(March 26, 2021) Rhoshunda Kelly is now the Mississippi commissioner of banking and finance, removing the “interim” from her title that she earned in an appointment announced last summer. Kelly has nearly 20 years as a bank regulator; she was named deputy commissioner in 2014. She has also served as a field examiner, review examiner and director of bank supervision. She holds a degree in business (banking and finance concentration) from Mississippi State University, and is a graduate of the school of banking at Louisiana State University where she is currently a faculty member. She is also an honor graduate of the American Bankers Association (ABA) Graduate Trust School.
In Alaska, James (“Jim”) McConnell has been appointed director of the Alaska Division of Banking and Securities, which regulates state depository and non-depository financial institutions, administers and enforces Alaska’s financial services laws, and provides information for consumers, investors, entrepreneurs, and regulated industries. McConnell has 20 years’ experience in commercial banking and 25 years as an independent loan consultant, project developer and “contract banker” throughout the state. He has experience in consumer and residential, commercial real estate, and project development lending, as well as troubled debt restructuring. His areas of specialization include consumer and residential lending, commercial real estate and project development lending, troubled debt restructures, infrastructure lending/review, and industrial development.
Finally, so long and thanks to New Mexico’s David Gee, who is retiring April 2, for his long-time service as Credit Union Industry Manager of the state’s Financial Institutions Division.
(March 26, 2021) Today is the effective date of NCUA’s new rule on joint ownership share accounts, which essentially permits the use of records other than signed membership cards or account signature cards as evidence that a jointly owned account qualifies for share insurance coverage apart from individually owned accounts. The final rule was approved by the NCUA Board at its February meeting … A new version (for this Congress) of the “Secure and Fair Enforcement Banking Act” (SAFE Banking Act, H.R. 1996) – which aims to provide protections for financial institutions serving cannabis-based businesses where it is legal – was introduced March 18 in the House by Reps. Ed Perlmutter (D-Colo.), Nydia Velazquez (D-N.Y.), Steve Stivers (R-Ohio) and Warren Davidson (R-Ohio). The legislation is similar to bills introduced (and which passed the House in 2019), but yet to become law, in previous Congresses … A Senate vote Thursday sent a bill extending the Paycheck Protection Program (PPP) to May 31 to President Joe Biden for his signature; the bill had previously been approved by the House. The Paycheck Protection Program Extension Act (H.R. 1799) would allow loan applications to the program—currently set to expire on March 31—for two more months and give the Small Business Administration (SBA) 30 additional days to process loan applications made by the new May 31 deadline … An April 14 webinar on BSA/AML compliance has been scheduled by NCUA, to provide updates on recently issued BSA statements, actions for managing high-risk accounts and highlights of the 2020 Anti-Money Laundering Act. The webinar is slated to start at 2 p.m. ET and last about an hour. (NASCUS and CUNA jointly host an annual BSA/AML compliance conference, scheduled again this year for the coming fall.) … 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.
LINKS:
Joint Ownership Share Accounts (final rule)
NASCUS summary: Joint Ownership Share Accounts (members only)
PPP Extension Act of 2021 (H.R. 1799)
Registration Now Open for April 14 Webinar on BSA/AML Compliance
Registration: Pierre Jay Awards April 22 presentations, registration
(March 26, 2021) Dates and details for three events upcoming in May and June were unveiled by NASCUS this week, focusing on human resources issues and marijuana and hemp developments.
On May 19 and 26, NASCUS sponsors its HR webinar series, featuring Diane Pape Reed, president of CUDoctor, a full-service consultancy and training company. She is also co-founder of the annual CUNA Human Resources Compliance Certification School and was VP of Sales and Administration for a mid-sized Credit Union for 10+ years.
In the May 19 session of the HR series, Reed will focus on building team trust and managing remote employees. In the May 26 session, she will highlight common remote management missteps and how managers can avoid them.
Both virtual sessions are one-hour long and begin at 2 p.m. ET.
On June 9-11, NASCUS sponsors its Marijuana and Hemp eSchool, a three-day virtual school that looks at recent regulatory updates, how businesses are evolving in the sector, what financial institutions should be considering in developing their own cannabis and hemp banking programs, and business payments (among other things).
