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NCUA Working to Provide Regulatory Relief, Close Stabilization Fund

WASHINGTON (June 14, 2017) – Credit unions can expect more regulatory relief and streamlined operations from the National Credit Union Administration in the future, Acting Board Chairman J. Mark McWatters said today.

McWatters described agency goals and steps NCUA has already taken to reduce burdens and better align regulation with the realities of 2017. NCUA, he said, has made changes to streamline the examination process, and staff is carefully studying the possibility of closing the Stabilization Fund this year. The agency is reviewing its operational structure and budget to find economies.

The over-arching goal, McWatters said, is to provide credit unions with an efficient regulatory structure that returns decision-making to the ground level while adhering to NCUA’s statutory duty to protect America’s 108 million credit union account holders.

McWatters covered a variety of credit union topics during his remarks to a crowd of more than 1,500 at the National Association of Federally Insured Credit Unions annual conference.

He noted the Treasury Department report on regulatory reform released Monday and said he was pleased the report’s recommendations regarding NCUA and the credit union system followed the direction the agency has set for itself. The plan released by Treasury was comprehensive, substantive, and practical and, with respect to its recommendations concerning credit union regulation, is consistent with the policies NCUA is advancing.

McWatters has said that, in particular, he wants the Board to revisit the risk-based capital and stress testing rules.

Closing the Stabilization Fund in 2017 remains a top priority, McWatters said. NCUA staff has been working on a plan that the agency’s Board expects to receive in the coming weeks. That closure would begin the process of returning surplus funds to federally-insured credit unions through a Share Insurance Fund dividend in 2018.

McWatters said the Board has already acted on items in his agenda, approving proposed rules to provide greater member communication in voluntary mergers and to improve the appeals process. He also wants to act in the areas of cyber security, combatting fraud, and finding ways to help smaller and low-income credit unions thrive.

ALEXANDRIA, Va. (June 21, 2017) – The video recording of the May 25, 2017, open meeting of the National Credit Union Administration Board is now available on the agency’s website.

Archived videos of past Board meetings may be viewed here, and each video remains on the site for one year.

At the May open meeting, the Board unanimously approved three items:

• A proposed rule to provide greater transparency to members of federal credit unions when those credit unions are seeking voluntary mergers.
• A proposed rule to enhance due process and provide consistency with other federal financial institutions regulators in the supervisory appeals process.
• A proposed rule to provide uniform, comprehensive procedures to govern the agency’s regulatory appeals process.

The Board also received a briefing from the Chief Financial Officer on the performance of the Temporary Corporate Credit Union Stabilization Fund, which remains in a positive net position.

NCUA posts these videos as part of the agency’s ongoing efforts to provide transparency and to allow those unable to attend Board meetings the opportunity to become better informed. An interval between the meeting and posting is necessary for the videos to comply with Section 508 of the Rehabilitation Act for the hearing and visually impaired.

The Board Actions page of NCUA’s website has more information, including Board agendas, which are posted at least one week in advance of each open meeting; copies of Board Action Bulletins, which summarize the meetings; copies of Board memorandums and other documents.

NCUA Acting Chairman Highlights Field of Membership, Member Business Lending, and Supplemental Capital

WASHINGTON (June 22, 2017) – National Credit Union Administration Acting Chairman J. Mark McWatters today recommended that Congress support the agency’s efforts to ease regulatory burdens on credit unions by tailoring and simplifying federal law.

“The NCUA encourages Congress to consider providing regulators with enhanced flexibility to write rules rather than imposing rigid requirements,” McWatters said. “Such flexibility would allow the agency to effectively limit additional regulatory burdens consistent with safety and soundness considerations.”

Paying particular attention to the diversity of scale and business models in financial institutions and recognizing that smaller institutions face their own challenges, McWatters highlighted legislative measures Congress could take to benefit credit unions.

“Permitting the NCUA greater discretion with respect to scale and timing when implementing broad statutory language would help mitigate the costs and administrative burdens imposed on smaller institutions,” he said. “Many credit unions are very small and operate on extremely thin margins. They are challenged by unregulated or less-regulated competitors as well as limited economies of scale.”

