NAFCU Compliance Blog

Share Insurance After a Merger

2012-01-27T08:50:00-05:00

Written by Steve Van Beek

One of the issues I covered during Wendesday's webcast was share insurance after a merger. Part 745.2(f) of NCUA's Regulations provides the general framework.

Granted, the issue isn't one that comes up all the time as there (1) needs to a merger or assumption and (2) there need to be members who were members of both credit unions that have now merged.

Here is 12 CFR 745.2(f):

"(f) Continuation of separate share insurance coverage after merger of insured credit unions. Whenever the liability to pay the member accounts of one or more insured credit unions is assumed by another insured credit union, whether by merger, consolidation, other statutory assumption or contract: The insured status of the credit unions whose member account liability has been assumed terminates, for purposes of this section, on the date of receipt by NCUA of satisfactory evidence of the assumption; and the separate insurance of member accounts assumed continues for six months from the date the assumption takes effect or, in the case of a share certificate, the earliest maturity date after the six-month period. In the case of a share certificate that matures within the six-month grace period that is renewed at the same dollar amount, either with or without accrued dividends having been added to the principal amount, and for the same term as the original share certificate, the separate insurance applies to the renewed share certificate until the first maturity date after the six-month period. A share certificate that matures within the six-month grace period that is renewed on any other basis, or that is not renewed, is separately insured only until the end of the six-month grace period."

Thus, the general rule from NCUA is that separate share insurance coverage applies for a six-month grace period. Prior to the end of the grace period, the member may need to restructure their accounts to ensure their accounts remain fully insured. If the member holds share certificates, there is extra flexibility built into the rules.

If your credit union has recently gone through a merger or has plans to, be sure to review if you have members that belonged to both credit unions and determine if their share insurance coverage might be impacted.

Have a great weekend!

NCUA Board Materials; Know Before You Owe; CFPB Hearings; Webcasts

2012-01-26T07:48:55-05:00

Written by Steve Van Beek

Below are a few tidbits for your Thursday morning.

NCUA Board Meeting. The NCUA Board is meeting today and the draft materials are usually available an hour prior to the Board meeting. The agenda for the meeting is here. The draft materials will be posted here shortly after 9 a.m. EST. Update: NCUA's website indicates the Board materials will be available after today's Board meeting.

Know Before You Owe. The CFPB released the latest on its Know Before You Owe project to combine the TILA-RESPA disclosures. The CFPB is continuing to work on the closing documents and is not yet at the proposal stage of the rulemaking process. Feel free to send any comments you have to the CFPB directly or to NAFCU.

Cordray Testimony. The NAFCU Today had a great recap of Richard Cordray's testimony on Tuesday before a House Subcommittee. Cordray will be testifying in front of the Senate Banking Committee next Tuesday, January 31st - so expect headlines to continue on the new CFPB Director.

Share Insurance Webcast. Yesterday was our special 2-hour webcast on NCUA's Share Insurance Coverage. If you missed the webcast, you can still purchase the on-demand version which is available for 12 months. For a listing of our upcoming live webcasts and available on-demand webcasts, click here.

Deadline Approaching for ATM Compliance with ADA Standards; 12-FCU-01

2012-01-25T07:45:00-05:00

Written by JiJi Bahhur, Regulatory Compliance Counsel

Just a friendly reminder that the physical access and speech output requirements for ATMs go into effect March 15, 2012. The speech output requirement applies to all ATMs on March 15, 2012. The new physical access requirements apply to ATMs that are altered or added after March 15, 2012. Existing ATMs would not need to be modified to meet the new physical access requirements.

The technical requirements for both physical access and speech output can be found in the 2010 ADA Standards for Accessible Design. Of noted importance were the reach requirements for ATMs, which has been changed from 54” to 48”, and also, the requirements for floor space for wheelchair access, which had been altered to provide more clearance room for individuals in wheel chairs. Additionally, new ATM keypad requirements were added. Note: Drive-up ATMs are not required to comply with the reach and floor space requirements.

For compliance with the speech output requirements, ATMs will be required to have speech output enabled so that users may listen to directions via telephone headset or in a similar nature. Further, the addition of Braille instructions and tactilely discernible keys are required.

For additional information on ADA-ATM compliance, check out our August 4, 2010 and September 16, 2010 blog posts and NAFCU’s Final Regulation.

***

Steve mentioned yesterday that there had not been a Letter to Federal Credit Unions issued in 2012. That changed yesterday afternoon when NCUA issued Letter to Federal Credit Unions 12-FCU-01 addressing the Operating Fees for FCUs.

