NCUA Board Approves Final Rule on the Role of Supervisory Guidance

ALEXANDRIA, Va. (Jan. 19, 2021) – The National Credit Union Administration Board unanimously approved today by notation vote a final rule that outlines and confirms the agency’s use of supervisory guidance.

The proposed rule was issued on November 5, 2020, as a joint interagency rulemaking among the NCUA, the Board of Governors of the Federal Reserve, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. The final rule adopts the proposed rule without change.

This final rule codifies the Interagency Statement Clarifying the Role of Supervisory Guidance issued by the agencies in September 2018. By codifying the 2018 statement, the final rule confirms that the NCUA will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities.

The 2018 interagency statement reiterated well-established law by stating that, unlike a law or regulation, supervisory guidance does not have the force and effect of law. As such, supervisory guidance does not create binding legal obligations for the public. Because it is incorporated into the final rule, the 2018 statement, as amended, is binding on the NCUA.

This final rule is effective 30 days after publication in the Federal Register.

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Chairman Hood’s Statement on Deputy Chief of Staff Gisele Roget

Hood Thanks Roget for Her Leadership During His Tenure

ALEXANDRIA, Va. (Jan. 19, 2021) – National Credit Union Administration Chairman Rodney E. Hood issued the following statement thanking Gisele Roget, the NCUA’s Deputy Chief of Staff, for her leadership during his tenure.

Roget has served in her Deputy Chief of Staff role since joining the agency in 2019, where she advised Chairman Hood on policy, communications, and congressional engagement. She is the first Black woman to hold this role for a prudential regulator.

Throughout Chairman Hood’s historic tenure as the first Black American to lead a banking regulatory agency, the NCUA provided significant regulatory relief, effectively responded to the COVID-19 crisis, steadfastly promoted diversity, equity and financial inclusion, and provided vital support to small businesses and communities across the nation.

“Gisele joined my office at a critical moment for the agency, and she has been a keystone member of my leadership team,” said Chairman Hood. “From the historic regulatory reform agenda, the changes in rulemaking and statute to address challenges brought forth by the COVID-19 pandemic and the agency’s landmark financial inclusion initiative, ACCESS, Gisele has been essential to every one of the agency’s many achievements.”

Prior to joining the NCUA in 2019, Roget held senior roles in the private and public sectors, including positions at MetLife, Inc., and the Federal Housing Administration. She also spent nearly a decade advising senior members of the House Financial Services Committee on housing policy, financial stability regulation, and congressional oversight.

Roget holds a bachelor’s degree from Yale University.

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NCUA’s Accomplishments Marked by Regulatory Relief, Financial Inclusion, Response to COVID-19

Chairman Hood Releases Select Accomplishments from April 2019 to January 2021

ALEXANDRIA, Va. (Jan. 19, 2021) – National Credit Union Administration Chairman Rodney E. Hood released today selected accomplishments since he was sworn in as the eleventh Chairman of the NCUA in April 2019.

Throughout Chairman Hood’s historic tenure as the first Black American to lead a banking regulatory agency, the NCUA provided significant regulatory relief, effectively responded to the COVID-19 crisis, steadfastly promoted diversity, equity and financial inclusion and provided vital support to small businesses and communities across the nation.

“Since I became Chairman nearly two years ago, the NCUA has been guided by the principle that regulation should be effective, not excessive, and that the agency should support financial inclusion,” Chairman Hood said. “With the support of the NCUA’s talented and dedicated staff, the agency stayed true to this principle and fostered an environment that allowed credit unions to stay competitive in an evolving marketplace.”

“As I continue my work on the NCUA Board, I remain steadfastly committed to serving the American people and the credit union system,” Chairman Hood said. “In 2021, I look forward to working with my fellow Board Members, the NCUA staff, and stakeholders in the credit union system to create a modern regulatory structure that fulfills our obligations to credit unions and their members, fosters innovation and financial inclusion, and protects the National Credit Union Share Insurance Fund.”

Providing Regulatory Relief

Under Chairman Hood’s leadership, the NCUA has vigorously pursued a regulatory agenda that is effective, but not excessive. These efforts have resulted in the modernization of the agency’s rules and regulations to ensure continued safety and soundness, while reducing regulatory burdens, and the expansion of access to safe and affordable financial products and services. The NCUA’s significant actions in support of this regulatory philosophy include:

Responding to the COVID-19 Pandemic

When the COVID-19 pandemic began in March of 2020, Chairman Hood focused on mitigating the pandemic’s impact on the credit union system, providing credit unions with the operational flexibility they need, and ensuring that credit union members have access to needed credit. The NCUA also adjusted its supervision and examination program to protect the safety of its staff and staffs of the credit unions it oversees, while addressing emerging risks and implementing statutory and regulatory changes that have occurred in response to COVID-19.

