TDR, RegFlex Final Lead NCUA Agenda

A final version of new Troubled Debt Restructuring (TDR) rules and Regulatory Flexibility (RegFlex) program changes will be the lead items on the agenda when the National Credit Union Administration holds its next open board meeting at 10 a.m. ET on May 24.

The NCUA's TDR proposal, which was released in January, would allow credit unions to modify TDR loans without having to immediately classify those loans as delinquent. Credit unions would no longer be forced to track each TDR loan's performance manually for six months. The proposal would also set consistent standards for the management of loan workout arrangements that assist borrowers, and eliminate confusion between TDRs and other loan modifications.

TDR loans, which have very specific accounting and reporting requirements, include certain loan modifications where a credit union or other lender grants a concession—often involving modification to the terms of a loan—to a borrower that it would not have otherwise provided based on the borrower's financial situation. The financial statement and call report treatment of TDRs are also unique.

The Credit Union National Association (CUNA) and leagues have urged NCUA to improve reporting and regulatory treatment for TDRs for some time, and CUNA in a recent comment letter said the NCUA's proposal represents "an important step forward in terms of guidance and reporting requirements for TDRs."

The NCUA also recently proposed eliminating the RegFlex program, and a final version of that plan is scheduled to be presented at the meeting.

Under the proposal to eliminate RegFlex, the NCUA would allow all credit unions to:

• Donate funds to charities of their choosing;
• Accept non-member deposits, subject to predetermined limits, from local governmental entities or other credit unions; and
• Purchase private-label commercial mortgage-related securities, subject to certain net worth constraints and safety and soundness rules.

Other rights would also be granted to credit unions that are not covered under the RegFlex designation.

CUNA supports the goals of this RegFlex proposal, but also suggested the NCUA could go beyond the parameters of this proposal, giving credit unions even greater freedom from burdensome regulations.

A review of the first quarter National Credit Union Share Insurance Fund will also be presented during the meeting, and the agency will also release a final Interpretive Rule and Policy Statement on supervisory committees.

This will be the first open board meeting held since March, as the agency cancelled its scheduled April board meeting.

Supervisory activities and an appeal will be addressed during the closed portion of the meeting.

For the full agenda, click here.