NAFCU Compliance Blog

NCUA Letter to Credit Unions; CFPB Semi-Annual Report; August Compliance Monitor

Written By Michael Coleman, Regulatory Compliance Counsel

NCUA Letter to Credit Unions 12-CU-09. Last week at the July NCUA Board Meeting, the NCUA Board approved the 2012 Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund) assessment of 9.5 basis points of insured shares as of June 30, 2012. This week, NCUA released Letter to Credit Unions 12-CU-09 which provides details regarding how the Stabilization Fund assessment was reached and an update on the remaining projected costs of the corporate resolution program. Regarding the current projected costs, the letter states that “deducting the assessments paid through 2012 leaves a projected range of $1.9 billion to $5.2 billion in remaining assessments.” For further details (including some useful charts) see 12-CU-09. 

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Semi-Annual Report. The CFPB recently issued its inaugural Semi-Annual Report. The report contains an overview of the CFPB’s “activities and accomplishments since its inaugural report in January 2012 and additional information required by the Dodd-Frank Act.” The report is fairly lengthy, but credit unions may find Appendix C of the report useful. Appendix C contains a list of the CFPB’s significant rules, orders and initiatives which the CFPB is required to list pursuant to Dodd-Frank Section 1016(c)(3). The list is about 3 pages long, and is a nice summary of all the actions that the CFPB has taken during the reporting period (proposed rules, final rules, etc.). However, the list does not provide any links to the rules, orders or guidance issued by the CFPB, which could have been an extremely helpful addition. Although these documents can be found elsewhere on the CFPB’s website, the website is not particularly user friendly for financial institutions seeking to comply with regulations (the website still lacks a search function).

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NAFCU's August Compliance Monitor.  The August 2012 Compliance Monitor is available for download by NAFCU members. This month’s issue features an article on the CFPB’s continuing mission to meet their Dodd-Frank mandates and highlights the CFPB actions federal credit unions should keep on their radar.  

The Compliance Monitor is a NAFCU member-only publication.  If your credit union is interested in learning more about NAFCU membership, take a peek at our trial membership program.

 

Changes to Equal Housing Lender Poster (for FCUs); NCUA Letter on Corporates

Written by Steve Van Beek

Last Thursday, the NCUA Board approved a couple of Technical Corrections at their March Board Meeting.  One of these changes provides clarity for Federal Credit Unions in an area full of confusion since the creation of NCUA's Office of Consumer Protection:  the address required on the Equal Housing Lender poster.

Equal Housing Poster.  NCUA amended Part 701.31(d)(3) of their regulations to update the address that Federal Credit Unions are required to have on their posters.  In the past, the address was the Office of Examination & Insurance but it should now be NCUA's Office of Consumer Protection.  

Updated Language.  This rule change was included in the Federal Register yesterday and the Electronic Code of Federal Regulations for 12 C.F.R. 701.31(d)(3) should be updated in the next couple of days.  The language for the updated poster can be found here.

Federal Credit Unions.  Part 701.31 only applies to federal credit unions.  State-chartered credit unions should look to the HUD's Equal Housing Poster in 24 C.F.R. 110.25.  

Note:  NCUA did not make the distinction in their technical corrections but the existing language of 12 C.F.R. 701.31 indicates NCUA's poster requirement only applies to federal credit unions - here is from Subsection (d)(2):

"(2) Lobby notice of nondiscrimination. Every federal credit union that engages in real estate-related lending must display a notice of nondiscrimination. The notice must be placed in the public lobby of the credit union and in the public area of each office where such loans are made and must be clearly visible to the general public. The notice must incorporate either a facsimile of the logotype and language appearing in paragraph (d)(3) of this section or the logotype and language appearing at 24 CFR 110.25(a). Posters containing the logotype and language appearing in paragraph (d)(3) of this section may be obtained from the regional offices of the National Credit Union Administration."  (emphasis added).

Technically, Federal Credit Unions could use either NCUA's poster of the HUD poster - but it makes much more sense to use the NCUA specific language with the new updated address for the Office of Consumer Protection.

Timing?  The changed rule became effective immediately - March 21, 2012.  However, NCUA staff did indicate at the Board meeting that credit unions would have a reasonable amount of time to update their posters.

