Final CUSO rule approved by NCUA
The National Credit Union Administration’s final rule addressing credit union service organization (CUSO) supervision is revised from the agency’s earlier proposal, but the Credit Union National Association remains concerned about the authority of the agency to exercise direct authority over CUSOs.
Under the proposal released in 2011, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. The final rule, approved during Thursday’s open board meeting, keeps those controversial provisions.
However, the NCUA noted that the final rule is more limited in scope than the proposed rule: The final rule is targeted to CUSOs that engage in high-risk or complex activities such as credit lending, information technology and custody, safekeeping and investment management.
Special requirements for a credit union investing in, lending to, or receiving services from the CUSO include:
- Services provided to each credit union;
- The investment amount, loan amount, or level of activity of each credit union; and
- The CUSO’s most recent year-end audited financial statements.
In addition, CUSOs engaging in credit and lending services will be required to report the following activity by loan type:
- The total dollar amount of loans outstanding;
- The total number of loans outstanding;
- The total dollar amount of loans granted year-to-date; and
- The total number of loans granted year-to-date.
NCUA acknowledged that all federally-insured credit unions with loans to or investments in CUSOs will be required under the final rule to make changes in the agreements they currently have with their CUSOs.continue reading »