Instead, she said, the agency hopes the new loan will make it more attractive for credit unions to offer short-term loans. There has been an increase in the total dollar amount of short-term loans offered by credit unions, but only a “modest” increase in the number of credit unions offering the loans.

The current Payday Alternative Loan program was created in 2010. When the CFPB issued its controversial strict payday loan rule, the agency specifically exempted loans modeled after that program from the rules.

NCUA officials emphasized that if they adopt the alternative discussed Thursday, it would not be automatically exempted from the CFPB rule.

McWatters said he and board member Rick Metsger would write to Acting Director Mick Mulvaney or “whoever the director is” to seek the automatic exemption.

The comment that the board would write to whoever the director is was ironic since McWatters is the person most mentioned as a candidate to take the helm of the CFPB.

McWatters also praised Comptroller of the Currency Joseph Otting for this week issuing core lending principles for federally insured banks to use in designing their own payday loan programs.

Specifically, the new payday loan would:

• Increase the maximum loan amount to $2,000 and have no minimum loan. Agency officials said the higher maximum and the lack of a minimum will allow credit unions to better meet the needs of borrowers.
• Allow a maximum loan term of 12 months, an increase from the six-month term offered in the existing loan program.
• Require no minimum length of membership to obtain loans. Under the existing program, a person must be a credit union member for at least a month before obtaining a short-term loan. However, a person would still be required to join the credit union before obtaining a loan.
• Eliminate the requirement that allows a federal credit union to only make three loans to a member in a six-month period. Credit unions still would be allowed to make only one loan at a time to any borrower.

Metsger supported the proposal, but said he is concerned that the number of loans programs authorized by the NCUA will be confusing. He emphasized that the new program would not replace the current PAL program.

Adding to the confusion is Mulvaney's announced intention to revisit the agency's controversial payday rules. The acting director is widely assumed to be contemplating making the rules less strict.

The board also agreed to solicit suggestions about a third type of loan that could have even more flexible terms. However, that loan program would not receive an automatic exemption from CFPB rules.

Also at Thursday's meeting, Eugene Schied, the agency's deputy chief financial officer said the agency is still on track for providing credit unions with a dividend early in the third quarter of the year.

And the board approved final rules governing involuntary liquidation.