Board Proposes Second Payday Alternative Loan Option, Seeks Comment on a Third

Board Proposes Second Payday Alternative Loan Option, Seeks Comment on a Third

Share Insurance Fund Posts $33.1 Million Net Income in First Quarter

ALEXANDRIA, Va. () The National Credit Union Administration Board held its fifth open meeting of 2018 at the agencys headquarters today and unanimously approved two items:

  • A notice of proposed rulemaking seeking comment on the agencys proposal to provide federal credit unions with additional options for payday alternative loans.
  • A final rule clarifying agency procedures for resolving severance claims arising from involuntary liquidations.

The Chief Financial Officer briefed the Board on the performance of the National Credit Union Share Insurance Fund, which posted a net income of $33.1 million in the first quarter, primarily due to the strong investment income earnings.

New Payday Alternative Loan Would Give Federal Credit Unions Second Option

Federal credit unions would have a second payday alternative loan option under a proposed rule (Part 701) approved by the Board.

The proposed payday alternative loan option would not replace the current payday alternative loan program (opens new window) , created in 2010, but would be a distinct product. This product would have features to help federal credit unions meet specific needs of certain payday loan borrowers that are not met by the current program and provide those borrowers with a safer, less expensive alternative to traditional payday loans.

During the fourth quarter of 2017, 503 federal credit unions reported making payday alternative loans under the NCUAs current rules. At the end of the fourth quarter of 2017, federal credit unions held $38.6 million in payday alternative loans on their books.

The proposed PALs II program would include most of the features of current payday alternative loan program, with four changes:

  • Sets the maximum loan amount at $2,000 and eliminates the minimum loan amount. Lire la suite