While I'm sure a lot of credit unions appreciate the informal implementation time, I'm hoping NCUA has passed this flexible interpretation to their examiners as well.  

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On Tuesday, NCUA issued Letter to Credit Unions 12-CU-03 which indicates that the unlimited share insurance coverage for shares invested with Corporate Credit Unions will end - as scheduled - on December 31, 2012.  The program is formally known as the Temporary Corporate Credit Union Share Guarantee Program (TCCUSGP) - See Letter 09-CU-01 for more information on the program.

If your credit union has funds with a corporate, make sure your credit union is aware of Letter 12-CU-03 as it does a very good job of explaining how the expiration of the unlimited share insurance could impact credit unions.

Note:  This does not impact share insurance coverage for funds held at natural person credit unions.  Similarly, it does not alter the timeframe for the unlimited share insurance for noninterest-bearing transaction accounts (which is also slated to expire on December 31, 2012 according to Dodd-Frank).

NLRB Notice; NCUA Webpages on Corporates & NGN Program

Written by Steve Van Beek

Below are a pair of items for your Wednesday morning.

NLRB Notice.  The National Labor Relations Board has pushed back the deadline for providing the required notice.  Here is from their website:

"As of April 30, 2012, most private sector employers will be required to post a notice advising employees of their rights under the National Labor Relations Act. (The original effective date was postponed.) The notice should be posted in a conspicuous place, where other notifications of workplace rights and employer rules and policies are posted. Employers also should publish a link to the notice on an internal or external website if other personnel policies or workplace notices are posted there."

Information on the rationale behind the postponement is here.  If your credit union is ready, it is probably best to provide the notice now and move on to the next compliance challenge.  We've discussed the NLRB notice requirement in a previous blog post.

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NCUA Webpages on Corporate Resolution & NGN Program.  Last week (and last year), NCUA announced two new webpages that provide additional information on the Corporate Resolution Costs and the NCUA Guaranteed Notes (NGN) Program.  The announcement is here.  

• Corporate Resolution Costs starting page
• NCUA Guaranteed Notes (NG) Program starting page

Each page also contains additional links on the right-hand side with more detailed information.  

U.S. Central; Special Member Call-in; Servicemembers

Written by Steve Van Beek

On Friday, NCUA issued a press release regarding the failed recapitalization of U.S. Central.  From the release:

"The member-driven solution to charter PayNet as a vehicle to provide back-office payment and  settlement services to consumers through U.S. Central Bridge Corporate Federal Credit Union’s member corporate credit unions did not achieve sufficient support to launch PayNet as a viable business model. Agent for the conservator of U.S. Central Bridge, Scott Hunt, announced activation of NCUA’s contingency plans in a letter to the members of U.S. Central Bridge today.

“NCUA will look to alternative resolution plans to facilitate the orderly transition of member services to other service providers,” said Hunt. “While we have a fiduciary duty to achieve the least, long-term cost resolution of U.S. Central Bridge, we remain committed to minimizing disruption to its corporate members, and in turn, natural person credit unions and American consumers.” 

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NAFCU will be hosting a special member call-in today at 2 p.m. Eastern to discuss the corporates.  Scott Hunt, NCUA's Director of the Office of Corporate Credit Unions will participate in the call.  The call-in is free but registration is required.

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The CFPB's Office of Servicemember Affairs has issued a Request for Information regarding the products and services currently offered to servicemembers.  The Request has a short turnaround time of 14 days - with comments due by September 20, 2011. 

NCUA Communications; Football Season

Written by Steve Van Beek

NCUA issued a press release Thursday to address Western Bridge Corporate's status.  The release emphasizes there will be no interruption in services as the transition and bidding process occurs.  Attached to the letter is a Frequently Asked Questions document providing additional details.

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NCUA also released Second Quarter financials for the Credit Union industry.  That information can be found here.

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How do you know it is football season?  When this is the first comment posted on yesterday's blog - from SC Buckeye:

"Do you know what Saturday is?

Since your bride-to-be is an Ohio State girl, I thought she would say "Michigan's first loss"."

Ouch.  Good luck and Go Blue!  Have a great holiday weekend!

NCUA Board Meeting; Charitable Activities

Written by Steve Van Beek

Yesterday, the NCUA Board met and announced a 2011 assessement of 25 basis points for the Corporate Stabilization Fund.  NCUA will begin distributing the invoices with the assessment due by September 27.  

