In a June 15 letter to the National Credit Union Administration, the American Bankers Association (ABA) vigorously opposed a proposal that would formalize a process for credit unions to purchase taxpaying banks.
ABA opined that credit unions -- aided by their tax advantage position -- are able to outbid taxpaying banks for the same deals.
ABA contended in its letter that credit unions are aggressively targeting banks for acquisition to expand their business lines, such as originating riskier business loans.
ABA also noted that many of these acquisitions are out-of-state. For example, ABA pointed out Grand Rapids, Michigan-based Lake Michigan CU's acquisition of Encore Bank, which operated in southwestern Florida.
Moreover, ABA wrote that these large credit unions are targeting banks serving wealthier communities outside of their chartered mandate to serve low- and moderate-income individuals.
ABA further stated that large credit unions acquiring tax-paying banks should be regulated similarly to the institutions they are purchasing.
Read the letter.
Showing posts with label Regulation. Show all posts
Showing posts with label Regulation. Show all posts
Thursday, June 18, 2020
Wednesday, May 27, 2020
NCUA Writes FCC Regarding Emergency Exception for Automated Calls
National Credit Union Administration Chairman Rodney E. Hood on May 19 wrote to the Federal Communications Commission (FCC) regarding a third-party petition to permit certain automated calls to fall under the Emergency Purposes Exception of the Telephone Consumer Protection Act (TCPA).
Hood wrote: "Autodialed calls providing information about payment deferrals, fee waivers, loan term extensions, other loan modifications, and forbearance could assist consumers during this challenging time."
In the letter, Hood noted that financial institutions are not seeking permission to use automated calls related to advertising, telemarketing, or seeking payment on a debt. Like other financial institutions, federally insured credit unions must comply with all other consumer protection laws governing autodialed calls.
In a related matter, a coalition of financial trade groups on May 21 wrote the FCC requesting an expedited ruling or waiver stating that phone calls and text messages placed by banks, credit unions, and other customer-facing financial service providers using an automatic telephone dialing system or prerecorded or artificial voice on matters related to the COVID-19 pandemic are “call[s] made for emergency purposes."
The trade groups signing the letter were the American Bankers Association (ABA), American Financial Services Association, Consumer Bankers Association, Credit Union National Association, Independent Community Bankers of America, Mortgage Bankers Association, and National Association of Federally-Insured Credit Unions.
Read the NCUA letter.
Read the joint trade group letter.
Hood wrote: "Autodialed calls providing information about payment deferrals, fee waivers, loan term extensions, other loan modifications, and forbearance could assist consumers during this challenging time."
In the letter, Hood noted that financial institutions are not seeking permission to use automated calls related to advertising, telemarketing, or seeking payment on a debt. Like other financial institutions, federally insured credit unions must comply with all other consumer protection laws governing autodialed calls.
In a related matter, a coalition of financial trade groups on May 21 wrote the FCC requesting an expedited ruling or waiver stating that phone calls and text messages placed by banks, credit unions, and other customer-facing financial service providers using an automatic telephone dialing system or prerecorded or artificial voice on matters related to the COVID-19 pandemic are “call[s] made for emergency purposes."
The trade groups signing the letter were the American Bankers Association (ABA), American Financial Services Association, Consumer Bankers Association, Credit Union National Association, Independent Community Bankers of America, Mortgage Bankers Association, and National Association of Federally-Insured Credit Unions.
Read the NCUA letter.
Read the joint trade group letter.
Tuesday, May 26, 2020
NCUA Makes Two Temporary Changes to PCA Requirements
The National Credit Union Administration (NCUA) Board on May 21 approved an interim final rule making two temporary changes to its prompt corrective action (PCA) requirements for credit unions that become less than well capitalized..
This interim rule temporarily reduces the earnings retention requirement for credit unions classified as adequately capitalized. For those credit unions that do not meet the earnings retention requirement, they will not have to submit a written application requesting approval to decrease its earnings retention amount. But if a credit union poses an undue risk to the National Credit Union Share Insurance Fund or exhibits material safety and soundness concerns, the appropriate NCUA Regional Director may require the credit union to submit an earnings transfer waiver request.
The interim final rule temporarily permits an undercapitalized credit union to submit a streamlined net worth restoration plan, demonstrating that the reduction in capital was caused predominantly by share growth and that this is a temporary condition because of the pandemic. However, if a credit union becomes less than adequately capitalized for reasons other than share growth, they must still submit a net worth restoration plan under the current requirements in NCUA’s regulations.
The NCUA Board believes that these amendments will provide federally insured credit unions with additional flexibility without jeopardizing the safety and soundness of the credit union system.
The interim final rule will become effective once it is published in the Federal Register.
These temporary changes will be in place until the end of 2020.