The e-school is led by Deirdra O’Gorman, founder and principal of DX Consulting. Since 2015, she has also served as CEO of The Fourth Corner Credit Union (4CCU), the first credit union chartered in more than 10 years in the state of Colorado.
For information on registration and complete agendas for the programs, see the links below.
LINKS:
HR Webinar series: Managing Remotely – Time to De-Stress and Establish Trust (May 19)
(March 26, 2021) More than a half million complaints – up 54% from the previous year – were fielded in 2020 by the CFPB, reflecting the financial impact of the coronavirus crisis, the agency said this week. In a release, the bureau said it handled 542,300 complaints last year, with well more than half of those (58%) emanating from credit and consumer reporting objections. Debt collection (15%), credit card (7%), checking or savings (6%), and mortgage complaints (5%) were other major areas of complaints, the agency said.
Starting in April 2020, the bureau said, the month after the financial impact of the coronavirus crisis became apparent, consumers began to submit more than 3,000 complaints each month mentioning “coronavirus” keywords. Ultimately, by year’s end, more than 32,000 complaints mentioning the effects of the COVID-19 disease (or related keywords) were submitted last year, the CFPB said.
Complaints received about consumer and credit reporting claiming inaccurate information on their reports, the bureau said, outdistanced the total from the year before. The CFPB said consumers mostly submitted the complaints about Equifax, Experian, and TransUnion, the three largest Nationwide Credit Reporting Agencies (NCRAs).
The reporting companies, according to CFPB, provided closure responses noting that a dispute would be filed on the consumer’s behalf, but otherwise failed to address the issues consumers raise in their complaints. The bureau also said the NCRAs mentioned suspected third-party activity in their responses to consumers, but did not detail steps taken to authenticate consumers or to address the issues raised in their complaints.
“While the NCRAs typically provided substantive and comparatively detailed responses to the majority of complaints in prior years—including providing details of dispute investigations and outlining steps taken for consumers that are attempting to address identity theft—this year, the CFPB observed that the NCRAs stopped providing complete and accurate responses in many of these complaints,” the agency said.
Later this year, the agency said, it will release a separate report on complaints submitted about the NCRAs that are related to incomplete or inaccurate information on the consumers’ credit reports. The report, CFPB said, will be in keeping with reporting requirements under the Fair Credit Reporting Act (FCRA).
LINK:
CFPB 2020 Consumer Response annual report
(March 26, 2021) Two new Federal Reserve committees will focus on the impact of climate change on financial stability, Fed Board Gov. Lael Brainard said this week, as the agency finds it “increasingly clear” that climate change could have “important implications” for the central bank in carrying out its responsibilities.
Climate change and its impact on credit union regulation was a key topic at last week’s virtual National Meeting of state regulators, sponsored by NASCUS. Brainard made her remarks in a speech this week to a New York-based group focusing on addressing climate change and other issues.
Brainard said the new Supervision Climate Committee (SCC) will address the microprudential side by strengthening the agency’s ability to consider climate change risk and develop an “appropriate program to ensure the resilience of our supervised firms” to the risks posed.
The second committee – the Financial Stability Climate Committee (FSCC) – will, Brainard said, identify, assess, and address climate-related risks to financial stability through a macroprudential approach (one that considers the potential for “complex interactions across the financial system,” she said). In that regard, she added, it will complement the work of the SCC.
“Microprudential and macroprudential objectives are often aligned,” she said. “For example, consistent disclosures are important not only to enable individual financial firms to measure and manage their exposure to climate-related financial risks, but also to support financial stability more broadly by helping the market to accurately price that risk. Given the importance of consistent, comparable, and reliable disclosures to financial stability and prudential objectives, mandatory disclosures are ultimately likely to be important.”
She also said the Fed is investing in new research, data, and modeling tools to support the work of the committees. “In light of the high uncertainty inherent in estimating climate-related shocks, scenario analysis may be a helpful tool to assess the effects on the financial system under a wide range of assumptions,” Brainard said. “Climate scenario analysis identifies climate-related physical and transition risk factors facing financial firms, formulates appropriate stresses of those risk factors under different scenarios, and measures their effects on financial intermediaries and the financial system.”
