(Feb. 19, 2021) Four new summaries have been posted by NASCUS, looking at recent actions from NCUA, which include: two regulatory alerts, a final rule on supervisory guidance, and (along with other federal regulators) answers to questions about anti-money laundering activities.
All four of the summaries are available to members only.
The summaries on regulatory alerts from NCUA look at two issued earlier this month: the first on 2021 threshold adjustments under Regs C, Z and V; the second on submission of 2020 Home Mortgage Disclosure Act (HMDA) data. The first alert (21-RA-02) notes that, in January, the bureau published annual adjustments for exemption thresholds under the Home Mortgage Disclosure Act (HMDA, Regulation C) and the Truth in Lending Act (TILA, Regulation Z). The asset-size thresholds, the alert points out, exempt some credit unions from data collection under Regulation C and from escrow account requirements for higher-priced mortgage loans and specific qualified mortgages under Regulation Z.
The alert also notes that the CFPB published an annual adjustment to the maximum amount consumer reporting agencies may charge consumers for making a file disclosure to a consumer under Regulation V.
The second alert (21-RA-03) reminds credit unions with $47 million or more in assets that they have until March 1 to file reports on home mortgage loan applications made last year under HMDA (as implemented by the CFPB’s Reg C). There are some limiting provisions for reporting under the rule, the agency pointed out in the alert. For example, the closed-end mortgage loan threshold increased from 25 to 100 effective July 1, 2020. “Credit unions that originated fewer than 100 covered closed-end mortgage loans in 2018 or 2019 are not required to report any closed-end mortgage loan information for 2020,” the agency wrote, noting that Section 1003.3(c) of Regulation C lists excluded (not covered) transactions.
The third summary from NASCUS looks at the agency’s final rule on supervisory guidance. Issued early this month. Under the rule, aimed at clarifying and codifying the role of supervisory guidance, the meaning of “supervisory guidance” is clarified as meaning, essentially, it doesn’t have the force of law. As finalized, it codifies an interagency statement issued by NCUA and other federal financial institution regulators in September 2018.
The final summary from NASCUS this week outlines “frequently asked questions” (FAQs) about suspicious activity reporting and other anti-money laundering considerations released by NCUA, Treasury’s Financial Crimes Enforcement Network (FinCEN) and federal banking agencies. According to the agencies, the FAQs clarify the regulatory requirements related to suspicious activity reporting to assist credit unions and other financial institutions with their compliance obligations. The FAQs also enable financial institutions to focus resources on activities that produce the greatest value to law enforcement agencies and other government users of Bank Secrecy Act (BSA) reporting, the agencies said.
NASCUS Summary: Final Rule Summary: Role of Supervisory Guidance (Part 791, Subpart D) (member only)
(Jan. 22, 2021) A new rule codifying that supervisory guidance does not have the force of law, and that enforcement actions are not based on the guidance, was finalized Tuesday by the CFPB, NCUA and two of the three federal banking agencies.
The rule codifies a 2018 interagency statement on the role of supervisory guidance that was intended to clarify the differences between regulations and guidance. The final rule also states that the statement is binding on the agency that adopted it. (The Federal Reserve, as of Thursday, had not yet finalized the rule, but is expected to.)
In their individual final rules, the agencies, noted that supervisory guidance does not create binding, enforceable legal obligations; that each agency does not issue supervisory criticisms for “violations” of or “non-compliance” with supervisory guidance; and describes the appropriate use of supervisory guidance.
In other action this week, the bureau released a small entity compliance guide that summarizes the October 2020 debt collection rule regarding communications between collectors and debtors. (That rule Regulation F to implement most of the Fair Debt Collection Practices Act’s (FDCPA) most substantive provisions.) Those include provisions, the bureau said, that generally restate the FDCPA’s prohibitions and requirements. “Section 2 provides a summary that highlights the October 2020 Final Rule’s key interpretations and clarifications of the FDCPA,” the bureau stated.
The debt collection rule takes effect Nov. 30, 2021, the guide notes. It applies to attempts to communicate, communications, and other conduct by debt collectors occurring on or after that date, regardless of when the underlying debt was incurred.
