CUNA, NAFCU Back NCUA's Fixed Asset Amendments, but Agree More Can Be Done

ALEXANDRIA, Va. – In separate comment letters filed last week, CUNA and NAFCU wrote that they generally support NCUA’s proposed regulation with regard to credit unions’ fixed assets. Both associations were in favor of clarifying and reorganizing the rule, as well as eliminating that a federal credit union include investments in any entity that holds fixed assets used by the institution, like a credit union service organization, when calculating the credit union’s investment in fixed assets. “The change in the proposal will reduce the likelihood that a credit union will overestimate its assets,” CUNA Assistant General Counsel Michelle Profit wrote. CUNA also wrote that it supported the 30-month time frame for submitting a request for a waiver from the fixed asset rule and the clarification on the definitions of partial and full occupancy in the current rule. Federal credit unions must partially occupy fixed assets they have within three years under the current fixed asset rule. Though CUNA thought the clarifications were helpful, NAFCU President and CEO Fred Becker argued they should be eliminated for parity with other banking regulators. “NAFCU believes that proposed 701.36(b) does not encourage long-term planning among safe and sound credit unions. Credit unions that exceed their space limitations after time may be left with costly alternatives in order to expand their operations,” he wrote. “Furthermore, credit unions may be unable to purchase space in the location of their choosing and/or may incur excessive costs to obtain a specific amount of space due to the restrictions of this section of the rule.NAFCU believes that credit unions should have the discretion to make this decision and that partial utilization within three years and a plan to fully utilize assets within a certain amount of time may be appropriate but should not be required by regulation.” CUNA is also asking that NCUA revisit another portion of the proposal. “Basically we’re supporting all aspects of that proposal and asking NCUA to take it one step further because under NCUA’s current regulations, Reg Flex credit unions-those that have 9% or more of net worth-don’t have to comply with the fixed assets requirements and we’re asking NCUA to take a look at that and see if a credit union with less than 9% could still escape the requirements of fixed assets,” CUNA Associate General Counsel Mary Dunn told reporters this week. [email protected]