At its January board of directors meeting on Thursday via live webcast, the NCUA board of directors approved 2-1 a proposed rule that would require boards of directors at federal credit unions to establish and adhere to processes for succession planning.
Under the proposed rule, credit union directors would be required to have knowledge of the federal credit union’s succession plan. The proposed rule would provide federal credit unions with broad discretion in implementing the proposed regulatory requirements to minimize any burden, according to the agency. Although the proposed rule would apply only to federal credit unions, the NCUA board is encouraging all credit unions, regardless of asset size, to have a succession plan to fill key positions and ensure their credit unions continued operations.
“At its core, this rulemaking is about federal credit unions of all sizes — especially smaller credit unions that do not already have succession plans — planning for their futures, so they can continue to serve their members for generations to come as independent entities,” said Todd Harper, NCUA chairman. “Small credit unions are at the heart of the movement, and we need to find a better way to preserve them, instead of consolidating them.”
Rodney Hood, board member, opposed the measure, saying that he would prefer that the NCUA hold webinars and issue guidance on the need for succession plans rather than adopting a rule, Washington Credit Union Daily reported. “I don’t think it’s our responsibility to micromanage,” Hood said.
The proposed rule will be published in the Federal Register, after which comments will be accepted for 60 days.
The board of directors was also briefed on the agency’s 2022 supervisory priorities, which were previously outlined in a letter to credit unions, and the status of the Central Liquidity Facility following the statutory expiration of its enhanced authority.
“With currently more than $26 billion in borrowing capacity, I am pleased to see the CLF remains a strong source of emergency liquidity should the need arise in 2022,” Harper said. “However, the expiration of the enhanced borrowing authority and other CLF provisions in the Coronavirus Aid, Relief, and Economic Security Act is concerning, especially with the pandemic and its financial and economic disruptions continuing into this year.”
In addition, the board of directors was briefed on required inflation adjustments to the agency’s civil monetary penalties, which were approved by a notation vote at the end of 2021. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires agencies to adjust the maximum amounts of civil monetary penalties annually to account for inflation.