(Jan. 14, 2022) And, for regulators, don’t forget that April 12-14 are the dates for the National Regulator Meeting to be held in San Diego.
Exclusively open to state regulators only, the three-day meeting offers a forum for open dialogue on best practices, discussions around common challenges, and a platform where state regulators may exchange ideas with their colleagues from across the country.
Last year’s session was held virtually, but still attracted a record number of state regulators. Among the session topics addressed: climate change and the ramifications for regulators, payments systems, and capital issues.
Held at the Courtyard San Diego Downtown hotel, the Tuesday through Thursday event begins at 8 a.m. each day, ending at 4:30 on the first two days and at 11 a.m. on day three.
More details will be coming soon; see the link below to follow the latest developments.
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2022 National Regulator Meeting, April 12-14, San Diego
(Jan. 14, 2022) Measuring the effectiveness of digital identity proofing – the process used to collect, validate and verify information about a person – is the aim of a “tech sprint” announced jointly this week by the FDIC and FinCEN.
The two agencies said they have several goals in the effort. Those include: increasing efficiency and account security, reducing fraud and other forms of identity-related crime (including money laundering and terrorist financing), and fostering “customer confidence in the digital banking environment.”
“Digital identity proofing is a foundational element to enable digital financial services to function properly,” the agencies said in their release. “This element is challenged by the proliferation of compromised personally identifiable information (PII), the increasing use of synthetic identities, and the presence of multiple, varied approaches for identity proofing.”
The FDIC and FinCEN said the tech sprint will ask participants to answer the challenge question of: “What is a scalable, cost-efficient, risk-based solution to measure the effectiveness of digital identity proofing to ensure that individuals who remotely (i.e., not in person) present themselves for financial activities are who they claim to be?”
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Joint Release/FDIC and FinCEN Launch Digital Identity Tech Sprint
(Jan. 14, 2022) Changes in risk-based capital requirements for federally insured credit unions have triggered changes in call reports, effective for the first quarter of 2022, NCUA said this week.
In a release, the agency said it is revising its call report (Form 5300) starting with the March 2022 reporting cycle. The changes were spurred by the adoption last month of the new Complex Credit Union Leverage Ratio (CCULR) rule, which took effect Jan. 1.
The agency said the revised call report is part of its 2016 “Call Report Modernization Initiative,” which it added “examined how changes to the agency’s data collection practices could enhance the value of the data NCUA collects from credit unions for offsite monitoring and pre-examination planning as well as reduce the reporting burden for credit unions where appropriate.”
The CCULR is aimed at creating a framework which allows “complex” credit unions (those with more than $500 million in assets) opting in to maintain the CCULR instead of risk-based capital (which also took effect Jan. 1). Under CCULR, a complex credit union may qualify to opt in to the CCULR framework if it has a minimum net worth ratio of 9%. The minimum requirement for a classification of “well capitalized” under the CCULR framework – modeled on federal banking agencies’ community bank leverage ratio (CBLR) – is higher than the 7% minimum ratio required under prompt corrective action (PCA) but lower than the 10% required under risk-based capital.
The CCULR final rule also amends provisions of the 2015 risk-based capital final rule. NCUA has noted that, based on June 30, 2021, call report data, about 70% of complex credit unions (down from 90% pre-pandemic) qualify to use the CCULR framework and would be well capitalized under a 9% calibration.
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(Jan. 14, 2022) Entities using a “multitude” of fictitious names and websites – including as a credit union — are purporting to offer banking services in the state of Florida, according to a report circulated in an alert this week by the OCC.
Specifically, the OCC alert names two entities – one calling itself a bank, the other a credit union. The Florida Office of Financial Regulation (FLOFR), the federal agency said, reported that both groups have been using foreign-hosted websites designed to obtain information to likely perpetrate fraud, including identity theft.
The oddball thing about the phony credit union is that it uses the initials “N.A.” (for national association) in its name – the moniker assigned to bank charters from the OCC.
“None of these entities are authorized to conduct banking business in the United States, and websites appear to spoof a legitimate financial institution,” the OCC stated.
The OCC identified the phony institutions as:
- Ledge Community Credit Union, N.A., purports to conduct banking business from addresses throughout Florida, including Fleming Island and Jacksonville which correspond to a legitimate Florida-chartered financial institution. Another known name used by the group includes Flygate Financial (www.flygatefinancial.com).
