LAS VEGAS – Responding to Congressional and court pressures, NCUA is working on two clarifying regulations this summer dealing with the Utah underserved case and bank charter conversions and is considering a third on CUSOs, NCUA Board Member Gigi Hyland told NACUSO's annual convention meeting here last week. In a general session talk Tuesday, Hyland gave no firm timetable as to when any of the rules might be released but said at least two of the issues – CUSOs and the America First FCU/field of membership case in Utah – are related to congressional inquiries. Both deal with the modest means/underserved test of CU and CUSO powers as first raised last November by House Ways and Means Committee Chairman William Thomas (R-Calif.). Hyland, who was joined on a NACUSO panel by Gary J. Kohn, her senior policy advisor and a former CUNA lobbyist, stressed the issues are complicated “but are something that we have to address” to fulfill a congressional request. As for CUSOs and their use of the limited liability structure as tied to the tax-exemption, she said NCUA as well as industry trade groups were asked first in November and then in subsequent communications from the Government Accountability Office to come up with extensive data detailing CUSO numbers, income, products and operations. Much of that data has been hard to come by, but NCUA does understand the concerns of lawmakers over transparency in the LLC structure, said Hyland. Still, based on the productive role CUSOs have played in industry growth and their worth in financial markets, “I am adamant,” she said, against putting the CU structure in jeopardy though restrictive controls on the favored LLC vehicle. The possible CUSO regulations, said the NCUA officials, are aimed more at clearing up the role of LLCs as linked to profit-making elements, how much income is earned, and how much is passed back to the CU. In all of the congressional probes on CUSOs and on the Utah court case which triggered a moratorium on underserved areas following the order of a Salt Lake City federal judge, Hyland expressed grave concern about putting CU expansion and structure at risk over the modest means/underserved test.

In her NACUSO remarks, she gave two examples of the futility of developing blanket modest means regulations as applied to CUs with diverse structure and charter.

“Take World Bank Federal Credit Union in Washington where the minimum salaries of members is $80,000-$90,000 a year,” she said making it difficult to place a modest means definition on that CU.