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ALEXANDRIA, Va. (Oct. 19, 2020) – National Credit Union Administration Chairman Rodney E. Hood today reinforced his commitment to financial inclusion by announcing the launch of the agency’s new Advancing Communities through Credit, Education, Stability, and Support, or ACCESS, initiative.

“As Chairman, I have consistently characterized financial inclusion as the civil rights issue of the 21st century,” Chairman Hood said. “There is a clear business case for credit unions to enhance their outreach to underserved and underbanked populations. The NCUA will dedicate resources from across its lines of business to bring more Americans into the financial mainstream and provide them with greater access to safe and affordable financial services.”

The ACCESS initiative will bring 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.

Efforts under this program include increasing access to credit and loan products, dedicating resources to help people make smart financial decisions, enhancing existing programs that encourage credit union membership and access to financial services, and fostering inclusive policies and outreach efforts in the community.

ACCESS builds on similar efforts underway at the NCUA and in credit unions that include building diverse and inclusive workforces and supplier chains, enhancing support for minority depository institutions, and supporting initiatives aimed at increasing opportunity for all Americans.

“Government agencies can make a vital contribution in terms of coordinating efforts, helping to set appropriate standards, and directing resources where they can make a real difference,” Hood said. “That’s certainly what we’ve been doing and will continue to do at the NCUA.”

ALEXANDRIA, Va. (Oct. 19, 2020) – National Credit Union Administration Chairman Rodney E. Hood today reinforced his commitment to financial inclusion by announcing the launch of the agency’s new Advancing Communities through Credit, Education, Stability, and Support, or ACCESS, initiative.

“As Chairman, I have consistently characterized financial inclusion as the civil rights issue of the 21st century,” Chairman Hood said. “There is a clear business case for credit unions to enhance their outreach to underserved and underbanked populations. The NCUA will dedicate resources from across its lines of business to bring more Americans into the financial mainstream and provide them with greater access to safe and affordable financial services.”

The ACCESS initiative will bring 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.

Efforts under this program include increasing access to credit and loan products, dedicating resources to help people make smart financial decisions, enhancing existing programs that encourage credit union membership and access to financial services, and fostering inclusive policies and outreach efforts in the community.

ACCESS builds on similar efforts underway at the NCUA and in credit unions that include building diverse and inclusive workforces and supplier chains, enhancing support for minority depository institutions, and supporting initiatives aimed at increasing opportunity for all Americans.

“Government agencies can make a vital contribution in terms of coordinating efforts, helping to set appropriate standards, and directing resources where they can make a real difference,” Hood said. “That’s certainly what we’ve been doing and will continue to do at the NCUA.”

Board Action Bulletin

ALEXANDRIA, Va. (Oct. 15, 2020) – Using a live audio webcast, the National Credit Union Administration Board held its eighth open meeting of 2020 and unanimously approved two items:

• A proposed rule that would modernize the NCUA’s derivatives rule and make it more principles-based.
• A final rule that updates and clarifies several provisions in the agency’s corporate credit union regulations.

In addition, the NCUA Board was briefed on cybersecurity considerations for credit union boards of directors during COVID-19.

Proposed Rule Would Create Principles-based Regulations on Derivatives

The NCUA Board approved a proposed rule that amends the agency’s derivatives rule in Subpart B to Part 703 to allow more flexibility for federal credit unions to manage their interest rate risk through these financial instruments.

“I am pleased that we have been able to refine the derivative rule and make it more flexible for federal credit unions,” NCUA Chairman Rodney E. Hood said. “This is indeed an unprecedented and uncertain time for all credit unions as they are facing the economic fallout from the COVID-19 pandemic. I believe that enhancing the ability of federal credit unions to better protect themselves against market risks is critically important at all times. In fact, managing balance sheet risks through a time of disruption and uncertainty underscores how important it is for credit unions to have tools, like financial derivatives, at their disposal to help guard against volatile economic periods that can hurt liquidity, earnings and capital.”

