(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 12, 2021) Two new summaries of final rules on corporate credit union purchase of subordinated debt, and on joint ownership share accounts, were posted by NASCUS this week.
Both are available to members only.
In October the NCUA Board approved a new corporate credit union rule that, as proposed, included a section on corporate purchase of credit union subordinated debt. However, the portion on purchase of subordinated debt was left out of the final rule. The board said then it would adopt that portion of the rule once it had finalized the subordinated debt final rule. Since that rule was adopted in December, the board then finalized late last month the subordinated debt portion of the corporate rule. NASCUS supported the provision.
The final rule takes effect Jan. 1.
The joint ownership share accounts final rule was approved by the NCUA Board at its Feb. 18 meeting. The rule, which takes effect March 26, would allow account records information other than a signature card to support the insured status of a joint ownership share account in a credit union. The final rule provides federally insured credit unions with an alternative method to satisfy the membership card or account signature card requirement. NASCUS supported the proposal.
LINKS:
NASCUS summary: Corporate Credit Unions (purchase of subordinated debt) (members only)
NASCUS summary: Joint Ownership Share Accounts (members only)
(Feb. 19, 2021) In other action Thursday, the NCUA Board unanimously approved a final rule on joint ownership share accounts, and heard a report on the new Emergency Capital Investment Program (EICP) established for financial institutions under legislation late last year.
The final rule on joint ownership share accounts, proposed by the board last May, would allow account records information other than a signature card to support the insured status of a joint ownership share account in a credit union. The final rule provides federally insured credit unions with an alternative method to satisfy the membership card or account signature card requirement, the agency said. “For example, under the final rule, the signature card requirement can be satisfied by the credit union having issued a mechanism for accessing the account, such as a debit card, to each co-owner or evidence of usage of the joint share account by each co-owner,” NCUA said.
NASCUS, in its comment supporting the proposal last year, wrote that providing federally insured credit unions flexibility in satisfying the signature card requirement with information in joint account records acknowledges that account opening practices have evolved substantially over the last nearly 50 years. NASCUS agreed with the proposal’s overall approach – and offered a modest change: replacing the phrase “such as” with “including, but not limited to.” Doing so, NASCUS wrote, would allow NCUA to “make clear on the face of the regulation that other evidence in the account records may be sufficient to establish qualifying joint ownership of a share account.”
Harper was commended by NASCUS’ Lucy Ito for considering state laws and rules in the agency’s deliberations over the final rule. The rule takes effect 30 days after publication in the Federal Register.
The board also heard a report on the new EICP, which was established by the Consolidated Appropriations Act, 2021, (adopted late last year) to encourage low- and moderate-income community financial institutions (such as federally insured CDFIs or MDIs that are in sound financial condition) to augment their efforts to support small businesses and consumers in their communities. The program contains $9 billion appropriated to Treasury to fund the program. For credit unions to participate, they may only issue subordinated debt to Treasury with a specified aggregate principal amount.
Eligible state-chartered credit unions must apply separately to (a) Treasury for access to ECIP funding and to (b) either their state regulator (state charters) or to NCUA (federal charters) for secondary capital approval.
LINKS:
Final Rule, Part 745, Joint Ownership Share Accounts
Board Briefing, Consolidated Appropriations Act, 2021, Emergency Capital Investment Program
(Feb. 12, 2021) A final rule on what records can be used to support the insured status of a joint ownership share account is slated for action during an open meeting to be held virtually Thursday (Feb. 18) by the NCUA Board.
Also on the agenda for the meeting, which gets underway at 10 a.m. ET (and which will be live streamed via the Internet): a quarterly report on the National Credit Union Share Insurance Fund (NCUSIF) and a briefing for the board on the Consolidated Appropriations Act, 2021, and the Emergency Capital Investment Program (ECIP) created under that statute.
The proposal on joint ownership share accounts, issued by the board last May, would allow account records information other than a signature card support the insured status of a joint ownership share account in a credit union. The aim of the proposal – which mirrors a rule adopted in 2019 by the FDIC Board – is aimed at facilitating prompt payment of share insurance in the event of a federally insured credit union’s failure “by explicitly providing alternative methods that the NCUA could use to determine the owners of joint accounts, consistent with the NCUA’s statutory authority,” the proposed rule summary stated.
NASCUS, in its comment supporting the proposal, wrote that providing federally insured credit unions flexibility in satisfying the signature card requirement with information in joint account records acknowledges that account opening practices have evolved substantially over the last nearly 50 years. NASCUS agreed with the proposal’s overall approach – and offered a modest change: replacing the phrase “such as” with “including, but not limited to.” Doing so, NASCUS wrote, would allow NCUA to “make clear on the face of the regulation that other evidence in the account records may be sufficient to establish qualifying joint ownership of a share account.”
The insurance fund report slated for next week is expected to show the fund’s equity ratio as of Dec. 31, 2020. Last September, the agency reported a 13-basis-points (bp) decline in the ratio to 1.22% during the six months ending June 30. That ratio was 16 bp lower than the fund’s “normal operating level” (target level) of 1.38% and within 2 bp of the level (1.2%) below which the agency would be required to deploy a restoration plan.
The drop in the ratio in the first half of last year was attributed to rapid share growth amid the COVID-19 pandemic. Agency staff said during the September open board meeting that the fund equity ratio was expected to rise to 1.32% by year-end 2020, following credit unions’ adjustments in their 1% NCUSIF capitalization deposit.