The National Credit Union Administration (NCUA), a U.S. government agency, has announced the sixth round of proposed regulatory changes as part of its ongoing Deregulation Project. The project aims to review and update NCUA regulations to focus on the safety, soundness, and resilience of credit unions. The NCUA is responsible for regulating, chartering, and supervising federal credit unions, providing oversight for federally insured institutions across the country. It also manages the Share Insurance Fund to insure deposits for more than 145 million account holders in both federal and most state-chartered credit unions. More information about NCUA’s role can be found on its official website.
With this announcement, the NCUA is seeking public comments on six proposals intended to clarify guidance or remove requirements considered unduly burdensome or duplicative within the Code of Federal Regulations.
One proposal would eliminate the requirement that new credit union directors obtain expertise in finance and accounting within six months after appointment. According to the Board, “removing this requirement reduces overall compliance burden on volunteer boards.”
Another proposal seeks to define “overall financial performance” in relation to compensation plans at federally insured credit unions (FICUs) that include incentives or bonuses tied to lending metrics. The Board also wants to specify that exceptions for incentive payments based on overall financial performance apply even when paid to senior management employees. The Board stated: “This change would provide clarity about the meaning of the regulation in a way that makes the regulation less burdensome for credit unions. This change would help credit unions recruit and retain staff, which is an important aspect of credit union resiliency.”
For eligible obligations under 12 CFR 701.23, three changes are proposed:
– Revising purchase policy requirements so that eligible obligations from liquidating credit unions must comply with purchasing FCU’s internal written policies.
– Allowing each board of directors authority over limitations set in their written sale policies.
– Removing section 12 CFR 701.23(g) regarding payments and compensation because broader conflict-of-interest provisions already exist.
According to NCUA, these changes aim to reduce administrative burden while still requiring appropriate internal policies tailored by each institution.
The Board also proposes removing regulations considered duplicative or obsolete:
– Eliminating 12 CFR 701.24 regarding refunds of interest on loans since it duplicates requirements already present in federal law.
– Removing 12 CFR 701.26 concerning service contracts because it requires written agreements but adds unnecessary complexity.
– Deleting certain definitions related to statutory liens from regulation 12 CFR 701.39(a)(1), as they are seen as unnecessary text complicating compliance.
Stakeholders are encouraged by NCUA officials to review these notices of proposed rulemaking and submit comments through the Federal Rulemaking Portal.
The NCUA continues its work overseeing federally insured credit unions nationwide, guaranteeing safe deposits and providing regulatory oversight as described on its official website. For further details about these deregulation efforts or tools such as CUOnline for financial submissions or Share Insurance Estimator for coverage information, visit NCUA’s website.
