[Federal Register Volume 90, Number 130 (Thursday, July 10, 2025)]
[Proposed Rules]
[Pages 30596-30603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-12807]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 90, No. 130 / Thursday, July 10, 2025 /
Proposed Rules
[[Page 30596]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Chapter VII
[NCUA-2024-0014]
Regulatory Publication and Voluntary Review as Contemplated by
the Economic Growth and Regulatory Paperwork Reduction Act of 1996
AGENCY: National Credit Union Administration (NCUA).
ACTION: Notification of regulatory review; request for comments.
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SUMMARY: As contemplated by the Economic Growth and Regulatory
Paperwork Reduction Act of 1996 (EGRPRA), the NCUA Board (Board) is
voluntarily reviewing agency regulations to identify rules that are
outdated, unnecessary, or unduly burdensome on federally insured credit
unions. The NCUA is not statutorily required to undertake the EGRPRA
review; however, the Board has elected to participate in the decennial
review process. The NCUA divided its regulations into 10 categories
outlined in the included chart. Over approximately 2 years, the NCUA is
publishing four Federal Register documents each requesting comment on
multiple categories of regulations. This second Federal Register
document requests comment on regulations in the categories of ``Agency
Programs,'' ``Capital,'' and ``Consumer Protection.'' The NCUA will
address the remaining five categories in the next two documents.
DATES: Comments must be received by October 8, 2025.
ADDRESSES: You may submit written comments by any of the following
methods (Please send comments by one method only):
Federal eRulemaking Portal: https://www.regulations.gov.
The docket number for this document is NCUA-2024-0014. Follow the
instructions for submitting comments. A plain language summary of the
document is also available on the docket website.
Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
Hand Delivery/Courier: Same as mailing address.
Public Inspection: You may view all public comments on the Federal
eRulemaking Portal at https://www.regulations.gov, as submitted, except
for those we cannot post for technical reasons. The NCUA will not edit
or remove any identifying or contact information from the public
comments submitted. If you are unable to access public comments on the
internet, you may contact the NCUA for alternative access by calling
(703) 518-6540 or emailing [email protected].
FOR FURTHER INFORMATION CONTACT: Pamela Yu, Special Counsel to the
General Counsel, Office of General Counsel, at the above address or
telephone (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Introduction
Congress enacted section 2222 of the EGRPRA \1\ to reduce
regulatory burden imposed upon insured depository institutions
consistent with safety and soundness, to promote consistency between
the Federal banking agencies' regulations, and to support consumer
protection. The statute requires that not less frequently than once
every 10 years, the Federal Financial Institutions Examination Council
(FFIEC),\2\ along with the Federal banking agencies,\3\ conduct a
review of their regulations to identify outdated or otherwise
unnecessary regulatory requirements imposed on insured depository
institutions. In conducting this review, the FFIEC or the appropriate
Federal banking agencies (Office of the Comptroller of the Currency
[OCC], Board of Governors of the Federal Reserve System [FRB], and
Federal Deposit Insurance Corporation [FDIC]; herein Agencies \4\)
shall (a) categorize their regulations by type and (b) at regular
intervals, provide notice and solicit public comment on categories of
regulations, requesting commenters to identify areas of regulations
that are outdated, unnecessary, or unduly burdensome.\5\
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\1\ 12 U.S.C. 3311.
\2\ The FFIEC is an interagency body empowered to prescribe
uniform principles, standards, and report forms for the Federal
examination of financial institutions and to make recommendations to
promote uniformity in the supervision of financial institutions. The
FFIEC does not issue regulations.
\3\ The FFIEC is composed of the OCC, FRB, FDIC, NCUA, Consumer
Financial Protection Bureau (CFPB), and State Liaison Committee. Of
these, only the OCC, FRB, and FDIC are statutorily required to
undertake the EGRPRA review. The NCUA Board elected to participate
in the first and second EGRPRA reviews and again has elected to
participate in this review process. Consistent with its approach
during the first and second EGRPRA reviews, the NCUA is issuing
documents and requests for comment on its rules separately. The CFPB
is required to review its significant rules and publish a report of
its review no later than 5 years after they take effect. See 12
U.S.C. 5512(d). This process is separate from the EGRPRA process.
\4\ The Office of Thrift Supervision (OTS) was still in
existence at the time EGRPRA was enacted and was included in the
listing of Agencies. Since that time, the OTS has been eliminated
and its responsibilities have passed to the Agencies and the CFPB.
\5\ Federally insured credit unions are also subject to
regulations that are not reviewed under this decennial review
process because they were not promulgated by the NCUA. Examples
include rules for which rulemaking authority was transferred to the
CFPB and anti-money laundering and Bank Secrecy Act regulations
issued by the Department of the Treasury's Financial Crimes
Enforcement Network, among others. If, during this decennial review
process, the NCUA receives a comment about a regulation that is not
subject to NCUA review, it will forward that comment to the
appropriate agency.
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The NCUA is not statutorily required to undertake the EGRPRA review
because the NCUA is not an ``appropriate Federal banking agency'' as
specified in EGRPRA. In keeping with the spirit of the law, however,
the NCUA Board has once again elected to participate in the decennial
review process. Accordingly, the NCUA has participated along with the
Agencies in the planning process but has developed its own regulatory
categories that are comparable with those developed by the Agencies.
Because of the unique circumstances of federally insured credit unions
and their members, the Board is issuing a separate document from the
Agencies. The NCUA's document is consistent and comparable with the
Agencies' document, except on issues that are unique to credit unions.
