NAFCU Letter to NCUA regarding its credit union service organization (CUSO) OMB Request

October 4, 2013

Tracy Crews
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314

RE:      OMB Control Number 3133 – 0149; NCUA Information Collection Activities – CUSOs

Dear Ms. Crews:

On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents federal credit unions, I am writing you regarding the National Credit Union Administration’s (NCUA) reinstatement, with changes, of an information collection previously approved by the Office of Management and Budget. This request for comment is timely because of the impending credit union service organization (CUSO) final rule. While this letter addresses the NCUA’s information collection and the burden it produces, the pending proposed rule on CUSOs is also addressed.

On July 27, 2011, the NCUA introduced a proposed rule that would extend the agency’s regulatory authority over CUSOs by requiring CUSOs to submit financial reports directly to the NCUA. NAFCU has stated a number of times that NCUA’s attempt to directly examine CUSOs as part of the 2011 proposed rule is beyond its legal authority designated to it by Congress. NAFCU does not believe the agency should resort to the proposed mechanism in an attempt to regulate and oversee CUSOs as it already has the information it needs to effectively oversee the safety and soundness of credit unions as well as the National Credit Union Share Insurance Fund.

NCUA currently has access to the books and records that CUSOs provide federally-insured credit unions (FICU) as part of their written agreements. Those requirements enable the NCUA to monitor a credit union’s involvement with its CUSO for safety and soundness purposes and help ensure that CUSOs are properly established and maintained in accordance with applicable state law. Given that the NCUA already gets the information it needs about CUSOs, it need not attempt to regulate and oversee CUSOs in a manner that it has proposed.

The Estimated Burden Hours

Current burden hours for this rule relate to new relationships between credit unions and CUSOs. The burden described in this information request is incorrect because it doesn’t take into account the amount of time credit unions devote to the maintenance and reporting of CUSO-related matters.

The NCUA estimates the total burden of this information request is $17,737 annually.The agency gets to this number by taking the average number of federally-insured credit unions (FICU) that are investing in new CUSOs (133) and multiplying it by an annual hourly burden (2) per credit union that is investing in a new CUSO to get the time it takes to execute the written agreements. NCUA then does the same for written legal opinions required as well and estimates the same 266 hours for that task.

The rule also requires certain credit unions to seek and obtain prior approval from the NCUA before making an investment to recapitalize an insolvent CUSO. As of March 31, 2013, there were only 15 FCUs that are less than adequately capitalized that had any interest in a CUSO. Assuming that all of these credit unions had to ask for a waiver, NCUA estimates it would take the FCU approximately two hours to complete a request for prior approval for an investment to recapitalize an insolvent CUSO.

This brings the total annual burden to 562 hours at a cost of $31.56 per hour for a total of $17,737.  As the calculation does not take into account the burden relative to the number of hours and related costs associated with credit unions’ collection, data management and maintenance of CUSO financial information, it is simply an inaccurate estimate.

Amount Credit Unions Can Invest In CUSOs

NAFCU has stated before and continues to urge the NCUA to increase the amount that a credit union is permitted to invest in a CUSO.  CUSOs have proven to be strong partners for credit unions to meet their members’ needs, and an important source of cost savings. Credit unions have a responsibility to their membership to function effectively from a business standpoint, and CUSOs provide a great value with minimal risk.

The range of services credit union members receive through CUSOs, from investments to marketing or insurance, and more, have also added a welcomed value. In order to keep up with member demand, NAFCU would like the NCUA to continue expanding the scope of permissible CUSO activities as new products and services are developed.This will allow credit unions to better serve their members while working with partners with whom they have built long standing relationships.

Thank you for your continued commitment to listen to feedback. Should you have any questions or would like to discuss these issues further, please feel free to contact me at or (703) 842-2212.


PJ Hoffman
Regulatory Affairs Counsel

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