NCUA headquarters. (Source: NCUA)
In a seven-page letter to the NCUA, NAFCU made the argument for the agency to drop the temporary status on an interim final rule that raised the maximum amount of loan participations a credit union could purchase from an originating lender.
The interim rule, published in the early days of the pandemic in April 2020, raised the maximum amount to $5 million or 200% of the credit union's net worth. The NCUA recently extended the timeframe for the rule to expire on Dec. 31, 2022.
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In Tuesday's letter to the NCUA, NAFCU Vice President of Regulatory Affairs Ann Kossachev wrote, "The temporary regulatory relief provided by §701.22(e) has not only operated as intended to allow FICUs to better weather the pandemic's economic challenges, but it also set the stage for a natural experiment."
Ann Kossachev Kossachev added, "Without attracting unmanageable risk to themselves or the [National Credit Union Share Insurance Fund], FICUs around the country leaned into their cooperative nature. Communities on both sides of expanded loan participation purchases have benefitted – be it from knowing their FICU can continue to offer attractive dividend rates even in a prolonged low-rate environment or from knowing their FICU can meet their individual and business borrowing needs when for-profit banks are pulling out of many communities."
In Kossachev's letter, she asked the NCUA to prioritize modernizing its loan participation regulations, to streamline existing processes, provide greater flexibility and more fully support the natural efficiencies of our credit union system by "eliminating §701.22's aggregate loan participation limits and otherwise building on the credit union system's successes attributable to cooperative lending."
According to a statement from NAFCU, it also asked the NCUA to immediately initiate a rulemaking to eliminate:
- "The general prohibition against credit unions purchasing loan participations they are not 'empowered to grant.'
- The general requirement that a loan participation purchasing credit union must directly contract with the originating lender."
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