The NCUA’s actions in response to the pandemic include:

Supervisory Guidance

  • Coronavirus (COVID-19): Information for Federally Insured Credit Unions and Members, a public website with COVID-19 resources, including frequently updated FAQs, for credit unions and members.
  • March 16, 2020 Letter to Credit Unions regarding NCUA Actions Related to COVID-19, which encourages credit unions to work with affected borrowers throughout the pandemic.
  • March 20, 2020 Letter to Federal Credit Unions regarding NCUA Actions Related to COVID-19-Annual Meeting Flexibility, which enables a federal credit union to adopt, by a two-thirds vote of its Board of Directors, a bylaw amendment to Article IV without undergoing further bylaw approval processes with the NCUA.
  • March 26, 2020 Letter to Credit Unions regarding Responsible Small-Dollar Lending in Response to COVID-19, which reiterated the NCUA’s support of small-dollar lending.
  • March 26, 2020 Letter to Credit Unions regarding Identification of Essential Critical Infrastructure Workers During COVID-19, which provided guidance for identifying essential critical infrastructure workers during the pandemic.
  • April 7, 2020 Letter to Credit Unions regarding SBA Loan Programs to Help Small Businesses and Members During the COVID-19 Pandemic, which stated that the NCUA would not criticize credit unions’ good faith efforts to prudently use SBA programs with members affected by COVID-19.
  • April 7, 2020 Letter to Credit Unions regarding a Summary of the Coronavirus Aid, Relief and Economic Security (CARES) Act, which outlined key provisions affecting credit unions due to the CARES Act and encourages credit unions without a current regular or agent CLF membership to join as soon as possible.
  • April 16, 2020 Letter to Credit Unions regarding Enhancements to Central Liquidity Facility Membership and Borrowing Authority, which outlined significant liquidity support to the entire credit union system as it addresses the impact of the COVID-19 pandemic.
  • April 17, 2020 Letter to Credit Unions regarding Temporary Regulatory Relief in Response to the COVID-19 Pandemic, which described temporary regulatory relief measures to help ensure that federally insured credit unions remain operational and liquid during the COVID-19 pandemic.
  • April 22, 2020 Letter to Credit Unions regarding Residential Appraisals Threshold Increase and Other COVID-19-Related Relief Measures, which increases the threshold level where an appraisal is not required for residential real estate related transactions from $250,000 to $400,000.
  • April 30, 2020 Letter to Credit Unions regarding Working with Borrowers Affected by the COVID-19 Pandemic, which described a variety of strategies credit unions can use to work with borrowers who experience financial hardship due to the COVID-19 pandemic.
  • May 22, 2020 Letter to Credit Unions regarding Principles for Making Responsible Small-Dollar Loans, which reminded credit unions to underwrite small-dollar loans based on prudent policies, offer these products in a manner consistent with safe and sound practices, comply with consumer protection and other applicable laws and regulations, and treat members fairly.
  • June 8, 2020 Letter to Credit Unions regarding Prompt Corrective Action Regulatory Relief Measures in Response to the COVID-19 Pandemic, which provided an overview of relief measures for federally insured credit unions during the pandemic, while still maintaining the safety and soundness of the credit union system.
  • July 27, 2020 Regulatory Alert regarding the Treatment of Certain COVID-19-Related Loss Mitigation Options Under the Real Estate Settlement Procedures Act, which states that a loan mortgage servicer may offer a borrower a loss mitigation option based on its evaluation of limited information collected from a borrower, if certain criteria are met.
  • August 6, 2020 Risk Alert on COVID-19 Fraud Schemes, informing credit unions about the risk of fraud associated with the COVID-19 pandemic.
  • November 20, 2020 Letter to Federal Credit Unions that extended the relief measures outlined in Letter to Federal Credit Unions, 20-FCU-02, NCUA Actions Related to COVID-19 – Annual Meeting Flexibility.

The Central Liquidity Facility

Following the regulatory enhancements provided by the CARES Act and changes to the agency’s regulations, the Central Liquidity Facility (CLF) experienced a significant increase in its membership and borrowing capacity. In total, 4,145 credit unions, or 80 percent, of all federally insured credit unions, have access to the CLF, either as a regular member or through their corporate credit union. New memberships have added $989.8 million in additional subscribed capital stock to the facility. Under the temporary authority granted by the CARES Act, the CLF can borrow sixteen times its total capital. As of December 2020, the facility’s borrowing authority stood at $32.2 billion. The NCUA’s actions in support of the CLF include:

Offsite Examinations and Remote Agency Operations

The NCUA’s response to COVID-19 has been robust. On March 16, 2020, the agency mandated a strict offsite examination and supervision policy that continues to this day. Since then, NCUA examination staff has been working closely with credit unions to obtain documentation, complete examination procedures offsite, and thereby limit the burden on credit unions so they can focus on providing uninterrupted service to their members. The NCUA’s actions in support of offsite examinations and remote agency operations include:

