Feb. 28, 2020 NASCUS Report

THIS WEEK: State system has presence at GAC; Legislation presented for FCUs; Hood looks forward to agency action; Taxi medallions, consumer protection discussed; Low-income, underserved webinar ahead; ‘Time-barred debt’ limits proposed; FAQs look at TRID rule; BRIEFLY: Change at CFPB; cannabis banking bill vote; StateFocus on way

State system well represented
at year’s biggest CU gathering

NASCUS meetings and discussions with credit union leaders from throughout the nation highlighted the association’s efforts this week in Washington during the Governmental Affairs Conference (GAC) of the Credit Union National Assn. (CUNA), the largest credit union gathering of the year.

NASCUS regulator and credit union board members, other state regulators (including five from states other than those represented on the NASCUS Regulator Board), NASCUS credit union members and association staff were among the more than 5,000 credit union advocates who gathered in the nation’s capital to discuss issues, share views and touch base about their segments of the credit union system.

For its part, NASCUS representatives participated in (or were scheduled for) meetings or discussions with such credit union and federal governmental groups as: NCUA (including Chairman Rodney Hood and members of the executive leadership team of the agency), the CFPB, the U.S. Treasury Department, CUNA Mutual Group, American Association of Credit Union Leagues (AACUL), World Council of Credit Unions (WOCCU), Defense Credit Union Council (DCUC), Filene Research Institute, National Association of Credit Union Service Organizations (NACUSO), National Association of Federally Insured Credit Unions (NAFCU), African American CU Coalition (AACUC), Credit Union Loan Service (CULS), Network of CU Latino Professionals, and various individual state leagues and associations.

Conferences were also held with various members of Congress to discuss legislative issues of importance to the state system. Among the meetings scheduled were those with: Rep. Frank Lucas (R-Okla.), Rep. Ted Budd (R-N.C.), Rep. David Kustoff (R-Tenn.), Rep. Scott Tipton (R-Colo.), and Rep. Denver Riggleman (R-Va.).

NASCUS also sponsored a reception during the GAC on behalf of the state system, with more than 100 credit union representatives from across the nation attending.

“The annual GAC is a terrific opportunity for the state system to share its views with its co-advocates from across the entire credit union system, as well as to listen to their ideas, questions and proposals,” said NASCUS President and CEO Lucy Ito. “We are grateful for the opportunity to participate in this, the largest credit union gathering of the year – and we are proud to contribute the strong voice of the state system to advocacy efforts for credit unions during the week of the conference.”

In the photos below, counter-clockwise, beginning at top: Members of the NASCUS Regulator Board gather for a formal picture with NCUA’s Hood, from left: Secretary/Treasurer Janet Powell (Manager, Credit Union Program, Oregon Dept. of Consumer and Business Services), Immediate Past Chair Mary Ellen O’Neill (Director, Financial Institution Division, Connecticut Department of Banking), Director Charles Vice (Commissioner, Kentucky Department of Financial Institutions), Vice Chairman Rose Conner (Administrator, North Carolina Credit Union Division), Chairman John Kolhoff (Commissioner, Texas Credit Union Department), Hood, NASCUS’ Lucy Ito, Director Steve Pleger (Senior Deputy Commissioner, Georgia Department of Banking & Finance). From left: Xceed Financial CU CEO (and 2020 and Herb Wegner Outstanding Lifetime Achievement awardee) Teresa Freeborn joins Nextmark FCU CEO Joe Thomas, World Council CEO Brian Branch and NASCUS’ Ito in celebrating the evening. From left: Iowa CU Superintendent Katie Averill and North Carolina’s Conner catch up with one another.

Bills seek to streamline FCU governance, expand loan maturities

At least four bills specifically dealing with governance, loan maturity limits and other issues for federal credit unions (FCUs) were introduced in Congress this week, on both sides of the capitol, in conjunction with the CUNA GAC.

