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The NCUA Board will hold two open meetings next week with several NAFCU-sought items on the agendas. Thursday's meeting includes three proposed rules – for field of membership (FOM) shared facility requirements, mortgage servicing rights, and overdraft policy – a temporary final rule related to coronavirus regulatory relief, and a final rule on subordinated debt.

During the meeting added for Friday, the board is set to issue a final rule on annual operating fee assessment, finalize the 2021-2022 budget, and receive a briefing on the agency's operating fee schedule and overhead transfer rate (OTR).

Proposed Rules

• According to the NCUA's newly released fall rulemaking agenda, the NAFCU-sought proposed rule for FOM shared facility requirements is to modernize requirements related to service facilities for multiple common bond (MCB) federal credit unions (FCUs). The proposed rule would include any shared branch, shared ATM, or shared electronic facility in the definition of service facility for FCUs participating in a shared branching network. These changes would apply to the definition of service facility both for additions of select groups to MCB FCUs and for expansions into underserved areas.
• The mortgage servicing proposed rule would amend the investment regulation to permit FCUs to purchase mortgage servicing rights from federally-insured credit unions (FICUs) under certain conditions.
• The overdraft policy was tabled as interim final rule during the board's May meeting. NAFCU was generally supportive of the rule and had called on the agency to provide relief measures aimed at simplifying regulatory hurdles associated with limitations on carrying and charging off negative balances.

Final Rules

Throughout the coronavirus pandemic, the NCUA has taken several steps to provide credit unions with regulatory relief, including for prompt corrective action (PCA) and loan participations. While the agenda does not indicate a specific issue, the temporary final rule related to Part 701 is expected to extend some previously-offered relief.

In January, the NCUA proposed expanding credit unions' use of subordinated debt to allow low-income credit unions, complex credit unions, and newly-formed credit unions to issue subordinated debt that operates as regulatory capital. NAFCU offered its support for the proposal but asked the NCUA to reconsider the rule's complex procedural requirements that could discourage investors and issuers. The NCUA Thursday is set to finalize the rule.

The NCUA's rule on annual operating fee assessment would exclude any loan an FCU reports under the paycheck protection program (PPP) or similar future programs from total assets. It would also amend the period used for the calculation of an FCU's total assets to the average total assets reported on the FCU’s previous four call reports, reducing the risk the NCUA under- or over-collects operating fees relative to the board-approved budget and providing more certainty to FCUs about the operating fee charges for the forthcoming year. NAFCU offered its support for providing FCUs greater certainty on operating fees owed, but also reiterated its call for prudent budget management.

Budget

The NCUA last week held its public hearing for the 2021-2022 budget, during which NAFCU Chief Economist and Vice President of Research Curt Long offered recommendations for cost saving measures and ways to improve overall budget efficiency. Long also reiterated those points in a letter to the agency yesterday.

As proposed, the budget estimates $315.6 million in spending for 2021 and $341.7 million in spending for 2022. Of note, the proposal reduces the 2021 budget, resulting from a surplus of travel funds this year and lower estimated travel budget next year due to the coronavirus pandemic.

Additional insights into the NCUA's and other federal agencies' fall rulemaking agendas can be found in NAFCU's member-only Compliance, Risk & BSA Network.