The NCUA Board published an interim final rule Monday making two temporary changes to its prompt corrective action (PCA) regulations to help ensure that federally insured credit unions remain operational and liquid during the COVID-19 pandemic. A similar rule expired at the end of 2020, and CUNA and Leagues have called on NCUA to reinstate PCA flexibility.
The first change temporarily enables the NCUA Board to issue an order applicable to all federally insured credit unions to waive the earnings-retention requirement for any federally insured credit union that is classified as adequately capitalized.
The second modifies these regulations with respect to the specific documentation required for net worth restoration plans (NWRPs) for federally insured credit unions that become undercapitalized.
These temporary modifications will be in place until March 31, 2022.
“We thank Chairman Harper and the NCUA for taking this action to address the continued challenges the pandemic presents to credit unions and their members,” said CUNA President/CEO Jim Nussle. “The decline in credit union net worth ratios due to the crisis warranted this additional flexibility and will help credit unions remain focused on serving their members.”
The NCUA Board will receive a briefing on the interim final rule at its April 22 board meeting.
CUNA and the Leagues have engaged heavily with NCUA on the need for PCA flexibility in recent months, including in a letter sent with the American Association of Credit Union Leagues and all 34 Leagues.