McWatters testified during a hearing of the Senate Banking, Housing, and Urban Affairs Committee. The text of McWatters’ testimony is available online here.

McWatters discussed three specific areas where Congress could reduce burdens on credit unions:

• Field of membership, especially with an eye towards reaching underserved consumers and communities;
• Member business lending, particularly granting regulatory parity with banks in residential lending; and
• Supplemental capital, allowing healthy and well-managed credit unions access, which would lead to a stronger capital base for credit unions and greater protection for taxpayers.

McWatters explained steps the NCUA has already takes to modernize regulation, including its three-year rolling review of rules and its voluntary participation in the Economic Growth and Regulatory Paperwork Reduction Act process. The agency also has chosen to comply with the spirit of recently issued Executive Orders addressing financial services regulation.

“The NCUA is committed to promulgating targeted regulation, accompanied by a thoughtfully tailored supervisory and examination program,” McWatters said. “The agency endeavors to identify emerging adverse trends in a timely manner and remains mindful that regulators should learn from the past, yet focus on the future.”

The agency also has implemented a flexible examination schedule that extends examination cycles up to 18 months. The NCUA has updated its field-of-membership, member-business-lending, and fixed-asset rules, McWatters said, and worked to help small credit unions with access to secondary capital, an expedited examination process, exemption from some rules, and facilitating the processes of obtaining the low-income credit union and community development financial institutions designations.

The NCUA is considering several initiatives that are likely to be implemented in the near future, including closure of the Temporary Corporate Credit Union Stabilization Fund, modernizing the Call Report and credit union Profile systems, and creation of the Enterprise Solutions Management program to make examinations, data collection, and reporting more effective and cost-efficient.

McWatters also indicated he intends to revisit the agency’s risk-based capital rule to determine whether significant revision or repeal is warranted.

Member Deposits Insured up to $250,000; Member Services Uninterrupted

ALEXANDRIA, Va. (June 22, 2017) – The Alabama Credit Union Administration today placed Riverdale Credit Union, in Selma, into conservatorship and appointed the National Credit Union Administration as agent for the conservator.

NCUA subsequently conserved the credit union.

Member deposits at Riverdale remain protected by the National Credit Union Share Insurance Fund. Administered by NCUA, the Share Insurance Fund insures individual accounts up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund 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.

Members who have questions about the conservatorship may review the Riverdale Credit Union’s Frequently Asked Questions (opens new window) posted on NCUA’s website. Members with questions about their Share Insurance Fund coverage can find more information on the Share Insurance Coverage page (opens new window) of NCUA’s MyCreditUnion.gov (opens new window) consumer website.

Member services will continue uninterrupted at Riverdale’s offices, which will keep their current office hours. Members with questions may contact the credit union at 334.872.9096 from 9 a.m. to 4:30 p.m., Monday through Friday.

The Alabama Credit Union Administration and NCUA placed Riverdale into conservatorship because of unsafe and unsound practices at the credit union. While continuing normal member services, the agencies will work to resolve issues affecting the credit union’s safety and soundness.

Chartered in 1967, Riverdale Credit Union serves persons who live, work, worship, or attend school in Autauga, Chilton, Dallas, Lowndes, Perry, or Wilcox counties in Alabama as well as various employee groups. Riverdale has 12,433 members and $76,181,951 in assets, according to the credit union’s most recent Call Report.

Board Action Bulletin

Enterprise Solution Modernization Program Points to Greater Agency Efficiencies

ALEXANDRIA, Va. (June 23, 2017) – The National Credit Union Administration Board held its fifth open meeting of 2017 at the agency’s headquarters here today and unanimously approved five items:

• Publishing a request for comment in the Federal Register on proposed changes in the methodology determining the overhead transfer rate.
• A notice of proposed rulemaking proposing amendments to agency regulations to create more transparency and simplicity in agency regulations governing corporate credit unions.
• A final rule updating agency regulations regarding treatment by the NCUA Board, as liquidating agent or conservator of a federally insured credit union, of financial assets transferred by a credit union in connection with a securitization or loan participation.
• A final rule revising agency procedures for disclosing records under the Freedom of Information Act.
• A final rule adjusting civil monetary penalties for inflation, as required by Congress.

The Board also received a briefing from the Office of the Executive Director and the Office of the Chief Information Officer on the Enterprise Solution Modernization program.

New Overhead Transfer Rate Methodology Out for Comment

Credit union system stakeholders will have an opportunity to comment on NCUA’s proposed changes to the way it calculates the overhead transfer rate.

NCUA in January 2016 published its original request for comments on the existing methodology for calculating the rate. Based on 40 comment letters received in response to that request and a subsequent internal assessment, the agency is proposing changes to the methodology to reduce both the complexity of the methodology and the resources necessary to administer the overhead transfer rate.

The Overhead Transfer Rate represents insurance-related costs in the agency’s operating budget to be funded by the National Credit Union Share Insurance Fund.

The staff presentation on the proposed changes to the overhead transfer rate methodology is available online here (opens new window).

Comments in response to this request, which is available online here (opens new window), must be submitted within 60 days of publication in the Federal Register.

Enterprise Solution Modernization Promises Reduced Burdens on Credit Unions

NCUA’s planned information technology modernization should improve the examination process and ease burdens on credit unions and on agency staff by reducing the amount of examination and supervision time spent in credit unions.

Launched in 2016, the Enterprise Solution Modernization program, the most complex program NCUA has undertaken, has three key parts:

• The Examination and Supervision Solution will replace the examination system and related supporting applications, including time and workload management tools.
• The Data Collection and Sharing Solution will define the necessary capabilities for a common platform to serve as a single point-of-entry for all data collection.
• The Enterprise Data Reporting Solution will lead to better analytics and data reporting.

The program will leverage commercially available tools rather than building and hosting customized systems. NCUA expects increased efficiencies and an improved user experience when the new system is in place.

A summary of the Enterprise Solution Modernization program provided by staff to the Board is available online here (opens new window).

Agency Seeking Comments on Corporate Credit Union Regulation Changes

NCUA is seeking comments on two proposed changes to its regulations covering corporate credit unions (Part 704) with respect to capital calculations.

The first change would better align capital components with a corporate credit union’s financial statements. The second would clarify the minimum retained earnings requirement for corporate credit unions.

The proposed changes would not alter existing standards for prompt corrective action, and the agency does not propose to change regulations on authorized investments, concentration risk limits, maturity limits or other limitations on corporate investment activities.

Comments on the proposed rule, available online here (opens new window), must be received within 60 days after publication in the Federal Register.

Safe Harbor Rule Updates to Respond to Industry Practices and GAAP

A final rule (Part 709) approved by the Board amends NCUA regulations on how the Board, as liquidating agent or conservator, treats a credit union’s financial assets transferred in connection with a securitization or participation.

The final rule responds to evolving industry practices, clarifies provisions in Part 709 that were affected by changes in Generally Accepted Accounting Principles, and parallels changes made to the Federal Deposit Insurance Act.

The final rule, available online here (opens new window), will become effective 30 days after publication in the Federal Register.

NCUA has issued a legal opinion letter on federal credit unions’ authority to issue and sell securities (opens new window).

Board Approves Revised Agency FOIA Procedures

The Board approved a final rule (Part 792) that makes changes in the agency’s procedures for responding to public records requests under the Freedom of Information Act.

The rule revises NCUA’s procedures for disclosing records, resolving disputes through the FOIA public liaison and the Office of Government Information Services.

The interim final rule approved by the Board became effective Dec. 22, 2016. NCUA accepted public comments through Jan. 23, 2017, and the final rule, available online here (opens new window), makes minor changes for consistency and clarification.

Final Rule Confirms Required Inflation Adjustments to Civil Monetary Penalties

The Board approved a final rule (Part 747) to amend its regulations and adjust for inflation the maximum amount for civil monetary penalties under its jurisdiction.

The Federal Civil Penalties Inflation Adjustment Act Improvement Act of 2015 requires agencies to adjust the maximum amounts of civil monetary penalties to account for inflation. The law does not require NCUA to assess the maximum penalty level, and the agency retains discretion to assess at lower levels, as it has done historically.

An interim final rule approved by the Board became effective Jan. 23, 2017. The final rule approved today, available online here (opens new window), confirms the adjustments made in that interim rule.

