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NAFCU urges NCUA to make temporary aggregate cap threshold permanent
In a letter to the NCUA regarding its interim final rule (IFR) raising the cap on the amount of loan participations credit unions can purchase from a single loan originator, NAFCU President and CEO Dan Berger urged the NCUA to "initiate a rulemaking to remove the aggregate cap altogether, or in the alternative, make the temporary threshold permanent upon its expiration at the end of the year.”
The NCUA’s IFR - published in April 2020 - temporarily raised the maximum aggregate amount of loan participations to be greater of $5 million or 200 percent of the credit union’s net worth. The NCUA extended this temporary flexibility to expire on Dec. 31, then limiting credit unions to a maximum agreement amount of loan participations to the greater of $5 million or 100 percent of the credit union’s net worth.
“To remain compliant, the credit union must cease purchases of loan participations from the originating lender or seek a waiver from the NCUA,” wrote Berger. “NAFCU members have utilized the temporary relief afforded by the IFR and the NCUA should, at a minimum, consider increasing this threshold.”
Berger suggested the NCUA adopt the suggestion from a Task Force Report to eliminate the aggregate limit in its entirety. “The Task Force Report suggests removal of the aggregate cap of $5 million or 100 percent of the credit union’s net worth and replacing the prescriptive aggregate cap with a limit established by each credit union’s individual policy,” he wrote. “NAFCU agrees with this suggested action as it effectively removes the need for credit unions to seek a waiver, which credit unions have described as almost impossible to obtain from the NCUA.
“Removing the aggregate loan participation cap from a single originating lender will greatly assist credit unions during this time and in continuing to grow in the future,” concluded Berger.
All three members of the NCUA Board addressed attendees during NAFCU's Congressional Caucus earlier this week; read recaps of the remarks from NCUA Chairman Harper, Board Member Rodney Hood, and Vice Chairman Kyle Hauptman.