Samantha: Hello, this is Samantha Shares.
This episode covers Corporate Credit Unions; Proposed Rule.
The following is an audio version of that document.
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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 unionâs asset
and liability management committee must have at least one member who
is also a member of the corporate credit unionâs board of directors.
The proposed rule would also remove filing requirements related to a corporate
credit unionâs 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 Aâs 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 unionâs annual report.
The nineteen ninety seven rule required a supervisory committee to obtain an
annual opinion audit of the corporate credit unionâs 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 yearâs 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.