  • March 30, 2020 Letter to Credit Unions regarding Offsite Examination and Supervision Approach, which mandated a strict offsite policy for all employees and contracted support staff as of March 16, 2020.
  • April 29, 2020 Letter to Credit Unions regarding Outreach Related to COVID-19 Impact, which informed credit unions that examiners would be reviewing questions with them between May 4 and May 18 to understand the challenges credit unions are facing during the COVID-19 pandemic.
  • May 28, 2020 Letter to Credit Unions regarding an Update to Offsite Examination and Supervision Approach, which informed credit unions about changes to the NCUA’s examination and supervision approach, effective June 1, 2020.
  • July 15, 2020 Letter to Credit Unions regarding Update to NCUA’s 2020 Supervisory Priorities, which provided new information on the NCUA’s 2020 supervisory priorities to reflect emerging economic conditions in response to the COVID-19 pandemic, as well as various statutory and regulatory changes that have occurred since March 2020.

Regulatory Relief

Extension of COVID-19 Relief Measures

NCUA Board Members and members of Congress worked to make certain critical CARES Act provisions were extended to ensure the NCUA and federally insured credit unions could respond to the evolving nature of COVID-19, and provide needed regulatory certainty to the industry.

Signed into law on December 27, 2020, the Consolidated Appropriations Act, 2021 extended several COVID-19 relief measures, including:

  • The CARES Act provisions that provided the CLF with increased flexibility and borrowing authority to support the liquidity needs of the system and the Share Insurance Fund through December 31, 2021.
  • The regulatory relief measures related to troubled debt restructurings, which lengthened the exemption from complying with the Financial Accounting Standards Board’s current expected credit losses methodology until January 1, 2022.

The Consolidated Appropriations Act provided $12 billion in COVID-19 relief funding for community development financial institutions that predominantly serve minority communities. Approximately a third of this $12 billion is set aside for smaller financial institutions with less than $2 billion in assets. Additionally, the act provided the Community Development Financial Institutions Fund with $270 million in supplemental funding. The Community Development Revolving Loan Fund, which the NCUA administers, received $1.5 million in funding for technical assistance grants and low-interest loans to support low-income credit unions.

The act also provided additional support for, and extended the Paycheck Protection Program (PPP), through March 31, 2021. Approximately $284 billion was set aside for first and second- round forgivable PPP loans. Also, $15 billion was set aside for PPP lending through community-based financial institutions like CDFIs and minority depository institutions (MDIs), along with other changes to the PPP program.

Advancing Diversity, Equity, and Financial Inclusion

Chairman Hood has been proud to lead an agency where its core values embrace the tenets of diversity, equity, and financial inclusion. More specifically, he and the NCUA Board are committed to promoting a diverse workforce, an inclusive work environment, and a diverse supply chain, all of which makes good business sense. Additionally, Chairman Hood has encouraged financial services leaders to act on their support for diversity with a commitment to community building through financial inclusion.

Diversity, Equity, and Inclusion

The NCUA has seen increasing levels of diversity in its workforce. In 2020, minorities accounted for 30.5 percent of the agency’s workforce. In terms of the NCUA’s leadership pipeline, the agency has improved the racial diversity of its senior staff positions, from 13.2 percent in 2015 to 22.0 percent in 2020. Racial diversity in the agency’s manager-level staff (Grades 13 to 15) increased from 22.1 percent in 2015 to 27.5 percent in 2020.

Examiners comprise 67.6 percent of the agency’s workforce and, thus, comprise a significant portion of the leadership pipeline. To ensure greater diversity within the examiner ranks, the NCUA increased its efforts to recruit diverse talent, including increasing recruitment efforts at historically black colleges and universities, Hispanic-serving institutions, and other minority- serving institutions, as well as providing internships to high school students from underserved and economically challenged communities.

Additionally, the NCUA encouraged the credit union system and the broader financial services industry to embrace and champion the principles of DEI by:

  • Convening the NCUA’s Diversity, Equity, and Inclusion Summit, which took place in Alexandria, Virginia, on November 6, 2019, when more than 150 credit union professionals gathered to promote the value of DEI for credit unions, share best practices, and develop solutions to industry-specific challenges.
  • Promoting credit union participation in the NCUA’s annual voluntary Credit Union Diversity Self-Assessments, which enable credit unions to more effectively monitor their diversity-related efforts.
  • Leading the formation of the Credit Union DEI Collective, which serves as a resource to the industry on all things DEI-related.

Financial Inclusion

During the NCUA’s Senior Staff Position Forum, which took place from April 27 through May 2, 2020, its senior leadership collectively identified financial inclusion as one of the agency’s top priorities.

