Home Info Newsroom NCUA Board Finalizes CAMELS Rule; OKs CUSO Lending Rule

NCUA Board Finalizes CAMELS Rule; OKs CUSO Lending Rule

Authored By: Lewis Wood on 10/21/2021

In actions today, the National Credit Union Administration Board voted to add the “S” component (Sensitivity to Market Risk) to the existing CAMEL rating system and approved a final rule that will expand lending opportunities for credit union service organizations (CUSOs).

Here is a summary of today's meeting:

  1. The Board unanimously approved a final regulation adding an “S” to the “CAMEL” rating system, thereby now, “CAMELS.” The rule change was largely uncontroversial within the industry as NCUA already measured both liquidity (L) and market sensitivity (S) risks in its examination program. Separating interest rate risk (S) from the liquidity measure provides greater transparency in the overall rating.

    Read Chairman Harper's statement
     
  2. The Board approved the final CUSO rule in a split vote (2-to-1) with Chairman Harper dissenting. Proponents Vice Chairman Hauptman and Board Member Hood argued the expansion of CUSO authority to make any loan a credit union is authorized to make will provide greater lending opportunities -- particularly in the auto market, which has evolved with the popularity of Carvana and other e-retailers. Harper’s opposition centered around advancing the rule absent NCUA 3rd party vendor authority to examine such CUSOs, with added concerns related to consumer protection. For example, CUSOs will be allowed to engage in small-dollar lending outside NCUA’s PAL regulations.

    NCUA Chairman Todd M. Harper Statement on Credit Union Service Organizations Final Rule
    NCUA Board Member Rodney E. Hood Statement on the Final Rule, Part 712, Credit Union Service Organizations
     
  3. The Board highlighted its action this week to allow credit unions in receipt of ECIP funds to maximize and leverage the capital infusion by extending the maturity to 30-year subordinate debt so long as the credit union has been approved by NCUA for secondary capital.
     
  4. The meeting opened with a Cybersecurity update where ransomware was identified as the biggest current concern. Credit unions were encouraged to assess risks associated with 3rd party service providers. Business e-mail compromises were also noted as a vulnerability.

    NCUA Chairman Todd M. Harper Statement on Cybersecurity Briefing

CUNA's summary is available here.

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