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Samantha: Hello, this is Samantha Shares.

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This episode covers Corporate
Credit Unions; Proposed Rule.

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The following is an audio
version of that document.

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This podcast is educational
and is not legal advice.

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We are sponsored by Credit Union
Exam Solutions Incorporated, whose

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team has over two hundred and
forty years of National Credit

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Union Administration experience.

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We assist our clients with N C
U A so they save time and money.

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If you are worried about a recent,
upcoming, or in process N C U A

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examination, reach out to learn how they
can assist at Mark Treichel dot com.

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Also check out our other podcast called
With Flying Colors where we provide tips

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on how to achieve success with N C U A.

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And now the document.

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

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

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and liability management committee
must have at least one member who

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

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

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

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by its independent public accountant.

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The intended effect is to reduce
unnecessary regulatory burden

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and provide corporate credit
unions with greater flexibility.

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Supplementary information.

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Introduction.

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Background.

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In two thousand ten, the Board
comprehensively revised the regulations

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governing corporate credit unions
to provide longer term structural

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

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seven through two thousand nine.

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

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

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

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

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

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update governance expectations, and
confirm that corporate credit unions may

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purchase subordinated debt instruments
issued by consumer credit unions.

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Legal authority.

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The Board is issuing this proposed
rule under its authority in

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the Federal Credit Union Act.

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

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authority for federal credit unions
and the federal supervisory authority

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for federally insured credit unions.

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The Act provides broad authority
for the Board to issue regulations

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governing both federally chartered
and federally insured credit unions.

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The Act also explicitly authorizes
the Board to subject corporate credit

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

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

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Proposed rule.

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Asset and liability management
committee representation.

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Before the financial crisis of two
thousand seven through two thousand

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

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

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

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

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That requirement has never been changed.

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The Board now proposes to
rescind the requirement for board

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representation on the asset and
liability management committee.

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The Board believes the requirement is
overly prescriptive and inflexible,

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and that corporate credit union
boards should have discretion to

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determine membership of the committee.

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

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

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

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

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

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

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

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hundred eighty days of year end.

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

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and required corporate credit unions
to provide the agency with any

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management letter or report issued
by the independent public accountant.

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

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

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

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management letters, or other
reports issued by the independent

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public accountant with the N C U A.

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

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public inspection and would no longer
need late filing notifications.

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The Board is proposing removal of
these requirements because they

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impose undue compliance burden
disproportionate to their public benefit.

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

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its examination authority.

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Examiners will continue to review
the materials during examinations.

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

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Other requirements remain.

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

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lose an independent public accountant
through dismissal or resignation.

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

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Corporate credit unions must continue
to submit a preliminary annual

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

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Regulatory procedures.

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The Providing Accountability Through
Transparency Act of twenty twenty three

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requires that a notice of proposed
rulemaking include an internet address

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

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

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Executive Orders.

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Under Executive Order twelve eight
six six and Executive Order thirteen

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

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a significant regulatory action.

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The rule would reduce filing
burdens and increase flexibility

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for corporate credit union boards.

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Under Executive Order fourteen
one nine two, which concerns

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deregulation, the proposed rule
is expected to be deregulatory.

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Regulatory Flexibility Act.

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

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

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

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

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There are no corporate credit
unions under that threshold.

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

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

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Paperwork Reduction Act.

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The proposed changes do not create or
modify information collection requirements

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under the Paperwork Reduction Act.

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

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Executive Order thirteen
one three two on federalism.

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

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state chartered corporate credit unions.

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

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between federal and state regulators.

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The proposal eliminates federal
filing requirements for state

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chartered corporate credit unions
but does not otherwise affect

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responsibilities of state regulators.

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Assessment of federal regulations
and policies on families.

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

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not affect family well-being.

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The proposal is limited to
corporate credit union governance

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and filing requirements.

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

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Regulation text.

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

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

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that the asset and liability management
committee review asset and liability

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management reports at least monthly.

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

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

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related risk management policies.

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

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

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Next, section seven zero four
point fifteen paragraph c

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would be revised as follows.

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Each corporate credit union that loses
an independent public accountant through

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

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

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

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

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

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

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

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This concludes the document.

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

00:09:06.061 --> 00:09:08.051
on LinkedIn or at Mark Treichel dot com.

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