News & Highlights


August 27, 2004

Jonathan G. Katz, Secretary
United States Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549-0609

Re: Comment Letter to Proposed Regulation B
File Number S7-26-04

Dear Mr. Katz,

This letter is written on behalf of the National Association of Credit Union Service Organizations (“NACUSO”) and its members. NACUSO is a trade association comprised of credit unions and credit union service organizations (“CUSOs”). CUSOs are service organizations owned by credit unions.

NACUSO is in favor of the exemptions provided to credit unions under proposed Regulation B and endorses the adoption of Regulation B with the stated exemptions for credit unions.

NACUSO requests that Regulation B also grant credit unions an exemption to enter into networking arrangements through CUSOs that are wholly owned by one or more credit unions. This request is very important to the credit union and CUSO members of NACUSO.

Prior to July 2001, credit unions could not receive revenue in networking arrangements in excess of a credit union’s actual expenses. CUSOs did not have this expense reimbursement limitation and thus, credit unions formed CUSOs to enter into networking agreements with broker/dealers. In July 2001, the National Credit Union Administration passed the Incidental Powers Regulation that removed the expense reimbursement limitations on credit unions, permitting credit unions to receive a full share of revenue generated in networking arrangements. Under the Chubb Securities No-Action Letter, CUSOs were no longer “required service corporations”.

CUSOs have been used by credit unions for twenty (20) years in networking arrangements. There is no evidence of any abuse or harm to investors as a result of CUSOs being used by credit unions for this purpose. There is no evidence that the use of CUSOs by credit unions in networking arrangements will pose a greater threat to investors than credit unions that do not use CUSOs.

We understand that the SEC feels comfortable in dealing with financial institutions as there is a regulator that directly regulates the financial institution. In the case of an issue involved with the investment program, the SEC has confidence that it could contact the financial institution’s regulator and that regulator will assist the SEC to resolve the issue. As you are aware, the respective credit union regulators regulate a credit union’s investment in its CUSO but do not directly regulate the CUSO. We submit that this is an immaterial distinction in practice as it relates to these networking arrangements. In the case of a serious regulatory issue, the credit union regulator has the ability to require the credit union to divest itself of its CUSO investment and terminate the credit union’s affiliation with the CUSO. This is a very powerful inducement to a credit union to cause its CUSO to act in accordance with the directives of the regulator. It is our contention that in the event that there is a problem in a networking arrangement, the SEC and the credit union regulator would have the same level of power and influence over a CUSO as they do a credit union.

Credit unions are non-profit financial cooperatives. Credit unions do not create investment products and therefore do not sell credit union proprietary investment products. Traditionally, credit unions have worked together to jointly provide financial services and operational services. As of year-end 2003, there are 9,709 credit unions and only 1,163 credit unions (about 12%) have assets in excess of $100,000,000. A common rule of thumb used by broker/dealers working with credit unions is that credit unions must have at least $100,000,000 to $150,000,000 in assets in order to support a registered representative. Credit unions also find that they need to have five or six registered representatives in order to afford a non-producing, full-time manager. A full-time manager of the investment program is a key component for success. Thus, both small and large credit unions find it highly desirable to have a credit union service organization that will aggregate the resources to effectively provide registered representatives, management and marketing services for investment programs. Of course, all personnel that provide these services would be fully and properly licensed with the broker/dealer.

The inability of CUSOs to provide this centralized hub of expertise is a severe detriment to the ability of many credit unions and their affiliated broker/dealers to effectively offer investment services. The inability to aggregate resources through a CUSO could prevent most credit unions from having networking arrangements. Serving small credit unions would be cost prohibitive to broker/dealers without the ability to use a CUSO to centralize the investment services management, compliance and registered representative services. This type of cooperative effort is unique to the credit unions. It is driven by the culture of cooperation among credit unions and by economic necessity.

The integrity and effectiveness of the credit union networking exemption would not be diminished by permitting credit unions to use CUSOs that are wholly owned by one or more credit unions. NACUSO submits that the benefits of having a centralized CUSO for multiple credit unions would enhance the ability of the broker/dealers to provide effective and efficient investment services. The ability to aggregate resources greatly aids the effectiveness of broker/dealers and the efficiency of the oversight function by the NASD and SEC. NACUSO strongly encourages the SEC to permit credit unions to use CUSOs in networking arrangements.

