CUNA shared credit unions’ concerns and input on a slate of issues in a letter to the House Financial Services Committee Tuesday. Among other topics, the letter, sent ahead of Wednesday’s hearing on the oversight of prudential regulators, covered proposed legislation granting NCUA oversight of all credit union service organizations (CUSOs) and vendors, providing temporary flexibility to NCUA to offer forbearance from prompt corrective action (PCA), and modernizations to the Federal Credit Union Act.
CUNA noted it is unable to support legislation granting NCUA oversight of all credit union service organizations and vendors, instead noting that it would like to work with the committee to fine tune this authority.
“We would like to work with the Committee to tailor this legislation so that it targets high risk areas,” the letter reads, “such as cyber security and AML relationships and ensures that credit unions do no pay higher direct or indirect costs as a result of the agency exercising this new authority.”
The letter does encourage Congress to enact legislation that provides temporary flexibility to NCUA to offer forbearance from PCA to otherwise healthy credit unions impacted by federally declared emergencies or disasters.
CUNA noted that credit unions entered the pandemic very well capitalized, but that the slowing economy, coupled with economic recovery measures (including economic impact payments) caused deposits—considered a liability on credit unions’ books—to rise, leading to supervisory scrutiny. This could lead to otherwise healthy credit unions diverting resources from members to meet rigid standards.
“Times of crisis are when credit union members need their credit union the most. Otherwise healthy credit unions should not be forced to reserve extra to accommodate rigid statutory and regulatory capital requirements when their capital declines as a result of natural disaster, pandemic or other external crisis; they should be able to continue to serve their members and help them weather the storm. Therefore, we encourage Congress to enact legislation that provides temporary flexibility to NCUA to offer forbearance from prompt corrective action to otherwise healthy credit unions impacted by federally declared emergencies or disasters.”
CUNA also called on Congress to consider additional changes to the Federal Credit Union Act, including charter enhancement legislation that would: