On 5/21/2020, the National Credit Union Administration Board held its fourth open meeting of 2020 via a live webcast. During this meeting the NCUA Board approved two items:
An interim final rule that makes two temporary changes to the agency’s prompt corrective action regulations providing relief to credit unions that temporarily fall below well capitalized.
A proposed rule that would provide an alternative method to satisfy the membership card or account signature card requirement.
Interim Final Rule
The NCUA Board unanimously approved an interim final rule that makes two temporary changes to the agency’s prompt corrective action regulations that provide relief to credit unions that temporarily fall below well capitalized.
This interim rule temporarily reduces the earnings retention requirement for credit unions classified as adequately capitalized. Those credit unions unable to meet the earnings retention requirement will not have to submit a written application requesting approval to decrease its earnings retention amount. If a credit union poses an undue risk to the Share Insurance Fund or exhibits material safety and soundness concerns, the appropriate NCUA Regional Director may require the credit union to submit an earnings transfer waiver request.
These temporary modifications will remain in place until December 31, 2020. By statute, credit unions that fall to less than adequately capitalized must submit a net worth restoration plan to their NCUA Regional Director. The interim final rule temporarily permits an undercapitalized credit union to submit a streamlined net worth restoration plan, demonstrating that the reduction in capital was caused predominantly by share growth and that this is a temporary condition because of the pandemic. If a credit union becomes less than adequately capitalized for reasons other than share growth, they must still submit a net worth restoration plan under the current requirements in NCUA’s regulations.
The interim final rule amending NCUA’s prompt corrective action requirements is effective upon publication in the Federal Register, and there is a 30-day comment period.
Proposed Rule
The NCUA Board unanimously approved a proposal that would amend the NCUA’s regulation governing the requirements for a share account to be separately insured as a joint account.
Specifically, the proposed rule would provide an alternative method to satisfy the membership card or account signature-card requirement. The proposal amends the regulation to explicitly provide that the signature-card requirement could be satisfied by information contained in the account records of the insured credit union.
For example, under this proposal, the requirement could be satisfied by evidence that a federally insured credit union has issued a debit card to each co-owner of the account or evidence that each co-owner of the account has conducted transactions using the share account. The proposed rule, if adopted, would assist the NCUA in promptly determining account ownership and level of share insurance coverage for each owner in the event a federally insured credit union’s failure, helping to alleviate delays and uncertainty for members. The proposal would apply to all federally insured credit unions and would not impose any increased burden or new recordkeeping requirements for joint accounts.
Comments on this proposed rule are due 30 days after the publication in the Federal Register.
The NCUA interim final rule can be found here.
The NCUA proposed rule can be found here.