CUNA Regulatory Comment Call

March 13, 2001

NCUA Board Seeks Second Round of Comments on Reg-Flex – Credit Unions are URGED to Comment

(Major Proposal for Federal Credit Unions)


The National Credit Union Administration Board is seeking comments on a proposed Regulatory Flexibility Program for federal credit unions that, as CUNA President and CEO Dan Mica stated, is a "good first step toward regulatory relief." If adopted, the program would allow certain credit unions to be exempt from some of NCUA's regulatory provisions that are not specifically required by law or only be subject to those provisions on a limited basis. The objective of the program is to provide regulatory flexibility without jeopardizing the safety and soundness of participating credit unions or the National Credit Union Share Insurance Fund.

(Click here to go directly to the highlights of the proposal.)

The proposed Reg-Flex is a major undertaking for NCUA and indicates the agency, under NCUA Board Chairman Dennis Dollar, wants to take a different approach to regulation that will minimize government interference while enabling credit unions to develop innovative and attractive products and services. Click here to see the proposed rule.

Comments on the new proposal are due May 14, 2001. Please submit your comments to CUNA by the end of April. We encourage you to use CUNA’s Operation Comment to help draft your letter and then send it directly to NCUA, CUNA and your league. You can access Operation Comment by clicking here.

You can also fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at or to Assistant General Counsel Jeffrey Bloch at; or mail them to Mary or Jeff in c/o CUNA’s Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005.

Only 77 comment letters were received by the agency on the Advance Notice of Proposed Rulemaking on Reg-Flex issued by the NCUA Board this time last year. It is essential that credit unions let the agency, the leagues and CUNA know that NCUA is certainly on the right track with this approach to regulation. Of course, we really want to hear from you with additional ideas you have for expanding Reg-Flex. Banker groups have repeatedly opposed efforts to reduce regulatory constraints for credit unions; and even some well-meaning officials at NCUA tend to be critical of regulatory relief. CUNA and the leagues urge all federal credit unions to read the Reg-Flex proposal and decide whether it can be expanded and how, consistent with the Federal Credit Union Act and safety and soundness. Then, use CUNA’s key points under Operation Comment to write and send your letter. Quantity does matter!! Of course, the most effective letters are those that come from the heart and are based on each credit union official’s experiences.

Originally part of the Reg-Flex program, the NCUA Board has decided to proposal increasing the threshold for an appraisal for a real estate loan and for a member business loan involving real estate for all credit unions. While all the federal financial regulators are required to have an appraisal rule, currently NCUA’s regulation is the most stringent, requiring appraisals for real estate loans of $100,000 or more. While NCUA is considering raising this level to $250,000 for real estate and member business loans involving real estate, NCUA would still require a written estimate of market value and NCUA could require an appraisal "whenever necessary to address safety and soundness concerns."

Highlights of the Reg-Flex Proposal

Which Credit Unions Could Qualify for Reg-Flex

How CUs Would Obtain the Exemption

Specific Rules Identified

NCUA has identified several regulations from which Reg-Flex credit unions would be exempt. These are:

Losing Reg-Flex Status

Appealing the Loss of Status

Additional Issues

Credit unions should feel free to raise with NCUA other suggestions they have for Reg-Flex, such as fidelity bond requirements, the use of audits for some or all examination components, and ANY other recommendation you feel NCUA should consider to improve the regulatory environment for federal credit unions.

NCUA states that changes to field of membership requirements, expanding the definition of "low-income" to include more groups, and member business loan requirements regarding loans to one borrower, personal liability, construction and development lending are not candidates for consideration under Reg-Flex at this time. However, we believe NOTHING should be off the table and if you have good arguments as to why these and other recommendations should be included, please share them NCUA, CUNA and your league.

CUNA's Federal Subcommittee, chaired by Edwin Collins, President of Lockheed Georgia Employees Federal Credit Union, will be developing CUNA's comment letter on Reg-Flex. It is vital that credit unions weigh-in on this issue.


Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •