ARLINGTON, Va.–The country’s state credit union regulators have weighed in on two NCUA proposals.
The National Association of State Credit Union Supervisors (NASCUS) has submitted two comment letters to the federal agency regarding proposed changes to the Interim Final Rules on Asset Thresholds and Central Liquidity Facility (CLF).
NASCUS said it supports implementing of the interim rule on Asset Thresholds to mitigate transition costs for federally insured credit unions (FICUs) related to the pandemic and the application of NCUA capital planning and stress testing rules. Furthermore, NASCUS said it also believes good cause exists for the issuance of this regulatory relief.
The interim rule allows a FICU to use March 31, 2020, financial data to determine whether the institution is subject to capital planning and stress testing requirements.
Given that the current calendar benchmark for determining ONES' supervisory Tiers was quickly approaching, an immediate effective date was necessary to minimize confusion for credit unions approaching a $10 billion threshold or determining which stress test Tier applies to them, stated NASCUS.
NASUC noted it had previously stated in COVID-19 responses that the unprecedented and volatile nature of the pandemic's effect on both the economy and the financial services' sector justifies expediting regulatory relief to facilitate credit unions' pandemic response.
"Many credit unions have experienced a surge in deposits during the pandemic and some level of post-pandemic run-off is expected,” NASCUS wrote. “Utilizing March 2020 data is a practical way to avoid subjecting credit unions to the additional compliance costs associated with the stress testing Tiers that would, but for the pandemic inflation of their balance sheets, not otherwise have qualified for stress testing under Part 702 at this time."
Central Liquidity Facility
Meanwhile, NASCUS wrote that when it comes to amending NCUA Rules and Regulations Part 725, Central Liquidity Facility, to cohere with statutory changes made to the CLF resulting from the enactment of the Consolidated Appropriations Act, it supports the changes to the CLF and continues to urge the NCUA to seek permanent enhancements to the CLF's ability to serve the credit union system.
NASCUS said it supports:
- Increasing the CLF's borrowing authority
- Permitting corporate credit unions to borrow for their own needs
- Matching an agent's stock subscription obligation to the agent's members that wish to borrow
- Making it easier for credit unions to join and withdraw from the CLF
Broader Leeway
“Giving the CLF broader leeway to approve borrowings substantially contributes to the safety and soundness of the credit union system,” NASCUS said.
Allowing these improvements to sunset until the next economic crisis would be a lost opportunity, it added.
"We concur with the issuance of this proposal as an interim final rule,” the letter reads. “Particularly in this case, where NCUA's changes are cohering to statutory changes made by Congress, making an exception to the public policy of advance notice and comment dictated by the Administrative Procedure Act is compelling."
Copies Available
Copies of both NASCUS comment letters are available here: