NCUA’s Requirements & Guidance Exam Flashcards
The central liquidity facility was established to address the economic conditions of the 1970s and to lend money to credit unions under certain circumstances. What are the three circumstances listed in this book?
Short term adjustments credit to help temporary requirements for funds; seasonal credit to help meet seasonal needs for funds; and protracted adjustment credit to help meet needs in unusual or emergency circumstances of longer-term nature
Federal credit unions are subject to what kinds of federal, state, or local taxes under the Federal Credit Union Act?
FCUs are exempt from federal and state income taxes and franchise taxes but are subject to the same real property taxes and personal property taxes that are imposed on other businesses
Because state-chartered credit unions are not “federal instrumentalities “ what tax are they subject to that federally chartered credit unions are not?
Unrelated business income tax-UBIT
NCUA issues many documents that credit unions need to review in order to be in compliance with the agency’s requirements. Match the listed documents with the correct description.
NCUA Rules and Regulations: C-NCUA directives that govern a particular topic and have a substantial impact on credit union operations.
Interpretive Rulings and Policy Statements: E-provide NCUA interpretations on what a law means on a particular subject generally requiring credit unions to comply and follow the guidelines provided in them
Letters to Credit Unions: D-issued by the NCUA board to provide clarifying information about a specific regulation, express concern about a credit union compliance, issue warnings, or announce changes in accounting rules, operating fee assessments or examination procedures and generally sent to all federally insured credit unions
Regulatory Alerts: A-advise federally insured credit unions about regulatory changes affecting their compliance requirements
Legal Opinion Letters: B-written responses to inquiries made to NCUA representing their legal staff’s interpretation of the law and regulations that are posted on the NCUA website but not sent directly to credit unions
The Federal Credit Union Act gives the NCUA authority to issue regulations and other guidance to direct the operations of federal credit unions and federally insured state-chartered credit unions. What is the difference between a final regulation and an interim final regulation?
A final regulation is issued after an official notice and comment period of 30 days to 120 days giving credit unions at least 30 days before compliance is mandatory. An interim final regulation is issued because of a pressing agency concern such as a safety or soundness problem or the enactment of a new law.
If a state- chartered credit union has federal share insurance NCUA has the right to examine the credit union but in most cases the NCUA relies on the state regulator to actually do the examination
Yes
What is the difference between a call report and a financial performance report?
Call reports-the financial and statistical report-NCUA requires all federally insured credit unions to submit a summary of their financial and statistical data quarterly
Financial Performance Report- a report drawn from the call report data providing credit unions a five year review of the data and showing how the credit union’s peers are performing.
NCUA has a variety of enforcement tools available to protect credit unions, their membership, creditors, the NCUSIF, and the credit union movement in general. Match the following enforcement tools to the correct definition.
Cease and Desist Order: C-prohibits a credit union from engaging in an activity described in the order and/or requires the correction of a condition resulting from a violation
Removal and Prohibition Orders: G-an order to remove a credit union board member or employee after a notice and hearing and an order to ban credit union officials and employees as well as affiliated parties from serving or being employed by any federally insured financial institution
Civil Money Penalties: F-a three tier penalty program against federally insured credit unions or institution-affiliated party ranging from $5000 to $1million a day.
Conservatorship: B-the NCUA Board takes immediate control of a federally insured credit union with no notice or hearing required
Order for Special Reserves: H-the NCUA Board requires a federal or federally insured state-chartered credit union to maintain special reserves to protect the interests of the members
Termination of Insurance: A- applies only to FISCUs and could mean the involuntary liquidation of the credit union
Involuntary Liquidation: E-the authority to close an insolvent federal credit union eliminating that credit union as a legal entity
Letters of Understanding and Agreement: D-agreement between the credit union and the regulator that require the credit union to take specific corrective action
When NCUA is faced with liquidating a credit union or merging it with another healthy credit union, what is the agency’s preference
NCUA will usually pursue a merger or purchase and assumption when a federal credit union cannot feasibly continue operating