Read the interim final rule.
This interim rule temporarily reduces the earnings retention requirement for credit unions classified as adequately capitalized. For those credit unions that do not meet the earnings retention requirement, they will not have to submit a written application requesting approval to decrease its earnings retention amount. But if a credit union poses an undue risk to the National Credit Union Share Insurance Fund or exhibits material safety and soundness concerns, the appropriate NCUA Regional Director may require the credit union to submit an earnings transfer waiver request.
The interim final rule temporarily permits an undercapitalized credit union to submit a streamlined net worth restoration plan, demonstrating that the reduction in capital was caused predominantly by share growth and that this is a temporary condition because of the pandemic. However, if a credit union becomes less than adequately capitalized for reasons other than share growth, they must still submit a net worth restoration plan under the current requirements in NCUA’s regulations.
The NCUA Board believes that these amendments will provide federally insured credit unions with additional flexibility without jeopardizing the safety and soundness of the credit union system.
The interim final rule will become effective once it is published in the Federal Register.
These temporary changes will be in place until the end of 2020.
Read the interim final rule.
Friday, May 8, 2020
NCUA Includes Military Personnel in Calculation of Low-Income Designation
The National Credit Union Administration (NCUA) announced on May 7 that it will include military personnel in its determination of whether a credit union qualifies for a low-income designation.
Under the new approach, military personnel will now be considered in a similar manner as students attending colleges, universities, vocational or technical schools when the NCUA evaluates a federally insured credit union’s low-income designation.
In other words, all military personnel will be treated as presumptive low-income individuals.
However, not all military personnel are low-income. Are admirals and generals low-income?
Credit unions receiving a low-income designation are exempt from the statutory member business loan cap of 12.25 percent of assets, are authorized to obtain secondary capital, are able to accept deposits from non-members, and are eligible for grants and loans from the Community Development Revolving Loan Fund.
But this pronouncement from this rogue regulator appears to violate the Administrative Procedures Act, as this represents a major change in its rules and regulations.
Read the press release.
Under the new approach, military personnel will now be considered in a similar manner as students attending colleges, universities, vocational or technical schools when the NCUA evaluates a federally insured credit union’s low-income designation.
In other words, all military personnel will be treated as presumptive low-income individuals.
However, not all military personnel are low-income. Are admirals and generals low-income?
Credit unions receiving a low-income designation are exempt from the statutory member business loan cap of 12.25 percent of assets, are authorized to obtain secondary capital, are able to accept deposits from non-members, and are eligible for grants and loans from the Community Development Revolving Loan Fund.
But this pronouncement from this rogue regulator appears to violate the Administrative Procedures Act, as this represents a major change in its rules and regulations.
Read the press release.
Wednesday, April 22, 2020
NCUA Amends Capital and Business Lending Regulations
The National Credit Union Administration (NCUA) Board unanimously approved on April 22, 2020, by notation vote, an interim final rule that amends the agency’s capital adequacy and member business loans and commercial lending regulations following the creation of the Small Business Administration’s Paycheck Protection Program (PPP).
The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the PPP to help certain businesses affected by the COVID-19 pandemic. The CARES Act requires that PPP loans receive a zero-percent risk weighting under the NCUA’s risk-based capital requirements. To reflect this statutory requirement, the interim final rule amends the NCUA’s capital adequacy regulation so that covered PPP loans receive a zero-percent risk weight in the agency’s risk-based net worth requirements.
Additionally, if a loan is pledged as collateral for a non-recourse loan provided through the Federal Reserve System’s PPP Lending Facility, the covered loan can be excluded from a credit union’s calculation of total assets for the purposes of calculating its net worth ratio. This ensures that credit unions can neutralize the regulatory capital effects of PPP loans pledged to the facility.
The interim final rule also makes a conforming change to the definition of a commercial loan in the NCUA’s member business loans and commercial lending rule. Under the rule, PPP loans are excluded from the definition of a commercial loan because the unique nature of these loans mitigates the need for enhanced commercial underwriting.
Read the interim final rule.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the PPP to help certain businesses affected by the COVID-19 pandemic. The CARES Act requires that PPP loans receive a zero-percent risk weighting under the NCUA’s risk-based capital requirements. To reflect this statutory requirement, the interim final rule amends the NCUA’s capital adequacy regulation so that covered PPP loans receive a zero-percent risk weight in the agency’s risk-based net worth requirements.
Additionally, if a loan is pledged as collateral for a non-recourse loan provided through the Federal Reserve System’s PPP Lending Facility, the covered loan can be excluded from a credit union’s calculation of total assets for the purposes of calculating its net worth ratio. This ensures that credit unions can neutralize the regulatory capital effects of PPP loans pledged to the facility.
