NCUA Board to Discuss Proposed Rules, IR Ceiling, and More

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The National Credit Union Administration (NCUA) Board will meet next week on Jan. 23, at 7 a.m. (Pacific).

The board’s agenda includes: 1) 2020 Annual Performance Plan; 2) Board Briefing, Civil Money Penalty Statutory Inflation Adjustment; 3) Proposed Rule, Part 708a, Subpart D, Credit Union Combination Transactions; 4) Proposed Rule, Parts 701, 702, 709 and 741, Subordinated Debt; and 5) Federal Credit Union Loan Interest Rate Ceiling.

The board will consider a proposed rule on subordinated debt and regulatory capital. In 2017, the board issued an advance notice of proposed rulemaking (ANPR) regarding the use of alternative capital for risk-based capital (RBC) purposes. One of the objectives in delaying the RBC rule until 2022 was so that the agency could finalize a rule permitting supplemental capital for RBC purposes before the RBC rule’s effective date. In responding to the 2017 ANPR, the California and Nevada Credit Union Leagues supported permitting all federally-insured credit unions (FICUs) to issue supplemental capital that would count towards the risk-based net worth requirement, and we recommended the agency take a measured approach with its implementation.

The board will also consider a proposed rule under Part 708a, which is about bank conversions and mergers — i.e., conversions of insured credit unions to mutual savings banks and mergers of insured credit unions into banks. The objective of the agenda item is unclear; however, NCUA Chairman Rodney Hood said last year that the agency would be considering a rule governing credit union-bank purchases.

The NCUA’s rulemaking agenda includes pre-rulemaking activities regarding the interest rate ceiling for federal credit union (FCU) loans. The board will receive a briefing and consider the impact of the statutory interest rate ceiling and possible methods the board may use to set a temporary interest rate ceiling for FCUs, including a variable or floating rate. The interest rate ceiling has been set at a fixed 18 percent since 1987.

The 2020 Annual Performance Plan will also be presented to the Board for approval. The Annual Performance Plan provides specific direction and guidance to the agency in implementing the overarching goals of the 2018 - 2022 Strategic Plan.

The Leagues will monitor the board meeting and provide an update soon after. NCUA Board meetings are broadcast via livestream video and can be accessed from NCUA’s homepage at www.ncua.gov. Open board meetings are also tweeted live; follow @TheNCUA on Twitter.

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