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NAFCU issues Final Regs on NCUA's CLF extension, FICU asset threshold IFRs
NAFCU Thursday sent two new Final Regulation Alerts to members breaking down the NCUA's recent interim final rules (IFRs) on credit union asset thresholds and the Central Liquidity Facility (CLF). The association's Final Regulation Alerts are member-only resources that feature full text and easy to read summaries for final rulemakings affecting credit unions.
The NCUA Board finalized the IFR to extend enhancements made to the CLF during its March meeting with unanimous approval. CLF enhancements first introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act are now effective through Dec. 31, 2021.
In the Final Regulation summary, NAFCU notes that the rule extends the shortened waiting period for terminating membership with the CLF until Jan. 1, 2023. In addition, the IFR extends the CARES Act provisions that permit an agent member of the CLF to borrow for its own liquidity needs and reduces the cost of agent access to the CLF.
NAFCU previously voiced support for an extension of the CLF provisions beyond their expiration date and will continue to advocate for permanent changes to the CLF to provide an important liquidity tool for credit unions.
The rule became effective March 24. For detailed background information of the IFR, including a section-by-section analysis, view the Final Regulation.
The second Final Regulation tackles the IFR regarding federally-insured credit unions’ (FICUs) asset thresholds, unanimously approved during the board’s March meeting. The IFR permits a FICU to use asset data as of March 31, 2020, for the 2021 and 2022 calendar years to determine whether it is subject to capital planning and stress testing requirements under Part 702, Subpart E and supervision from the NCUA’s Office of National Examinations and Supervision (ONES).
Through the Final Regulation, NAFCU highlights that the IFR provides FICUs with additional time to prepare for heightened regulatory and supervisory demands upon reaching the asset thresholds in Part 702, Subpart E as a result of unprecedented share growth.
In addition, the NCUA reserves the authority to subject certain credit unions to enhanced capital planning and stress testing requirements based on several considerations, including whether asset growth was due to a merger or purchase and assumption transaction.
NAFCU has previously advocated for this flexibility to provide relief for credit unions and parity with a similar rule from the federal banking regulators. As credit unions have seen a large influx of deposits over the past year resulting from coronavirus-related relief efforts and changes in members' financial habits, NAFCU has flagged concerns for credit unions approaching the $10 billion threshold, at which point the CFPB also has supervisory authorities.
The rule became effective March 23. For more on the IFR – including a section-by-section analysis – view the Final Regulation.
NAFCU will continue to urge the NCUA to consider additional relief efforts that would leverage the strength of corporate credit unions to support continued growth and stability within the credit union industry.
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