The interim final rule also makes a conforming change to the definition of a commercial loan in the NCUA’s member business loans and commercial lending rule. Under the rule, PPP loans are excluded from the definition of a commercial loan because the unique nature of these loans mitigates the need for enhanced commercial underwriting.
Read the interim final rule.
Friday, April 17, 2020
NCUA Board Adopts Temporary Reg Relief Measures
The National Credit Union Administration Board on April 16 approved a temporary final rule providing federally insured credit unions with regulatory relief during the COVID-19 crisis.
The Board temporarily raised the maximum aggregate amount of a loan participation that a federally insured credit union (FICU) can purchase from a single originating lender to the greater of $5 million or 200 percent of a FICU's net worth. NCUA's current rule limits the maximum aggregate amount of a loan participation that can be bought from a single originating lender to the greater of $5 million to 100 percent of net worth.
The Board also suspended limitations on eligible obligations that a federal credit union (FCU) may purchase and hold. Specifically, a FCU with a CAMEL composite rating of 1, 2, or 3 may purchase eligible obligations of FICUs or liquidating credit unions irrespective of whether the obligation belongs to the purchasing FCU's members. The rule previously limited purchases of eligible obligations to a FCU with a CAMEL ration of 1 or 2.
In addition, the Board is tolling the required timeframe for the occupancy or disposition of properties not being used FCU business or that have been abandoned.
These temporary modifications are effective upon publication in the Federal Register and will be in place until December 31, 2020, unless extended by the NCUA Board.
Read the temporary final rule.
The Board temporarily raised the maximum aggregate amount of a loan participation that a federally insured credit union (FICU) can purchase from a single originating lender to the greater of $5 million or 200 percent of a FICU's net worth. NCUA's current rule limits the maximum aggregate amount of a loan participation that can be bought from a single originating lender to the greater of $5 million to 100 percent of net worth.
The Board also suspended limitations on eligible obligations that a federal credit union (FCU) may purchase and hold. Specifically, a FCU with a CAMEL composite rating of 1, 2, or 3 may purchase eligible obligations of FICUs or liquidating credit unions irrespective of whether the obligation belongs to the purchasing FCU's members. The rule previously limited purchases of eligible obligations to a FCU with a CAMEL ration of 1 or 2.
In addition, the Board is tolling the required timeframe for the occupancy or disposition of properties not being used FCU business or that have been abandoned.
These temporary modifications are effective upon publication in the Federal Register and will be in place until December 31, 2020, unless extended by the NCUA Board.
Read the temporary final rule.
Tuesday, April 14, 2020
NCUA Issues CLF Interim Final Rule
The National Credit Union Administration (NCUA) Board issued on April 13 an interim final rule that will enhance the ability of the Central Liquidity Facility (CLF) to serve as liquidity backstop to the nation’s credit union system.
The rule makes it easier for credit unions to join the facility as a regular member or through a corporate credit union as part of an agent relationship, and access emergency liquidity should the need arise.
Specifically, the interim final rule:
The NCUA Board urges all natural person and corporate credit unions to join the CLF, if they have not done so.
Read the interim final rule.
The rule makes it easier for credit unions to join the facility as a regular member or through a corporate credit union as part of an agent relationship, and access emergency liquidity should the need arise.
Specifically, the interim final rule:
- Eliminates the six-month waiting period for a new member to receive a loan;
- Makes temporary amendments to the waiting period for a credit union to terminate its membership;
- Eases collateral requirements on some assets; and
- Allows, temporarily, for an agent member to borrow for its own liquidity needs.
The NCUA Board urges all natural person and corporate credit unions to join the CLF, if they have not done so.
Read the interim final rule.
Tuesday, April 7, 2020
Regulators Encourage Mortgage Servicers to Work with Homeowners Affected by COVID-19
Financial regulators on April 3 issued a joint policy statement granting flexibility to mortgage servicers to work with borrowers struggling as a result of the coronavirus pandemic. Under the CARES Act, servicers are required to grant payment forbearances to impacted borrowers for up to 180 days, and possibly longer.
The agencies confirmed that these forbearance offers are exempt from certain loss mitigation procedural requirements and servicers do not need to obtain a complete application before offering CARES Act forbearance to a borrower. The agencies also said that they would not penalize servicers for failing to provide the required notice of acknowledgement to borrowers who submit incomplete applications within the five-day timeframe described in the servicing rules, provided that the notice is given before the end of the forbearance period. The agencies also said that they would not penalize servicers for failing to provide other loss mitigation notices and outreach efforts, so long as servicers demonstrate good-faith efforts to comply “within a reasonable timeframe.”
