Aug. 26, ’16 NASCUS Report

Governor, lawmaker, NCUA chairman highlight Summit

Views from state, congressional and NCUA top levels will be delivered at the NASCUS State System Summit, Oct. 5-7, as a governor, member of Congress and the top federal regulator of credit unions address the audience of state system players in Chicago. Scheduled to speak are:

  • Illinois Gov. Bruce Rauner (R), to kick off the program on Wednesday (Oct. 5) with a special greeting. The 42nd governor of the state, Rauner was sworn into his first term last year, focusing on taxpayer value, jobs, education, and term limits and accountability in state government.
  • Rep. Randy Hultgren (R-Ill.) to speak on the opening day. A three-term member of Congress from the 14th congressional district of Illinois, Hultgren is a member of the House Financial Services Committee, and serves on the subcommittees for capital markets and government-sponsored enterprises, and oversight and investigations.
  • NCUA Board Chairman Rick Metsger – to speak Thursday (Oct. 6) — assumed that role in April, becoming the ninth chairman of the agency board, having served as a member of the panel since 2013 (and vice chairman since 2014). Since becoming chairman, Metsger has pursued a review of the agency’s exam and supervision process. Dubbed the “Exam Flexibility Initiative,” recommendations are expected to be delivered to the NCUA Board at its meeting Sept. 15 – three weeks before the NASCUS Summit.

In addition to the remarks from the three policymakers, the Summit will specifically address a number of other topics, including: the Current Expected Credit Loss (CECL) accounting standard, the growth of “FinTech” as a competitive force to credit unions, the new face of commercial lending in light of new NCUA rules and regulations, outlook for the November elections, and more. The NASCUS State System Summit – the only annual event for the nation’s state credit union system brings together credit union regulators and practitioners for mutual exchange and dialog. The three-day event will be headquartered at the Westin River North Hotel in Chicago.

Agenda/registration, 2016 NASCUS State System Summit (Chicago, Oct. 5-7)


Three state credit unions representatives have been named to the Credit Union Advisory Council of the Consumer Financial Protection Bureau, along with five representatives of federal credit unions. The appointments came just in time: the next meeting of the CUAC is set for Thursday (Sept. 1) in Washington. Representatives from state credit unions to be added to the council are:

  • Patrick F. Harrigan, Chief Risk Officer and General Counsel, Service Credit Union, Portsmouth, N.H.
  • Amy Nelson, Chief Executive Officer, Point West Credit Union, Portland, Ore.
  • Raynor Zillgitt, Vice President Risk Management and General Counsel, Lake Trust Credit Union, Brighton, Mich.

Others newly named to the CUAC are: Daniel Berry, Chief Executive Officer, Duke University Federal Credit Union, Durham, N.C.; Faith Lleva Anderson, Senior Vice President and General Counsel, American  Airlines Federal Credit Union, Fort Worth, Texas; Ricardo Ledezma, Corporate Compliance Assurance Manager, San Antonio Federal Credit Union, San Antonio, Texas; Sarah Marshall, Chief Executive Officer, North Side Community Federal Credit Union, Chicago; and Dayatra T. Matthews, Senior Vice President of Legal & Compliance, Local Government Federal Credit Union, Raleigh, N.C. The new members Credit Union Advisory Council will serve two-year terms.

With regard to the Sept. 1 meeting of the council, youth financial capability and debt collection are topics on the agenda for the gathering, which will be held at bureau headquarters in Washington. Director Richard Cordray is scheduled to open the meeting and welcome the group. According to the bureau, individuals who wish to attend the Council meeting must RSVP to: by noon, Wednesday, Aug. 31, (no later), and must include “CUAC” in the subject line of the RSVP.

CFPB release on appointment of CUAC members


A new website to assist mortgage settlement professionals was announced this week by the bureau, which the agency described as designed to be an aid in navigating through the changes that are part of the ‘Know Before You Owe’ mortgage initiative. “One of the most important results of the Know Before You Owe mortgage initiative is the need for closer collaboration between settlement agents and creditors for both to effectively comply with regulatory disclosure requirements,” the bureau states in the introduction to the website. “Learn what has and has not changed about settlement agent responsibilities, creditor responsibilities, consumer privacy, and electronic delivery.”

Know Before You Owe: The settlement professional’s guide


Separately, CFPB this week stated that it has taken action against Wells Fargo Bank for illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers. The agency, in a press release, stated that it took the action after identifying breakdowns throughout the bank’s servicing process including failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information. The CFPB’s order requires Wells Fargo to improve its consumer billing and student loan payment processing practices. The company must also provide $410,000 in relief to borrowers and pay a $3.6 million civil penalty to the CFPB. BTW: The NASCUS website’s CFPB resources center reports regularly on updates and developments from the bureau; see the link below to keep up with the latest.