We thank you for the opportunity to comment and would welcome any questions you may have regarding these comments.

Very truly yours,

Robert Dorsa, NACUSO President
Guy Messick, NACUSO General Counsel


As General Counsel to NACUSO, I have received many messages that indicate there is confusion as whether network investment programs that are still in a CUSO should be moved to the credit union. This message is being sent to our members in an effort to alleviate some of the confusion. The facts are as follows:

  1. As a result of the 2001 Incidental Powers Regulations, the SEC has told all who have asked that CUSOs no longer have a networking exemption to receive income without being registered, as CUSOs are no longer a “required service corporation” under the Chubb No-Action Letter. It is the position of the SEC that CUSOs have been out of compliance since July 2001.
  2. The SEC has required broker/dealers enter into new networking agreements only with credit unions and not CUSOs. The only exception has been for state chartered credit unions in states that have not confirmed that their state chartered credit unions have Incidental Powers similar to federally chartered credit unions. Wisconsin is the only state I know where this applies. Clarification is being sought from the Wisconsin state credit union regulator.
  3. In the proposed draft of Regulation B, credit unions and banks are provided a networking exemption but CUSOs and bank operating subsidiaries are not mentioned at all.
  4. The SEC has repeatedly stated that it has comfort in dealing with credit unions as they have regulators that the SEC can call upon to help correct any problem that may arise. Since CUSOs are not directly regulated by a credit union regulator, the SEC does not have the same comfort level with CUSOs.
  5. As to the networking exemption, the SEC has indicated that they do not see any reason, from their perspective, to treat CUSOs differently than operating subsidiaries for banks, which have never had a networking exemption.
  6. The SEC has indicated that it is their intention to issue a no-action letter based upon a request submitted by the CUNA Brokerage Advisory Task Force. That letter has not been issued as yet. That letter could provide some guidance as to the role of CUSOs in the investment program but there is no indication that that rule would be expanded to permit CUSOs to have an exemption, especially if CUSOs are not granted a networking exemption under Regulation B.
  7. I have received reports from some broker/dealers indicating that there is pressure from some NASD examiners to move the investment program from the CUSO to the credit union. This pressure does not appear to be uniformly applied. There are no enforcement actions that I am aware of against any CUSO based networking program.

What do we make of all this? NACUSO is responding in two capacities, as an advocate and as an advisor. As an advocate, NACUSO is strongly requesting that the SEC grant the networking exemption to both credit unions and CUSOs. NACUSO will not give up that fight. We expect that other credit unions, CUSOs, and trade associations will also be supportive of expanding Regulation B to include CUSOs. We believe we have good arguments but we have an uphill battle to convince the SEC. The SEC has different perspectives in its role as the securities industry’s regulator.

As an advisor we must not overlook the fact that it is very likely that CUSOs will not be included in Regulation B and only credit unions will have a networking exemption. You look to us for answers to aid you in planning. The ostrich approach to planning is not advisable. We recommend that, at the very least, you should be actively planning on how you will move your investment program from the CUSO to the credit union in order not to be caught unprepared if the SEC starts to initiate enforcement actions against CUSOs.

Many credit unions have already moved their networking program from the CUSO to the credit union. It is likely that the SEC will not begin to initiate enforcement actions against CUSOs until Regulation B is passed and passed in its present state without mentioning CUSOs but there is a regulatory risk in waiting. There is no official grace period that you can rely upon.

We are very close to this issue and we have given you the best assessment of the situation. The level of the regulatory risk of keeping the investment program in the CUSO has been constant and, in our opinion, has not changed as a result of the issuance of the proposed Regulation B for comment, but we think the risk will be very high once Regulation B is passed. The comment period ends September 1, 2004. It is anticipated that there will be many comments that the SEC will have to sort through. We cannot be certain as to you when the Regulation will be enacted but only that it will be enacted at some point, as it is required by the Gramm-Leach-Bliley Act.

Guy Messick
NACUSO General Counsel
July 30, 2004


Many of our members have expressed an interest in continuing to enable CUSOs to enter into networking agreements. CUSOs are not mentioned in the proposed Regulation and would not have that power. NACUSO intends to issue a comment letter in support of CUSOs (along with credit unions) to be able to have the power to enter into networking agreements and to provide administrative and management support for the investment programs. If you want your thoughts considered for inclusion in NACUSO’s letter, please submit them by email to Guy Messick by Monday, August 16th. You are invited to submit your own comments to the SEC as well. The comments are now due on or before September 1st.