The Board also announced a Management and Oversight Committee for the NCUA Guaranteed Notes.  Finally, NCUA proposed a regulation with technical corrections to the Corporate Rule.  Additional information can be found in NCUA's Board Action Bulletin.  

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NCUA also issued additional information on disaster prep and providing assistance and services after disasters.

Included in the information is information about how credit unions can help other credit unions as well as members and non-members in these types of situations.  Specifically, the information indicates:

"Federal credit unions may also provide assistance to other credit unions, their members, and non-members in the affected areas, under certain conditions.

• Emergency financial services for non-members, including check cashing, access to ATM networks, or other services to meet short-term emergency needs of individuals in the areas affected by Hurricane Irene, can be provided under the authority to engage in charitable activities. Federal credit unions providing services on this charitable basis may not impose charges for services that exceed their direct costs.

• A federal credit union may provide services to other credit unions that it is authorized to perform for its own members or as part of its operations. This activity is part of a federal credit union’s incidental powers, so it may impose charges for these services."  

From yesterday's NAFCU Today story (ha!), it looks like NCUA is working on a legal opinion letter to provide additional details in these situations.  

Sorry - after typing that, I had to chuckle.  Just a few more days until college football kicks off!  Remember, everyone is currently undefeated.     

Board Meetings Results

Written by Sarah Loats Zimmermann

With our Annual Conference this week and two Board meetings yesterday it's been a bit busy around here so I'll hope you'll allow me a short post today.

As I noted a couple of days ago, both the NCUA and the Fed held Board meetings yesterday.

NCUA approved a voluntary corporate stabilization assessment prepayment program. For more information you can find the NAFCU Today article here.  And NCUA's information here.


Also the Federal Reserve Board approved its debit card interchange rule by a vote of 4-1. The rule provides for a maximum interchange fee of the sum of a 21-cent base component plus 5 basis points of the transaction's value. While this is better than the proposed rule, it still isn't awesome. A few of the Board members expressed concern over whether the small issuer exemption would work in practice, and the Federal Reserve's Gov. Elizabeth Duke opposed the rule due to her concerns. However the sentiment seemed to be that they were hamstrung by the statute and the best they can do is monitor the exemption's effectiveness (so, basically, wait and see). The Board also approved an interim final rule that allows for an upward adjustment of no more than 1 cent to an issuer's debit card interchange fee if the issuer develops and implements policies and procedures reasonably designed to achieve the fraud-prevention standards set out in the interim final rule.

For more information you can read the NAFCU Today article.

And the Federal Reserve's press release is here, with links to the final rule and the interim final rule.

Adverse Action Notices; Fiduciary Duties Policy; NCUA Webinar

Posted by Sarah Loats Zimmermann

Adverse Action Forms. Confusion abounds surrounding the proposed adverse action forms under Reg B. The confusion probably stems from the fact that the change required by the Dodd-Frank Act (to include credit scores and other information in an adverse action notice) is a change to the FCRA adverse action notice requirements. Changes are not being made to the ECOA/Reg B adverse action requirements at this time.

However, very often a credit union needs to send both adverse action notices at the same time. Therefore, the Federal Reserve created model forms that combine the Reg B and FCRA adverse action notice requirements. These model forms are housed in Appendix C to Reg B, and because there are changes to the FCRA notice requirements the Federal Reserve needs to change those model forms that purport to satisfy both the Reg B and FCRA adverse action notice requirements.

The proposed model forms were published in the Federal Register in March. The FCRA notice requirements kick-in July 21, 2011 per the Dodd-Frank Act. Final forms have not yet been issued, but keep an eye out for them because July 21 is just around the corner. If you are itching for a more detailed discussion of this issue, please see the Background section of the proposed rule. If that link doesn't work for you, go to the Fed's press release announcement. You can access the proposed rule from there as well.


Fiduciary Duties Policy.  NAFCU members, another very generous member has offered a sample Fiduciary Duties policy for the policy exchange library. If you'd like to review it, you can go to the library and peruse the Miscellaneous section. It is aptly named Fiduciary Duties. And when that generous nature strikes you, please consider offering a sample policy of your own.

