WASHINGTON–America’s Credit Unions has sent letters to NCUA offering suggestions on how the agency can improve its fidelity bond and insurance coverage regulations without compromising its effectiveness, as well as also calling on the agency to create parity for credit unions with new positions taken by the FDIC and OCC.
In its most recent letter America’s Credit Unions responded to a request for comment for renewal of information collection involving fidelity bond and insurance coverage.
The trade group noted NCUA regulations require a credit union’s board of directors to review and approve fidelity bond coverage, including signing bond renewal documentation. NCUA also requires board approval to follow a rotation of signatories and prescribes procedures for renewal and documentation.
‘Increasingly Complex’
“While fidelity bond coverage is a critical risk-management tool for credit unions of all sizes, these requirements have become increasingly complex over time and now present significant operational challenges, especially for smaller credit unions with limited staff or boards whose meeting schedules do not always align with required approval timelines,” wrote Regulatory Advocacy Senior Counsel Luke Martone. “The complexity of these procedures appears disproportionate to the risk they are designed to mitigate.”
The Recommendations
America’s Credit Unions is recommending NCUA:
- Periodically reevaluate whether the requirements remain necessary and whether they continue to achieve their intended objectives
- Assess the continued necessity of the board signature requirement and determine whether requiring board members to personally sign bond renewals meaningfully reduces risk, or if objectives can be met through other means
- Allow greater flexibility in the approval processes, including permitting credit unions to delegate fidelity bond review and approval to the supervisory committee, management, or another appropriate governing body, with the board retaining ultimate oversight through periodic reporting or sign-off
- Consider eliminating or modifying the signatory rotation requirement, which adds complexity without obvious benefit. If retained, credit unions should have discretion to determine how and when to rotate signatories based on how their board is organized
- Allow the board to review and sign off on coverage once a year, which would greatly reduce scheduling challenges and extra paperwork, especially for smaller credit unions with limited staff.
Parity With FDIC, OCC Actions is Sought
Separately, Saying it is seeking to relieve credit unions of regulatory burdens so they can better serve their members and communities, America’s Credit Unions has written to NCUA asking for parity related to two recent actions taken by the Office of the Comptroller of the Currency (OCC) and the FDIC.
As the CU Daily previously reported, the OCC has announced that effective Jan. 1, 2026, it is eliminating mandatory OCC policy-based examination requirements for community banks to reduce supervisory burden and better align OCC practices with risk-based supervision.
As America’s Credit Unions noted, both agencies have also proposed to define the term “unsafe or unsound practice” to focus on material risks to a financial institution and generally require an imprudent act to be likely to harm the institution’s financial condition.
Letter Requests Letter
“To keep credit unions at parity with banks, we urge the NCUA to issue a letter embracing the OCC’s examination reforms and to undertake a rulemaking aligned with the interagency proposal on unsafe or unsound practices and MRAs,” wrote America’s Credit Unions Head of Regulatory Advocacy James Akin in the letter.
Akin added the steps will “prevent competitive disadvantages and ensure examiners concentrate on the issues of greatest consequence.”
What’s Being Asked
- Match recent OCC/FDIC reforms and start a parallel rulemaking so credit unions aren’t put at a competitive disadvantage
- Make exams truly risk-based by ending blanket checklists, defaulting to more off-site work, and cutting duplicative data requests by using existing filings first
- Decide when to conduct exams on issues like flood insurance, fair lending, Servicemembers Civil Relief Act, and similar areas on actual risk rather than calendar-based timing, and do follow-ups when warranted by risk
- Define “unsafe or unsound practice” in the same way bank regulators propose, tied to material financial harm, and limit formal findings to legal violations or issues that meet that bar
- Create a nonbinding “examiner observations” category for suggestions, and make clear that missing a target date or declining a suggestion won’t trigger enforcement unless there is a legal violation or truly unsafe practice.
Comptroller’s Comments Addressed
The ACU letter also addresses recent remarks from OCC Comptroller Jonathan Gould about an unlevel playing field between banks and credit unions, “noting that community bankers indicate in their own words that other banks are their primary competition, not credit unions,” the letter states.