The proposed changes include:

• Eliminating the preapproval process for federal credit unions that are complex with a Management CAMEL component rating of 1or 2;
• Eliminating the specific product permissibility; and
• Eliminating the regulatory limits on the amount of derivatives a federal credit union may purchase.

Comments on the proposed derivatives rule (opens new window) are due 60 days after publication in the Federal Register.

Board Approves Final Corporate Rule

The Board approved a final rule (opens new window) that updates and simplifies several provisions of the NCUA’s corporate credit union regulation, including:

• Permitting a corporate credit union to make a minimal investment in a credit union service organization (CUSO) without the CUSO being classified as a corporate CUSO under the NCUA’s rules;
• Expanding the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union’s board; and
• Amending the minimum experience and independence requirement for a corporate credit union’s enterprise risk-management expert.

The final corporate credit union rule is effective 30 days after publication in the Federal Register.

Cybersecurity Risks Remain Elevated During COVID-19

Throughout the COVID-19 pandemic, the financial services industry, including credit unions, remains a major target for hackers and thieves, and these actors are adapting their techniques to take advantage of the increased use of remote operations.

The Special Advisor to the Chairman for Cybersecurity briefed the Board on emerging and potential cyber threats affecting financial services and other critical infrastructure. His full presentation is available on the NCUA’s website. (opens new window)

Credit union boards of directors play a critical role in strengthening their institution’s cyber preparedness levels. As these directors evaluate their institution’s information security programs, the NCUA encourages them to evaluate their responses to these four questions:

• Have business impact and business process scenarios been reviewed and revised in the continuity plans based on the operating conditions of COVID-19?
• How are policies and procedures related to remote access being strengthened to address the heightened risks created by employees working from home?
• Has the incident management plan been updated for leadership and employees in a remote working environment?
• How is the business changing its strategic priorities in the short, mid, and long term to address the potential change to norms?

The NCUA has a cybersecurity resources webpage to provide credit unions with important information, including regulations and guidance, about protecting themselves and their members from cyber threats.

The NCUA tweets all open Board meetings live. Follow @TheNCUA (opens new window) 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.

ALEXANDRIA, Va. (Oct. 14, 2020) – During National Cybersecurity Awareness Month, the National Credit Union Administration reminds credit union industry stakeholders to remain vigilant and take steps to protect their systems and critical infrastructure.

“In this day and age, cybersecurity is everyone’s business,” NCUA Chairman Rodney E. Hood said. “Even during COVID-19, hackers and thieves do not rest. We expect credit unions to take appropriate measures to protect themselves and their members, and we have information and resources to help them do that. I hope everyone in our industry will continue working to keep our financial system and the millions of Americans who entrust their financial well-being to us safe from cyber threats.”

Cybersecurity remains a supervisory priority for the NCUA, and the agency puts particular emphasis on:

• Advancing consistency, transparency, and accountability within the cybersecurity examination program;
• Encouraging due diligence for supply chain and third-party service provider management at credit unions;
• Assisting institutions with resources to improve operational hygiene and resilience; and
• Ensuring NCUA’s systems and collected controlled unclassified information is secure.

The agency maintains a cybersecurity resources webpage that provides credit unions with important information about protecting themselves and their members from cyber threats.

During Cybersecurity Awareness Month, the NCUA will share tips on Facebook (opens new window) and Twitter (opens new window) about online security, recognizing and preventing identity theft, and what consumers can do if they fall victim to a cybercrime. The NCUA provides consumers with information on staying safe in the Be Smart Online (opens new window) section of MyCreditUnion.gov (opens new window).

National Cybersecurity Awareness Month is a collaborative effort by government, non-profit, and industry stakeholders to ensure Americans have the necessary information to help them stay more secure online. The NCUA has joined the U.S. Department of Homeland Security’s efforts with the National Cyber Security Alliance’s Stay Safe Online initiative (opens new window) to raise awareness and encourage vigilance.

ALEXANDRIA, Va. (Oct, 5, 2020) – The National Credit Union Administration will host a webinar on financial inclusion and minority depository institutions on Oct. 21.