Finally, the agencies said they would not take action against servicers for delays in sending annual escrow statements, provided the servicers demonstrate good-faith efforts to comply “within a reasonable timeframe.” In addition to the statement, the CFPB offered further clarification in a set of frequently asked questions regarding compliance with the servicing rules during the COVID-19 emergency
Read more.
The agencies confirmed that these forbearance offers are exempt from certain loss mitigation procedural requirements and servicers do not need to obtain a complete application before offering CARES Act forbearance to a borrower. The agencies also said that they would not penalize servicers for failing to provide the required notice of acknowledgement to borrowers who submit incomplete applications within the five-day timeframe described in the servicing rules, provided that the notice is given before the end of the forbearance period. The agencies also said that they would not penalize servicers for failing to provide other loss mitigation notices and outreach efforts, so long as servicers demonstrate good-faith efforts to comply “within a reasonable timeframe.”
Finally, the agencies said they would not take action against servicers for delays in sending annual escrow statements, provided the servicers demonstrate good-faith efforts to comply “within a reasonable timeframe.” In addition to the statement, the CFPB offered further clarification in a set of frequently asked questions regarding compliance with the servicing rules during the COVID-19 emergency
Read more.
Wednesday, April 1, 2020
Trade Groups Urge FCC to Facilitate COVID-19 Related Calls
As financial institutions seek to contact customers with COVID-19-related information, seven financial trade groups filed a petition requesting that the Federal Communications Commission issue an expedited declaratory ruling or waiver confirming that financial institutions’ COVID-19-related calls are exempt from the requirements of Telephone Consumer Protection Act (TCPA).
The TCPA requires banks and other callers to obtain the customer’s prior express consent prior to placing an autodialed call, but exempts calls placed for “emergency purposes.”
These phone calls and text messages may include outreach to customers and members (hereinafter referred to collectively, as consumers) to offer payment deferrals, fee waivers, extension of repayment terms, or other delays in payment, modification, or forbearance on mortgage payments or other loans; to advise consumers of branch closings, service limitations, reduced hours, or the availability of remote banking or other remote access options; to warn consumers of potential fraud on the consumer’s account; or otherwise to make consumers aware of programs, relief, and resources offered by the institution in response to the pandemic.
The trade groups urged the FCC to confirm that COVID-19-related calls placed by financial institutions fall within the emergency purposes exception. “If financial institutions cannot freely communicate with consumers, it will thwart the directives issued by the [CFPB] and the federal banking agencies encouraging financial institutions to ‘work constructively’ with consumers impacted by COVID-19,” the groups wrote. “Constructive engagement with consumers is best achieved by proactive communication via automated phone call or text message by the institution.”
The seven trade groups were American Bankers Association, American Financial Services Association, Consumer Bankers Association, Credit Union National Association, Independent Community Bankers of America, Mortgage Bankers Association, and National Association of Federally-Insured Credit Unions.
Read the petition.
The TCPA requires banks and other callers to obtain the customer’s prior express consent prior to placing an autodialed call, but exempts calls placed for “emergency purposes.”
These phone calls and text messages may include outreach to customers and members (hereinafter referred to collectively, as consumers) to offer payment deferrals, fee waivers, extension of repayment terms, or other delays in payment, modification, or forbearance on mortgage payments or other loans; to advise consumers of branch closings, service limitations, reduced hours, or the availability of remote banking or other remote access options; to warn consumers of potential fraud on the consumer’s account; or otherwise to make consumers aware of programs, relief, and resources offered by the institution in response to the pandemic.
The trade groups urged the FCC to confirm that COVID-19-related calls placed by financial institutions fall within the emergency purposes exception. “If financial institutions cannot freely communicate with consumers, it will thwart the directives issued by the [CFPB] and the federal banking agencies encouraging financial institutions to ‘work constructively’ with consumers impacted by COVID-19,” the groups wrote. “Constructive engagement with consumers is best achieved by proactive communication via automated phone call or text message by the institution.”
The seven trade groups were American Bankers Association, American Financial Services Association, Consumer Bankers Association, Credit Union National Association, Independent Community Bankers of America, Mortgage Bankers Association, and National Association of Federally-Insured Credit Unions.
Read the petition.
Monday, March 30, 2020
Aspiring Low-Income or Complex CUs
The National Credit Union Administration (NCUA) Board is proposing to allow aspiring low-income credit unions (LICU) and non-LICU complex credit unions to issue subordinated debt.
Currently, the Federal Credit Union Act only allows LICUs to issue secondary capital.
An aspiring LICU or non-LICU complex credit union is defined as a credit union that anticipates being designated as a LICU or Nnn-LICU Complex Credit Union within 24 months following their planned issuance of the subordinated debt.
