July 28, ’17 NASCUS Report

Agency resets Sept. meeting date, following TCCUSF comments

NCUA will hold its next board meeting Sept. 28 — one week later than the agency had originally set its meeting — as it prepares to consider dismantling the fund set up to stabilize the corporate credit union system. The September board meeting (no meeting is scheduled in August, as has been the board’s practice for many years) will be the first since the closing of comments Sept. 5 on the board’s proposal from just last week to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) and merge it into the National Credit Union Share Insurance Fund. If the board approves closing the fund early in October (which is widely supported within the credit union industry), an estimated $600 million to $800 million from the insurance fund could be distributed to credit unions in 2018.

Also last week, the board proposed raising the “normal operating level” of the insurance fund to 1.39% (from the current 1.3%), which has raised eyebrows this week within some corners of the industry. Reactions have ranged from calling an increase “unacceptable,” to prompting “initial concerns.”

According to NCUA, closing the corporate fund (and merging its assets and liabilities into the insurance fund) would increase the insurance fund’s net position and result in an increase in the equity ratio. “However, given the nature of certain assets and liabilities of the Stabilization Fund, the Share Insurance Fund’s assumption of these assets and liabilities will introduce additional risk of volatility to the Share Insurance Fund’s equity ratio,” NCUA said last week. To counter that, NCUA is proposing increasing the normal operating level. Doing so, NCUA said, will help ensure the Share Insurance Fund has sufficient equity to withstand a moderate recession without the equity ratio falling below 1.20%, thereby minimizing the need for premium assessments during a moderate economic downturn.


Further action by the House on legislation to include NCUA’s budget in the congressional appropriations process may have to wait until after the summer break – unless the representatives take action today. As of Friday morning, the House had yet to vote on or consider the appropriations package that includes the NCUA budget provision (the Financial Services and General Government appropriations bill); the provision would also subject the budgets of the CFPB, FDIC and portions of the Federal Reserve budgets to the appropriations process. The summer “district work period” (recess) is scheduled to start after Friday’s close of business (3 p.m. ET). The earliest the House could get to the bill after that is Sept. 5, when it returns for a “DC Work Week.” Similar legislation in the Senate has not yet been considered.


The House voted this week to overturn and eliminate a new rule banning the use of arbitration clauses in contracts by financial institutions to block class-action lawsuits by consumers. The House voted largely along party lines, 231-190 (with only one Republican voting against the resolution) to invoke the Congressional Review Act (CRA) in blocking the “arbitration rule” issued earlier this month by the Consumer Financial Protection Bureau (CFPB). The CRA gives Congress the power to repeal, and block the re-issuing of, regulations issued by federal regulators during a 60-day window following the effective date of final rules. The arbitration rule was issued just two weeks ago. The House resolution is now headed to the Senate, which has not set a date for consideration. Democrats are all expected to oppose the resolution, and so are some Republicans, making the future of the resolution uncertain. The rule is slated to take effect Sept. 18. If the resolution is adopted by both the House and Senate (and signed by the president), it would nullify the CFPB’s rule and prevent the agency from issuing any similar rule relating to arbitration in the future.


You have only until Monday (July 31) to comment to the CFPB about its proposal to revise thresholds for reporting open-end lines of credit (through home equity loans), a new summary from NASCUS points out. In the summary (which outlines the proposal on “Temporary Increase in Home Mortgage Disclosure Act (Regulation C) Thresholds for Open-End Lines of Credit Protection Bureau,” NASCUS points out that the bureau is looking for comments in two key areas:

  • Whether the bureau should temporarily increase the open-end transactional coverage threshold. If so, whether to raise the threshold to 500 or to a larger or smaller number.
  • Whether, if the bureau elects to increase the open-end transactional coverage threshold, it should do so for a period of two years or a longer/shorter period of time.


The summary notes that, under the proposed rule, institutions that originate fewer than 500 open-end lines of credit in either of the two preceding calendar years would not be required to collect and report data for a temporary, two-year period.  The open-end line of credit reporting threshold will return to the previous standard effective January 1, 2020, the summary states.

NASCUS Summary: Proposed rule — temporary increase in home equity loan reporting thresholds


The ban on usage of the terms “bank,” “banker” and “banking” by Canada’s provincial credit unions and other financial services providers in the country may be short lived, according to comments this week by a Canadian trade association leader while attending the World Council of Credit Unions (WOCCU) annual meeting in Vienna, Austria. Martha Durdin, president of the Canadian CU Association, told CUToday.info that the decision by the Canadian federal government to ban the use of the three common terms by credit unions and others is being reconsidered. Indeed, Wayne Stetski, a member of the Canadian Parliament, has clarified that the intended target of the proposed ban is not “highly regulated and respectable” credit unions, but newly emerging, non-regulated entities that are deceiving the public.

