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Board Action Bulletin

ALEXANDRIA, Va. (March 18, 2021) – Through a live audio webcast, the National Credit Union Administration Board held its third open meeting of 2021 and unanimously approved two items:

• A temporary interim final rule permitting federally insured credit unions to use asset data as of March 31, 2020, to determine the applicability of certain regulatory asset thresholds during calendar years 2021 and 2022.
• An interim final rule making conforming changes to the agency’s regulations on the Central Liquidity Facility because of the Consolidated Appropriations Act, 2021.

The NCUA Board also received a briefing on the financial performance of the NCUA Guaranteed Notes (NGN) and the asset management estates that comprise the agency’s Corporate System Resolution Program. Approximately 2000 credit unions will receive a distribution.

Corporate Capital Holders for Three Corporates to Receive Distribution in April

The President of the NCUA’s Asset Management and Assistance Center and staff from the agency’s NGN Division briefed the NCUA Board (opens new window) on the financial performance of the NGN program and the asset management estates of five corporate credit unions that failed in 2009 and 2010 during the financial crisis.

During the briefing, the AMAC President stated that the performance of the asset management estates means that the liquidating agent for U.S. Central Federal Credit Union, Members United Corporate Federal Credit Union, and Southwest Corporate Federal Credit Union will be able to distribute $368 million to member capital account holders in April.

“The success of the NCUA Guaranteed Notes program is a testament to the leadership shown by previous NCUA Chairmen and Board members, who supported this program and our recovery efforts over the years, even when it seemed the chances were remote for the Corporate System Resolution Program to end with any distributions to capital holders,” Chairman Harper said. “This success is also a testament to the efforts of the NCUA staff over the last decade. Their wise actions, careful management, and perseverance gave the NCUA the ability to manage and reduce potential losses to the system.”

The U.S. Central, Members United, and Southwest asset management estates collectively have about 2,600-member capital account holders, mostly credit unions, with a total claim of $2.5 billion. After accounting for mergers, purchases and acquisitions, and liquidations, about 2000 active credit unions will receive a distribution. This will be the second distribution to the member capital holders of Southwest, the first occurring in July 2020.

The NCUA plans to send letters to distribution recipients notifying them of their amount and other payment details. The distribution will be made to credit unions generally through an electronic funds transfer. The payout is planned for April. The NCUA will work with each non-credit union recipient to ensure timely receipt of the payout.

Additional information on the distribution is available on the NCUA’s website.

Interim Final Rule Provides Measures of Relief from Certain Regulatory Thresholds

The NCUA Board approved a temporary interim final rule (opens new window) that permits federally insured credit unions to use asset data as of March 31, 2020, to determine applicability of capital planning and stress testing requirements under the NCUA’s regulations. This data will also determine regional or national supervision of federally insured credit unions.

Throughout 2020, federally insured credit unions experienced unprecedented balance sheet growth, due to increased personal savings rates, declining loan demand, and economic stimulus because of the COVID-19 pandemic. Many credit unions have or will exceed asset thresholds subjecting them to additional regulatory requirements or supervision by the Office of National Examinations and Supervision.

Complying with these new regulatory standards may impose additional compliance costs for credit unions that otherwise may not have become subject to these requirements at this time. This interim final rule gives affected credits unions time to prepare for additional regulatory standards.

Said Chairman Harper, “While the rule before us today affects large credit unions, we recognize that the latest stimulus payments resulting from the American Rescue Plan will soon lead to further increases in the assets and shares of smaller credit unions. The NCUA Board, therefore, will soon consider a tailored, targeted and temporary rule, similar to last year’s regulatory action, to exempt credit unions from certain prompt corrective action requirements.”

The interim final rule becomes effective upon publication in the Federal Register. There is a 60-day comment period.

Enhancements to the Central Liquidity Facility Extended to December 31, 2021

The Board approved an interim final rule (opens new window) that updates the NCUA’s regulations to conform with the statutory changes made by the Consolidated Appropriations Act, 2021, signed into law on December 27, 2020.

“The temporary changes and increased flexibilities provided by Congress to the NCUA’s CLF are very useful, but we should pursue permanent reforms,” Chairman Harper said. “As such, I will continue to urge Congress to make the CLF provisions, first incorporated into the CARES Act, permanent. Permanence would provide regulatory certainty during the current crisis and bolster the credit union system’s ability to respond to future emergencies.”

Specifically, the Consolidated Appropriations Act extended several enhancements to the NCUA’s Central Liquidity Facility, first enacted by the Coronavirus Aid, Relief, and Economic Security Act. This rule amends the NCUA’s CLF regulation to reflect these extensions. This rule also extends the withdrawal from CLF membership provisions that the Board included in its April 2020 interim final rule.

The interim final rule becomes effective upon publication in the Federal Register. There is a 60-day comment period.

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.