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. NCUA also live streams, archives and posts

videos of open Board meetings online.

Member Deposits Remain Protected to $250,000; Member Services Uninterrupted

ALEXANDRIA, Va. (June 23, 2017) – The National Credit Union Administration today placed Citizens Community Credit Union, located in Devils Lake, North Dakota, into conservatorship.

Member deposits at Citizens Community Credit Union remain protected by the National Credit Union Share Insurance Fund. Administered by NCUA, the Share Insurance Fund insures individual accounts at Citizens Community 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.

Member services will continue uninterrupted at the credit union’s office located at 1117 Highway 2 E, Devils Lake, and at all branches. Members can continue to conduct normal financial transactions, deposit and access funds, make loan payments, and use shares. Citizens Community Credit Union’s main office is open Monday through Friday from 8:30 a.m. to 5 p.m. and Saturday from 9 a.m. to 12:30 p.m. For the location and hours of operation of the credit union’s branches, visit the Locations and Hours webpage.

Members with questions about Citizens Community’s operations may contact the credit union at 701-662-8118. Members with questions about the conservatorship may review the Citizens Community Credit Union Frequently Asked Questions posted on the NCUA website (opens new window). Members with questions about their Share Insurance Fund coverage can find more information on the Share Insurance Coverage (opens new window) section of NCUA’s MyCreditUnion.gov (opens new window) consumer website.

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

Citizens Community Credit Union is a federally insured, state-chartered credit union with 11,399 members and assets of $201,255,973, according to the credit union’s most recent Call Report. Citizens Community Credit Union serves eligible members subject to the provisions of its bylaws, primarily encompassing the trade areas of Devils Lake, St. John, Bisbee, Ft. Totten, Lakota, Northwood, Larimore, and Grand Forks, North Dakota and East Grand Forks, Minnesota.

Member Deposits Insured up to $250,000, Member Services Uninterrupted

ALEXANDRIA, Va. (June 26, 2017) – The National Credit Union Administration today placed LOMTO Federal Credit Union in Woodside, New York, into conservatorship.

Member deposits at LOMTO Federal Credit Union remain federally insured by the National Credit Union Share Insurance Fund. Administered by NCUA, the Share Insurance Fund insures individual accounts up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund 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.

Normal member services at the credit union’s offices at 5024 Queens Boulevard in Woodside and 180 Riverside Boulevard, New York, New York, will continue uninterrupted.

NCUA placed LOMTO Federal Credit Union into conservatorship because of unsafe and unsound practices at the credit union. During the conservatorship, NCUA will work to resolve issues affecting the institution’s safety and soundness while maintaining normal member services.

Members who have questions about the conservatorship may review the LOMTO Federal Credit Union Frequently Asked Questions document attached to this release and available online here (opens new window). Members with questions about their Share Insurance Fund coverage can find more information in the Share Insurance Coverage (opens new window) section of NCUA’s MyCreditUnion.gov (opens new window) comsumer website.

Chartered in 1936, LOMTO Federal Credit Union serves multiple occupational and associational groups and communities primarily located in New York, New York. LOMTO Federal Credit union has 2,958 members and $236,468,882 in assets, according to the credit union’s most recent Call Report.

ALEXANDRIA, Va. (June 27, 2017) – President Donald J. Trump has designated Acting National Credit Union Administration Board Chairman J. Mark McWatters as the tenth Chairman of the NCUA Board, effective June 23.

“I thank President Trump for this honor and the trust he has placed in me,” McWatters said. “As Chairman of the NCUA, I remain committed to providing regulatory relief for the credit union community, in compliance with the Federal Credit Union Act, and to streamlining the operations of NCUA as a prudential regulator.”

“We best fulfill our obligation to protect America’s $1.3 trillion credit union community and its 108 million, largely middle-class, members, and the safety and soundness of the National Credit Union Share Insurance Fund by promoting a strong and vibrant system and by making the NCUA even more efficient, effective, transparent and fully accountable.”

McWatters was nominated to the NCUA Board by then-President Barack Obama on Jan. 7, 2014. Following Senate confirmation, he took office as an NCUA Board Member on Aug. 26, 2014. McWatters has served as Acting Board Chairman since Jan. 23.