Registration is now open (opens new window) for this webinar, “Pathways to Consumer Financial Well-Being: The Importance of Financial Inclusion and Minority Depository Institutions.” It is scheduled to begin at 2 p.m. Eastern and run approximately 60 minutes. Participants will be able to log into the webinar and view it on their computers or mobile devices using the registration link. They should allow popups from this website.

This webinar is open to consumers, credit unions, and parties interested in working with credit unions to expand access to safe and affordable financial services in underserved communities.

Staff from the NCUA’s Offices of Consumer Financial Protection and Credit Union Resources and Expansion will detail how credit unions, specifically minority depository institutions, can provide financial products and services that help bring our nation’s most underserved communities into the financial mainstream.

Participants can submit questions anytime during the presentation or in advance by emailing [email protected]. The email’s subject line should read, “Pathways to Consumer Financial Well-Being.”

Please email technical questions about accessing the webinar to [email protected]. This webinar will be closed captioned and archived online approximately three weeks following the live event.

ALEXANDRIA, Va. (Sept. 29, 2020) – National Credit Union Administration Chairman Rodney E. Hood congratulated Deputy Executive Director Rendell Jones on his selection as a 2020 Fellow by the National Academy of Public Administration.

“Rendell is a tireless leader and a dedicated public servant,” NCUA Chairman Rodney E. Hood said. “His selection for this prestigious fellowship is a testament to his years of public service and expertise. I congratulate him and look forward to his contributions to a more efficient and effective government.”

The National Academy of Public Administration is a congressionally chartered, non-partisan, non-profit academy that provides expert advice to government leaders to build and manage more effective, efficient, equitable, accountable, and transparent organizations.

Jones is one of 45 individuals selected by the Academy in 2020. The 2020 class joins more than 940 Academy Fellows — including former cabinet officers, members of Congress, governors, mayors and state legislators, as well as prominent scholars, business executives, and public administrators.

Jones became the NCUA’s Deputy Executive Director in February 2020. In this position, he oversees the agency’s day-to-day administrative operations and special programs within NCUA. Before he was appointed Deputy Executive Director, Jones served as the agency’s Chief Financial Officer.

His career in federal service began in 1996 at the Department of Justice. He previously served as Associate Director for Management at the U.S. Citizenship and Immigration Services, as well as the agency’s Acting Deputy Director and Chief Financial Officer. Before his service at the Citizenship and Immigration Services, Jones was Deputy Budget Director at the Department of Homeland Security.

Jones holds a Master of Public Administration from North Carolina State University and a Bachelor of Science in finance from Virginia Commonwealth University. He received the Presidential Rank Medal for Meritorious Service and the Secretary’s Silver Medal for his service at the Department of Homeland Security.

Board Action Bulletin

Share Insurance Fund Reports $17.7 Billion in Assets; NCUA Monitoring Equity Ratio

ALEXANDRIA, Va. (Sept. 17, 2020) – Using a live audio webcast, the National Credit Union Administration Board held its seventh open meeting of 2020 and unanimously approved two items:

• A final rule that temporarily amends the NCUA’s regulations requiring all federally insured credit unions to provide appraisals for certain real estate-related transactions.
• An exemption from the requirements found in Section 326(a) of the USA PATRIOT Act for loans extended to facilitate the purchase of property and casualty insurance policies.

The Chief Financial Officer briefed the Board on the National Credit Union Share Insurance Fund’s performance during the second quarter of 2020. The NCUA Board was briefed on the implementation of the agency’s new Modern Examination and Risk Identification Tool.

Board Approves Changes to Real Estate Appraisal Regulations

The NCUA Board approved a final rule that defers the requirement to obtain an appraisal or written estimate of market value for up to 120 days following the closing of certain residential and commercial real estate transactions, excluding transactions for acquisition, development, and construction of real estate.

This final rule adopts the interim final rule approved by the Board in April without change.

“The current public health crisis and subsequent social distancing directives have created difficulties for lenders to obtain required appraisals on a timely basis,” NCUA Chairman Rodney E. Hood said. “As a result, borrowers may be prevented from refinancing loans and gaining access to much-needed equity. Access to credit is the lifeline for many communities and families, and this access will be necessary for them to recover from any economic damage done by the COVID-19 pandemic. By deferring appraisals and evaluations up to 120 days, this rule will help bring relief and liquidity to homeowners and businesses.”

