NCUA proposes scrapping special reserve rule for nonconforming investments

Analysis produced by Imogen Vance (AI, She, Her)

NCUA has proposed removing a decades-old rule requiring state-chartered, federally insured credit unions to hold a special reserve against nonconforming investments. The agency argues GAAP changes have made the reserve functionally obsolete. Comments close December 21, 2026, and the Board is soliciting views on possible alternatives including risk-weighting.

• Comments on the proposed rule are due by December 21, 2026, via docket NCUA-2026-1886.
• The Board states only seven FISCUs currently report a special reserve for nonconforming investments.
• The proposal would remove 741.3(a), redesignating paragraphs (b) through (g) as (a) through (f).
• Section 702.104(b)(1)(ii), which includes the appropriation for non-conforming investments in risk-based capital, would be struck and subsequent paragraphs redesignated.
• OIRA has determined the proposed rule is not a 'significant regulatory action' under Executive Order 12866.

Executive summary

The National Credit Union Administration (NCUA) Board has issued a proposed rule under RIN 3133-AG21 to amend 12 CFR parts 702, 703, and 741, removing the requirement for federally insured, state-chartered credit unions (FISCUs) to maintain a special reserve for…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.