Jan. 26, ’18 NASCUS Report

Agency issues prototype call report; signals RBC changes possible

NCUA is giving the credit union system 60 days to weigh in on both its revised, streamlined call report and its credit union profile, as the agency strives to unveil the new forms by March of next year, at the earliest, the agency board agreed as a result of a briefing at its regular monthly meeting Thursday. In issuing a “request for information” on prototypes of the new forms, NCUA said the data fields have been reduced from the existing forms by 40% (for the call report) and 20% (for the profile).

With regard to the call report (Form 5300), NCUA said the 40% reduction in data fields resulted mostly from simplifying derivative schedules (the biggest reduction); streamlining lending related data collected; and reducing information for shares, liabilities, and off-balance sheet items. The agency said it has also “improved the organization” of the form in the areas of investment and lending schedules, and “updates based on GAAP,” or those related to the new “current expected credit loss” (CECL) accounting standard (which goes into effect in 2020) for early adopters, and other GAAP changes.

Additionally, the agency is signaling that changes are still being considered to the Risk-Based Capital (RBC) rule, set to take effect next year. The form includes a separate schedule for risk-based capital, the agency said, “in case the rule is not delayed or repealed.”

On the Profile (Form 4501A), the agency said the reduction of 20% was related to reduced checkbox (or attributes) options. Other changes include updating information requests (for “contemporary relevance”) for payment systems, information technology, and product and service categories.

During the briefing, staff told NCUA Chairman J. Mark McWatters and Board Member Rick Metsger that the prototypes were developed based on frequency analysis (determining how many credit unions report on each data field in the forms), stakeholder input and recommendations (including that from NASCUS and the state system) and technical considerations (such as how GAAP is relevant to the forms).

NCUA Office of Examination and Insurance Director Larry Fazio said the agency is looking for comments in a variety of areas, including: if additional account codes should be “retired” (or discontinued); the organization of the forms; whether additional data should be collected; lead time credit unions, vendors and other need to prepare for changes; and other issues.

Fazio said the earliest that the agency could issue the new forms for use (incorporating any suggestions raised during the comment period) is March of next year.


NCUA Request for information: Modernizing Data Collection for Supervision of Credit Unions

NASCUS comment letter: Call report modernization


In other action at its meeting Thursday at NCUA headquarters in Alexandria, Va., the NCUA Board:

  • Issued a proposed rule, for 60 days, to clarify its procedures for resolving severance claims – including those that constitute an executive’s “golden parachute” — arising from involuntary liquidations at federally insured credit unions. According to NCUA, the proposal would clarify the requirements for proof of a claim by an employee for pay or benefits such as unpaid wages, sick time or vacation time while making a distinction between employees’ claims and “golden parachutes.”
  • Issued a final rule to amend its regulations and adjust for inflation the maximum amount for civil monetary penalties under its jurisdiction, as required by federal law.
  • Approved the agency’s 2018-2022 Strategic Plan (and 2018 annual performance plan), which outlines three strategic goals for NCUA: ensure a safe and sound credit union system; providing a regulatory framework that is transparent, efficient, and improves consumer access; and maximize organizational performance to enable mission success. The plan also outlines three performance goals: Fully and efficiently, execute the requirements of the agency’s examination and supervision program; enable continuous risk analysis, identify key trends and target examinations where most needed; promulgate efficient, targeted regulation tailored to offer meaningful relief without undermining safety and soundness

“The agency is adopting new technology and analytical tools to improve its offsite monitoring; recalibrating its examination approach; and revising operations, priorities, and structure to use its resources most effectively,” staff told the board in its presentation about the strategic plan.

Under the performance plan’s “strategic objective 1.2, Provide High-quality and Efficient Supervision,” the plan states that NCUA’s strategy will be to “work closely with the state supervisory authorities to ensure necessary action to mitigate risk within the state credit union program.”

NCUA 2018-2022 Strategic Plan (and 2018 Annual Performance Plan)

Proposed rule: Involuntary Liquidation of Federal Credit Unions and Claims Procedures

Final rule: Civil Monetary Penalty Inflation Adjustment


NCUA’s new rule on governing procedures for appealing material supervisory determinations to the NCUA Supervisory Review Committee (SRC) is now in effect and applies only to NCUA material supervisory determinations, not state determinations or actions, according to a new summary posted by NASCUS.

