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NCUA Holds Final Listening Session

Chairman Matz addressed a number of issues at National Credit Union Administration's (NCUA) sixth and final listening session in Denver earlier in the week of July 30, such as concerns over examination practices. She was accompanied by NCUA Executive Director Dave Marquis, Director of Examination and Insurance Larry Fazio, Region 5 Director Elizabeth Whitehead, General Counsel Mike McKenna, and Director of the Office of Small Credit Union Initiatives Bill Myers.

Chairman Matz spent a few minutes discussing the recently announced NCUA Office of National Examinations and Supervision. Matz said that the agency is reorganizing its existing resources to create the office in order to enhance oversight of the corporate credit unions and natural person credit unions with $10 billion or more in assets. Matz stated that this will reallocate examination resources from smaller, less risky credit unions, to the largest, most complex, and potentially risky credit unions. While the transition for the new office will begin in January of 2013, credit unions will not be moved into the office until January of 2014. NCUA has provided a list of Q&As regarding the new office.

Chairman Matz noted that the agency is still working on its Credit Union Service Organization (CUSO) proposal, which Credit Union National Association (CUNA) does not support. Matz went on to explain the importance of the agency having greater information on credit unions’ involvement with CUSOs and on the CUSOs themselves.

In addition, there was much discussion of the Central Liquidity Facility (CLF) and the agency’s recently proposed emergency liquidity rule. In response to a question regarding the fate of the $2 billion of CLF stock held by the US Central Corporate Bridge, Director of Examination and Insurance Fazio described how the $2 billion, which is currently held in US Treasury securities, will be redeemed and then paid out by US Central Bridge to the corporates and natural person credit unions that are entitled to it. Fazio also explained that the CLF’s borrowing authority, which is 12 times its capital base, will be reduced in the coming months (with the exit of US Central Bridge) from approximately $50 billion at its peak down to around $2 billion. The $2 billion borrowing authority will be based on capital that will remain in the CLF that has been contributed by the CLF’s roughly 90 direct credit union members (as well as some retained earnings of the CLF).

Executive Director Marquis clarified that US Central Bridge has been acting as an agent of credit unions to allow them to access the CLF, and noted that only members may borrow directly from the CLF. Fazio noted that natural person credit unions may become members of the CLF by contributing one-quarter of 1% of their assets. Fazio mentioned that the landscape of available liquidity is about to change, and this is one reason for emergency liquidity proposal.

​Photo Caption:  National Credit Union Administration Chairman, Deborah Matz.