news.cuna.org/articles/108280-cuna-highlights-18-month-exam-cycle-tcpa-more-at-ncua-forum

CUNA highlights 18-month exam cycle, TCPA, more at NCUA forum

November 3, 2015

ALEXANDRIA, Va. (11/3/15)--At the National Credit Union Administration's open forum discussion for credit unions Friday, CUNA policy and advocacy officers queried agency officials on a series of regulatory issues currently facing credit unions.

The topics spanned the agency's new member business lending (MBL) rule, "autodialer" rules under the Telephone Consumer Protection Act (TCPA) and the agency's 18-month examination cycle.

NCUA Chair Debbie Matz, Vice Chair Rick Metsger, and board member J. Mark McWatters, as well as NCUA regulatory content experts, all participated in the listening session that was open to any topic and held at the NCUA’s Alexandria, Va., headquarters.

Senior Director of Advocacy Andy Price raised another top issue for credit unions and asked if the agency will move to an 18-month examination cycle. CUNA and state credit union leagues have been advocating for an extended exam cycle to reduce both agency spending and disruptions to credit union operations.

Although Matz claimed the time isn’t right at the moment due to numerous regulatory relief rules, she added “we’re not saying no.”

Chief Policy Officer Bill Hampel took the opportunity to remind the agency of CUNA members’ concerns regarding the examination process once a new MBL rule is finalized. In June, the NCUA proposed a rule that would completely overhaul its MBL regulation. Almost all specific requirements not established by the Federal Credit Union Act would be eliminated from the rule, and subject to examiner review of credit union developed policies.

CUNA's biggest concerns with the plan, Hampel said, are the unknown nature of corresponding examiner guidance, which will heavily influence how credit unions construct their MBL policies. CUNA believes the Administrative Procedures Act allows for meaningful public input on potential guidance. In meetings and correspondence with the agency, CUNA also has asked for inclusion of a safe harbor for credit unions seeking to run simple commercial lending programs.

Larry Fazio, director of the NCUA’s Office of Examination and Insurance, responded saying the NCUA is working hard to train examiners on how to minimize potential disagreements.

Hampel also asked if examiners would take into consideration the effect on a credit union’s observed net worth ratio of the Financial Accounting Standards Board’s proposed Current Expected Credit Loss approach to determining the allowance for loan and lease losses.

The new accounting rule would likely require a larger allowance account (lower net worth ratio) than current accounting rules for any given loan portfolio. 

Fazio replied by stating that examiners will be informed of this effect.

Deputy Chief Advocacy Officer Elizabeth Eurgubian then shared CUNA and credit union concerns with the Federal Communications Commission’s (FCC) recent ruling on the TCPA, which could affect credit unions looking to contact members with important account information over the phone.

CUNA previously wrote to the NCUA on these issues, and has sought congressional review, saying the ruling brings an “immense amount of uncertainty and potential liability.”

Gail Laster, director of the NCUA’s Office of Consumer Protection, said the agency would raise those concerns to the FCC at the staff level.

The upcoming budget process was also discussed during the forum. The NCUA will propose its operating budget at the next board meeting, and it will be a two-year budget. Matz called this “a return to business as usual” from before the financial crisis.

NCUA Chief Financial Officer Rendell Jones said the budget presented in November will be for 2016, as well as “our best estimate” of what the budget will look like in 2017.

Matz also addressed the upcoming and highly anticipated field-of-membership proposal from the NCUA, although she didn’t specify a time frame, other than saying it would be unveiled in “the coming months.”

“This is going to be a very interesting proposal, it’s going to be a new way for us to look at field of membership, bearing in mind that we have statutory constraints,” she said.

Matz also said a supplemental capital rule, one that would permit supplemental capital to be considered the numerator for risk-based capital purposes, is being worked on by staff.

“It’s turned out to be a lot more complex than we thought it would be,” she said.

Other highlights from the forum include:

  • Matz is hopeful the NCUA will be able to eliminate some full-time equivalents from the agency’s budget, which will be presented at the November board meeting. She added that the agency’s budget would be an increase over last year;
     
  • Fazio said the agency is looking at ways to perform more parts of examinations offsite, thereby making the process easier for mid- to large-sized credit unions;
     
  • Fazio also said the NCUA is looking at call reports, both in terms of data required and submission methods. A goal is to make the collection process modular, so credit unions would only complete those sections that apply to them. Changes will be finalized by late 2017 to take effect with first quarter 2018 filings; and
     
  • Laster said the agency is looking at ways to keep credit unions up to date with potential changes to their low-income designation.