WASHINGTON — The National Credit Union Administration laid out a detailed and comprehensive regulatory reform plan on Wednesday, with proposals ranging from minor procedural changes to more ambitious goals, like a firmer assertion of federal preemption over state laws.
“The need for a forward-looking regulatory structure that offers meaningful relief without undermining safety and soundness is quite clear,” NCUA Board Chairman J. Mark McWatters said in a press release. “These recommendations serve as a roadmap for a thoughtful process to achieve that goal.”
The agency proposed dozens of specific changes to current rules, and suggested reviewing a number of other regulations. Those changes would be implemented in three waves over the next four years, with some already in progress, the NCUA said.
The first order of business would include examining ways for the NCUA to raise appraisal thresholds on its own and loosening some of the requirements in the NCUA’s advertising rule.
The NCUA also proposed eliminating the portfolio limits and waiver provisions for third-party servicing of indirect auto loans, as well as removing the limit on total loan participation purchased from a single originating lender.
In addition, the agency recommends taking steps to update the Federal Credit Union Bylaws, and extend the implementation date for the risk-based capital rule.
In the longer term, the NCUA recommended revisions into a number of other requirements, including specific issues like risk-based capital, investment restrictions and third-party due diligence, as well as much broader topics like federal preemption or anti-money-laundering.
The proposals are the product of a new regulatory reform task force created by the agency in March after President Trump signed an executive order directing all agencies to take steps towards easing regulatory burden.
Though the NCUA is an independent agency and not subject to the order, it decided to voluntarily comply. The reform package would replace the NCUA’s ongoing annual review of one-third of its regulations.
“We have made significant progress in the area of regulatory relief in the years following the financial crisis, and this proposal takes that effort to another level,” said Rick Metsger, a board member at the NCUA. “The task force scoured all the agency’s regulations, looking for ways to make improvements. I hope credit union stakeholders will take time to review this plan carefully and offer comments.”
