(March 19, 2021) Mark your calendars for the April 22 Pierre Jay Awards 2021 virtual presentation ceremony, getting underway at 2 p.m. ET. There is no charge for attending the event, although registration is required.
Three leaders of the state system — Patty Idol, Kim Santos and Sarah Vega — are being recognized for the 2021 awards, which are the highest honors bestowed by NASCUS for persons or entities demonstrating service, commitment and leadership to the state system.
“We will recognize their tremendous dedication and contributions to the state credit union system, as told to us by their peers, friends and family,” said NASCUS’ Lucy Ito. “We urge NASCUS members and all those in the state system to participate and learn more about our award winners’ amazing accomplishments and personal impact on our industry.”
Idol is the former president and CEO of Mountain Credit Union in Waynesville, N.C., where she began her career as a branch manager. Over 35 years, she rose through the ranks at the credit union and in the credit union system, becoming chair of the NASCUS Credit Union Advisory Council, chair of the Carolinas Credit Union League (CCUL) Board and president of the Western Chapter of CCUL
Santos is director of the Office of Credit Unions (OCU) at the Wisconsin Department of Financial Institutions in Madison, Wis., where in 1992 she began her career as a credit union examiner. Since 2013, she has supervised the 118 state-chartered credit unions in her state as director of the OCU.
Vega is the former chief of staff to former NCUA Board Chairman Mark McWatters, where she also served as a senior policy advisor. She also previously served as chief of staff to former NCUA Board Chairman Michael Fryzel – and has the distinction of being the only person to have served as top staffer to two NCUA Board chairmen. She is the former director of the Illinois Division of Financial Institutions, a role in which she also served as chairman of the NASCUS Regulator Board.
For more information, including registration for the April 22 event, see the link below.
LINK:
Registration: Pierre Jay Awards April 22 presentations, registration
(March 19, 2021) NASCUS’ Lucy Ito participates today in an online “Friday Conversation” about the “Commitment to Change” in credit unions united against racism. The event is hosted by the African American Credit Union Coalition (AACUC) featuring “Legendary Women” in the credit union system. The one-hour session, which gets underway at 1 p.m. ET, features (in addition to Ito) Alicia S. Chaney (moderating the session), manager of campus recruiting and retention for CUNA Mutual Group; Hazelmae Overturf, senior manager of learning and development for BECU; Brandi Stankovic, COO and chief strategy officer for CU Solutions Group; and Leslie Pearce, SVP Fiserv Corp.
LINK:
Registration, ‘Commitment to Change’ conversation
(March 19, 2021) Nine areas that will affect the resource needs of NCUA– including monitoring the equity ratio of the savings insurance fund, enhancing the examination program and building the supervision workforce — in the coming year and likely beyond, are listed in the agency’s 2020 annual report released this week.
The nine areas, the agency said, “will continue to shape the environment facing credit unions and will determine the resource needs of the NCUA.” Those areas are:
- Monitoring the National Credit Union Share Insurance Fund’s (NCUSIF’s) equity ratio
- Enhancing the agency’s examination program
- Building the NCUA workforce to supervise an evolving credit union environment
- Declining membership in small credit unions
- Growing threats to cybersecurity
- Adapting to technology-driven changes to the financial landscape
- Factoring the near-term economic outlook
- Managing interest rate risk and liquidity risk
- Continuing consolidation
Regarding the insurance fund, the agency said that an incident such as a significant credit union failure that drops the equity ratio below 1.0% “would result in a direct expense to credit unions through the impairment of the 1.0% capital deposit they contribute to the fund, which credit unions have recorded as an asset on their balance sheets.”
“Additionally, if the equity ratio falls below 1.20%, or is expected to within six months, the Federal Credit Union Act requires the NCUA Board to assess a premium on federally insured credit unions to restore the fund to at least 1.20% or adopt a fund restoration plan,” the report reminds. It notes that the fund, as of Dec. 31, 2020, was at 1.26% of equity to shares insured — 12 points below the “normal operating level” of the fund of 1.38%.
As for enhancing the exam program, the report states that in 2021 the agency will finalize deployment of the new MERIT system and transition new exams from AIRES to the new method. “This transition includes the agency’s primary examination platform as well as many business processes targeted to take advantage of MERIT’s configurable platform,” the report states. It also indicates that the agency will continue to develop its Enterprise Data Program, intended to “enhance how agency governs and reports its data.”
