Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC

Samantha: Hello, this is Samantha Shares.

This episode covers Corporate
Credit Unions; Proposed Rule.

The following is an audio
version of that document.

This podcast is educational
and is not legal advice.

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And now the document.

The N C U A Board is proposing to amend
its regulations for corporate credit

unions by removing the requirement
that a corporate credit union’s asset

and liability management committee
must have at least one member who

is also a member of the corporate
credit union’s board of directors.

The proposed rule would also remove
filing requirements related to a corporate

credit union’s annual report and any
management letter or other report issued

by its independent public accountant.

The intended effect is to reduce
unnecessary regulatory burden

and provide corporate credit
unions with greater flexibility.

Supplementary information.

Introduction.

Background.

In two thousand ten, the Board
comprehensively revised the regulations

governing corporate credit unions
to provide longer term structural

enhancements to the system in response
to the financial crisis of two thousand

seven through two thousand nine.

The provisions of the two thousand
ten rule were intended to stabilize

the corporate system and improve the
ability of corporate credit unions to

function and provide services to natural
person credit unions without undue risk.

Since two thousand ten, the Board has
amended the rule for corporate credit

unions several times to refine capital
standards, clarify investment authorities,

update governance expectations, and
confirm that corporate credit unions may

purchase subordinated debt instruments
issued by consumer credit unions.

Legal authority.

The Board is issuing this proposed
rule under its authority in

the Federal Credit Union Act.

Under the Act, the National Credit
Union Administration is the chartering

authority for federal credit unions
and the federal supervisory authority

for federally insured credit unions.

The Act provides broad authority
for the Board to issue regulations

governing both federally chartered
and federally insured credit unions.

The Act also explicitly authorizes
the Board to subject corporate credit

unions to whatever rules, regulations,
and orders it deems appropriate.

Part seven zero four of the N C U A’s
regulations implements these requirements.

Proposed rule.

Asset and liability management
committee representation.

Before the financial crisis of two
thousand seven through two thousand

nine, the Board revised part seven
zero four in nineteen ninety seven.

That rule required that corporate credit
unions operate according to a written

asset and liability management policy,
and it required that each asset and

liability committee include at least
one member of the board of directors.

That requirement has never been changed.

The Board now proposes to
rescind the requirement for board

representation on the asset and
liability management committee.

The Board believes the requirement is
overly prescriptive and inflexible,

and that corporate credit union
boards should have discretion to

determine membership of the committee.

Filing requirements for a corporate
credit union’s annual report.

The nineteen ninety seven rule required
a supervisory committee to obtain an

annual opinion audit of the corporate
credit union’s financial statements,

to submit the audit report to the board
of directors, and to submit the report

and all related auditor communications
to the N C U A within thirty days.

In two thousand ten, the Board expanded
auditing and reporting requirements.

It required filing of the annual
report with the N C U A within one

hundred eighty days of year end.

The N C U A also made those annual
reports available for public inspection

and required corporate credit unions
to provide the agency with any

management letter or report issued
by the independent public accountant.

Corporate credit unions also had to
notify the N C U A if they filed late.

The Board now proposes to remove
several of these filing requirements.

Corporate credit unions would no
longer need to file annual reports,

management letters, or other
reports issued by the independent

public accountant with the N C U A.

The N C U A would no longer make
those annual reports available for

public inspection and would no longer
need late filing notifications.

The Board is proposing removal of
these requirements because they

impose undue compliance burden
disproportionate to their public benefit.

The N C U A already has access to
the records and reports through

its examination authority.

Examiners will continue to review
the materials during examinations.

The intent is to reduce burden without
affecting safety and soundness.

Other requirements remain.

Corporate credit unions must still notify
the N C U A within fifteen days when they

lose an independent public accountant
through dismissal or resignation.

The proposed rule removes the requirement
to report engagement of an accountant.

Corporate credit unions must continue
to submit a preliminary annual

report to their membership at the
next calendar year's annual meeting.

Regulatory procedures.

The Providing Accountability Through
Transparency Act of twenty twenty three

requires that a notice of proposed
rulemaking include an internet address

where a plain language summary of no
more than one hundred words is posted.

The required summary and the proposal
are available on Regulations dot gov.

Executive Orders.

Under Executive Order twelve eight
six six and Executive Order thirteen

five six three, this proposed rule has
been reviewed and is not considered

a significant regulatory action.

The rule would reduce filing
burdens and increase flexibility

for corporate credit union boards.

Under Executive Order fourteen
one nine two, which concerns

deregulation, the proposed rule
is expected to be deregulatory.

Regulatory Flexibility Act.

The Act generally requires analysis
of the impact of a proposed rule

on small entities unless the agency
certifies that the rule will not have

a significant economic impact on a
substantial number of small entities.

The N C U A considers credit unions under
one hundred million dollars to be small.

There are no corporate credit
unions under that threshold.

Therefore, the Board certifies that
the proposed rule will not have a

significant economic impact on a
substantial number of small credit unions.

Paperwork Reduction Act.

The proposed changes do not create or
modify information collection requirements

under the Paperwork Reduction Act.

Therefore, no new O M B
control number is needed.

Executive Order thirteen
one three two on federalism.

This proposed rule applies to all
federally insured credit unions, including

state chartered corporate credit unions.

The N C U A expects only minor effects on
states or on the distribution of authority

between federal and state regulators.

The proposal eliminates federal
filing requirements for state

chartered corporate credit unions
but does not otherwise affect

responsibilities of state regulators.

Assessment of federal regulations
and policies on families.

The N C U A has determined
that this proposed rule does

not affect family well-being.

The proposal is limited to
corporate credit union governance

and filing requirements.

Any effect on families, including
financial well-being, would be indirect.

Regulation text.

The N C U A Board proposes to amend
part seven zero four of its regulations.

First, section seven zero four point eight
paragraph b would be revised to require

that the asset and liability management
committee review asset and liability

management reports at least monthly.

These reports must address compliance
with the Federal Credit Union Act,

N C U A rules and regulations in
Title Twelve, Chapter Seven, and all

related risk management policies.

The revision removes the requirement
that at least one asset and liability

committee member must also be a
member of the board of directors.

Next, section seven zero four
point fifteen paragraph c

would be revised as follows.

Each corporate credit union that loses
an independent public accountant through

dismissal or resignation must notify the N
C U A within fifteen days and must include

a reasonably detailed statement of the
reasons for the dismissal or resignation.

The corporate credit union must provide
a copy of the notice to the independent

public accountant at the same time
it provides notice to the N C U A.

In addition, a corporate credit union
must submit a preliminary annual

report to its membership at the
next calendar year’s annual meeting.

Other prior filing requirements related
to the annual report are removed.

This concludes the document.

If your credit union could use assistance
with your exam, reach out to Mark Treichel

on LinkedIn or at Mark Treichel dot com.

This is Samantha Shares, and
we thank you for listening.