NCUA Chairman Todd M. Harper Statement on the Final Rule on Joint Ownership Share Accounts

As Prepared for Delivery on February 18, 2021

Tom, thank you for your excellent presentation on the final rule on the requirements for a share account to be separately insured as a joint account. Last May, I supported issuing a proposed rule on this matter, and I support this final rule now. The NCUA Board proposed these regulatory changes with the intent that they would further confidence in the credit union system and embody a forward-looking approach that explicitly permits the use of new and innovative technologies and processes to meet the agency’s policy objectives.

After carefully considering the public comments and conducting further analysis, this final rule affirms the rationale for issuing the proposed rule and incorporates one clarifying change. The final rule includes alternative language to better convey that the examples of evidence of co-ownership in the proposed regulatory text do not define the only form of evidence that could satisfy the signature requirement.

As noted in today’s presentation, this rulemaking mirrors changes to federal deposit insurance made in 2019 by the Federal Deposit Insurance Corporation. Said another way, this final rule would make the share insurance provided by the NCUA to members of federally insured credit unions comparable to deposit insurance of the customers of banks and thrifts. By maintaining parity between the two federal programs that protect the shares and deposits of consumers, the final rule ensures that credit unions remain on a competitive footing with banks and thrifts.

And, as noted in the text of the final rule, this change is not in reaction to any observed current problem with respect to identifying qualifying joint accounts at credit unions and processing insurance payments timely. I want to highlight that point now.

Several of the commenters on this rule also emphasized that the change is especially important given the challenges posed by COVID-19 and the resulting economic uncertainty. I agree. Should the pandemic’s economic fallout contribute to the failure of a federally insured credit union, these changes would facilitate the prompt payment of share insurance on joint accounts.

There are three other points I would like to underscore about this rulemaking.

First, the final rule only affects a requirement in the NCUA’s regulations that must be satisfied for a share account to be separately insured as a joint account. It does not affect any other legal requirements applicable to federally insured credit unions, which may, and likely will, for legal or other reasons, find it appropriate or necessary to continue collecting customers’ signatures.

For example, this final rule neither modifies nor affects any state law requirements generally applicable to federally insured credit unions, including those that necessitate the collection and maintenance of customers’ signatures. I view state regulators as the NCUA’s partners, and some states have their own regulatory or statutory requirements for signature cards. During consideration of the proposed rule, I asked whether it would affect or supersede existing state laws in any way. This final rule sensibly respects existing state laws in this area.

Second, this final rule does not affect the general principles contained in the NCUA’s share insurance regulations applicable in determining the insurability of accounts. These general principles applicable in determining insurance continue to apply to all share accounts, including joint ownership accounts.

Finally, it is important to reiterate that the final rule does not introduce any new requirements for an account to be insured as a joint account. And, the final rule would neither reduce nor affect the insurance coverage on any account for which the existing joint account requirements are satisfied.

In my view, this final rule is good for credit union members and the federally insured credit unions to which they belong. I also appreciate the flexibility provided for in this rulemaking. It will accommodate both technological changes and evolving recordkeeping processes at federally insured credit unions.