NAFCU Compliance Blog

A Little of This, A Little of That

This week, Representative Barney Frank introduced two bills that would ease burdens on financial institutions in the area of internet gambling.  Read all about it here.  I thought you might like to read about efforts to take stuff off of our plates.

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You may have heard FDIC Chairman Sheila Bair talk about the creation of a national systemic risk council.  NCUA Chairman Fryzel isn't against the idea, as long as NCUA keeps its independence.

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Hey NAFCU members: We put together a contact sheet to help you reach us.  It contains all the relevant email addresses and phone numbers.   Download Contacting NAFCU Compliance.  It also contains advice to ensure you get what you need.  Enjoy, enjoy!

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I love FAQ's.  Especially OFAC's.  For example, what do you do when someone who is on the SDN list tries to open an account at your credit union?  Check out the answer.

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Mandy and I celebrate our first anniversary this weekend.  Holy cow!  What a difference a year can make.

Here are five random things I learned this year:

1. "Absolutely!" is the best answer to any question from your spouse. 
2. Children are a blessing.  An expensive, sleep-depriving blessing.
3. Life can exist without a daily dose of ESPN.
4. I should buy stock in any company that makes diapers or baby formula.
5. I never thought getting someone else to burp would play such a major part in my day.

  For all you moms, Happy Mother's Day!  Enjoy your weekend, stay safe, and stay compliant.

The Hill; Prohibition Orders; Softball

Posted by Anthony Demangone

Wow, was yesterday a big day on Capitol Hill.

First, a movement to give bankruptcy judges the ability to "cram-down" mortgages in certain situations was unsuccessful yesterday.  As you may recall, NAFCU opposed the proposed legislation.  The movement, which was pushed as an amendment to major housing legislation before the U.S. Senate needed 60 votes.  It fell short of 50.  Kudos to NAFCU's team of lobbyists, who worked around the clock the last few weeks. 

The Senate is also looking at giving NCUA additional borrowing authority to deal with the corporate credit union situation, as extending the share insurance increase to $250,000.

Finally, the House passed legislation to provide additional legislative protections to consumers in the area of credit cards.  Much of the legislation is already going to take affect as part of UDAP.  But the legislation would codify those changes, making them much more difficult to roll back.  That now moves to the Senate. 

Rather than hash out all the details, NAFCU Today has done a good job of providing great overviews of what took place.  Read all about it here.

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NCUA issued prohibition orders on Wednesday.  Read all about them here.  The orders are good wake-up calls for two groups of people:

1. Those who refuse to believe that there are people simply looking to rob your credit union blind; and
2. Those people who think no one is looking for insider abuse.

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Have a great weekend, everyone!  Mandy and I have a babysitter for Saturday! My goal is to have an adult beverage or two, have a nice dinner, and then fall asleep by 9 p.m.

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Added by Steve Van Beek

NAFCU Softball Update: The NAFCU Nationals split their games on Thursday night.  The first game was a nail biter with NAFCU losing 11-10.  We rallied in the bottom of the last inning and had the tying run on third base but their centerfielder made a diving catch to end the game.

Game Two was a whole new game with the NAFCU bats catching fire.  The game started with a inside-the-park homerun by Quincy, one of NAFCU's lobbyists, and we never looked back.  Final Score: 23-3 (the good way). 

NCUA LOLs; Yoga

Yesterday, NCUA released two legal opinion letters.

• NCUA released NCUA Legal Opinion Letter 09-0108 (January 26, 2009) to clarify that the Freedom of Information Act (FOIA) does not apply to federal credit unions.  That's nothing new.  But here are a few thoughts.  While members cannot FOIA federal credit unions, they can make formal requests for information pursuant to 12 C.F.R. Part 701.3.  Understand that process, as you have a short timeline to respond.  Also, access NCUA's FOIA page here. 