For example, there are 40 credit unions with total assets between $450 and $500 million of which 21 are non-LICUs. NCUA expects this number of credit unions may increase over time. This means more non-LICUs could be designated as aspiring complex credit unions.
However, these aspiring LICUs and non-LICU complex credit unions would not be allowed to count this subordinated debt as regulatory capital for prompt corrective action purposes until they become either an LICU or non-LICU complex credit union.
But allowing these aspiring credit unions to issue subordinated debt will fuel rapid growth. This will allow these credit unions to achieve the complex credit union threshold -- permitting these credit unions to count this subordinated debt as regulatory capital.
This proposal would subvert the purpose of prompt corrective action, which is meant to curb aggressive growth.
Moreover, this proposal regarding aspiring credit unions is troubling. The Federal Credit Union Act only discusses low-income credit unions and complex credit unions. It does not mention aspiring LICUs or non-LICU complex credit unions.
This is another case of this agency engaging in regulatory fiat.
Currently, the Federal Credit Union Act only allows LICUs to issue secondary capital.
An aspiring LICU or non-LICU complex credit union is defined as a credit union that anticipates being designated as a LICU or Nnn-LICU Complex Credit Union within 24 months following their planned issuance of the subordinated debt.
For example, there are 40 credit unions with total assets between $450 and $500 million of which 21 are non-LICUs. NCUA expects this number of credit unions may increase over time. This means more non-LICUs could be designated as aspiring complex credit unions.
However, these aspiring LICUs and non-LICU complex credit unions would not be allowed to count this subordinated debt as regulatory capital for prompt corrective action purposes until they become either an LICU or non-LICU complex credit union.
But allowing these aspiring credit unions to issue subordinated debt will fuel rapid growth. This will allow these credit unions to achieve the complex credit union threshold -- permitting these credit unions to count this subordinated debt as regulatory capital.
This proposal would subvert the purpose of prompt corrective action, which is meant to curb aggressive growth.
Moreover, this proposal regarding aspiring credit unions is troubling. The Federal Credit Union Act only discusses low-income credit unions and complex credit unions. It does not mention aspiring LICUs or non-LICU complex credit unions.
This is another case of this agency engaging in regulatory fiat.
Friday, March 20, 2020
Sen. Brown Calls on Financial Regulators to Cease Non-Coronavirus Rulemaking
U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – on March 17 sent letters to the Department of Housing and Urban Development (HUD) and independent financial regulators, including the National Credit Union Administration (NCUA), demanding that they suspend all rulemaking that could impede the federal response to the COVID-19 pandemic.
In a letter to NCUA, Senator Brown wrote: “The NCUA should focus its resources on providing reliable guidance and responding to the health and economic effects of this crisis rather than processing other rulemakings. During this period, all rulemaking and comment periods closing after March 1, 2020 that are not related to the virus response...should be suspended or extended for at least 45 days.”
There are two rulemakings scheduled to close after March 1 -- the Business Combination proposed rule on March 30 and Subordinated Debt rulemaking on July 8.
Read the letter to National Credit Union Administration.
In a letter to NCUA, Senator Brown wrote: “The NCUA should focus its resources on providing reliable guidance and responding to the health and economic effects of this crisis rather than processing other rulemakings. During this period, all rulemaking and comment periods closing after March 1, 2020 that are not related to the virus response...should be suspended or extended for at least 45 days.”
There are two rulemakings scheduled to close after March 1 -- the Business Combination proposed rule on March 30 and Subordinated Debt rulemaking on July 8.
Read the letter to National Credit Union Administration.
Wednesday, March 18, 2020
WI CU Regulator Removes MBL Cap for Community First CU
The Wisconsin Office of Credit Unions approved an application of Community First Credit Union (Neenah, WI) to remove the aggregate member business loan (MBL) cap, according to the Office's Credit Union Activities Report.
The credit union applied for the removal of the cap on December 9, 2019.
On January 14, 2019, the member business loan cap for Community First CU was increased to 25 percent of assets.
As of December 2019, the credit union's member business loan to asset ratio was almost 16 percent.
The credit union applied for the removal of the cap on December 9, 2019.
On January 14, 2019, the member business loan cap for Community First CU was increased to 25 percent of assets.
As of December 2019, the credit union's member business loan to asset ratio was almost 16 percent.
Tuesday, March 10, 2020
Joint Trades Letter Urges FCC Action to Prevent Erroneously Blocked Calls
A broad coalition of trade associations, including bank and credit union trade groups, wrote the Federal Communications Commission (FCC) on March 4 asking the FCC to protect outbound calls placed by legitimate businesses from telephone companies’ call-blocking programs.