EGRPRA also requires the FFIEC or the Agencies to publish in the
Federal Register a summary of the comments received, identifying
significant issues raised and commenting on these issues. It also
directs the Agencies to eliminate unnecessary regulations to the extent
[[Page 30597]]
that such action is appropriate. Finally, the statute requires the
FFIEC to submit to Congress a report that summarizes any significant
issues raised in the public comments and the relative merits of those
issues. The report also must include an analysis of whether the
Agencies are able to address the regulatory burdens associated with
such issues or whether these burdens must be addressed by legislative
action. The FFIEC report submitted to Congress following the prior
EGRPRA reviews included a section discussing the Agencies and banking
sector issues and a separate section devoted to the NCUA and credit
union issues. It is likely that the FFIEC will follow a similar
approach in this third EGRPRA review and report process.
Per the objectives of the decennial review, the Board asks the
public to identify areas of the NCUA's regulations that are outdated,
unnecessary, or unduly burdensome. In addition to this second document,
the Board will issue two more documents for comment over the course of
approximately 2 years, at regular intervals. The decennial review
supplements and complements the reviews of regulations that the NCUA
conducts under other laws and its internal policies.\6\
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\6\ Interpretive Ruling and Policy Statement (IRPS) 87-2, 52 FR
35231 (Sept. 8, 1987) as amended by IRPS 03-2, 68 FR 32127 (May 29,
2003) (Reflecting the NCUA's commitment to ``periodically update,
clarify and simplify existing regulations and eliminate redundant
and unnecessary provisions.'').
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II. The Decennial Review's Targeted Focus
The decennial regulatory review provides a significant opportunity
for the public and the Board to consider groups of related regulations
and identify possibilities for streamlining and improvement. The
decennial review's overall focus on the totality of regulations will
offer a new perspective in identifying opportunities to update and even
streamline regulations. For example, the decennial review may
facilitate the identification of regulatory requirements that are no
longer consistent with the way credit union business is conducted and
that, therefore, might be eliminated. Of course, regulatory updates
must be compatible with ensuring the continued safety and soundness of
federally insured credit unions and the financial system as a whole and
with the consumer financial protections.
Any resulting regulatory modifications from the NCUA's decennial
review must also be consistent with the NCUA's statutory mandates, many
of which require the issuance of regulations. EGRPRA recognizes that
effective burden reduction may require statutory changes. Accordingly,
as part of this review, the Board is specifically soliciting comment
from the public on, and reviewing the comments and regulations
carefully for, the relationship among burden reduction, regulatory
requirements, policy objectives, and statutory mandates. The Board also
seeks quantitative data about the impact of rules, where available.
The Board views the approach of considering the relationship of
regulatory and statutory change, in concert with EGRPRA's provisions
calling for grouping regulations by type, to provide the potential for
particularly effective burden reduction. The Board anticipates the
decennial review will also contribute to its ongoing efforts to update
and make regulations more efficient. Since 1987, under a formally
adopted NCUA policy, the Board reviews each of its regulations at least
once every 3 years with a view toward eliminating, simplifying, or
otherwise easing the burden of each regulation.\7\ Further, the Board
considers regulatory requirements each time it proposes, adopts, or
amends a rule. For example, under the Paperwork Reduction Act of
1995,\8\ the Regulatory Flexibility Act,\9\ and internal agency
policies, the NCUA assesses each rulemaking with respect to the burdens
the rule might impose. The Board also invites the public to comment on
proposed rules as generally required by the Administrative Procedure
Act.\10\
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\7\ IRPS 87-2, 52 FR 35231 (Sept. 8, 1987) as amended by IRPS
03-2, 68 FR 32127 (May 29, 2003).
\8\ 44 U.S.C. 3501-3521.
\9\ 5 U.S.C. 610.
\10\ 5 U.S.C. 551-559.
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The Board is particularly sensitive to the impact of agency rules
on small institutions. The Board currently defines ``small entity'' as
a federally insured credit union with less than $100 million in
assets.\11\ The Board is cognizant that each new or amended regulation
has the potential for requiring significant expenditures of time,
effort, and resources to achieve compliance, and that this burden can
be particularly challenging for institutions of smaller asset size,
with fewer resources available.
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\11\ NCUA IRPS 15-1, 80 FR 57512 (Sept. 24, 2015).
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III. The Board's Review Process
EGRPRA contemplates the categorization of regulations by ``type.''
During its prior decennial reviews, the Board developed and published
for comment 10 categories of the NCUA's regulations, including some
that had been issued jointly with the Agencies. The Board believes
these prior categories worked well for the purpose of presenting a
framework for the review and proposes to use the same categories in
this third review.\12\ The categories are:
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\12\ Consistent with EGRPRA's focus on reducing burden on
insured depository institutions, the Board has not included
internal, organizational, or operational regulations in this review.
These regulations impose minimal, if any, burden on federally
insured credit unions.
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Applications and Reporting;
Powers and Activities;
Agency Programs;
Capital;
Consumer Protection; \13\
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\13\ The Board is seeking comment only on consumer protection
regulations for which it retains rulemaking authority for insured
credit unions under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111-203, 124 Stat. 1376 (2010) (Dodd-
Frank Act).
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Corporate Credit Unions;
Directors, Officers and Employees;
Anti-Money Laundering and Bank Secrecy Act;
Rules of Procedure; and
Safety and Soundness.
Any rules adopted for the first time since the last decennial
review was completed have been incorporated into the appropriate
category.\14\
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\14\ Commenters should note, in this respect, that for new
regulations that have only recently gone into effect, some passage
of time may be necessary before the effect associated with the
regulatory requirements can be fully and properly understood.
