More flexibility needed in NCUA's fixed-assets proposal: CUNA

October 13, 2014

WASHINGTON (10/14/14)--While the Credit Union National Association "generally supports" the National Credit Union Administration's fixed-assets proposal, it believes the NCUA can and should provide additional flexibility.

The proposal would allow federal credit unions to exceed the 5% limit without prior NCUA approval, provided it is done by establishing and following a fixed-assets management policy. It would also simplify the partial occupancy requirement for premises acquired for future expansion.

"We generally support the direction of the proposal, but feel the agency could have gone much, much further in providing flexibility to federal credit unions by eliminating the 5% cap altogether because it's not statutory," said Mary Dunn, CUNA's deputy general counsel, in CUNA's comment letter to the agency.

CUNA's suggested changes to the proposal include:

  • Elimination of the 5% aggregate limit. The proposal would not eliminate the 5% cap, rather it would remove prior approval requirements and the need for a waiver prior to a purchase that would exceed the 5%. There have not been examples of too many fixed assets becoming a threat to safety and soundness, so CUNA believes that federal credit union boards are capable to setting reasonable limits for themselves;

  • Credit union boards should set key time benchmarks. CUNA supports letting credit unions determine how long they need to reach full or partial occupancy, rather than the five-year time frame set by the NCUA. If the NCUA determines it cannot provide that flexibility, CUNA supports a time limit of 10 years before partial occupancy must be reached;

  • Fixed-assets management (FAM) responsibility should rest with credit unions but without the need for a specific FAM program. CUNA believes that management of fixed assets should be part of overall management responsibility, rather than be required to maintain a specific program. If the NCUA continues to require a FAM, CUNA believes an annual review of the program is not necessary;

  • The NCUA should update the fixed-assets exemption to credit unions with $50 million in assets, instead of the current $1 million threshold; and

  • The agency should grandfather previously approved waivers, without imposing any of the new requirements necessary to exceed the 5% limitation on those credit unions that have already been granted a waiver.

Use the resource link to access the full letter.

CUNA comment letters