As discussed at the NACUSO Annual Conference in May, NCUA reviews one third of its regulations every three years. There is a list of those regulations that will be reviewed this coming year. That can be viewed on NCUA’s website Included in this year’s review will be the regulations governing, CUSOs, Incidental Powers, Privacy and Member Business Loans. If you have any thoughts on how these Regulations can be improved, please send them to NCUA by August 1st at . We ask that you copy our General Counsel Guy Messick at so that NACUSO can advocate on your behalf. Note that you will have the ability to comment on any proposed changes but this is your chance to help define the issues.


The Securities and Exchange Commission (SEC) has issued a proposed rule (“Regulation B”) that would grant credit unions some of the exemptions from the broker-dealer registration requirements that banks currently receive and provide new exemptions for banks. These exceptions are provided under the Securities Exchange Act of 1934 “Exchange Act,” as amended by the Gramm-Leach-Bliley Act (“GLBA”). These exceptions and how the SEC proposes to treat credit unions under Regulation B are described below:

  • First, the proposal would allow credit unions to enter into the same networking arrangements with broker-dealers that banks can. Currently, credit unions may enter into networking arrangements with broker-dealers under the conditions set forth in an SEC opinion letter (“Chubb letter”). However, banks can network with broker-dealers under the terms of the Exchange Act bank exception for third-party brokerage arrangements. This proposal extends that Exchange Act exception to include credit unions, and would thereby supercede the Chubb letter.
  • Second, the proposal would permit credit unions to sweep deposit accounts into no-load money market funds under the same terms as banks can under the bank exception in the Exchange Act. The SEC states that the statutory exception is limited and should place financial institutions offering similar services on a more level playing field.
  • Third, the proposal permits credit unions to buy and sell securities for investment purposes for themselves, or for accounts for which they act as trustee or fiduciary under the terms of the investments transaction exception in the Exchange Act.

The proposal would permit all credit unions, including federal- and state-chartered credit unions, as well as federally insured and privately insured credit unions to utilize the exemptions that are described above. Although the proposal would grant credit unions these three exceptions, it would not automatically give them any associated exemptions given to banks in the future. Moreover, the proposal does not grant credit unions all the exceptions that banks currently have. The SEC requests comments on whether all credit unions should be included in the current proposal, and asks for information on the regulatory oversight given all types of credit unions.

The proposal does not extend to credit unions an exemption to conduct safekeeping and custody activities because the SEC claims it did not find that credit unions engage in activities included in the safekeeping and custody exemption. Under this exception, a bank does not have to register as a broker, if it engages in certain specified types of safekeeping and custody services with respect to securities on behalf of its customers. The SEC invites comment on whether credit unions engage in these types of activities and what legal authority they use to do so. CUNA asked in its comment letter that credit unions be given this authority.

SEC has issued Regulation B and it amends a previous proposal (“Interim Rules”) that provided guidance on the bank exceptions for banks and thrifts under the Exchange Act.

Advocacy Updates

Report on Advocacy Fund spending… NACUSO Working for You

Through the support of our members and partners, NACUSO raised approximately $273,000 in contributions toward its Advocacy Fund (and predecessor Legal & Litigation Fund) over the past 3 years.  The goal of the two funds together are to enable NACUSO to conduct crucial advocacy work on behalf of CUSOs and their credit union owners / partners.

In keeping with our commitment to be fully transparent and to regularly communicate our usage of these dollars (we provided detail of how the funds were spent from 2014-2015 last year, which is also included in the attached Report), we would like to provide you with the following information, which was provided in detail to each contributor in the first quarter of 2017.  NACUSO spent the following amounts from the Advocacy funds during 2016:

$24,000     Dollar Associates, LLC - paid for advocacy work with Congress and NCUA on CUSO issues
$24,000     Messick & Lauer, P.C. - paid for advocacy work with NCUA and meetings with Congress on CUSO issues
$   718     Travel to Washington DC for meetings with Congress and NCUA
$48,718    Total amount spent influencing Congress and NCUA for favorable CUSO environment

The remaining funds, out of the total $273,000 in combined contributions, equal $110,323.  This represents the balance in Restricted Cash as of 12-31-16, as per the NACUSO Advocacy and Legal Fund Analysis report (click link below).

