TO:
Bill Cheney, CUNA President and CEO
FM:
Mary Dunn, CUNA SVP and Deputy General Counsel
RE:
NCUA Board Meeting
DT:
January 26, 2012
Today, the NCUA Board issued a proposal on troubled debt restructurings (TDRs) and loan modifications, adopted a final rule on interest rate risk (IRR), and released an advance notice of proposed rulemaking on derivatives. While we are reviewing all of these materials, our initial reaction to the IRR rule is the same one we had to the proposal…it is regulatory overkill. The TDR and loan modification proposal seems to provide useful clarifications and favorable changes regarding reporting of these arrangements on the 5300 Call Report, such as eliminating requirements that TDRs be tracked manually, but would require loan workout policies. We have had a number of conversations with NCUA officials about the need for regulatory and reporting improvements particularly with TDRs, and want to commend Scott Waite, Pam Finch, and Keith Peterson for their work to seek clarifications on these issues. Also, Michigan Credit Union League President Dave Adams and other Leagues played leadership roles in urging the agency to move forward to improve reporting requirements for TDRs. NCUA staff did not present reports on the National Credit Union Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund during today’s meeting, since the Board agreed that such reporting will occur only quarterly. We will be monitoring developments regarding the NCUSIF and the TCCUSF and advocating for a return to more frequent reports if needed. Proposed IRPS – Troubled Debt Restructurings The Board issued for a 30-day comment period a proposed rulemaking to amend Part 741 of NCUA Rules and Regulations, along with an accompanying Appendix C, Proposed Interpretative Ruling and Policy Statement (IRPS) on “Loan Workouts and Nonaccrual Policy, and Regulatory Reporting of Troubled Debt Restructured Loans” (TDRs). CUNA will be reviewing the proposal with our Examination and Supervision Subcommittee, Accounting Subcommittee, and members of the CUNA CFO Council. NCUA proposes to amend its regulations to require federally-insured credit unions (FICUs) to maintain written policies that address the management of loan workout arrangements and nonaccrual policies for loans, consistent with industry practice or Federal Financial Institutions Examination Council (FFIEC) requirements, as listed in the FFIEC’s Uniform Retail Credit Classification and Account Management Policy (Uniform Policy), adopted in June of 2000. NCUA did not adopt the Uniform Policy at that time. The proposed rulemaking includes the IRPS 1