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NAFCU to NCUA: Avoid undermining intended flexibility and autonomy
NAFCU Regulatory Affairs Counsel Dale Baker wrote to the NCUA to offer recommendations regarding the agency’s proposed financial innovation rule. The rule would amend the agency’s loan participation and eligible obligation regulations by offering flexibility for federally-insured credit unions to engage in indirect lending arrangements with fintechs and other third parties.
In the letter, Baker noted that NAFCU requests that the agency not “undermine the flexibility and autonomy it intends to provide credit unions by prescriptively defining or otherwise limiting key aspects of loan participation and eligible obligation activities.”
Additionally, NAFCU provided the NCUA other recommendations, including:
· not creating a separate indirect lending rule and follow a principles-based approach;
· maintaining intended flexibility by not defining some broad terms within the proposal’s language; and
· not requiring that credit unions engaged in indirect lending be actively involved or consulted at the time a facilitating partner extends credit to borrowers on the credit union’s behalf or limit the number of permissible facilitating partners.
Baker’s letter also requests the agency permanently adopt section 701.22(e)’s higher loan participation purchasing threshold, which expired after being issued and extended twice in response to COVID-19. The letter reiterates NAFCU’s request to eliminate the 15 percent loan participation limit. In addition, Baker encouraged the NCUA to ensure that any safety and soundness standards the agency elects to codify are flexible and allow credit unions to maintain a level of autonomy.
NAFCU will continue to engage the NCUA on this proposed rule to ensure that credit unions are able to maintain the flexibility and autonomy needed to serve their 135 million members.