Oct. 13, ’17 NASCUS Report

NASCUS to voice state view in NCUA budget briefing

For the second straight year, NASCUS will offer the state system view of NCUA’s budget plans – and particularly the impact of those plans on the Overhead Transfer Rate (OTR) — next week when the agency hosts its annual budget briefing on Wednesday. NASCUS President and CEO Lucy Ito will offer the state system view, which will also touch on the value of greater agency reliance on and collaboration with state regulators which, Ito will point, can positively accrue to NCUA’s expenditures and productivity.

NCUA revamped its “budget briefings” last year, promising that it would be “more comprehensive than the briefings previously held by the agency,” according to then-chairman Rick Metsger. Last year’s briefing (also held in October) featured several presenters from national and state groups (including NASCUS’s Ito), as well as industry representatives.

In her comments at the 2016 briefing, Ito focused on three areas: transparency of the NCUA budget focusing on the OTR, separation internally of NCUA’s examination and insurance functions, and the future structure of the NCUA Board. Ito also pointed out that all states agencies have some type of external oversight of their budgets, which serves as an important check and balance on state regulator expenditures.

NASCUS comment letter: Overhead transfer rate methodology

Lucy Ito written statement to 2016 NCUA Budget Briefing


A proposed 2018 budget of $320.9 million for the NCUA will be the main topic of next week’s briefing which, in documents posted on its website, the agency stated:

  • Represents an increase of about $3 million (or 0.9%) from the 2017 budget of $318 million.
  • Increases the “operating fund” portion of the budget (one of three portions) by 2.1%, or $6.1 million to $298 million, up from its “restated” 2017 board-approved budget of $292.1 million (adjusted for non-cash items). The operating fund includes employee compensation, travel, rent, contracted services and “administrative” expenses (including annual leave and depreciation).
  • Proposes to reduce the other two portions of the spending plan – the capital and share insurance fund budgets – respectively, by 2.5% (down $388,000 to $15.4 million) and 26.6% (down $2.7 million to $7.4 million from the previous year’s “restated” budget).

The operating fund – which represents about 93% of the agency’s overall spending – also includes a net decrease of 42 full-time equivalents (FTE) from the 2017 Board Approved Budget, the agency said in a release.

The big decline in the insurance fund portion, the agency said, was due to a reduction in contractor support for credit union stress testing. Direct charges within the budget, NCUA stated, include administration of the NCUA Guaranteed Note (NGN) program, state examiner training and laptop leases, as well as financial audit support. The estimated costs for state examiner computer leases and training, the agency stated, of $1.5 million are unchanged from prior years.

“It remains imperative that we provide a transparent budget process in a fully accountable manner that is beneficial to credit unions and the agency,” NCUA Board Chairman J. Mark McWatters said in a statement. “The 2018-2019 budget proposal is another step in our broader effort to re-align our resources with the mission of the agency to meet the needs of an evolving credit union system in a cost-effective manner while continuing to protect the safety and soundness of the system and the Share Insurance Fund.”

NCUA Posts 2018–2019 Budget Proposal


Two final rules, one dealing with appeals procedures and the other on the agency’s supervisory review committee, will be considered by the NCUA Board at its open meeting Thursday (Oct. 19) in Alexandria, Va. Additionally, the board will consider a proposed rule (under Part 702 of its regulations) on capital planning and supervisory stress testing. The board will also consider issuing a request for information on electronic loan, deposit and investment data collection.

NCUA issued a proposal on its supervisory review committee this summer to expand the subjects appealable to the committee and provide credit unions an option for additional review by the Director of NCUA’s Office of Examination and Insurance (E&I). In its comment, NASCUS supported the changes, with some “modest” changes: clarify that the review process as codified applies to NCUA supervisory determinations; enhance transparency with additional reporting, and; codify the supervisory review committee process within Part 741(to assist in placing all regulations affecting federally insured, state-chartered credit unions (FISCU) in one place in NCUA rules).

The final rule on the appeals process (also proposed this summer) recommends streamlining and replacing the process for appeals to the NCUA Board for those agency regulations that have existing embedded appeals processes. The procedures would apply in cases in which a decision rendered by a regional director or other program office director is subject to appeal to the board. In its comments, NASCUS supported the rule, but urged the agency to publish results of appeals on a regular basis, once again recommended that the rule be consolidated under Part 741 (for easy state credit union reference), and recommended that the appeals process should include copying the state regulator in all correspondence between NCUA and the FISCU.

NCUA Board meeting agenda, Oct. 19


A new summary has been published by NASCUS about the CFPB’s proposed policy guidance about loan-level home mortgage disclosure act (HMDA) data that financial institutions must report before the data is disclosed to the public. The summary outlines that the proposed guidance (which is open for comment until Nov. 24) describes the Bureau’s application of a “balancing test” to date and loan-level HMDA data that the consumer bureau proposes to make available to the public beginning in 2019.  (The “balancing test” refers to how the agency will determine whether and how HMDA data should be modified prior to its disclosure to the public to protect applicant/borrower privacy while also fulfilling HMDA’s public disclosure purposes). The summary also makes clear: the proposed policy guidance is not intended to re-open any portion of the 2015 HMDA Final Rule.

NASCUS Summary: CFPB Notice of Proposed Policy Guidance/Request for Comments re: Disclosure of Loan-Level HMDA Data


Markup of nearly two dozen bills related to financial services and its regulation began was completed this week by the House Financial Services Committee and sent to the full House for consideration. In a two-day hearing, the committee discussed and voted on 23 bills that Committee Chairman Jeb Hensarling (R-Texas) said were mostly aimed at providing help to smaller banks, credit unions and early growth companies. “These are goals that every Democrat and Republican on this committee has said they support,” he said. “So this markup gives all members of the committee the opportunity to make their actions align with their words. They can cast their votes with what they have publicly said they support.”