LINK:
Debt Collection Rule Small Entity Compliance Guide
(Jan. 8, 2021) The state credit union system supports NCUA’s efforts to clarify how it will treat supervisory guidance issued by the agency in the context of examination and supervision, NASCUS said in a comment letter filed with NCUA Monday.
However, NASCUS also urged the agency in the letter to coordinate with state agencies as it implements a final rule, and to consider incorporating definitions of covered guidance into the final rule.
NASCUS was commenting on a proposal issued by NCUA in October aimed at clarifying and codifying the role of supervisory guidance. In doing so, the agency joined with other federal financial institution regulators who had earlier issued the same proposal for the institutions they supervise.
Under the proposal, the meaning of “supervisory guidance” would be clarified as meaning, essentially, it doesn’t have the force of law. If finalized, it would codify an interagency statement issued by all of the agencies in September 2018. That statement was intended to make clear that, unlike a statute or regulation, supervisory guidance is not the same as statute or regulation. “Supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance,” the 2018 statement read.
In its comment, NASCUS said the state system supports the proposal, but also made some recommendations, including:
- NCUA should coordinate with state supervisory agencies. Noting that the prevalence of joint examinations and the pilot Alternating Examination Program necessitate NCUA coordinate implementation of this rule with state regulators, NASCUS urged the agency to work with states to ensure a mutual understanding of how NCUA examiners will manage supervision of activities “for which guidance rather than rules form the foundation of supervisory expectations.” NASCUS also urged the agency to ensure state regulators understand how NCUA will incorporate state reliance on state guidance into joint examinations – or in alternating exams where NCUA may be the lead. “NCUA must also communicate to state regulators what, if any, effect state examinations citing state guidance will have on NCUA reliance upon, and acceptance of, state examinations of a federally insured state credit union,” NASCUS added.
- The agency should consider incorporating definitions of covered guidance into a final rule. NASCUS suggested that a final rule would benefit from additional clarification as to what is “supervisory guidance,” noting that the proposal does not contain a formal definition. “It is foreseeable that confusion could arise as to whether existing and future issuances are covered by the rule,” NASCUS wrote. “For example, NCUA Interpretive Rules and Policy Statements (IRPS) are part exempted interpretive rules and covered policy statements. NCUA might consider explicitly identifying existing and future issuances as either covered supervisory guidance or exempt interpretive rule to provide clarity for stakeholders.”
Finally, NASCUS urged the agency to “remain vigilant” to ensure implementation of the proposal (should it become a final rule) does not inadvertently diminish communication of supervisory and regulatory expectations to credit unions.
LINK:
NASCUS comment: Proposed Rule, Role of Supervisory Guidance
(Dec. 11, 2020) Two new summaries were posted this week by NASCUS, outlining an NCUA final rule on corporate credit unions and an interagency proposal about codifying the use of “supervisory guidance” from federal agencies. Both are available to members only.
Corporate final rule clarifies provisions
The final rule on corporate credit unions, generally aimed at clarifying a number of provisions in NCUA’s rules, was adopted unanimously by the NCUA Board in October. The rule takes effect next week (Dec. 14), and addresses five key areas:
- permits a corporate credit union to make a minimal investment in a credit union service organization (CUSO) without the service organization being subjected to heightened agency oversight;
- expands the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union’s board;
- removes the “experience and independence” requirement for a corporate CU’s enterprise risk management (ERM) expert;
- clarifies the definition of a collateralized debt obligation;
- simplifies the requirement for net interest income modeling.
Although the proposal did contain two provisions regarding proposed subordinated debt offerings by credit unions, the final rule leaves those out. NCUA decided to remove both of those provisions, noting that both sections would be addressed in a final rule on subordinated debt in the future. The agency added that it does not envision any changes to the proposed definition of a debt instrument included in the proposal.
