CUNA outlines NCUA priorities ahead of Hauptman testimony

July 20, 2020

CUNA hopes any potential nominee for the NCUA board will build on the agency’s positive momentum of recent years while coordinating with other agencies, it wrote to the Senate Banking Committee Monday. The committee will hear testimony from NCUA board nominee Kyle Hauptman on Tuesday.

CUNA historically does not take positions on presidential nominations and does not express any views on the merits of this specific nomination in its letter.

Rather, CUNA commends NCUA for recent positive actions that include:

  • Ongoing efforts to extend the examination cycle for certain credit unions has benefited numerous credit unions, particularly those for which a 12-month cycle was clearly unnecessary. However, CUNA continue to believe the NCUA should extend the examination cycle for credit unions under $3 billion in assets;
  • Streamlining examinations and make operations more efficient, and CUNA urges the agency to continue these efforts;
  • NCUA’s move toward virtual examinations, provided credit unions have the ability for in-person interaction to allow them to engage with examiners. Further, CUNA appreciates the agency’s pending request for information on how it can further modernize the examination program;
  • NCUA’s work to modernize the call report. On a going-forward basis, CUNA requests the agency continually monitor the call report to determine how it can be further improved;
  • NCUA’s litigation efforts regarding its field of membership (FOM) rulemaking. CUNA is pleased with the recent decision of the U.S. Supreme Court denying an appeal from the American Bankers Association to void the FOM rule;
  • NCUA Chairman Hood has stated the agency will continue to respect the spirit and intent of the Presidential Executive Order to reduce regulatory burden;
  • NCUA is in the process of reviewing comments received on a proposed subordinated debt rule. CUNA supports an NCUA rulemaking that would provide all credit unions the ability to issue a form of supplemental capital, such as subordinated debt;
  • The agency recently announced a distribution to certain credit unions associated with the NCUA Guaranteed Note program. CUNA is hopeful the agency’s Asset Management and Assistance Center will make future payouts associated with other corporate credit unions in the near future;

Areas in which NCUA could improve:

  • CUNA encourages NCUA to support legislative efforts to extend the CARES Act’s temporary Troubled Debt Restructuring (TDR) relief for an additional year, until the end of 2021, and to continue working with the other banking regulators to ensure the interagency guidance on TDRs remains in effect for the duration of the crisis and its aftershocks;
  • Allowing interest to be capitalized on consumer mortgage loans, in connection with a loan modification made during the time of the pandemic. This approach would be consistent with the requirements of Fannie Mae and Freddie Mac;
  • CUNA maintains the risk-based capital rule is a solution in search of a problem, and should be delayed to, at earliest, Jan. 1, 2023;
  • CUNA recommends NCUA issue an interim final rule eliminate the requirement that a borrower “be a member of the credit union for at least one month” before receiving a PAL I loan.
  • Until FASB agrees to exempt credit unions from the current expected credit loss (CECL) standard, CUNA believe a more proactive and collaborative strategy by the NCUA with industry stakeholders will better ensure credit unions are prepared for this major change as the effective date approaches.