January 22, 2021

NAFCU details NCUA proposals related to risk-based net worth, CUSOs

regulationsFollowing last week's NCUA Board meeting, NAFCU Thursday sent member credit unions Regulatory Alerts with key details on the agency's proposed rules related to risk-based net worth requirements for complex credit unions and credit union service organizations (CUSOs).

The risk-based net worth proposal is intended to provide relief to credit unions amid the coronavirus pandemic by increasing the threshold for defining a complex credit union for purposes of the current risk-based net worth requirement to $500 million and a risk-based net worth requirement that exceeds six percent. The NCUA has indicated this relief will enable credit unions to better prioritize service to members and support lending activities.

In addition to providing additional context to the proposed rule, NAFCU's Regulatory Alert seeks feedback on whether the amended definition of "complex" provides meaningful capital relief to credit unions, and what other areas of capital relief the NCUA should consider.

In the Regulatory Alert on the CUSO proposal, NAFCU highlights the objectives it seeks to accomplish:

  1. expanding the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union may originate; and
  2. granting the NCUA Board additional flexibility to approve permissible activities and services outside of notice and comment rulemaking.

NAFCU explains how the rule would impact credit unions, including by allowing them to keep up with the pace of technological advances and help digitize loan processes, and also flags some potential concerns.

Member credit unions can access Regulatory Alerts here; comments on both proposed rules are due to NAFCU Feb. 19.