The NCUA’s upcoming regulatory review of Part 704 presents a crucial opportunity for corporate credit unions like LaCorp—and for member credit unions that depend on us for liquidity and investment solutions.
One of our biggest concerns? NCUA Rule 704.8(k), which caps the deposits a corporate credit union can accept from any single member at 15% of its moving daily average net assets (MDANA).
🔎 Why is NCUA Part 704.8(k) a problem for YOUR credit union?
🟠 Restricts liquidity when it’s needed most—In times of tightening liquidity, this rule limits corporates from fully serving as a liquidity bridge for member credit unions.
🟠 Forces funds out of the credit union system—Credit unions exceeding the cap frequently move excess deposits to Federal Reserve accounts, reducing funds available within the cooperative network.
🟠 Hurts smaller credit unions—The lack of a de minimis threshold disproportionately affects smaller corporates and their smaller members, reducing the ability of smaller credit unions to earn competitive overnight yields within the system.
🟠 Creates challenges during excess liquidity—During COVID stimulus deposits, the lagging MDANA reset failed to keep up with overnight surges, artificially restricting deposit capacity even when corporates had the capital and safety to manage the inflows effectively.
💡 Why was NCUA Part 704.8(k) enacted?
🔸 Rule 704.8(k) was originally enacted after reports that large corporate members of US Central Credit Union unduly influenced board votes by threatening to withdraw deposits. However, today's regulations no longer allow a central corporate credit union like US Central to exist, making this rule obsolete.
🔸 All corporate credit union members operate under the one member, one vote principle, ensuring fair governance regardless of deposit size.
🔸 During the COVID-19 crisis, NCUA temporarily waived this rule with no reported negative effects, further demonstrating that the restriction is unnecessary.
💡 What about NCUA Part 704.8(k) needs to change?
🔵 LaCorp supports modifying Rule 704.8(k) to allow a deposit limit based on the greater of:
🔵 15% of MDANA,
🔵 200% of total capital, or
🔵 A minimum of $50 million.
This revision would keep liquidity in the credit union system, increase financial flexibility for member credit unions,and ensure deposit limits adjust dynamically to real-world conditions.
📢 What can you do about NCUA Part 704.8(k)?
🟢 LaCorp will remind you when the NCUA announces the public comment period, ensuring you don’t miss the opportunity to make your voice heard!
🟢 Submit a comment to the NCUA—Federal law (41 U.S. Code § 1707) protects your right to provide feedback on regulations, ensuring that all voices are heard without risk of retaliation. when the NCUA announces the public comment period—your voice can drive change!
🟢 Share this post to encourage other credit unions to take action.
🟢 Connect with LaCorp—we’re here to help guide you through the comment process.
Let’s ensure the regulatory framework supports, rather than restricts, credit union liquidity management—in both high- and low-liquidity cycles.