CUCE NCUA RULES NEW UPDATE WITH
COMPLETE SOLUTION
Triggers for written Interest Rate Risk (IRR) policy requirement - CORRECT ANSWER -
- credit unions above $50 million assets
- CUs with between $10 million and $50 million that have total first mortgages plus
investment with greater than five years maturity that equals or exceeds 100% of their net
worth (supervisory interest rate risk threshold)
FISCU - CORRECT ANSWER - Federally Insured State-chartered Credit Union
Corporate Credit Union - CORRECT ANSWER - a credit union that only provides services
to other credit unions, not consumers
Parts of FCU Act - CORRECT ANSWER - 1. General Provisions
2. Share Insurance
3. Central Liquidity Facility
NCUA Board - CORRECT ANSWER - 1. 3 members
2. members are nominated by President & confirmed by Senate
3. President designates chairperson
4. Single 6-year term
5. No more than 2 from same political party
FCU Act powers granted to state-chartered CUs - CORRECT ANSWER - Only share draft
authority
Borrowing Limitation - CORRECT ANSWER - up to 50% of paid in capital and unimpaired
surplus
Permitted services for nonmembers w/in FOM - CORRECT ANSWER - 1. sell travelers
checks and money orders
2. cash checks and money orders
3. provide check cashing services
4. provide wire transfer services
What section is power of NCUA to examine all federally insured CUs? - CORRECT
ANSWER - Title 2, Share Insurance
,What membership service does FCU Act specifically authorize for state-chartered CUs?
- CORRECT ANSWER - offering share draft accounts (Title 2)
Central Liquidity Facility (CLF) membership - CORRECT ANSWER - 1. voluntary
2. open to all CUs
3. Agent membership available only to corporate CUs
When is CLF authorized to lend money to CUs? - CORRECT ANSWER - 1. short-term
adjustment credit, for seasonal needs
2. protracted adjustment credit, for unusual or emergency circumstances of a longer-term
nature resulting from national, regional, or local difficulties
NOT for the purpose of expanding a CU's portfolio
Required to take a first-priority security interest in specific assets of the CU with a net
book value at least equal to 110% of the amount owed to the CLF.
How can an FCU offer services not specifically authorized by the FCU Act? - CORRECT
ANSWER - 1. Generally, it can't
2. Under the "incidental powers" clause
What is an FCU's tax status - CORRECT ANSWER - 1. Exempt from federal tax under
501(c)(1)
2. Exempt from state income tax under FCU Act
3. Exempt from state & local sales taxes imposed directly on a consumer or business
4. Subject to real property and personal property taxes (Federal, state, and local)
5. Subject to pass-through taxes (such as on an electric bill)
6. Exempt from federal UBIT (state CUs are not exempt)
7. Not required to file Form 990 (state CUs must file)
8. Excise taxes: case by case; exempt if tax, not if more like a user fee
Backing of NCUSIF - CORRECT ANSWER - full faith & credit of the US Government
Where is the NCUA within the US government structure? - CORRECT ANSWER -
independent agency of the Executive branch
Procedures for developing a regulation under the Administrative Procedures Act (APA) -
CORRECT ANSWER - 1. NCUA develops proposed regulation, usually because of a
change in the law, a safety and soundness concern, or a need to clarify an existing agency
directive.
2. The NCUA Board is required to publish an agenda announcing that the board will be
considering a proposed regulation.
, 3. The board must consider at a public meeting (an "open" meeting) whether it will
propose a regulation for public comment. If a majority of the NCUA Board (that is, two
members) agrees to seek public comments, the proposed regulation will be published in
the Federal Register, the official government publication of all proposed and final
regulations issued by all federal agencies.
4. Proposed regulations are to be issued for a minimum of 30 days for what is generally
referred to as the "notice and comment period." Typically, proposed regulations are open
for comment between 30 days and 120 days.
5.NCUA staff then reviews the written comments received and usually within a few
months after the end of the comment period, proposes in another open meeting a final
regulation for the NCUA Board to consider.
6. The board can accept, reject, or amend the staff proposal. In order for a regulation to
be finalized, it must be approved by the majority of the NCUA Board. If it is approved, it
will be published as a final regulation in the Federal Register.