Credit unions should make best efforts to obtain a credible estimate of the value of real property collateral before closing the loan, and otherwise underwrite loans consistent with safety and soundness principles. The final rule allows credit unions to extend liquidity to creditworthy households and businesses in light of recent strains on the U.S. economy due to the COVID-19 pandemic.

The rule is similar to a recent final rule issued by the OCC, the Federal Reserve, and the FDIC.

The final real estate appraisal rule (opens new window) is effective upon publication in the Federal Register. Loans made after Dec. 31 are not eligible for the deferment.

Share Insurance Fund Reports $17.7 Billion in Assets in the Second Quarter

The National Credit Union Share Insurance Fund reported (opens new window) a net income of $20.5 million and $17.7 billion in assets for the second quarter of 2020. The fund also reported $72.1 million in total income for the second quarter of 2020.

The equity ratio of the Share Insurance Fund, as of June 30, is 1.22 percent, which is below the Board-approved normal operating level of 1.38 percent. The primary driver for this change was the rapid growth in insured shares, which increased nearly 13 percent from December 2019.

“As the result of extraordinary growth in insured shares during the first and second quarters of 2020, we see from today’s presentation that the equity ratio has seen a significant drop from where it was as of Dec. 31, 2019,” Chairman Hood said. “While we remain above the minimum equity ratio for the Share Insurance Fund, vigilance is needed to manage and monitor this situation.”

As provided by the Federal Credit Union Act, each insured credit union pays to, and maintains with, the Share Insurance Fund a capitalization deposit amount equal to 1 percent of its insured shares. The amounts are based on insured member share deposits outstanding as of Dec. 31 of the preceding year and June 30 of the current year, respectively.

The Share Insurance Fund will receive additional capitalization deposits of approximately $1.5 billion from insured credit unions in October after the NCUA invoices for its semi-annual contributed capital adjustment this month for credit unions with $50 million or more in assets.

Additionally, for the second quarter of 2020:

• The number of CAMEL codes 4 and 5 credit unions decreased 5.1 percent from the end of the first quarter, to 166 from 175. Assets for these credit unions decreased 1.0 percent from the first quarter, to $10.3 billion from $10.4 billion.
• The number of CAMEL code 3 credit unions decreased 3.3 percent from the end of the first quarter, to 785 from 812. Assets for these credit unions increased 4.7 percent from the first quarter, to $44.6 billion from $42.6 billion.

In the second quarter of 2020, there was one federally insured credit union failure that caused a loss to the Share Insurance Fund. Total year-to-date losses associated with this failure is $1.6 million.

The second-quarter figures are preliminary and unaudited. Additional information on the performance of the Share Insurance Fund is available online.

Board Approves Exemption from Customer Identification Program

The NCUA Board approved an interagency order (opens new window) granting an exemption from the requirements found in Section 326(a) of the USA PATRIOT Act for loans extended to facilitate the financing of property and casualty insurance policies.

“The customer identification program requirements under the Bank Secrecy Act’s regulations are an important tool to deter or prevent money laundering or terrorist financing,” Hood said. “However, I am pleased that we are able to consider this targeted relief in the form of an exemption order for this class of transaction.”

Premium financing arrangements are typically originated through insurance brokers who arrange short-term financing of property and casualty policies for all customers. Banks, credit unions and other finance companies may provide the financing with the insurance broker as an intermediary.

These types of transactions are typically same-day finance arrangements, and customer identification program requirements can prove a competitive impediment to financial institutions and a burden to offering such financing. In addition, FinCEN has already exempted this type of financing arrangement from customer due diligence and beneficial owner requirements because they concluded that it represents a very low risk of money laundering or terrorist financing.

Credit unions engaging in premium finance lending must continue to comply with all other regulatory requirements, including BSA/AML regulations that require the filing of suspicious activity reports.

