NCUA board approves ‘second chance’ ruling


The NCUA board of directors yesterday approved a final interpretive ruling and policy statement to expand career opportunities for individuals convicted of certain minor offenses. The proposal was unanimously approved during the agency’s monthly board meeting yesterday.

The so-called “second chance rule” allows people convicted of certain minor offenses to return to work in the credit union industry without applying for approval from the NCUA board.

“This adjustment is not only about regulatory relief, but also it is simply the right thing to do,” said Chairman Rodney Hood in a statement. “Expanding career opportunities for those who have taken responsibility for past indiscretions is consistent with Americans’ shared values of forgiveness and redemption.”

The Federal Credit Union Act prohibits anyone convicted of a criminal offense involving dishonesty or breach of trust, or who has entered into a pretrial diversion or similar program in connection with a prosecution for such an offense, from participating in the affairs of an insured credit union. The policy change expands the list of exceptions to the application requirement. Specifically, convictions or program entries for offenses involving insufficient funds checks of aggregate moderate value, small dollar simple theft, false identification, simple drug possession, and isolated minor offenses committed by covered persons as young adults will not require an application to the board.

Additionally, the board approved a proposed rule that would raise the appraisal requirement for real estate transactions secured by single 1-to-4-family residential property from $250,000 to $400,000. The proposed rule would align the NCUA’s appraisal rule with a final rule issued in October by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.

Federally insured credit unions would still need to obtain a written estimate of market value for properties that fall below the appraisal threshold, and the proposed rule incorporates the existing statutory requirement that appraisals be subject to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice.

Finally, the board received an update on the National Credit Union Share Insurance Fund, which posted a net income of $24 million in the third quarter of 2019. The Share Insurance Fund’s net position was $16.7 billion at the end of the third quarter, and the equity ratio was 1.33 percent. The NCUA calculated the equity ratio on an insured share base of $1.2 trillion.

For a full recap of yesterday’s meeting, visit the NCUA’s website.

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