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NCUA Proposed Rule to Amend its RegFlex Program

Although it is the CFPB that has over 15 proposals and interim finals rules currently out for comment, we wanted to make sure you are also aware of the NCUA's RegFlex proposal. At its December meeting, the NCUA Board approved a proposed rule that would effectively eliminate the agency's Regulatory Flexibility program. However, the proposal would also amend rules affected by the current RegFlex program that are designed to provide some regulatory relief for federal credit unions. The proposal would place most of the six flexibilities of the current RegFlex rule into the subject-specific rules that apply to all federal credit unions, which include: charitable contributions, nonmember deposits, fixed assets, zero-coupon investments, borrowing repurchase transactions, and commercial mortgage related securities.

The proposal would make several other changes, such as extend the time period in the fixed assets rule by which a federal credit union must partially occupy certain premises from three years to six years for unimproved land. The proposal would make other changes that we have concerns with, such as replacing the current authority for RegFlex federal credit unions to purchase zero-coupon investments with maturities that exceed 10 years, with authority for federal credit unions meeting a "well capitalized standard" to purchase zero-coupon investments with maturities of up to 30 years. As proposed, to meet the "well capitalized standard," a federal credit union must have: (1) received a CAMEL rating of 1 or 2 during its last two exams, and (2) maintained a "well capitalized" net worth classification for the preceding six quarters.

Please review CUNA's Regulatory Comment Call and provide your thoughts and concerns on the proposal. NCUA is accepting comments until February 27 but get your comments to CUNA early so your opinion is used in forming a final comment letter.