To ensure legitimate calls are not blocked, the FCC should require telephone companies to provide notification of mislabeling and blocking and to provide a robust challenge mechanism that permits a legitimate business whose calls are being blocked to have the block removed promptly, the groups said. They also recommended that telephone companies be required to share information with each other on phone numbers that have been mislabeled or mistakenly blocked and also report that information to the FCC.
The trade groups were American Association of Healthcare Administrative Management, American Bankers Association, American Financial Services Association, ACA International, Consumer Bankers Association, Credit Union National Association, Edison Electric Institute, Mortgage Bankers Association, National Association of Federally Insured Credit Unions, and National Council of Higher Education Resources.
Read the letter.
To ensure legitimate calls are not blocked, the FCC should require telephone companies to provide notification of mislabeling and blocking and to provide a robust challenge mechanism that permits a legitimate business whose calls are being blocked to have the block removed promptly, the groups said. They also recommended that telephone companies be required to share information with each other on phone numbers that have been mislabeled or mistakenly blocked and also report that information to the FCC.
The trade groups were American Association of Healthcare Administrative Management, American Bankers Association, American Financial Services Association, ACA International, Consumer Bankers Association, Credit Union National Association, Edison Electric Institute, Mortgage Bankers Association, National Association of Federally Insured Credit Unions, and National Council of Higher Education Resources.
Read the letter.
Wednesday, February 12, 2020
Trade Groups Urge Swift Action by FCC to Reform TCPA
The U.S. Chamber of Commerce and other industry trade groups, including bank and credit union trade groups, in a February 5 letter urged the Federal Communications Commission (FCC) to issue without delay a re-interpretation of a key term in the Telephone Consumer Protection Act (TCPA): the definition of an “automatic telephone dialing system (ATDS),” commonly known as an “autodialer.”
The FCC is considering issuing new TCPA rules in light of a federal appellate court’s decision in 2018 to strike down the FCC’s expansive definition of that statutory term.
The groups asserted that “consumers are harmed when they do not receive time-critical, non-telemarketing communications” from banks and other companies “because the business is discouraged from placing the call due to litigation risk.”
The groups also claim that ongoing uncertainty surrounding the definition of ATDS continues to fan the flames of abusive TCPA litigation.
Read the letter.
The FCC is considering issuing new TCPA rules in light of a federal appellate court’s decision in 2018 to strike down the FCC’s expansive definition of that statutory term.
The groups asserted that “consumers are harmed when they do not receive time-critical, non-telemarketing communications” from banks and other companies “because the business is discouraged from placing the call due to litigation risk.”
The groups also claim that ongoing uncertainty surrounding the definition of ATDS continues to fan the flames of abusive TCPA litigation.
Read the letter.
Thursday, February 6, 2020
Housing Policy Group Calls for Delay of ‘QRM’ Definition Review
The Coalition for Sensible Housing Policy -- a broad group of financial, housing and community development stakeholders -- wrote on January 30 to the federal banking agencies urging them to delay the conclusion of a mandated review of the “qualified residential mortgage” definition and related provisions of the credit risk retention rule.
The groups called for a delay until the Consumer Financial Protection Bureau (CFPB) finalizes and implements the changes it is currently considering to the Qualified Mortgage definition. “It is only after the CFPB has made its final determination on the definition of QM, and following some period of experience under the new QM configurations, that the agencies would be in a position to evaluate and seek comment on the market and consumer impacts of QM/QRM equivalency versus divergence of the definitions,” the groups wrote.
The agencies were required to begin the review no later than Dec. 24, 2019, pursuant to the timeline set forth in the original rule.
Read the letter.
The groups called for a delay until the Consumer Financial Protection Bureau (CFPB) finalizes and implements the changes it is currently considering to the Qualified Mortgage definition. “It is only after the CFPB has made its final determination on the definition of QM, and following some period of experience under the new QM configurations, that the agencies would be in a position to evaluate and seek comment on the market and consumer impacts of QM/QRM equivalency versus divergence of the definitions,” the groups wrote.
The agencies were required to begin the review no later than Dec. 24, 2019, pursuant to the timeline set forth in the original rule.
Read the letter.
Wednesday, February 5, 2020
NCUA's Combination Transaction with a Non-Credit Union Proposal
The National Credit Union Administration (NCUA) on January 30 published in the Federal Register a proposed rule regarding a credit union's combination transaction with a non-credit union, including a bank.
The proposed rule provides clarity about the processes and requirements for a federally insured credit union with respect to this transaction.
The proposed rule requires NCUA's advance approval of all these transactions. In the case of federally insured state chartered credit unions, the advance approval of the state regulator is also required.
NCUA also identifies the factors that it will review regarding this transaction. Four factors involve safety and soundness issues, while the last two factors examine the impact of this proposed transaction on credit union members and potential members and whether the proposed transaction is in keeping with the credit union's mission.