‘Supervisory guidance’ would be codified
In late October, NCUA joined the federal banking agencies and the CFPB in proposing a rule (for a comment period ending Jan. 4) aimed at clarifying and codifying the role of supervisory guidance from federal financial institution regulators. Under the proposal, the meaning of “supervisory guidance” would be clarified as meaning, essentially, it doesn’t have the force of law. If finalized, the proposal would codify an interagency statement issued by all of the agencies in September 2018. That statement was intended to make clear that, unlike a statute or regulation, supervisory guidance is not the same as statute or regulation. “Supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance,” the 2018 statement read.
NCUA has maintained that the proposal will not create a burden for credit unions – partially because, the agency said, NCUA has followed the intent of the proposal for at least the last seven years. NCUA has noted that, at least since 2013, all “documents of resolution” for credit unions have been to specific statutory and regulatory citations – a practice, the agency has vowed, would not change under the proposed rule.
LINKS:
Summary: corporate rule (members only)
Summary: role of supervisory guidance (members only)
(Nov. 13, 2020) NASCUS has posted a new summary of a proposal by federal financial institution regulators – including NCUA and CFPB – aimed at clarifying and codifying the role of supervisory guidance. The summary is available to members only.
Voting unanimously at a rare second monthly board meeting Oct. 28, the NCUA Board agreed to join the interagency proposal on the role of supervisory guidance issued by the agencies. Under the proposal, the meaning of “supervisory guidance” would be clarified as meaning, essentially, it doesn’t have the force of law.
If finalized, the proposal would codify an interagency statement issued by all of the agencies in September 2018. That statement was intended to make clear that, unlike a statute or regulation, supervisory guidance is not the same as statute or regulation. “Supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance,” the 2018 statement read.
But some in the financial services industry (most vocally, banks) wanted more than a statement. They developed a petition to the federal banking agencies and CFPB requesting that the statement be adopted by the agencies in the form of the rule. NCUA was not an initial target of the petition but, since the credit union regulator signed on to the original statement, it was obligated to consider signing on to the proposed rule.
When the board considered the proposal two weeks ago, staff asserted that it would not impose a burden on credit unions. That’s at least partially because, they said, the agency has followed the intent of the proposal for at least the last seven years. Staff pointed out that NCUA has, at least since 2013, tied all “documents of resolution” for credit unions to specific statutory and regulatory citations – a practice, the agency staff (and board members) vowed would not change under the proposed rule.
Comments on the proposal are due Jan. 4, following a 60-day comment period.
LINK:
Summary — Interagency Proposed Rule re: Role of Supervisory Guidance
(Nov. 6, 2020) Continuing its streak of accreditation, the NASCUS-CUNA BSA/AML Certification eSchool – now underway through Dec. 7 – has again been certified for continuing education units (CEUs) by the Association of Certified Anti-Money Laundering Specialists (ACAMS), the premier body for educating and accrediting anti-money laundering specialists around the world. The certification means that participants at the NASCUS-CUNA eSchool will earn one CEU (as a CAMS credit) for each session they attend in conjunction with the school. Those sessions include: BSA in the Virtual World; Don’t Build a House on Sand: Risk Assessment; De-Risking: No Joking Matter/Fine Tuning Your CDD; BSA Leadership; A View from the Regulator; Future of BSA: SBA, Lending, and Other Updates BSA; Roundtable Q & A. Credits are only eligible for those individuals who participate during the live delivery of the program. See the link for more information on the eSchool … Comments are due Jan. 4 on an interagency proposal (including by NCUA, CFPB and the federal banking agencies) on the role of supervisory guidance in regulation. See the CFPB Rules and Summaries page on the NASCUS website for more information.
LINK:
NASCUS & CUNA BSA/AML Certification eSchool
NASCUS web page: CFPB Rules and Summaries 2020
A proposed rule aimed at clarifying and codifying the role of supervisory guidance from federal financial institution regulators was adopted by NCUA this week, joining the federal banking agencies and CFPB in issuing the proposal for comment.
Voting unanimously during a rare second meeting in a month, the NCUA Board joined the banking agencies in issuing (for a 60-day comment period) the proposal on the role of supervisory guidance issued by the agencies. Under the proposal, the meaning of “supervisory guidance” would be clarified as meaning, essentially, it doesn’t have the force of law.
