NCUA seeks comment on new deregulation proposals for credit unions

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NCUA deregulation proposals

Highlights

NCUA seeks comment on proposals to amend 12 CFR 704 and 12 CFR 713, simplifying fidelity bond requirements for federally insured and corporate credit unions.
The agency proposes clarifying application procedures for new activities by allowing federal credit unions to apply directly to the NCUA Board without requiring prior advisory opinions.
Updates to 12 CFR 725 aim to reduce burden by streamlining Central Liquidity Facility membership and reporting, adding flexibility for capital stock adjustments, and modernizing technical rules.

Proposals target bond rules and application process

As reported by NCUA.gov, citing the National Credit Union Administration, the agency is requesting comments on three proposals tied to its Deregulation Project, which is intended to keep rules focused on credit unions' safety, soundness and resilience.

One proposal would amend 12 CFR 704 and 12 CFR 713 to simplify fidelity bond requirements for federally insured credit unions and corporate credit unions. The changes would remove or modify requirements tied to bond purchases and renewals, approved bond forms and guidance on coverage levels, while still requiring credit unions to maintain adequate protection against fraud, dishonesty, theft and other covered losses.

A separate proposal would clarify that federal credit unions may apply directly to the NCUA Board for approval of an activity that is not already recognized as an authorized incidental power. The agency says the rule would remove language that has created confusion over whether an advisory opinion from the Office of General Counsel is required before an application goes to the Board, while maintaining that such guidance remains optional.

CLF updates aim to reduce burden

Another proposal would update 12 CFR 725 by incorporating certain regulatory changes adopted during the COVID-19 pandemic, removing outdated provisions and simplifying Central Liquidity Facility membership and reporting requirements.

The proposal also would give additional flexibility for capital stock subscription adjustments and make technical revisions intended to improve clarity and consistency. NCUA says the changes are designed to reduce regulatory burden and modernize CLF rules while preserving the facility's role as a contingent liquidity source for credit unions.

Our earlier coverage on the insurance-linked securities (ILS) market outlined how investors and reinsurance buyers are tracking catastrophe bond issuance, pricing trends, and capital flows as a gauge of available risk capacity. It also noted the market’s expansion into casualty ILS and evolving secondary-peril risk modeling, underscoring how alternative capital is reshaping protection against a wider range of risks.

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