The NACUSO Board and its Legislative & Regulatory Advocacy Committee is continuing to prioritize the advocacy of a regulatory environment that is pro-CUSO and pro-collaboration within our industry.  NACUSO needs your support for this initiative and to accomplish its purposes.  While strategies may change over time based upon circumstances and opportunities to advance the cause of CUSOs, the necessity for funding of such initiatives is essential if NACUSO is going to remain in a position to impact the decision-making process for CUSOs and the credit unions that invest in, or utilize them.

Click to Contribute

For a summary of how NACUSO has worked to maintain an environment that is supportive of collaborative investment, the following report entitled NACUSO Working For You (see below) provides a summary of the work we have done on your behalf.  To capsulize some of its key points, a summary of what we feel are the NACUSO “wins” this past year are:

  • Effectively opposing the costly extension of Vendor Authority to NCUA.
  • Worked with NCUA on the revised MBL Rule.
  • Advocating for the expansion of CUSO powers to originate loans credit unions are authorized to make, to help bring scale and expertise benefits to credit unions in all loan categories.
  • Encouraged NCUA to be transparent in its budget and rule making including the OTR calculation.
  • Working with NCUA to minimize adverse impact of the CUSO Registry and to correct the acknowledgements initially in the Registry.

To emphasize the last bullet above, initially, in its first version of the CUSO Registry documentation that CUSOs were required to submit with their data to NCUA in 2016, the agency’s acknowledgement form required CUSOs – when submitting their data – to accept responsibility under regulations that only apply to credit unions but were not intended to, apply to CUSOs.  These acknowledgments, if left unchallenged and signed by CUSO officials, could have exposed CUSOs to potential penalties under regulations that do not, and were never intended to apply to CUSOs.  Upon becoming aware of this inappropriate acknowledgement requirement, NACUSO worked directly with senior NCUA staff to bring our concerns to their attention.  NCUA agreed to the NACUSO position and made the needed changes to the acknowledgements for the CUSO Registry data submission process.  In addition, for those CUSOs who had already submitted their registration and signed the acknowledgements, NACUSO developed a letter with the appropriate wording for those CUSOs to send to NCUA to clarify this acknowledgement concern.

Effective advocacy requires ongoing diligence in following every aspect of regulatory requirements impacting CUSOs and the credit unions that invest in them and benefit from them.  It necessitates prompt response at times and the ongoing resources to interact positively on behalf of the CUSO community on issues and requirements of all types.  With a new Congress now in session, educating them on the benefits of credit unions and the collaborations that enable them to cost effectively serve their members, as well as invest in innovation, through CUSOs that help spread and minimize risk, is an important message we are delivering.  We hope that you agree such diligent advocacy initiatives are crucial to the long-term viability of the collaborative movements within the credit union community.

We hope this report helps you see how we have carefully managed the funds entrusted to us, for Advocacy purposes.  We would be happy to answer any questions that you may have.  Thank you for your support, and for giving NACUSO the opportunity to support you as you serve your members.  Please consider adding your support to our advocacy efforts by contributing today.

View NACUSO’s 2016-17 Advocacy Plan 

View NACUSO’s Advocacy & Legal Fund Analysis


Best Regards,

Jack M. Antonini
President & CEO

NACUSO Working For You

Legislative & Regulatory Advocacy Update

Vendor Authority

Knowing that obtaining vendor authority was the number one legislative issue for NCUA in 2015-16, Jack Antonini and Guy Messick met with key Congressional representatives in January to tell Congress why credit unions and CUSOs oppose the extension of this expansive, costly and unnecessary authority to NCUA.  When NCUA made their official request for vendor authority, Congress was not persuaded by their arguments.

We continue to monitor the situation to ensure that the Senate and House recognize that such an unwarranted extension of regulatory and examination authority beyond the current statutory mandate of NCUA is both controversial in the industry and potentially damaging to an industry that is dependent upon third party relationships because of their smaller size in comparison to many of their competitors.  Credit unions need third party support and collaborative innovation to continue to effectively meet their members’ needs, and a burdensome regulatory and examination regime for anyone who does business with a credit union will not foster that support and innovation.