• NCUA also released NCUA Legal Opinion Letter 08-1024 (January 30, 2009).  This one deals with conflict of interest provisions.  NCUA stated the following:

You have asked if the conflict of interest provision in the National Credit Union Administration’s (NCUA’s) general lending regulation would preclude a credit union from selling loans to a bank in which one of the credit union’s directors owns stock. 12 C.F.R. 701.21(c)(8). We conclude the conflict of interest provisions prohibiting credit union officials from receiving any compensation in connection with making loans does not apply when a credit union sells loans it previously made but, nevertheless, we recommend that, in the circumstances you described, an interested director should recuse himself from deliberating or voting on the transaction.

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After putting together the second bouncy seat yesterday, I decided to get some exercise . (For those who don't know what a bouncy seat is, it seems to be a plastic, colorful child containment system that bounces.  I guess "bouncy seat" sounds nicer than my description.)  My wife suggested that I work through this short yoga booklet that she uses.   This is how it progressed.

Cocky Compliance Guy: This is pretty simple.
Loving Wife:  Just wait.

10 minutes later...

Compliance Guy:  Umm.  This one is pretty hard. 
Laughing, Loving Wife:  Just wait.

Next morning.

Sore Compliance Guy: (Grunts as he gets out of bed.)
I Told You So Wife:  (Giggles.)

NCUA Seeks Share Insurance Parity; And baby (and another baby) makes four

Kudos to NCUA Chairman Michael Fryzel.  Yesterday, Mr. Fryzel requested credit union inclusion in the Treasury Department’s recently expanded deposit insurance coverage of non-interest bearing deposit accounts.  See the press release here.  If granted, it would create parity between banks and credit unions.  Here's what he says:

‘Based on the belief that the policies of the National Credit Union Share Insurance Fund (NCUSIF) should be generally consistent with those of the FDIC, I believe that there should be full share insurance coverage for non-interest-bearing transaction accounts temporarily through 2009,” said Fryzel. “I am requesting that Treasury establish a parallel guarantee for credit unions in order to avoid any unintended impact on the credit union system.”

Fryzel also noted in an October 22, 2008 letter to Secretary Henry M. Paulson that NCUA lacks statutory authority similar to that of FDIC in creating such a program for banks and thrifts, specifically pertaining to systemic authority.

Separately Chairman Fryzel noted the importance for consumers in “the federal government creating a uniform regime regarding insured deposits. Given the uncertainty and turmoil in the markets, it is critical that consumers have confidence in the guarantee that stands behind funds in these non-interest bearing transaction accounts, regardless of what type of insured institution is providing the service.” 

No word yet from Treasury.  As usual, stay tuned.  But one thing is for sure, NCUA is moving quickly to do what it can to create parity for credit unions when compared to other financial institutions in this highly volatile financial environment.

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Mandy and I are pleased to announce that we are expecting...twins!  (We're getting one of each flavor: a boy and a girl.) We're very excited, and the twins seem to be doing fine.  This "final rule's" "effective date" is early March.  Wish us luck!

   

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Have a great weekend, everyone.  (Except for you Buckeye fans.)

More Share Insurance; Shameless Plug; Married Life

Here's some more additional information:

• The House takes up the bailout bill later today.  This bill contains language that would temporarily increase share insurance protection for credit union accounts up to $250,000.
• Still nothing official from NCUA on whether they will follow the FDIC's decision to loosen requirements concerning insurance coverage for revocable trust accounts (which include POD accounts).

• We've heard that some consumers have been withdrawing large amounts of cash in today's turbulent times.  Banker's Online put together a model "Cash Withdrawal Letter of Indemnification." You can access it here.  As usual from Banker's Online, good stuff.

• NCUA added an insurance FAQ to their website.  That might come handy.  You could have copies for members or use the information to help update your website.  Access the FAQ here

• If you haven't seen it, here's a link to NCUA's new share insurance poster.  It grabs your attention.  At first, I thought NCUA wanted me to join the Army!

