U.S. Treasury Announces Second ECIP Application Round; Applications Due Jan. 31
Jan. 25, 2023 — The U.S. Department of the Treasury’s second application round of Emergency Capital Investment Program funding closes January 31, 2023. Treasury anticipates between $160 million and $340 million will be available for investment in qualified institutions in the second round. Applications are due January 31, 2023, at 11:59 p.m. Eastern.
For more information, click here to visit the U.S. Treasury’s website.
Credit unions participating in the second round of ECIP funding and that meet the eligibility requirements under the NCUA’s Subordinated Debt rule may also apply for regulatory capital treatment under the pre-approval requirements outlined in the rule.
As in the ECIP’s first round, Treasury requires approved, qualified financial institutions to select a maturity of either 15 or 30 years during the closing process. Currently, the NCUA’s Subordinated Debt rule limits the maximum maturity of Subordinated Debt Notes to 20 years.
Last September, the NCUA Board issued a notice of proposed rulemaking to, among other things, provide flexibility on the maximum maturity of Subordinated Debt Notes. The Board is currently reviewing comments received on this rulemaking and will consider a final rule in the first half of 2023.
In the meantime, a credit union applying to the NCUA for regulatory capital treatment should indicate in its application that it would elect either the 15- or 30-year maturity in the event the NCUA Board finalizes the September 2022 proposed rule permitting a longer maturity period. If the Board does not finalize the proposed changes, second-round issuances will be subject to the 20-year maturity limit in the current Subordinated Debt rule.
The NCUA encourages credit unions to submit their Subordinated Debt applications to the appropriate NCUA supervision office by February 28, 2023. Contact your appropriate supervision office with any questions about the application process.
(Nov. 5, 2021) Payment stablecoins and their arrangements should be subject to a federal regulatory framework on a consistent and comprehensive basis through an act of Congress – including by requiring that stablecoins may only be issued by federally insured credit unions and banks, according to a report issued this by a presidential working group focusing on the digital currencies.
Issued by the Treasury Department’s “President’s Working Group on Financial Markets,” along with the FDIC and the OCC, the report also said that such federal legislation would complement existing authorities held by federal regulators meant to ensure market integrity, investor protection and prevention of illicit finance.
“Stablecoins that are well-designed and subject to appropriate oversight have the potential to support beneficial payments options,” said Treasury Secretary Janet L. Yellen in a statement. “But the absence of appropriate oversight presents risks to users and the broader system.”
The report’s conclusions are being interpreted by some that stablecoin issuers would have to secure either a bank or credit union charter before participating with the payment method. In any event, a key recommendation is that legislation be enacted that only allows stablecoins to be issued by federally insured financial institutions.
Key concerns that should be addressed in legislation, according to the report, include:
- Risks to stablecoin users and protection against stablecoin runs, which legislation should address by requiring stablecoin issuers to be insured depository institutions, “which are subject to appropriate supervision and regulation, at the depository institution and the holding company level.”
- Payment system risk, which legislation should address by requiring custodial wallet providers to be subject to appropriate federal oversight. “Congress should also provide the federal supervisor of a stablecoin issuer with the authority to require any entity that performs activities that are critical to the functioning of the stablecoin arrangement to meet appropriate risk-management standards,” the report stated.
- Systemic risk and concentration of economic power, which should be addressed by legislation that requires stablecoin issuers to comply with activities restrictions that limit affiliation with commercial entities. “Supervisors should have authority to implement standards to promote interoperability among stablecoins,” the report asserts. “In addition, Congress may wish to consider other standards for custodial wallet providers, such as limits on affiliation with commercial entities or on use of users’ transaction data.”
In the meantime, the report states, the FDIC and OCC are committed to taking action to address risks falling within their jurisdictions, “including efforts to ensure that stablecoins and related activities comply with existing legal obligations, as well as to continued coordination and collaboration on issues of common interest.”
The report states that while Congressional action is “urgently needed” to address the risks inherent in payment stablecoins, “in the absence of such action, the agencies recommend that the Financial Stability Oversight Council (FSOC) consider steps available to it to address the risks outlined in this report.”
The report also notes that work on digital assets and other payment innovations related to cryptographic and distributed ledger technology is ongoing throughout the Biden Administration. “The administration and the financial regulatory agencies will continue to collaborate closely on ways to foster responsible financial innovation, promote consistent regulatory approaches, and identify and address potential risks that arise from such innovation,” the report stated.
LINK:
President’s Working Group on Financial Markets Releases Report and Recommendations on Stablecoins
(Oct. 22, 2021) “FedNow” – the Federal Reserve’s much-anticipated (and delayed) round the clock payment system – will be ready “sooner rather than later,” Federal Reserve Bank President Esther George (the “executive sponsor” of the Fed initiative) told a bankers’ group Tuesday, reiterating that a 2023 debut is on track. Her comments confirmed an announcement by the Fed made in February, also targeting 2023 as the debut for the system. Originally, the Fed had set the system’s debut for as late as 2024 … Likely in response to strong political pressure brought by both the credit union and banking industries, the Treasury this week raised the proposed threshold to $10,000 for reporting of balances at accounts held at credit unions and banks to the IRS. The banking industry immediately rejected the amended proposal (as it had the previous threshold of $600 or more). Under the proposal, meant to find and track account holders who are not paying their taxes, credit unions and banks would have to provide data on accounts with total annual deposits or withdrawals worth more than $10,000, not including payroll and beneficiary deposits … Large technology companies operating U.S. payments systems were ordered this week by the CFPB to provide information on their business practices, which CFPB said would help it better understand how the firms use personal payments data and manage data access to users in order to ensure adequate consumer protection. CFPB said the initial orders were sent to Amazon, Apple, Facebook, Google, PayPal, and Square. CFPB said it will also be studying the payment system practices of Chinese tech giants, including Alipay and WeChat Pay.