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Although there are other possible ways of categorizing its rules,
the Board continues to maintain that these 10 categories are logical
groupings that are not so broad such that the number of regulations
presented in any one category would overwhelm potential commenters. In
the Board's view, these categories also reflect recognized areas of
stakeholder interest and specialization or are particularly critical to
the health of the credit union system. As was noted during the previous
reviews, some regulations, such as lending, pertain to more than one
category and are included in all applicable categories.
As with the prior decennial reviews, the Board remains convinced
that publishing the NCUA's rules for public comment adjacently, but
separately, from the Agencies is the most effective method for
achieving EGRPRA's burden reduction goals for federally insured credit
unions. In addition to not being statutorily required to undertake
EGRPRA and owing to differences in the credit union system as compared
to the banking system, there is not a direct, category by category,
correlation between the NCUA's rules and those of
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the Agencies. For example, credit union membership, credit union
service organizations, and corporate credit unions are all unique to
credit union operations. Similarly, certain categories identified by
the Agencies in their review process have limited or no applicability
in the credit union sector, such as community reinvestment,
international operations, and securities. The categories developed by
the Board and the Agencies, respectively, reflect these differences.
The Board intends to maintain comparability with the Agencies'
documents to the extent there is overlap or similarity in the issues
and the categories.
Over approximately two years, the Board is publishing four Federal
Register documents, each addressing one or more categories of rules.
Each Federal Register document will have a 90-day comment period. This
staggered approach will provide stakeholders with sufficient time to
focus in on discrete issues and provide comments to the Board. The
Board welcomes recommendations on grouping the remaining categories and
the order in which to publish them.
On May 23, 2024, the Board published the first document addressing
the following categories of regulations: Applications and Reporting and
Powers and Activities.\15\ This second notice addresses the following
categories of regulations:
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\15\ 89 FR 45602 (May 23, 2024).
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Agency Programs;
Capital; and
Consumer Protection.
The Board invites the public to identify outdated, unnecessary, or
unduly burdensome regulatory requirements imposed on federally insured
credit unions in these three categories. The Board anticipates
publishing the remaining five categories for similar comment periods at
regular intervals over approximately two years.
The Board has prepared two charts to assist the public's
understanding of the organization of its review. The first chart, set
forth at section V.A. below, presents the three categories of
regulations on which the NCUA is requesting recommendations in this
document. The three categories are shown in the left column. In the
middle column are the subject matters that fall within the categories
and in the far-right column are the regulatory citations. The second
chart, set forth at section V.B. below, presents the remaining five
categories in a similar format.
After the conclusion of the comment period for each decennial
document published in the Federal Register, the Board will review the
comments it has received and decide whether further action is
appropriate with respect to the categories of regulations included in
that document. The NCUA and the Agencies will consult and coordinate
with each other and expect generally to make this determination
jointly, as appropriate, in the case of rules that have been issued on
an interagency basis. Similarly, as appropriate, the NCUA and the
Agencies will undertake any rulemaking to amend or repeal those rules
on an interagency basis. For rules issued by the NCUA, the Board will
review the comments received and independently determine whether
amendments to or repeal of its rules are appropriate.
IV. Request for Recommendations About Three Categories of Regulations:
Agency Programs; Capital; and Consumer Protection
The Board seeks public comment on regulations within the second
three categories--Agency Programs, Capital, and Consumer Protection--
that may impose outdated, unnecessary, or unduly burdensome regulatory
requirements on federally insured credit unions. The Board recognizes
that there are proposed rules concerning some of these categories open
as of the date of this document and will solicit comment on all rules
finalized by the agency before the publication of the last document in
the series. In addition to comments on regulations in these categories
generally, the Board is requesting comments on certain specific
regulations described below within these categories issued since the
last decennial review. The NCUA's review efforts would benefit most by
comments that cite specific provisions or language and provide reasons
why such provisions should be changed. Suggested alternative provisions
or text, where appropriate, would also be helpful. If the
implementation of a comment would require modifying a statute that
underlies the regulation, the comment should, if possible, identify the
needed statutory change. The Board will consider comments submitted
anonymously.
Specific Issues for Commenters To Consider
While all comments related to any aspect of the review are welcome,
the Board reiterates the posture adopted during the previous decennial
reviews and specifically invites comment on the following issues as
they pertain to the Board's Agency Programs, Capital, and Consumer
Protection rules addressed in this document. The Board has included two
additional questions in the cumulative effects category since the
issuance of the first decennial review document. The Board will ask
these same questions for each subsequent document it issues in
connection with the decennial process and invites comments on these
additional questions for the categories in the first document.
Need and purpose of the regulations.
Question 1: Have there been changes in the financial
services industry, consumer behavior, or other circumstances that cause
any regulations in these categories to be outdated, unnecessary, or
unduly burdensome? If so, please identify the regulations, provide any
available quantitative analyses or data, and indicate how the
regulations should be amended.
Question 2: Do any of these regulations impose burdens not
required by their underlying statutes? If so, please identify the
regulations and indicate how they should be amended.
Overarching approaches or flexibilities.
Question 3: With respect to the regulations in these
categories, could the Board use a different regulatory approach to
lessen the burden imposed by the regulations and achieve statutory
intent?
Question 4: Do any of these rules impose unnecessarily
inflexible requirements? If so, please identify the regulations and
indicate how they should be amended.
Cumulative effects.
Question 5: Looking at the regulations in a category as a
whole, are there any requirements that are redundant, inconsistent, or
overlapping in such a way that taken together, impose an unnecessary
burden that could potentially be addressed? If so, please identify
those regulations, provide any available quantitative analyses or data,
and indicate how the regulations should be amended.