Among the measures that the committee sent on to the House:

H.R. 1116, TAILOR Act of 2017 
Directs the federal financial institutions regulatory agencies to tailor their rulemakings in consideration of the risk profiles and business models of institutions that are subject to such rules. The bill also directs such agencies to annually report to Congress and testify regarding the specific actions taken to tailor their regulatory actions.

H.R. 2706, Financial Institution Customer Protection Act of 2017 
Prohibits a federal banking agency from directing a depository institution to terminate an account, absent a material reason. The bill requires a federal banking agency to provide a depository institution written justification of any request to terminate or restrict a customer account, except in instances of national security. The bill also requires the federal banking agencies to issue an annual report to Congress that describes the number of customer accounts the agency requested or caused to be closed and the legal authority on which the agency relied.

H.R. 3072, Bureau of Consumer Financial Protection Examination and Reporting Threshold Act of 2017 
Amends the Consumer Financial Protection Act of 2010 to raise the examination threshold that brings an insured depository institution or insured credit union under supervision by the Consumer Financial Protection Bureau’s (CFPB) from assets of $10 billion or more to assets of $50 billion or more. The bill also increases from $10 billion to $50 billion the threshold at which an insured depository institution or insured credit union is subject to CFPB reporting requirements.

H.R. 2396, Privacy Notification Technical Clarification Act 
Amends the Gramm-Leach-Bliley Act to reduce confusion among consumers that can occur when they receive annual privacy notices, by clarifying that financial institutions are not required to provide an annual privacy notice disclosure so long as the institution makes its current policy available to consumers online or at the consumer’s request, and the institution conspicuously notifies consumers of the available policy.

H.R. 2954, Home Mortgage Disclosure Adjustment Act 
Amends the Home Mortgage Disclosure Act of 1975 to exempt from maintenance of mortgage loan records and disclosure requirements depository institutions that have originated in each of the two preceding calendar years, fewer than 500 closed-end mortgage loans, and fewer than 500 open-end lines of credit.

H.R. 3758, Senior Safe Act of 2017 
Provides that: (1) a supervisor, compliance officer, or legal advisor for a covered financial institution who has received training regarding the identification and reporting of the suspected exploitation of a senior citizen (at least 65 years old) shall not be liable for disclosing such exploitation to a covered agency if the individual made the disclosure in good faith and with reasonable care; and (2) a covered financial institution shall not be liable for such a disclosure by such an individual if the individual was employed by the institution at the time of the disclosure and the institution had provided such training.

H.R. 3857, PASS Act of 2017 (repeal of “fiduciary rule”)
Repeals the Department of Labor’s (DOL) final rule titled “Definition of the Term ‘Fiduciary’ Conflict of Interest Rule–Retirement Investment Advice” (fiduciary rule) and related prohibited transaction exemptions published on April 8, 2016. The bill also requires a broker-dealer to provide increased disclosures to the customer before the broker-dealer may purchase a securities product on behalf of that customer, including disclosures regarding the type and scope of services the broker-dealer provides, the standard of conduct that applies to the relationship, the types of compensation the broker-dealer receives, and any material conflict of interest.

House Fin. Svcs. Cmte memo: Items for Oct. 11 markup

Committee release: Chairman Says Measures ‘Help Build a Healthier, More Robust Economy’


NASCUS conferences on crucial subjects –the new CECL accounting standard, BSA and mortgage lending — are on tap next month, all optimized for the state credit union system. In addition to those: a one-day forum in Connecticut for CEOs, senior management, directors and committee members. Here are details for:

  • The Nov. 6 Connecticut Executive Forum in Rocky Hill, Conn., covers vital issues for directors, CEOs, senior staff and committee members, including implications of the FinTech boom, trends and developments in the state system nationwide, a survey of NCUA rulemaking, a discussion of hot button issues and more.
  • The Nov. 7 CECL Symposium (sponsored by NASCUS and the Carolinas Credit Union League) in Charlotte, N.C., looks at key subjects related to the Financial Accounting Standards Board’s (FASB) accounting standard for “current expected credit loss” (CECL), including: What CECL is, why the change and the policy behind it; Implementation dates and strategies for implementing; walking through the methodologies; pitfalls to be aware of and benefits for early implementation; how to train Board Members to understand the change.
  • The Nov. 12-15, BSA Conference (sponsored by NASCUS and the Credit Union National Association (CUNA)) in Las Vegas, is widely regarded as the premiere bank secrecy act conference and offers compliance officers, state and federal examiners, industry experts and regulators — from beginners to veterans — a forum for discussing and learning about the very latest of the complex federal BSA laws.
  • The Nov. 28 Mortgage Symposium in Newton, Mass., is a one-day session delivering a high-level overview on topics such as real estate loan workflow, Fannie/Freddie as investor/servicer, the business of loan servicing, economics of servicing, servicing components and loss mitigation. The session is led by Tracy Ashfield, president of credit union mortgage consulting and training firm Ashfield & Associates, who also works with NASCUS and NCUA to provide training and education about residential mortgage lending for examiners and regulators.

For more details on each, including costs and registration information, see the link below

NASCUS Fall 2017 Education Agenda

BRIEFLY: Updated TRID ‘small entity’ compliance guide published

The CFPB has updated its guide on TILA-RESPA Integrated Disclosure (TRID) rule implementation for small entities. The bureau said the guide incorporates amendments and clarifications set forth in the final rule issued on July 7, 2017. Generally, compliance with the 2017 TILA-RESPA rule is mandatory for applications received on or after Oct. 1, 2018.

TRID small entity compliance guide

Information Contact:
Patrick Keefe, pkeefe@nascus.org

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