NCUA adopts final corp. CU rule, proposes changes to bridge-loan rule
April 30, 2015
ALEXANDRIA, Va. (5/1/15)--A pair of rules regarding corporate credit unions were on the agenda at Thursday's National Credit Union Administration board meeting, one final and one proposed.
The final rule, approved unanimously by the board, makes several changes the agency says are intended to clarify corporate credit union regulations and facilitate compliance.
NCUA board member J. Mark McWatters (left) reads a statement on a proposed final rule dealing with corporate credit unions. (CUNA Photo)
One change extends the corporates' maximum secured borrowing term to 180 days from 30 days, enhancing their ability to provide seasonal liquidity.
Another change involves corporate credit unions in a merger situation. The rule now allows the surviving corporate to count retained earnings acquired in mergers going forward, a change designed to reduce future risks to the National Credit Union Share Insurance Fund after a corporate consolidation.
The proposed rule involving corporates is meant to allow them to more easily provide short-term bridge loans to credit unions awaiting funding from the NCUA's Central Liquidity Facility (CLF). The CLF exists to serve as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls.
Those loans can take up to 10 business days, which can create a lag between approval by the CLF, and when the money is actually funded. The proposal would allow corporate credit unions to make bridge loans for up to 10 business days as interim funding to the CLF borrowers.
The proposed rule would exclude these loans from the calculation of net assets and net risk-weighted assets for determining minimum capital requirements.
The NCUA approved issuing the bridge-loan plan for a 30-day comment period, which will begin when the proposal is published in the Federal Register.
For more coverage on the NCUA's Thursday meeting, see "CUNA-sought changes in NCUA final FOM rule: Input sought on IOLTAs" and "Share insurance fund posts $25M net income in 2015 1Q" in today's News Now.