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Board Action Bulletin

ALEXANDRIA, Va. (July 18, 2019) – The National Credit Union Administration Board held its seventh open meeting of 2019 at the agency’s headquarters today and approved three items:

• A final rule amending the agency’s regulation requiring real estate appraisals for certain transactions to provide greater clarity and a measure of regulatory relief.
• A proposed interpretive rule and policy statement that would expand career opportunities for individuals convicted of certain minor offenses.
• A final rule updating the agency’s fidelity bond requirements for corporate and natural-person credit unions.

The Chief Financial Officer briefed the Board (opens new window) on the agency’s revised 2019 budget estimates, which currently project redistributing $5.3 million to agency priorities.

Final Appraisal Rule Increases Real Estate Appraisal Requirement Threshold

The Board approved a final rule (opens new window) that amends the agency’s real estate appraisal requirements for certain transactions as part of the NCUA’s regulatory reform agenda.

“This rule is part of a commonsense approach to regulation that will help put more resources into our communities,” NCUA Board Chairman Rodney E. Hood said. “Rethinking the appraisal rule is an example of regulatory reform that is positive and can help boost economic activity and job creation, particularly in some of our nation’s more hard-pressed areas.”

The final rule accomplishes four agency objectives:

• Increases the threshold for required appraisals in commercial real estate transactions from the current $250,000 to $1 million;
• Reorganizes the appraisal regulation to make it easier to  determine when a written estimate or an appraisal is required;
• Exempts real estate transactions located in rural areas from appraisal requirements if certain conditions are met; and
• Amends the definitions section of the rule to reflect these changes.

The final rule will become effective 90 days after publication in the Federal Register.

Policy Changes Would Offer Second Chances on Some Prohibitions

Board members approved a proposed interpretive ruling and policy statement (opens new window) that would allow individuals convicted of certain minor offenses to return to work in the credit union industry without applying for the Board’s approval.

“I have heard it said that forgiveness is less about changing the past than it is about changing the future,” Chairman Hood said, “and this rulemaking before us today keeps with Americans’ shared values of forgiveness and redemption.”

Section 205(d) of the Federal Credit Union Act prohibits anyone convicted of a criminal offense involving dishonesty or breach of trust, or who has entered into a pretrial diversion or similar program in connection with a prosecution for such an offense, from participating in the affairs of an insured credit union.  An individual in those circumstances must apply to the NCUA Board for its consent in order to work in a credit union.

The proposed changes would reduce the number of offenses that would require that application.

Comments on the proposed changes must be received within 60 days of publication in the Federal Register.

Budget Projects Redistributing $5.3 Million

The Board approved the Chief Financial Officer’s recommendation to redistribute $5.3 million to agency needs.

Projected staff levels for the remainder of 2019 show employee pay and benefits will be approximately $4.2 million below the approved Operating budget. That money and other funding will be applied to certain administrative and contracted services, high-priority capital projects, and additional staffing in the current Office of Public and Congressional Affairs, which will be renamed the Office of External Affairs and Communications.

At its November 2018 open meeting, the Board approved a $304.4 million Operating budget, a $22 million Capital budget, and an $8.4 million Share Insurance Fund Administrative Expenses budget.

Fidelity Bond Requirements Updated

The Board approved a final rule (opens new window) amending the agency’s fidelity bond requirements to better ensure safe and sound credit union operations and protect the National Credit Union Share Insurance Fund.

The final rule, part of the agency’s regulatory reform agenda, will:

• Strengthen oversight of fidelity bond coverage by a credit union’s board of directors;
• Create a one-year discovery period following a credit union’s liquidation;
• Codify the Office of General Counsel’s September 2017 legal opinion (opens new window) permitting a natural-person credit union to extend bond coverage to certain credit union service organizations; and
• Clarify the documents subject to the NCUA Board’s approval and require all bond forms receive approval every 10 years.

The final rule does not require a credit union’s supervisory committee to review its fidelity bond renewal.

The final rule will become effective 90 days after publication in the Federal Register.

The NCUA tweets all open Board meetings live. Follow @TheNCUA (opens new window) on Twitter, and access Board Action Memorandums and NCUA rule changes at www.ncua.gov. The NCUA also live streams, archives and posts videos of open Board meetings online.