Proposed Rule2025-23855
Limits on Loans to Other Credit Unions
Primary source
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Published
December 29, 2025
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) seeks comment on a proposed rule to remove the regulations related to approval and policies on making loans to other credit unions. While this provision will no longer be codified in regulation, Federal Credit Unions would remain subject to statutory requirements related to making loans to credit unions. Federally insured state-chartered credit unions would remain subject to any other applicable NCUA or state law or regulation.
Full Text
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<title>Federal Register, Volume 90 Issue 245 (Monday, December 29, 2025)</title>
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[Federal Register Volume 90, Number 245 (Monday, December 29, 2025)]
[Proposed Rules]
[Pages 60583-60585]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23855]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AF72
Limits on Loans to Other Credit Unions
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: The NCUA Board (Board) seeks comment on a proposed rule to
remove the regulations related to approval and policies on making loans
to other credit unions. While this provision will no longer be codified
in regulation, Federal Credit Unions would remain subject to statutory
requirements related to making loans to credit unions. Federally
insured state-chartered credit unions would remain subject to any other
applicable NCUA or state law or regulation.
DATES: Comments must be received by February 27, 2026.
ADDRESSES: Comments may be submitted in one of the following ways.
(Please send comments by one method only):
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
The docket number for this proposed rule is NCUA-2025-1435. Follow the
``Submit a comment'' instructions. If you are reading this document on
<a href="http://federalregister.gov">federalregister.gov</a>, you may use the green ``SUBMIT A PUBLIC COMMENT''
button beneath this rulemaking's title to submit a comment to the
<a href="http://regulations.gov">regulations.gov</a> docket. A plain language summary of the proposed rule
is also available on the docket website.
<bullet> Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
<bullet> Hand Delivery/Courier: Same as mailing address.
Mailed and hand-delivered comments must be received by the close of
the comment period.
Public inspection: Please follow the search instructions on <a href="https://www.regulations.gov">https://www.regulations.gov</a> to view the public
[[Page 60584]]
comments. Do not include any personally identifiable information (such
as name, address, or other contact information) or confidential
business information that you do not want publicly disclosed. All
comments are public records; they are publicly displayed exactly as
received and will not be deleted, modified, or redacted. Comments may
be submitted anonymously. If you are unable to access public comments
on the internet, you may contact the NCUA for alternative access by
calling (703) 518-6540 or emailing <a href="/cdn-cgi/l/email-protection#f7b8b0b4ba969e9bb799948296d9909881"><span class="__cf_email__" data-cfemail="d19e96929cb0b8bd91bfb2a4b0ffb6bea7">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Ariel Pereira, Senior Attorney, Office
of General Counsel, at (703) 518-6540 or at 1775 Duke Street,
Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
On February 23, 2021, the Board published a final rule amending
various parts of the NCUA's regulations to permit low-income designated
credit unions, complex credit unions, and new credit unions to issue
subordinated debt for purposes of regulatory capital treatment.\1\
Among other changes, the final rule established a new Sec. 701.25,
governing loans by Federal Credit Unions (FCUs) to other credit unions.
The regulation establishes an aggregate limit on such loans of 25
percent of the lending FCU's paid-in and unimpaired capital and
surplus. It also sets limits for loans to a single credit union
borrower. The regulation sets forth specific eligibility requirements
and aggregate limits for FCUs that invest in the Subordinated Debt of
other credit unions. The requirements of Sec. 701.25 are made
applicable to federally insured state-chartered credit unions (FISCUs)
through Sec. 741.227.\2\
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\1\ 86 FR 11060 (Feb. 23, 2021).
\2\ FCUs and FISCUs are collectively referred to as federally
insured credit unions, or FICUs.
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In addition to the limits discussed above, Sec. 701.25 imposes
documentation requirements on FCU boards of directors, and through
Sec. 741.227 on FISCU boards as well. Specifically, paragraph (b) of
Sec. 701.25 requires the board of directors to approve all loans to
other credit unions and to establish written policies for managing the
associated credit risk. The policies must specify the limits on the
aggregate principal amount of loans the FICU can make to all other
credit unions and the aggregate principal amount of loans the FICU can
make to any single credit union. Such limits specific to the FICU may
not exceed the generally applicable limits established in Sec. 701.25.