Question 6: Have the NCUA and the Agencies issued similar
regulations in the same area that should be considered together as
bodies of regulation, when assessing the cumulative effects on an
insured credit union? If so, please identify the regulations, why they
should be considered together, and any available analyses or data for
the Board's consideration.
Question 7: Could any regulations or category of
regulation be streamlined or simplified to reduce unduly burdensome or
duplicative regulatory requirements?
Effect on competition.
[[Page 30599]]
Question 8: Do any of the regulations in these categories
create competitive disadvantages for one part of the financial services
industry compared to another or for one type of federally insured
credit union compared to another? If so, please identify the
regulations and indicate how they should be amended.
Reporting, recordkeeping, and disclosure requirements.
Question 9: Do any of the regulations in these categories
impose outdated, unnecessary, or unduly burdensome reporting,
recordkeeping, or disclosure requirements on federally insured credit
unions?
Question 10: Could a federally insured credit union
fulfill any of these requirements through new technologies (if they are
not already permitted to do so) and experience a burden reduction? If
so, please identify the regulations and indicate how they should be
amended.
Unique characteristics of a type of institution.
Question 11: Do any of the regulations in these categories
impose requirements that are unwarranted by the unique characteristics
of a particular type of federally insured credit union? If so, please
identify the regulations and indicate how they should be amended.
Clarity.
Question 12: Are the regulations in these categories clear
and easy to understand?
Question 13: Are there specific regulations for which
clarification is needed? If so, please identify the regulations and
indicate how they should be amended.
Impact to minority depository institutions and small
insured institutions. The Board has a particular interest in minimizing
burden on minority depository institutions and small insured credit
unions (those with less than $100 million in assets).
Question 14: Are there regulations in these categories
that impose outdated, unnecessary, or unduly burdensome requirements on
a substantial number of minority or small institutions?
Question 15: Has the Board issued regulations pursuant to
a common statute that, as applied by the NCUA and Agencies, create
redundancies or impose inconsistent requirements?
Question 16: Should any of these regulations be amended or
repealed to minimize this impact? If so, please identify the
regulations and indicate how they should be amended.
Question 17: Have the effects of any regulations in these
categories changed over time that now have a significant economic
impact on a substantial number of minority or small institutions? If
so, please identify the regulations and indicate how they should be
amended. The Board seeks information on (1) the continued need for the
rule; (2) the complexity of the rule; (3) the extent to which the rule
overlaps, duplicates, or conflicts with other Federal rules, and, to
the extent feasible, with State and local governmental rules; and (4)
the degree to which technology, economic conditions, or other factors
have changed in the area affected by the rule.
Scope of rules.
Question 18: Is the scope of each rule in these categories
consistent with the intent of the underlying statute(s)?
Question 19: Could the Board amend the scope of a rule to
clarify its applicability or reduce the burden, while remaining
faithful to statutory intent? If so, please identify the regulations
and indicate how they should be amended.
Impact to credit union member-owners.
Question 20: Are there regulations in these categories
that unduly or negatively impact credit union member-owners? If so,
please identify the regulations and indicate how they should be
amended.
Specific NCUA Regulations Issued Since the Last Decennial Review
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\16\ For the last decennial review, the Board's second document
requesting public comment on the NCUA's regulations was issued on
December 19, 2014, with a comment period that ended on March 19,
2015. See 79 FR 75763 (December 19, 2014). Accordingly, the Board is
currently requesting public comment on the Board's regulations
issued since March 2015, that pertain to Agency Programs, Capital,
and Consumer Protection.
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Community Development Revolving Loan Fund. In November
2016, the Board finalized a rule to make several amendments to the
NCUA's regulation governing the Community Development Revolving Loan
Fund (CDRLF) to make the rule more succinct and improve its
transparency, organization, and ease of use by credit unions. The
amendments were largely technical in nature or clarified the NCUA's
practices with respect to disbursing money from the CDRLF. For example,
the final rule removed unnecessary and duplicative definitions; removed
an aggregate loan limit to allow the NCUA to grant CDRLF loans in
excess of $300,000 and to meet changing loan demands; clarified the
procedures a credit union must follow to apply for a loan or grant from
the CDRLF; and clarified that appeals rights applies to both loans and
technical assistance grants.
Minority Depository Institution Preservation Program.
In 2010, Congress enacted Section 367 of the Dodd Frank
Wall Street Reform and Consumer Protection Act, which required the
NCUA, FRB, and OCC to comply with the goals of the Financial
Institutions Reform, Recovery and Enforcement Act of 1998 to preserve
and promote minority depository institutions. In June 2015, the Board
issued a final Interpretive Ruling and Policy Statement (IRPS 13-1) to
establish a Minority Depository Institution Preservation Program for
federally insured credit unions. Recognizing the important role of
minority depository institutions in minority communities, the Board
issued the final IRPS to implement a program of proactive steps and
outreach efforts to preserve minority ownership in the credit union
industry. IRPS 13-1 prescribes the program's eligibility criteria and
its features.
The Board issued revisions to IRPS 13-1 in February 2024.
The revisions included updating the administering office to reflect the
agency's current structure; clarifying that the meaning of ``community
it services,'' means a credit union's field of membership; adding a
reference to agency guidance to examiners regarding supervision of
minority depository institutions; clarifying the process for reviewing
a minority depository institution's designation status; and adding new
subsection headings and expanding the discussion of agency actions and
policies in the areas of minority depository institution engagement,
technical assistance, examinations of minority depository institutions,
grants and loans, and training.
