NCUA Board Approves Two Regulatory Relief Measures

Posted by Marissa Anema Thursday, May 31, 2012 10:51:00 AM


ALEXANDRIA, Va. – On May 24, the NCUA Board convened its third open meeting of 2012 at the agency’s headquarters and unanimously approved three items:

  1. A final rule and guidance on troubled debt restructurings (TDRs) to facilitate loan modifications and help distressed credit union members remain in their homes;
  2. A final rule extending existing Regulatory Flexibility (RegFlex) provisions to all federal credit unions and eliminating the RegFlex designation program; and
  3. A policy statement removing RegFlex revocations from the list of material supervisory determinations made by the Supervisory Review Committee.

Regulatory Flexibility
RegFlex exempts qualifying federal credit unions with strong net worth and consistently strong CAMEL ratings from certain NCUA regulations, in whole or in part. Included in the exemption are certain investment limitations.

If a credit union qualifies for RegFlex, it may adopt investment policies and practices that include expanded authority. The credit union may continue to abide by these expanded authorities as long as the credit union continues to qualify for the designation or until notified otherwise by the NCUA.

All CUs Get Some RegFlex
The enhanced management and investment rights given to some credit unions under the NCUA’s RegFlex program will soon be extended to the 1,770 credit unions that are not covered under the RegFlex designation after the agency approved expansion of that program on May 24, 2012.

The RegFlex final rule will become effective 30 days after it is published in the Federal Register

TDR Rule Model of 'Collaboration': CUNA, NCUA
Under the new TDR rules, credit unions will soon be allowed to modify TDR loans without having to immediately classify those loans as delinquent. The new rules, which will go into effect 30 days after they are published in the Federal Register, will set consistent standards for the management of loan workout arrangements that assist borrowers, and eliminate confusion between TDRs and other loan modifications. The rules also make some changes to loan status calculations, and require credit unions to discontinue interest accrual on loans that are 90 days or more past their due date.

NCUSIF Equity Ratio up to 1.32%
The latest National Credit Union Share Insurance Fund (NCUSIF) report, unveiled at the open board meeting, reflects the positive trends the credit union system is experiencing.

NCUA reported that the NCUSIF's equity ratio stood at 1.32% as of March 31, 2012. If the NCUSIF's equity ratio is above its normal operating level of 1.30% at year-end the excess must be transferred to the Temporary Corporate Credit Union Stabilization Fund to repay its borrowings. However, the agency anticipates the equity ratio will be 1.30% at the end of 2012.

The NCUA also reported that there were 396 CAMEL 4 and 5 credit unions, representing 2.98% of insured shares, or approximately $23.7 billion in assets, as of March 31.  There have been seven total credit union failures thus far in 2012, as compared to a total of 16 during 2011, the NCUA report said.

The Temporary Corporate Credit Union Stabilization Fund's total net position remained constant at negative $5.2 billion, and the fund recorded a net operating income of $20.8 million as of March 31, the agency said.

Click here to read further details about the approved regulations and for the full May 24 NCUA Board Meeting Report. 

Source: CUNA News Now


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