The NCUA board approved an item to place several final rules on upcoming board meeting agendas and approved a subordinated debt proposal Thursday.
Board Member Rodney Hood introduced an agenda item—signed by Vice Chairman Kyle Hauptman—calling on the board to place several final rules on the board’s future meeting agendas, and instructing staff to prepare the final rulemakings.
This includes adding the following final rules to future meeting agendas:
CUNA generally supported all three proposals, and all three were among a list of pending rulemakings CUNA called on NCUA to review earlier this year.
Chairman Todd Harper said he didn’t support the proposals at this time but is willing to work with staff and board members over the next few months to work on potential solutions. The action item passed with a 2-1 vote, with Harper voting no.
The subordinated debt proposal that would amend the December 2020 rule to change the definition of “Grandfathered Secondary Capital” to include any secondary capital issued to the United States Government or one of its subdivisions, under an application approved before January 1, 2022, irrespective of the date of issuance.
This is designed to benefit eligible low-income credit unions that are either participating in the Treasury’s Emergency Capital Investment Program or other programs administered by the U.S. government that can be used to fund secondary capital, if they do not receive the funds for such programs by Dec. 31.
This proposal would also provide that the expiration of regulatory capital treatment for these issuances is the later of 20 years from the date of issuance or January 1, 2042.
NCUA’s mid-session 2021 budget review showed a combined budget surplus of $15 million, with $12.2 million coming mostly due to COVID travel restrictions. The board also made available up to $20.5 million in 2021 from unspent 2020 balances, in addition to the $15 million.
Of the $20.5 million, NCUA estimates that approximately $6.8 million will be required through the end of 2022, leaving a projected surplus balance of $13.7 million,
As of June 30, the equity ratio of the fund is 1.23%, a decrease from 1.26% as of Dec. 31, 2020. According to staff, the six-month projection for the ratio is 1.28% for the period ending Dec. 31.