REMINDER – COMMENT PERIOD ENDS THURSDAY, MARCH 25 ON NCUA’S PROPOSED CUSO RULE

Unless it is extended thirty days as has been requested by the American Bankers Association, the comment period for the NCUA’s recently proposed CUSO rule ends this Thursday, March 25, at midnight.

We have encouraged our credit union clients that have an investment in a CUSO or might consider such an investment in the future to let their voice be heard in support of this rule which allows a CUSO to offer all types of loans that a credit union can offer.

CUSOs can currently, under existing regulation, make mortgage loans, business loans, student loans and credit card loans. They, however, cannot make personal loans or auto loans.

This proposed rule would close that gap between the currently regulatory authorized sources for CUSO lending and expanding authority for CUSOs to be a potential lending growth solution for credit unions in all areas of credit union lending – including personal loans and, particularly important today, auto loans – in addition to the mortgage, business, credit card and student lending areas currently authorized.

Credit unions need additional lending options.

The CUSO model can help this drive toward increased lending. While it can be a real market expander for a credit union with a wholly owned lending CUSO, it can be the salvation for many smaller to moderate sized credit unions that can now use multiple credit union collaboration to keep them alive and competitive in some challenging areas of lending such as auto loans.

If you have not yet read it, the full proposed CUSO rule can be accessed at the following link: https://www.federalregister.gov/documents/2021/02/26/2021-01398/credit-union-service-organizations-cusos

If your credit union sees value in having the CUSO option available for all types of lending whether or not you think you will use it at this time, we encourage you to write a comment letter in support of the rule.

The comment letter can be filed quite easily by using the online portal below.

https://www.regulations.gov/search?filter=3133-AE95

If you would like some language to use or work from in shaping your comments, feel free to use the language below or something similar.

I am contacting you today on behalf of ABC Credit Union in order to state our support for the NCUA’s recently proposed rule expanding the lending authority of Credit Union Service Organizations (CUSOs). 

CUSOs should be able to lend in any field that credit unions are authorized to lend.

CUSOs are a part of the credit union future through the value of collaboration and the ability to expand lending services to more consumers that need access to lower cost borrowing options.

We encourage the NCUA Board to finalize the CUSO rule.  Thank you for this opportunity to comment on the proposed rule.

If you would like to do so, the following paragraph can be added before the final paragraph.

It would also be beneficial in extending lower cost lending options to more underserved Americans if the regulatory language requiring CUSOs to primarily serve credit union members were to be made more flexible by requiring CUSOs to substantially serve credit union members. 

Again, this is a separate issue not included in the current proposed rule but might be worth introducing to NCUA for future consideration.

At present CUSOs must do at least 50% of its business with members of the owning credit union(s) in order to meet the “primarily serving credit union members” criteria.  Changing that language to “substantially serving credit union members” would enable NCUA, by regulation, to lower the 50% requirement to 20%, 25%, 33% or some other number that would be less than 50% – but still substantial.

Add that language if you agree with it.  If not, use the language provided above or something similar.  Put it in your own words if you can.

But it is better to send the same language than not to be heard on the issue at all.

Until next time.

Dennis Dollar