CUNA Regulatory Comment Call
December 13, 1999
NCUA Board Member Dollar Initiates Regulatory Relief
- Board Member Dennis Dollar plans to propose a regulatory relief measure called "Reg-Flex" in the first part of next year. The purpose is to facilitate credit union innovation in member services and to help credit unions compete in the financial services marketplace.
- Board Member Dollar is focusing on regulatory changes, but has also encouraged proposals that might involve statutory changes, which NCUA could consider recommending to Congress.
- CUNA wants to work with Board Member Dollar and provide a range of recommendations that would help relieve credit unions regulatory burden.
- We are soliciting input from leagues and credit unions on ideas to reduce regulatory requirements and make it easier for credit unions to serve their members, consistent with statutory requirements.
- A primary objective of the proposal, according to Board Member Dollar, will be to remove specific regulatory requirements for credit unions that meet a safety and soundness trigger, which will likely be a combination of capital ratio and CAMEL rating.
- We anticipate Board Member Dollar will disclose the details of his proposal during CUNAs Governmental Affairs Conference in February and submit it to the NCUA Board in April.
- Board Member Dollar anticipates an extensive comment period throughout much of 2000 with a goal of having the final Reg-Flex rule in place by the time the risk-based net worth standards of Prompt Corrective Action (PCA) are effective in January 2001.
- raising the $100,000 threshold for requiring an appraisal for residential real estate loans (§ 722.3);
- relaxation of the fidelity bond coverage requirements (§ 704.18);
- a more streamlined approach regarding voluntary mergers of credit unions (Part 708b);
- relaxed limitations on receipt on public funds (§ 701.32);
- less restrictive procedures regarding the purchase, sale, or pledge of assets (§ 701.23);
- less onerous requirements regarding the reporting of catastrophic acts and the reporting of compliance with Part 748 Report of Crime or Catastrophic Act and Bank Secrecy Compliance (§ 748.1(a) and (b));
- reduced burden associated with NCUA examinations;
- expanding the definition of low-income credit unions, allowing more credit unions to use secondary capital for purposes of prompt corrective action and possibly to avoid statutory limits on member business loans;
- raising the statutory usury ceiling; and
- expanding CUSO authority.
- Board Member Dollar cites regulations that cover fixed asset ratios, investment authority, and CUSO investments as candidates for Reg-Flex relief. How would you rank these three examples according to how important they would be to provide credit unions with needed regulatory relief?
- Other possible candidates for Reg-Flex relief include regulations regarding the $100,000 threshold for requiring an appraisal for residential loans; fidelity bond coverage; voluntary mergers; receipt of public funds; purchase, sale, or pledge of assets; reporting of catastrophic acts and reporting of compliance with other provisions of Part 748; and reduced burden associated with NCUA examinations. Do you agree that these examples would provide credit unions with needed relief? Which of these would provide credit unions with the most significant amount of relief? Do you consider any of these regulations to be insignificantly burdensome?
- Do you have any other examples of regulations that should be covered under the Reg-Flex burden? Which of your examples would provide credit unions with the most significant regulatory relief?
- Do you have any other comments or suggestions regarding the Reg-Flex proposal?
ADDITIONAL INFORMATION ABOUT THE PROPOSAL
Reg-Flex can be described as the "flip side" of PCA because regulatory relief for well-capitalized credit unions will provide positive incentives to avoid the PCA penalties that may occur if capital levels fall below certain levels. Board Member Dollar has mentioned some examples of regulations that could be subject to Reg-Flex relief, such as those that cover fixed asset ratios (§ 701.36), investment authority (Part 703), and CUSO investments (Part 712).
An NCUA working group has been assigned the task of developing the Reg-Flex proposal. CUNAs Examination and Supervision Subcommittee will also serve as a focus group for the development of recommendations.
For the present, credit unions have an opportunity to provide input to the development of Mr. Dollars proposal. In addition to the examples mentioned by Board Member Dollar, other possible areas for inclusion in the Reg-Flex proposal could include the following:
Please submit your comments on this proposal to CUNA by January 20, 2000 and we will then prepare and deliver a complete set of comments to Mr. Dollar at that time. Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at firstname.lastname@example.org or to Assistant General Counsel Jeffrey Bloch at email@example.com; or mail them to Mary or Jeff in c/o CUNAs Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. You may also contact us if you would like more information about this proposal.
Eric Richard General Counsel (202) 508-6742 firstname.lastname@example.org |
Mary Mitchell Dunn SVP & Associate General Counsel (202) 508-6736 email@example.com
Jeffrey Bloch Assistant General Counsel (202) 508-6732 firstname.lastname@example.org
Catherine Orr Senior Regulatory Counsel (202) 508-6743 email@example.com