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The NCUA Board next week is set to issue a final rule on corporate credit unions – first proposed at the board's February meeting – in addition to a proposed rule related to derivatives. The board will also issue a request for information (RFI) regarding its supervisory guidance and potential improvements in future communications.

Corporate credit unions

NAFCU is generally supportive of the board’s proposed rule to amend the agency’s corporate credit union rules. The rule as proposed in February would amend Part 704, and would make four notable changes:

1. permit a corporate credit union to make a noncontrolling, de minimis investment in a natural person CUSO without the CUSO being classified as a corporate CUSO;
2. expand the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union’s board;
3. remove the minimum experience and independence requirement for a corporate credit union’s enterprise risk management expert; and
4. clarify how corporate credit unions may invest in subordinated debt instruments.

NAFCU had explicitly called for the first two changes in a letter last year regarding the NCUA's regulatory review. The association submitted a letter in response to the board’s February proposal, offering support for the agency’s effort to provide greater flexibility and ease regulatory burden.

The association has previously shared its support of corporate credit unions and the role they play as providers of liquidity and has urged the agency to make amendments to its rules to allow more flexibility without impacting the safety and soundness of the corporate system.

NAFCU sent members a Regulatory Alert following the proposal to outline how it would affect credit unions and offer section-by-section analysis.

Derivatives

During the meeting, the board will also issue a proposed rule on derivatives. In 2014, the NCUA Board issued a final rule to allow federal credit unions the ability to apply to use derivatives in an effort to reduce interest rate risk.

In a Letter to Credit Unions shortly before the final rule went into effect, the board explained how the rule would require federal credit unions to apply for, and receive, NCUA approval before using the derivatives investment authority.

Board briefing

In addition, the board will be briefed on cybersecurity considerations credit union boards of directors should take into account amid the coronavirus pandemic. NAFCU closely monitors cybersecurity issues and is a leader in calling for national data security and privacy standards; additionally, October is National Cyber Security Awareness month.

The meeting is set to begin at 10 a.m. Eastern Thursday and is only available via webcast.

NAFCU will monitor next week's meeting and update credit unions via NAFCU Today. The board will next meet Nov. 19; view the 2020 meeting dates.