NACUSO is focused on protecting credit union collaboration through CUSOs, but we need your help, so we can continue to be vigilant in monitoring legislation in Congress, please contribute to NACUSO’s Advocacy Fund today – click here to contribute.


NACUSO was supportive of the positive changes in NCUA’s revised MBL Rule, including the greater authority to waive personal guarantees, a more balanced approach to construction loan limitations, enhanced flexibility on counting loan participations against the MBL cap and the improved treatment of 1-4 dwelling rental property.  NACUSO also, in consultation with our business lending CUSO members, recognized that the Conflict of Interest provisions in the new MBL Rule could be misconstrued by examiners, so we have engaged with NCUA Board members and senior NCUA staff about the issue, and sent a letter to explain our concern and our recommended solution (see NACUSO’s MBL Conflict of Interest Letter to NCUA ).

Expansion of CUSO Authorized Powers

NACUSO wrote to the NCUA Board in 2015 requesting an amendment to NCUA Regulations Part 712.5 to add to the list of authorized CUSO powers to help facilitate a competitive solution to the growing Internet and peer-to-peer lending competitors for car loans and unsecured loans faced by credit unions in today’s environment (see NACUSO’s letter).  Chairman Matz responded that she was not opposed to reconsidering new authorities for CUSOs, indicating “if CUSOs can legally provide additional services to benefit credit unions and their members without compromising safety and soundness, I would strongly support those efforts.”  Chairman Matz went on to say that she had asked NCUA staff to review the policy and safety and soundness considerations relative to our request, and this review is already underway (see Chairman Matz response).

NACUSO has since asked the NCUA Board to consider updating the CUSO powers to align CUSO loan support with the loans credit unions are authorized to provide to their members  (see NACUSO’s 2017 Expansion of CUSO Authorized Powers Letter to NCUA), so CUSOs can bring scale, risk mitigation and expertise benefits to credit unions in all loan categories, not just those listed in the regulations.  While we explained the reasons for updating the NCUA Rules and Regulations Part 712.5 defining the permissible pre-approved activities a CUSO may provide, we also referred to our advocacy efforts to have auto loans and consumer loans added to the list of CUSO activities over the past two years, and the support that NCUA has communicated regarding those efforts.  We respectfully submit that now is the time to update the CUSO regulations to clarify that CUSOs are authorized to assist credit unions with any loan type that credit unions are authorized to make.

Update on CUSO Rule Implementation

Pursuant to the CUSO Rule the NCUA adopted in November 2013, CUSOs have been required to report certain information directly to NCUA pursuant to the agreement with their investing credit unions.  NCUA built an on-line reporting system that went live in the first quarter of 2016, and CUSOs updated their CUSO Registry information in the first quarter of 2017.

NACUSO continues to work with regulators minimize the regulatory burden on CUSOs and to help credit unions realize the maximum benefit from collaboration through CUSOs.  We work to ensure regulations affecting credit unions and CUSOs are as favorable as possible, but we need your help to continue this regulatory advocacy work, please contribute to the NACUSO Advocacy Fund today.

NACUSO Supported Transparency on OTR

NACUSO has long expressed its concern about the growth of NCUA and its extension of its regulatory arm, both directly and indirectly, into areas of questionable statutory authority such as the de facto regulation and examination of CUSOs through the 2013 CUSO Rule.  The extension of regulatory authority by NCUA comes with increased costs, costs that are paid for ultimately by credit union members.

NCUA takes money from the insurance fund to pay for its operations through the Overhead Transfer Rate (“OTR”).  The OTR currently funds approximately 70% of NCUA’s budget.  NCUA does not have to justify its expenses or ask permission from anyone to take as much money as it deems appropriate from the share insurance fund for its operations.  Fortunately, under new leadership, NCUA has decided to be more transparent as part of its budget process and publish details of how it calculates the OTR.

NACUSO 2016-17 Legislative & Regulatory Advocacy Plan

As we explained when we announced the formation of the NACUSO Advocacy Fund two years ago, the regulatory climate that enabled credit unions to maximize the benefits of CUSOs and collaboration is under siege, and as an industry, we need to respond.  NACUSO established an Advocacy Fund to supplement its efforts to promote and protect a collaboration/CUSO friendly regulatory climate.