Risk-Based Capital.
In October 2015, the Board amended the NCUA's regulations
regarding prompt corrective action (PCA) to require that credit unions
taking certain risks hold capital commensurate with those risks. The
risk-based capital provisions apply only to federally insured, natural-
person credit unions with assets over $100 million. The overarching
intent was to reduce the likelihood of a relatively small number of
high-risk outliers exhausting their capital and causing systemic
losses--which, by law, all federally insured credit unions would have
to pay through the National Credit Union Share Insurance Fund (NCUSIF).
The final rule restructured NCUA's PCA regulations and made various
revisions, including amending the agency's existing risk-based net
worth requirement by replacing it with a new risk-based capital ratio
for federally
[[Page 30600]]
insured, natural-person credit unions. The risk-based capital
requirement set forth in the rule was more consistent with NCUA's risk-
based capital measure for corporate credit unions and, as the law
requires, more comparable to the regulatory risk-based capital measures
used by the FDIC, FRB, and OCC. The final rule also eliminated several
provisions in NCUA's PCA regulations, including provisions relating to
the regular reserve account, risk-mitigation credits, and alternative
risk weights.
In November 2018, the Board issued a supplemental final
rule to delay the effective date of the NCUA's October 29, 2015, final
rule regarding risk-based capital for one year, moving the effective
date from January 1, 2019, to January 1, 2020. The final rule also
amended the definition of a ``complex'' credit union adopted in the
2015 final rule for risk-based capital purposes by increasing the
threshold level for coverage from $100 million to $500 million. These
changes provided covered credit unions and the NCUA with additional
time to prepare for the rule's implementation and exempted an
additional 1,026 credit unions from the risk-based capital requirements
of the 2015 final rule without subjecting the NCUSIF to undue risk.
The Board further amended the NCUA's previously revised
PCA regulations in December 2019. The final rule delayed the effective
date of both the NCUA's October 29, 2015, final rule regarding risk-
based capital and the NCUA's November 6, 2018, supplemental final rule
regarding risk-based capital, moving the effective date from January 1,
2020, to January 1, 2022.
Transition to the Current Expected Credit Loss
Methodology. A final rule issued in June 2021 facilitated the
transition of federally insured credit unions to the current expected
credit loss (CECL) methodology required under Generally Accepted
Accounting Principles (GAAP). The final rule provided that, for
purposes of determining a federally insured credit union's net worth
classification under the PCA regulations, the Board would phase-in the
day-one adverse effects on regulatory capital that may result from
adoption of CECL. Consistent with regulations issued by the other
federal banking agencies, the final rule temporarily mitigated the
adverse PCA consequences of the day-one capital adjustments, while
requiring that federally insured credit unions account for CECL for
other purposes, such as Call Reports. The final rule also provided that
federally insured credit unions with less than $10 million in assets
were no longer required to determine their charges for loan losses in
accordance with GAAP. These credit unions could instead use any
reasonable reserve methodology (incurred loss), provided that it
adequately covered known and probable loan losses.
Capital Planning and Stress Testing.
In July 2015, the Board issued amendments to the
regulation governing credit union capital planning and stress testing.
Capital planning requires covered credit unions to assess their
financial condition and risks over the planning horizon under both
expected and unfavorable conditions. Annual supervisory stress testing
allows NCUA to obtain an independent test of these credit unions under
stress scenarios. By setting a regulatory minimum capital ratio under
stress, the regulation requires covered credit unions to take
corrective action before they become undercapitalized to an extent that
may cause a risk of loss to the NCUSIF. The rule provides several
timeframes for the formulation and submission of capital plans and for
the stress testing of covered credit unions. The amendments adjusted
the timing of certain events in the capital planning and stress testing
cycles. The revisions to the regulation became effective January 1,
2016.
In April 2018, the Board issued a final rule to amend the
NCUA's regulations regarding capital planning and stress testing for
federally insured credit unions with $10 billion or more in assets. The
final rule reduced regulatory burden by removing some of the capital
planning and stress testing requirements applicable to covered credit
unions. The final rule also made the NCUA's requirements more efficient
by, among other things, authorizing covered credit unions to conduct
their own stress tests in accordance with the NCUA's requirements and
permitting covered credit unions to incorporate the stress test results
into their capital plans.
Capital Adequacy: The Complex Credit Union Leverage Ratio;
Risk-Based Capital. In December 2021, the Board finalized a rule to
provide a simplified measure of capital adequacy for federally insured,
natural-person credit unions classified as complex (those with total
assets greater than $500 million). Under the final rule, a complex
credit union that maintains a minimum net worth ratio, and that meets
other qualifying criteria, is eligible to opt into the complex credit
union leverage ratio (CCULR) framework if they have a minimum net worth
ratio of nine percent. A complex credit union that opts into the CCULR
framework need not calculate a risk-based capital ratio under the
NCUA's October 29, 2015 risk-based capital final rule, as amended on
October 18, 2018. A qualifying complex credit union that opts into the
CCULR framework and maintains the minimum net worth ratio is considered
well capitalized. The final rule also made several amendments to update
the NCUA's October 29, 2015 risk-based capital final rule, including
addressing asset securitizations issued by credit unions, clarifying
the treatment of off-balance sheet exposures, deducting certain
mortgage servicing assets from a complex credit union's risk-based
capital numerator, revising the treatment of goodwill, and amending
other asset risk weights. The final rule was effective January 1, 2022.
Loans in Areas Having Special Flood Hazards.
