The Pulse (10-21-15)



The Pulse (10-21-2015)

October 21, 2015 ● Volume 04, Issue 42


The Pulse Archive

Credit Union News

NCUA approves final risk-based capital rule

At their Oct. 15 scheduled open meeting, the NCUA Board approved the final risk-based capital rule (RBC), more than 20 months after it was initially proposed. Early reports reflect that compared to the significant changes made between the first and second proposal, there were relatively minor changes made between the second proposal and NCUA’s final rule issued today. NCUA further indicated that guidance will be provided on the rule in early 2018, with examination on the rule beginning in 2019.

While the final rule is in excess of 400 pages and will take time for a comprehensive review, initial observations of significance include:

  • The reduced effective weight of the following to 100 percent, so long as the total equity exposure is less than 10 percent of the sum of a credit union's capital elements of the RBC ratio numerator:
  1. Equity investments in credit union service organizations (CUSOs),
  2. Perpetual contributed capital at corporate credit unions, and
  3. Other higher risk equity investments.

The NCUA estimates 95 percent of credit unions with such investments will receive a lower risk weight.

  • Reducing the risk weight to 0 percent for share-secured loans where the shares securing the loan are on deposit at the credit union;
  • Allowing a lower risk weight for certain charitable donation accounts; and
  • Extending the grandfathering period for certain supervisory goodwill to 2029.

The final rule also contains an added appendix describing alternative approaches which can be used to determine the risk weights assigned to certain assets. Lastly, the NCUA Board further discussed its intention to formulate a separate proposal for supplemental capital to be made final prior to RBC’s effective date.

Thank you for your efforts to weigh in on this critical piece of rulemaking. The proposal was changed in large measure by issues and concerns raised by the over 2,000 comment letters the NCUA received on each of the two proposals, including 36 comment letters from Minnesota credit unions on the first version. Network staff, with valuable input from the Regulatory Review Committee, spearheaded comment letter efforts which included a draft letter to guide credit unions, as well as an informational conference call and an online resource center. Representatives from MnCUN and Minnesota credit unions also attended NCUA’s Listening Session to discuss specific concerns with the risk-based capital proposal.

Through MnCUN’s lobbying efforts, seven Minnesota Congressional Representatives and Sen. Franken sent letters encouraging NCUA Chairman Matz to consider dramatically changing the proposed Risk-Based Capital (RBC) rule to make it less onerous. These communications were part of the 375 Members of Congress and dozens of other stakeholders nationally who expressed concern for the proposal. The Risk-Based Capital rule was also discussed in meetings on the Hill with the Minnesota Congressional delegation as well as with NCUA Board members during Hike the Hill meetings and MnCUN sponsored events. In addition, CUNA commissioned a legal opinion focusing on whether NCUA had the statutory authority to implement the rule as it was proposed, a document which was a source of debate when the NCUA Board took up the revised proposal (RBC2) in January 2015.

The significant improvements that are reflected in the final rule would not have been possible without the CUNA, League, and individual credit union commentary given to NCUA throughout the rule making process to ensure the best possible regulatory outcome. We will be providing more information regarding the final rule in the coming weeks.


Rep. Emmer visited St. Cloud Credit Union for International Credit Union Day

Congressman Tom Emmer visited St. Cloud Federal Credit Union to discuss the importance of Minnesota’s credit unions on International Credit Union (ICU) Day®.

Rep. Emmer greeted credit union members, and addressed questions from attendees ranging from the economy, the debt ceiling, social security, and current world issues. “Credit unions are incredibly important to our state,” Emmer said. “I look forward to growth and prosperity for credit unions and the people you serve.”

Emmer then met with MnCUN staff and area credit union CEOs to discuss issues specific to the industry, including Regulatory Relief and the Consumer Financial Protection Bureau. He encouraged CEOs to communicate to their employees how these issues affect their business – what helps and what hurts. “Encourage them to contact their legislators too,” he suggested. 

Jed Meyer, President and CEO of St. Cloud Federal Credit Union said, “Congressman Emmer believes in the cooperative structure and has been a great supporter of credit unions; it was an honor to host him for International Credit Union Day.”