Letters to Credit Unions; Interpretive Rulings & Policy Statements; Cordray Testimony

2012-01-24T08:09:00-05:00

Written by Steve Van Beek

If you've tried navigating NCUA's website recently, you've probably noticed a few changes in terms of where information is located as well as the overall format.

I wanted to highlight a couple of items that might be useful.

NCUA Letters to Credit Unions

The good part is NCUA has indicated which Letters are Active and which are Inactive in a status column next to each Letter to Credit Unions. The 2012 Letters are here and the 2011 Letters are here.

The bad part? I had to go back to 2002 before I found a Letter to Credit Unions that was Inactive.

NCUA has a policy of reviewing a third of its regulations each year. I'm starting to think NCUA should include Letters to Credit Unions in that review as the mountain of guidance documents continues to grow each year.

Note: Letters to Federal Credit Unions can be found here (there are currently no letters for 2012).

Interpretive Rulings & Policy Statements

NCUA's website also breaks down their Interpretive Rulings & Policy Statements (IRPS) by those "Currently in Effect" and those that are "Withdrawn."

This chart can be very helpful if you've found an IRPS that addresses your compliance question but you have an inkling the guidance might be outdated. This is especially true as the IRPS itself does not indicate that it is withdrawn.

***

Director of the CFPB, Richard Cordray, will be testifying before a House of Representatives Subcommittee today. You can find Cordray's planned testimony here.

A Couple of Blog Housekeeping Issues

2012-01-23T07:11:00-05:00

Written by Steve Van Beek

If you like the blog, please consider sharing the blog with your colleagues if you think they would enjoy the blog as well. They can register by going here and inputting their email address.

Verfication Process. For those who do subscribe, be sure to look for a verification email. The daily blog postings will not be delivered until the verification email has been confirmed. When the verification email is confirmed, the blog postings will begin to be delivered on the next business day.

Caution: It seems the verification email gets grabbed in quite a few SPAM filters, so be sure to check your Junk folder or contact your IT team if you don't receive the verification email within an hour of subscribing to the blog postings.

Unverified. If you have tried to sign-up for the blog postings and you haven't received the postings each day, I'd encourage you to attempt the subscription process again and be sure to verify the confirmation email. Similarly, if you have a colleague that has indicated they tried to sign-up and isn't receiving the daily blog postings - please considering forwarding this post on to them so they can subscribe again.

Open to Everyone. The blog is open to everyone so you can be assured that we are not screening who receives the blog postings each day. Anyone can subscribe and we are very thankful to have a diverse group of dedicated blog readers.

Questions or Concerns. If you have any questions, please let us know. You can email us at compliance@nafcu.org and we'll do our best to help you out. Unfortunately, we cannot add you to the email subscription list. The email subscription is a voluntary opt-in process (no E-SIGN consent required - sorry, I couldn't resist the lame compliance joke).

***

Legal Disclaimer. I also wanted to take a minute to reiterate the blog's legal disclaimer. The disclaimer is located on the main blog page itself but since a lot of readers receive the blog posts directly via email, here is the disclaimer:

This website is intended to provide general compliance information in regard to the subject(s) covered. It is provided with the intent and understanding that the publisher is not engaged in the act of rendering legal, accounting or any other professional advice. The information provided in this website is not intended nor should be used as a substitute for legal advice or other expert opinions and services in specific situations. NAFCU is not responsible for the content of comments and reserves the right to delete or block comments that it finds inappropriate.

We'll be back with normal blogging tomorrow, have a great Monday!

January NCUA Board Agenda; Professional of the Year; Reg School

2012-01-20T07:48:57-05:00

Written by Steve Van Beek

Yesterday, NCUA announced their agenda for the January Board meeting which will occur next Thursday, January 26th. The open portion of the meeting will have three items.

Final Rule – Part 741 of NCUA’s Rules and Regulations, Interest Rate Risk Policy and Program.
Proposed Rule – Part 741 of NCUA’s Rules and Regulations, Loan Workouts, Nonaccrual Policy, and Regulatory Reporting of Troubled Debt Restructured Loans.
Advance Notice of Proposed Rulemaking, Part 703 of NCUA’s Rules and Regulations, Derivatives.

As always, NAFCU's Regulatory Affairs team will provide updates of each rulemaking.

***

NAFCU's Annual Awards nomination process is currently underway. NAFCU-members have until March 16 to nominate candidates for Federal Credit Union of the Year; CEO of the Year; Volunteer of the Year and Professional of the Year. The categories are split by asset-size as well - with one winner for credit unions under $150 million in assets and one winner for credit unions over $150 million.

Professional of the Year. With the unprecedented regulatory changes over the past year, credit union compliance personnel have provided outstanding efforts at credit unions throughout the country. A nomination for Professional of the Year is a great way to honor those individuals at your credit union.