In June 2015, the NCUA, OCC, FRB, FDIC, and the Farm
Credit Administration (FCA), amended their regulations regarding loans
in areas having special flood hazards to implement certain provisions
of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA),
which amended some of the changes to the Flood Disaster Protection Act
of 1973 mandated by the Biggert Waters Flood Insurance Reform Act of
2012 (Biggert-Waters Act). Specifically, the final rule required the
escrow of flood insurance payments on residential improved real estate
securing a loan, consistent with the changes set forth in HFIAA. The
final rule also incorporated an exemption in HFIAA for certain detached
structures from the mandatory flood insurance purchase requirement.
Furthermore, the final rule implemented the provisions of the Biggert-
Waters Act related to the force placement of flood insurance. Finally,
the final rule integrated the OCC's flood insurance regulations for
national banks and Federal savings associations.
In February 2019, the agencies further amended their
regulations regarding loans in areas having special flood hazards to
implement the private flood insurance provisions of the Biggert-Waters
Act. Specifically, the final rule required regulated lending
institutions to accept policies meeting the statutory definition of
``private flood insurance'' in the Biggert-Waters Act; and permitted
regulated lending institutions to exercise their discretion to accept
flood insurance policies issued by private insurers and plans providing
flood coverage issued by mutual aid societies that do not meet the
statutory definition of ``private flood insurance,'' subject to certain
restrictions.
In May 2022, the agencies issued guidance reorganizing,
revising, and
[[Page 30601]]
expanding the Interagency Questions and Answers Regarding Flood
Insurance. The revised guidance was intended to assist lenders in
meeting their responsibilities under Federal flood insurance law and
increase public understanding of the agencies' respective flood
insurance regulations. Significant topics addressed by the revisions
included guidance related to major amendments to the flood insurance
laws regarding the escrow of flood insurance premiums, the detached
structure exemption, force placement procedures, and the acceptance of
flood insurance policies issued by private insurers. With this
issuance, the agencies consolidated the Questions and Answers proposed
by the agencies in July 2020 and the Questions and Answers proposed by
the agencies in March 2021 into one set of Interagency Questions and
Answers Regarding Flood Insurance.
Share Insurance.
The Board amended the NCUA's share insurance regulations
in December 2015 to implement statutory amendments to the Federal
Credit Union Act resulting from the enactment of the Credit Union Share
Insurance Fund Parity Act. The statutory amendments required the NCUA
provide enhanced, pass-through share insurance for interest on lawyers
trust accounts (IOLTA) and other similar escrow accounts. As its name
implies, the Insurance Parity Act ensured that NCUA and the FDIC insure
IOLTAs and other similar escrow accounts in an equivalent manner.
In February 2018, the Board adopted amendments to the
NCUA's share insurance rule to provide stakeholders with greater
transparency regarding the calculation of each eligible financial
institution's pro rata share of a declared equity distribution from the
NCUSIF. The Board also adopted a temporary provision to govern all
NCUSIF equity distributions related to the Corporate System Resolution
Program (CSRP), a special purpose program established by the Board to
stabilize the corporate credit union system following the 2007-2009
financial crisis. The Board also made technical and conforming
amendments to other aspects of the share insurance rule to account for
these changes.
The Board issued a final rule in February 2021 to amend
the NCUA's share insurance regulation governing the requirements for a
share account to be separately insured as a joint account by the
NCUSIF. Specifically, the final rule provided an alternative method to
satisfy the membership card or account signature card requirement
necessary for insurance coverage (signature card requirement). Under
the final rule, even if an insured credit union cannot produce
membership cards or account signature cards signed by the joint
accountholders, the signature card requirement can be satisfied by
information contained in the account records of the insured credit
union establishing co-ownership of the share account. For example, the
signature card requirement can be satisfied by the credit union having
issued a mechanism for accessing the account, such as a debit card, to
each co-owner or evidence of usage of the joint share account by each
co-owner.
In September 2024, the Board finalized a rule to simplify
the share insurance regulations by establishing a ``trust accounts''
category that would provide for coverage of funds of both revocable
trusts and irrevocable trusts deposited at federally insured credit
unions; provide consistent share insurance treatment for all mortgage
servicing account balances held to satisfy principal and interest
obligations to a lender; and provide more flexibility for the NCUA to
consider various records in determining share insurance coverage in
liquidations.
Accuracy of Advertising and Notice of Insured Status. The
Board revised provisions of the NCUA's advertising rule in April 2018
to provide regulatory relief to federally insured credit unions.
Previously, the advertising rule required federally insured credit
unions to use the NCUA's official advertisement statement when
advertising, and it permitted three versions of that statement. The
revised rule allowed credit unions the option of using a fourth
version: ``Insured by NCUA.'' To provide additional regulatory relief,
the Board also expanded an existing exemption from the advertising
statement requirement regarding radio and television advertisements and
eliminated the requirement to include the official advertising
statement on statements of condition required to be published by
law.\17\
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\17\ In addition to these final rules, the Board issued several
temporary final rules to grant temporary regulatory relief in
response to COVID-19. Because these were temporary final rules that
have now expired, the Board is not seeking public comment on these
final rules in this document.
Central Liquidity Facility. The Board issued an interim
final rule in April 2020 to provide credit unions with greater
access to liquidity to help ensure they remained operational
throughout the pandemic. This rule made it easier and more
attractive for credit unions to join the NCUA's Central Liquidity
Facility (CLF). In addition, the rule made several amendments to
conform to the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act). In March 2021, in response to the enactment of the
Consolidated Appropriations Act, 2021, (CAA) the Board issued an
interim final rule to cohere the NCUA's regulations to the statutory
changes made by the CAA. Specifically, the CAA extended several
enhancements to the CLF, which were first enacted by the CARES Act.
