(Nov. 13, 2020) Last week’s election results – in which Democrat (and former vice president) Joseph R. Biden claimed more electoral votes than Republican (and incumbent) President Donald Trump, as well as more than 5 million more actual votes — will have an impact on federal regulation of credit unions, likely beginning with who sits in the top regulators’ seats.

For NCUA, the result could mean a change who leads the agency. The chairman of the NCUA Board is designated by the president (not confirmed by the Senate if already sitting on the board), and does not serve a set term in that role, other than their term as a member of the board. Current credit union regulator board Chairman Rodney Hood (appointed by Trump) could be displaced by Biden in favor of a Democrat, as early as January following inauguration. Hood’s term on the board runs to August 2023. Board members may not succeed themselves.

The only Democrat currently on the board is Todd Harper, whose own term ends in April. Biden could name Harper board chairman, and then nominate another Democrat to take his place sometime after April. Harper could remain on the board until his successor is confirmed by the Senate.

And there may be more opportunities for the new president. NCUA Board Member J. Mark McWatters (a Republican appointee) is serving in a holdover capacity (since his term ended in August 2019) until the Trump nominee for his seat, Kyle Hauptman, is confirmed by the Senate. Hauptman’s nomination is currently pending before the Senate, after a split vote by the Senate Banking Committee to recommend confirmation. (Senate Democrats, on a voice vote, voted no.)

But a vote on Hauptman’s nomination has not yet been scheduled by the Senate. If the Senate fails to act before the current session ends in early January (and the current Congress with it), his nomination will come to an end – and Biden will have another seat to fill on the board, likely with a Democrat. (However, there is still plenty of time between now and Jan. 2 for the Senate to take up and act on Hauptman’s nomination.)

Meanwhile, the CFPB director’s job, now held by Kathleen Kraninger, will be up for change under a Biden administration – thanks to a Supreme Court decision just this year which ruled the director of the agency holds the job “at will” of the president, and is not only subject to “for-cause” firing, despite the five-year term the director fills once confirmed. Kraninger’s term runs to 2023.

Democrats in both the House and Senate have been roundly critical of Kraninger’s performance as director, and will likely argue that the new administration should make a change.

(Nov. 13, 2020) An “agency review team” for federal financial regulators, including NCUA, to assist in the transition from the administration of President Donald Trump to that of President-elect Joe Biden will be led by a former leader of a commission that oversees the commodities markets, Biden’s transition office said this week.

The team includes no credit union representatives, at least so far.

Gary Gensler, former chairman of the Commodity Futures Trading Commission (CFTC), will lead the “Federal Reserve, Banking and Securities Regulators” agency review team. The teams, according to the description provided by the transition office of Biden and Vice President-Elect Kamala Harris, are responsible for understanding the operations of each agency, ensuring a smooth transfer of power, and preparing Biden, Harris and their cabinet “to hit the ground running on Day One.”

The group headed by Gensler (most recently a senior advisor and lecturer at the Massachusetts Institute of Technology (MIT)) will cover NCUA, the Federal Reserve, FDIC, CFTC, and the Securities and Exchange Commission (SEC). (The OCC will be covered by a separate team looking at the Treasury Department.) The 14-member team does not include any members whose most recent employer is a credit union, credit union regulator or credit union-related group. Although that’s the case now, that could change in coming weeks as the teams begin setting up subgroups to look at specific agencies.

Another key agency review team announced this week: One looking at the CFPB, which will be headed by its former (and short-tenured) Deputy Director Leandra English. Most recently with the New York State Department of Financial Services as a special policy advisor (since January 2020), English will lead an eight-member team. There are no credit union representatives in that group. Bill Bynum of Hope Enterprises Corp. (and CEO of Hope FCU in Jackson, Miss.) is also a member of the team.

English was named deputy director of the bureau in 2017 by outgoing Director Richard Cordray; she had been chief of staff at the agency. In naming English, Cordray was effectively naming his successor since the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) states that the deputy succeeds the director if that individual resigns or the position is vacant. Cordray resigned his office the same day (but after) he named English deputy director; she expected to become director.

However, later that day, Trump announced that he had appointed then-Office of Management and Budget (OMB) Director John (“Mick”) Mulvaney to the additional job of acting director of the consumer bureau. A federal judge days later ruled that Mulvaney’s appointment was proper; a subsequent suit brought by English to overturn that ruling was unsuccessful. She left the agency in July.

LINK:
Biden-Harris agency review teams

(Nov. 6, 2020) While the presidential election contest remained too close to call days after the election, legalizing marijuana for personal or medical uses in five states was a different story: initiatives passed or were leading in each state by relatively healthy margins.

Voters in Arizona, Mississippi, Montana, New Jersey and South Dakota are giving or have given the green light to statewide ballot measures asking them to legalize marijuana for personal or medical use (or both in one case).

In Arizona, voters approved – by 59.8% (with 89% of votes reported as of Thursday) – a measure legalizing possession and use of marijuana for persons who are at least 21 years old, enacting a tax on marijuana sales, and requiring the state to develop rules to regulate marijuana businesses.

Montana voters agreed (with 57.8% in favor) to a state constitution amendment allowing for the legislature or a citizen initiative to establish a minimum legal age for the possession, use, and purchase of marijuana, similar to the regulation of alcohol under the state constitution.

In New Jersey, voters are giving the thumb’s (by 66.9%, and 63% of votes reported as of Thursday) to a measure legalizing the possession and use of marijuana for persons age 21 and older and legalizing the cultivation, processing, and sale of retail marijuana.

