May 19, ’17 NASCUS Report

Three proposed rules on agency agenda

Three proposals are on the agenda for next week’s NCUA Board meeting, covering rules for the agency supervisory review committee, appeals procedures and voluntary mergers of federal credit unions. According to the official board agenda released by NCUA this week, the two-member board is also scheduled to hear a quarterly report on the Temporary Corporate Credit Union Stabilization Fund (TCCUSF). No further explanation was provided about details of the proposed rules or the stabilization fund report. The presence of three rule proposals on the agenda for one board meeting is a departure from the panel’s approach in the first four months of the year, a period in which the board issued for comment one rule proposal (the advance notice of proposed rulemaking on alternative capital in January), and adopted an 18% maximum loan interest rate for federal credit unions (in February). The board canceled a meeting in March. During much of that four-month period, however, the agency was honoring a regulatory freeze imposed by President Donald Trump (issued in late January for 60 days). The board is scheduled to meet next Thursday morning at 10 in NCUA headquarters in Alexandria, Va.


Highlights of the impact on the state credit union system – in particular, the effect on NCUA, the CFPB and state credit unions – are outlined in a new summary of the Financial CHOICE Act by NASCUS, available to NASCUS members only. The Financial CHOICE Act, H.R. 10 – passed by the House Financial Services Committee two weeks ago and sent to the House floor – is sweeping legislation largely aimed at dismantling the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, and offering overall reform of the federal financial regulatory structure. It includes a number of NASCUS-supported provisions, including: more transparency in the NCUA budgeting process (including through public hearings), and for the overhead transfer rate (OTR).

The bill also contains a so-called “off-ramp” provision that would allow financial institutions, including credit unions, which maintain an average leverage ratio of at least 10% the option to be exempt from federal capital and liquidity requirements. The institutions, if they apply for the exemption and receive it, would be defined as “qualifying banking organizations” (QBOs) in the CHOICE Act.

The six-page NASCUS summary looks closely at the impact of the bill (which itself is nearly 600 pages long) on NCUA, the CPFB and state credit unions generally, including: Bringing NCUA and CFPB into the regular Congressional appropriations process; budget and National Credit Union Share Insurance Fund transparency at NCUA; changing the scope (and name) of the CFPB; removal of the bureau’s “unfair, deceptive or abusive acts or practices (UDAAP)” authority and returning preservation of  “unfair or deceptive acts or practices” (UDAP), to federal banking regulators, and more. H.R. 10 is expected to be considered on the House floor by the end of the month.

NASCUS analysis/summary of H.R. 10, the Financial Choice Act (members only)


Tips to help prevent the spread of a resurgence of last week’s cyber attack that hit systems in up to 100 countries, taking those systems offline and in some cases shutting down businesses and institutions entirely, have been compiled by NASCUS for the state system. No doubt, last week’s attack will be a central topic of discussion during the NASCUS/CUNA fourth annual Cybersecurity Symposium in just about two weeks in San Diego.

The attack was carried out through ransomware, which exploits vulnerabilities in computer operating systems and also attempts to trick users in clicking links or downloading malware attachments. The result is the user’s computer files being encrypted, and a ransom is demanded to unlock the files. The ransomware (or “malware”) was discovered in April, and computer systems vendors (including Microsoft, quickly released a patch to address the vulnerability.

To prevent any resurgence, experts working with NASCUS recommend that users:

  • Ensure that firewalls are configured properly, and have the latest software updates.
  • Ensure that servers and workstations have the latest software patches. These are the patches that fix the operating system vulnerabilities that allow the malware into your system.
  • Ensure that important files are backed up, at least on a nightly basis, to maintain data security.
  • Ensure that users are aware of phishing emails. Users should be instructed not to click on any links they are not familiar with, or open any unfamiliar email attachments.  (A phishing email is one that tries to trick users into clicking a link or downloading an attachment.)
  • Ensure that user accounts do not have administrator access.  This limits the damage that can be done, if a computer is compromised.