To that end, the NCUA launched in October 2020 its Advancing Communities through Credit, Education, Stability, and Support (ACCESS) initiative. Comprised of representatives from across the agency, this initiative refreshes and modernizes regulations, policies, and programs that support financial inclusion within the agency and, more broadly, throughout the credit union system. By dedicating resources from across its business units, the NCUA is working to ensure an inclusive and open-minded approach to making access to safe and affordable financial services more widely available.

It is fitting that the NCUA play a significant role in these efforts, as credit unions have a strong emphasis on service to their members and to the surrounding community. Those qualities are captured in the credit union’s “people helping people” ethos.

Advancing Communities through Credit

The NCUA recognizes that expanding access to credit gives more Americans the opportunity to build businesses, afford higher education, achieve the dream of homeownership, and create strong, vibrant communities. To that end, the NCUA expanded the availability of credit to stimulate economic growth and improve the financial well-being of all Americans in the following areas:

Advancing Communities through Education

Informed consumers who have a strong foundation in personal finance are essential to a healthy credit union system. A core credit union mission, therefore, is that of promoting financial literacy. The NCUA has worked to advance financial literacy and personal finance education efforts and — along with other governmental, private sector, and non-profit partners — has participated in national financial literacy initiatives. The agency’s efforts in this area include:

Advancing Communities through Stability

Often, MDIs and small and low-income credit unions are the only federally insured financial institutions in underserved and rural communities. Accordingly, they play a critical role in providing affordable financial services to millions of Americans. The NCUA worked to help these institutions thrive and meet the evolving needs of their members, and by extension, their communities. These efforts include:

  • A July 18, 2019 final appraisal rule helping boost economic activity and job creation in underserved and rural areas, particularly in certain hard-pressed areas.
  • Participating, on March 3, 2020, at the Freedman’s Bank Forum, where financial regulators and financial institutions discussed MDI-related issues.
  • Convening, on March 4, 2020, the NCUA’s MDI Forum, a two-day forum for credit unions focusing on the NCUA’s 2020 supervisory priorities, strategies for growth, and the agency’s initiatives to support MDIs.
  • Issuing a May 28, 2020 Letter to Credit Unions regarding Low-Income Designations: Qualification of Military Personnel, which improved NCUA’s low-income designation methodology and thereby ensured full financial inclusion for the men and women serving in our nation’s military.
  • Issuing, on June 25, 2020, the NCUA’s Annual Report to Congress on Minority Depository Institutions.
  • Using a portion of the NCUA’s annual Community Development Revolving Loan Fund grants for the Minority Depository Institutions Mentoring Program, which fosters relationships between low-income-designated credit unions and small MDIs that help those credit unions serve their communities better.
  • A December 17, 2020 final rule amending various parts of the NCUA’s regulations to permit low-income designated credit unions, complex credit unions, and new credit unions to issue subordinated debt for purposes of regulatory capital treatment.

Advancing Communities through Support

Chairman Hood recognizes that the NCUA’s primary responsibility is to ensure the continued safety and soundness of the nation’s credit union system. He also recognizes the impact employment has in advancing communities. Where appropriate, the Chairman has encouraged the credit union system and the broader financial services industry to support new employment opportunities for minorities, women, the disabled, and the underserved because doing so allows these individuals to join the financial mainstream and benefit from greater economic opportunity. These efforts include:

  • Approving, on November 21, 2019 with the NCUA Board, the Second Chance Initiative, which allows individuals convicted of certain minor offenses to work in the credit union industry without applying for the Board’s approval.

Improving the NCUA’s Culture

The NCUA values having a respectful and professional workplace. To improve the agency’s culture and ensure that the NCUA retains a respectful and professional work environment, the NCUA has taken these actions:

  • Creating the new Office of Ethics Counsel, which includes a Chief Ethics Counsel, who serves as the agency’s most senior ethics official.
  • Supporting the formation of new staff-led Employee Resource Groups (ERGs), which promote collaboration and communication amongst staff throughout the agency.
  • Supporting the development of an ERG Ambassador Program to identify member volunteers to support agency-wide recruitment efforts.
  • Instituting mandatory, live, and on-demand inclusion and anti-harassment training for all managers that supplement existing training.

