League Submits Comment Letter on DBO's Proposed Amendments to Regs

DBO letter

On Thursday, July 23, the California Credit Union League submitted a comment letter to the California Department of Business Oversight (DBO) on its proposed amendments to the California credit union regulations.

The proposed amendments would modernize the regulations in order to reflect changes to the California Financial Code (FC) and federal regulations, streamline the process for out-of-state credit unions that apply to operate in California, and allow credit unions a greater choice of permissible investments.

The League generally supports the proposed amendments; however, we offered recommendations to provide clarity and further improve the proposed regulations.

The proposed amendments significantly broaden the investment authority for California credit unions. We are pleased the DBO is proposing greater flexibility for credit unions in their choices of investments.

Given the less prescriptive and more principle-based nature of the proposed amendments, the DBO maintains safety and soundness oversight and may find an investment is unsafe. In such a case, the League strongly recommends the regulations “permit a credit union to develop a reasonable plan, as agreed to by the Commissioner, to unwind any investment determined by the DBO to be unsafe. The plan should be based on the individual, unique circumstances and market conditions.”

The DBO also proposed to repeal a requirement that foreign (other state) credit unions identify the state where chartered in connection with the use of its name in California. The League opposed this. Many consumers choose a credit union based on the credit union’s commitment to, and investments in, the community. As one League member stated, given an informed choice, many consumers often choose to “buy local.”

For a copy of the League’s letter to DBO Commissioner Manuel Alvarez, click here.

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