LINKS:
Statement by Secretary of the Treasury Janet L. Yellen on Congressional Tax Compliance Proposals
CFPB Orders Tech Giants to Turn Over Information on their Payment System Plans
(July 16, 2021) Welcome to accounting and consulting firm SingerLewak as the latest NASCUS associate member. Partner Sheila Balzer in the firm’s Denver operations is the leader for its expertise in state credit union operating and loan systems … Former Fed official Nellie Liang (and Fed Board nominee by former President Donald Trump (R)) was confirmed by the Senate Thursday as Treasury under secretary for domestic finance – responsible for policy on financial institutions, financial markets, and more – with nearly three-fourths of the Senate voting in favor. The under secretary’s office serves as a key contact for NCUA and other independent federal financial regulators … NASCUS was on the scene this week as the State Liaison Council (SLC) of the FFIEC was briefed, and as the FFIEC itself met, in Washington. NASCUS is a member of the SLC, which advises the FFIEC to “encourage the application of “uniform examination principles and standards by state and federal supervisory agencies.”
(June 4, 2021) All deposit, loan and investment accounts at financial institutions (including credit unions) for persons and businesses would be subject to a $600 “de minimus” gross inflow reporting threshold, according to the 2022 budget submitted late last week by the Biden Administration.
Under the provision – which is designed to increase taxpayer compliance with income reporting – Treasury would have broad power to issue regulations, which would take effect beginning in the 2023 tax year. The provision was included in the so-called “Green Book,” which outlines the specific tax provisions that the administration seeks to enact along with its budget.
The provision requires that reporting include a breakdown for cash, transactions with a foreign account, and transfers to and from another account with the same owner. Payment settlement entities would also be required to collect Taxpayer Identification Numbers (TINs) and file a revised IRS Form 1099-K expanded to all payee accounts (except de minimis amounts), which would report not only gross receipts but also gross purchases.
The entire budget proposal must be considered – and passed – by Congress before it takes effect. The budget proposal has a long way to go before a final version, as amended by the House and Senate, becomes law.
LINK:
Treasury Green Book for proposed 2022 federal budget
(May 14, 2021) NCUA is encouraging credit unions to participate in a May 24 webinar explaining (and answering questions about) the U.S. Treasury’s Emergency Capital Investment Program (ECIP), which has extended its application period to July 6.
The 75-minute webinar, “An Overview of the Emergency Capital Investment Program,” will be held at 3 p.m. ET, the agency said in a release.
The ECIP was established under the Consolidated Appropriations Act, 2021. Under the program, Treasury provides up to $9 billion in capital directly to credit unions and other depository institutions that are certified community development financial institutions (CDFIs) or minority depository institutions (MDIs). The funding may be used to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers – especially those in low-income and underserved communities – that may be disproportionately impacted by the economic effects of the COVID-19 pandemic.
Treasury says it will set aside $2 billion for CDFIs and MDIs with less than $500 million in assets and an additional $2 billion for CDFIs and MDIs with less than $2 billion in assets.
NCUA Board Chairman Harper has repeatedly encouraged credit unions to learn more about the program.
Registration for the webinar is open; participants may submit questions in advance by email at [email protected]; questions submitted by May 18 will receive priority, NCUA said.
LINKS:
Federal Financial Regulators to Hold Webinar on Emergency Capital Investment Program
Treasury ECIP information, application portal
(March 12, 2021) A policy unveiled early last year by CFPB that limited the extent of the agency’s response to certain abusive acts or practices affecting consumers was rescinded Thursday, the bureau announced. CFPB said it intends now to “exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act as established by Congress.” The release said the bureau intends these changes “to better protect consumers and the marketplace from abusive acts or practices, and to enforce the law as Congress wrote it.” Then-Director Kathleen Kraninger originally set the policy in place last year … Nellie Liang – a nominee for the Federal Reserve Board in 2018 (but whose nomination was never considered by the Senate Banking Committee, let alone the full Senate) – will be nominated as Treasury undersecretary for domestic finance, the White House said Thursday. The position is responsible for a wide variety of policy, including that for credit unions, banks and other financial institutions. Liang, an economist, is a former top Fed staff member … Meanwhile, the nomination of Rohit Chopra to be the next director of the CFPB received a tie vote this week in the Senate Banking Committee on a recommendation by the committee for confirmation. The tied recommendation will proceed, however, to consideration by the full Senate under rules adopted by the Senate early this year … NCUA and the federal banking agencies Thursday released a proposed list of 24 questions and answers addressing the private flood insurance provisions of the 2012 Biggert-Watters Flood Insurance Reform Act. Comments are due in 60 days. The proposal includes some references to a set of Q&As proposed last year and published July 6 in the Federal Register. Those Q&As only included two on private flood insurance, the agencies noted, adding that the rules for private insurance had just been finalized in 2019. The regulators said they plan to publish a final document in the Federal Register that will consolidate Thursday’s proposed private insurance Q&As with the 2020 proposed Q&As.
Agencies Release Proposed New Interagency Questions and Answers Regarding Private Flood Insurance