NAFCU urges NCUA to eliminate fixed-assets cap

NAFCU_logo_editedThe National Association of Federal Credit Unions recently expressed support for some changes proposed by the National Credit Union Administration but added some alterations should be made.

“We agree with the NCUA that use of plain language would help credit unions better understand the regulations,” NAFCU said. “We also welcome the addition of the scope section, the proposed new definitions and the clarification for how to obtain a waiver.”

NAFCU said, however, the definition of “partially occupy” should be amended to remove the part that requires that a partial occupation is “sufficient to show that the federal credit union will fully occupy the premises within a reasonable time.”

“NAFCU does not believe that such requirement is necessary,” NAFCU said. “The definition, as well as the provisions…that address partial occupation, should be tailored to provide a credit union adequate flexibility to determine the use of its premises.”

Additionally, NAFCU said NCUA’s five percent cap on investment in fixed assets by institutions with $1 million or more in assets is “wholly arbitrary.”

“NAFCU strongly urges the agency to entirely remove the cap, greatly increase it or change the regulatory scheme to provide flexibility for credit unions,” NAFCU said. “Credit unions should be granted ample flexibility to determine whether investing in particular fixed assets is in the best interest of their members. Investments in fixed assets are made to improve services to members, including making such services more accessible and readily available. As services are more accessible, the safety and soundness concerns that the cap seeks to address would decrease because the credit union will likely experience increased shares and retained earnings, lowering the percentage of the credit union’s investment in fixed assets.”

NAFCU said eliminating the cap would “address the lack of parity in this field between federal credit unions and state-chartered credit unions.”

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