Board Actions May 2012
NCUA FINALIZES TWO REGULATORY
RELIEF MEASURES

The NCUA Board convened its third open meeting of 2012 at the agency’s headquarters May 24 and unanimously approved three items. The Board also received a quarterly update for the Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund).

TDR Changes Keep Credit Union Members
in Their Homes

The Board adopted a final rule and guidance on troubled debt restructurings (TDRs) to facilitate loan modifications and help distressed credit union members remain in their homes. The changes are designed to ensure that members who can no longer afford to make full payments on their original mortgages can keep their homes, if they agree to certain modified terms with their credit union. For details on the final TDR rule (Part 741) and loan workout guidance (Part 741, Appendix C), see page 1.

RegFlex Expanded to Cover
All Federal Credit Unions

n Use a six-year time horizon (instead of three years) to partially
occupy unimproved property acquired for future expansion.
n Obtain certain exceptions to constraints on purchasing
whole loans from other federally insured credit unions.
n Enter into borrowing-repurchase transactions in which the
purchased securities have maturities exceeding the
maturity of the borrowing-repurchase agreement, provided
the investment value does not exceed net worth and subject
to other constraints.
n Purchase private-label commercial mortgage-related
securities, subject to certain net worth constraints and
safety and soundness investment criteria.
n Invest in zero-coupon securities, subject to certain net
worth and investment maturity limits.

The NCUA Board adopted a final rule extending existing Regulatory Flexibility (RegFlex) provisions to all federal credit unions and eliminating the RegFlex designation program. Through this action, NCUA is complying with the intent of President Obama’s Executive Order 13579 which asked independent agencies to modify, streamline, expand, or repeal regulations to provide relief from unnecessary burdens.

The final rule’s preamble includes a summary table (s ee table on pages 8 and 9) to assist readers in distinguishing between the authorities for federal credit unions that meet well-capitalized standards and for federal credit unions that may not. The table furthers NCUA’s efforts to comply with the Plain Writing Act.

“NCUA has improved the regulatory environment by removing barriers to Regulatory Flexibility provisions for more than 1,700 credit unions,” said Chairman Matz. “By lifting unnecessary restrictions, granting additional powers, and increasing management flexibility, this RegFlex relief expansion advances NCUA’s Regulatory Modernization Initiative and complements the President’s efforts to ease regulatory burdens where appropriate.”

When issuing the proposed RegFlex relief rule, NCUA inadvertently omitted changes removing references to RegFlex in the fidelity bond rule (Part 713). The Board therefore issued an interim final rule in conjunction with the final RegFlex rule changes outlined above. The Board encourages all interested individuals or groups to submit comments on the interim final rule before July 30, which is 60 days after publication in the Federal Register so that the Board can consider any amendments at a later date.

RegFlex Dropped from Supervisory

The final RegFlex relief rule closely mirrors the proposed rule and has seven components. These RegFlex relief changes become effective on July 2, which is 30 days after publication in the Federal Register.

Review Committee Duties

Specifically, the final rule allows all federal credit unions to: n Make charitable contributions to charities of their choosing. n Accept non-member deposits, up to the greater of 20 percent of shares or $3 million, from local governmental entities or other credit unions.

The Board issued an Interpretative Ruling and Policy Statement to change the Guidelines for the Supervisory Review Committee and remove RegFlex revocations from the list of material supervisory determinations federal credit unions can appeal. Because a RegFlex designation is no longer required to earn regulatory flexibility, federal credit unions no longer have a need to appeal. In issuing the policy statement, the Board provided a 30-day comment period. The new guidelines become final 90 days following publication in