• Many members are asking credit unions to tell them how much insurance protection they have.  That's always a dicey thing.  Here's the disclaimer one credit union came up with.  I think its a dandy.

  •  "The calculation I am about to prepare for you is an estimate and will be based on today's balance and account structure/titles. Ultimately, NCUA makes the final determination as to how much insurance you will receive, which will only be done in the unlikely event of the credit union's failure. You may, however, use NCUA's Share Insurance Estimator to make future coverage determinations."
    

     

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Warning: Shameless plug.  I spent yesterday taping a 2008 BSA training session designed for credit union board members, supervisory committee members and other volunteers.  It will be on CD and will run roughly 45 minutes.  Details to come soon.

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The old me: Never missed a Penn State or Steelers football game.
The new, married me:  I spent last weekend in State College, Pa., home to Penn State, the Nittany Lions and the "Happy Valley."  Did I go to the game?  No.  I visited with Mandy's father.  And we went to a very fun fall festival.  On Monday evening, the Steelers were on TV.  I missed it.  I was hanging pictures, making lunches and doing dishes.

The times, they are a changing.

Have a great weekend, everyone! (Except for the Boilermakers.)

No, not that deadline; Married Life

There's a compliance deadline coming October 1.  And I'm not talking about Affiliate Marketing.

Last year, the Federal Reserve announced final rules to amend Regs B, E, M, Z and DD.  The amendments address the delivery of electronic disclosures.   Here's the Fed's press release, which includes links to each final rule.  Remember, NCUA has to ensure that our Truth in Savings rule closely mimics their Reg DD, so expect changes in the not too distant future. 

Don't blame the messenger.

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My father said something funny the other day.  He grew up in Latrobe, Pennsylvania, which is 40 or so miles outside of Pittsburgh.  He played tennis for Duquense, which is in downtown Pittsburgh.  He may live in north-central Pennsylvania, but he's a Pittsburgh boy, through and through. After the Steeler's victory last week, I called to chat.  Both my Mom and Dad were on the line. 

Mom: Your father said something that made me laugh this weekend.  He said that at his age, the only thing that he gets excited for is the Steelers.
Dad: It's true.  I was sick to my stomach all day Sunday.

I told Mandy, and I think she saw her future.  She looked worried.

Editor's note: The editor isn't watching as much football as he did as a bachelor.  Mandy says this is a good thing.  The editor is not so sure. 

Newspapers; Married Life

Last Sunday, Michelle Singletary of the Washington Post wrote an article about how some creditors have been garnishing protected funds.  You can read her article here.  (You may have to sign up for free to view the content.) 

I won't get into the pros and cons of her article.  The garnishment of funds is a very complicated subject with very little guidance from our regulators.  There is this proposed joint interagency guidance on the subject.  And then there is the issue of offsetting against accounts where protected funds have been deposited. 

Here's my point for today: articles such as Ms. Singletary's can generate a good deal of buzz within your membership.  I'm sure that quite a few members read her article and then asked themselves whether their credit union garnished protected funds.  Some of them might actually call you and ask.  That's why I think it is important for compliance officers to read the newspapers that their membership might read.  Scan headlines at a minimum to see if an article touches upon an issue that is important for you or your members. 

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So, I received another shopping list from my wonderful wife.  But there was one item that, while appearing simple, turned out to be quite difficult.

Three small turnips.

I had heard of turnips.  I know a turnip is some sort of vegetable.  But I realized that in my 36 years of life on this planet, I had not purchased one.  And as I stared at the poorly labeled vegetable section, I suddenly realized that I probably could not identity a turnip in a vegetable line-up.  I asked one woman for help who admitted that she was in the same boat.  (Before asking why in the world I was purchasing them.  I blamed Mandy.  The woman said she understood.)

Eventually, I found the right vegetable tray.  So know I know what a turnip is, which might come in handy some day.

This marriage thing can be an education in surprising ways.