Supporting Small Businesses

Recognizing the credit union mission is grounded in the concept of providing affordable financial products and services tailored to meet the specific needs of their members, the NCUA supported policies, programs, and initiatives that help entrepreneurs start or expand businesses. In addition, because the COVID-19 pandemic has had a particularly severe impact on the nation’s small businesses, especially those in vulnerable and marginalized communities, the NCUA focused on ways that the agency can best assist credit unions in their efforts to help main street entrepreneurs and their small businesses survive. These efforts include:

  • April 30, 2019 NCUA-SBA Memorandum of Understanding, which is geared towards bringing small business and credit unions together by launching a series of initiatives, including webinars, training events, and media outreach, that will increase credit unions’ understanding and usage of SBA-backed loans and resources.
  • August 2019 Regulatory Alert regarding Servicing Hemp Business, which provides much- needed clarity to farmers and other rural Americans as they seek to invest in this new product.
  • April 28, 2020 Letter to Credit Unions regarding the Regulatory Treatment for Paycheck Protection Program Loans, which described an interim final rule amending regulatory requirements related to the SBA PPP loans and the Board of Governors of the Federal Reserve System’s PPP Lending Facility advances.
  • June 9, 2020 NCUA-EXIM Memorandum of Understanding, a first-of-its-kind agreement whereby the NCUA and the Export-Import Bank of the United States develop educational and training initiatives on export financing opportunities, which are then shared with credit unions so they can gain access to capital.
  • June 16, 2020 Letter to Credit Unions with Additional Guidance Regarding Servicing Hemp-Related Businesses, which provides additional information for credit unions that are serving, or considering serving, legal hemp-related businesses.

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NCUA Chairman Hood’s Statement on Former Acting Comptroller of the Currency Brian Brooks

ALEXANDRIA, Va. (Jan. 15, 2021) – National Credit Union Administration Chairman Rodney E. Hood issued the following statement today on Brian Brooks, who served as Acting Comptroller of the Currency.

“During his tenure, Acting Comptroller Brooks had a significant impact on the OCC, providing strong, thoughtful, and steady leadership. I appreciate his public service to the nation, as well as the opportunity to collaborate with him on financial inclusion initiatives and other matters. I wish him all the best in his future endeavors.”
 

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NCUA and CFPB Sign Memorandum of Understanding

MOU Underscores NCUA and CFPB Commitment to Consumer Protection

ALEXANDRIA, Va. (Jan. 14, 2021) – The National Credit Union Administration and the Consumer Financial Protection Bureau announced a memorandum of understanding agreement to improve coordination between the agencies related to the consumer protection supervision of credit unions over $10 billion dollars in assets.

“This agreement underscores NCUA’s commitment to consumer protection by facilitating vital information sharing between the agencies for credit unions over $10 billion dollars in assets,” said NCUA Chairman Rodney E. Hood. “Improved coordination with CFPB will produce better outcomes in support of consumers and reduce burden on covered institutions.”

“Today’s MOU is an important step towards improving our existing framework and increasing opportunities for collaboration between our agencies,” said CFPB Director Kathleen L. Kraninger. “By working in a collaborative way, we will engage in more effective processes to protect consumers in the financial marketplace. We look forward to our continued partnership with the NCUA.”

Under this MOU, CFPB and NCUA will pursue opportunities to proactively and efficiently share supervisory information, including drafts of Covered Reports of Examination and final Reports of Examination for credit unions over $10 billion dollars in assets, using secure, two-way electronic means. CFPB and NCUA will jointly collaborate in semi-annual strategy planning sessions to identify and address areas of alignment and coordination in examinations for covered institutions.

The MOU will better facilitate coordinated examinations to reduce redundancy and unnecessary overlap. CFPB and NCUA will also share information on training activities and content. Finally, the MOU will permit both agencies to share information related to supervisory activities and potential enforcement actions.

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Board Approves Proposals on Risk-Based Capital, CAMEL System, and CUSO Lending

Board Action Bulletin

ALEXANDRIA, Va. (Jan. 14, 2021) – Through a live audio webcast, the National Credit Union Administration Board held its first open meeting of 2021 and approved six items:

  • A proposed rule that would raise the asset threshold for defining a credit union as “complex” for purposes of being subject to any risk-based net worth requirement.
  • An advance notice of proposed rulemaking that solicits comments on two approaches to simplify risk-based capital requirements.
  • A proposed rule that would add the “S” component to the existing CAMEL rating system and redefine the “L” component.
  • A proposed rule expanding the list of permissible activities and services for credit union service organizations.
  • A final rule clarifying that corporate credit unions may purchase subordinated debt instruments.
  • The NCUA’s 2021 Annual Performance Plan.

In addition, the NCUA Board was briefed on the agency’s ACCESS Initiative, the Consolidated Appropriations Act, 2021, and annual adjustments to the agency’s civil monetary penalties.

Proposal Would Raise the Asset Threshold in NCUA’s Risk-based Capital Rule

By a 2-1 vote, the NCUA Board approved a proposed rule that would raise the asset threshold for defining a credit union as “complex” for purposes of being subject to any risk-based net worth requirement in Part 702 of the NCUA’s regulations.

The proposed rule would amend the NCUA’s regulations to provide that any risk-based net worth requirement will be applicable to only a federally insured, natural-person credit union with quarter-end assets that exceed $500 million and a risk-based net worth requirement that exceeds six percent. This change would remain in place until the risk-based capital rule goes into effect.