LINK:
FRB Gov. Lael Brainard: “Financial Stability Implications of Climate Change”
(March 26, 2021) The state system supports raising the asset threshold to $500 million for defining a credit union as “complex” under risk-based net worth (RBNW) requirements, citing the benefit the move would accrue for both credit unions and their members.
In a comment letter filed this week with NCUA, NASCUS wrote that it concurred with NCUA over raising the threshold from $50 million to $500 million, stating that the action would not result in a material increase in risk the National Credit Union Share Insurance Fund (NCUSIF). Beyond that, NASCUS wrote, the benefit of the regulatory relief provided by the threshold change for both credit unions and their members “outweighs any nominal increase in risk.”
“NCUA provides a compelling case in the Supplemental Material for raising the asset threshold,” NASCUS wrote. “We note the fact that the proposed change would provide relief to 1,737 federally insured credit unions (FICUs) while maintaining coverage of over 81% of assets held by FICUs.”
In January, the NCUA Board proposed (on a vote of 2-1, with now-Chairman Todd Harper dissenting) to propose the rule raising the asset threshold. The board noted then the difficulties posed by the ongoing COVID-19 pandemic, and said the proposal is aimed at providing a measure of regulatory relief to further encourage credit unions to ensure access to credit and other services.
NASCUS acknowledged in its comment letter that while an overwhelming majority of credit union assets would still be covered under the RBNW provisions, more modestly sized credit unions would be able to refocus on responding to the financial impact of the pandemic and serving their membership.
Additionally, NASCUS wrote, it makes sense to cohere the current threshold now to the threshold taking effect Jan. 1 under the 2015 Risk-Based Capital Rule (2015 RBC Final Rule).
“The question before us is what regulatory and supervisory sense is there for maintaining a $50 million threshold for the remaining nine months of 2021 given the limited risk mitigation utility maintaining a low threshold provides? We see little benefit to maintaining the existing threshold as an interim benchmark,” NASCUS stated.
(March 26, 2021) The Federal Reserve’s top supervisor this week made it clear that the future of LIBOR as a reference rate for such products as adjustable-rate mortgages will be sealed after June 2023.
In remarks this week to a symposium on reference rates sponsored by the Federal Reserve Bank of New York’s Alternative Reference Rates Committee (ARRC), Federal Reserve Board Vice Chair for Supervision Randal Quarles said recent statements about the discontinuation of the London Interbank Offer Rate (LIBOR) are definitive. “There is no scenario” in which LIBOR (London Interbank Offer Rate) will continue past mid-year 2023, when U.S. dollar (USD) LIBOR will no longer be published, Quarles said.
The group that publishes LIBOR has already announced that it can no longer guarantee the rate after the end of this year. (The June 2023 date refers to outstanding contracts that use the rate; after that date, the administrator of LIBOR – the ICW Benchmark Administration (IBA) has said it will no longer publish overnight, one-month, three-month, six-month, or one-year USD LIBOR).
Additionally, the federal banking regulators in November issued guidance to their supervised entities that, after the end of this year, “continued use of LIBOR in new contracts would create safety and soundness risks, and we will examine bank practices accordingly.” NCUA has not issued similar guidance, although it did join an FFIEC statement last summer urging financial institutions to continue their efforts to transition to alternative reference rates. In addition, the agency’s 2021 “supervisory priorities” note the agency continues to encourage credit unions to prepare for LIBOR’s demise by year’s end.
Also this week, the New York state legislature passed legislation that is aimed at minimizing legal uncertainty and adverse economic effects for LIBOR contracts, a side effect of the discontinuation of the reference rate. According to the ARRC, the legislation affects LIBOR contracts that mature after June 2023, including those that have no effective means to replace LIBOR upon its cessation. The legislation is significant to the phase-out of LIBOR since New York law governs many of the financial products and agreements referencing LIBOR, according to the ARRC.