(Jan. 28, 2022) Four new positions are being filled by the MA Division of Banks, the agency said this week. The MA openings include those for consumer protection examiner I (depository institutions); depository institution supervision manager; regional field manager of risk management examinations; and information technology examiner I. For details on each of the positions, see the link below … Reduction of “junk fees” charged by banks and financial companies is the aim of an initiative announced this week by CFPB. The bureau said its research has found areas where back-end fees (such as “resort fees” and “service fees”) obscure the “true cost” of a product and undermine a competitive market. Two examples the agency provided include more than $14 billion in “punitive” late fees charged by major credit card companies in 2019 and more than $15 billion in overdraft and non-sufficient funds (NSF) fees charged that same year. The agency announced a request for public comment for input that would help shape the agency’s rulemaking and “guidance agenda,” including future enforcement priorities … Diane Ellis, director of the division of insurance and research for the FDIC will leave the agency on May 31, the agency said this week, completing a 34-year career at the agency. She has served as director since 2013, when she was appointed to oversee the economic, banking, and policy research program and management of the agency’s Deposit Insurance Fund (DIF), the FDIC said … Effective Monday, Anthony Cappetta is the new president of the NCUA Central Liquidity Fund (CLF), the lender for credit unions that have unusual or unexpected liquidity shortfalls. Cappetta, a 30-year U.S. Army veteran, was named CLF vice president in 2019. He joined the agency in 2014 as director of the NCUA Guaranteed Notes division in the agency’s Office of Examination and Insurance. Before joining NCUA, the agency said, he served in leadership roles at several hedge funds and banks.
LINKS:
NASCUS Career/Job Postings webpage
Consumer Financial Protection Bureau Launches Initiative to Save Americans Billions in Junk Fees
FDIC Announces Retirement of Diane Ellis, Director of the Division of Insurance and Research
Anthony Cappetta Appointed President of the Central Liquidity Facility
(Jan. 28, 2022) While acknowledging that industry consolidation and regulation related to climate change are two risks NCUA should consider in the context of its five-year strategic plan, NASCUS wrote to the agency this week in part cautioning against over-regulation in both areas that might weaken services to members overall.
NASCUS made the points to the agency in a comment letter on the NCUA 2022-2026 draft strategic plan.
Regarding risk from industry consolidation, NASCUS told the agency that a measure of voluntary and strategic consolidation can strengthen the credit union system overall. However, the association said, too much regulation can be a burden that drives some credit unions to seek a merger. Such regulatory burden, NASCUS indicated, can weaken the dual chartering system particularly as federal rules preempt those of the states.
“As state autonomy is curbed by preemption, the credit union system becomes homogenized, eliminating possible alternatives to merger for overburdened credit unions,” NASCUS wrote. “Any regulations that are going to be preemptive must be precisely calibrated to avoid inappropriately hindering effective state supervision. Minimizing preemption of state regulatory and supervisory authority could materially mitigate some of the pressures that drive credit union mergers.”
On climate change, NASCUS urged the agency not to discourage service to entire communities or markets as NCUA works to deal with climate change-related effects on industries and on consumer preferences. In particular, NASCUS wrote, the agency should steer clear of suggestions that services to the agricultural sector should be de-risked.
“NASCUS has concerns that NCUA comments regarding climate change could easily be misconstrued as suggesting credit unions should de-risk agricultural communities and members,” NASCUS wrote.
“Depriving farming communities of local financial services and discouraging agricultural lending is not sound policy and runs contrary to NCUA’s self-stated second strategic goal of improving the financial well-being of individuals and communities through access to affordable and equitable financial products and services,” the association added. “In many cases, agricultural communities have limited access to financial institutions and fewer commercial and consumer credit choices. Encouraging credit unions to de-risk these communities would only further diminish their already limited options. In addition, for some small farms, the prospect of climate change is precisely the reason they need access to commercial credit to facilitate transition to climate-resistant crops.”
In other comments, NASCUS wrote:
- Under goal 1 (ensuring a safe, sound viable credit union system), NCUA should include qualifying language that acknowledges the possibility of reduced risk resulting from growth.
- Under goal 2 (improving financial well-being of members and their communities), supporting financial services for agriculturally based communities is consistent with the goal, and that that strengthening the dual chartering system will spur innovation, strengthen the credit union system, and benefit members. NASCUS also said it welcomed NCUA’s statement that it would streamline its new credit union chartering process. However, NASCUS also said the agency should bifurcate its charter application and share insurance application process to make it easier for prospective credit union founders to understand the state chartering and NCUA share insurance requirements.
