Trades Urge NCUA To Allow CUSOs To Expand

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ALEXANDRIA, Va.-NCUA should allow CUSOs to expand their reach, according to CUNA and NAFCU.

In separate comment letters to NCUA regarding its annual regulatory review, both trade groups urged the regulator to adjust a number of its rules governing CUSOs.

"CUSOs allow credit union members to obtain services that the credit union itself may not be able to offer for a myriad of reasons," NAFCU Senior Counsel and Director of Regulatory Affairs Carrie Hunt wrote. "It is important, accordingly, that NCUA regulations do not unnecessarily impede the ability for credit unions to work with their CUSOs so that their members' needs and demands are met."

On behalf of CUNA, SVP and Deputy General Counsel Mary Mitchell Dunn asked the regulator to "consider a broader list of permissible CUSO activities" and to encourage CUs to use services that would add value for members.

Hunt directly challenged NCUA on its 2008 decision to disallow CUSO loan origination, asking that the regulator at least consider allowing the organizations to engage in secured vehicle lending, as many CUs lack the experience to develop an indirect lending program.

"Credit unions that seek to expand their market share in this area necessarily must do so by joining one of the networks for indirect point of sale financing which are marketed to car dealerships. It could be financially impossible for any one credit union to operate one of these systems on its own," Hunt suggested.

In its comment letter, the National Association of State CU Supervisors (NASCUS) continued its push calling for NCUA to consolidate all of its insurance rules in Part 741, a move which VP-Regulatory Affairs and Government Relations Jenny Champagne argued would reduce regulatory burden on state-chartered CUs and make examiners' jobs easier. CUNA and NAFCU also chimed in on insurance matters, with Dunn requesting the regulator lowering the NCUSIF's normal operating level to 1.2% and Hunt suggesting assessments be calculated using average insurance shares in a particular year as opposed to a fixed date.

The trades also asked NCUA to fight harder for a legislative change to the MBL cap and to be more flexible with CUs engaged in business lending. NAFCU suggested that CUs be allowed to issue loans at a higher LTV than 80% based on their risk management histories and capital positions.

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