Tuesday, September 20, 2011

NCUA Announces Upcoming Regulatory Agenda

In a speech on September 19 before the National Association of Federal Credit Unions, NCUA Chairman Debbie Matz announced the forthcoming regulatory agenda for the NCUA.

Debbie Matz said in her speech: "[M]y goal is to target risky behaviors in credit unions, not credit unions themselves."

The NCUA chair stated that the agency will move forward with its plans to finalize its CUSO transparency and interest rate risk rules. Additionally, Chairman Matz noted some new proposed regulations that will be issued this fall or next year.

First, NCUA Board plans to consider a Loan Participation Protection rule, which will cover both originators and buyers of loan participations. NCUA will require originators to keep some “skin in the game” so as to provide "a disincentive for the kinds of reckless behavior that puts the Share Insurance Fund at risk." The proposed rule would also require participating credit unions to investigate these loans thoroughly – not just at origination, but over the life of the loan.

Second, NCUA will propose an Investment Concentration Exposure Limits rule, which will be aimed at limiting concentrations in the riskiest investments, like private-label mortgage-backed securities and collateralized debt obligations.

Third, NCUA will propose extending six of the seven remaining Regulatory Flexibility (RegFlex) provisions to all federal credit unions. The seven remaining RegFlex provisions are:

1. charitable contributions;
2. nonmember deposits;
3. ownership of fixed assets;
4. zero coupon securities;
5. borrowing repurchase transactions;
6. commercial mortgage related securities; and
7. purchase of obligations from federally-insured credit unions.

Ms. Matz also called on credit unions to lobby Congress for the authority to issue secondary capital and lifting the business loan cap.

Read the speech.

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