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NCUA set to finalize financial innovation rule
The NCUA Board meets next week and is set to issue a final rule related to financial innovation. The agency’s proposal 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.
Commenting on the proposal, NAFCU urged the agency to 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.”
The association also offered 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;
- 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; and
- permanently adopting section 701.22(e)’s higher loan participation purchasing threshold, which expired after being issued and extended twice in response to COVID-19.
NAFCU will provide credit unions with an analysis of the final rule after the meeting.
The NCUA Board will also receive a quarterly briefing on the share insurance fund during Thursday’s meeting.