The main Awards homepage is here which includes the updated nomination process. Nomination criteria can be found here. Award guidelines are here.

***

Regulatory Compliance School. Just a reminder that today is the deadline for early-bird pricing for Regulatory Compliance School. Save $100 off registration by signing-up today. Remember to use code NEWYEAR during registration and save an additional $100.

You don't have to be a NAFCU member to attend. If you are looking for a detailed understanding of the regulations impacting credit unions - this is the conference for you.

Have a great weekend!

A Different Look at the Republished Regulations

2012-01-19T06:44:00-05:00

Written by Steve Van Beek

With all the discussion of the CFPB's republishing of the consumer regulations, I thought it would be a good idea to also highlight some of the regulations that did not transfer to the CFPB.

In December, we discussed how NCUA would retain Truth in Savings - Part 707 for credit unions.

There are also quite a few Federal Reserve regulations that did not transfer to the CFPB. The rationale being that these regulations do not implement the "enumerated consumer laws" and, thus, didn't fall under the CFPB's authority.

Here is a list with links to some of the Federal Reserve regulations that did not transfer to the CFPB:

Keep in mind that the Federal Reserve retains control over these regulations. Thus, if there is a rule change to Regulation CC, for example, it would come from the Federal Reserve.

***

One of the gifts that Dodd-Frank gave to all credit unions is the need to look to another regulator for regulatory changes. Which means we have another regulator that, unfortunately, does not have the ability to view the comprehensive regulatory burden put on credit unions by the various regulators.

New NAFCU Blog, Same Approach

2012-01-18T06:21:00-05:00

Written by Anthony Demangone

When my father dropped me off at McKean Hall for my freshman year at Penn State, I knew I wanted to be a journalist. I quickly joined the college newspaper and started writing. I never found stories about intrigue and politics interesting to write. Rather, I focused on things that interested me.

I somehow got sidetracked on my road to the Pulitzer Prize. Life happens. But my love of writing never wore off. That’s one of the reasons I started the NAFCU Compliance Blog back in 2007.

But life happened…again. When I took on the role of NAFCU COO, I handed off this blog to Steve’s capable hands.

Well, the addiction has overtaken me yet again. As Steve mentioned a few weeks ago, I’ve started a new blog – Musings from the CU Suite. What’s the new angle? Work and management are tough. But there’s a ton of good information out there about how to be better at both. My new blog will attempt to bring the best of all of that to you.

I hope you consider wandering over to sign up for the blog. It would be great to have you join the conversation.

Now, I did write along those lines a wee bit back in the day. Here are some of those old posts, which I hope you find useful.

Just how did my view of compliance change now that I’m NAFCU’s COO?
A good compliance officer should try to read the tea leaves.
In an age of Google, Facebook, Twitter, and iPads, don’t forget the research power of picking up the phone.
The art of making decisions when you are “off the grid.”
My ode to compliance officers.

Have a great week, guys.

Speech on Reg Burden; Reg D Comments; Share Insurance Webcast

2012-01-17T08:14:00-05:00

Written by Steve Van Beek

Last Friday, Federal Reserve Board Governor Elizabeth Duke gave a speech to community bank presidents and indicated that regulators need to resist the urge to regulate using "one-size fits all" regulation and supervision.

"I do believe in the community bank model and its future. Indeed, I believe there is a real place for the customization and flexibility that community banks can exercise to meet the needs of local communities and small business customers. Still, the disproportionate cost of regulatory compliance for smaller institutions is real. Financial supervisors must be vigilant in efforts to maintain financial system stability and ensure that consumers are able to understand their financial product choices, no matter where they choose to bank. However, as we and other agencies craft regulations to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and adjust supervisory practices to meet these priorities, I think we must avoid a one-size-fits-all approach to supervision."

While the speech was directed at community banks, there are clear parallels for credit unions who are facing increased regulatory compliance costs. I continue to find it interesting that regulators talk about reducing regulatory burden when there is a 2,300 page elephant in the room mandating thousands of regulatory changes. Every tweak and adjustment that stems from Dodd-Frank increases the regulatory burden. For compliance officers, even the process of determining if a regulation applies to their credit union is a challenge with the current pace of regulatory change.

***

In mid-December, NAFCU sent a comment letter to the Federal Reserve on Regulation D. NAFCU emphasized the need to update the arcane transactional limitation requirements to reflect the modern environment. Here is one paragraph from the letter:

"The current law is burdensome and confusing for depositors that wish to have unfettered access to their funds. It is unreasonable to expect consumers to understand and remember the arcane limits on the number and type of transfers that are allowed out of their savings account. For example, under the current rule, transfers among the consumer’s accounts via online banking are limited; however, a consumer can make unlimited transfers via mail or by messenger. The rule is outdated and as a consequence, the restrictions on transfers are incoherent to even the most knowledgeable consumers. It would be helpful to consumers if the regulation was modified to reflect the current financial services environment."

