Legislative Update with Jay Kruse
by Jay Kruse, Chief Advocacy Officer
Good morning! I hope everyone is having a great week and enjoying the first signs of fall!
Funding the Government
This is a very important week in Washington DC, as Congress looks to pass a Continuing Resolution (CR) to fund the government past September 30th. Late yesterday afternoon the Senate came to a compromise on their CR, which does include funding for the National Flood Insurance Program and would fund the government through December 16th. The CR legislation must be passed by both chambers and signed by the President by 11:59 p.m. on Friday.
Credit Union Board Modernization Act House Vote
The Credit Union Board Modernization Act (H.R. 6889) is scheduled for a House floor vote this week! The bill, which is co-sponsored by Dakotas’ Congressmen Dusty Johnson (R-SD) and Kelly Armstrong (R-ND), would allow credit union boards the flexibility to meet at minimum six times a year rather than the required 12 times a year. The legislation also includes a requirement that credit union boards meet at least once every quarter.
This legislation will update some outdated requirements that proved to be very burdensome for many credit unions during the COVID pandemic. With the amount of time and resources that go into hosting credit union board meetings, it only makes sense to allow credit unions some flexibility when scheduling their meetings.
A Senate version of this legislation was also introduced in May by a bipartisan group of senators and includes ND Senator Kevin Cramer as a co-sponsor.
NCUA Releases Simplified CECL Tool
The Simplified CECL Tool provides a methodology for credit unions to determine the Allowance for Credit Losses (ACL) on loans and leases for their loan portfolio. It was developed primarily for credit unions with less than $100 million in assets. The Weighted Average Remaining Maturity (WARM) methodology for calculating the ACL was chosen by the NCUA because the Financial Accounting Standards Board deemed it appropriate to estimate a credit loss allowance for less complex financial asset pools.
This tool relies on portfolio-level WARM proxy data to estimate current expected credit losses. For the WARM assumptions to remain applicable in an ever-changing environment, the Simplified CECL Tool will be updated quarterly.
You can download the tool on NCUA’s website here. You will also find a Users’ Guide and FAQ’s, but if you have any questions about CECL and implementing NCUA’s new tool, don’t hesitate to contact me.
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