Press release: Action against Wells Fargo for illegal student loan servicing


A California inquiry into state online lenders – particularly those lenders’ compliance with state laws and regulations – was highlighted by a trade publication this week focusing on “who to watch as regulators size up online lending.” In its report, the American Banker newspaper noted that California Department of Business Oversight Commissioner Jan Lynn Owen is one of eight state and federal regulators and lawmakers to keep an eye on, as the “rapidly evolving online lending sector” continues to grow. Among the others: Comptroller of the Currency Tom Curry, Sen. Sherrod Brown (D-Ohio), and Rep. Patrick McHenry (R-N.C.). The publication noted the CBO’s survey of 13 major online lenders – conducted last year, with results released this past spring – which showed a 930% increase in California in on-line lending over the past five years, easily outpacing the national growth over the same period of 236%. As Owen stated at the time of the release (and repeated this week by the Banker), “These online lenders are filling a need in today’s economy, and we have no desire to squelch the industry or innovation,” she stated. “We have a duty, however, to protect consumers and businesses, and they have more and more at stake as this industry grows.” (Reminder: A special session during the NASCUS 2016 Summit in Chicago will focus on FinTech and its impact on credit unions.)

NASCUS ‘Around the States’: Online lending grew by more than 930%


Once a single closed-end member business loan (MBL) is paid down below the $50,000 threshold, it no longer needs to be classified as an MBL and counted toward the statutory MBL limit, according to a summary of a legal opinion letter from NCUA, and published by NASCUS. The summary covers an Aug. 9 letter from NCUA’s Office of General Counsel to a California law firm, asking for clarification about the classification of member business loans. In responding “no” as to the classification as an MBL, the agency’s office of general counsel pointed to a 2002 opinion, and the 2003 preamble to that year’s MBL rule, which clarifies the MBL reporting requirements. Noting that under the scenario of a member holding a single closed-end MBL which has been paid down below the $50,000 mark, “then the loan is no longer classified as an MBL, and the FICU need not count it toward its statutory MBL limit,” the opinion letter states.

Meanwhile, guidance from NCUA issued in March on regulatory changes affecting military members, is outlined in another summary recently posted by NASCUS. The agency issued Regulatory Alert 16-RA-04 to assist credit union compliance with the U.S. Department of Defense’s (DoD) rule changes for the Military Lending Act (MLA). The guidance includes an enclosure containing a detailed discussion of the MLA changes. One important exception, NCUA pointed out, involves payday alternative loans (PALs). “If your credit union offers PALs in accordance with NCUA’s regulation, under the Military Lending Act you can exclude one application fee in a rolling 12-month period from the military annual percentage rate,” the alert stated. The changes to the MLA take effect Oct. 3; compliance with changes to provisions related to credit cards take effect a year from then – Oct. 3, 2017. The NASCUS summary is available to members only.

NASCUS regulatory resources/summaries of NCUA opinion letters (members only)

NCUA opinion letter on classification of member business loans (OL2016-0604)

NCUA regulatory alert/guidance on regulatory changes affecting military members (members only)

NASCUS regulatory resources/summaries of NCUA Reg Alerts (16-RA-04)

BRIEFLY: Next NASCUS Report Sept. 9; Walk-ins welcome to leg/reg committee; Exam scheduling in presidential campaign

With the summer coming to a close, and a holiday weekend ahead, NASCUS Report is taking a break next week (Sept. 2) – but will be back Sept. 9 (the following week) with the latest from Washington affecting the state credit union system … In Chicago or environs on Tuesday, Oct. 4? Stop in (at no charge) for some enlightening conversation – and state system bonhomie –for the NASCUS Legislative and Regulatory Committee (L&R) meeting at 11:45 a.m. in the Westin River North hotel (see the link below for address, etc.). That also happens to be, of course, the headquarters for the 2016 NASCUS State System Summit, which gets underway officially the next day … Exam scheduling has made its way into the presidential campaign, with the camp of Democratic nominee Hillary Clinton posting a fact sheet stating (among other things) that the candidate “supports making exam schedules more flexible for healthy credit unions so they don’t face unneeded supervision.”


2016 State System Summit details (and hotel address)

Clinton campaign fact sheet

Information Contact:
Patrick Keefe, NASCUS Communications, or (703) 528-5974

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