Mandate relief light
by. Henry Meier
I think Chairman Matz may have gotten a little carried away by the lights of Vegas the other day when she announced fixed asset mandate relief at NAFCU’S convention. I can’t get excited by mandate relief that replaces one mandate, the requirement to get preapproval of property investments exceeding five percent of assets, with another replete with a new acronym.
If you thought your days of not having to worry about the fixed asset rule were over, then you are going to be disappointed by NCUA’s mandate relief proposal.
Currently, the aggregate of all a credit union’s investments in fixed assets must not exceed five percent of its shares and retained earnings without a waiver from NCUA. In addition, since much of your standard Information technology investments count against this cap, CUNA and others have pointed out that the rule can restrict needed investments. The good news is that if this proposal goes forward credit unions would be able exceed the cap without getting a waiver. But, credit union boards exceeding the threshold will have to develop an effective Fixed Assets Management (FAM) program. In addition, the your credit union must have analyzed and determined that the investment in fixed assets in excess of the five percent limit is appropriate, safe and sound, and supported by its FAM program.
The FAM must include a “prudent” aggregate limit for the FCU; be accompanied by a board resolution detailing the board’s approval of the expansion and internal controls to assure proper oversight of the program. The resolution is quite detailed since it must include:
continue reading »