In its summary of the final rule (Supervisory Review Committee; Procedures for Appealing Material Supervisory Determinations), NASCUS points out that a federally insured credit union (FICU) may appeal a material supervisory determination made by NCUA staff to the SRC, and then possibly to the NCUA Board. “Material supervisory determination’’ means a written decision by a NCUA program office that may significantly affect the capital, earnings, operating flexibility, or that may otherwise affect the nature or level of supervisory oversight of an insured credit union, the summary states.

However, the summary also notes that the NCUA SRC appeal process applies only to NCUA material supervisory determinations. It does not include determinations/actions of state regulatory agencies, the summary notes; and, “if a supervisory determination that is subject to a request for review or appeal pursuant to these procedures is the product of a joint NCUA/state determination, NCUA will immediately notify the state regulator (providing copies of all relevant materials and the request for review) and solicit the state regulator’s views regarding the merits of the appeal.” The summary also notes that any NCUA determination on review/appeal affects only the NCUA’s actions. “NCUA will notify the state regulator of its decision with respect to NCUA’s involvement in the determination and leave the FICU and state to resolve issues between them,” the summary states.

The NASCUS summary further points out that even though the rule applies to federally insured state-chartered credit unions (FISCUs), there is no cross reference to Part 741 of the agency’s rules – the section that largely affects state credit unions.

NASCUS Final Rule Summary: Supervisory Review Committee


Notices on regulations implementing the Military Lending Act (MLA) and reporting thresholds and changes for 2018 under the Home Mortgage Disclosure Act (HMDA) were issued by NCUA last week, giving federally insured credit unions a reminder on both.

On the MLA notice, NCUA reminded that the Department of Defense (DoD) issued amended interpretive guidance on Dec. 14, “further explaining its existing regulation that implements the Military Lending Act.” The guidance, NCUA stated, explains when vehicle financing involving a trade with negative equity qualifies for an exemption from MLA coverage, clarifies use of a lien to secure MLA-covered credit, and addresses how the timing of checking a covered-borrower status affects the rule’s safe harbor provision.

On the HMDA reporting, NCUA reminded that changes to the criteria requiring credit unions to record and report data took effect Jan. 1. Other changes simplify requirements for responding to public requests for HMDA data, NCUA stated. “Credit unions with less than $45 million in assets are exempt from collecting data on 2018 transactions,” NCUA stated. “Those with more assets must collect specified data if they meet certain activity thresholds.” The agency also pointed out that, instead of providing members of the public with the credit union’s data and other related information, credit unions may instead supply a notice indicating they can obtain the data from the CFPB’s website.

DOD interpretive guidance

NCUA Fair Lending Compliance Resources


Civil investigative demands (CIDs) issued by the CFPB are the subject of the first “request for information” issued by the consumer agency, as part of a “call for evidence” about its “proper and appropriate functions.” In a release this week, the CFPB said the RFI will “provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities.”

Comments are due March 27 (60 days), according to the Federal Register notice published today.

Last week, Acting CFPB Director Mick Mulvaney said the agency would be issuing the call for “evidence” of the agency’s functions in performing its role through the RFIs to provide the public an opportunity to provide feedback and suggest ways to “improve outcomes for both consumers and covered entities.”

The bureau said it is issuing the RFI to “to seek public input regarding the exercise of it authority to issue CIDs, including from entities who have received one or more CIDs from the Bureau, or members of the bar who represent these entities.” While the notice concedes that issuing CIDs is “an essential tool” for enforcing federal consumer financial law, it states that the RFI is an attempt to “better understand” how its CID processes may be updated, streamlined or revised. Additionally, the notice states, the RFI will help the bureau understand “how to align the Bureau’s CID processes with those of other agencies with similar authorities.”

The bureau said it is looking for specific suggestions about updates or changes to its CID practices is developing, issue or modifying CIDs “in as much detail as possible, the potential update or modification, supporting data or other information such as cost information or information concerning alignment with the processes of other agencies with similar authorities.”

Request for Information Regarding Bureau Civil Investigative Demands and Associated Processes


The federal consumer protection bureau will, under its new leadership, make “rulemaking by enforcement” a thing of the past, according to a memo the acting director of the agency sent to all staff this week. In the memo from CFPB Acting Director Mick Mulvaney, he stated the governing philosophy of the previous director (Richard Cordray) was to aggressively ‘push the envelope’ in pursuit of the ‘mission;’ that we were the ‘good guys’ and the ‘new sheriff in town,’ out to fight the ‘bad guys.’”