At the 2016 NACUSO Annual Conference, we shared our 2016-17 NACUSO Advocacy Plan, based upon the four basic precepts upon which our advocacy work is based.  Those four pillars are designed to support an environment that:

  • Encourages credit unions to deliver a better member experience and improve the financial well-being of members
  • Encourages credit unions to seek new collaborative ways to serve members needs
  • Rewards investment in innovation and collaboration
  • Supports the use of CUSOs as the incubators for collaboration and innovation so that credit unions can reap the benefits of entrepreneurialism without direct risks

The Advocacy Plan also identifies the key associational positions that NACUSO is focused on, for the benefit of CUSOs and their credit union owners, which are summarized as follows:

  • Supports the development of clear examination guidelines that recognizes that NCUA has review powers and not examination powers over CUSOs. Such guidelines would inhibit de facto regulatory creep that would treat CUSOs as regulated entities that would discourage innovation and collaboration. NACUSO will intervene with NCUA in the more egregious cases if the CUSO or the investing credit unions request NACUSO’s assistance.  NACUSO opposes any legislative efforts by NCUA to gain statutory authority to directly regulate and examine CUSOs through an unnecessary expansion of the agency’s examination authority over credit union vendors
  • NACUSO supports the modernization of the permitted CUSO Services list to include all loan types that credit unions can originate to help bring scale benefits as well as risk mitigation and expertise benefits to credit unions
  • NACUSO will encourage regulators to view innovation and collaboration as an essential part of a revitalized credit union model and adapt their regulations and supervision to encourage the responsible and prudent development of the collaborative model

Key strategies for accomplishing the NACUSO 2016-17 Legislative and Regulatory Advocacy Plan are detailed in the Advocacy Plan.  In order to have a maximum impact upon the regulators and the industry, CUSOs and their credit union owners must stand united as we promote the unique collaborative opportunities and risk sharing benefits that our CUSOs provide.   Together, our participation in collaboration advocacy efforts through NACUSO will be our most effective way of impacting the future regulatory environment under which CUSOs operate.

NACUSO will focus its advocacy efforts on those issues most critical to the CUSO community as a whole and will attempt to avoid watering down its message on key issues by taking public positions on all issues that may impact CUSOs or credit unions in a more indirect manner.

In the current environment it has become increasingly important for credit unions to find new sources of non-interest income in order to enhance earnings, build capital, and support member growth.  Thus, collaboration and innovation are more critical now than ever before to create sustainability for the credit union movement.  NACUSO educates the industry as a whole (CUSOs, credit unions and other providers) on the benefits of collaboration and innovation, facilitates cooperative business opportunities, and provides leadership on how to implement these strategies within a favorable legislative and regulatory environment.

It is the desire of NACUSO to be recognized as an effective organization in support of building a favorable legislative and regulatory environment through what we consider the four pillars of future credit union success – collaboration, innovation, growth and entrepreneurship.  NACUSO will be balanced in approach, but bold in action to aggressively promote this agenda and will seek to join with other like-minded organizations, when appropriate, to work in collaboration with NACUSO to see these key agenda items accomplished.

All of the organizations associated with the NACUSO Board of Directors have already made contributions to the NACUSO Advocacy Fund.   We urge you to add your collaborative voice to NACUSO’s advocacy efforts.  Please complete the commitment form today, and send your contributions to NACUSO so we can help you.  Please share with your friends in the industry who want to ensure a bright innovative, collaborative future for our industry and our members.  If you or your industry friends are not yet members of NACUSO, now is the time to join, and be part of the collaborative solution.  If you have questions about the NACUSO Advocacy Fund, click the link to go to the NACUSOAdvocacy Fund FAQ’s.

Thank you very much for your support, and for giving NACUSO the opportunity to serve you as you serve your members.  It is a privilege that we truly appreciate.


Jack M. Antonini
President & CEO

Jack M Antonini
President & CEO – NACUSO  (713) 208-0989
NACUSO’s 2018 Network Conference April 16-19 at Disneyland Resort in Anaheim, CA
Learn more about NACUSO in this short video!

NCUA Meeting Provides CUSO Guidance 6/16/16

NACUSO Visits NCUA to Discuss the CUSO Registry and CUSO Reviews

On June 14, Jack Antonini, NACUSO President and Guy Messick, NACUSO General Counsel met with NCUA Staff on the results of the CUSO Registry and the thinking on how CUSO Reviews will be handled.

