ALEXANDRIA, Va. –During its meeting today, the NCUA board issued a proposed rule it said will provide consistency with other federal financial institutions regulators in the supervisory appeals process.
The board also received a briefing from the Chief Financial Officer on the performance of the Temporary Corporate Credit Union Stabilization Fund, which remains in a positive net position.
In the first proposal, credit unions would have new opportunities to appeal issues directly to the NCUA board. Changes in the appeals process under the proposed rule include:
- Expanding the number of material supervisory determinations that can be appealed to the agency’s Supervisory Review Committee;
- Creating an optional intermediate level of review before an appeal goes to the Committee; and
- Changing the nature and composition of the Committee.
Under the proposed rule, an appeal at any level would not affect, delay, or impede any formal or informal supervisory or enforcement action in progress. Likewise, it would not affect NCUA’s authority to take any supervisory or enforcement action against a federally insured credit union, the agency said.
Comments on the proposed rule, available online here, must be received within 60 days of publication in the Federal Register.
NCUA Chairman J. Mark McWatters called the proposal “near and dear” to his heart, saying that in judicial and quasi-judicial situations people and credit unions have a right to an appeal. Under the proposal, if one board member agrees to hear the appeal, it is required to go before the NCUA board.
“Several existing NCUA regulations provide a right of appeal, but these generally lack uniformity and may be confusing to parties who might seek to appeal an adverse decision to the Board,” the agency said. “The proposed rule would bring these under a uniform set of procedures and would enhance due process for all parties. Subject matters affected by the new rule would include chartering and field of membership, investment authority, conversions and mergers, creditor claims in liquidations, and share insurance determinations. Certain areas, such as formal enforcement actions, prompt corrective action, and material supervisory determinations, would be excluded from coverage under the proposed rule.”
Separately, the NCUA board was told for the quarter ending March 31, 2017, the Temporary Corporate Credit Union Stabilization Fund's net position increased about $43.8 million to end at $1.6 billion.
The increase in the Stabilization Fund's net position resulted from a $37.8 million reduction in the provision for insurance losses and $6.5 million in guarantee fee income during the first quarter. The reduction in the provision for insurance losses was due primarily to improvements in projected cash flows related to the legacy assets securing the NCUA Guaranteed Notes Program.
NCUA's Chief Financial Officer briefed the Board on the Fund’s performance based on the best available preliminary and unaudited information. Earlier this year, KPMG LLP, the independent firm that audits the Stabilization Fund’s financial statements, issued an unmodified, or “clean,” audit opinion of the Fund for the seventh year in a row.