ALEXANDRIA, Va.—The NCUA board pulled from its June 25 meeting agenda a proposal on its risk-based net worth rule.
In a tweet, NCUA Board Chairman Rodney Hood said the reason the proposal was pulled was it would not have passed. "It is unfortunate that I did not have a solid second vote to move this critical piece of regulatory relief forweard," said Hood in a tweet.
The decision to pull the proposal comes one month after Hood's proposal for an interim final rule on overdrafts lost on a 2-1 vote at the May board meeting, as CUToday.info reported here.
Proposals related to risk-based capital and risk-based net worth have been among the longest-running issues before the agency. Most recently, the agency has been issuing guidance around additional capital flexibility as a result of the coronavirus.
Both CUNA and NAFCU have advocated for additional flexibility around net worth and capital issues.
Feedback Requested on Exam Program
Separately, the NCUA Board unanimously approved a request for information on how it might use new and emerging data and technology to support a further modernization of its examination and supervision functions.
“I am pleased to hear that we are taking strides in researching ways to modernize our largest function here at the NCUA, the examination and supervision program,” NCUA Chairman Rodney Hood said. “While evaluating the safety and soundness of the credit unions we insure is a necessary process, reducing the burden on credit unions while maintaining our effectiveness, sounds like a win-win for all parties involved.”
NCUA, which has had to turn quickly to technology and speed its pace of adoption with virtual examinations due to the cornavirus pandemic, said it will use stakeholder responses to:
- Refine a strategy for leveraging technology in the future examination and supervision process;
- Determine how much onsite activity would still be required with an examination done primarily offsite; and
- Develop an implementation strategy that reduces regulator and examination burdens while maintaining the agency’s ability to determine whether federally insured credit unions are operating in a safe and sound matter, and in compliance with all applicable laws and regulations.
Comments related to the request for information must be received 60 days after its publication in the Federal Register.
NASCUS Response
In response, NASCUS President and CEO Lucy Ito said, "“NASCUS and the State System look forward to engaging in the request for information process regarding offsite examinations and supervision. We appreciate the Board providing the State System with the opportunity to offer feedback on this issue. Since both NCUA and State Supervisory Agencies examine federally insured state-chartered credit unions, collaboration is essential.”
NAFCU Response
“NAFCU strongly supports an effective, efficient and meaningful examination program,” said NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt. “We appreciate the NCUA’s commitment to exam modernization as it considers moving the process to a predominately offsite model. We also encourage the agency to fully transition to its extended examination cycle and provide more frequent updates on the exam modernization process. Today, credit unions are well capitalized and healthy, and any future changes to exams should promote continued industry health without creating unnecessary burdens.”
Technical Amendments Approved
The board also unanimously approved several technical amendments to NCUA’s regulations. These amendments include several changes to correct minor errors and inaccurate citations throughout the NCUA’s regulations.
Because these changes are technical and do not substantively affect federally insured credit unions, they are being issued as final rules, the agency said.
The final rule is effective upon publication in the Federal Register, except for the amendments to the final rule published at 80 FR 66626, which are effective on Jan. 1, 2022.