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NCUA issues rule on subordinated debt rulemaking, approves mid-session budget revisions
The NCUA Board Thursday unanimously approved a proposed rule related to subordinated debt, amending the definition of “grandfathered secondary capital” to include secondary capital issued to the U.S. Government or one of its subdivisions under an application approved before Jan. 1, 2022.
The proposal aims to benefit low-income credit unions (LICUs) participating in the Treasury Department's Emergency Capital Investment Program (ECIP) or other programs, provided that the funds are not received by Dec. 31, 2021. NAFCU is supportive of the NCUA providing clarity on the treatment of ECIP funds for LICUs with pending secondary capital applications.
In addition, the Board also unanimously approved the mid-session budget revisions to reprogram budgeted funds for additional cybersecurity and ethics counsel positions, as well as funds for employee relocations, and more. In August, NAFCU called on the NCUA to schedule its customary mid-session budget review and increase financial transparency.
The Board was also briefed on the National Credit Union Share Insurance Fund (NCUSIF) quarterly report. The SIF quarter ending June 30 reported the equity ratio is 1.23 percent and is projected to be 1.28 percent as of Dec. 31. Currently, a restoration plan is not statutorily required at this time given the actual or projected equity ratio is above 1.2 percent. NAFCU has continuously urged the NCUA against a premium assessment and has instead called for additional investment authorities. The association supports a strong NCUSIF and a NOL, which provides adequate protection to taxpayers and minimizes the potential for premium charges to credit unions.
The association will continue to work closely with the NCUA to ensure credit unions have the resources, guidance, and flexibility needed to effectively serve their members as recovery from the coronavirus pandemic ends and into the future.