“This cyber attack has drawn the attention of the world, underscoring the continuing need for effective cyber security,” said Lucy Ito, president and CEO of NASCUS. “The Cybersecurity Symposium coming up June 5-6 in San Diego, counting more than 20 experts presenting on cyber security techniques, best practices and latest developments, will be a terrific forum for discussing the aftermath of this event; I’m looking forward to the discussion.”

NASCUS/CUNA Cybersecurity Symposium, June 5-6/San Diego
Instructions for updating Windows-PC software
Instructions for updating Mac software


An assessment by CFPB of mortgage servicing rules under the Real Estate Settlement Procedures Act (RESPA) is not anticipated to include any specific proposals to modify any rules, NASCUS points out in a new summary posted this week. However, the NASCUS summary points out, findings of the assessment will help inform CFPB’s consideration of additional future rulemaking. CFPB issued last week a call for comments (due by July 10) about the assessment, mandated by law, which requires the bureau to conduct an assessment of each significant rule or order it adopts under federal consumer financial law. Additionally, the law requires report to be published of the assessment not later than five years after the effective date of such rule or order. CFPB expects the mortgage servicing rules assessment report to be published by Jan. 10, 2019. The NASCUS summary lays out the details of the rule assessment, topics covered under the RESPA mortgage servicing rules, and the topics the bureau is specifically comments on.

Summary: CFPB Notice of Assessment of the 2013 RESPA Servicing Rule and Request for Comment


Applications are due July 1 for low-income credit unions seeking Community Development Revolving Loan Fund (CDRLF) grants, NCUA announced this week. An online application form, explanation of grant requirements and more information is available on the agency’s website. NCUA, in a release this week, stated that its Office of Small Credit Union Initiatives (OSCUI) will – through a competitive application process — determine credit unions’ eligibility and administer approximately $2 million to the “most qualified applicants,” subject to the availability of funds.

Also this week: the agency issued an invitation for eligible credit unions to submit applications for the OSCUI Loan Program, subject to funding availability. The OSCUI Loan Program, NCUA pointed out, serves as a source of financial support, in the form of loans, for credit unions serving predominantly low-income members. It also serves as a source of funding to help low-income designated credit unions (LICUs) respond to emergencies arising in their communities.

OSCUI grants and loans information


Re-accreditation for five years has been earned by Wisconsin Office of Credit Unions from NASCUS – the fourth accreditation for the state credit union regulator since 2001. “Re-accreditation is a significant achievement, representing the effectiveness and sound supervision of the state credit union regulatory system,” said NASCUS President and CEO Lucy Ito. “Congratulations to Director Kim Santos and the OCU, and the 143 state chartered credit unions in the state, which hold just more than $31 billion in assets.” Overall, 27 of the 45 states agencies (all of which are NASCUS members) are accredited by the association. The credit unions in these states hold about 86% of all state chartered credit union assets.

NASCUS Accreditation/Certification Program (and contact info)


Early-bird registration discounts end after June 1for the 2017 NASCUS State System Summit, the only national meeting focusing exclusively on the state credit union system. After the deadline, registration fees rise an additional $200 per registration for members, and up to $300 for non-members. This year’s Summit, Aug. 29-Sept. 1 in San Diego (at the Westin Gaslamp Quarter Hotel), takes a close look at what’s ahead for the state credit union system by featuring sessions on FinTech, the future of the CFPB, the future of the corporate system, evolving field of membership rulemaking, the future of cross-border business, outlook for the payments system, and more. Other sessions include a look at unconscious bias and its impact on credit union growth, cybersecurity, marijuana issues for 2017, litigation to watch, and the congressional and political environments. In addition, the Summit features the winner of the “Next Big Idea” competition sponsored by the National Association of Credit Union Service Organizations (NACUSO). Another deadline to keep in mind: the Aug. 8 hotel registration cutoff. See the link for complete information about the Summit.

NASCUS 2017 State System Summit; registration info, agenda, speakers, more


Starting in July, the Mississippi Department of Banking and Consumer Finance will assess “sensitivity to market risk” within its own component rating (“S”), rather than as a factor within the “Liquidity and Asset-Liability Management” or “L” component rates, Commissioner Charlotte Corley told credit unions in her state earlier this month. As of now, there are 16 states employing the “S” component in their exam programs.


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

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