- Under goal 3 (maximizing the agency’s performance), the agency should continue working with state regulators “to develop the supervision program of the future and to ensure examiner training is robust and timely.”
LINK:
NASCUS Comments on NCUA 2022-2026 Draft Strategic Plan (Docket No. NCUA-2021-0100)
(Jan. 28, 2022) NASCUS’ annual Member Reception at the CUNA Government Affairs Conference (GAC) is scheduled for March 1, from 5-7 p.m.; it is for NASCUS members only (and a guest).
The reception will be held at Marriott Marquis Hotel, in the University of the District of Columbia Room. (The hotel is right across the street from the GAC venue at the Washington Convention Center). RSVP’s are due by Feb. 22.
LINK:
2022 NASCUS Member Reception information (including RSVP instructions)
(Jan. 28, 2022) A list of “dozens of specialty reporting companies that collect and sell access to people’s data” was released Thursday by the CFPB. The data collected, the agency said, includes individuals’ finances, check-writing histories, or rental history records “often without their knowledge.”
The CFPB said that – unlike the three nationwide consumer reporting agencies (Equifax, TransUnion, and Experian), which allow consumers to check their credit reports for free once a week (at least through December) – many of the specialty companies charge consumers a fee to access the data.
According to the bureau, its list allows people to see which companies provide this information for free, as well as search for those that provide specialized reporting by specific markets, including employment, tenant, insurance, and medical. If a consumer uses the list, accesses their credit history, and finds information that appears to be inaccurate, the agency indicated, that person has “the right to file a dispute and the consumer reporting company is required to conduct a reasonable investigation,” the agency said.
LINK:
CFPB Identifies Consumer Reporting Companies the Public Can Hold Accountable
(Jan. 28, 2022) State chartered credit unions in Illinois will receive a fee credit of nearly $1.9 million from the state, based on regulatory fees collected in 2021 that exceeded state regulatory expenses, the Illinois Credit Union League (ICUL) said last week. That represents one of the largest fee credits ever, according to the ICUL.
The fee credit is based on legislation, sought by the league, that implemented a settlement of a case brought by the ICUL in 2004. Among other things, the settlement reduced the state’s Credit Union Fund margin that triggers a credit back to credit unions. According to the ICUL, the amount of each regulatory fee credit is based on the fee paid by individual credit unions as a proportion of the aggregate total of fees collected by the state.
LINK:
(Jan. 28, 2022) A vote by the full Senate is the next stop on the journey of the nomination of Todd Harper to be confirmed for another term on the NCUA Board as chairman. No date has been yet set for a vote.
The Senate Banking Committee voted 17-7 last week to recommend Harper’s confirmation to the full Senate. It was one of 12 votes that the committee took last week on nominations by President Joe Biden (D)
Harper joined the NCUA Board in 2019 to fill an unexpired term and was designated chairman in January 2021 by Biden, succeeding Rodney Hood (R). If confirmed, Harper would have a board term that continues through April 10, 2027. The current term of Vice Chairman Kyle Hauptman ends in August 2025; the current term of Board Member Rodney Hood in August 2023.
The Federal Credit Union Act generally provides that NCUA Board members may not be appointed to succeed themselves, but the act also notes that someone appointed to fill an unexpired term may be reappointed for a full six-year term.
As NCUA Board chairman, Harper serves on and is now also the chair of the FFIEC.
LINK:
Senate Banking and Housing Committee Votes on Key Biden Administration Nominees
(Jan. 28, 2022) Boards of federal credit unions (FCUs) would be required to “establish and adhere to” processes for succession planning under a proposal issued, on a 2-1 vote, by the NCUA Board Thursday.
The proposal only affects FCUs. NCUA noted that federally insured, state-chartered credit unions (FISCUs) must comply with any state-specific requirements pertaining to succession planning. “However, the Board encourages FISCU boards, to the extent compatible with state law, to undertake succession planning efforts to help ensure continued viability of their credit union,” NCUA said in the proposal.
In fact, the proposal’s summary notes that, although it would apply only to FCUs, “the Board’s purpose is to encourage and strengthen succession planning for all credit unions.”
The proposal also does not affect federally insured corporate credit unions, the agency noted. NCUA said its regulations (under 12 CFR part 704) already “adequately address succession planning” at the corporates.
According to the proposal, succession plans will help to ensure that the FCU has plans to fill key positions, such as officers of the board, management officials, executive committee members, supervisory committee members, and (if provided for in the bylaws) the members of the credit committee to provide continuity of operations.
“In addition, the proposed rule would require directors to be knowledgeable about the FCU’s succession plan,” the proposal states.