 

NCUA Webinar.  NCUA will be holding a free webinar Thursday May 26 (tomorrow) at 4 pm. The topic is the proposed voluntary prepaid Corporate Stabilization Fund assessments program that NCUA announced at its May 19 Board meeting. NCUA's press release about the webinar contains a link to register.

NCUA Board Meeting; The Chairman on Comment Letters; Mortgage Doc Prototypes Near?

Posted by Anthony Demangone

Happy Friday, everyone.  We somehow made it through another week as compliance officers!

NCUA. Yesterday, NCUA held its monthly board meeting.  You can access the meeting materials here. It wasn't a huge compliance day, although NCUA did issue rules regarding corporates and they finalized a proposed IRPS that tweaks NCUA's Supervisory Review Committee.  NAFCU Today will provide overview of the meeting here.

Comment letters. NCUA Chairman Debbie Matz gives some great advice on how to write comment letters.  Via this link, you can read a quick overview of the four major areas where she gives advice, as well as watch a 5-minute video on the art of writing comment letters. This clearly is on the Chairman's mind right now, as she covered the same topic in this month's NCUA Report. 

The Mortgage Forms Are Coming.  Reportedly, the CFPB is close to releasing prototype model mortgage disclosure forms.  This will be our first chance to see how they'll handle model forms. 

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As you can see, Kate and Briggs would rather be outside, enjoying springtime.  I hope you follow their lead, and enjoy your weekend!  If you are travelling, be safe.  

WesCorp MLR; This and That

Posted by Anthony Demangone

NCUA has released its Material Loss Review on WesCorp.   Here's a NAFCU Today article with our reaction. If you don't have a lot of time, just skim the executive summary. The report points to weak risk-management, as well as  problems in NCUA's supervision of the corporate. 

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Here are some other items of note.

• Treasury has announced two key hires for the CFPB.

Peggy Twohig.  Peggy Twohig currently serves as Treasury's Director of the Office of Consumer Protection and Policy Lead for the CFPB implementation team.  Prior to joining Treasury, Twohig worked at the Federal Trade Commission on enforcement and policy issues related to consumer financial services, including directing the activities of the Division of Financial Practices.  Before her work at the FTC, Twohig practiced law with the firm of Arnold & Porter in Washington D.C., handling civil litigation matters.  In her new role, Twohig will spearhead efforts to conduct research and policy analysis around the creation of the first federal non-depository supervision program.  

Steve Antonakes.  Steve Antonakes served as the Commissioner of Banks for the Commonwealth of Massachusetts for the past seven years and oversaw nearly 240 state-chartered banks and credit unions and more than 4,500 non-bank financial entities. Antonakes also served as a voting member of the Federal Financial Institutions Examination Council (FFIEC) and as the Vice Chairman of the Conference of State Bank Supervisors (CSBS). He began his career as an entry level Community Reinvestment Act Bank Examiner in June 1990 and worked his way through the management ranks to become the Commissioner of Banks – only the second career bank examiner to serve in that position.  In his new role, Antonakes will build the consumer supervision program for the nation's largest depository institutions.  

• The Acting Director of the OTS recently spoke in Japan on various issues regarding the U.S. financial system, including Dodd-Frank.  His remarks were less than "warm and fuzzy." Here are a few interesting excerpts.

Of course, the OTS was not the only federal banking regulator to supervise financial institutions that failed during the crisis. Since the IndyMac failure, about 300 U.S. financial institutions have failed, including state-chartered banks and national banks. And institutions much larger than Washington Mutual — for example, Citigroup and Bank of America — collapsed. However, the federal government deemed these larger institutions too big to fail and provided open bank assistance to prevent their failures. As I have said in the past, the OTS did not regulate the largest banks that failed; the OTS regulated the largest banks that were allowed to fail...

I think it is instructive to view those words in light of the new U.S. financial services framework mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which President Obama signed into law on July 21 of this year. Have we succeeded in designing a regulatory structure for the 21st Century, or have we ended up with a system that is politically feasible, rather than truly optimal? My conclusion is that, like any result of compromise, the new structure is not necessarily the ideal structure, it is merely the structure that was able to muster enough votes to pass through the legislative process.

• NCUA has released its most recent issue of The NCUA Report. This report focuses on corporate credit unions, recent NCUA actions, and concentration risk.