CUNA and League advocacy efforts over the past 13 months have included a strong push with NCUA to ensure Prompt Corrective Action (PCA) flexibility and overall engagement with the agency to secure policies that support credit unions during the pandemic, CUNA Chief Advocacy Officer Ryan Donovan wrote in CUNA’s Removing Barriers Blog.
NCUA approved an interim final rule in May 2020 to both allow the board to temporarily waive the earnings retention requirement for adequately capitalized credit unions and allow certain credit unions to submit simplified net worth restoration plans. This rule expired Dec.31.
CUNA and all 34 credit union Leagues wrote to NCUA Chairman Todd Harper last month to encourage renewal of the interim final rule, and the topic was discussed this week at a meeting between Harper and CUNA’s Small Credit Union Community.
“Thankfully, Chairman Harper recently indicated the agency will soon take action to reinstitute capital relief. In the next few weeks, we expect to learn more about what NCUA is willing and able to do to provide flexibility to credit unions,” Donovan wrote. “It’s not clear whether they will simply extend the previous temporary rule or whether they will expand that flexibility to include suggestions that CUNA and the leagues made in March.”
Whatever relief may be available has not changed CUNA’s focus on a long-term solution, Donovan adds, and that includes deploying 360-degree advocacy beyond NCUA.
“In July 2020, we sent legislative language to then-Senate Banking Committee Chairman Mike Crapo and current Chairman Sherrod Brown outlining statutory changes that would help NCUA go even further to accommodate credit unions. This language was developed largely based on legislation introduced in the aftermath of Hurricane Katrina, which illustrates the fact that there is a structural flaw in the Federal Credit Union Act that needs to be addressed.”
The language was not included in end-of-year appropriations legislation, but CUNA and League continue efforts to get NCUA to do everything they can to help credit unions facing pandemic-induced PCA challenges and work with Congress to provide additional accommodations as appropriate.