Proposed Rule2026-01696
Public Unit and Nonmember Shares
Primary source
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Published
January 28, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) seeks comment on a proposed rule to amend the NCUA's public unit and nonmember share rule to remove the requirement for a written plan to document the intended use of any borrowings, public unit, or nonmember shares if, collectively, those funds exceed 70 percent of the federally insured credit union's (FICU's) paid-in and unimpaired capital and surplus. FICUs would remain subject to the limits and other regulatory requirements governing public unit and nonmember shares. Removing this regulation will provide greater flexibility while holding FICUs accountable for managing the associated risks through a principles-based supervisory approach.
Full Text
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<title>Federal Register, Volume 91 Issue 18 (Wednesday, January 28, 2026)</title>
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[Federal Register Volume 91, Number 18 (Wednesday, January 28, 2026)]
[Proposed Rules]
[Pages 3685-3688]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01696]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AF92
Public Unit and Nonmember Shares
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
amend the NCUA's public unit and nonmember share rule to remove the
requirement for a written plan to document the intended use of any
borrowings, public unit, or nonmember shares if, collectively, those
funds exceed 70 percent of the federally insured credit union's
(FICU's) paid-in and unimpaired capital and surplus. FICUs would remain
subject to the limits and other regulatory requirements governing
public unit and nonmember shares. Removing this regulation will provide
greater flexibility while holding FICUs accountable for managing the
associated risks through a principles-based supervisory approach.
DATES: Comments must be received by March 30, 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-2026-0133. 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 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#410e06020c20282d012f2234206f262e37"><span class="__cf_email__" data-cfemail="a3ece4e0eec2cacfe3cdc0d6c28dc4ccd5">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Keisha Brooks, Attorney-Advisor,
Office of General Counsel, at (703) 518-6540 or at 1775 Duke Street,
Alexandria, VA 22314.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
The Federal Credit Union Act (FCU Act) authorizes federal credit
unions (FCUs) to receive payment on shares from nonmembers ``subject to
such terms, rates, and conditions as may be established by the [FCU]
board of directors, within limitations prescribed by the Board[.]'' \1\
Section 107(6) of the FCU Act provides that an FCU may receive payment
on shares from its members (including public units that are members)
and from other credit unions.\2\ Section 107(6) also permits an FCU to
receive payments on shares from nonmembers under certain circumstances,
including payment on shares from nonmember public units and their
political subdivisions.\3\ Moreover, a low-income designated credit
union may receive payment on shares from any source regardless of
membership.\4\
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\1\ 12 U.S.C. 1757(6). Federally insured, state-chartered credit
unions (FISCUs) are subject to state law.
\2\ 12 U.S.C. 1757(6).
\3\ Id. The term ``public unit'' is defined at 12 CFR 745.1(c).
\4\ 12 U.S.C. 1757(6). For this purpose, Sec. 701.34 of the
NCUA's regulations defines a ``low-income member.'' 12 CFR
701.34(a)(2).
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B. Legal Authority
The Board is issuing this proposed rule pursuant to its authority
under the FCU Act. Under the FCU Act, the NCUA is the chartering and
supervisory authority for FCUs and the federal supervisory authority
for FICUs.\5\ The FCU Act grants the NCUA a broad mandate to issue
regulations governing both FCUs and all FICUs. Section 120 of the FCU
Act is a general grant of regulatory authority and authorizes the Board
to prescribe rules and regulations for the administration of the FCU
Act.\6\ Section 207 of the FCU Act is a specific grant of authority
over share insurance coverage, conservatorships, and liquidations.\7\
Section 209 of the FCU Act is a plenary grant of regulatory authority
to the Board to issue rules and regulations necessary or appropriate to
carry out its role as share insurer for all FICUs.\8\ In addition,
section 107(6) of the FCU Act specifically recognizes that the Board
may prescribe limitations governing shares accepted by FCUs.\9\
Accordingly, the FCU Act grants the Board broad rulemaking authority to
ensure that the credit union industry and the National Credit Union
Share Insurance Fund (Share Insurance Fund) remain safe and sound.
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\5\ 12 U.S.C. 1752-1775.
\6\ 12 U.S.C. 1766(a).
\7\ 12 U.S.C. 1787(b)(1).
\8\ 12 U.S.C. 1789(a)(11).
\9\ 12 U.S.C. 1757(6).
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Section 701.32 of the NCUA's regulations authorizes FCUs to receive
payments on shares from public units and certain nonmembers, including
other credit unions, so that the FCU could use the funds to benefit its
membership, for example by providing loanable funds.\10\ Section 701.32
limits the total amount of public unit and nonmember shares that an FCU
may receive to (i) 50 percent of the credit union's net amount of paid-
in and unimpaired capital and surplus less any public unit and
nonmember shares, or (ii) $3 million, whichever is greater.\11\ These
limitations apply to all FICUs through Sec. 741.204. In 1989, the
Board established aggregate limits on such shares out of concern for
the safety and soundness of the credit union and to mitigate potential
losses to the Share
[[Page 3686]]
Insurance Fund. \12\ The 1989 rule was prompted by several cases
involving the misuse of such funds, which had resulted in losses to the
Share Insurance Fund.\13\ The 1989 rule also established a process for
FCUs to request a waiver from the NCUA Regional Director.\14\ The
waiver process required the FCU to submit, among other things, a
written plan concerning its use of public unit and nonmember
shares.\15\ At the time, the Board expected these credit unions to have
a reasonable plan in place ``to ensure such funds are used in a safe
and sound manner and are utilized in the best interests of the
membership.'' \16\
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\10\ 54 FR 31182 (July 27, 1989).