He stated that, going forward, will be different. “In fact, that entire governing philosophy of pushing the envelope frightens me a little. I would hope it would bother you as well,” he wrote. He reminded the bureau staff that they are government employees who “work for the people. And that means everyone: those who use credit cards, and those who provide those cards; those who take loans, and those who make them; those who buy cars, and those who sell them. All of those people are part of what makes this country great. And all of them deserve to be treated fairly by their government. There is a reason that Lady Justice wears a blindfold and carries a balance, along with her sword.”

(Former Director Cordray, meanwhile, tweeted this week that “Leaked memo from the CFPB’s putative acting director says the agency will no longer “push the envelope” on behalf of consumers as we did on my watch. Did we push hard to see that people are treated fairly by big banks, debt collectors, and payday lenders? You bet we did.”)


Meanwhile, a federal appeals court has granted the request of the deputy director of the agency for an expedited review of her claim (rejected by a lower court) that she is rightly the acting director of the agency, and not Mulvaney. Leandra English, in her appeal, argues that her promotion from chief of staff to deputy director – immediately before Cordray resigned – positioned her to take over once the director left. But President Donald Trump installed Mulvaney as director, claiming his right to do so under a separate federal law. English is required to turn in her brief in the case by Jan. 30; the Trump administration will have until Feb. 23 to file its brief. A reply brief is due by March 6.


A rule affecting prepaid cards and accounts has been extended by one year (to April, 2019), reflecting comments that those affected “need more time” to put the rule to work – especially card issuers who need to package cards sold in stores, the Consumer Financial Protection Bureau (CFPB) announced Thursday.

In a release, the CFPB said it is also finalizing updates to the rule (issued in 2016) to adjust requirements for resolving errors on unregistered accounts, and to “provide greater flexibility for credit cards linked to digital wallets.”

According to the bureau, the one-year extension of the overall rule resulted from the agency’s sensitivity to “concerns raised by commenters about needing more time to implement the rule, especially where they are making changes to packaging for prepaid cards sold in stores.”

Regarding the error resolution requirement adjustments will apply prospectively, after a consumer’s identity has been verified. The agency said that amendments proposed last June would have required consumers to register their accounts to receive fraud and error protection benefits, such as the right to dispute charges and have stolen money restored, and to extend the protections retroactively to suspected thefts or disputes occurring before registration was successfully completed. “These changes will help encourage prompt registration and streamline compliance for financial institutions as well as ensure continued availability and utility of prepaid accounts for consumers,” the bureau stated.

The changes for credit cards linked to digital wallets, the bureau said, “ensure that consumers continue to receive full federal credit card protections on their traditional credit card accounts while making it easier for them to link those accounts to digital wallets that can store funds.” The bureau also said the changes would reduce “potentially unnecessary complications” and expense to consumers who link credit cards to digital wallets.

CFPB final ruleRules Concerning Prepaid Accounts Under the Electronic Fund Transfer Act
(Regulation E) and the Truth in Lending Act (Regulation Z)


At the 21st Annual Volunteer Leadership Institute (VLI) in Hawaii, NASCUS President and CEO Lucy Ito exchanged views with NCUA’s Rick Metsger during a session moderated by Hawaii Credit Union League President and CEO Dennis Tanimoto titled “What’s Trending with the Regulators.” About 400 credit union volunteers attended the conference (sponsored by RochdaleParagon Group). Ito also presented a separate session on “Around the States: A Tour of Credit Union Fun Facts” … In North Carolina, NASCUS Legislative and Regulatory Affairs staff members Brian Knight and Nichole Seabron conducted examiner training for the North Carolina Credit Union Division.

BRIEFLY: Swearing-in of new Fed chairman ahead; check our website for registration for upcoming events

Swearing in of Jerome H. “Jay” Powell as the next chairman of the Federal Reserve Board, having been confirmed by the Senate Tuesday on a vote of 84-13 this week, will come within the next week. He succeeds Janet Yellen as chairman, who (in her resignation letter last year to President Donald Trump) said her resignation would be effective upon the swearing in of her successor; her term expires Feb. 3 … NASCUS is ready to take your registrations for its growing list of directors’ conferences, examiner schools, industry days — and other conferences and symposiums — throughout the year. Shop on our education/training page, and sign up for the meetings/events that are right for you!

NASCUS Education & Training: 2018 agenda

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