The ban was the result of an advisory issued June 30 by the Canadian Office of the Superintendent of Financial Institutions, which interpreted the nation’s Bank Act to bar use of the words by non-bank financial service providers, including credit unions. Durdin’s group has estimated that, if the advisory stands and credit unions are forced to comply, it could cost them up to $80 million to make changes, including creating and popularizing “new words” to describe and advertise credit unions. An official announcement about reconsideration is expected sometime early next month by Canada’s Minister of Finance, Bill Morneau.

AROUND THE STATES: New MBL rule earns thanks to regulator

State-chartered credit unions in North Carolina have “parity and clarity” in business lending with federally chartered credit unions in the state, as the result of the adoption of a new member business lending rule by the state. Carolinas Credit Union League President John Radebaugh coined the rhyming phrase in a statement to credit unions in his state, in which he also thanked North Carolina Credit Union Division Administrator Rose Conner for efforts to secure the new rule. “No longer will there be antiquated state rules or state rules that are out of synch with federal rules, which could discourage credit unions from making such loans,” Radebaugh stated. “This new rule is good for credit union members and good for North Carolina. The League is grateful to Administrator Conner for her efforts to get this MBL rule through.” The NCCUD proposed a permanent rule adoption following its January issuance of an MBL rule update in response to NCUA’s new MBL regulation, Radebaugh noted.


Want to obtain our special hotel rate for the 2017 Summit (Aug. 29-Sept. 1 in San Diego)? Better act fast: the cutoff date for our hotel rate is Aug. 8, less than two weeks away. Our headquarters for this year’s event is the Westin Gaslamp Quarter Hotel, located on the border of the historic Gaslamp Quarter, and close to many attractions in San Diego. The NASCUS State System Summit is a unique conference where credit union regulators and practitioners come together for dialog and exchange. Issues, best practices, emerging trends and – as is the focus in this year’s event – the future of certain aspects of the credit union system are all on the table. Among those who are gathering to discuss these trends and developments with Summit participants: NCUA Board Member Rick Metsger, former NCUA Board Chairman Dennis Dollar, cybersecurity expert Jim Stickley, marijuana business banking expert Sundie Seefried (CEO of Partner Colorado Credit Union in Denver) and many more. Key topics at the event include fintechevolving field of membership (FOM) requirementsthe future of the corporate system, cybersecurity, outlook for CFPB – and others. Find out more about the 2017 Summit – including registration and hotel reservations – at the event’s website, linked below.

Hotel info, registration: 2017 NASCUS State System Summit, Aug. 29-Sept. 1, San Diego


The deadline is today for submitting nominations for the 2017 Pierre Jay Award, which honors outstanding individual service, leadership and commitment to the state credit union system. Eligibility for nomination is open to anyone, program or organization making a significant contribution to the state credit union system over the last year (or years). However, only NASCUS members are eligible to submit a nomination for consideration. The award will be conferred late next month at the 2017 NASCUS State System Summit in San Diego (at the Westin Gaslamp Quarter Hotel). For more information – including the on-line nomination form, additional nomination guidelines and list of past winners – see the website link below.

2017 Pierre Jay Award: nomination form and more information

BRIEFLY: Hearings for nominees, vote on Treasury official, Mnuchin on regulation, Cotney at WOCCU, job opening

The Senate Banking Committee held a confirmation hearing Thursday for Federal Reserve Board nominee Randal Quarles (as vice chairman of supervision for the Fed), and Joseph Otting, nominee for Comptroller of the Currency … Earlier in the morning, the committee members voted favorably for Senate confirmation on Chris Campbell’s nomination as assistant Treasury secretary for financial institutions … Treasury Secretary Steven Mnuchin told the House Financial Services Committee Thursday that the Dodd-Frank $50 billion asset threshold for bank regulations should be raised to between $250 billion and $300 billion; larger “uncomplex” banks should get an exemption too, he said … Former Massachusetts Commissioner of Banks David Cotney represented NASCUS this week at the World Council’s meeting in Vienna, Austria; he spoke during a session focusing on “Regulation in an Era of Digitalization” … NASCUS has a position open for a vice president of communications; see the link below for the job description.

Position opening: Vice president, Communications (NASCUS)


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