NCUA to limit golden parachutes at troubled CUs

July 30, 2010 – NCUA issued a proposed rule barring golden parachutes at some credit unions and two other, interim final rules out for comment as a result of Thursday’s open board meeting in Alexandria, Va.

The proposed rule, out for a 30-day comment period, would bar troubled, federally insured credit unions from entering into golden parachute and indemnification contracts with institution-affiliated parties. It is not retroactive and would apply only to new contracts and revisions.

The agency wants to protect the NCUSIF from wrongful or improper use of FICU assets “and to inhibit unwarranted rewards” to those who may have contributed to the credit union’s financial problems, staff wrote in Thursday’s board action memorandum.

The NCUA Board also issued these Thursday:

Truth-in-savings interim final rule

This tracks revisions to the Federal Reserve Board’s Truth in Savings Act Regulation DD addressing electronic disclosures of overdraft fees, overdraft fee disclosure terminology and retail sweep accounts that began taking effect July 6.

NCUA is incorporating these into its own rules. The final rule will take effect 30 days following publication in the Federal Register, except a provision requiring the use of the term “total overdraft fees” in periodic statement disclosures takes effect Oct. 1. A 60-day comment period is also included.

Interim final on “low-income” member

Effective upon publication in the Federal Register, this requires comparisons between like data categories in comparing credit union member income data with Census Bureau data.

The data shows whether a credit union qualifies for NCUA’s low-income designation; the rule will ensure consistency with NCUA’s geocoding software but isn’t expected to change credit unions’ status. A 60-day comment period is attached.

NAFCU is preparing Regulatory Alerts for its members.