If finalized, the proposal would codify an interagency statement issued by all of the agencies in September 2018. That statement was intended to make clear that, unlike a statute or regulation, supervisory guidance is not the same as statute or regulation. “Supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance,” the 2018 statement read.
A petition brought by banking industry trade groups in 2018 called on the federal banking agencies and CFPB to go further than a statement in clarifying the role of supervisory guidance. The bank groups specifically urged the agencies to make clear that matters requiring attention, matters requiring immediate attention and other such supervisory actions may only be based on a violation of statute or regulation, and not on a failure to comply with supervisory guidance.
NCUA was not a target of the 2018 petition. However, because the agency joined in the 2018 statement, it had to be involved in the considerations for a proposed rule as required by federal regulatory procedure, according to agency staff.
The FDIC Board issued the proposal for comment last week at a meeting of its board. The CFPB and the OCC followed that action and joined the proposal (both of those agencies’ leaders also sit on the FDIC Board). The Federal Reserve has also jumped on the proposal after its board gave the green light.
That left NCUA as the only agency (as of Wednesday) whose leadership had not yet agreed to join the proposed rule, but that had signed the 2018 statement. It was not for a lack of effort. The agency had planned to consider the proposal at its Oct. 15, but pulled the measure off the agenda just as the meeting began. The reason, according to agency staff: it had not yet received word that the other four regulators had completed any revisions to the proposal.
As Scott Neat, associate director of the agency’s office of examination and insurance, told the board this week: the agencies strive to work closely together on joint rulemaking and to issue their proposals at the same time – but it doesn’t always work out that way. “Timing is seldom simultaneous,” Neat said.
However, he also told the board, to ensure that NCUA can “remain timely in its formal approval process of this proposed rule,” the agency convened the board meeting Wednesday to consider it. Typically, the NCUA Board meets only once a month.
In other comments, staff told the NCUA Board members that the proposal will not create a burden for credit unions. That’s at least partially because, they said, the agency has followed the intent of proposal for at least the last seven years. Staff pointed out that NCUA has, at least since 2013, tied all “documents of resolution” for credit unions to specific statutory and regulatory citations – a practice, the agency staff (and board members) vowed would not change under the proposed rule.
LINK:
Proposed Interagency Rule, Part 791, Role of Supervisory Guidance
The role of “supervisory guidance” would be clarified as meaning it doesn’t have the force of law in a proposed rule issued this week by federal banking regulators, CFPB and, soon, NCUA.
The FDIC, Federal Reserve, OCC, CFPB and NCUA are all listed on the proposal, which was issued for a 60-day comment period by the FDIC Board at its open meeting this week. The proposed rule, according to its summary, would codify an interagency statement issued by all of the agencies in September 2018. That statement was intended to make clear that, unlike a statute or regulation, supervisory guidance does not have the force and effect of law. “Supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance,” the 2018 statement read.
However, apparently the statement was not enough for some. The American Bankers Association (along with the Bank Policy Institute), filed a petition in 2018 with the banking agencies and CFPB (but not NCUA) calling on them to institutionalize the statement by codifying it in a formal rulemaking. Specifically, according to ABA, the bankers’ groups urged their regulators to clarify that matters requiring attention, matters requiring immediate attention and other such supervisory actions may only be based on a violation of statute or regulation, and not on a failure to comply with supervisory guidance.
This week, the ABA said the proposed rule “codifying” the statement was in response to their petition.
Late Thursday, the NCUA Board scheduled a meeting for next week (Wednesday, Oct. 28 at 2 p.m.) to consider its own rule on “supervisory guidance” (even though the agency was already listed on the proposal issued by the FDIC and the other agencies).
Last week, Chairman Rodney Hood opened the board’s October meeting by announcing the members had agreed to remove from the agenda a proposed “request for information” regarding supervisory guidance review and “improvements in communications.” No reason was given for the removal of the agenda item.
LINK:
FDIC Proposed Rule on The Role of Supervisory Guidance: