Comments due soon on corporate CU changes, FHLB membership

January 2, 2015

WASHINGTON (1/5/15)--The new year brings opportunities to comment on several proposals from federal agencies, including the National Credit Union Administration, Federal Housing Finance Agency (FHFA) and Internal Revenue Service (IRS).

The NCUA's corporate credit union proposal would make technical amendments to a number of regulatory provisions in part 704 of the NCUA's regulations.

These include:

  • Correcting an error where NCUA staff omitted capturing the retained earnings of a merged credit union when the continuing corporate computes its 2016 or 2020 capital ratios;

  • Allowing corporate credit unions to borrow on a secured basis for 120 days over the current 30 days to better meet seasonal liquidity demands; and

  • Removing a limitation on borrowing that could have impeded a corporate's ability to meet member liquidity needs.

Mary Dunn, deputy general counsel for the Credit Union National Association, said that while the NCUA has billed the proposal as merely technical changes, "we see it as more substantive and our comment letter will reflect that."

Comments on the NCUA's corporate credit union proposed rule are due Monday.

The FHFA is accepting comments on its proposal altering membership requirements to Federal Home Loan Bank (FHLB) program through Jan. 12. The proposal would add new requirements to acquiring and maintain FHLB membership, including an ongoing requirement that all members hold 1% of assets in home mortgage loans.

The proposal has already been criticized by nearly 100 members of the Senate and House, who have told the FHFA that Congress only should be responsible for FHLB membership decisions.

Comments were originally due in November, but an additional 60 days were added to the comment period after feedback from various organizations and legislators.

An IRS proposal would remove the 36-month nonpayment testing period from the agency's rule on cancellation of debt, with comments due Jan. 13.

Currently, cancellation of debt income of more than $600 must be reported on Form 1099-C if any of eight "prongs" stipulated in the rule exist. The eighth prong deals the expiration of the non-payment testing period, does not actually result from a discharge and may be difficult to determine, according to the IRS, and it may also be confusing to debtors who receive these forms and do not know whether to report the amount in income.

(Editor's note: This article first appeared in the Jan. 2 issue of News Now.)