The rule amended the NCUA's CLF regulation to reflect the
extensions. The rule also extended the withdrawal from CLF
membership provisions that the Board included in the April 2020
interim final rule that made the changes related to the CARES Act.
Regulatory Capital Rule: Paycheck Protection Program
Lending Facility and Paycheck Protection Program Loans. The Board
issued an interim final rule in April 2020 to make a conforming
amendment to the NCUA's capital adequacy regulation following the
enactment of the CARES Act, which authorized the Small Business
Administration to create a loan guarantee program, the Paycheck
Protection Program (PPP), to help certain businesses affected by the
COVID-19 pandemic. The CARES Act required that PPP loans receive a
zero percent risk weighting under the NCUA's risk-based capital
requirements. To reflect the statutory requirement, the interim
final rule amended the NCUA's capital adequacy regulation to provide
that covered PPP loans receive a zero percent risk weight. The
interim final rule also provided that if the covered loan was
pledged as collateral for a nonrecourse loan that was provided as
part of the FRB's PPP Lending Facility, the covered loan could be
excluded from a credit union's calculation of total assets for the
purposes of calculating its net worth ratio. The interim final rule
also made a conforming amendment to the definition of commercial
loan in the NCUA's member business loans and commercial lending
rule.
Temporary Regulatory Relief in Response to COVID-19--
Prompt Corrective Action. In May 2020, the NCUA temporarily modified
certain regulatory requirements to help ensure that federally
insured credit unions remained operational and liquid during the
COVID-19 pandemic. Specifically, the Board issued two temporary
changes to the NCUA's PCA regulations. The first amended the PCA
regulations to temporarily enable the Board to issue an order
applicable to all federally insured credit unions to waive the
earnings retention requirement for any credit union that was
classified as adequately capitalized. The second modified the
regulations with respect to the specific documentation required for
net worth restoration plans for federally insured credit unions that
become undercapitalized. These temporary modifications were in place
until December 31, 2020. In April 2021, the Board extended the
temporary modifications until March 31, 2022, and in February 2022,
the Board again extended the two temporary changes to the PCA
regulations until March 31, 2023.
Asset Thresholds. In March 2021, the Board issued a
temporary interim final rule to permit federally insured credit
unions to use asset data as of March 31, 2020, to determine the
applicability of certain regulatory asset thresholds during calendar
years 2021 and 2022. Specifically, the interim final rule allowed a
federally insured credit union to use March 31, 2020, financial data
when determining whether the institution was subject to capital
planning and stress testing requirements under the NCUA's
regulations and supervision from the Office of National Examinations
and Supervision.
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The Board has not identified any rules pertaining to Agency
Programs, Capital, and Consumer Protection that would have a
significant impact on a substantial number of small entities. However,
the Board will consider any public comments submitted through the
decennial review process and agency experience to identify regulations
it can
[[Page 30602]]
update that have a significant impact on a substantial number of small
federally insured credit unions.\18\
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\18\ The review will be consistent with the requirements of a
Regulatory Flexibility Act, section 610 review. The Board will
determine whether particular rules should be continued without
change, amended, or rescinded, consistent with the objectives of
applicable statutes, to minimize any significant economic impact of
the rules on a substantial number of small federally insured credit
unions.
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V. The Board's Review of Regulations Under the Regulatory Flexibility
Act (RFA)
The Board will use the decennial review to satisfy any potential
obligations under section 610 of the RFA.\19\ There are no rules within
the scope of the review that had a significant economic impact on a
substantial number of small entities. Regardless, consistent with the
spirit of section 610 of the RFA, for each rule the Board has issued in
the last 10 years, the Board invites comment on (1) the continued need
for the rule; (2) the complexity of the rule; (3) the extent to which
the rule overlaps, duplicates or conflicts with other Federal rules,
and, to the extent feasible, with State and local governmental rules;
and (4) the length of time since the rule has been evaluated or the
degree to which technology, economic conditions, or other factors have
changed in the area affected by the rule. The purpose of the review
will be to determine whether such rules should be continued without
change, or should be amended or rescinded, consistent with the stated
objectives of applicable statutes, to minimize any significant economic
impact of the rules upon a substantial number of such small entities.
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\19\ Section 610 of the Regulatory Flexibility Act, 5 U.S.C.
610, imposes a continuing obligation on agencies to review
regulations that may have a significant economic impact upon a
substantial number of small entities, within 10 years after a final
rulemaking is published. The factors agencies consider in evaluating
a rule under 5 U.S.C. 610 are (1) the continued need for the rule;
(2) the nature of complaints or comments received concerning the
rule from the public; (3) the complexity of the rule; (4) the extent
to which the rule overlaps, duplicates or conflicts with other
Federal rules, and, to the extent feasible, with State and local
governmental rules; and (5) the length of time since the rule has
been evaluated or the degree to which technology, economic
conditions, or other factors have changed in the area affected by
the rule.
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Category Subject Regulation cite
----------------------------------------------------------------------------------------------------------------
A. Regulations About Which Comment Is Currently Requested
----------------------------------------------------------------------------------------------------------------
3. Agency Programs............................ Community Development 12 CFR 705.
Revolving Loan Fund
Access for Credit Unions.
National Credit Union 12 CFR 725.
Administration Central
Liquidity Facility.
Designation of low-income 12 CFR 701.34.
status; receipt of
secondary capital
accounts by low-income
designated credit unions.
