WASHINGTON — America’s Credit Unions and Endangered Small Credit Union Defense (ESCUD) are both applauding a new proposal from the National Credit Union Administration that would eliminate several regulatory requirements governing fidelity bond coverage, including mandatory full-board reviews of bond applications, restrictions on who can sign renewal agreements and automatic expiration dates for approved bond forms.
As the CU Daily reported here, the proposal is one of three proposals announced earlier this week as part of the NCUA’s ongoing Deregulation Project, and would give federally insured credit unions greater flexibility in managing their fidelity bond coverage while retaining requirements intended to protect institutions and the National Credit Union Share Insurance Fund against losses from fraud, dishonesty and theft.
“We appreciate the NCUA listening to credit unions regarding outdated fidelity bond renewal requirements,” said Scott Simpson, president and CEO of America’s Credit Unions. “The proposal directly reflects specific America’s Credit Unions’ recommendations to reduce unnecessary burdens on credit unions while maintaining appropriate protections.”
Simpson said eliminating mandatory full-board reviews and signatory rotation requirements would give boards more flexibility while maintaining safety and soundness.
“Removing the automatic 10-year expiration for approved bond forms is another practical step that reduces recurring administrative paperwork,” he added.
ESCUD Also Hails Announcement
Separately, Kennewick, Wash.-based Endangered Small Credit Union Defense (ESCUD) said a longstanding small credit-union complaint has been over the complexity of annual fidelity bond renewals and it, too, welcomes the announcement from NCUA.
The organization noted that in September 2025, after participating in an NCUA town hall and meeting privately with then-Chairman Kyle Hauptman and then Chief of Staff Sarah Bang, ESCUD President Doug Wadsworth submitted a priority list that specifically identified the post-2019 bond renewal process as unnecessarily burdensome for small institutions.
“The rules required formal board approval, designation of a rotating non-employee signatory, wet-ink signatures, and careful minute documentation—or risked examiner citations over process details that did not affect safety or soundness or coverage,” ESCUD said, noting it shared this priority with America’s Credit Unions, which submitted its own letter on this regulation in October 2025. ESCUD said it then followed with another formal letter to the NCUA (on this single issue) in November 2025 requesting relief for credit unions under $500 million in assets.
Doug Wadsworth, who leads ESCUD and who also serves as outgoing president of the $75 million Tri-CU in Kennewick, Wash., said the proposal addresses a classic example of “pointless burdens that small CUs often face.”
“These 2019 requirements created more busy-work for volunteer boards and CEO time, without meaningfully improving safety and soundness in any way,” he said. “ESCUD raised it early from the small-credit-union perspective, then America’s Credit Unions amplified it, and now the NCUA has responded with practical changes that help institutions of all sizes. It might seem like a little thing, but when you are little – anything helps.”
What’s Being Proposed
According to the NCUA, the proposed amendments to Parts 704 and 713 of its regulations are intended to eliminate unnecessarily prescriptive requirements, simplify compliance and reduce administrative costs.
Among the principal changes:
* Eliminating Mandatory Full-Board Reviews. Credit union boards would no longer be required to review and approve every application for the purchase or renewal of fidelity bond coverage. Instead, boards could delegate those responsibilities to an individual board member or a supervisory or audit committee.
* Ending Signatory Rotation Requirements. The NCUA would eliminate the prohibition against the same board member signing consecutive fidelity bond purchase or renewal agreements. The agency said the requirement can be particularly burdensome for smaller credit unions with limited numbers of eligible board members.
* Removing the 10-Year Expiration. NCUA-approved fidelity bond forms would no longer automatically lose their approval after 10 years. The agency said the requirement creates recurring administrative work for credit unions and bond issuers, even when existing forms remain appropriate.
* Simplifying Coverage Requirements. The proposal would eliminate advisory language recommending additional coverage beyond regulatory minimums and a formula tied to daily cash on hand or money in transit. The NCUA said these provisions are either redundant, ambiguous or too inflexible to address modern risks.
* Extending Changes to Corporate Credit Unions. Similar changes to approval procedures and bond-form expiration requirements would apply to federally insured corporate credit unions.
Why the Requirements Were Adopted
The NCUA explained that several of the requirements targeted for elimination were adopted in 2019 following losses to the National Credit Union Share Insurance Fund.
At the time, the agency was concerned that bond issuers could rescind coverage when individuals signing applications knew about fraudulent activity or potential claims.
The 2019 regulations consequently required full-board approval of bond applications and renewals, signatures from non-employee board members and rotation of those signatories.
The NCUA now believes those requirements can be relaxed without compromising safeguards.
Under the proposal, individuals signing bond agreements would still have to be non-employees serving on a board or supervisory or audit committee. Boards would also remain responsible for reviewing coverage annually to determine whether it adequately addresses their credit union’s risks.
The agency would retain its authority to review previously approved bond forms and rescind approvals when appropriate.
Changes to Coverage Formulas
The NCUA is also proposing to eliminate two provisions concerning the amount of fidelity bond coverage credit unions should maintain.
One recommends purchasing additional coverage when circumstances warrant. Another recommends increased coverage based on a formula involving cash on hand and money in transit.
The agency said both provisions use the word “should,” creating uncertainty over whether they are mandatory or advisory. It also said formulas based on limited risk factors may not adequately reflect the circumstances of today’s credit unions.
The proposed changes would not eliminate existing minimum fidelity bond coverage requirements or boards’ responsibility to ensure adequate protection.
Separately, the NCUA is seeking public comment on whether to eliminate a provision requiring corporate credit union boards to obtain coverage above regulatory minimums when necessary to address their institutions’ particular circumstances.
Impact on Credit Unions
The NCUA said the proposal would apply to all federally insured credit unions, including federally insured, state-chartered institutions.
The agency expects the changes to reduce administrative costs and compliance burdens but does not anticipate a significant economic impact on a substantial number of small credit unions, which it defines for this analysis as institutions with less than $100 million in assets.
The NCUA also said the amendments would not fundamentally alter existing requirements for fidelity bond protection.
America’s Credit Unions Sees Meaningful Relief
Simpson characterized the proposal as an example of the regulatory relief the trade association has been seeking through the NCUA’s deregulation initiative.
“These updates deliver meaningful regulatory relief, and we look forward to working with the NCUA as it advances further common-sense reforms through its deregulation project,” Simpson said.
The proposal remains subject to public comment and has not been finalized. Comments may be submitted through Regulations.gov under docket number NCUA-2026-18
