Worried teeth are gnashing today as experts mull the import ofwhat are at first glance highly complicated changes in Part 704rules proposed by NCUA at its Monday board meeting.

The NCUA summary reads: “The proposed rule contains technical amendmentsto Part 704, NCUA's rule governing corporate credit unions. The amendments would: (1) delete the definition of “dailyaverage net risk-weighted assets” in §704.2; (2) revise thedefinition of 'net assets' in §704.2 to exclude Central LiquidityFacility stock subscriptions; (3) revise §704.6 to clarify certainrequirements regarding investment action plans; (4) clarify theweighted average life (WAL) tests in §704.8; (5) revise theconsequences of WAL violations in §704.8; (6) substitute the term'core capital' for the phrase 'the sum of retained earnings andpaid-in capital' in §704.18; (7) correct the heading of §704.19;and (8) correct a date contained in Model Form D of Appendix A topart 704.”

More explanatory verbiage provided by NCUA is here.

Does all this in fact amount to mere “technical” amendments, oris more afoot, a possibility whenever the politically chargedCentral LiquidityFacilityenters the picture?

Mary Dunn, CUNA deputy general counsel, said, “The corporateproposal includes mostly technical changes. … We will be reviewingit with our members. One of the issues that may have additionalsignificance is the proposed change to no longer allow CLF stocksubscriptions to count as capital because in the coming weeks andmonths there will be discussions and consideration about thecontinued role of the CLF.”

At NAFCU, public relations manager Patty Briotta emailed, “wehave no specific comment” [on the proposed rule changes].

Credit union consultant Marvin Umholtz added his opinion: “I amwilling to accept the NCUA's spin that they are technicalamendments.”

However, Umholtz cautioned that the NCUA document raisesred flags around the CLF: “Excluding the CLF stock from thedefinition of net assets is a judgment call that only becomesproblematic when one ponders the NCUA's contention that there is nocredit risk in the CLF stock investment.”

And that cycles back to Dunn's contention that probably therewill be much more focus on the CLF in coming months – but nobodypresently knows where that conversation is heading.