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Board Seeks Comments on Proposed Changes to the OTR Methodology

June 2017
Board Seeks Comments on Proposed Changes to the OTR Methodology

Board Action Bulletin

Enterprise Solution Modernization Program Points to Greater Agency Efficiencies

ALEXANDRIA, Va. (June 23, 2017) – The National Credit Union Administration Board held its fifth open meeting of 2017 at the agency’s headquarters here today and unanimously approved five items:

  • Publishing a request for comment in the Federal Register on proposed changes in the methodology determining the overhead transfer rate.
  • A notice of proposed rulemaking proposing amendments to agency regulations to create more transparency and simplicity in agency regulations governing corporate credit unions.
  • A final rule updating agency regulations regarding treatment by the NCUA Board, as liquidating agent or conservator of a federally insured credit union, of financial assets transferred by a credit union in connection with a securitization or loan participation.
  • A final rule revising agency procedures for disclosing records under the Freedom of Information Act.
  • A final rule adjusting civil monetary penalties for inflation, as required by Congress.

The Board also received a briefing from the Office of the Executive Director and the Office of the Chief Information Officer on the Enterprise Solution Modernization program.

New Overhead Transfer Rate Methodology Out for Comment

Credit union system stakeholders will have an opportunity to comment on NCUA’s proposed changes to the way it calculates the overhead transfer rate.

NCUA in January 2016 published its original request for comments on the existing methodology for calculating the rate. Based on 40 comment letters received in response to that request and a subsequent internal assessment, the agency is proposing changes to the methodology to reduce both the complexity of the methodology and the resources necessary to administer the overhead transfer rate.

The Overhead Transfer Rate represents insurance-related costs in the agency’s operating budget to be funded by the National Credit Union Share Insurance Fund.

The staff presentation on the proposed changes to the overhead transfer rate methodology is available online here.

Comments in response to this request, which is available online here, must be submitted within 60 days of publication in the Federal Register.

Enterprise Solution Modernization Promises Reduced Burdens on Credit Unions

NCUA’s planned information technology modernization should improve the examination process and ease burdens on credit unions and on agency staff by reducing the amount of examination and supervision time spent in credit unions.

Launched in 2016, the Enterprise Solution Modernization program, the most complex program NCUA has undertaken, has three key parts:

  • The Examination and Supervision Solution will replace the examination system and related supporting applications, including time and workload management tools.
  • The Data Collection and Sharing Solution will define the necessary capabilities for a common platform to serve as a single point-of-entry for all data collection.
  • The Enterprise Data Reporting Solution will lead to better analytics and data reporting.

The program will leverage commercially available tools rather than building and hosting customized systems. NCUA expects increased efficiencies and an improved user experience when the new system is in place.

A summary of the Enterprise Solution Modernization program provided by staff to the Board is available online here.

Agency Seeking Comments on Corporate Credit Union Regulation Changes

NCUA is seeking comments on two proposed changes to its regulations covering corporate credit unions (Part 704) with respect to capital calculations.

The first change would better align capital components with a corporate credit union’s financial statements. The second would clarify the minimum retained earnings requirement for corporate credit unions.

The proposed changes would not alter existing standards for prompt corrective action, and the agency does not propose to change regulations on authorized investments, concentration risk limits, maturity limits or other limitations on corporate investment activities.

Comments on the proposed rule, available online here, must be received within 60 days after publication in the Federal Register.

Safe Harbor Rule Updates to Respond to Industry Practices and GAAP

A final rule (Part 709) approved by the Board amends NCUA regulations on how the Board, as liquidating agent or conservator, treats a credit union’s financial assets transferred in connection with a securitization or participation.

The final rule responds to evolving industry practices, clarifies provisions in Part 709 that were affected by changes in Generally Accepted Accounting Principles, and parallels changes made to the Federal Deposit Insurance Act.

The final rule, available online here, will become effective 30 days after publication in the Federal Register.

NCUA has issued a legal opinion letter on federal credit unions’ authority to issue and sell securities.

Board Approves Revised Agency FOIA Procedures

The Board approved a final rule (Part 792) that makes changes in the agency’s procedures for responding to public records requests under the Freedom of Information Act.

The rule revises NCUA’s procedures for disclosing records, resolving disputes through the FOIA public liaison and the Office of Government Information Services.

The interim final rule approved by the Board became effective Dec. 22, 2016. NCUA accepted public comments through Jan. 23, 2017, and the final rule, available online here, makes minor changes for consistency and clarification.

Final Rule Confirms Required Inflation Adjustments to Civil Monetary Penalties

The Board approved a final rule (Part 747) to amend its regulations and adjust for inflation the maximum amount for civil monetary penalties under its jurisdiction.

The Federal Civil Penalties Inflation Adjustment Act Improvement Act of 2015 requires agencies to adjust the maximum amounts of civil monetary penalties to account for inflation. The law does not require NCUA to assess the maximum penalty level, and the agency retains discretion to assess at lower levels, as it has done historically.

An interim final rule approved by the Board became effective Jan. 23, 2017. The final rule approved today, available online here, confirms the adjustments made in that interim rule.

NCUA tweets all open Board meetings live. Follow @TheNCUA on Twitter, and access Board Action Memorandums and NCUA rule changes at NCUA also live streams, archives and posts videos of open Board meetings online.

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