WASHINGTON—NCUA plans to focus on five areas of regulatory relief in 2015, according to remarks Monday from Chairman Debbie Matz at CUNA's Governmental Affairs Conference here.

Those include supplemental capital, fields of membership, asset securitization, fixed assets and member business lending, and Matz declared that she was "committed to making 2015 the year of regulatory relief."

Chief among the areas she said the regulator will focus on is supplemental capital. Matz noted that there have been concerns that under current law NCUA could count some debt as supplemental capital for risk-based capital ratios.

"I understand the need for supplemental capital in certain circumstances," she told the GAC audience. "So I assure you: I am committed to allowing supplemental capital to be counted in full."

To do that that, Matz said NCUA will take several steps, including changing the order of NCUSIF payout priorities to make sure supplemental capital accounts are not insured, as well as setting standards such as minimum redemption periods for CUs to offer subordinated debt to supplement risk-based capital.

A working group at NCUA is also looking at ways to increase low-income CUs' access to secondary capital, and the group is discussing potential legislative and regulatory changes in order to allow changes for raising further capital.

"NCUA can allow certain forms of supplemental capital for both risk-based capital and low-income credit unions," said Matz. "For credit unions without a low-income designation, legislation is required to allow supplemental capital to count toward the seven-percent net worth leverage ratio."

NCUA has also introduced a proposal to give some large CUs the option to securitize their own assets, which Matz said "would permit these credit unions to top new sources of liquidity and reduce interest-rate risk by converting fixed-rate assets to cash."

The regulator is currently tweaking the proposal, but Matz said she hoped the board could approve a final rule by year-end.

Next week, however, the NCUA Board is set to consider a proposed rule to eliminate the 5% cap on fixed assets, a proposal Matz floated last summer at NAFCU's annual conference in Las Vegas.

"We all know over-concentration in fixed assets like buildings is dangerous," Matz told the GAC crowd. "Credit unions should prudently and deliberately make decisions about the level of assets to hold, but they should be able to do that without needless red tape. Decisions to upgrade your technology or your facilities should be your decisions to make—and yours alone."

MBLs, FOMs and Other Acronyms

Matz also took time to discuss member business lending, noting that some CUs have commented that the waiver process for those loans often prevents them from acting as quickly as they might. NCUA plans to eliminate those waives, she said.

"We're going to move away from defining highly prescriptive, one-size-fits-all business loan underwriting requirements," Matz said. "You know your members' needs better than we do. Our business lending rules need to reflect that."

While the regulator will still issue loan guidance and supervise for sound commercial lending practices, the agency plans to lift certain limits on construction and development loans.

Changes to FOM rules are also in store by year-end to make it easier for federal credit unions to expand.

"You should not be required to get approval from NCUA each and every time you want to add another group," Matz said. "Last year, we proposed a rule designating seven categories of associations federal credit unions could automatically add to their fields of membership. This year, we would like to add even more automatic qualifiers."

Matz noted that her FOM working group is currently identifying obstacles to membership expansion and examining ways the rules can be tweaked to increase flexibility.

All of these measures, Matz said, are meant to ensure that the regulator can respond to credit unions' concerns and allowing CUs to do business more efficiently and effectively.

"We will listen, and, where sensible, we will act," Matz said near the end of her remarks. "Our No. 1 goal is to keep the credit union system safe, sound and sustainable. You will have greater freedom in pursuit of that goal."

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