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NCUA Issues Subordinated Debt, Member Expulsion Proposals
The NCUA board issued two proposals and heard a quarterly update on the National Credit Union Share Insurance Fund at its Thursday meeting.

Agency staff project the share insurance fund equity ratio increase to 1.30% for the six-month period ending Dec. 31, 2022.

The subordinated debt proposal would make changes to the subordinated debt rule. It would:

• Replace the maximum maturity of subordinated debt notes with a requirement that any credit union seeking to issue notes with maturities longer than 20 years demonstrate how such instruments would continue to be considered “debt.”

• Extend the regulatory capital treatment of grandfathered secondary capital to the later of 30 years from the date of issuance or Jan. 1, 2052.

• Make four minor modifications to the current rule to make it more user-friendly and flexible.

The member expulsion rule would amend federal credit union bylaws to incorporate the Credit Union Governance Modernization Act, enacted in March. The rule contains a proposed policy by which a federal credit union member may be expelled for cause by a two-thirds vote of a quorum of the credit union’s board of directors.

Comments on the proposal are due within 60 days of its publication in the Federal Register.

Copyright 2022. CUNA News. (link)
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