The CUSO Registry sign-up period and the follow-up by NCUA found there were approximately 900 CUSOs.   NCUA believes that there are more CUSOs that have not reported.  Under the NCUA Regulations (Part 712.1(d)), “A CUSO also includes an entity in which a CUSO has an ownership interest of any amount, if that entity is engaged primarily in providing products or services to credit unions or credit union members.”   So these subsidiary CUSOs are considered CUSOs and required to make annual reports to NCUA.   The NCUA staff believes that many CUSOs were not fully aware of this requirement and there are a number of subsidiary CUSOs that have not reported.   NCUA will be following up with CUSOs to obtain these filings.   NCUA is also scrubbing the data and asking for clarification if the data is indicating that there may have been a reporting error. (more…)

Report on Advocacy Fund spending…NACUSO Working for you

Through the support of our partners, NACUSO raised approximately $63,000 in contributions toward its Legal and Litigation Fund in 2014 with a primary purpose to develop strategies for the most effective way to seek the repeal and/or mitigation of the impact of the CUSO Rule that NCUA had adopted in November 2013.  Subsequently, NACUSO established an Advocacy Fund to supplement the Legal and Litigation Fund.  The goal of the two funds together were to enable NACUSO to coordinate legal decision making, with a crucial advocacy component that will have more impact than the always risky option of legal action.  In total, $190,600 was contributed to the NACUSO Advocacy Fund.  Combined these two related initiatives received total contributions from NACUSO partners of approximately $253,600 in 2014 and 2015.

In keeping with our commitment to be fully transparent and to regularly communicate our usage of these dollars, we would like to provide you with the following information.  NACUSO spent the following amounts from the two funds during 2014 and 2015:


CUSO Registry Clean Up Period 4/22/16

As most of you know, all CUSOs are obligated under the NCUA Regulations to register certain information directly with NCUA on an annual basis.   Over 800 CUSOs did so in February and March.   NCUA is now in the process of making sure all CUSOs have registered.   Their new deadline is April 30.  They are taking CUSO information from the credit union 5300 call reports and sending out letters reminding “CUSOs” that they have to register.   Some credit unions may have incorrectly listed a company as a CUSO.  Other credit unions list their CUSO but use an acronym for the CUSO instead of the CUSO’s full name.   NCUA, not knowing better is sending letters to any and all companies listed on the call reports. (more…)

Regulatory Update 3/15/16

Letter to NCUA regarding CUSO Registry Acknowledgement: Yesterday, NACUSO informed you of a change we negotiated with our General Counsel (Messick & Lauer) with the NCUA regarding the CUSO Registry Acknowledgment each CUSO is required to agree to when submitting their CUSO registration in the NCUA’s CUSO Registry system.  As we pointed out in our Regulatory Alert yesterday, the acknowledgment required CUSOs to agree to be bound by statutes that only apply to credit unions and which imposed penalties that are not applicable to CUSOs.


Change to the CUSO Registry Acknowledgement 3/14/16

During the process of assisting with CUSO Registry questions, it came to our attention that in order to complete the CUSO Registry, CUSOs were required to agree to be bound by statutes that apply to credit unions and which imposed penalties that are not applicable to a CUSO.  On behalf of NACUSO and the many CUSOs in this industry, Messick & Lauer (NACUSO’s General Counsel) have advocated and negotiated to revise this acknowledgement to more accurately describe the duty of CUSOs to respond to the CUSO Registry.  It is a contractual duty with the credit union and not a direct regulatory obligation to NCUA.   As NCUA continues to pay more attention to CUSOs, NACUSO will continue to take action to be the voice of CUSOs and to resist any attempts at regulatory overreach.  The NCUA has changed the acknowledgement text.  For your reference, the text of the previous and current CUSO Registry acknowledgments are below. (more…)

Regulatory Update 2/26/16

NCUA’s CUSO Registry Training & Demonstration webinar held on February 11 is now available to be viewed.  If you missed the webinar, or want to view it again, to help you in completing the CUSO Registry, you can watch it by clicking on the following link:  View 2/11/16 Webinar. You have until March 31, 2016 to complete your initial registration of all CUSOs.