One of the reasons that the proposal was issued, according to the agency, is that credit union consolidation largely through mergers is being driven by lack of succession planning. “An NCUA analysis found that poor management succession planning was either a primary or secondary reason for almost a third (32 percent) of credit union consolidations,” the agency said.
At the same time, the agency said, another reason for a heightened focus on succession planning is the ongoing retirements of the “Baby Boomer” generation of individuals born between 1946 and 1964.
“According to some sources, approximately 10 percent of credit union chief executive officers were expected to retire between 2019 and 2021,” the agency asserted.
NCUA Board Member Rodney Hood voted against the proposal because, he said, the agency has “other tools in its toolbox” other than a regulation to help credit unions deal with succession planning. He suggested, for example, greater uses of webinars sponsored by the agency. Both Board Chairman Todd Harper and Vice Chairman Kyle Hauptman supported issuing the proposal for a 60-day comment period.
In other action, the board:
- Heard a briefing on the agency’s Central Liquidity Facility (CLF), including plans to increase credit union membership in the facility to “to better serve individual CUs, the Share Insurance Fund and the system overall.” The agency also noted that it continues to advocate for Congress restoring and making permanent the enhanced authorities provided to the CLF as part of the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act and extended (until the end of 2021) by Congress in early 2021. The enhancements are: Increasing the facility’s maximum legal borrowing authority; permitting temporary access for corporate credit unions, as agent members, to borrow for their own needs; providing greater flexibility and affordability to agent members to join and serve smaller groups of their covered institutions than their entire memberships; and providing the NCUA Board with more clarity and flexibility regarding the loans.
- Listened to a briefing on the agency’s supervisory priorities for 2022 (which echoed the letter sent to all federally insured credit unions the week before). However, the agency staff said regarding the current expected credit loss (CECL) accounting standard, which takes effect for credit unions next year, the agency will be providing training and guidance to credit unions as they adopt the new accounting model – including a spreadsheet to be released later this year. Additional training, the agency said, would be made available to credit unions on an as-needed basis.
- Heard an update on its final rule (approved by a board notation vote late last month) on adjusting the maximum amount of civil monetary penalty (CMP) amounts, as required by statute, a somewhat routine action that other federal financial institution regulators have already taken this month.
LINKS:
Proposed Rule, Part 701, Succession Planning.
Board Briefing, 2022 Supervisory Priorities
Board Briefing, Final Rule, Part 747, Statutory Inflation of Civil Monetary Penalties.
(Jan. 28, 2022) Best practices for requesting examination information from banks, credit unions and other federally supervised financial institutions, and a common authentication solution for secure access to the regulators’ supervision systems, were issued late last week by the Federal Financial Institutions Examination Council (FFIEC).
The exam council said the statement announcing the best practices and authentication solution “presents the results of the final phase of the Examination Modernization Project in which FFIEC members addressed the feedback provided by supervised entities regarding examination requests and authentication requirements for FFIEC members’ supervision systems.”
Principles for examination information requests, according to the exam council, include:
- Information requests should be risk-focused and relevant to the examination.
- Supervised institutions should be given sufficient time to produce new or additional requested information.
- Examiners should coordinate information requests among the examination team to avoid duplicative and/or redundant requests.
- Information requests should be made through the supervised institution’s designated regulatory examination point-of-contact, if applicable, to avoid placing burden on other institution staff.
- Information requests and supplemental information requests should be clearly articulated in writing.
Regarding the authentication solution, the statement asserted that a common approach will allow supervised institutions and the exam council’s member agencies to securely authenticate to supervision systems, while eliminating the need for multiple credentials to access regulator systems.
However, each regulator is given the flexibility to deploy the authentication solution as it deems fit, the statement indicated.
“The agreed-upon transition strategy provides each FFIEC agency the flexibility to implement common authentication as needed, at its own planned pace and as resources become available,” the exam council said. “As FFIEC members continue to align their technological capabilities where permissible and possible, additional opportunities for burden reduction will be evaluated.”
LINK:
(Jan. 28, 2022) Changes to the first quarter call report for federally insured credit unions will be highlighted during a 90-minute webinar set for Feb. 10 by NCUA, the agency announced this week.
More specifically, the webinar on the agency’s call report Form 5300 will include a look at new schedules for risk-based capital (RBC) and the Complex Credit Union Leverage Ratio (CCULR), both of which took effect at year’s start, the agency said.
Registration is open for the event. It is scheduled to begin at 2 p.m. and run for an hour and a half. Participants may submit questions during the presentation, or in advance (by emailing the questions to [email protected], with a email’s subject line of “Call Report Changes.” Technical questions about accessing the webinar should be sent to [email protected].
LINK: