ALEXANDRIA, Va. – NCUA, which said last week it approved an additional 553 federally chartered credit unions to low-income status and its exemption from the member business loan cap, said this morning it plans to add another 400 state chartered credit unions to the list, providing them with the ability to accept non-member deposits, secondary capital and the ability to tap into NCUA’s low-rate community development loans, as well as exceed the 12.25% of assets limit on commercial loans.
The agency is working with the National Association of State CU Supervisors to approve about 400 state charters to the low-income list, according to Bill Myers, director of NCUA’s Office of Small CU Initiatives.
That makes a total of 2,000 of the nation’s 7,000 federally insured credit unions, including some of the nation’s largest, which will be eligible for the exemption from the congressionally mandated MBL cap and the other rules. The addition of 1,000 credit unions to the list comes as Congress is not expected to pass credit union-backed legislation that would increase the cap all the way to 27.5%.
The NCUA Board also proposed this morning to broaden its definition of a small credit union to $30 million in assets from the current $10 million in another effort ease regulatory burden. Small credit unions are exempt from the agency’s risk-based net worth rules and the new rule requiring a comprehensive interest-rate risk policy, among other things, and are eligible for assistance through the small credit unions office, such as consultation and advisory services.
“When we look at the metrics of small credit unions, they really are struggling,” said NCUA Chairman Debbie Matz, during this morning’s monthly NCUA Board meeting. “I view this as a step towards helping the viability of small credit unions.”
The proposal was issued for a 30-day comment period.
The NCUA Board also proposed a rule that would allow credit unions to invest in Treasury Inflation Protected Securities, or TIPS, the value of which rises with inflation and falls with deflation. When a TIPS matures, the holder is paid the adjusted principal or original principal, whichever is greater. The TIPS proposal is open for a 30-day comment period.
NCUA also invited comments on a preliminary proposal to ease restrictions on payday loans, in order to increase the number of credit unions offering the products. Among the questions being posed are: should credit unions be allowed to charge higher rates or higher fees, be allowed to offer shorter terms or greater amounts for the payday loans.