Iowa Division of Credit Unions
Proposed Rule Changes
The Iowa Division of Credit Unions is proposing rule changes for the following rules in Chapter 189 of the Iowa Administrative Code.
These rules have been approved by the Credit Union Review Board. The public comment period does not open until the rules are published by the Administrative Rules Committee. The link below can be used to view and provide feedback on any rule changes open for comments.
2021 Proposed Organizational Changes
Proposed Changes to Variances
Chapter 23, Uniform Waiver and Variance Rules
The proposed amendments update rules in accordance with changes to Iowa Code section 17A.9A. The changes call for deletion of the word “variance” when the word is used in relation to “waiver” with 189-23. Amendments are also proposed relating to submission of information regarding waivers on the Legislative Services Agency’s Internet site.
Background and Reasoning
The Iowa Legislature changed the Iowa Uniform Waiver and Variance Rule to remove reference to variances. This necessitated rulemaking to update 189-23 to comply with the Iowa Code section 17A.9A.
2019 Proposed Organizational Changes
Chapter 2, Organization, Chartering and Field of Membership of a Credit Union
Add Rule 189-2.9A (1) (533): The board of directors shall hold at least twelve regular meetings each calendar year. No more than one regular meeting shall be held in one calendar month. Add Rule 189-2.9A (2) (533): A quorum shall be required to undertake any credit union business and at any meetings of the board of directors called by the superintendent pursuant to Iowa Code Chapter 533.
Background and Reasoning
Iowa law requires board of directors to attend no less than 75% of the board’s regular meetings held during the year. IA Code 533.205(3)(c). However, the required frequency of regular meetings is not otherwise defined. The additional administrative rule is intended to explain what constitutes a regular meeting and mirrors the National Credit Union Administration’s rule requiring board of directors to meeting monthly. 12 U.S.C. § 1761a (113). Iowa code section 533.113A allows for the superintendent to call a meeting of the board of directors. The superintendent’s office and agents routinely call such meetings to discuss examination results and review required actions identified in the course of an examination. The Division has a reoccurring problem with attendance at such meetings. As such, we recommend a rule explaining the attendance requirements for these and regular meetings. This provision is consistent with the credit union’s bylaws which require a quorum to be present when conducting any business of the credit union. A required meeting with the superintendent and applicable staff constitutes business of the credit union and necessitates a quorum of the board of directors.
Rule 189-2.9A (1) – Iowa Code Section 533.104(5); 533.205(3)(c). 12 U.S.C. § 1761a (113). Rule 189-2.9A (2) – Iowa Code Section 533.104(5); 533.113A.
2019 Proposed Branch Offices Changes
Chapter 6, Branch Offices
Amend Rule 6.1(2): Application. A state chartered credit union desiring to establish and operate a branch “or administrative office” shall submit to the superintendent an “Application to Establish a Branch or Office.” A state chartered credit union owning an interest in a credit union service organization shall submit to the superintendent an “Application to Establish a Branch or Office” for any building which is intended to be used primarily by the credit union or credit union members, even if owned by the credit union service organization. The application and instructions for preparing and filing it are furnished upon request. However, the superintendent may waive the application requirement when in the superintendent’s opinion the waiver is necessary or desirable.
Add Rule 6.1(7): Failure to file an Application to Establish a Branch or Office: Failure to file an “Application to Establish a Branch or Office” prior to closing on an existing property or breaking ground on a building project may result in a fine of one hundred dollars per day upon notice from the Division, until the application is submitted to the Iowa Division of Credit Unions.
Background and Reasoning
In accordance with Iowa Code Section 533.301(19), the current administrative rule requires a credit union to submit a branch application in advance of opening a new branch; however, as credit unions evolve and grow this rule needs to evolve and grow with them. Many of our credit unions are building administrative buildings, which do not meet the definition of a branch articulated in the current rule. Additionally, there is a growing trend of credit unions using credit union service organizations in order to build and manage administrative buildings. Therefore, these credit unions are not submitting branch applications and this undermines the purpose and intent of the rule and Iowa Code Section 533.301(19). There is also no mechanism to enforce the requirements in Iowa Code Section 533.301(19).
It is the position of the Division that credit unions should be required to submit the same application prior to breaking ground or opening administrative buildings as they are for a branch. The rule is intended to permit the Division to make a safety and soundness determination prior to the credit union financially committing to a project which potentially jeopardizes the credit union and to extend this requirement to credit union service organizations. The Division has a reoccurring problem with credit unions failing to file branch applications or notify the Division of fixed asset investments. The Division requires credit unions to notify it of investments in fixed assets when the investment causes the credit union’s fixed assets to exceed 5% of the total assets, however, this is essentially an honor system. We recommend updating the rule to make it applicable to non-branch buildings and adding an enforcement mechanism.