ARLINGTON, Va.–State credit union regulators are expressing support for actions taken by the NCUA board at its meeting last week.
The National Association of State Credit Union Supervisors (NASCUS) said it welcomed the final rules approved by the board, including on capitalization of interest by federally insured credit and mitigating the day-one effect of the Current Expected Credit Loss (CECL) accounting standard on capital levels.
In response to the new rule on capitalization of interest, which NCUA said is designed to provide greater flexibility for CUs to work with economically distressed members, NASCUS President and CEO Lucy Ito said, “This rule will expand the options for loan repayments by members working to regain their economic footing as the financial impact of the coronavirus crisis begins to recede.”
On the CECL standard rule, Ito said she appreciated the board heeding the state system’s suggestions on recognizing fiscal years and clarifying eligibility for small, state-chartered credit unions subject to GAAP.
Applause for Differences
NASCUS noted that during his remarks NCUA Board Vice Chairman Kyle Hauptman commented on the structural differences of credit unions compared to other financial counterparts.
“NASCUS applauds Vice Chairman Hauptman in observing that the cooperative structure of credit unions differentiates them from other financial intermediaries,” said Ito. “NASCUS believes CECL should apply to credit unions given their business functions as depositories and lenders. We look forward to working with NCUA on tools and resources to assist credit unions in complying with CECL in a cost-effective and time-effective manner.”
Support for Advisory Body
As for a call by Board Member Rodney Hood for a credit union advisory body at NCUA, similar to advisory bodies of other federal agencies, Ito said, “NASCUS fully agrees with Board Member Hood and Chairman (Todd) Harper on the value of a credit union advisory body at NCUA.”
Ito noted NASCUS enacted a public policy calling for creating an NCUA Federally Insured Credit Union Advisory Council in April 2017.
“As administrator of the National Credit Union Share Insurance Fund (NCUSIF), NCUA should form an advisory council of federally insured credit unions to provide NCUA with advice and guidance on issues related to share insurance regulation and supervision,” said Ito. “Such an advisory council should consist of equal numbers of state chartered and federally chartered credit unions and should convene at least twice annually with the NCUA board in public meetings.”