CUNA pushes for modernization in NCUA reg. review

August 4, 2015

WASHINGTON (8/4/15)--CUNA urged the National Credit Union Administration to review its requirement that all federal credit unions use a single set of bylaws, regardless of size and complexity, in a letter sent Monday.

CUNA, in its letter on the agency’s annual regulatory review, commented on a number of other regulations present, in addition to the bylaws.

“In our view, this ‘one-size fits all’ approach to credit union bylaws is archaic. For example, it may be sufficient for the board of a small credit union to meet every other month as opposed to monthly,” the letter reads. “The NCUA should provide flexibility to credit unions of varying size and complexity for purposes of their corporate governance.”

CUNA suggests that the NCUA issue comprehensive bylaws that can be used by newly chartered federal credit unions to simplify their incorporation, and by smaller credit unions to simplify their operations.

The NCUA is currently working on revisions to its bylaws.

CUNA also suggested the NCUA:

  • Provide more field of membership flexibility, as the federal charter is falling behind many state charters;
  • Do more to allow credit unions to obtain the low-income designation, and asked the agency to revise the procedure for losing the designation in order to allow more certainty for credit unions;
  • Eliminate of the capital adequacy requirement in its risk-based capital proposal. CUNA also questioned whether the agency has the authority to issue a two-tiered risk-based capital rule;
  • Amend its policy regarding other real estate owned (OREO) properties by relaxing its policy that a credit union demonstrate active marketing of an OREO property for sale when the property is being rented;
  • Clarify that senior management can participate in a credit union loan portfolio growth incentive based on overall portfolio growth for a year without violating an agency regulation;
  • Revise the definition of originating lender in its loan participation rule; and
  • Adjust the rule on nonmembers cashing checks to preempt liabilities in the case of charging fees to nonmembers outside of the field of membership.

Other areas addressed in the letter include mergers, conversions and various technical items.