America's Credit Unions: NCUA's Final Rules Eliminate Red Tape, Expand Credit Union Flexibility
By CU Today Staff —
WASHINGTON--In the latest action of the NCUA’s Deregulation Project, the agency has finalized 11 rules. Many of the rules make changes by removing outdated requirements or giving credit unions flexibility, America's Credit Unions noted, providing the following analysis:
Suretyship and Guaranty; Segregated Deposit and Collateral – 12 CFR 701.20(c)(3) and 701.20(d): This final rule updates the regulation so credit unions no longer need to set aside funds or collateral from the member to cover the risk when they guarantee a member’s obligation.
Limits on Loans to Other Credit Unions – 12 CFR 701.25(b): This final rule removes the requirement for a federal credit union board of directors to approve loans to other credit unions.
Notice of Termination of Excess Insurance Coverage – 12 CFR 741.5: This final rule removes the 30-day notice requirement prior to a credit union’s termination of excess share insurance coverage and instead requires federally insured credit unions to notify members some time before the excess of coverage.
Requirements for Insurance – 12 CFR 741.10: This final rule was finalized as proposed and eliminates a notification requirement that federally-insured credit unions were already required to make as part of their agreement for maintaining federal share insurance.
Purchase, Sale, and Pledge of Eligible Obligations – 12 CFR 701.23: This final rule amends the NCUA regulations to remove the prescriptive list of items that must be included in federal credit union written policies around the purchase, sale, and pledge of eligible obligations. The final rule also strikes the provision regarding conflicts of interest and compensation, which are also covered in credit union bylaws and other NCUA rules.
Credit Union Service Contracts – 12 CFR 701.26: This final rule removes section 701.26 and amends section 721.3 to formally clarify that credit unions may serve as representatives in shared operational arrangements with other credit unions or organizations, minimizing compliance complexity by removing extraneous requirements.
Third-Party Servicing of Indirect Vehicle Loans – 12 CFR 701.21(h): This final rule removes two sections of regulations that limited a federally insured credit union’s purchases of indirect auto loans serviced by a third party to 50% of its net worth.
Four of the rules—Chartering and Field of Membership for FCUs IRPS 08-2, Chartering and Field of Membership for FCUs IRPS 10-1, Chartering and Field of Membership for FCUs – IRPS 06-1, and Corporate Credit Unions—were finalized as proposed and rescind various regulations, all of which are already included in the Chartering and Field of Membership Manual. America’s Credit Unions supported these rules, agreeing that removing the redundant guidance would reduce confusion and allow credit unions to rely on one source for current chartering and field of membership requirements.
Originally reported by CU Today.