“This proposal aligns with my regulatory philosophy of ensuring regulation is effective, not excessive. It is also important to remember that risk-based net worth is just one tool the agency uses to assess capital adequacy,” NCUA Chairman Rodney Hood said. “All credit unions will continue to be subject to a minimum net worth requirement. This proposed rule would not alter the NCUA’s longstanding expectation that a credit union is considered unsafe and unsound if it does not hold capital commensurate with its risk exposure, even if it is above the regulatory minimum.”

Comments on the proposed rule must be received no later than 30 days following publication in the Federal Register.

Board Approves ANPR on Capital Requirements

By a 2-1 vote, the Board approved an advance notice of proposed rulemaking that solicits comments on two approaches to simplify risk-based capital requirements. The Board’s risk-based capital requirements are set forth in a 2015 final rule, which is scheduled to become effective on Jan. 1, 2022.

At its December 2019 meeting, the Board delayed the effective date of the final risk-based capital rule by providing additional time to evaluate the capital standards for federally insured credit unions that are classified as “complex” or those with total assets greater than $500 million.

The first approach would replace the risk-based capital rule with a risk-based leverage ratio requirement, using relevant risk attribute thresholds to determine those complex credit unions required to hold additional capital. The second approach would retain the 2015 risk-based capital rule but enable eligible complex federally insured credit unions to opt-in to a “complex credit union leverage ratio” framework to meet all regulatory capital requirements. The complex credit union leverage ratio approach would be modeled on the community bank leverage ratio framework, which is available to certain banks.

Comments on the advance notice of proposed rulemaking must be received no later than 60 days following publication in the Federal Register.

Proposed Rule Would Add “S” to the CAMEL Rating System

The NCUA Board unanimously approved a proposed rule that would add the “S” (Sensitivity to Market Risk) component to the existing CAMEL rating system, thus updating the rating system from CAMEL to CAMELS, and redefine the “L” (Liquidity Risk) component.

The estimated implementation of this proposal is approximately one year or as early as the first quarter of 2022. Comments on the proposed rule must be received no later than 60 days following publication in the Federal Register.

Proposal Would Expand Permissible Activities and Services for CUSOs

The NCUA Board, by a 2-1 vote, approved a proposed rule that would amend the NCUA’s credit union service organization (CUSO) regulation. The proposed rule would accomplish two objectives:

  • Expand the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union may originate; and
  • Grant the Board additional flexibility to approve permissible activities and services.

The NCUA is also seeking comment on broadening the investment authority of federal credit unions in CUSOs.

Comments on the proposed rule must be received no later than 30 days after publication in the Federal Register.

NCUA’s 2021 Annual Performance Plan Approved

The Board unanimously approved the NCUA’s 2021 Annual Performance Plan, which provides specific direction and guidance toward achieving the mission and the strategic goals and objectives outlined in the agency’s 2018–2022 Strategic Plan.

“The Annual Performance Plan lays out how we will oversee the credit union systems and to manage and protect the Share Insurance Fund in the coming year as we navigate the current COVID-19 crisis,” Hood said. “I believe that this plan sets forth performance goals for 2021 that, when met, will make for a stronger NCUA and industry.”

The plan also describes the means, strategies, and specific actions the agency has resourced and intends to undertake to achieve each strategic objective. The Annual Performance Plan was developed simultaneously with the 2021–2022 budget. As part of the budget development process, NCUA offices justified how budget requests would further the purpose of the NCUA’s strategic goals and objectives, and identified specific performance indicators that demonstrate the results of budgetary investments.

Final Rule Amends the NCUA’s Corporate Credit Union Regulations

The Board unanimously approved a final rule that amends the NCUA’s corporate credit union regulation. The final rule:

  • Updates the definitions in this regulation and makes clear that corporate credit unions may purchase subordinated debt instruments issued by natural-person credit unions; and
  • Specifies the capital treatment of these instruments for corporate credit unions that purchase them.

This final rule is effective Jan. 1, 2022.

Briefing Notes Agency’s Progress in Advancing Financial Inclusion

The NCUA’s Office of Consumer Financial Protection and Office of Credit Union Resources and Expansion briefed the Board on the agency’s ACCESS Initiative, which identifies and implements how the agency can:

  • Help credit unions bring more people into the mainstream financial system;
  • Ensure unbanked and underserved people and communities have access to affordable financial services and broaden employment and business opportunities; and
  • Reduce regulatory burden and foster greater innovation and flexibility so credit unions can meet the evolving needs of their members.

“NCUA’s ACCESS initiative is bringing together agency leaders to develop policies and programs that support financial inclusion within the agency and more broadly, throughout the credit union system,” Hood said. “We must recognize there’s no “silver bullet” to combating inequity. Instead, we need a carefully considered, comprehensive agenda that puts financial inclusion for underserved, minority communities at its core while focusing on those of modest means.”