On building its workforce, the agency said it increasingly needs cybersecurity specialists and experts in areas including capital markets, commercial lending, consumer financial protection and payments systems. “The agency also has a large percentage of employees who have reached, or will soon reach, retirement age, including many in senior levels of management,” the report states. “Finding appropriate successors who can lead the agency and employees who have the requisite skills and expertise is essential to ensuring that the NCUA can continue to achieve its mission effectively.”
The report notes that, this year, it will use a new learning management system to “better enable access to on-demand training for all employees,” and will develop and execute training to support implementation of the new MERIT exam system and its multi-year leadership development strategy.
Also in the report, the agency states:
- Among its supervisory priorities in the wake the coronavirus crisis, it will work with state regulators and credit unions to identify operational challenges emerging from the impact of the pandemic;
- It will continue in 2021 working with six state regulators in piloting an alternating-year examination program for federally insured, state-chartered credit unions (FISCUs). After the pilot ends, the agency said, it and the states will assess how – and whether – the results can improve the exam program, particularly by improving coordination.
LINK:
NCUA Releases 2020 Annual Report
(March 19, 2021) Asset data as of March 31, 2020 will be used to determine the applicability of regulatory asset thresholds for such things as capital planning and stress testing at larger credit unions for the remainder of this year and all of next, under an interim final rule approved by the NCUA Board Thursday.
The new rule will affect about 10 large credit unions, NCUA said, including those with state charters. It is meant to mitigate the impact of the influx of savings to credit unions, particularly larger ones, during the coronavirus crisis. The savings surge has been fueled, at least in part, by federal stimulus payments (including the one just recently approved by Congress of $1,400 to individuals). Coupled with that surge, NCUA said, has been a slowdown in spending by consumers as they hunkered down for the economic downturn caused by the crisis, keeping share accounts higher.
“For FICUs (federally insured credit unions) just below $10 billion in assets, these factors have resulted in their balance sheets swelling by an average of about 14 percent, and in one case by more than 34 percent,” NCUA said. “In contrast, in 2019, FICUs with assets just below the $10 billion threshold had an average asset growth of only 9 percent.”
The agency asserted that, due to the surge in assets, many FICUs have been or will be pushed over the asset thresholds subjecting them to additional regulatory requirements, or supervision by the agency’s Office of National Examinations and Supervision (ONES), which mostly oversees larger credit unions. “Complying with these new or more stringent regulatory standards would impose additional transition and compliance costs on such FICUs that otherwise may not have become subject to these requirements at this time,” NCUA stated. “This interim final rule gives affected FICUs more time to either reduce their balance sheets, or to prepare for higher regulatory standards.”
NCUA also estimated that the balance sheet growth has not significantly increased the risk profile of the affected credit unions, although the agency reserves the authority to subject a credit union to ONES supervision or to designate it as a Tier I/II/III credit union depending on the circumstances surrounding the growth and the risks associated with the type or assets held or any additional activities undertaken by a credit union.
The interim final rule – approved unanimously by the board — takes effect upon publication in the Federal Register; a comment period of 60 days was also set for the rule.
In other action, the board approved (also unanimously) another interim final rule, that one updating its regulations for the Central Liquidity Facility (CLF). The changes grew out of the passage in December of the Consolidated Appropriations Act, 2021. That legislation extended several enhancements to the CLF (such as more flexible memberships) made in last year’s Coronavirus Aid, Relief, and Economic Security (CARES) Act. The new rule amends the NCUA’s CLF regulation to reflect these extensions. This rule also takes effect on publication in the Federal Register, and also will have a 60-day comment period.
LINK:
Interim final rule: Asset thresholds
Interim final rule: CLF conforming rules
(March 19, 2021) Payments totaling $368.7 million will be made by April 30 to about 2,000 credit unions that used to be members of three failed corporates, the NCUA Board was told Thursday, as the agency continues winding down the liquidation that began more than 10 years ago of the three institutions.
The board, meeting in its regular monthly meeting for March, was also told that there remains potential for future distributions to the former members of the corporate credit unions, which were U.S. Central, Members United and Southwest.
Capital holders of two other failed corporates – WesCorp and Constitution – should not expect payouts, the board was also told.
According to NCUA staff, those holding membership capital accounts (MCAs) in U.S. Central will receive a total of $150 million in the payout; $126.2 million will go to Members United MCA holders; and $96.5 million will go to Southwest MCA holders.
The payouts represent a partial recovery of the depleted capital at the failed corporates, which were seized by NCUA in 2009 following their failures. According to charts displayed in a staff briefing, the percentage of the recovered depleted capital is 8.9% for U.S. Central, 25.6% for Members United, and 22.9% for Southwest.
Credit union MCA holders are only paid after all senior priority claims have been fully paid or provided, NCUA noted.
