WASHINGTON (8/7/12)--Noting that the cumulative regulatory burden on credit unions is at an all-time high, the Credit Union National Association (CUNA) in a comment letter urged the National Credit Union Administration (NCUA) to develop a new advisory council to discuss developing problem areas and trends with the credit unions it regulates.
The advisory council could also identify barriers that prevent some credit unions from serving their members to the fullest extent possible, and discuss incentives that could help credit unions improve their member service. CUNA also suggested the advisory council could "serve as a useful sounding board as the agency develops proposals and directives for the credit union system."
The CUNA recommendations were included in the group's comments regarding the NCUA's annual request for comment on one-third of its rules, an ongoing effort by the agency to reduce redundancies and other burdens.
In that letter, CUNA also presented a series of regulatory relief recommendations that would help relieve credit unions while preserving legal requirements.
"There are many critical regulatory issues facing credit unions today and improving the regulatory environment for credit unions is absolutely essential for their sustainability and continued success in serving their members," CUNA said.
Another way the agency could improve the regulatory environment for credit unions, CUNA suggested, is shielding well-managed, well-capitalized credit unions from member business lending (MBL) regulatory requirements that are not specifically stated in the Federal Credit Union Act.
MBL rules that require credit unions to obtain personal guarantees from borrowers, and certain other rules addressing loan-to-value ratios, construction and development loan limits and appraisal requirements, are among those that could be eliminated for these credit unions, CUNA said.
CUNA also urged the agency to amend its policy regarding renting real estate owned (REO) properties. Under the NCUA's current policy, federal credit unions must commit to a plan to actively promote an REO property for sale and seek a buyer, with the expectation that it will collect on the sale within 12 months, even if the property has renting tenants.
CUNA suggested the NCUA could relax this policy, noting that "it is often more difficult to rent a property if the tenants are concerned the property is being marketed." Amending the NCUA's position on REOs as rentals could maintain property values and the quality of surrounding neighborhoods--the very neighborhoods in which the credit union may hold, service, or originate other mortgages," CUNA said.
In the letter, CUNA also addressed the NCUA's small credit definition and issues related to mergers and conversions, investment and deposit activities, chartering, and loan participations, among other issues.
CUNA urged the agency to work review the regulatory relief recommendations in a timely manner, and assemble a final package of regulatory relief measures that could be implemented this fall.
For the full letter, use the resource link.