NCUA Vice Chairman Kyle S. Hauptman Statement on the Final Rule, Part 745, Simplification of Insurance Rules

As Prepared for Delivery on September 19, 2024

Regulatory relief can come in many forms. The best kind is what we’re doing today, which is regulatory relief that isn’t taking on more risk or reducing government oversight, but rather just adding clarity.

So, this is a good time to remind ourselves that the question of how easy it is to follow the rules is determined by those who have to follow them, not by those who write them. The volume of calls received by the agency provide strong evidence on the need for simplification. The NCUA share insurance specialists have taken over 17,000 calls since the fourth quarter of 2019. Staff estimates that over 50 percent of these are related to coverage for trust accounts (revocable and irrevocable). These inquiries do not include those received through email, submitted through MyCreditunion.gov, or received directly by other NCUA staff. These numbers also don’t include the folks who had questions but found answers from other credit unions or were just too nervous to tell their regulator about it. By definition, that happens more than regulators realize.

So, today’s action is smart regulatory relief. We at the NCUA are also saving ourselves some time and effort. Both rules on today’s Board agenda provide much-needed improvements on consistency, simplification, and clarity.

Today’s final rule on insurance coverage is substantially unchanged from the proposed rule. Thank you to the 13 stakeholders who took the time to provide input. Commenters were universally supportive and provided suggestions for changes in the future. They also appreciated the benefits of a simpler calculation and parity with the FDIC.

The rule simplifies and reduces the number of rules governing the treatment for trust accounts. The regulation establishes a single category for trust accounts using a common calculation for both revocable trusts and irrevocable trusts. The final rule is also intended to streamline the currently time-consuming trust review process and facilitate faster share insurance payouts to beneficiaries.

By reducing unclear and confusing elements of this rule, credit unions, their employees, and NCUA staff are better able to serve the public. The ultimate beneficiaries are the members.

I’ll finish with one final message: the way we help small credit unions is by making it less burdensome to start and operate a small credit union. Succession planning is also easier when NCUA makes the job of running a small credit union a more attractive job.