The New York Credit Union Association joined with credit union leagues around the country, with William J. Mellin, Association president/CEO, signing a CUNA letter to the NCUA leadership on Friday. The letter urges the agency to provide additional relief to help credit unions facing prompt corrective action challenges.
In May 2020, the NCUA issued an interim final rule that provided credit unions relief related to PCA by permitting the NCUA Board to issue an order to temporarily waive the earnings retention requirement for any credit union classified as adequately capitalized. The interim final rule also permitted credit unions to submit simplified net worth restoration plans if the reduction in capital was caused by share growth resulting from a temporary condition due to the pandemic. The rule, however, expired Dec. 31, 2020.
In the letter, CUNA asks that the NCUA adopt a new interim final rule, essentially identical to the 2020 interim final rule to provide relief to credit unions experiencing prompt corrective action issues related to an increase in share growth, with the relief remaining in effect until the end of the pandemic as determined by the Centers for Disease Control or other federal entity authorized to make such a determination.
We believe it is necessary and reasonable for the NCUA to adopt such a rulemaking. The NCUA adopted the 2020 IFR in May to deal with an increase in share growth, resulting from government stimulus payments. The reasons the 2020 IFR was adopted in May 2020 are still as relevant today, particularly with another round of federal stimulus payments on the way.
Further, the letter states that the Dec. 31, 2020 sunset date of the 2020 interim final rule appears to be “an arbitrary, convenient date,” with no indication that the pandemic-related economic challenges would cease by then.
The letter can be accessed on CUNA’s website.