CUNA and Leagues called on the NCUA board to adopt an interim final rule to provide Prompt Corrective Action (PCA) relief. The 2020 interim final rule (IFR) on PCA expired December 31, 2020.
“We ask the NCUA to adopt an IFR essentially identical to the 2020 IFR adopted last year that provided relief to credit unions experiencing PCA issues related to an increase in share growth,” the letter reads. “The relief should remain in effect until the end of the pandemic as determined by the Centers for Disease Control (CDC) or other federal entity authorized to make such a determination.”
The previous interim final rule provided credit unions PCA relief by:
Along with PCA relief, CUNA and Leagues are asking the NCUA to temporarily exclude certain assets from net worth ratio.
“[D]eposits in credit unions have swelled during the crisis, largely as a result of government stimulus and changes in consumer spending and savings habits. Credit unions are increasingly investing these funds in zero- and low-risk assets, such as shorter-term Treasury securities,” the letter reads. “These deposits and resulting investments, however, have caused a decrease in the net worth ratio for many credit unions. Therefore, we reiterate our call for the NCUA to follow the lead of other federal banking regulators and exclude such investments, as well as 10% of deposits held at the Federal Reserve, from the net worth ratio calculation.”