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NCUA reveals new corporate CU rule
ALEXANDRIA, Va. (9/27/10)—The National Credit Union Administration (NCUA) on Friday revealed the final corporate credit union rule. Credit Union National Association (CUNA) President/CEO Bill Cheney said that CUNA is “gratified” that the new corporate rule reflected many of the recommendations of CUNA’s Corporate Task Force. “We firmly believe it offers a solid model for corporate credit unions going forward,” Cheney added. Overall, the NCUA’s corporate credit union final rule mirrors the agency’s proposed rule, which was released earlier this year. The final corporate rule amends Part 704 of the NCUA's rules, adjusting the current corporate capital requirements by replacing the current 4% minimum total capital ratio with a 4% minimum leverage ratio, a 4% tier one risk-based capital ratio, and an 8% total risk-based capital ratio for adequately capitalized corporate credit unions. The new corporate rule will prohibit the purchase of private-label mortgage-backed securities or subordinated securities. So-called "golden parachute" executive compensation packages will not be allowed to be awarded to executives of troubled corporates, and all corporates will be required to disclose their executive compensation packages. Corporate boards must also be comprised of natural person credit union employees that have attained the level of CEO, chief financial officer, or chief operating officer or treasurer/manager at their respective credit unions. The majority of the corporate rules will become effective 90 days after they are published in the Federal Register. However, the rules impacting capital requirements and the activities of credit union service organizations (CUSOs) will have delayed effective dates, the NCUA said. NCUA General Counsel Bob Fenner added that the NCUA would release additional refinements to its corporate rule in the future. The NCUA plans to address corporate membership fees, internal reporting, risk management, and other issues, he added. The NCUA also voted to delegate corporate credit union CUSO authority to the Director of the Office of Corporate Credit Unions (OCCU). The NCUA Board may also play a role in the approval or disapproval of a corporate credit union CUSO’s activities if those activities go “beyond the scope” of activities covered by section 712.5 of NCUA regulations. Potential guidelines for new corporate credit union charters were also released during the meeting. The guidelines will be open to public comment for thirty days. The NCUA also announced plans to bundle portions of the $50 billion in troubled assets currently held by U.S. Central FCU, Western Corporate FCU (WesCorp), and some other corporates into individual securities that could then be sold on the open market. (See related story: NCUA acts on Corp. CUs, legacy assets)


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