Launched in October 2020, the NCUA’s ACCESS initiative, or Advancing Communities through Credit, Education, Stability, and Support, brings together leaders across the NCUA to refresh and modernize regulations, policies, and programs in support of greater financial inclusion within the agency and the credit union system. It will build on earlier successes and address the financial services and financial literacy needs of underserved and diverse communities across the U.S, as well as expand opportunities for employment.

Additional information on the ACCESS Initiative is available on the NCUA’s website at www.ncua.gov/access.

Board Briefed on Consolidated Appropriations Act, 2021

The NCUA Office of General Counsel briefed the Board on the Consolidated Appropriations Act, 2021, as it relates to the extension of enhancements to the Central Liquidity Facility in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The CARES Act made several changes to Title III of the Federal Credit Union Act, which governs the CLF. These changes were scheduled to sunset on Dec. 31, 2020. The Consolidated Appropriations Act, among other things, extended the sunset date of the CLF enhancements in the CARES Act to Dec. 31, 2021. The Board was briefed on this extension and potential regulatory actions the Board may take to align the NCUA’s regulations with the Consolidated Appropriations Act.

Board Briefed on Required Inflation Adjustments to Civil Monetary Penalties

The Office of General Counsel briefed the Board on the required inflation adjustments for the maximum amounts for civil monetary penalties under its jurisdiction, as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

The act requires agencies to adjust the maximum amounts of civil monetary penalties annually to account for inflation. The NCUA Board previously approved these adjustments by notation vote on Dec. 29, 2020. The final rule will become effective upon publication in the Federal Register.

The NCUA tweets all open Board meetings live. Follow @TheNCUA on Twitter, and access Board Action Memorandums and NCUA rule changes at www.ncua.gov. The NCUA also live streams, archives and posts videos of open Board meetings online.

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Indianapolis’ Newspaper Federal Credit Union Conserved

Accounts Remain Protected by Share Insurance Fund; Member Services Uninterrupted

ALEXANDRIA, Va. (Jan. 14, 2021) – The National Credit Union Administration today placed Indianapolis’ Newspaper Federal Credit Union in Indianapolis, Indiana, into conservatorship.

Member deposits at Indianapolis’ Newspaper Federal Credit Union remain protected by the National Credit Union Share Insurance Fund. Administered by the NCUA, the Share Insurance Fund insures individual accounts at Indianapolis’ Newspaper Federal Credit Union up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund also separately protects IRA and KEOGH retirement accounts up to $250,000. The Share Insurance Fund has the backing of the full faith and credit of the United States.

The NCUA placed Indianapolis’ Newspaper Federal Credit Union into conservatorship because of unsafe and unsound practices at the credit union. While continuing normal member services, the NCUA will work to resolve issues affecting the credit union’s operations.

Member services will continue uninterrupted at the credit union’s main office at 126 S. Meridian Street, Indianapolis, Indiana. Members can continue to conduct normal financial transactions, deposit and access funds, and make loan payments. The office is open Tuesday through Thursday from 9 a.m. to 3:30 p.m., and from 9 a.m. to 3 p.m. on Friday.

Members with questions about Indianapolis’ Newspaper Federal Credit Union’s operations may contact the credit union at 317.870.1002. Members with questions about the conservatorship may review the Indianapolis’ Newspaper Federal Credit Union frequently asked questions posted on the NCUA’s website. Members with questions about their Share Insurance Fund coverage can find more information in the Share Insurance Coverage section of the NCUA’s MyCreditUnion.gov consumer website.

Indianapolis’ Newspaper Federal Credit Union is a federally insured, federally chartered credit union with 1,155 members and assets of $6,604,355 according to the credit union’s most recent Call Report. Indianapolis’ Newspaper Federal Credit Union serves various select employee groups in the greater Indianapolis area.

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NCUA Names Frank Kressman General Counsel, Melane Conyers-Ausbrooks Board Secretary

ALEXANDRIA, Va. (Jan. 15, 2021) – The National Credit Union Administration today announced the selection of Frank Kressman as General Counsel and Melane Conyers-Ausbrooks as Board Secretary.

“Frank has an extensive career in law and a deep knowledge of financial regulation and credit unions,” said NCUA Chairman Rodney E. Hood. “This, together with his more than 20 years’ experience at the NCUA, including serving as Acting General Counsel, will serve him well in his new role. I am delighted the NCUA Board appointed Frank to this critical role.”

Mr. Kressman currently serves as the agency’s Acting General Counsel and leads the NCUA’s Office of General Counsel. The Office represents the agency in litigation, executing administrative actions, interpreting the Federal Credit Union Act and the NCUA’s rules and regulations, processing Freedom of Information Act requests, advising the NCUA Board and the agency on general legal matters, and maintaining the agency’s records management program. The General Counsel’s office also drafts regulations designed to ensure the continued safety and soundness of the credit union system.

