Week ahead: NCUA goes all in on remote exams amid coronavirus

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Recent developments could make it easier for credit unions to navigate the coronavirus crisis.

With many industry groups already calling on the National Credit Union Administration to up its relief efforts, the regulator on Monday announced all NCUA exams will be offsite though at least May 1, and the remote exam policy will remain in effect until further notice. The regulator is set to host a webinar on its pandemic response strategy at 2:00 p.m. ET on March 31.

At least one trade group has already suggested COVID-19 has fundamentally changed the nation’s economy.

"We do think that we're basically already in a recession," Jordan van Rijn, senior economist at the Credit Union National Association, said during a Monday press call. CUNA is updating its unemployment targets in the wake of government reports that weekly unemployment claims have shot up to nearly 3.3 million, shattering the previous record. CUNA originally forecasted unemployment could reach 6%, a statistic van Rijn said was “undoubtedly optimistic.” He said some economic predictions have suggested unemployment could reach as high as between 9% and 12%.

Mergers and acquisitions may have taken a backseat for many institutions in the wake of the coronavirus, and NCUA has adjusted at least one comment deadline to reflect that. The regulator’s proposal governing credit union-bank purchases originally had a March 30 deadline for comments, but a March 28 tweet from the agency indicated the due date had been extended by an additional 60 days. As of Monday morning only eight letters had been submitted.

The House and the Senate are in recess until at least April 20, so the hearing dockets are both clean within the Senate Banking and House Financial Services committees. However lawmakers last week approved a $2 trillion coronavirus economic-relief package – which President Trump signed into law late Friday – that is likely to have a significant impact on the industry.

Some key provisions most important to credit unions include establishing CUs as eligible to participate in the paycheck protection program, which allows credit unions to provide guaranteed loans to businesses and self-employed individuals. The relief effort allows credit unions to further modify existing loans and delays the implementation date for the Financial Standards Accounting Board’s current expected credit loss standard, though credit union groups have called on NCUA to further push that back until at least 2024.

The law also expands NCUA’s access and borrowing authority through the Central Liquidity Facility, a mixed-ownership government corporation that exists within the agency and is managed by the NCUA board. Typically the CLF requires membership and as of year-end 2019, had 278 members that contributed $288.7 million of capital stock according to the NCUA's 2019 annual report.

More on the legislation’s impact can be found here.

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Law and regulation Coronavirus NCUA CUNA Compliance M&A