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The NCUA Board Thursday unanimously approved the publication of a proposed rule to allow the capitalization of interest in connection with loan workouts and modifications. NAFCU has consistently called on the NCUA to make this change and provide credit unions with much needed relief – during the pandemic and beyond – to help their members meet payment obligations on all types of member loans. It was the first association to do so in March.

"Americans are still experiencing severe financial hardships as a result of the coronavirus pandemic, and they need solutions that will help them manage the financially rocky months ahead," said NAFCU Director of Regulatory Affairs Ann Kossachev. "The NCUA Board's proposed rule allowing credit unions and their members to use capitalized interest during loan modifications and TDRs will provide members with a safe, sound solution with strong consumer protections.

"We thank the NCUA Board for working to provide relief to credit unions and their members, and we look forward to commenting on the proposal to ensure that it is not burdensome to implement."

NCUA Board Chair Rodney Hood and Member Todd Harper noted that this proposal will eliminate burdensome regulations and benefit consumers while still ensuring safety and soundness of the industry.

Comments on the proposal will be due 60 days after it is published in the Federal Register.

In addition to issuing the proposed rule, the board received several briefings:

• 2020 Budget: The NCUA Board approved a reprogramming of roughly $4.32 million from an estimated $18 million of unspent 2020 travel budgets for coronavirus-response activities, including evaluating lessons learned from virtual exams and central office renovations. The agency also reported about $300,000 in unspent funds intended for facilities-related expenses. Last week, the agency released its proposed 2021 and 2022 budgets, which reflect the surplus of travel funds and lower estimated travel budget for next year as the pandemic continues. It has a public budget briefing planned for Dec. 2; NAFCU will provide feedback on the proposed spending to ensure a strong, cost-effective budget.
• National Credit Union Share Insurance Fund (NCUSIF): During the September board meeting, the NCUA announced it would be sending SIF invoices to more than 2,000 credit unions based on their share growth. The agency yesterday reported that it has collected nearly all of the $1.5 billion worth of invoices. Assets held in the NCUSIF totaled $19.2 billion at the end of the third quarter; the equity ratio will next be updated at the end of the year. Should the ratio fall below 1.2 percent, the NCUA is statutorily obligated to establish a restoration plan and could potentially assess a premium charge to restore the NCUSIF. NAFCU has advised the NCUA to pursue measures that allow credit unions additional investments rather than assess a premium, and Hood in recent testimony said there is "no need" to assess a premium.
• State of Credit Union Diversity: Strengthening the industry's diversity, inclusion, and equity (DEI) efforts has been a priority for Hood since he became chairman. While he has encouraged credit unions to participate in the voluntary diversity self-assessment, those that completed the 2019 assessment represented about 2.3 percent of the industry, though the total number of credit unions that responded increased from 81 in 2018 to 118 in 2019. Hood clarified with staff that completing the assessment has no impact on credit unions' examination results. In addition to reviewing the results of the 2019 Diversity Self-Assessment, the board received an updated on the agency's new Advancing Communities through Credit, Education, Stability and Support (ACCESS) initiative.

The board's next meeting is scheduled for Dec. 17.