During its board meeting Thursday, NCUA eliminated two requirements that would have:
- Limited natural person credit unions’ membership to only one corporate credit union; and
- Resulted in a virtual requirement that all entities using the services of a corporate credit union contribute to the Temporary Corporate Credit Union Stabilization Fund.
“NCUA has improved its corporate credit union rule by eliminating requirements which we strongly argued were at odds with the interests of credit unions and the agency’s legal authority,” says CUNA President/CEO Bill Cheney. “We appreciate the agency’s willingness and capacity to listen to credit unions about these issues.”
Cheney says allowing natural person credit unions to belong to more than one corporate will develop broader support for corporate credit unions that are well-managed and are able to meet agency and credit union due diligence scrutiny.
The final corporate credit union rule imposes five categories of additional requirements on corporate credit unions:
1. Requiring corporate credit unions to conduct all board of director votes as recorded votes and include the “no” votes or abstentions of individual directors in the meeting minutes;
2. Incorporating audit, reporting, and audit committee practices that are modeled on Federal Deposit Insurance Corp. requirements and the Sarbanes-Oxley Act, such as ensuring that material accounting adjustments conform to Generally Accepted Accounting Principles;
3. Requiring corporates to establish enterprise-wide risk management committees staffed with at least one independent risk management expert;
4. Allowing corporates to charge their members reasonable one-time or periodic membership fees; and
5. Requiring the disclosure of compensation received from a corporate’s credit union service organization (CUSO) by certain highly compensated corporate executives.
The NCUA board “has no such intent” to apply these requirements to natural person credit unions at this time, according to the supplementary information accompanying the final rule.
Some provisions of the rule, such as those on corporate credit union board responsibilities (e.g., recording “no” votes), disclosure of corporate executives’ CUSO-related income, and corporates’ ability to impose membership fees will be effective upon publication in the Federal Register.
The NCUA Board, however, approved delayed effective dates for the following final rule requirements:
- The effective date of the audit and reporting requirements will generally be Jan. 1, 2012, but some management reporting requirements will not apply until Jan. 1, 2013. The requirement for an assessment by an independent public accountant will not be effective until Jan. 1, 2014.
- The enterprise-wide risk management provisions will be effective 24 months after the final rule’s publication in the Federal Register (i.e. in or about April 2013).
- The effective date of the definitions added to the corporate credit union regulations by this final rule will be Jan. 1, 2012.
CUNA will issue an analysis of the corporate credit union final rule in the near future.
The NCUA Board also approved new services for corporate credit union CUSOs, adopted a final interpretive ruling and policy statement on NCUA Supervisory Review Committee guidelines, and reviewed reports on the National Credit Union Share insurance Fund and the Temporary Corporate Credit Union Stabilization Fund.