B. Legal Authority
The Board is issuing this proposed rule pursuant to its authority
under the Federal Credit Union Act (FCU Act).\3\ Under the FCU Act, the
NCUA is the chartering and supervisory authority for FCUs and the
federal supervisory authority for FICUs. The FCU Act grants the NCUA a
broad mandate to issue regulations governing both FCUs and FICUs.
Section 120 of the FCU Act is a general grant of regulatory authority
and authorizes the Board to prescribe regulations for the
administration of the FCU Act.\4\ Section 209 of the FCU Act is a
plenary grant of regulatory authority to the NCUA to issue regulations
necessary or appropriate to carry out its role as share insurer for all
FICUs.\5\ The FCU Act also includes an express grant of authority for
the Board to subject federally chartered central, or corporate, credit
unions to such rules, regulations, and orders as the Board deems
appropriate.\6\
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\3\ 12 U.S.C. 1751 et seq.
\4\ 12 U.S.C. 1766(a).
\5\ 12 U.S.C. 1789.
\6\ 12 U.S.C. 1766(a).
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II. Proposed Rule
The Board proposes to remove Sec. 701.25(b). Upon reconsideration,
the Board believes that the regulation is unnecessary and overly
prescriptive. The FCU Act already requires a FCU's board of directors
to approve all loans to other credit unions.\7\ Accordingly, for FCUs,
Sec. 701.25(b) is largely redundant of an existing statutory
requirement. Moreover, FICU boards are in the best position to
determine whether formal approval policies are necessary for such
loans, consistent with the number, size, and risks associated with the
FICU's lending practices. Removing this regulation will provide FICUs
with greater flexibility. The Board emphasizes that while the proposed
rule would no longer require FICU boards to adopt written policies
regarding aggregate limits on loans to other credit unions, FICUs
remain subject to the limits and other requirements regarding such
loans set forth in the other provisions of Sec. 701.25. If the
proposed rule is adopted, FISCUs would refer to state law to determine
whether their boards must approve loans to other credit unions.
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\7\ 12 U.S.C. 1757(5)(C).
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III. Regulatory Procedures
A. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 (5
U.S.C. 553(b)(4)) requires that a notice of proposed rulemaking include
the internet address of a summary of not more than 100 words in length
of a proposed rule, in plain language, that shall be posted on the
internet website under section 206(d) of the E-Government Act of 2002
(44 U.S.C. 3501 note) (commonly known as <a href="http://regulations.gov">regulations.gov</a>). The Act,
under its terms, applies to notices of proposed rulemaking and does not
expressly include other types of documents that the Board publishes
voluntarily for public comment, such as notices and interim-final rules
that request comment despite invoking ``good cause'' to forgo such
notice and public procedure. The Board, however, has elected to address
the Act's requirement in these types of documents in the interests of
administrative consistency and transparency. The Board seeks comment on
a proposed rule to remove the regulations related to approval and
policies on making loans to other credit unions. While this provision
will no longer be codified in regulation, Federal Credit Unions would
remain subject to statutory requirements related to making loans to
credit unions. Federally insured state-chartered credit unions would
remain subject to any other applicable NCUA or state law or regulation.
The proposal and the required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
B. Executive Orders 12866, 13563, and 14192
Pursuant to Executive Order 12866 (``Regulatory Planning and
Review''), as amended by Executive Order 14215, a determination must be
made whether a regulatory action is significant and therefore subject
to review by the Office of Management and Budget (OMB) in accordance
with the requirements of the Executive Order.\8\ Executive Order 13563
(``Improving Regulation and Regulatory Review'') supplements and
reaffirms the principles, structures, and definitions governing
contemporary regulatory review established in Executive Order 12866.\9\
This proposed rule was drafted and reviewed in accordance with
Executive Order 12866 and Executive Order 13563. OMB has determined
that this proposed rule is not a ``significant regulatory action'' as
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defined in section 3(f)(1) of Executive Order 12866. Further, this
proposed rule to remove the regulations requiring that a FICU board of
directors adopt minimum approval and written policy standards regarding
loans to other credit unions is consistent with Executive Order 13563.
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\8\ 58 FR 51735 (Oct. 4, 1993).
\9\ 76 FR 3821 (Jan.21, 2011).
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Executive Order 14192 (``Unleashing Prosperity Through
Deregulation'') requires that any new incremental costs associated with
new regulations shall, to the extent permitted by law, be offset by the
elimination of existing costs associated with at least 10 prior
regulations.\10\ This proposed rule is expected to be a deregulatory
action under Executive Order 14192.
