Summary of October NCUA Board Meeting

The National Credit Union Administration (“NCUA”) held its regularly scheduled October Board meeting. Highlights of the meeting follow.

The NCUA Board received a briefing on cybersecurity and adopted two final rules. In addition, NCUA Chairman Todd Harper mentioned his support of the recent Letter to Credit Unions regarding Treasury’s Emergency Capital Investment Program (“ECIP”). The letter describes that eligible low-income designated credit unions (“LICUs”) may accept 30-year subordinated debt investments from ECIP. Additionally, a LICU may treat this ECIP funding as secondary capital in accordance with NCUA’s regulations, provided that any LICU receiving secondary capital treatment has an NCUA-approved secondary capital plan by December 31, 2021.

Final Rule – Credit Union Service Organizations (Part 712)

In a 2-1 vote, with Chairman Harper opposing, the Board adopted a final rule amending NCUA’s regulation regarding CUSOs. The final rule, adopted as proposed:

- Expands the list of permissible activities and services for CUSOs to include originating any type of loan that a FCU may originate; and

- Grants the Board additional flexibility to approve permissible activities and services outside of notice-and-comment rulemaking.

At last month’s Board meeting, Board Member Rodney Hood and Vice Chairman Kyle Hauptman voted in favor of a Board action that added three pending rulemakings to the meeting agendas for October (CUSO proposal), November (FOM Shared Facility Requirements proposal), and December (Mortgage Servicing Rights proposal). Thus, Chairman Harper’s vote against the CUSO rule was expected. The Chairman reiterated his concerns with this rulemaking, stating that the rule will increase a regulatory blind spot and will ultimately lead to losses to the Share Insurance Fund.

The final CUSO rule adopts the proposed rule issued at the January 2021 Board meeting without any substantive changes, and is effective 30 days after publication in the Federal Register.

Final Rule – CAMELS Rating System (Parts 700, 701, 703, 704, 713)

The NCUA adopted a final rule that adds the “S” (Sensitivity to Market Risk) component to the existing CAMEL rating system and redefines the “L” (Liquidity Risk) component, thus updating the rating system from CAMEL to CAMELS. NCUA examiners will begin assigning the “S” component rating for examinations and supervision contacts starting on or after April 1, 2022.

In response to a question from Chairman Harper, staff noted that of the 21 states that do not use the “S” component for state-chartered credit unions, the adoption of CAMELS will have no implications for these credit unions.

Further, Chairman Harper stated his hope that in the future the agency will pursue a similar action for the management part of the rating system when looking at the largest credit unions.

Board Briefing – Cybersecurity

The NCUA Board received a comprehensive briefing on the state of cybersecurity as it applies to credit unions and the NCUA. The briefing provided updates on:

  • - Cybersecurity Threats;
  • - Information Security Examination & Cybersecurity Assessment Program;
  • - Guidance and Risk Alerts;
  • - Cybersecurity Resources Webpage; and
  • - Industry Outreach and Partner Engagement.

Staff mentioned that NCUA is currently revamping, and later this month will redeploy, its cybersecurity webpage. A summary of the NCUA’s industry outreach and partner engagement efforts, along with the resources available on the NCUA’s Cybersecurity Resources page at ncua.gov/cybersecurity, were also presented.

The next NCUA open Board meeting is presently scheduled for November 18, 2021. Board meeting recorded videos may be found at NCUA Board Meetings, Agendas, and Results | National Credit Union Administration.

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