‘Transparency’ Key to Upcoming CU-Bank Purchase Reg: NCUA’s Hood

By Melissa Angell for the Credit Union Journal

National Credit Union Administration Chairman Rodney Hood on Tuesday offered further insights into an upcoming proposal from the agency surrounding CU-bank purchases.

“There seems to be this perception that credit unions are arbitrarily and capriciously buying banks, and that’s not the case,” Hood said in an interview with CU Journal.

“The main thing that I want to do with the guidance is let the broader industry know that there is transparency – all of the boards at the banks and credit union have to approve the deal, so if anything it’s more of a refresh or an update,” he said.

Hood tweeted that CU-bank deals will need to be approved by NCUA in the same manner as the FDIC approves bank deals. But he added Tuesday that the agency will also be looking closely at issues of common bond.

“Those banks must still have the credit union field of membership in consideration, he said. “That means that if that field of membership is not a part of that credit union’s mission, then they can’t acquire that bank.”

The rule on bank purchases is expected sometime before year-end. While that may gain the most headlines, Hood also outlined a regulatory docket for NCUA’s four remaining board meetings of 2019 focused on improving access to capital and delivering a payday alternative loans product for credit unions.

As reported, this summer when the regulator delayed implementation of its controversial risk-based capital rule until 2022, Hood pledged to use the extra time to revamp credit union capital rules, including a proposal expanding the use of subordinated debt. Unlike banks, CUs’ only access to capital is through retained earnings, but Hood said Tuesday the board is looking to enhance that.

“Some of the methods that I’m considering is having other investors — whether it be other credit unions or other nonprofits — who want to provide subordinated debt to credit unions that can be counted toward their regulatory capital,” he said.