Enough Fidelity?; Married Life

I just spoke with a federal credit union that was shocked to learn that it was not holding enough fidelity bond coverage, based on its assets.  This credit union had been examined and audited a bunch, but no one picked up on it.  What is the minimum amount your federal credit union needs?  12 C.F.R. 713.5 will tell you.

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Marriage certainly changes things.  A few weeks ago, I innocently emailed Mandy to ask whether we needed anything from the grocery store.  Two minutes later, I get this email:

- Two 2 packs of paper towels
- 1 package organic "hearts of romaine" lettuce (Nature's promise or Giant brand.  Typically, one bag will have 3 palms)
- 2 bags of Nature's Promise/organic baby carrots (1 is for tomorrow night, see below)
- 1 1/2 gallon of 1% Nature's Promise/organic milk
- 1 fridge pack of Fresca
- 1 six pack of bottled water (store brand or cheap)
- 2 bags of low fat cheddar cheese, shredded
- Small jar of Smucker's Simply Fruit, red raspberry or blackberry
- Nature's Promise/organic chicken thighs, boneless
- head of broccoli
- package of whole wheat spaghetti
- 1 or 2 green pepper(s)
- 1 box of good crackers (whole wheat, healthy, etc.)
- 1 box of animal cracker (low fat) cookies
- 1 medium size bag of gourmet potato chips
- 2 bottles of okay red wine
- 1 very small container of prepared pasta or potato salad

I had two reactions:

1. Based on this list, my days of Cheese Whiz on Ritz crackers are probably behind me.
2. Moving forward, I see the probability of me sending "do you want me to pick anything up" emails decreasing.

Email Signatures; Das Photos

Many credit unions (and NAFCU for that matter) use the email signature area to market products and services.  But here's a thought: how many have reviewed their email signature for compliance with Regulation Z, Truth in Savings, and NCUA's advertising requirements? 

It seems to me that an email signature that promotes a savings or loan product would qualify as an advertisement.  Regulation Z contains no exceptions whatsoever for its advertising requirements.  TIS has some exceptions for certain advertisements, as does NCUA's advertising rules.  I haven't gone through the entire analysis in my head yet, but I think it is something worth thinking about.  And how many of you compliance gurus review signature lines of a marketing nature before they go final?

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OK, you wanted wedding photos. Here they are! 

Have a great weekend, everyone!

Book of Answers Updated; RESPA; Married Life

NAFCU's Book of Answers is updated, and it is better than ever!  NAFCU members can access it here.  For you non-NAFCUers, here's a taste:

Question: We have a truth-in-savings disclosure which has the shares/share draft/Christmas club and IRA rates on it. If a member only wishes to open a basic share account, is it necessary for all the rates to be listed for each product?

Answer: No. But many do so for the sake of consistency, convenience and marketing the credit union's other products. Such disclosures are governed by NCUA's Truth-in-Savings regulation. It indicates that credit unions may make disclosures for each account offered by the credit union "separately or combined with disclosures for the credit union's other accounts, as long as it is clear which disclosures are applicable to the member's account." 12 C.F.R. 707.3(a).

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Even with the turnover at the helm of HUD, it seems that they are still trying to get a final REPSA reg before the end of the Bush Administration.

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After a long and productive weekend of moving, storage runs and organizing, Mandy and I sat down Sunday evening to watch Charlie Wilson's War.  Movers had been in and out during the day, and Poe the Cat hid in a closet and didn't take off even though the front door was open quite a bit.  I was very familiar with Charlie Wilson and the book, so I was pretty excited to watch the flick.  And I tend to ramble on about such things.  So I kept talking about the movie while it was on, but Mandy kept talking about Poe.

After the movie, which detailed the fall of the Soviet empire, the Soviet defeat in Afghanistan, and the larger-than-life story of Charlie Wilson, I looked over and said the following.

Compliance Guy: "Wow, wasn't that amazing?"

Mandy: "Yeah.  The door was open all day, and Poe didn't run out." (Pause)   "Oh, did you mean the movie?"