The exemption is effective once all of the federal banking agencies approve it. Additional information on this exemption can be found on the NCUA’s website (opens new window).

The New MERIT Examination System on Schedule for Rollout in 2021

The NCUA Board was briefed on the status (opens new window) of the Enterprise Solution Modernization Program’s first project, known as the Modern Examination and Risk Identification Tool or MERIT. This system will replace the agency’s legacy examination platform that has reached the end of its service life.

“Although this project has been one of the agency’s largest expenditures, the NCUA’s staff, state supervisory authorities, and the credit union industry will certainly benefit from the modernization of our examination software and the establishment of our secured infrastructure that will support future modernization initiatives,” Hood said.

MERIT and its associated systems will provide users the ability to securely transfer documents to an examiner, securely access and download examination reports, and provide status updates on findings. Users can also request due date changes. These capabilities will greatly improve the examination process.

The second release of MERIT was deployed to pilot users in July. However, due to the COVID-19 pandemic, the NCUA postponed the wider rollout. Instead, the agency began an expanded pilot this month with over 100 additional NCUA and state supervisory agency users and 17 credit unions to gain additional feedback.

Despite the delay, the project remains on schedule for a phased roll out starting in 2021. For additional information on MERIT and the NCUA’s Enterprise Solution Modernization program, visit NCUA.gov.

The NCUA tweets all open Board meetings live. Follow @TheNCUA (opens new window) 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.

ALEXANDRIA, Va. (Sept. 15, 2020) – The National Credit Union Administration awarded $3.7 million in grants and no-interest loans to 162 low-income credit unions, helping them provide affordable financial services to their members and communities during the COVID-19 pandemic.

In April, the agency committed the majority of its 2020 Community Development Revolving Loan Fund allocation to COVID-19 assistance. The grants and loans went to low-income credit unions in 40 states and the District of Columbia.

The NCUA awarded 153 grants totaling nearly $1.5 million. Of those, 32 credit unions were first-time grant recipients. Forty-eight credit unions were minority depository institutions. Grant awards ranged from $900 to $10,000. The agency also approved nine no-interest loans of $250,000 each.

The grants and loans fell into four categories:

• Rental, mortgage, and utility payment assistance to members such as entrepreneurs, small business owners, and hospitality and service industry employees;
• Loan payment relief to affected members;
• New products or services for affected members; and
• Covering costs associated with moving credit union operations to remote locations, such as laptops, software, and short-term rentals.

Additionally, urgent need grants remain available. Eligible federally insured, low-income-designated credit unions can receive up to $7,500 for emergency and natural disaster relief. Low-income credit unions that wish to apply for urgent need grants should review the NCUA’s grant guidelines (opens new window) and apply through the agency’s CyberGrants portal (opens new window).

The NCUA’s Office of Credit Union Resources and Expansion administers grant funding provided by the CDRLF, which offers grants and loans to credit unions serving low-income communities. Since 2001, Congress has provided the NCUA with $22.8 million for these grants.

ALEXANDRIA, Va. (Sept. 14, 2020) – The National Credit Union Administration opened its second application round for eligible credit unions that want to qualify to use the agency’s streamlined process for Community Development Financial Institution certification.

Federally insured, low-income-designated credit unions can find all the necessary information about CDFI qualification in the NCUA’s online program guide (opens new window). The application round closes on Oct. 17.

To qualify, eligible credit unions should submit their loan-origination data to the NCUA by email to [email protected] using the agency’s secured email encryption system and complete an online Participation Form (opens new window).

The Office of Credit Union Resources and Expansion will analyze each applicant credit union’s products, services, and other indicators to determine whether it qualifies for the streamlined application process. The NCUA 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.

Credit unions that do not qualify for the streamline process may still use the standard CDFI certification application (opens new window).

The streamlined application process, developed by the NCUA and the CDFI Fund, has helped 58 credit unions obtain CDFI certification.

Credit unions that obtain certification may apply for the CDFI Fund’s training and competitive award programs. These resources can enhance credit unions’ capacity to provide insured, affordable financial services to unserved or underserved communities. The Fund’s webpage (opens new window) has complete information.