NCUA Unveils Impressive List of Regulatory Reforms

It seems like every few months now, an agency is rolling out another list of regulatory reforms so you have to forgive yours truly for being more than a little skeptical when I saw the headline yesterday afternoon announcing that NCUA is seeking comments on a “sweeping regulatory reform plan.”

Perhaps it’s because I overslept this morning and feel particularly refreshed but I’m impressed by NCUA’s list of recommendations, some of which we have already seen and some of which make the type of subtle changes that can make everyone’s life a little easier.

Yesterday’s announcement and request for comment marks the public unveiling of work done by an internal NCUA task force which has been meeting since March. The task force was created in response to the President’s call for all agencies to: search out and replace, repeal or modify regulations that, among other things, eliminate jobs or inhibit job creation; are outdated or ineffective; impose costs that exceed benefits or “create a serious inconsistency” with other regulatory initiatives.

One of the things that I am most pleasantly surprised by is the emphasis NCUA is placing on addressing existing regulations related to loans and loan participation. For example, it wants to remove portfolio limits and waiver requirements for third-party servicing of indirect vehicle loans. And it also wants to combine most of the existing borrowing limits into one specific section of the regulations.

Another aspect of the proposals that intrigues me is how NCUA is continuing to push for greater flexibility in authorizing community credit union expansions, notwithstanding an ongoing lawsuit by the Banker’s Association challenging the regulations that NCUA has already approved.

Finally, NCUA also wants to consider extending the January 1, 2019 implementation date for risk based capital requirements. More importantly it is open to narrowing the applicability of the RBC requirements.