(Jan. 7, 2022) Sarah Bloom Raskin, a former Maryland financial institution regulator who also served as a deputy Treasury secretary and member of the Federal Reserve Board, is under consideration for another stint at the central bank: as Federal Reserve Board vice chair for supervision. Washington news outlets this week were reporting that Raskin is under consideration for the post by President Biden. If confirmed, Raskin would be only the second occupant in post, succeed Randal Quarles (the first), who resigned late last year after his term in that role ended … Reports this week indicated that the Nebraska Department of Banking and Finance rejected the purchase of a Nebraska bank by an Iowa credit union. The agency said that GreenState Credit Union of North Liberty, Iowa, could not purchase the assets of Premier Bank, based on Omaha. According to the agency’s ruling, the bank did not carry its burden of proof to show “that there is express power under federal law for a national bank to sell substantially all of its assets,” at least in this case. Premier Bank is reportedly appealing the decision … The three big credit bureaus “failed to fully respond to consumers with errors,” a report released this week by the CFPB charged. The bureau said its report, which represented a new analysis, showed that in 2021, Equifax, Experian, and TransUnion together reported relief in response to less than 2% of covered complaints, down from nearly 25% of covered complaints in 2019. The report looks at errors in credit reports as recounted by consumers to the credit reporting agencies. According to CFPB, consumers submitted more than 700,000 complaints to the bureau regarding Equifax, Experian and TransUnion from January 2020 through September 2021. Those complaints, the bureau said, represented more than 50% of all complaints received by the agency for that period.
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(Clockwise from upper left: NASCUS’ Lucy Ito joins NASCUS Executive Vice President and General Counsel Brian Knight, and NCUA Office of Examination and Insurance Director Myra Toeppe in a discussion of key issues)
(Aug. 20, 2021) The surging Delta variant of the coronavirus is putting a damper on NCUA’s plan to resume on-site operations, including exams, the agency’s top supervisor told the NASCUS S3 conference this week.
According to NCUA Office of Examination and Insurance Director Myra Toeppe, the continued phasing-in of on-site operations depends on the virus variant. She indicated a timetable still needs to be determined. However, the agency is ready (and willing) to go into a credit union whenever it sees a risk to the insurance fund, she said.
“We’ll go in where we need to go in if we see a risk to the insurance fund; we have been clear on that,” Toeppe said during a Tuesday session of the conference. (She was sitting in on the session in place of NCUA Board Chairman Todd Harper, who was unable to attend.) “We do have problem case officers that are doing things. Our regional offices, if we need to be on site, they will get with the (NCUA) executive director to determine from an insurance perspective if we need to go in. We’ve actually had to do some conservatorships during this time. Those are the exception, not the rule.”
But Toeppe emphasized that the agency would move with caution in any event. “People matter,” she said.
The agency’s top examiner also offered a strong defense for NCUA’s call for third-party vendor exam authority. “We do need it,” Toeppe, a former savings and loan regulator, said. “When I first came over to NCUA, I was stunned we didn’t have third-party vendor exam authority. I was used to always having it.” She said her former agency was never accused of abusing the authority, “and it was never a problem.”
Toeppe said NCUA sees reliance “more and more and more” by credit unions on the use of vendors and third parties to help them in a number of areas. She cited data processing and lending as examples.
The agency executive asserted that use of third-party vendors can become a source of risk to the share insurance fund. “And that’s always my focus,” she said. “We want to be sure we aren’t exposing the insurance fund to undue risk. And that’s really where it comes from; it’s a risk perspective for NCUA.”
She added that if the agency secures the authority (which will take an act of Congress to do so), NCUA would use it cautiously. She disputed some reports that the agency would be “ramping up” such as by hiring 500 additional examiners. “I think we’d use (the authority) prudently, where needed, just exactly like the state supervisors have done,” she said. “Where it’s needed, when it’s needed when we see a risk– just like the state supervisors, they’ve used it prudently. The banking regulators use it prudently. I don’t think there would be any difference.
She said that using the authority, when needed, is necessary to avoid a regulatory blind spot. “From (the perspective of) managing the share insurance fund, that makes us very nervous. That’s one thing that keeps me up at night,” she said.
In other comments, Toeppe said:
- Cybersecurity is a persistent threat; the one risk that just doesn’t go away. “We have ebbs and flows of other risks, but cybersecurity just keeps coming,” she said. “It just doesn’t stop, it’s in everything. It’s the constant ‘come at you’ thing. It’s high level, persistent.”
- NCUA is not discouraging mergers among credit unions (as opposed to banking regulators with banks, under an executive order from President Joe Biden). “We don’t tell (credit unions) no you can’t merge, but we want to make sure they are doing the right thing.”
- She has no problem with credit unions buying banks, as long as the transaction is done well and the credit union has done its homework. “Everyone thinks we rubber stamp them,” she said, adding the agency does not. She said the transaction must make sense, and that the agency has be sure of the risk that the insurance fund is taking on with the transaction.
(June 18, 2021) Other new and proposed rules that should be coming up for action soon by the NCUA Board were also outlined in the spring 2021 regulatory agenda published recently by the agency (via the White House Office of Management and Budget (OMB)). Those include:
- A proposed rule to integrate an NCUA equivalent (the Complex Credit Union Leverage Ratio, CCULR) to the community bank leverage ratio (CBLR) into NCUA’s capital standards, perhaps as soon as next month. The CCULR is modeled on the bank ratio adopted by federal banking agencies in 2019, which removes requirements for calculating and reporting risk-based capital ratios for most banks with less than $10 billion in assets, more than 9% in risk-based capital, and that meet certain risk-based qualifying criteria. Banks meeting the criteria can “opt-in” to use the CBLR. NASCUS, in a comment letter last month, said the state system supported further development of the CCULR, noting that it would allow both the 2015 risk-based capital and subordinated debt rules to take effect.
- A final rule (as soon as September) updating the CAMEL exam rating system, including adding an “S” (for “sensitivity to market risk”). NASCUS filed comments on the proposal in early May, urging the agency to move “expeditiously” on adding the S component, which, NASCUS wrote, would better align NCUA with state credit union and federal banking regulators that have already made the move.
- A final rule (perhaps by the end of this summer) expanding CUSO lending activities. In its comment letter in March, NASCUS noted possible, additional reporting requirements for state credit unions if the proposal were made final. In some states, NASCUS pointed out, CUSOs owned by state credit unions already hold expanded lending power. The association noted, however, that the NCUA proposal could end up requiring additional reporting requirements that don’t today exist for SCUs. “NASCUS opposes extension of any additional reporting requirements to SCU CUSOs resulting from an expansion of FCU powers,” the association wrote.
- Revision of regulation prohibiting a federally insured credit union (FICU) from making golden parachute and indemnification payments to an institution-affiliated party under certain circumstances. According to the rule list, the proposed rule would improve the organization and clarity of the regulation and would include a section on merger-related financial arrangements. It also would amend the regulation to assist FICUs in the identification and processing of golden parachute payments. The proposal is scheduled by October or later.