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news.cuna.org/articles/39899-matz-calls-2015-the-year-of-reg-relief

Matz Calls 2015 the Year of Reg Relief

NCUA Chair says the agency will focus on five areas to reduce CUs’ regulatory burden.

March 9, 2015

Debbie Matz

NCUA Chair Debbie Matz touted 2015 as the year of regulatory relief from the stage of the CUNA Governmental Affairs Conference this morning.

To a packed room of thousands of credit union leaders, Matz said after her initial remarks, "Now let's turn to what you really want to hear today: how NCUA can better let you do your jobs.

"In other words, what else, consistent with safety and soundness, can NCUA do to ease regulatory burdens on credit unions?"

Matz identified five focal areas of the agency's relief efforts this year:

  • Counting supplemental capital;
  • Expanding fields of membership;
  • Removing the fixed-assets limit;
  • Permitting asset securitization; and,
  • Easing member business lending.

"I commend NCUA Chairman Matz for laying out today at CUNA's GAC five areas of regulatory reform that resonated well with our near 5,000 attendees," said CUNA President/CEO Jim Nussle in response to Matz's remarks. "We view this as a starting point not an ending one, and I look forward to working with NCUA to achieve as much regulatory relief as possible for credit unions, their members and their communities."

CUNA strongly advocates regulatory relief for credit unions both through regulatory and legislative initiatives and changes. CUNA notes that credit unions can better serve their members if regulators and legislators help remove unnecessary barriers.

On supplemental capital, Matz said, "I understand the need for supplemental capital in certain circumstances. I assure you, as part of modernizing risk-based capital, I am committed to allowing supplemental capital to be counted in full. I am open to proposing rules to accommodate these forms of supplemental capital through regulatory changes. The effective dates would coincide with implementation of risk-based capital in 2019."

But not everyone should have to wait until 2019 to benefit from regulatory changes on supplemental capital, she added. She said a focus of the working group she has assembled on the issue is providing low-income credit unions ways to increase their access to secondary capital this year.

However, she said that for credit unions without a low-income designation, the NCUA maintains that legislation is required to allow supplemental capital to count toward the 7% net worth leverage ratio. She said she supports legislation with that intent.

Regarding field-of-membership rules, Matz noted that last year the NCUA proposed a rule designating seven categories of associations that federal credit unions could automatically add to their fields of membership. "This year, we would like to add even more automatic qualifiers," she said.

On fixed-asset limits, Matz said, "We will soon provide more discretion for credit unions to manage fixed assets." While she cautioned about "an over-concentration" in fixed assets, she also said credit unions should be able to "prudently and deliberately make the decisions about the appropriate level of fixed assets to hold...without needless red tape."

"The fourth area of regulatory relief is permitting asset securitization. As the credit union system grows in size and complexity, many of you have begun adopting more sophisticated financial innovations," Matz continued.

"We intend to allow larger, qualified credit unions to securitize their assets," she said, noting that securitization would permit these credit unions to tap new sources of liquidity and reduce interest rate risk by converting fixed-rate assets into cash.

"We're fine-tuning our proposed rule on asset securitization and hope to finalize it later this year."

On member business lending, the Matz said the agency plans to eliminate the business loan waiver process altogether. "Determining whether to exempt a borrower from a personal guarantee is something that your loan officers should do, based on your prudent underwriting criteria. We are going to move away from defining highly prescriptive, one-size-fits-all business loan underwriting requirements," Matz said.

"The bottom line is: You know your members' needs better than we do. Our business lending rules need to reflect that," the NCUA leader noted.