ALEXANDRIA, Va. (7/31/14, UPDATED 10:34 a.m. ET)--As National Credit Union Administration Chair Debbie Matz said it would earlier this month, the agency just approved a proposal for comment that would allow most federal credit unions to manage their own fixed-asset purchases without having to seek supervisory permission or waivers. However, the proposal has limitations.
Under the plan, credit union updates to facilities, upgrades to technologies and purchases that do not affect safety and soundness would be left up to the credit union. However, under this fixd-asset proposal, the NCUA said that to exceed the 5% cap, a credit union would be required to maintain a fixed-asset management plan, which would be evaluated similarly to the way a waiver request is currently scrutinized.
Currently the NCUA's regulations limit the aggregate of a credit union's investments in fixed assets at 5% of its shares and retained earnings for credit unions with more than $1 million in assets. A credit union can apply for a waiver with a written request describing the investment.
The rule would not apply to federally insured, state-chartered credit unions, nor would it apply to credit unions with less than $1 million in assets.
Board member Rick Metsger has made fixed-asset changes a focus since he was appointed to the NCUA board, and said last week he was strongly in favor of giving credit unions the ability to make their own decisions when it comes to managing fixed assets.
The Credit Union National Association supports this rule change as an improvement to the current waiver process and stated its support in a recent letter to the NCUA board. Relief from credit union regulatory burden is a top advocacy issue for CUNA.