On February 24, the NCUA announced a sixth round of proposed regulatory changes under its ongoing “Deregulation Project” seeking to reduce compliance burdens, eliminate duplicative requirements, and streamline outdated provisions for federally insured credit unions (previously covered by InfoBytes here). The agency requested public comments on six proposals published in the Federal Register:

1. Post-Election Training for New Board Members: The NCUA proposed removing 12 CFR 701.4(b)(3), which requires each federal credit union director to attain a working familiarity with finance and accounting within six months of election or appointment, asserting the requirement is “unnecessarily prescriptive.”
2. Loan Compensation/Commission: The agency proposed amending 12 CFR 701.21(c)(8) to define “overall financial performance” and expressly permit incentive or bonus compensation to employees, including “senior management,” based on that measure. The agency said the change would clarify permissible compensation structures tied to lending metrics.
3. Eligible Obligations: The NCUA proposed revising 12 CFR 701.23 to remove lists of items that must be included in written policies for purchasing, selling, and pledging eligible obligations, instead allowing boards to determine appropriate policies. The proposal would also eliminate a conflict-of-interest and compensation provision, codified at 12 CFR 701.23(g), that the agency stated is duplicative of other requirements.
4. Refund of Interest (Loans): The agency proposed rescinding 12 CFR 701.24, which governs interest refunds to members, contending the regulation simply restates authority already provided in the Federal Credit Union Act. The NCUA said eliminating the section would simplify the regulatory code by reducing duplicative text.
5. Credit Union Service Contracts: The NCUA proposed removing 12 CFR 701.26, which requires service contracts to be in writing, calling it a “standard business practice” that does not need to be codified. The agency assessed the change would reduce administrative costs and compliance complexity.
6. Definitions Related to Statutory Lien: The agency proposed deleting 12 CFR 701.39(a)(1), which defines the phrase “except as otherwise provided by law or except as otherwise provided by federal law,” explaining that the definition is redundant and provides no substantive guidance.

Comments on the six proposals are due by April 27.