NCUA board approves CAMELS, CUSOs final rules at October meeting

At its October meeting on Thursday via live audio webcast, the NCUA board of directors approved two final rules:

  • a final rule that adds the sensitivity to market risk or “S” component to the existing CAMEL rating system and redefines the liquidity risk, or “L” component; and
  • a final rule that expands the list of permissible activities and services credit union service organizations or CUSOs are allowed to engage in.

Unanimously approved by the board, the benefits of adding the “S” component are to enhance transparency and allow the NCUA and federally insured consumer and corporate credit unions to better distinguish between liquidity risk (“L”) and sensitivity to market risk (“S”), according to the agency. Further, the addition of “S” also enhances consistency between the supervision of credit unions and financial institutions supervised by the other banking agencies.

Implementation of the revised CAMELS rating system will occur on the final rule’s effective date, which is April 1, 2022.

Approved by a 2-1 vote, approved a final rule that amends the NCUA’s credit union service organization regulation:

  • expands the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union may originate; and
  • grants the board additional flexibility to approve permissible activities and services outside of notice-and-comment rulemaking.

Board members Kyle Hauptman and Rodney Hood voted in favor of the final rule, while Todd Harper, NCUA chairman, voiced “strong opposition,” CUTODAY reported.

Harper said he has a “classic philosophical difference,” saying that while his colleagues believe the final CUSO rule will help small credit unions to compete and remain viable, he believes “unleashing such competition within the credit union system will lead to lower earnings for smaller credit unions because of the earnings that CUSOs will siphon off the top from participating credit unions,” according to CUTODAY.  

Cybersecurity briefing
The board was also briefed by staff from the NCUA’s Office of Examination and Insurance on continued cybersecurity risks to financial institutions. Topics included:

  • a cybersecurity threat update;
  • information security examination and cybersecurity assessment program;
  • guidance and risk alerts;
  • cybersecurity resources webpage; and
  • industry outreach and partner engagement.

“To compete, credit unions must be able to safely and securely use technology to deliver member services and adopt financial innovations to ensure the industry’s long-term success,” Harper said.

Additional details about Thursday’s meeting can be accessed on the NCUA website. The next NCUA board meeting is at 10 a.m. on Nov. 18, and can be livestreamed at

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