NCUA advances deregulation round with final rules and obsolete lending rule proposal

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NCUA advances deregulation round

Highlights

NCUA proposed eliminating 12 CFR 723.9, an obsolete transitional lending rule from 2016, to simplify credit union regulations and requests public comment.
A final rule permanently maintains the regulatory treatment for Paycheck Protection Program loans adopted on April 27, 2020, under the CARES Act.
NCUA amended 12 CFR 701.39 by removing an unnecessary definition of statutory lien language, with no change to credit unions’ legal obligations or authorities.

Deregulation package targets outdated credit union rules

As reported by National Credit Union Administration, the latest package includes a proposed rule and an interim final rule that would eliminate 12 CFR 723.9, a transitional provision in the commercial lending regulation that the agency now considers obsolete.

The provision was adopted as part of the 2016 commercial lending rule to cover credit unions operating under certain NCUA-approved waivers or supervisory actions during the shift to a principles-based framework. The agency says the rule has served its purpose and that removing it would simplify the regulatory code and improve clarity.

NCUA is requesting comments on the proposal as part of its continuing review of regulations. The broader Deregulation Project is intended to keep rules aligned with credit unions' safety, soundness, and resilience while stripping out provisions no longer seen as necessary.

Final rules preserve PPP treatment and revise lien language

The two final rules address separate areas of credit union oversight. One makes permanent the regulatory treatment of Paycheck Protection Program loans that has been in place since April 27, 2020, after those provisions were originally adopted during the COVID-19 pandemic to implement the CARES Act.

The second final rule amends 12 CFR 701.39 by removing paragraph (a)(1), which defined the phrase "except as otherwise provided by law or except as otherwise provided by federal law." NCUA says that definition is unnecessary because credit unions are already responsible for identifying and complying with applicable laws when they exercise statutory lien authority.

The agency says the revision does not change a credit union's statutory lien authority or its existing legal obligations. Together, the changes signal a continued effort by the U.S. regulator to trim legacy provisions while keeping the operating framework for credit unions intact.

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