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Federal Register / Vol. 86, No. 243 / Wednesday, December 22, 2021 / Rules and Regulations
suspended limitations on the eligible obligations that a Federal credit union FCU may purchase and hold. In addition, given physical distancing practices necessitated by COVID19, the rule also tolled the required timeframes for the occupancy or disposition of properties not being used for FCU
business or that have been abandoned.
The temporary amendments were originally scheduled to expire on December 31, 2020. The Board subsequently extended their effectiveness until December 31, 2021.
Due to the continued impact of COVID
19, the Board has decided it is necessary to further extend the effective period of these temporary modifications until December 31, 2022.
DATES: This rule is effective December 22, 2021 except for the amendment to 701.23 in instruction 3.b., which is effective April 1, 2022. The expiration date of the temporary final rule published on April 21, 2020 85 FR
22010, and extended by final rule published on December 22, 2020 85 FR
83405, is further extended through December 31, 2022.
FOR FURTHER INFORMATION CONTACT:
Policy and Analysis: Victoria Nahrwold, Office of Examination and Insurance, at 703 5482633; Legal: Ariel Pereira, Senior Staff Attorney, Office of General Counsel, at 703 5186540; or by mail at: National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314.
SUPPLEMENTARY INFORMATION:
I. Background II. Legal Authority III. The Regulatory Amendments IV. Regulatory Procedures
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I. Background The COVID19 pandemic has created uncertainty for FICUs and their members. The Board continues to work with federal and state regulatory agencies, in addition to FICUs, to assist FICUs in managing their operations and to facilitate continued assistance to credit union members and communities impacted by the COVID19 pandemic.
In April 2020, as part of these ongoing efforts, the Board temporarily modified certain regulatory requirements to help ensure that FICUs remain operational and liquid during the COVID19
pandemic.1 The Board concluded that the amendments would provide FICUs necessary additional flexibility in a manner consistent with the NCUAs responsibility to maintain the safety and soundness of the credit union system.
The temporary amendments were to 1 85

FR 22010 Apr. 21, 2020.

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remain in place through the end of calendar year 2020 unless the Board took action to extend the date. In December 2021, the Board concluded that continuing economic uncertainty merited a further extension of the amendments until December 31, 2021.2
The economic environment is a key determinant of credit union performance. While the recovery in economic activity and labor markets is expected to continue, it also poses challenges. The NCUA, like credit unions, needs to plan and prepare for a range of economic outcomes that could affect credit union performance. This includes ensuring a regulatory environment that provides FICUs with the flexibility necessary to cope with and address the range of potential COVID19 impacts.
Due to the continuing impact of the COVID19 pandemic on FICUs and their members, the Board has determined that it is necessary to again extend the effectiveness of these temporary provisions. The temporary amendments will remain in place through December 31, 2022.
II. Legal Authority The Board is issuing this temporary final rule pursuant to its authority under the Federal Credit Union Act Act.3 The Act grants the Board a broad mandate to issue regulations governing both FCUs and, more generally, all FICUs. For example, section 120 of the Act is a general grant of regulatory authority and authorizes the Board to prescribe rules and regulations for the administration of the Act.4 Section 209 of the Act is a plenary grant of regulatory authority to issue rules and regulations necessary or appropriate for the Board to carry out its role as share insurer for all FICUs.5
Other provisions of the Act confer specific rulemaking authority to address prescribed issues or circumstances.6
Accordingly, the Act grants the Board broad rulemaking authority to ensure that the credit union industry and the NCUSIF remain safe and sound.
III. The Regulatory Amendments A. Aggregate Limit on Loan Participation Purchases Section 701.22b5ii The Boards regulation at 701.22
limits the aggregate amount of loan 2 85

FR 83405 Dec. 22, 2020.
3 12 U.S.C. 1751 et seq.
4 12 U.S.C. 1766a.
5 12 U.S.C. 1789.
6 An example of a provision of the Act that provides the Board with specific rulemaking authority is section 207 12 U.S.C. 1787, which is a specific grant of authority over share insurance coverage, conservatorships, and liquidations.

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participations that a FICU may purchase from any one originating lender to the greater of $5,000,000 or 100 percent of the FICUs net worth.7 Under the temporary regulatory amendments, the aggregate limit below which a waiver from the appropriate NCUA Regional Director is not required is temporarily raised to the greater of $5,000,000 or 200
percent of a FICUs net worth.
The Board continues to believe that, as currently formulated in 701.22, the limitation may be overly prescriptive during this time. Additional regulatory flexibility continues to be especially warranted to deal with the economic impact of the COVID19 pandemic, which may result in additional stress on credit union balance sheets, potentially requiring robust liquidity management.
B. Purchase, Sale, and Pledge of Eligible Obligations Section 701.23b The Boards regulations in 701.23
generally require that purchased eligible obligations be obligations of a purchasing FCUs members and loans the FCU is empowered to grant or the loan is refinanced to be one the FCU is empowered to grant. Section 701.23b2 provides certain limited exceptions to the general requirements for well-capitalized FCUs that have composite CAMEL ratings of 1 or 2. 8 The regulations authorize these FCUs to purchase the eligible obligations of any FICU or of any liquidating credit union without regard to whether they are obligations of the purchasing FCUs members, provided they are loans the FCU is empowered to grant or the loan is refinanced to be one it is empowered to grant.
In the April 2020 temporary final rule, the Board temporarily amended its regulations to authorize FCUs with CAMEL composite ratings of 1, 2, or 3
to purchase eligible obligations of FICUs and liquidating credit unions irrespective of whether the obligation belongs to the purchasing FCUs members and without regard to whether they are loans the credit union is empowered to grant or are refinanced to ensure the obligations are ones the purchasing credit union is empowered to grant. This change did not alter the requirement for a purchasing FCU to be well-capitalized under 701.23b2.9
7 12

CFR 701.22b5ii.
701.23 also contains exceptions to the membership requirement for certain purchases of student loans and real estate loans that an FCU
purchases to complete a pool for sale. The Board established this exception in a 1979 final rule. 44
FR 27068 May 9, 1979.
9 Generally, credit unions with a CAMEL
composite rating lower than 3 are considered to be in troubled condition under the NCUAs regulations. 12 CFR 700.2.
8 Section
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