NCUA Letter Dials Back Power to Hold Board, Membership Meetings Virtually; Bill Would Extend CLF Authorities; CUNA Execs Honored

12/07/2022 CUToday

ANDRIA, Va.– NCUA has issued a Letter to Credit Unions that dials back some of the powers CUs have been granted over the past three years when it comes to holding both board and membership meetings, including the authority to hold both types of meetings coompletely virtually. The agency is allowing for some flexibility, however, allowing for hybrid meeetings. 

Since the onset of the COVID-19 pandemic the agency has been giving federal credit unions the flexibility to conduct membership and board of director meetings completely virtually. That emergency exemption is set to expire on Dec. 31, 2022.

“Specifically, in those actions the NCUA provided that a federal credit union could adopt at any time, by a two-thirds vote of its board of directors, and without additional NCUA approvals, a bylaw amendment to Article IV of the NCUA’s Federal Credit Union Bylaws. The letters to federal credit unions provided specific wording for the bylaw amendment,” the agency said in the letter. “In addition, the NCUA has issued several meeting-related notifications to federal credit unions since 2020 in connection with the COVID-19 pandemic. Specifically, the NCUA stated in those notifications that if a federal credit union had adopted the above-referenced bylaw amendment, then it was appropriate for that federal credit union to invoke its provisions for meetings if a majority of its board of directors so resolved for each such meeting. The NCUA noted that general quorum requirements still had to be met for ‘virtual-only’ meetings.”

Looking Forward

Moving forward, NCUA said it does not “believe that current circumstances continue to warrant federal credit unions to invoke the subject bylaw provision beyond year-end 2022.”

Federal credit unions that have already adopted the bylaw amendment may retain it in their bylaws, but it will not be applicable after the end of 2022 unless NCUA issues a new notification allowing federal credit unions to invoke it, the agency said.

“Although ‘virtual-only’ member meetings will no longer be an option, the NCUA reminds federal credit unions that they may choose to hold hybrid meetings if that suits their needs,” the letter states. “Hybrid meetings consist of a meeting held virtually in conjunction with an in-person component for members who wish to or need to attend that way. While general quorum requirements still must be met for hybrid meetings, federal credit unions may count attendees at both the virtual and in-person components toward those requirements.”
NCUA stated a hybrid meeting format could preserve federal credit union resources and reduce the effort required to hold meetings without disenfranchising those members for whom virtual attendance is difficult or impossible.

Additional Requirements

Federal credit unions must also consider whether their current bylaws authorize hybrid meetings or whether bylaw changes will be necessary, NCUA stated.

In addition, NCUA said:

• Federal Credit Union Bylaws permit federal credit union boards to conduct “virtual-only” meetings for all but one of their board meetings per calendar year. Further, if a quorum of the directors is physically present at the one required in-person meeting, then the remaining directors may attend that meeting virtually.
• Federal Credit Union Bylaws permit flexibility for distributing member notices. “Specifically, the bylaws provide that notices for member meetings may be sent by electronic mail to members who have opted to receive statements and notices electronically. As such, a paper mailing is not required for all members, only those members who have not opted to receive electronic statements and notices.”
  

  Dan Berger

NAFCU Response

“NAFCU appreciates the NCUA heeding our calls for additional flexibility in credit unions’ annual member meeting requirements,” said NAFCU President and CEO Dan Berger. “Even as the COVID-19 pandemic further demonstrated areas in need of modernization, credit unions proved how innovative they are in finding ways to serve members amid disruption. By allowing hybrid meeting formats, and for members meeting both in-person and virtually to count toward quorum in most situations, credit unions can keep members fully informed in the way that works best for them.”

Virginia League Response

We’re pleased to see the flexibility involving the counting of both in-person and virtual attendees toward a quorum,” said Virginia CU League President Carrie Hunt. “That issue was a specific focus of our engagement efforts with NCUA. We appreciate NCUA giving issues surrounding membership and board meeting requirements the careful consideration they deserve. We still support full virtual meetings, but we thank the agency for providing some degree of flexibility to federal credit unions. Credit unions were quick to address the challenges associated with Board and membership meetings posed by the pandemic. Credit unions proved they could leverage today’s technology to successfully balance the governance needs and orderly operation of the credit union with the protection of members’ interests and their ability to participate in the affairs of their credit union.”

Bill Would Extend CLF Enhancements

Meanwhile, legislation (S. 5183) that would extend by five years enhancements made to NCUA’s Central Liquidity Facility (CLF) by the CARES Act and that would allow corporate credit unions to purchase CLF capital stock for a specific subset of members rather than for all members has been introduced by Sens. Alex Padilla (D-CA) and Kevin Cramer (R-ND).

The expanded CLF authorities expire Dec. 31.

“NAFCU thanks Senators Padilla and Cramer for introducing bipartisan legislation which would offer credit unions greater flexibility and ample liquidity resources, as they continue to brace economic headwinds,” stated NAFCU President and CEO Dan Berger. “We have urged lawmakers to make CLF enhancements permanent since the CARES Act and will continue to do so to allow credit unions to best serve their 134 million members.”

The trade association noted that both lawmakers have advocated for Congress to include provisions that would make CLF enhancements permanent in the FY2023 National Defense Authorization Act (NDAA), which is still being worked on by both chambers.

Alex Padilla

Small CUs ‘Don’t Not Have Access’

“Congress created the Central Liquidity Facility in 1978 to improve the general financial stability of credit unions by serving as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls,” said Padilla in a statement. “Unfortunately, under current law, smaller credit unions often do not have access to the critical tool that could help them address liquidity shortfalls, especially amid higher interest rates.”

CUNA Leaders Recognized

Jim Nussle

Separately, CUNA President/CEO Jim Nussle and Deputy Chief Advocacy Officer Jason Stverak have been named among The Hill’s top lobbyists for 2022. Nussle and Stverak were commended for demonstrating, “a track record of success in the halls of Congress and the administration during a critical year for policy.”  

CUNA noted that since Nussle joined the trade group in 2014 he has appeared on the list each year since then.

“Credit unions were able to accomplish several priorities this year through strong engagement with policymakers who understand the power of the credit union difference,” Nussle said. “Our laser focus on our members cuts through a lot of the noise in Washington, D.C., and I thank CUNA, League, and credit union leaders for the great advocacy work they do.”  

Stverak joined CUNA in October 2021 after serving as deputy chief of staff to Sen. Kevin Cramer (R-ND).

“It’s an honor to be part of a team that is able to accomplish real, positive changes for our members,” Stverak said. “This honor is a testament to the strong relationships CUNA, Leagues, and credit unions continue to foster with each other, and with policymakers at the federal level.” 

Stverak was previously recognized as a Top 100 Lobbyist by the National Institute for Lobbying and Ethics.