NCUA should focus on FOM reforms, additional regulatory relief
The NCUA should strongly consider the regulatory burden facing credit unions, and incorporate credit union feedback in future regulatory reviews, America’s Credit Unions wrote Friday in comments on the agency’s annual regulatory review.
The NCUA reviews one-third of its regulations each year. This year’s review covers parts 700-710, which include chartering, field of membership (FOM) modifications, duties of directors, investment activities, and bank conversions/mergers.
“We applaud the NCUA for recognizing the stagnant nature of the agency’s FOM requirements when compared to some innovative state charters. To that end, credit union boards of directors must have significant flexibility to determine their FOM to enhance safety, soundness, and service,” the letter reads. “Therefore, FOM reform is a top issue for America’s Credit Unions and our member credit unions. While we recognize that the NCUA is restricted by provisions of the Federal Credit Union Act, we believe additional changes can update the regulation’s requirements to align them with today’s economic and technological environment.”
This includes FOM reforms to:
- Eliminate the population cap for a “well-defined local community;” if that is not possible, it should raise it to 10 million (up from the current 2.5 million);
- Expand the current exemption to allow all immediate family members of a deceased member to be eligible for membership and broaden the definition of “immediate family” to include a wider range of legal and blood relatives;
- Reconsider NCUA’s interpretation of “reasonable proximity” to credit union facilities beyond the current 25-mile radius; and
- Meaningfully incentivize and facilitate credit union investment in mobile and online technologies.
The NCUA could also streamline, clarify, and/or otherwise improve regulations by:
- Reviewing federal credit union bylaws regularly to eliminate confusing provisions and reflect technological advancements;
- Focus on promoting credit unions’ ability to effectively run their organizations in a way that allows them to serve their members without unnecessary risk to the share insurance fund, rather than focusing on a rule to mandate succession planning;
- Be more transparent and conservative in its budgeting process;
- Adopt the proposed rule to revise the current requirements for written overdraft policies;
- Review clarifications to its loan participation rules, including limits on aggregate amounts of loan participations that can be purchased;
- Move quickly on a rulemaking to implement the signed-into-law GENIUS Act to regulate stablecoins.
- Expand credit unions’ investment authority and enhance opportunities to engage with and invest in innovative technology solutions and fintech companies; and
- Update its Truth in Savings rule to better reflect modern banking practices around fee disclosures.
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