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April 22, 2011 – NCUA's board on Thursday cleared a final corporate credit union rule that is notable both for what it does and doesn't do: Approved 3-0, and as strongly advocated by NAFCU, the rule does not include a limit on membership in corporates or capitalization cost-sharing by non-insured members.

The proposal's membership provisions would have limited one natural person credit union to membership in one corporate and bar it from investing in other corporates.

NAFCU President Fred Becker welcomed the board's decision on membership and stabilization costs. The membership provision in particular "runs contrary to the principle that the future of the corporates and the corporate system should be determined by member-owners natural person credit unions," he said.

Of the five provisions remaining in the final rule, the requirement for recorded board votes continues to cause concern. "NAFCU supports efforts to promote the greatest transparency possible," Becker said. But he added the recorded vote rule "may have the unintended effect of discouraging qualified individuals from serving."

The association generally supported the balance of the proposed rule. As approved Thursday, the final provisions:

• require new reporting on internal controls;
• require establishment of an enterprise-wide risk management committee that includes at least one risk management expert from outside the organization (the board may determine the rest of the committee make-up);
• require disclosure of certain credit union service organization compensation to highly paid employees that work for the corporate and the CUSO; and
• allow corporates to charge reasonable, one-time or periodic membership fees as needed to facilitate retained earnings growth.

All but the provision on CUSO compensation were modified in some way from last year's proposal. All internal controls and reporting provisions, for example, now apply to all corporates, not just those with at least $1 billion in assets. Generally, these take effect Jan. 1, 2012, except delayed effective dates of Jan. 1, 2013, and Jan. 1, 2014, apply to management assessments of the internal control structure and procedures and related attestations by independent public accountants.

NAFCU is preparing a Final Regulation for its members.