Mark Douvier, President/CEO Collegeville Community Credit Union; Mara Humphrey, Vice President Governmental Affairs MnCUN; Steve Oien, President/CEO Minnco Credit Union; Jed Meyer, President/CEO St Cloud Federal Credit Union; Rep. Tom Emmer; Mel Tody, President, St. Cloud City & County Employees Credit Union; Randy Trimm, CEO Great River Federal Credit Union; Sarah Mason, Vice President – Marketing and Brand St. Cloud Federal Credit Union; Mark Cummins, President/CEO MnCUN.


Register now for upcoming Peer-to-Peer (P2P) meetings and Education Sessions

Credit union professionals are encouraged to join their peers at upcoming Minnesota Credit Union Network Peer-to-Peer (P2P) meetings and Education Sessions. Each event below includes time for personal introductions, lunch and discussion.

For more information and to register for these events, visit the MnCUN education calendar online. 


Credit Unions in the News

Follow the links on the stories below to read more about the outstanding programs, new initiatives and well-deserved recognition received by your peers recently. Got news of your own? Send stories, pitches, press releases and published articles to MnCUN Communications Specialist Laura Whittet

St. Cloud Federal Credit Union Closes Branches to Update a Floor Wing at Place of Hope

Ideal Credit Union Community Foundation Sixth Annual Golf Tournament sets new record for funds raised


City & County Credit Union makes impact in community



MnCUN provides legislative advocacy insights to Grassroots Coordinators

View all Governmental Affairs news stories

CFPB issues final HMDA rule

October Board Action Bulletin

NCUA releases October NCUA Report

NCUA releases latest economic update

FINCEN SAR statistics Bulletin

FBI releases PSA on EMV cards

View all Regulatory Compliance news stories




CUNA Mutual Group Debuts New Collateral Protection Enhancement 

CUNA Mutual Group is enhancing its Collateral Protectionsolutions for credit unions to address emerging risks to their loan portfolios related to the growing popularity of Transportation Network Companies (TNCs) like Uber and Lyft.

A new no-cost TNC endorsement to CUNA Mutual Group’s Collateral Protection Blanket Auto policy protects credit unions from potential loan losses due to damage caused while a borrower is operating as a TNC driver. The new coverage became effective Oct. 1, in most states. State National Companies, CUNA Mutual Group’s alliance partner for Tracked Collateral Protection Insurance, will also be adding a similar, no-cost endorsement for Tracked CPI customers. 

Ride sourcing organizations such as Lyft and Uber enable individuals to use their personal, non-commercial vehicle as a livery, or taxi-type service through a mobile app managed by the TNC that connects passengers with drivers. Drivers are attracted by the opportunity to be their own boss, work a flexible schedule and earn extra income. 

However, most personal auto policies don’t include coverage for commercial use, and state legislation doesn’t require TNCs to provide comprehensive/collision coverage, said Al Olson, CUNA Mutual Group staff underwriting specialist. As a result, many drivers aren’t aware they may not be adequately covered when driving for a TNC. 

“TNC drivers might think their personal insurance will cover them if they are in an accident while ‘on the job,’ but that may not be the case,” Olson said. “If physical damage occurs and there is no insurance coverage, the likelihood of drivers defaulting on their auto loans increases, which creates a potential loss exposure for lenders.” 

Although a credit union may have collateral insurance in force to protect their loan portfolio, standard collateral insurance coverage excludes vehicles while used for “public or livery conveyance,” Olson added. “So there would be no coverage for the credit union in this situation. That’s why we created the TNC endorsement to cover credit unions should this occur.” 

To learn more about CUNA Mutual Group and the products and services it has to offer your credit union and its members, contact MnCUN Director of Business Development Kris Jacobsen by email or at (651) 288 - 5515.

If this describes you, then you are invited to join The Crew. This group 
If this describes you, then you are invited to join The Crew. This group 

 Joanna Drennen
 Nathan Dormody

Minnesota Credit Union Network
555 Wabasha Street N, Suite 200
St. Paul, MN 55102

(651) 288-5170
(800) 477-1034