The National Credit Union Administration proposed new rules this morning that will dramatically impact regulation of credit union service organizations if approved. The NCUA proposed three major changes.

First, the NCUA has proposed altering the Board’s access to a CUSO’s records. Currently, the NCUA maintains the right to inspect a CUSO’s books and records at any time. Under the new regulations, however, all CUSOs would be required to submit an annual financial report directly to both the NCUA and the Tennessee Department of Financial Institutions (the “Department”).

Next, the Board raised concerns regarding federally insured state-chartered credit unions (“FISCUs”) which find themselves “less than adequately capitalized.” More specifically, the NCUA is worried that FISCUs which continue to invest in failing CUSOs risk creation of serious problems for their members.