South Dakotans had two marijuana-related measures to consider: one legalizing the recreational use of marijuana and another requiring the state legislature to pass laws providing for the use of medical marijuana and the sale of hemp by April 1, 2022. The former was approved by 54.2% of voters, the latter by 69.9%.

Finally, Mississippi voters have given approval handily to medical use of marijuana, despite a relatively convoluted process. First, voters were asked to give the OK to either (or both) of measures advanced by state citizens (through an initiative process), or an alternative of that version advanced by the state legislature (as allowed under state law). In the first stage, voters could choose “either” or “neither.” Voters said OK to “either’ by 67.8%.

Second, those voters who chose “either” were asked to select which one of the “eithers” they supported. The citizens’ measure won overwhelmingly, with 73.9% of the vote. That version would amend the state constitution to create a medical marijuana program administered by the state health department for persons with qualified debilitating medical conditions.

NASCUS has been a leader in the credit union system to call for clarity in federal law regarding financial institutions’ ability to serve legal marijuana businesses. The federal government continues to classify marijuana, also known as cannabis, as an illegal controlled substance, which complicates the ability of credit unions to serve legal marijuana-related businesses within their states. To date, 44 states and the District of Columbia have legalized marijuana use and possession for either recreation or medical use.

There is more to Tuesday’s national election than who or which party controls the White House and Congress – there are also questions, in four states, as to whether marijuana can be legalized for personal use, and in two others about legalizing marijuana for medical use.

NASCUS – since at least 2014 — was among the first organizations representing state regulators, credit unions or financial institutions to call for clarity in federal law regarding financial institutions’ ability to serve legal marijuana businesses. The federal government continues to classify marijuana, also known as cannabis, as an illegal controlled substance, which complicates the ability of credit unions to serve legal marijuana-related businesses within their states.

Nevertheless, states continue to consider legalization for personal or medical use. Voters in Arizona, Montana, New Jersey and South Dakota have statewide ballot measures asking voters to legalize marijuana for personal use. More specifically, by state, the measures would:

In Arizona: legalize possession and use of marijuana for persons who are at least 21 years old, enact a tax on marijuana sales, and require the state to develop rules to regulate marijuana businesses.

In Montana: amend the state constitution to allow for the legislature or a citizen initiative to establish a minimum legal age for the possession, use, and purchase of marijuana, similar to the regulation of alcohol under the state constitution.

In New Jersey: legalize the possession and use of marijuana for persons age 21 and older and legalize the cultivation, processing, and sale of retail marijuana.

In South Dakota: legalize the recreational use of marijuana and require the state legislature to pass laws providing for the use of medical marijuana and the sale of hemp by April 1, 2022.

Meanwhile, in addition to the South Dakota effort, medical marijuana use is up for consideration in Mississippi too – but with a much more complicated procedure. Two versions of a medical marijuana amendment are under consideration in the Magnolia State, one advanced by citizens (but subject to state legislature consideration), and the other advanced by the state legislature. The former measure is known as a “indirect initiated constitutional amendment.” The latter is the alternative developed by the state legislature after its consideration.

Thus, voters have choices: They may select “either measure” or “neither.” If they select the latter, they can move on in their voting – or select one of the medical marijuana versions just in case the “eithers” outpoll the “neithers.”

On the other hand, if a voter selects “either” at the start of this process, the voter must then answer the second question: that is, “which one?”

The “indirect” version (advanced by citizens) would allow medical marijuana treatment for more than 20 specified qualifying conditions, allow individuals to possess up to 2.5 ounces of marijuana at one time, and tax marijuana sales at the current state sales tax rate of 7%.

The state legislature’s version would restrict smoking marijuana to terminally ill patients; require pharmaceutical-grade marijuana products and treatment oversight by licensed physicians, nurses, and pharmacists; and leave tax rates, possession limits, and certain other details to be set by the legislature.

To date, 44 states and the District of Columbia have legalized marijuana use and possession for either recreation or medical use (11 for recreational, 33 and D.C. legalizing or decriminalizing medical marijuana).

The NASCUS Michigan Examiner School gets underway on Thursday (Nov. 5) in a virtual setting. The three-hour session features sessions on fraud (with Rayleen Pirnie, Director Risk and Fraud, New England Automated Clearinghouse (NEACH); cannabis and hemp (with Deirdra O’Gorman, Founder & Principal, DX Consulting); and compliance (with Glory LeDu, CEO, League InfoSight, Inc.). See the link below for registration details … Also on the NASCUS education calendar in the upcoming weeks: the Tennessee Directors’ College (another virtual event), Dec. 1 from 9 a.m. to noon CT (10 a.m.-1 p.m. ET) … Complaints about student loans were down about 33% for the year ending Aug. 31, the CFPB said this week – but the agency declined to pinpoint a single factor for the drop, which continued a trend starting in 2017. Among the causes it did point out: relief provided under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which the bureau said likely contributed “significantly” to the decrease since March 20, but that didn’t account for the steady decline in complaints before that …In case you somehow forgot or weren’t paying attention (both unlikely): there’s an election on Tuesday. If you haven’t already (via mail for early in-person voting), remember to cast your ballot at your local polling place!

LINKS:
NASCUS MI Examiner School Nov. 5 (registration and agenda)

NASCUS Dec. 1 TN Direcctors’ College

Annual Report of the CFPB Private Education Loan Ombudsman 2020