-of-membership manual. The agency said the new rule gives it more flexibility in situations where an emergency merger is necessary.
NCUA staff told the board during the meeting the “definition is critical as it’s the linchpin for NCUA to exercise its statutory authority.”
The new rule extends to 30 months from 24 the forecast horizon for where NCUA projects a credit union will be financially, and extends to 18 months from 12 when NCUA projects a credit union will drop below 2% net worth.
The rule also addresses credit unions that receive 208 assistance from NCUA, with agency staff saying research has found a “very close proxy between 208 assistance and then leaving the system shortly thereafter.”
The board was told by staff that the rule related to 208 assistance is not “rigid” and does not automatically mean those CUs will definitely be subjected to an emergency merger.
NCUA Chairman J. Mark McWatters said he sees the change as a “positive safety and soundness move” aimed at identifying earlier in the process credit unions that are headed for trouble.
NCUA reported it received 12 comment letters on the proposal, all of which were supportive.
In the second board vote, approval was given to a plan that eliminates the Office of Small Credit Union Initiatives, renames the Office of Consumer Financial Protection and Access the Office of Consumer Financial Protection, and which creates a new office named the Office of Credit Union Resources and Expansion (CURE). That new office will absorb most of the current functions of the Office of Small Credit Union Initiatives, the federal credit union chartering and field of membership functions of the Office of Consumer Financial Protection, and the minority depository institution preservation program of the Office of Minority and Women Inclusion.