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Regulatory Advocacy

Working Together to Reduce Regulatory Burdens
Regulation Summary
Agency National Credit Union Administration
Rule Name Voluntary Liquidation
Comment Due Date 05/02/14

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PowerComment

The NCUA proposes to amend its voluntary liquidation regulation, Part 710, to reduce administrative burdens on voluntarily liquidating federal credit unions (FCUs) and recognize technological advances.

While there are very few voluntary liquidations annually, the Leagues’ applaud NCUA’s efforts to streamline and modernize the regulations.

The NCUA proposes the following amendments:

  1. Permit voluntarily liquidating FCUs to publish required creditor notices in electronic media reasonably calculated to reach the general public in the area or areas where the FCUs do business.
  2. Increase the asset size threshold applicable to publication requirements:
    • Increase from $5 million to $50 million the threshold for requiring multiple creditor notices. As proposed, FCUs with assets equal to or greater than $50 million must publish the required notice once a week for three consecutive weeks. The $50 million threshold is proposed to align with NCUA’s definition of small credit unions.
    • Exempt FCUs with less than $50 million in assets from the multiple publication requirement. As proposed, FCUs with assets equal to or greater than $1 million but less than $50 million must publish the notice only once (although they may choose to publish more notices).
    • Exempt FCUs with less than $1 million in assets from the publication requirement. (Currently, FCUs with less than $500,000 are exempt.)
  3. Specify that partial distributions to members, which are subject to the Regional Director’s approval, must not exceed the insured limit of each member’s share account. This limitation is meant to guard against the problems that could arise if NCUA must convert a voluntary liquidation to an involuntary liquidation based on insolvency. (For example, when a voluntarily liquidating FCU discovers during the process that it is insolvent, then NCUA may place the credit union into involuntary liquidation. This finding could stem from conditions such as unanticipated creditor claims or difficulty in converting remaining assets to enough cash to pay all shares and liabilities.)
  4. Specify that, in calculating pro rata distributions to members, voluntarily liquidating FCUs must determine member share balances as of the date the members voted to approve the liquidation or the date on which all share drafts cleared, whichever is later.
  5. Permit voluntarily liquidating FCUs to distribute member share payouts either by wire or other electronic means approved by a member or by mail or personal delivery.