NCUA Chairman Rodney Hood sent a letter to the chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs outlining four areas he believes statutory changes would assist credit unions in light of the coronavirus pandemic.
In the letter to Sen. Mike Crapo, R-Idaho, Hood recommended statutory changes that he says would improve liquidity, provide capital relief, enhance community lending opportunities, and increase access for the delivery of remote financial services.
First, Hood stated that NCUA recommends improving liquidity for credit unions and making changes to the Central Liquidity Facility permanent.
Second, Hood recommended three temporary changes to the current prompt corrective action framework to provide regulatory relief. These proposals include:
- a temporary reduction in the minimum capital standards for federally insured credit unions;
- a temporary waiver of the net-worth restoration plan requirement; and
- a temporary increase from $5 million to $100 million for the asset threshold below which the NCUA board can delegate decisions related to critically undercapitalized credit unions.
Third, the NCUA recommended three changes to lending standards to assist credit unions:
- temporarily raise the Member Business Lending Cap;
- permanently increase the federal credit union loan maturity limit from 15 years to 30 years; and
- permanently expand credit union reach for underserved areas.
Lastly, the letter stated that, because the pandemic prompted many credit unions to significantly limit or suspend in person transactions in their branches, the restrictions have forced credit union members to conduct all of their financial transactions through online banking and other electronic means.
Because of the rapid growth of mobile banking in recent years, the pandemic has highlighted the need for permanent statutory changes to the “reasonable proximity” requirement, Hood said.
“If a multiple common bond credit union wants to offer services to select employee groups or associations, the group seeking credit union service currently has to be in reasonable proximity to a credit union service facility,” the letter stated. “This requirement is outdated and unnecessarily restricts access to credit union services for individuals and businesses. NCUA requests that the reasonable proximity requirement be removed or significantly amended to permit greater flexibility for members to join a credit union.”
Hood’s full letter can be accessed by clicking here.