Dive Brief:
- The National Credit Union Administration Board proposed a rule that would allow people convicted of certain minor offenses to work in the credit union industry without applying for the board’s approval, according to a proposal published in the Federal Register Tuesday.
- The proposed rule aims to expand career opportunities for such individuals by incorporating the NCUA’s “Second Chance” interpretive ruling and policy statement and the Fair Hiring in Banking Act into the board’s regulations, which loosen some of the statutory prohibitions imposed by Section 205(d) of the Federal Credit Union Act.
- Section 205(d) prohibits anyone convicted of a criminal offense involving dishonesty or breach of trust, or anyone who has entered into a pretrial diversion or similar program in relation to such an offense, from participating in the affairs of an insured credit union without the consent of the NCUA Board — a restriction the proposed rule aims to soften.
Dive Insight:
The proposed rule aims to address the individuals and types of offenses covered by Section 205(d) in the Federal Credit Union Act and the NCUA’s procedures for reviewing submitted consent applications. The rule would also amend the policies and procedures used by the board to govern an application to rescind a prohibition outlined in Section 205(d), and update regulation concerning the conditions under which “newly chartered or troubled federally insured” credit unions must notify the NCUA of any proposed changes they make.
The NCUA Board unanimously approved the proposed rule during an open meeting last month. The board is accepting comments on the rule up till 60 days following its publication in the Federal Register.
The list of exceptions to the application requirements were also expanded under the Second Chance policy update (IRPS 19-1) made in 2019, which reduced the scope and number of offenses that required the submission of a consent application to the board. Under this change, convictions or program entries for offenses involving insufficient funds checks of aggregate moderate value; small dollar simple theft; false identification; simple drug possession; and isolated minor offenses committed by covered persons as young adults do not require an application.
“Many of these individuals are not violent or career criminals. They are people who made poor choices at some point and who have since paid their debts to society,” NCUA Chairman Todd Harper said in a statement following the board’s approval of the proposed rule in October.
“What’s more, a disproportionate number of these individuals come from communities of color. If we are to advance financial inclusion and equity within the credit union system, we must facilitate the access of all demographic groups to credit union employment opportunities," he added.
If the final proposed rule is approved by the NCUA Board, the Second Chance interpretive rule and policy statement will be rescinded.