\11\ 12 CFR 700.2 defines ``paid-in and unimpaired capital and
surplus or unimpaired capital and surplus.''
\12\ 54 FR 31182 (July 27, 1989).
\13\ 54 FR 31182 (July 27, 1989).
\14\ 54 FR 31182 (July 27, 1989).
\15\ 54 FR 31182 (July 27, 1989).
\16\ 54 FR 31183 (July 27, 1989).
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Most recently, a 2019 final rule significantly altered the primary
aggregate limit (changing it from 20 percent of total shares to 50
percent of net worth less such shares), eliminated the waiver process,
and added a due diligence requirement for a written plan.\17\ In the
preamble to the 2019 final rule, the Board recognized that these shares
are functionally equivalent to borrowings and provide FCUs with
diversified and reasonably priced funding sources to better serve
members.\18\ The Board also made conforming amendments to Sec.
741.204, which applies to all FICUs, to reflect the changes to Sec.
701.32.\19\
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\17\ 84 FR 58305, 58309 (Oct. 31, 2019).
\18\ 84 FR at 58309 (Oct. 31, 2019). For FCUs, the 50 percent
borrowing limit is explicitly established by statute in 12 U.S.C.
1757(9).
\19\ 12 CFR 741.204.
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II. Proposed Rule
Following a review of the NCUA's regulations, the Board has
determined that Sec. 701.32(b)(2) is unnecessarily prescriptive and
burdensome. Specifically, the NCUA has determined that removing the due
diligence requirement for a written plan in Sec. 701.32(b)(2) is
appropriate for the reasons discussed in this preamble. Under Sec.
701.32(b)(2), an FCU board of directors must adopt a specific written
plan concerning the intended use of these funds that is consistent with
prudent risk management principles before receiving public unit or
nonmember shares that, taken together with any borrowings, exceed 70
percent of paid-in and unimpaired capital and surplus. Section 741.204
of the NCUA regulations applies the written plan requirement to FISCUs.
Unlike the prior waiver process, FICUs are not required to submit
these plans for NCUA approval before accepting external funds that, in
total, would exceed 70 percent of paid-in and unimpaired capital and
surplus. Instead, FICUs that exceed the 70 percent limit must maintain
the written plan and make it available to NCUA examiners. As stated in
the preamble to the 2019 final rule adopting the due diligence
requirement, the Board originally designed this approach to provide a
FICU with flexibility to adopt a diverse funding structure without the
regulatory burden of developing a plan regarding the intended use of
those funds unless the credit union borrows a significant amount of
funds or accepts a significant number of public unit and nonmember
shares.\20\ The Board now believes this prescriptive provision is
unnecessary. Credit unions will continue to be expected to manage any
liquidity and interest rate risk associated with this form of funding,
which will be evaluated as part of a credit union's supervisory
examination.
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\20\ 84 FR 58305, 58306 (Oct. 31, 2019).
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As part of a deregulatory initiative to reduce regulatory burden by
eliminating rules that are no longer necessary for the safe and sound
operation of credit unions, the Board proposes to remove paragraph
(b)(2) of Sec. 701.32. This provision created an administrative
requirement for FICU boards to adopt a written plan for using public
unit and nonmember shares when these funds, taken together with any
borrowings, exceed 70 percent of paid-in and unimpaired capital and
surplus. This imposes an unnecessary administrative burden on FICUs.
While the FCU Act specifically recognizes that the Board may prescribe
limitations governing public unit and nonmember shares accepted by
FCUs, the authorizing statute does not require the Board to mandate a
written plan for using these funds. Thus, this provision is an
unnecessary regulatory creation.
The Board believes that FICUs should have greater flexibility to
manage their funding sources and that liquidity and concentration risks
are more effectively managed through the supervisory process and the
credit union's own internal risk management policies rather than a one-
size-fits-all due diligence requirement. Further, a credit union's
ability to safely manage its share composition depends on a variety of
factors, including its asset structure, liquidity management practices,
and overall risk profile. Accordingly, the Board believes that FICUs
can manage their reliance on these funds as part of their comprehensive
asset-liability and liquidity risk management programs.
Mandating a specific written plan for using public unit and
nonmember shares codifies what are already standard due diligence and
prudent business practices. Such a prescriptive, one-size-fits-all
approach is unduly burdensome, particularly for smaller and low-income
designated credit unions. The level of appropriate due diligence should
be tailored to a credit union's unique size, complexity, and risk
tolerance. Removing this paragraph would empower FICU boards to
exercise their business judgment and fiduciary responsibilities that
are appropriate for their specific institution.