“I am very pleased that Mr. McWatters has officially been designated as the Chairman of the NCUA by the President,” Board Member Rick Metsger said. “This recognizes his hard work and dedication to the mission of the agency and I look forward to our continued work together to provide access and financial safety to the over 100 million Americans who are part of the nation’s credit union system.”

Prior to joining NCUA’s Board, McWatters served as Assistant Dean for Graduate Programs and as a Professor of Practice at the Southern Methodist University Dedman School of Law and as Adjunct Professor at the university’s Cox School of Business. He also served on the Governing Board of the Texas Department of Housing and Community Affairs and on the Advisory Committee of the Texas Emerging Technology Fund.

McWatters served as a member of the Troubled Asset Relief Program Congressional Oversight Panel and as counsel to Rep. Jeb Hensarling (R-Texas). He also practiced law as a partner in three large cross-border law firms and as counsel to an international hedge and private equity firm, where he specialized in taxation, corporate finance, and mergers and acquisitions. He began his career as a judicial clerk to the Hon. Walter Ely of the Ninth U.S. Circuit Court of Appeals.

McWatters is licensed to practice law in Texas and New York and as a Certified Public Accountant in Texas. He holds a J.D. degree from the University of Texas at Austin School of Law and an LL.M degree from each of Columbia University School of Law and New York University School of Law.

NCUA Chairman’s Letter Stresses Cooperation to Ease Burdens on Credit Unions

ALEXANDRIA, Va. (July 6, 2017) – National Credit Union Administration Chairman J. Mark McWatters today wrote Consumer Financial Protection Bureau Director Richard Cordray to request CFPB provide a conditional exemption for credit unions with assets of more than $10 billion from its examination and enforcement authority.

Citing credit unions’ unique role in the financial system by virtue of their being not-for-profit institutions owned and controlled by members, McWatters said shifting examination and enforcement authority to NCUA offers numerous benefits from the current system, in which credit unions face unnecessary examination burdens and aggressive punitive fines.

“Subjecting federally insured credit unions and their consumer/member owners to the dual examination—and, in the case of federally insured, state-chartered credit unions, triple examination—regime mandated under Section 1025 of the Consumer Financial Protection Act imposes unnecessarily burdensome costs, particularly given their positive, consumer-focused role,” he said.

“I believe the CFPB and the NCUA can and should work together,” McWatters said. “As the prudential regulator of federally insured credit unions, the NCUA possesses a broader arsenal of enforcement tools than is available to the CFPB, allowing the agency to take more targeted actions to protect consumers and address consumer financial protection law violations.”

McWatters’ letter is available online
here (opens new window).

McWatters said this requested change would not affect CFPB’s exclusive rulemaking authority over federally insured credit unions, and the bureau would still be able to take enforcement action if it determined NCUA was not adequately enforcing consumer protection laws.

Section 1025 of the Consumer Financial Protection Act of 2010 gives CFPB primary enforcement authority for consumer financial protection law over insured depository institutions with assets of more than $10 billion. Six federally insured credit unions—Navy Federal Credit Union, State Employees’ Credit Union, Pentagon Federal Credit Union, Boeing Employees Credit Union, SchoolsFirst Federal Credit Union, and The Golden 1 Credit Union—have assets of $10 billion or more.

McWatters said shifting this authority would free up CFPB’s examination and enforcement resources to focus on larger investor-owned, for-profit institutions while continuing to provide consumer protections for credit union members.

“I believe granting federally insured credit unions an exemption from Section 1025 will help ensure they are treated fairly and equitably while also maintaining consumer protections and a level playing field for all parties involved,” McWatters said.

ALEXANDRIA, Va. (July 12, 2017) – The National Credit Union Administration Board has re-scheduled its July closed meeting.

The July closed meeting will be held Wednesday, July 19, beginning at 3 p.m. Eastern.

The July open meeting will still be held Thursday, July 20, beginning at 10 a.m. Eastern.

Both meetings were originally scheduled for Thursday, July 20.

Meeting agendas are available on NCUA’s Board Meeting Calendar and Actions webpage. The July open Board meeting, like all NCUA open board meetings, will be available on livestream from the agency’s website.