The payments will be made to MCA holders that have claim certificates issued by the agency in 2010. At the time of liquidation of the corporates, NCUA said, there were 2,654 MCA holders in the three credit unions, 97% of which were credit unions. However, since 2010, a number of those credit unions have been merged into other credit unions, participated in purchases and acquisitions – and a few others have been liquidated – leaving about 2,000 MCA credit union holders, NCUA said.
The agency said it would notify payout recipients by letter of their individual distributions and other payment details. Distributions will be made via electronic funds transfer by April 30, the agency added.
LINK:
NCUA Guaranteed Notes Program and Asset Management Estate Update
(March 19, 2021) Saying it is concerned that some payments will be intercepted to cover such things as unpaid overdraft fees, the CFPB this week encouraged financial institutions (including credit unions) and debt collectors to allow the payments to reach consumers.
In a statement, CFPB Acting Director Dave Uejio said the bureau is “squarely focused” on addressing the impact of the coronavirus crisis on economically vulnerable consumers and is watching carefully the economic income payments (EIPs) to consumers authorized under the American Rescue Plan, adopted by Congress just last week. The EIPs were part of President Joe Biden’s plan to provide an economic stimulus to the country in the wake of the financial impact of the pandemic.
Uejio also noted he is staying in touch with state regulators and their efforts to protect consumer payments. He said he wants to better understand the effectiveness of those states’ efforts.
As for the payments themselves, Uejio said his agency is concerned that the funds will not reach consumers, and will instead be intercepted by financial institutions or debt collectors to cover overdraft fees, past-due debts, or other liabilities. “The Bureau will stay closely engaged on this issue as the COVID relief payment rollout continues.”
The CFPB acting director stated in the release that financial industry trade associations have told the bureau that their member institutions want to work with consumers struggling in the pandemic. “Many of these organizations have told us they have begun or soon will take proactive measures to help ensure that consumers can access the full value of their stimulus payments,” Uejio said. “If payments are seized, many financial institutions have pledged to promptly restore the funds to the people who should receive them.”
NASCUS maintains a website page outlining state wage garnishment guidance, established about a year ago with the first wave of stimulus payments under the CARES Act. The page lists the actions taken by states to shield payments from debt collectors and creditors.
NASCUS state wage garnishment guidance
Regulators and NASCUS staff meet via video conference for the 2021 National Meeting
(March 19, 2021) Two days of discussion and focus on key issues this week highlighted the 2021 National Meeting of state regulators, which featured a record turnout of state regulators from across the nation and held this week.
Meeting in a virtual session this year, the annual dialogue for state regulators only brings together state supervisors from around the country to take a close look at key issues, discuss common challenges, and exchange ideas in the NASCUS-sponsored event. The meeting is not open to the public; attendance, specific discussions and proceedings are for regulators only.
“State regulators came prepared to discuss and share ideas at this year’s event, as they do every year,” said NASCUS President and CEO Lucy Ito. “The virtual aspect of the meeting seemed to have little impact on the participation, as indicated by the record crowd of registrants. The key component of this annual gathering is the dialogue it generates among the state supervisors, particularly as they address common challenges and goals for the state credit union system. This year’s discussion, spanning more than seven hours including presentations, was both lively and thought-provoking.”
The Wednesday session of the event featured marijuana banking guidance (from the Washington Department of Financial Institutions), the future of payment systems, and the future of capital in credit unions. NASCUS’ Ito facilitated a look “around the states” to give the regulators an update from around the nation; Regulator Board Chairman Rose Conner opened the program.
The Thursday session featured sessions on climate change as a safety and soundness issue, and a “fireside chat” with NCUA Board Chairman Todd Harper.
Speakers at the event included:
- David Cotney, former Massachusetts Commissioner of Banks (2010-16), and now senior advisor for FS Vector, who addressed climate change;
- Steven M. Rothstein, managing director Ceres Accelerator for Sustainable Capital Markets (which focuses on reducing financial impact of the climate crisis) and who also presented on climate change;
- Mark Dixon, director of payments innovation for the New England Automated Clearing House (NEACH), who focused on payments systems;
- Mike Townsley, policy counsel and director of regulatory policy for CSBS (who also addressed payment systems and finch charter issues);
- Mark Debree, managing principal for Catalyst Strategic Solutions, which focuses on interest rate risk, liquidity risk, strategic planning and other key issues for credit unions (and who addressed capital issues in a session moderated by NASCUS Executive Vice President and General Counsel Brian Knight).
Presentations and other resources from the event are available to regulator members only at the link below.
LINK:
2021 National Meeting Resources (regulator members only)