Removing this provision would also reduce administrative burden and
enable FICUs to manage their own operations responsibly, tailoring
their processes to their specific needs and risk profiles, subject to
NCUA examiner oversight. Removing this prescriptive requirement would
also align the regulation with a principles-based philosophy, trusting
FICU boards to fulfill their fiduciary duties to safeguard the credit
union's interests without being constrained by inflexible procedural
mandates. Therefore, the Board proposes to remove paragraph (b)(2) from
Sec. 701.32 to support a more principles-based regulatory approach
that reduces this administrative burden on FICU boards of directors.
The Board invites public comment on the proposed elimination of
Sec. 701.32(b)(2). The Board invites comments on all aspects of the
proposed rule. The Board specifically requests comment on whether
removing Sec. 701.32(b)(2)'s mandate for a written plan could create
safety and soundness concerns or lead to imprudent risk-taking by FCUs
or FISCUs.
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)) (Act) 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
[[Page 3687]]
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.
In summary, the Board seeks comment on a proposed rule to amend the
NCUA's public unit and nonmember share rule to remove the requirement
for a written plan to document the intended use of any borrowings,
public unit, or nonmember shares if, collectively, those funds exceed
70 percent of the federally insured credit union's (FICU's) paid-in and
unimpaired capital and surplus. FICUs would remain subject to the
limits and other regulatory requirements governing public unit and
nonmember shares. Removing this regulation will provide greater
flexibility while holding FICUs accountable for managing the associated
risks through a principles-based supervisory approach.
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.\21\ 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.\22\ This proposed rule was drafted and reviewed in accordance
with Executive Order 12866 and Executive Order 13563. Consistent with
Executive Order 13563, this proposed rule will reduce the burden of
requiring FICUs to develop and maintain a written plan for using
elevated levels of public unit and nonmember shares and borrowings. OMB
has determined that this proposed rule is not a ``significant
regulatory action'' as defined in section 3(f)(1) of Executive Order
12866.
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\21\ 58 FR 51735 (Oct. 4, 1993).
\22\ 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.\23\ This proposed rule is expected to be a deregulatory
action for purposes of Executive Order 14192.
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\23\ 90 FR 9065 (Feb. 6, 2025),
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C. Regulatory Flexibility Act
The Regulatory Flexibility Act \24\ 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.\25\ For purposes of this
analysis, the NCUA considers small credit unions to be those having
under $100 million in assets.\26\ The Board fully considered the
potential economic impacts of the regulatory amendments on small credit
unions.
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\24\ 5 U.S.C. 601 et seq.
\25\ 5 U.S.C. 605(b).
\26\ 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 a written plan regarding
the use of borrowings and public unit and nonmember shares when,
collectively, those amounts reach specified levels. While removing
these documentation requirements might relieve some economic costs on
affected FICUs, they are unlikely to be significant. The proposed rule
does not repeal or alter the aggregate limits on public unit and
nonmember shares. Nor does it relax NCUA expectations that FICUs
develop and execute safe-and-sound strategies for securing and
deploying all types of funding. The agency is simply giving FICU boards
the option of developing their own policies for managing public unit
and nonmember shares within existing aggregate limits. Any FICU
satisfied with the written plan requirement is free to retain it as
part of its volatile-funding policies.
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 proposed rule would eliminate the information collection
requirements for OMB Control Number 3133-0114 with a current expiration
date of March 31, 2026. Upon publication of the final rule in the
Federal Register, as applicable, the NCUA will submit a request to OMB
to discontinue OMB Control Number 3133-0114. The proposed rescission of
these regulations, along with the information collection requirements
contained therein and the discontinuance of OMB Control Number 3133-
0114 would reduce public information collection burden by 100 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 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 would apply to all FICUs, but the NCUA expects that any effect on
states or on the distribution of power and responsibilities among the
various levels of government will be minor. State law governs the
authority for state-chartered credit unions to accept nonmember shares.
The proposed change would remove an administratively imposed due
diligence requirement for FISCUs and is not intended to affect the
division of responsibilities between the NCUA and state regulatory
authorities with oversight of FISCUs. The rulemaking would therefore
not have 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. The NCUA
welcomes comments on ways to eliminate, or at least minimize, any
potential impact in this area.
[[Page 3688]]
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.\27\ The proposed rule
relates to FICUs that accept elevated levels of external funds, and any
effect on family well-being is expected to be indirect. The proposed
regulatory changes are exclusively concerned with the adoption of a
written plan by FICU boards regarding the intended use of such funds.
The potential positive effect on family well-being, including financial
well-being is, at most, indirect.
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\27\ 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 23rd day
of January, 2026.
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. 701.32 [Amended]
0
2. Amend Sec. 701.32 by removing paragraph (b)(2).
[FR Doc. 2026-01696 Filed 1-27-26; 8:45 am]
BILLING CODE 7535-01-P
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