Updating the Regulation D transaction limitation requirements is a win-win as consumers obtain greater access to their funds and credit unions would need to spend less time and resources classifying and monitoring transactions.

***

On January 25th, NAFCU will host a special 2-hour webcast on Share Insurance featuring yours truly. The early-bird pricing ends at the end of day tomorrow - so you can save $100 by signing up today or tomorrow.

We are going to be covering Share Insurance issues from a couple of different angles:

How Share Insurance is Calculated Per Account - Based on Ownership Type;
Disclosure of Federally-Insured Status on Advertisements;
Share Insurance Disclosure Requirements Where Credit Unions Take Deposits;
How Mergers Impact Share Insurance Coverage;
Options for Educating Members on their Share Insurance Coverage;
NCUA's Share Insurance Calculator; and
Detailed Examples of Certain Accounts and the Amount of Insurance Coverage Available.

The full information is here. Also, because this is a 2-hour webcast, NCCOs can earn 2 CEU credits.

Questions & Answers. As usual, we'll be answering questions during the webcast. Due to complex nature of share insurance questions - we'll also be posting a detailed Q&A document that will be available to attendees after the webcast. If you are registered and have questions ahead of the webcast - please send them in (compliance@nafcu.org) and I'll try to add the issue into the presentation. At a minimum, we'll include the question in our Q&A document.

Updated Reg B Adverse Action Address

2012-01-13T07:45:00-05:00

Written by Steve Van Beek

As part of their Regulation B adverse action notices, credit unions are required to provide the name and address of the Federal agency which administers compliance with the Equal Credit Opportunity Act (ECOA) for the credit union. Until recently, FCUs needed to include the appropriate NCUA Regional Office. NCUA's creation of its Office of Consumer Protection (OCP) resulted in the OCP taking over the requirements from each Regional Office.

The Problem? While NCUA send out a few generic notices regarding updating the address to the Office of Consumer Protection, the language in Regulation B - specifically Appendix A - was not updated.

Thus, credit unions looking at the language of Regulation B were being provided with different information than the informal notices sent by NCUA.

The Clarification? The CFPB's republishing of Regulation B into 12 CFR 1002 also included an update of Appendix A to reflect the new address for NCUA's OCP that should be used for adverse action notices.

The underlying requirement for including the agency address on adverse action notices comes from 12 CFR 1002.9(a)(2) and (b)(1).

The CFPB's Appendix A now includes this information (for FCUs under $10 billion on assets):

"d. Federal Credit Unions: National Credit Union Administration, Office of Consumer Protection (OCP), Division of Consumer Compliance and Outreach (DCCO), 1775 Duke Street, Alexandria, VA 22314."

Note: Credit unions over $10 billion need to include the CFPB's name and address.

The Timing? The CFPB's republishing indicates that institutions have until January 1, 2013 to make the change. Here is from 12 CFR 1002.9(b)(1) of Regulation B:

"(b) Form of ECOA notice and statement of specific reasons. (1) ECOA notice. To satisfy the disclosure requirements of paragraph (a)(2) of this section regarding section 701(a) of the Act, the creditor shall provide a notice that is substantially similar to the following: The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The Federal agency that administers compliance with this law concerning this creditor is [name and address as specified by the appropriate agency or agencies listed in Appendix A of this part]. Until January 1, 2013, a creditor may comply with this paragraph (b)(1) and paragraph (a)(2) of this section by including in the notice the name and address as specified by the appropriate agency in Appendix A to 12 CFR Part 202, as in effect on October 1, 2011."

Appendix A to the Federal Reserve's Regulation B (12 CFR 202) is located here and reflects the Regional Offices.

My understanding is state-chartered credit unions would continue to include the FTC information on their adverse action notices. See Item 9 under Appendix A for "All Other Creditors Not Listed Above."

***

The CFPB discussed the January 1, 2013 timeframe in more detail in the preamble to the republished Regulation B. I know quite a few FCUs have already made the address changes to their adverse action notices, but those who haven't should begin the process now.

A potential benefit of the CFPB's January 1, 2013 timeframe is it clarifies that notices that were not updated previously were still in compliance with Regulation B. If an examiner or auditor indicates your credit union should have updated your notice earlier, I'd show them the language in 12 CFR 1002.9(b)(1) and then work towards getting the notice updated.

***

Programming Note - NAFCU's offices will be closed on Monday for the Federal holiday. We'll be back pinging your inboxes on Tuesday. Have a great weekend!