The Joy of Being Federal; Shuffle; The Agony of Being Blue and White

Pennsylvania just passed a regulation that greatly restricts the ability of lenders to offer no-document mortgages.   Read the state press release here.  Will it apply to federally-chartered credit unions located in the Keystone State?  It doesn't seem so. 

In the final rule, Pennsylvania's Department of Banking indicated that it "will not enforce or administer the CDCA against entities that set forth a valid claim of Federal preemption."  (The CDCA is the statute that authorized the regulations.)  Read the regs here if you want.

Federal credit unions have one heck of "valid claim of preemption."  Pursuant to the Federal Credit Union Act, NCUA regulations explicitly underscores the preemption of state laws that attempt to affect the rate, terms and other conditions of federal credit union loans.  See 12 C.F.R. 701.21(b) for all the glory.

These situations arise regularly, as states and even county governments pass laws or regulations that affect lending.  Preemption is never a slam dunk, but if the local rule affects the rates, terms or other conditions, it likely is preempted.

If you'd like a nice overview of the preemption issue, read this NCUA legal opinion letter.  I consider it to be the Grand Poobah of federal credit union preemption guidance. 

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Yesterday, NCUA announced that it is reassigning the examination and supervision of Alaska and Nevada credit unions, effective January 1, 2009.  Nevada goes to Region I (Albany, NY) and Alaska goes to Region II (Alexandria, Va.)  NCUA's announcement didn't provide a sunset date.

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For those who saw the grand slaughter Rose Bowl, you know that my Nittany Lions were crushed by the Lords of Hollywood, aka U.S.C.  It was a grand season, but I have to tip my hat to Old S.C.  Perhaps next year.  Perhaps.