- Fedro Asset Bank, N.A., purports to conduct banking business from addresses in Jacksonville, Orlando, Gainesville, and Tampa.
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(Jan. 14, 2022) Aug. 15-17 are the dates for the NASCUS State System Summit (S3), set for Huntington Beach, Calif., the association announced this week.
The yearly event – the flagship event for NASCUS and the annual conference for the state credit union system – is a unique event which brings together credit union regulators and practitioners for a mutual exchange of dialog, problem-solving, and shared resources within the system during three days of learning and networking with friends, colleagues, and industry leaders from across the country.
Past events have included addresses and presentations from NCUA Board members, wide-ranging discussions on current and emerging issues. Those have included: employment trends at credit unions, crisis communications, CBD and hemp banking, legislative challenges and opportunities, and much more.
A hallmark of the S3 each year is the interaction among participants and dialog. The intimate setting and design of the program offers attendees to share ideas, express views and seek answers to their questions in a convivial atmosphere.
For more information and developments about the program over the coming weeks, watch the NASCUS website.
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NASCUS State System Summit (S3), Aug. 15-17, Huntingon Beach, Calif.
(Jan. 14, 2022) Clarifying processes available for federal regulators to consider temporary waiver relief for appraisals by making “a clear distinction” between a request by a state appraiser regulatory agency and via petition by others is the aim of a rule proposed this week by the appraisal subcommittee of the FFIEC.
The appraisal subcommittee (ASC) said the reason behind the distinction is in federal law. According to the proposal published in the Federal Register, the ASC may, under the law, grant a temporary waiver only when the ASC or a state appraiser regulatory agency has made the statutorily required written determination with two parts. Those parts are: There is a scarcity of certified or licensed appraisers to perform appraisals in connection with federally related transactions (FRTs) in a state, or in any geographical political subdivision of a State; and such scarcity is leading to significant delays in the performance of such appraisals for FRTs.
“Accordingly, the proposed rules seek to clarify the procedural differences in processing a Request for Temporary Waiver accompanied by a written determination as compared to a Petition requesting the ASC exercise its discretion to initiate a temporary waiver proceeding,” the proposal states.
The proposal, the ASC said, clarifies who can file a request for a temporary waiver, what a request for the waiver should contain; ASC review of a request for temporary waiver for purposes of determining sufficiency of the document’s content and receipt by the ASC; and what is required in the event a request for temporary waiver is not deemed to be received, and thereby is either denied or referred back to the state appraisal agency.
For petitions, the ASC said the proposal clarifies: Who can file a petition requesting that the ASC exercise its discretionary authority to issue an order (thereby initiating a temporary waiver proceeding); what a petition should contain; the need to forward a copy of a petition to the state appraisal agency of the affected state; what the ASC may review for purposes of determining whether the petition may be processed for further action; what is required in the event a petition does not meet the requirements of its Contents of a Petition and thereby is either denied or referred back to the petitioner; and what further action may be taken.
The proposal would also expand the timeframe for an ASC determination of a temporary waiver (or waiver request) to 90 days from the current 45. It also clarifies the distinction between mandatory waiver termination versus discretionary waiver termination.
Comments are due on the proposal on March 14 (60 days).
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Appraisal Subcommittee; Appraiser Regulation; Temporary Waiver Requests
(Jan. 14, 2022) A reminder to debt collectors of their obligations when collecting medical debts to comply with federal prohibitions on misrepresentations and unfair practices was issued Thursday by the CFPB.
The bureau said its Compliance Bulletin noted the Fair Debt Collection Practices Act’s (FDCPA) prohibition on misrepresentations and unfair practices, including when collecting medical debts covered by the No Surprises Act (NSA). The bulletin also reminds consumer reporting agencies and information furnishers to comply with the Fair Credit Reporting Act’s (FCRA) accuracy and dispute resolution requirements, including when furnishing information about or reporting medical debts covered by the NSA.
Enacted last year, the NSA is aimed at protecting people covered under group and individual health plans from facing surprise medical bills when they receive most emergency services, non-emergency services from out-of-network providers at in-network facilities and services from out-of-network air ambulance service providers, among others.
The bulletin advises credit bureaus that the accuracy and dispute obligations imposed by the FCRA apply with respect to debts stemming from charges that exceed the amount permitted by the NSA.
