Oct. 1, 2012 – NAFCU on Friday urged NCUA to clearly articulate its justification for as proposed rule stating NCUA’s authority to designate a federally insured, state-chartered credit union as being in “troubled condition” and to ensure such a rule is necessary.
NCUA is proposing this rule change to bring consistency to its processes for dealing with troubled institutions. Currently, only state supervisory agencies apply the “troubled condition” to an institution that is state-chartered but federally insured. NCUA does this for federal credit unions, and when it does that, the credit is required from that point to notify the agency in advance of any changes in staffing its board, committee or senior executive officer positions.
NAFCU Regulatory Affairs Counsel Tessema Tefferi, in an official comment, said NAFCU supports NCUA’s desire for consistency, but as administrator of the National Credit Union Share Insurance Fund, the agency already has significant authorities in dealing with FISCUs.
Drawing on NCUA’s own information, Tefferi noted that where NCUA once participated only in exams of FISCUs with $500 million or more in assets, today it is involved in exams of those with at least $250 million. NCUA also notes the number of hours its examiners spend in these joint exams has nearly doubled. NCUA has “considerable authority” to address developments affecting the share insurance fund, Tefferi said.
Any final rule should explain clearly the need for this added authority, Tefferi said.