4. Capital.................................... Capital Adequacy.......... 12 CFR 702.
Adequacy of reserves...... 12 CFR 741.3(a).
5. Consumer Protection........................ Nondiscrimination 12 CFR 701.31.
requirements [Fair
Housing].
Truth in Savings.......... 12 CFR 707.
Loans in Areas Having 12 CFR 760.
Special Flood Hazards.
Fair Credit Reporting; 12 CFR 717, Subpart I.
Duties of Users Consumer
Report Regarding Address
Discrepancies and Records
Disposal.
Fair Credit Reporting; 12 CFR 717, Subpart J.
Identity Theft Red Flags.
Share Insurance........... 12 CFR 745.
Accuracy of Advertising 12 CFR 740.
and Notice of Insured
Status.
Disclosure of share 12 CFR 741.10.
insurance.
Notice of termination of 12 CFR 741.5.
excess insurance coverage.
Uninsured membership 12 CFR 741.9.
shares.
Member inspection of 12 CFR 701.3.
credit union books,
records, and minutes.
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B. Categories and Regulations About Which the NCUA Will Seek Comment Later
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6. Corporate Credit Unions.................... Corporate Credit Unions... 12 CFR 704.
7. Directors, Officers, and Employees......... Loans and lines of credit 12 CFR 701.21(d).
to officials.
Reimbursement, insurance, 12 CFR 701.33.
and indemnification of
officials and employees.
Benefits for employees of 12 CFR 701.19.
Federal credit unions.
Management Official 12 CFR 711.
Interlocks.
Fidelity Bond and 12 CFR 713.
Insurance Coverage for
Federally Insured Credit
Unions.
General authorities and 12 CFR 701.4.
duties of Federal credit
union directors.
Golden Parachute and 12 CFR 750.
Indemnification Payments.
8. Anti-Money Laundering and Bank Secrecy Act. Filing of reports [of 12 CFR 748.1.
known or suspected crimes 12 CFR 748.2.
or suspicious
transactions].
Procedures for monitoring
Bank Secrecy Act
compliance.
9. Rules of Procedure......................... Involuntary Liquidation of 12 CFR 709.
Federal Credit Unions and
Adjudication of Creditor
Claims Involving
Federally Insured Credit
Unions in Liquidation.
Voluntary Liquidation..... 12 CFR 710.
Uniform Rules of Practice 12 CFR 747, Subpart A.
and Procedure.
Local Rules of Practice 12 CFR 747, Subpart B.
and Procedure.
Procedures for Appealing 12 CFR 746, Subpart A.
Material Supervisory
Determinations.
Appeals Procedures That Do 12 CFR 746, Subpart B.
Not by Law Require a
Board Hearing.
10. Safety and Soundness...................... Loans to members and lines 12 CFR 701.21.
of credit to members.
Investments............... 12 CFR 703.
Supervisory Committee 12 CFR 715.
Audits and Verifications.
Security program.......... 12 CFR 748.0.
Guidelines for 12 CFR 748, Appendix A; 12 CFR 748,
Safeguarding Member Appendix B.
Information; Responding
to Unauthorized Access to
Member Information and
Member Notice.
Records Preservation 12 CFR 749.
Program and Appendices--
Record Retention
Guidelines; Catastrophic
Act Preparedness
Guidelines.
[[Page 30603]]
Appraisals................ 12 CFR 722.
Examination............... 12 CFR 741.1.
Liquidity and contingency 12 CFR 741.12.
funding plans.
Regulations Codified 12 CFR 741, Subpart B.
Elsewhere in NCUA's
Regulations as Applying
to Federal Credit Unions
That Also Apply to
Federally Insured State-
Chartered Credit Unions.
Guidance for an Interest 12 CFR 741, Appendix A.
Rate Risk Policy and an
Effective Program.
Loan Workouts, Nonaccrual 12 CFR 741, Appendix B.
Policy, and Regulatory
Reporting of Troubled
Debt Restructured Loans.
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VI. Regulatory Procedures
Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 (5
U.S.C. 553(b)(4)) (Act) requires that a notice of proposed rulemaking
include the internet address of a summary of not more than 100 words in
length of a proposed rule, in plain language, that shall be posted on
the internet website under section 206(d) of the E-Government Act of
2002 (44 U.S.C. 3501) (commonly known as regulations.gov). The Act,
under its terms, applies to notices of proposed rulemaking and does not
expressly include other types of documents that the Board publishes
voluntarily for public comment, such as documents and interim-final
rules that request comment despite invoking ``good cause'' to forgo
such notice and public procedure. The Board, however, has elected to
address the Act's requirement in these types of documents in the
interests of administrative consistency and transparency.
In summary, as contemplated by the Economic Growth and Regulatory
Paperwork Reduction Act of 1996, the NCUA Board is reviewing its
regulations to identify rules that are outdated, unnecessary, or unduly
burdensome on federally insured credit unions. The NCUA divided its
regulations into 10 categories outlined in the included chart. Over
approximately the next 2 years, the NCUA is publishing four Federal
Register documents requesting comment on multiple categories. This
second Federal Register document requests comment on regulations
concerning these categories: ``Agency Programs,'' ``Capital,'' and
``Consumer Protection.'' The NCUA will address the remaining five
categories in the next two documents.
The document and the summary can be found at https://www.regulations.gov.
By the National Credit Union Administration Board.
Melane Conyers-Ausbrooks,
Secretary of the Board.
[FR Doc. 2025-12807 Filed 7-9-25; 8:45 am]
BILLING CODE 7535-01-P