The minimum amount of information to be part of an application includes the balance sheet and income statements for both institutions; a combined financial statement showing the transaction's potential impact on the credit union's net worth; information about the due diligence assessment of the proposed transaction; a delinquent loan summary; analysis of the adequacy of the allowance for loan and lease losses; and a list of the other institution's assets that would be impermissible by law.
The proposed rule requires a credit union's board of directors must vote to approve a proposed combination transaction before the credit union submits its application package. The board of directors must certify that management has explained how the transaction would affect the credit union's balance sheet and net worth and how the purchase prices was determined. Furthermore, board members must certify that they do not have a personal or pecuniary interest in the transaction.
The credit union must address how the potential members fall within the credit union's field of membership and how the credit union plans to convert potential members into actual members.
The comment period is for 60 days and must be received by March 30, 2020.
Read the proposed rule.
The proposed rule provides clarity about the processes and requirements for a federally insured credit union with respect to this transaction.
The proposed rule requires NCUA's advance approval of all these transactions. In the case of federally insured state chartered credit unions, the advance approval of the state regulator is also required.
NCUA also identifies the factors that it will review regarding this transaction. Four factors involve safety and soundness issues, while the last two factors examine the impact of this proposed transaction on credit union members and potential members and whether the proposed transaction is in keeping with the credit union's mission.
The minimum amount of information to be part of an application includes the balance sheet and income statements for both institutions; a combined financial statement showing the transaction's potential impact on the credit union's net worth; information about the due diligence assessment of the proposed transaction; a delinquent loan summary; analysis of the adequacy of the allowance for loan and lease losses; and a list of the other institution's assets that would be impermissible by law.
The proposed rule requires a credit union's board of directors must vote to approve a proposed combination transaction before the credit union submits its application package. The board of directors must certify that management has explained how the transaction would affect the credit union's balance sheet and net worth and how the purchase prices was determined. Furthermore, board members must certify that they do not have a personal or pecuniary interest in the transaction.
The credit union must address how the potential members fall within the credit union's field of membership and how the credit union plans to convert potential members into actual members.
The comment period is for 60 days and must be received by March 30, 2020.
Read the proposed rule.
Friday, January 24, 2020
NCUA Board Proposes Sub Debt and Combination Transaction Rules
The National Credit Union Administration (NCUA) Board on January 23 proposed a rule governing the issuance of subordinated debt by credit unions.
The rule would update the authority of low-income-designated credit unions to issue subordinated debt.
The proposed rule also would authorize complex credit unions subject to the agency’s risk-based capital requirements and new credit unions to use subordinated debt under certain circumstances.
The proposal will permit aspiring low-income credit unions and complex credit unions to issue subordinated debt.
The proposed rule will allow federal credit unions to borrow from any source.
The proposal will expand the eligible investors from institutional investors to accredited investors.
Plus, the proposed rule would incorporate enhanced investor protections.
This proposal will have a comment period of 120 days.
In addition, the NCUA Board proposed a rule providing greater clarity regarding the regulations governing transactions where a federally insured credit union proposes to assume liabilities from or merge with another institution that is not a credit union.
The proposed rule:
NCUA estimates that there will be approximately 20 transactions per year.
The rule would update the authority of low-income-designated credit unions to issue subordinated debt.
The proposed rule also would authorize complex credit unions subject to the agency’s risk-based capital requirements and new credit unions to use subordinated debt under certain circumstances.
The proposal will permit aspiring low-income credit unions and complex credit unions to issue subordinated debt.
The proposed rule will allow federal credit unions to borrow from any source.
The proposal will expand the eligible investors from institutional investors to accredited investors.
Plus, the proposed rule would incorporate enhanced investor protections.
This proposal will have a comment period of 120 days.
In addition, the NCUA Board proposed a rule providing greater clarity regarding the regulations governing transactions where a federally insured credit union proposes to assume liabilities from or merge with another institution that is not a credit union.
The proposed rule:
- simplifies the basic requirements that apply to combination transactions between a federally insured credit union and another type of financial institution;
- ensures that the directors of a federally insured credit union proposing such a transaction understand the nature and ramifications of the proposed transaction; and
- makes regulatory provisions applicable to all asset purchases and lists other NCUA regulations that apply to each particular transaction.
NCUA estimates that there will be approximately 20 transactions per year.
Thursday, December 5, 2019
CFPB Remittance Proposal Will Provide Reg Relief to Certain Banks and CUs
The Consumer Financial Protection Bureau (CFPB) on December 3 issues a proposed remittance rule that will provide regulatory relief to certain banks and credit unions.
The CFPB proposed a change to permanently allow depository institutions to estimate certain fees and exchange rates when making disclosures to their customers. Institutions are currently allowed to do so under a temporary provision of the rule, which is set to expire in July 2020.