Generally, the bills address:

  • Reforming board duties: The Credit Union Fairness Act (S.3326) would remove some “outdated duties” for FCU boards and remove the statutory requirement that the credit unions provide NCUA with the names of its loan officers. The bill was introduced by North Carolina Sens. Richard Burr and Thom Tillis (both R).
  • Member expulsion: The Credit Union Governance Modernization Act (S. 3323) would allow an FCU to expel a member for just cause. The bill was introduced by Sens. Ben Sasse (R-Neb.) and Tina Smith (D-Minn.).
  • Loan maturity limits: Legislation designed to raise FCU loan maturity limits (outside of mortgage loans) to 20 years from the current statutory limit of 15 years was announced by Sens. Tim Scott (R-S.C.) and Catherine Cortez Masto (D-Nevada). No bill number has yet been assigned to the bill.
  • Board meetings: The Credit Union Board Modernization Act (H.R. 5981) would reduce the statutory requirement of FCU board meetings once a month to not more than six times a year. The bill was introduced by Rep. Katie Porter (D-Calif.) and is co-sponsored by Rep. Mark Amodei (R-Nevada).

Agency looks ahead to serving rural areas, clarifying guidances

NCUA will be taking actions over the remainder of the year to help credit unions meet the needs of underserved rural areas, and to clean up its own guidance and processes, the agency’s board chairman said in a speech this week at the GAC.

NCUA Chairman Hood, in remarks to the conference, said he has asked agency staff for a set of policy tools to help credit unions ensure services to rural communities that lose access to financial institution branches or where the services offered fall short of the need. Some tools, he said, have already been implemented. For example, he said the NCUA was the first federal financial regulator to issue guidance on working with businesses in the legal hemp industry. He also cited the agency’s changes in commercial real estate appraisal rules. More details will be discussed in coming weeks, he said.

Additionally, Hood said, the agency will conduct a comprehensive review of all agency guidance letters and legal opinions to see if they remain relevant. Once the review is complete, he said, the guidance will be revised and updated for clarity and to ensure it reflects “modern practices and the current environment.” (The FDIC has conducted a similar review, including retiring outdated “financial institution letters” (FILs) to banks.)

Other actions ahead, the chairman noted, include: exploring ways to make agency operations more efficient and effective; revising supervisory procedures to improve oversight; and taking significant steps toward modernizing the agency’s information technology infrastructure. Announcements are yet to come, he indicated.

Taxi medallions, consumer protection, highlight other remarks

The sale of the portfolio of credit union taxicab medallion loans, and additional consumer compliance supervision for credit unions, were topics for the other two members of the NCUA Board who also addressed the GAC meeting in Washington.

NCUA Board Member J. Mark McWatters told the credit union group that the sale of the agency’s taxi medallion loan portfolio to Marblegate Asset Management LLC (announced last week) was the best option for meeting the agency’s statutory obligation to achieve the least long-term cost to the National Credit Union Share Insurance Fund (NCUSIF). He said the sale followed 18 months of managing the assets, conducting due diligence investigations, and negotiating with prospective purchasers. (Hood, in his remarks, noted that the agency contacted 23 firms in its effort to find a buyer for the taxi medallion loans.)

McWatters repeated assurances offered last week that the agency made clear to those interested in purchasing the loans that they “must work with the taxi medallion loan borrowers in a transparent, good-faith manner and in full compliance with all applicable consumer protection laws.” He also said the agency specifically excluded “vulture funds” from the process and eliminated any prospective purchasers who did not demonstrate the capacity to adequately service the loans, a track record of treating borrowers in a fair-mined manner, and a financially workable bid.

The agency has not revealed the sale price of the loan portfolio. The NCUSIF has lost more than $760 million because of credit union failures related to taxi medallion loans.

Meanwhile, NCUA Board Member Todd Harper, in remarks to the group, reiterated his call for the agency to strengthen its own focus on consumer financial protection in supervising credit unions. He reminded the group that the agency is responsible for the supervision of credit unions with less than $10 billion in assets. He said 319 credit unions had more than $1 billion in assets as of Sept. 30, and he said the agency needs to refine its approach. “The NCUA Board should create a dedicated program for supervising for compliance with consumer financial protection matters,” Harper said. “In doing so, we will better safeguard member interests and ensure that the credit union system lives up to its commitment to serving members.”