7. NCUA is required by law to give an effective date of at least 30 days after publication
in the Register, giving credit unions an opportunity to hear about the change. NCUA can,
and often does, give a longer period between when the NCUA Board approves a new
regulation and when credit unions must comply with it, especially if the regulation will
require changes in procedures, forms, or training. A period shorter than 30 days is allowed
when: 1) the regulation grants an exemption or relieves a restri
Advance Notice of proposed rulemaking (ANPR) - CORRECT ANSWER - requests
comment on an issue prior to writing a proposed regulation
IRPS: Interpretive Rulings and Policy Statements - CORRECT ANSWER - - Agency's
interpretation of meaning of the FCU Act on a particular subject
- does not require public comment before finalization
How are IRPSs used? - CORRECT ANSWER - 1. to serve as commentary to explain a
law
2. to address a particular area of concern such as investment practices
3. to be a joint policy statement from all the federal banking agencies
Letters to Credit Unions - CORRECT ANSWER - 1. provide clarifying information about
a specific regulation
2. express concern about how credit unions are complying with certain developments
3. issue warnings
4. announce changes in accounting rules, operating fee assessments, or examination
procedures
COMPLETE SOLUTION
Triggers for written Interest Rate Risk (IRR) policy requirement - CORRECT ANSWER -
- credit unions above $50 million assets
- CUs with between $10 million and $50 million that have total first mortgages plus
investment with greater than five years maturity that equals or exceeds 100% of their net
worth (supervisory interest rate risk threshold)
FISCU - CORRECT ANSWER - Federally Insured State-chartered Credit Union
Corporate Credit Union - CORRECT ANSWER - a credit union that only provides services
to other credit unions, not consumers
Parts of FCU Act - CORRECT ANSWER - 1. General Provisions
2. Share Insurance
3. Central Liquidity Facility
NCUA Board - CORRECT ANSWER - 1. 3 members
2. members are nominated by President & confirmed by Senate
3. President designates chairperson
4. Single 6-year term
5. No more than 2 from same political party
FCU Act powers granted to state-chartered CUs - CORRECT ANSWER - Only share draft
authority
Borrowing Limitation - CORRECT ANSWER - up to 50% of paid in capital and unimpaired
surplus
Permitted services for nonmembers w/in FOM - CORRECT ANSWER - 1. sell travelers
checks and money orders
2. cash checks and money orders
3. provide check cashing services
4. provide wire transfer services
What section is power of NCUA to examine all federally insured CUs? - CORRECT
ANSWER - Title 2, Share Insurance
,What membership service does FCU Act specifically authorize for state-chartered CUs?
- CORRECT ANSWER - offering share draft accounts (Title 2)
Central Liquidity Facility (CLF) membership - CORRECT ANSWER - 1. voluntary
2. open to all CUs
3. Agent membership available only to corporate CUs
When is CLF authorized to lend money to CUs? - CORRECT ANSWER - 1. short-term
adjustment credit, for seasonal needs
2. protracted adjustment credit, for unusual or emergency circumstances of a longer-term
nature resulting from national, regional, or local difficulties
NOT for the purpose of expanding a CU's portfolio
Required to take a first-priority security interest in specific assets of the CU with a net
book value at least equal to 110% of the amount owed to the CLF.
How can an FCU offer services not specifically authorized by the FCU Act? - CORRECT
ANSWER - 1. Generally, it can't
2. Under the "incidental powers" clause
What is an FCU's tax status - CORRECT ANSWER - 1. Exempt from federal tax under
501(c)(1)
2. Exempt from state income tax under FCU Act
3. Exempt from state & local sales taxes imposed directly on a consumer or business
4. Subject to real property and personal property taxes (Federal, state, and local)
5. Subject to pass-through taxes (such as on an electric bill)
6. Exempt from federal UBIT (state CUs are not exempt)
7. Not required to file Form 990 (state CUs must file)
8. Excise taxes: case by case; exempt if tax, not if more like a user fee
Backing of NCUSIF - CORRECT ANSWER - full faith & credit of the US Government
Where is the NCUA within the US government structure? - CORRECT ANSWER -
independent agency of the Executive branch
Procedures for developing a regulation under the Administrative Procedures Act (APA) -
CORRECT ANSWER - 1. NCUA develops proposed regulation, usually because of a
change in the law, a safety and soundness concern, or a need to clarify an existing agency
directive.
2. The NCUA Board is required to publish an agenda announcing that the board will be
considering a proposed regulation.
, 3. The board must consider at a public meeting (an "open" meeting) whether it will
propose a regulation for public comment. If a majority of the NCUA Board (that is, two
members) agrees to seek public comments, the proposed regulation will be published in
the Federal Register, the official government publication of all proposed and final
regulations issued by all federal agencies.
4. Proposed regulations are to be issued for a minimum of 30 days for what is generally
referred to as the "notice and comment period." Typically, proposed regulations are open
for comment between 30 days and 120 days.
5.NCUA staff then reviews the written comments received and usually within a few
months after the end of the comment period, proposes in another open meeting a final
regulation for the NCUA Board to consider.
6. The board can accept, reject, or amend the staff proposal. In order for a regulation to
be finalized, it must be approved by the majority of the NCUA Board. If it is approved, it
will be published as a final regulation in the Federal Register.
7. NCUA is required by law to give an effective date of at least 30 days after publication
in the Register, giving credit unions an opportunity to hear about the change. NCUA can,
and often does, give a longer period between when the NCUA Board approves a new
regulation and when credit unions must comply with it, especially if the regulation will
require changes in procedures, forms, or training. A period shorter than 30 days is allowed
when: 1) the regulation grants an exemption or relieves a restri
Advance Notice of proposed rulemaking (ANPR) - CORRECT ANSWER - requests
comment on an issue prior to writing a proposed regulation
IRPS: Interpretive Rulings and Policy Statements - CORRECT ANSWER - - Agency's
interpretation of meaning of the FCU Act on a particular subject
- does not require public comment before finalization
How are IRPSs used? - CORRECT ANSWER - 1. to serve as commentary to explain a
law
2. to address a particular area of concern such as investment practices
3. to be a joint policy statement from all the federal banking agencies
Letters to Credit Unions - CORRECT ANSWER - 1. provide clarifying information about
a specific regulation
2. express concern about how credit unions are complying with certain developments
3. issue warnings
4. announce changes in accounting rules, operating fee assessments, or examination
procedures