Before his selection as Acting General Counsel, Mr. Kressman served as a Deputy General Counsel to the NCUA. He joined the agency in 1998 as a staff attorney. His previous experience includes work as an attorney at the Federal Deposit Insurance Corporation and the Commodity Futures Trading Commission. Mr. Kressman holds a bachelor’s degree from Dickinson College in Carlisle, Pennsylvania, a Juris Doctor from the Gonzaga University School of Law in Spokane, Washington, and a Master of Laws degree from The American University Washington School of Law in Washington, D.C.

Prior to being selected as Board Secretary, Ms. Conyers-Ausbrooks served as Acting Secretary of the Board and worked in the NCUA Office of General Counsel managing the NCUA’s Ethics Program and serving as the agency ethics point of contact. In that role, she provided ethics advice, training, and counseling to agency staff and leadership, and monitored compliance with all ethics laws, regulations, and policies.

Previously, she served as legal counsel at Brown Foss and as Vice President and Chief Counsel-Retail Channel at CitiMortgage Inc. Ms. Conyers-Ausbrooks received a Bachelor of Science from the University of Maryland, College Park and a Juris Doctor from Howard University School of Law.

“Melane did an outstanding job as Acting Secretary of the Board. The experience she gained in that role, together with her extensive experience in the Office of General Counsel, make her an ideal candidate for Board Secretary,” Chairman Hood said. “I look forward to working alongside Melane as she takes on this new role in support of our important mission.”

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Lowden Named Deputy Chief Financial Officer

ALEXANDRIA, Va. (Jan. 12, 2021) – The National Credit Union Administration today announced the selection of Melissa M. Lowden as the agency’s next Deputy Chief Financial Officer, effective January 17, 2021.

Lowden will help lead a team of more than 50 employees who perform essential functions, including accounting and financial reporting, enterprise risk management, strategic and performance planning, budgeting, procurement, facilities and logistical support, the administration of credit union operating fees, and the National Credit Union Share Insurance Fund’s capitalization deposits and investments.

“Melissa has more than 20 years’ experience managing finances for organizations and leading large teams to achieve their goals in financial systems, operations, reporting and audit readiness,” Chairman Rodney E. Hood said. “Her experience and leadership will greatly benefit our managing the Share Insurance Fund and the NCUA Operating Fund.”

Lowden previously served as the NCUA’s Acting Deputy Chief Financial Officer, as Division Director for the CFO’s Financial Reporting and Analysis Division, and she helped to manage the NCUA’s strategic plan and enterprise risk management program.

Prior to joining the NCUA in 2015, she held various financial management positions in the CFO’s office at the Department of Homeland Security, including serving as the Deputy Director of Financial Management.

Ms. Lowden is a Certified Public Accountant (CPA), a Certified Government Financial Manager (CGFM), and holds a Bachelor of Business Administration degree in Accounting from James Madison University.

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NCUA Will Open Streamlined CDFI Application Round Jan. 24

ALEXANDRIA, Va. (Jan. 12, 2021) – Federally insured, low-income credit unions seeking Community Development Financial Institution certification can apply to use the National Credit Union Administration’s streamlined qualification process beginning Jan. 24.

“Expanding access and opportunity is fundamental to the credit union system’s mission, and it is one of the pillars of ACCESS, the agency’s financial inclusion initiative,” NCUA Chairman Rodney E. Hood said. “I encourage eligible credit unions to explore using this tool as a way to serve underserved communities and provide them with needed credit and essential financial services.”

CDFI certification makes credit unions eligible for CDFI Fund training and competitive award programs that enhance their capacity to provide underserved communities with access to insured, affordable financial services. The Consolidated Appropriations Act, 2021 authorizes additional COVID-19 relief funding for community development financial institutions that predominantly serve minority communities. Approximately a third of this additional funding includes a set aside for smaller financial institutions with less than $2 billion in assets.

NCUA’s program guide has instructions explaining the streamlined qualification process. The deadline for streamlined certification applications is April 3. Credit unions that do not qualify to use the streamlined process may still use the standard CDFI certification application.

To qualify for the streamlined process, low-income-designated credit unions submit loan originations to the NCUA by email to [email protected] and complete an online participation form. The Office of Credit Union Resources and Expansion then analyzes each credit union’s products, services, and other indicators to determine whether it qualifies to use the streamlined certification application. The office will provide qualified credit unions with the necessary information to complete and submit the streamlined certification application to the CDFI Fund, which will make the final determination on certification.

The NCUA has more detailed information on its NCUA-CDFI Certification Initiative webpage, and the CDFI Fund’s webpage has complete information about certification and its programs.

To learn more about the NCUA’s Advancing Communities through Credit, Education, Stability, and Support, or ACCESS, initiative, visit www.ncua.gov/access.

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