Webinar focuses on service to low-income, underserved areas

Credit union service to low-income and underserved communities will be the focus of a March 11 webinar hosted by NCUA’s Office of Credit Union Resources and Expansion (CURE) and will include representatives from the CFPB, it was announced this week. The webinar, “Financial Inclusion: Pathways to Serving the Underserved,” will cover the current landscape of financial inclusion in the U.S.; barriers and challenges to low-income populations for financial inclusion; and innovations in financial inclusion, according to NCUA. Speakers from both NCUA and CFPB will be joined by credit union officials who will share information about their programs to help bring greater inclusion and equity to low-income and underserved communities. The free event is scheduled to begin at 2 p.m. ET and run approximately one hour; registration is required.

NCUA Hosts Financial Inclusion Webinar

Proposal sets limit on ‘time-barred debt’ collections

Debt collectors would be banned from making calls or taking other “non-litigation means” to collect on debt that is beyond the statute of limitations unless it is disclosed during an initial contact that the debt is, in fact, past the time limit under a proposal late last week. In a Supplemental Notice of Proposed Rulemaking (Supplemental NPRM), the CFPB stated that its proposal on “time-barred debt” (that is, debt beyond the statute of limitations) also requires the debt collector to inform the consumer that the statute of limitations on the debt has expired during any required validation.

Consumer research conducted by the Bureau found that a time-barred debt disclosure helps consumers understand that they cannot be sued if they do not pay,” CFPB stated in a release. “That can help consumers make better informed decisions whether to pay the debt or not.”

The latest proposal is a supplement to a proposal issued last spring (May 2019) to implement the Fair Debt Collection Practices Act (FDCPA), the CFPB said. Under that proposal, debt collectors would be allowed up to seven telephone-contact attempts a week with consumers about a specific debt. That proposal would also establish that once a phone conversation between a consumer and a debt collector takes place, the collector must wait “at least a week” before calling the consumer again.

The proposal will be out for a 60-day public comment period once it is published in the Federal Register.

CFPB supplemental notice of proposed rulemaking: Debt Collection Practices (Regulation F)

FAQs look at TRID rule, lender credits

Disclosures for home mortgages under the TRID rule and lender credits are the subjects for frequently asked questions (FAQs) published by CFPB this week. The FAQs on the TILA-RESPA Integrated Disclosures (TRID) and lender credits, according to the bureau, cover five topics: corrected closing disclosures and the three-day business-day waiting period before consummation; model forms; construction loans; providing loan estimates to consumers; and lender credits. The FAQs focus on compliance issues related to TRID. As it typically does with such releases, the bureau noted that reviewing the FAQs “is not a substitute for reviewing TILA, RESPA, Regulation Z, or its official interpretations (also known as the commentary). The statutes, Regulation Z, and its official interpretations are the definitive sources of information regarding the requirements.”

TILA-RESPA Integrated Disclosure FAQs

BRIEFLY: CFPB no. 2 stepping down; cannabis banking vote in ‘a matter of months;’ StateFocus on the way

CFPB Deputy Director Brian Johnson is leaving the agency to join a Washington law firm next month, the firm announced this week. Johnson was named the acting No. 2 at the agency in July 2018 by then-Acting Director Mick Mulvaney. He became permanent deputy director in May 2019. He was formerly principal policy director at the agency. Before that, he worked for former House Financial Services Committee Chairman Jeb Hensarling (R-Texas) … Cannabis banking legislation could come to a Senate vote “in a matter of months,” Sen. Cory Gardner (R-Colo.) told the GAC audience this week. The Secure and Fair Enforcement Banking Act (SAFE Act), which passed the House last year, would provide some protections to credit unions and other financial institutions that serve state-authorized cannabis related businesses. So far, it has not proceeded in the Senate – but Gardner indicated that may soon be changing: “We’re close to finding that common ground,” he said. NASCUS strongly supports SAFE Act adoption … The February issue of NASCUS’ latest publication, StateFocus, was sent to all members Thursday. Available only to members, the monthly publication highlights action in the states – including recent legislative and regulatory developments, as well as other issues of interest in the states to the credit union system. This month’s issue looks at recent legislative developments affecting credit unions in a variety of states (among other things).

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