On March 24, the NCUA proposed a rule to remove prescriptive limits on federally insured credit unions’ ability to purchase or participate in third-party auto loans, marking the eighth round of its ongoing initiative to streamline regulations and remove provisions it considers outdated or duplicative (previously covered by InfoBytes here). The proposal would eliminate §§ 701.21(h) and 741.203(c), which currently cap aggregate purchases from a single servicer at 50 percent of a credit union’s net worth — rising to 100 percent after 30 months — and require waiver approvals from regional directors, with additional concurrence from state supervisory authorities for state-chartered institutions.

According to the NCUA, these provisions are “unduly burdensome,” and credit union boards are “in the best position” to establish policies scaled to their size, transaction complexity, and risk tolerance. The NCUA said removing these limits would reduce regulatory burden and provide greater flexibility, consistent with what it described as a principles-based supervisory approach. If adopted, the agency stated that boards would remain responsible for ensuring purchases are “appropriately scaled” and consistent with safety and soundness standards. Public comments on the proposal are due by May 26.