NCUA Chairman Rodney Hood wrote to Sen. Mike Crapo (R-Idaho), chair of the Senate Banking Committee, this week with several suggestions Congress can make to improve the operating environment for credit unions. Many suggestions align with CUNA’s suggestions raised during engagement with both NCUA and members of Congress in recent weeks.

Hood thanked Crapo for his work passing the CARES Act and noted additional funding for NCUA’s Community Development Revolving Loan Fund grants would help more credit unions responding to the coronavirus disease (COVID-19) pandemic.

Hood’s recommendations fall under several categories:

Liquidity

• Make temporary changes to the Central Liquidity Facility permanent. CUNA has requested this in letters to Congress on the next phase of COVID-19 relief legislation; and
• Grant temporary authority for the NCUA Board to waive the limit for federally chartered credit unions lending to other credit unions, currently at 25% of paid-in and unimpaired capital and surplus.

Prompt corrective action framework

• Temporary reduction in minimum capital standards for federally insured credit unions. CUNA wrote to NCUA earlier this week calling for flexibility for handling credit unions that may fall into the 6% to 7% net worth leverage ratio PCA range;
• Temporary waiver of net-worth restoration plan requirement for up to 180 days; and
• Temporary increase to $100 million (up from the current $5 million) to $100 million for the asset threshold below which the NCUA Board can delegate decisions related to critically undercapitalized credit unions.

Lending

• Temporarily raise the Member Business Lending Cap to 20% of a credit union’s assets (up from the current 12.25%.) CUNA supports legislation to free up member business lending capital by exempting loans made during the pandemic from the cap;
• Permanently increase the federal credit union loan maturity limit from 15 years to 30 years. CUNA has called on both NCUA and Congress (where House and Senate bills have been introduced) to increase the limits; and
• Permanently authorize all credit union charters to apply for serving areas designated as underserved and designate Opportunity Zones as underserved areas and allow any credit union located in a designated Opportunity Zone the ability to extend service to businesses and individuals who live or work there.

In addition, Hood called for a change in the requirement that if a multiple common bond credit union wants to offer services to select employee groups or associations it must be in reasonable proximity to a credit union service facility.

This requirement is outdated and unnecessarily restricts access to credit union services for individuals and businesses,” he wrote. “NCUA requests that the reasonable proximity requirement be removed or significantly amended to permit greater flexibility for members to join a credit union. Field of membership eligibility requirements would remain in place.”