Voglio sapere a riguardo di…

11646

Federal Register / Vol. 86, No. 37 / Friday, February 26, 2021 / Proposed Rules
cards.16 In granting CUSOs these lending authorities, the NCUA has considered factors specific to each type of lending, such as whether these Expansion of Permissible CUSO Lending activities require specialized staff or Activity economies of scale, and, as discussed below, whether loan aggregation was The Board has reconsidered its 2008
position on permitting CUSOs to engage prevalent in the marketplace for the particular type of lending.
in all types of lending. The Board now For example, when the NCUA
believes that permitting CUSOs to permitted CUSOs to engage in credit originate any type of loan that an FCU
may originate may better enable FCUs to card origination, the agency expressed concern that the scale, expertise, and compete effectively in todays back office operational support required marketplace and better serve their to be successful in the credit card members.
business was causing many FCUs As discussed above, the FCU Act without such resources to sell their permits an FCU to lend to or invest in credit card portfolio to other financial a CUSO that provides services institutions.17 The NCUA has also associated with the routine and daily permitted expanded CUSO lending operations of credit unions. The NCUA
when economies of scale, which an has interpreted this statutory authority broadly to permit an FCU to lend to and individual FCU may not have, made lending more economically viable.18
invest in a CUSO that does most of the When the NCUA granted CUSOs the same activities and services permissible ability to originate consumer mortgage for an FCU.11 However, to date CUSOs loans, it stated that economies of scale have not been permitted to originate are essential to provide mortgage loans 12
certain kinds of loans.
in a cost effective and professional The NCUA historically has been manner.19 The Board has stated that reluctant to grant CUSOs general enabling FCUs to realize the benefits of lending authority for all loans for economies of scale offered by CUSOs several reasons. First, the NCUA has may allow FCUs to offer services to their been hesitant in granting CUSOs members that otherwise could not be authority to provide consumer loans as offered. For example, in permitting it may be perceived as a dilution of the CUSOs to engage in business loan 13
FCU common bond requirement.
origination, the NCUA noted that FCUs Specifically, because CUSOs may serve could afford their small business people that are not members of an FCU, members access to loans that the FCU
the NCUA has been concerned about may otherwise not be able to offer.20 In FCUs benefiting from CUSO profits addition, the NCUA has also permitted generated from non-members. Second, CUSOs to engage in lending where loan the NCUA has also expressed concern aggregation for resale on a secondary that if member loans were being made market is customary such as consumer by CUSOs, the NCUA would have a mortgage and student loan origination.21
duty to examine such loans and that The Board has previously cited the strict would lead to stricter NCUA
rules in the secondary market as examination authority over CUSOs.14
justification for expanding CUSO
Finally, the NCUA has also limited lending authority.22
CUSO lending authority due to concerns In past rulemakings, the NCUA has that permitting CUSOs to engage in a also discussed why the agency declined core credit union function could to expand CUSO lending authority more negatively affect affiliated credit union broadly. The NCUA stated that a services.15
primary rationale for allowing CUSOs to engage in a particular kind of loan Due to these concerns, the NCUA has origination is that an FCU may not previously found compelling possess the level of expertise or justification for expanding CUSO
resources required for a successful loan lending authority for only four types of program, whereas the CUSO may. With loans: 1 Business; 2 consumer respect to vehicle loan origination, the mortgage; 3 student; and 4 credit NCUA stated that most FCUs are able to successfully originate vehicle loans and 10 Originate means to fund or make loans. This is
khammond on DSKJM1Z7X2PROD with PROPOSALS

and comment rulemaking.10 Each proposed change is discussed in detail below.

separate from the already recognized authority of CUSOs to engage in loan support services that include loan processing and servicing under 712.5j.
11 12 CFR 712.5.
12 See, 62 FR 11779 Mar. 13, 1997.
13 Id.
14 Id.
15 68 FR 16450 Apr. 4, 2003.

VerDate Sep<11>2014

16:16 Feb 25, 2021

Jkt 253001

16 Id.

See also, 73 FR 79307 Dec. 29, 2008.
17 73 FR 79307 Dec. 29, 2008. See also, 73 FR
23982 May 1, 2008.
18 51 FR 10353 Mar. 26, 1986.
19 Id.
20 68 FR 56537 Oct. 1, 2003.
21 63 FR 10743 Mar. 5, 1998.
22 Id.

PO 00000

Frm 00002

Fmt 4702

Sfmt 4702

do not need the expertise of a CUSO.23
Similarly, in declining to expand CUSO
lending authority to general consumer loans, the NCUA described such loans as relatively easy to offer and process and did not believe such loans shared similar characteristics with other more sophisticated lending categories permissible for CUSOs.24
After reexamining CUSO authority, the Board is now considering whether it is appropriate to expand CUSO lending authority. It is currently permissible for CUSOs to engage in several types of lending, including consumer mortgage, business, student, and credit card.
These categories of permissible CUSO
lending represent several core areas of FCU business. The proposed rule would permit a reasonable expansion of CUSO
lending authorities, and the Board expects the proposed rule would principally result in CUSOs originating automobile loans and small dollar consumer loans.
One reason the NCUA has historically been hesitant to expand CUSO lending is the concern that if CUSOs engaged in a core credit union function, it could negatively affect affiliated credit union services. As discussed above, CUSOs, however, have been originating loans that are also core FCU lending products for over 30 years without negatively impacting FCUs. Given this extensive history, the Board does not believe the expansion of CUSO lending authority in the proposed rule would be disruptive to FCUs.
The Board also believes that recent technological developments have further increased the benefits of allowing CUSOs to engage in expanded loan originations. As noted by the U.S.
Treasury Department, consumer expectations for financial services are expanding with unprecedented speed.
The market to originate loans has grown increasingly complex as technological changes, including digitization, help drive changes to the established lending landscape.25 Digital lending is increasingly common throughout the household and small business lending market as consumers derive credit from a highly diverse mix of financial institutions and nonbank firms. For example, nonbank firms constitute a significant share of the consumer lending market and are increasingly 23 73

FR 79307 Dec. 29, 2008.
FR 10743 Mar. 5, 1998.
25 See U.S. Treasury, A Financial System That Creates Economic Opportunity: Nonbank Financials, Fintech, and Innovation, July 2018.
Available at https home.treasury.gov/sites/
default/files/2018-07/A-Financial-System-thatCreates-Economic-Opportunities---NonbankFinanci pdf.
24 63

E:FRFM26FEP1.SGM

26FEP1