“The CFPB will investigate claims and take action against companies that attempt to collect or report or furnish consumer information about debts stemming from charges that exceed the amounts permitted under the NSA,” the bulletin states.
The bulletin also includes several other reminders to debt collectors, information furnishers and credit bureaus:
- Consumer financial protection law prohibits debt collectors from misrepresenting the character, amount, or legal status of any debt.
- Furnishers of information to debt collectors must have reasonable written policies and procedures regarding the accuracy and integrity of consumer information provided to credit bureaus.
- The accuracy and dispute obligations imposed by federal consumer financial protection law apply with respect to debts stemming from charges that exceed the amount permitted by the NSA.
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CFPB Issues Bulletin to Prevent Unlawful Medical Debt Collection and Credit Reporting
(Jan. 14, 2022) There will soon be three vacancies on the governing board of the nation’s central bank, as the current vice chair resigned, effective today (Jan. 14). Citing only the fact that his term as Federal Reserve Board member expires at the end of the month, Vice Chair Richard Clarida tendered his resignation to the White House from the agency leadership. His resignation will leave three empty seats on the seven-member board. Also empty: the role filled by a sitting governor as vice chair for supervision (vacant since Randal Quarles resigned last month). Lael Brainard has been nominated to replace Clarida as board vice chair; a confirmation hearing was held for her Thursday. If confirmed, her term in that role would run to 2026, the same year her Fed board chair term ends … Meanwhile, in his own confirmation hearing for a reappointment (for a four-year term) as Fed chair, Jerome H. (“Jay”) Powell said that, if confirmed, the Fed “will remain vigilant about new and emerging threats” to financial stability. He also said the agency, while he has been chair, intensified its focus and supervisory efforts on evolving threats such as climate change and cyberattacks, and improved public access to instant payments.
Ensuring the state charter remains competitive with not only the federal charter, but other depository charters and nondepository entities known as fintechs is a priority for new NASCUS President and CEO Brian Knight, he told trade newspaper American Banker this week.
In comments published Wednesday, Knight said restoring a healthy dual chartering system will lead to a balanced framework between state and federal credit unions. “All credit unions benefit from the healthy competition between charters to innovate and enhance the value of the charter,” he said.
He said NASCUS will advocate for regulation and supervision that enforces safety and soundness while also recognizing technological advancements in the financial services ecosystem.
Knight became NASCUS leader on Jan. 1, succeeding Lucy Ito who retired after seven years in the role. An attorney, Knight has served the state credit union system since 1998; he was most recently executive vice president and general counsel.
The NASCUS leader told the publication that a challenge for state-chartered credit unions is NCUA serves as both insurer and charterer for federal credit unions. He asserted that dual role can “muddy the distinction” between supervising safety and soundness and regulating a charter. That can lead to homogenization among the charters which, he said, weakens the overall credit union system.
That can be manifested, he told the publication, through federal examiners misapplying federal credit union rules to a state charter on an insurance review, which can lead to a form of unnecessary preemption of state authority, he said.
“A healthy dual chartering system is not possible when state innovation is overly constrained by federal preemption,” Knight said. “We need to carefully consider what NCUA rules applicable to state charters unduly preempt state authority and weaken the dual chartering system.”
In any event, the NASCUS leader said the state system’s relationship with NCUA has been on a “positive trajectory that has benefitted the entire system.” He said he anticipates that continuing in 2022.
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(Jan. 14, 2022) More than two more weeks – to Jan. 31 – have been added for federally insured credit unions (FICUs) to complete and submit the voluntary Credit Union Diversity Self-Assessment by NCUA, the agency said this week. It also issued a “letter to credit unions” Thursday calling attention to the extension.
NCUA said it had extended the deadline for FICUs to complete and submit the assessments from Jan. 15 to month’s end. The agency gave no reason for the extension, other than to give FICUs “more time.”
According to NCUA, the assessment is a tool designed to help credit unions evaluate and advance their diversity policies and practices. The agency said credit unions can voluntarily use the online tool to create a baseline for action, such as making the commitment to develop new products and services aimed at addressing the needs of communities of color, increasing investment in underserved areas, or improving community marketing and outreach.
“The voluntary self-assessment is not part of the examination process,” the agency’s letter states. “Completing an assessment will not impact your CAMELS rating. There are many benefits in confidentially sharing your diversity, equity, and inclusion journey with the NCUA, but it will not be used in the supervisory process.”
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