NCUA Board Approves Proposals on Risk-Based Capital, CAMEL System and CUSO Lending

January 14, 2021 – Through a live audio webcast, the National Credit Union Administration Board held its first open meeting of 2021 and approved six items. One being a proposed rule expanding the list of permissible activities and services for credit union service organizations.
The NCUA Board, by a 2-1 vote (Harper voted against the proposed rule), approved a proposed rule that would amend the NCUA’s credit union service organization (CUSO) regulation. The proposed rule would accomplish two objectives:
  • Expand the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union may originate; and
  • Grant the Board additional flexibility to approve permissible activities and services.
The NCUA is also seeking comment on broadening the investment authority of federal credit unions in CUSOs.
Comments on the proposed rule must be received no later than 30 days after publication in the Federal Register.
Comment from Jack Antonini, CEO of NACUSO
NACUSO would like to commend the NCUA Board on their proposed expansion of CUSO powers to allow CUSOs to assist credit unions with auto lending and personal loans. As the marketplace has evolved, the competition for these types of loans has increased, making it more difficult for credit unions to maintain their market share in these important core lending areas. Allowing credit unions to collaborate and utilize industry owned CUSOs to help them achieve scale, while sharing costs and risk, will enable credit unions to offer competitive solutions to their members.
CUSOs have been used successfully by credit unions to offer credit cards, mortgages, member business loans and student loans. This regulation will extend the benefits of collaboration to the core lending areas of auto and personal lending.
CUSOs act as intermediaries to source loans for credit unions, helping credit unions to serve their members conveniently and efficiently, in today’s interconnected online world. With new FinTech competitors capturing market share with new tech solutions, having the opportunity to collaboratively build competitive high-tech solutions to better serve their members, is a real competitive advantage for credit unions.
NCUA already has CUSO oversight in place, through their CUSO Registry, CUSO Reviews and the ability to look at CUSOs through their credit union owners. This expansion of CUSO powers will have the same strong oversight that both the NCUA and state regulators have been utilizing in overseeing CUSOs over the past several years, ensuring safety and soundness remains a top priority.