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\10\ 90 FR 9065 (Feb. 6, 2025),
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C. Regulatory Flexibility Act
The Regulatory Flexibility Act \11\ generally requires an agency to
conduct a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements, unless the agency certifies that
the rule will not have a significant economic impact on a substantial
number of small entities. If the agency makes such a certification, it
shall publish the certification at the time of publication of either
the proposed rule or the final rule, along with a statement providing
the factual basis for such certification.\12\ For purposes of this
analysis, the NCUA considers small credit unions to be those having
under $100 million in assets.\13\ The Board fully considered the
potential economic impacts of the regulatory amendments on small credit
unions.
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\11\ 5 U.S.C. 601 et seq.
\12\ 5 U.S.C. 605(b).
\13\ 80 FR 57512 (Sept. 24, 2015).
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To the extent that the proposed rule would have any economic
impacts, they will be deregulatory in nature. The proposed rule would
remove the requirement that FICU boards adopt minimum approval and
written policy standards regarding loans to other credit unions. While
these documentation requirements might impose some economic costs on
FICUs, they are unlikely to be significant. Accordingly, any impacts
associated with their rescission are also unlikely to impose a
significant economic burden.
Accordingly, the NCUA certifies the proposed rule would not have a
significant economic impact on a substantial number of small credit
unions.
D. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) generally provides that
an agency may not conduct or sponsor, and not withstanding any other
provision of law, a person is not required to respond to, a collection
of information, unless it displays a currently valid Office of
Management and Budget control number. The PRA applies to rulemakings in
which an agency creates a new or amends existing information collection
requirements. For purposes of the PRA, an information-collection
requirement may take the form of a reporting, recordkeeping, or a
third-party disclosure requirement. The information collection
requirements contained in Part 701.25(b) are approved by OMB under OMB
Control Number 3133-0207 with a current expiration date of October 31,
2025.
The proposed rule would revise the following information collection
requirement(s): Removal of the Policies for loans to credit unions--12
CFR 701.25(b).
Upon the publication of the final rule in the Federal Register, as
applicable, the NCUA will submit a request to OMB to revise OMB Control
Number 3133-0207. The proposed rescission of these regulations, along
with the information collection requirement(s) contained therein and
the revision of OMB Control Number 3133-0207, would reduce public
information collection burden by an estimated 1,650 annual burden
hours.
If you want to comment on the proposed rescission of the
information-collection requirements that would result from this
proposed rule, please send your comments and suggestions on this
proposed action as previously described in the DATES and ADDRESSES
sections.
E. Executive Order 13132 on Federalism
Executive Order 13132 encourages certain regulatory agencies to
consider the impact of their actions on state and local interests. The
NCUA, an agency as defined in 44 U.S.C. 3502(5), complies with the
executive order to adhere to fundamental federalism principles. This
proposed rule applies to FCUs and to FISCUs. The rulemaking may,
therefore, have some direct effect on the states, the relationship
between the national government and the states, or on the distribution
of power and responsibilities among the various levels of government.
However, to the extent the rule has any such effects, it will be to
relieve FISCUs of regulatory burden. The proposed rule would remove the
requirement that FICU boards adopt minimum approval and written policy
standards regarding loans to other credit unions. The NCUA welcomes
comments on ways to eliminate, or at least minimize, any potential
impact in this area.
F. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999.\14\ The proposed
regulatory requirements are exclusively concerned with the adoption of
written policies by FICUs regarding loans to other credit unions. The
potential positive effect on family well-being, including financial
well-being, is, at most, indirect.
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\14\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701
Advertising, Aged, Civil rights, Credit, Credit unions, Fair
housing, Individuals with disabilities, Insurance, Marital status
discrimination, Mortgages, Religious discrimination, Reporting and
recordkeeping requirements, Sex discrimination, Signs and symbols,
Surety bonds.
By the National Credit Union Administration Board, this 19th day
of December, 2025.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated in the preamble, the NCUA Board proposes to
amend 12 CFR part 701, as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS.
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1788, 1789.
Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31
is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and
3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
Sec. 701.25 [Amended]
0
2. In Sec. 701.25 remove paragraph (b) and redesignate paragraph (c)
as paragraph (b).
[FR Doc. 2025-23855 Filed 12-23-25; 8:45 am]
BILLING CODE 7535-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.