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NAFCU shares support of providing corporate CUs with greater flexibility
In response to the NCUA's proposal to amend the agency's corporate credit union rules, NAFCU's Andrew Morris shared the association's general support of the effort to provide greater flexibility and ease regulatory burden, and detailed credit union members' feedback on the proposed amendments.
NAFCU previously shared its support of corporate credit unions and the role they play as providers of liquidity and has urged the agency to make amendments to its rules to allow more flexibility without impacting the safety and soundness of the corporate system.
"While NAFCU believes that some elements of the proposal should be modified to avoid unintended restrictions on corporate credit unions and their capacity to support the credit union industry as whole, we support the overall objective of easing regulatory burden," wrote Morris, NAFCU's senior counsel for research and policy.
"We also encourage the NCUA to explore a framework for all federally insured credit unions that advances the same, fundamental objective of the CUSO-related amendments in the proposal; namely, making engagement with fintech companies easier to sustain continued innovation in the credit union industry," added Morris.
As proposed, the rule to amend Part 704 would make four notable changes, the first two of which NAFCU explicitly called for in a letter to the agency last year:
- permit a corporate credit union to make a noncontrolling, de minimis investment in a natural person CUSO without the CUSO being classified as a corporate CUSO;
- expand the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union’s board;
- adjust certain prescriptive requirement for a corporate credit union’s enterprise risk management expert; and
- clarify how corporate credit unions may invest in subordinated debt instruments.
In the letter, sent Monday, Morris noted that the proposed amendments will support greater collaboration within the credit union system and the ability to make small investments into ventures tailored to credit union needs "is necessary to ensure long term competitive viability of the credit union industry."
Morris also urged 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 and outlined additional opportunities for relief.
For more on the NCUA's proposed rule, view a recent NAFCU Regulatory Alert on the issue. NAFCU will continue to work with the agency on relief efforts and update credit unions on the latest developments.