What is the legal structure of a credit union?

What is the legal structure of a credit union?

Credit unions are financial organizations that are structured in a cooperative model. Members purchase shares in the organization. The money from the members is pooled together and used to provide financial services to the members.

What is NCUA regulation?

The NCUA’s mission is to ensure the nation’s system of cooperative credit remains safe and sound. To achieve this, the agency’s examination program focuses on risks to the broader system and the National Credit Union Share Insurance Fund.

Are credit unions subject to regulation O?

Regulation O actually does not apply to credit unions. Since credit unions are not members of the Federal Reserve System, the requirements of Regulation O do not apply to them. Instead, NCUA has its own rule, section 701.21(d), which provides the requirements for credit union loans to officials.

Do credit unions have capital regulation?

The Risk-Based Capital (RBC) rule requires a second, complex calculation of the capital level of a credit union. To be considered well-capitalized by the National Credit Union Administration (NCUA), credit unions will have to have a minimum RBC ratio of 10%, as well as a net worth to assets ratio of 7%.

How much money is insured by the NCUA?

For a complete directory of federally insured credit unions, visit the NCUA’s agency website at ncua.gov. The standard share insurance amount is $250,000 per share owner, per insured credit union, for each account ownership category.

Who are the regulators of credit unions?

Federally chartered credit unions are regulated by the National Credit Union Administration, while state-chartered credit unions are regulated at the state level. The Fed is one of several banking regulatory agencies at the federal level.

What extension of credit is not covered by FRS regulation O?

The bank cannot give credit extensions that it would not provide to a non-insider customer, nor can it extend credit beyond legal or self-imposed lending limits. One exception to this rule comes with compensation packages provided by banks to all employees, including non-insiders.

What is capital ratio for credit unions?

The law stipulates that a credit union with a 6% net worth ratio is “adequately” capitalized. Considering the risk exposure of the vast majority of credit unions, 6% is indeed a completely adequate level of net worth.

What is the difference between a credit union and a building society?

Credit Unions offer many of the same services as banks and Building Societies, such as savings accounts, chequing accounts (share draft accounts), loans, etc. Credit Unions are owned and run by its members, for the benefit of its members. Some Credit Unions have different lending criteria or rules for loans.

Do credit unions have reserve requirements?

Reserve requirements currently are assessed on the credit union’s net transaction accounts (mostly share draft accounts). Credit unions must also regularly submit deposit reports of their deposits and other reservable liabilities. These amounts are used in the calculation of reserve requirements of credit unions.

What is considered an extension of credit under Reg O?

Regulation O governs any extension of credit by a member bank to an executive officer, director, or principal shareholder of that bank, of a bank holding company of which the member bank is a subsidiary, and of any other subsidiary of that bank holding company.

Who is considered an insider under Regulation O?

The term insider has a special definition for the purposes of Regulation O. A Regulation O insider is a principal shareholder,5 an executive officer,6 a director, or a related interest of any of these persons.