In addition, the proposed rule would increase the threshold at which institutions are considered to be “remittance transfer providers” from 100 to 500. The CFPB noted that increasing this safe harbor threshold would reduce the regulatory burden on more than 400 banks and almost 250 credit unions that send a relatively small number of remittances each year.
According to CFPB analysis, all credit unions and a majority of the banks affected by the change in the safe harbor threshold have less than $10 billion in assets.
Read proposed rule.
The CFPB proposed a change to permanently allow depository institutions to estimate certain fees and exchange rates when making disclosures to their customers. Institutions are currently allowed to do so under a temporary provision of the rule, which is set to expire in July 2020.
In addition, the proposed rule would increase the threshold at which institutions are considered to be “remittance transfer providers” from 100 to 500. The CFPB noted that increasing this safe harbor threshold would reduce the regulatory burden on more than 400 banks and almost 250 credit unions that send a relatively small number of remittances each year.
According to CFPB analysis, all credit unions and a majority of the banks affected by the change in the safe harbor threshold have less than $10 billion in assets.
Read proposed rule.
Wednesday, November 13, 2019
Indiana Bank to Acquire Privately Insured CU
In a rare transaction, an Indiana bank will acquire an Indiana credit union.
ABA Newsbytes is reporting that First Bank of Berne, a $711 million community bank based in Berne, Ind., will acquire the $18.7 million Adams County Credit Union in Monroe, Indiana.
Adams County Credit Union is privately insured by American Share Insurance.
Therefore, this merger will not be hindered by the National Credit Union Administration's burdensome bank-credit union merger regulations.
Details regarding the transaction were not disclosed.
ABA Newsbytes is reporting that First Bank of Berne, a $711 million community bank based in Berne, Ind., will acquire the $18.7 million Adams County Credit Union in Monroe, Indiana.
Adams County Credit Union is privately insured by American Share Insurance.
Therefore, this merger will not be hindered by the National Credit Union Administration's burdensome bank-credit union merger regulations.
Details regarding the transaction were not disclosed.
Monday, October 28, 2019
Study: Most State CU Regulations Are Very Difficult to Read
A paper appearing in the Journal of Accounting - Business & Management found that majority of state credit union regulations are very difficult to read.
The paper, Pawnshops Regulatory Environment: A Readability Analysis (April 2018), compared the readability of pawnshop regulations to credit union regulations in 42 states.
States excluded from the analysis are Arkansas, Delaware, Idaho, Iowa, New York, North Dakota, South Dakota, and Wyoming; because the state does not have credit union regulations or state level pawnshop regulations.
The paper contends that the readability of regulations could be a barrier to a small business' success, as the ability to navigate regulations are a function of human capital.
The paper used FRE score to calculate the readability of the state regulation, which looks at the average number of syllables per word and the average number of words per sentence.
The FRE score will range from 0 to 100 -- higher the score, the easier to read. The following table shows FRE score by reading level.
The paper found that most state credit union regulations were at a college graduate reading level. Twenty-five states had a reading level of college graduate. The mean FRE score was 28.78.
All state credit union regulations required a minimum reading level of college.
The state with the most readable credit union regulation was Maine, while California had the most difficult to read credit union regulation. The following table shows the reading level of each states' credit union regulation with FRE score in parenthesis. Click on the image to enlarge.
The findings from this study suggest that state credit union regulators should look at improving the readability of their regulations, especially for small credit unions with limited financial and human capital resources.
The paper, Pawnshops Regulatory Environment: A Readability Analysis (April 2018), compared the readability of pawnshop regulations to credit union regulations in 42 states.
States excluded from the analysis are Arkansas, Delaware, Idaho, Iowa, New York, North Dakota, South Dakota, and Wyoming; because the state does not have credit union regulations or state level pawnshop regulations.
The paper contends that the readability of regulations could be a barrier to a small business' success, as the ability to navigate regulations are a function of human capital.
The paper used FRE score to calculate the readability of the state regulation, which looks at the average number of syllables per word and the average number of words per sentence.
The FRE score will range from 0 to 100 -- higher the score, the easier to read. The following table shows FRE score by reading level.
The paper found that most state credit union regulations were at a college graduate reading level. Twenty-five states had a reading level of college graduate. The mean FRE score was 28.78.
All state credit union regulations required a minimum reading level of college.
The state with the most readable credit union regulation was Maine, while California had the most difficult to read credit union regulation. The following table shows the reading level of each states' credit union regulation with FRE score in parenthesis. Click on the image to enlarge.
The findings from this study suggest that state credit union regulators should look at improving the readability of their regulations, especially for small credit unions with limited financial and human capital resources.
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