May 17, 2019 NASCUS Report

NCUA Chairman Hood testifies at Congressional hearings; NASCUS’ Ito responds

This week, NCUA Board Chairman Rodney Hood spent two days testifying alongside his fellow federal financial regulators before House and Senate committees.

The first hearing, titled “Oversight of Financial Regulators” was held Wednesday, May 15 before the Senate Banking Committee and the second hearing, titled “Oversight of Prudential Regulators: Ensuring the Safety, Soundness and Accountability of Megabanks and Other Depository Institutions,” was held Thursday, May 16 before the House Financial Services Committee. In addition to Chairman Hood, witnesses included, Joseph Otting, comptroller at the Office of the Comptroller of the Currency (OCC), Randal Quarles, vice chair for supervision at the Federal Reserve Board, and Jelena McWilliams, chairman of the Federal Deposit Insurance Corporation (FDIC) Board.

During both hearings, Chairman Hood outlined the strong state of the credit union industry and the National Credit Union Share Insurance Fund (NCUSIF), NCUA’s efforts to reduce the regulatory burden of credit unions, and the steps the agency is taking to address diversity and inclusion.

In a press statement released after the Senate hearing, NASCUS President and CEO Lucy Ito expressed agreement with the Chairman’s sentiments. “We agree with Chairman Hood that NCUA has made great strides in reducing the regulatory burdens of credit unions, while maintaining safety and soundness. NASCUS particularly appreciates the timely closing of the Corporate Credit Union Stabilization Fund, for which we had long advocated. The Stabilization Fund’s closing has resulted in unprecedented dividends to credit unions while maintaining a healthy equity level in the Share Insurance Fund.”

In oral and written testimonies, the Chairman raised concerns regarding cybersecurity and the credit union industry’s vulnerability to cyber threats, specifically noting the industry’s potential exposure from third party vendors. The Chairman advised lawmakers of the limitations on NCUA’s authority – noting that NCUA does not currently have the authority to examine credit union service organizations (CUSOs) and calling on Congress to grant NCUA enforcement authority over credit union vendors. NCUA’s lack of vendor authority stands in contrast to the powers of the other federal financial regulators.

Ito stated NASCUS shares Chairman Hood’s concerns about cyber threats and is prepared to engage with policymakers to identify solutions that respect state jurisdiction in this area. “We together, with state credit union regulators, stand ready to work with NCUA and Congress to ensure any federal cybersecurity standard respects the authority of the states to implement policies necessary to protect consumers in their communities.”

At Thursday’s hearing, Chairman Hood expressed an openness to studying the impact of the Financial Accounting Standards Board’s current expected credit losses accounting standards (CECL) on credit unions and their members and to reviewing the NCUSIF normal operating level. Ito commended the Chairman’s “deliberative” approach to reviewing these issues.

CFPB releases plan to review rules

Earlier this week, the Consumer Financial Protection Bureau (CFPB) issued a notice regarding how it plans to review regulations under the Regulatory Flexibility Act (RFA) and to request public input.

In the RFA, Congress specified that agencies review certain rules within 10 years of their publication and consider the rules’ effect on small businesses. The purpose of the review is to minimize any significant economic impact of the rules upon a substantial number of small entities, consistent with the stated objectives of applicable statutes. At the conclusion of each review, CFPB will determine whether the rule should be continued without change or should be amended or rescinded. The RFA requires each agency to invite public comment on each rule undergoing review.

The public will have 60 days to comment on the CFPB’s plan after publication in the Federal Register.


Bureau launches review of 2009 Overdraft Rule

In 2009, the Federal Reserve Board issued a rule that limits the ability of credit unions and financial institutions to assess overdraft fees for paying ATM and one-time debit card transactions that overdraw consumers’ accounts. The rule amends Regulation E, which implements the Electronic Fund Transfer Act (EFTA). The Bureau recodified Regulation E, including the amendments made by the Overdraft Rule, in 2011 when the Bureau assumed rulemaking responsibility under the EFTA.

The notice seeks comment on the economic impact of the Overdraft Rule on small entities. The public will have 45 days to comment after publication of the notice in the Federal Register.


NCUA Board will look at proposed rule on public unit and nonmember shares

A proposed rule on public unit and nonmember shares will be considered by the NCUA Board when it meets next week in Alexandria, Va., for its regular monthly meeting.

The proposed rule, Part 701, Public Unit and Nonmember Shares, applies to federally insured (FICUs), including state chartered credit unions (FISCUs), and is a part of the agency’s 2019 Regulatory Review.

The Board will also receive a quarterly report on the Share Insurance Fund and a briefing on the Office of Credit Union Resources and Expansion.

The May open meeting of the NCUA Board is set for 10 a.m. Thursday (May 23) at agency headquarters in Alexandria, Va.

NCUA Board agenda, May 23

TRANSITIONS: New leadership in AZ, CA, NV and NM

Keith A. Schraad has been named Interim Superintendent of the Arizona Department of Financial Institutions. Schraad comes to the position with over 25 years of both private‐ and public‐sector experience in the areas of insurance, healthcare, technology and government. Formerly from Kansas, Schraad served in the Kansas Senate from 1996 to 1998, where he was Vice Chairman of the Judiciary Committee.

Manuel Alvarez was sworn in as Commissioner of the California Department of Business Oversight. Alvarez had been general counsel, chief compliance officer and corporate secretary at Affirm Inc. since 2014. He was an enforcement attorney at the Consumer Financial Protection Bureau from 2011 to 2014, a deputy attorney general at the California Department of Justice, Office of the Attorney General from 2010 to 2011 and an associate at Dentons LLP from 2007 to 2010. He succeeds Jan Lynn Owen, who had headed the agency since it was created six years ago to replace the merged Department of Financial Institutions and Department of Corporations (DOC).

Department of Business and Industry Director Michael Brown has appointed Rickisha Hightower, Esq. as Interim Commissioner of the Nevada Financial Institutions Division (FID). The appointment comes after FID Commissioner George Burns announced his resignation with an intent to retire from state service effective May 3. Burns served nearly 12 years as Nevada’s top banking regulator. Hightower has served as FID deputy commissioner since December 2018. Prior to that she was a deputy attorney general with the Office of the Nevada Attorney General where her clients included the Nevada Mortgage Lending Division and the FID.

Earlier this year, New Mexico Regulation and Licensing Department Superintendent Marguerite Salazar announced that Christopher Moya has been named director of the department’s Financial Institutions Division. Moya joined the Financial Institutions Division as a financial examiner in 2011, then was promoted to Consumer Industry Manager, where he oversaw the mortgage origination and escrow businesses operating in our state. Moya became deputy director, responsible for the budget and operations of the Division in 2013, and has been serving as acting director since 2016.

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