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.
Showing posts with label Regulatory Burden. Show all posts
Showing posts with label Regulatory Burden. Show all posts
Wednesday, May 27, 2020
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.
Saturday, May 23, 2020
499 CUs Had Not Filed Call Reports as of May 15
S&P Global Market Intelligence is reporting that a number of credit unions took advantage of the regulatory delay in filing their call reports during the coronavirus pandemic.
The National Credit Union Administration extended the deadline for federally insured credit unions that file call reports to May 26 from April 26.
According to S&P Global Market Intelligence, 499 credit unions or 9 percent of all federally-insured credit unions had not filed their first quarter 2020 call report as of May 15.
These credit unions held over 8 percent of the industry's assets, based upon December 31, 2019 call reports.
Read more.
The National Credit Union Administration extended the deadline for federally insured credit unions that file call reports to May 26 from April 26.
According to S&P Global Market Intelligence, 499 credit unions or 9 percent of all federally-insured credit unions had not filed their first quarter 2020 call report as of May 15.
These credit unions held over 8 percent of the industry's assets, based upon December 31, 2019 call reports.
Read more.
Tuesday, March 24, 2020
GOP Lawmakers Ask FinCEN for Extension in Filing CTRs
A group of House Republican lawmakers on March 23 asked Financial Crimes Enforcement Network (FinCEN) Director Ken Blanco for an extension for institutions filing currency transaction reports (CTRs) until at least after the coronavirus national emergency has concluded.
The lawmakers wrote that the regulatory compliance teams at small to mid-size institutions "are stretched thin with trying to stay on top of all of the demands associated with the pandemic."
The lawmakers noted that CTRs represent a major regulatory compliance burden for small community banks and credit unions and that such an extension “would help banks and credit unions focus on their most urgent and important priorities during this public health emergency, which are serving consumers and keeping credit flowing to the economy.”
The lawmakers wrote that the regulatory compliance teams at small to mid-size institutions "are stretched thin with trying to stay on top of all of the demands associated with the pandemic."
The lawmakers noted that CTRs represent a major regulatory compliance burden for small community banks and credit unions and that such an extension “would help banks and credit unions focus on their most urgent and important priorities during this public health emergency, which are serving consumers and keeping credit flowing to the economy.”
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.
Monday, September 23, 2019
NCUA Should Propose the Equivalent of the Community Bank Leverage Ratio
On June 20, 2019, the National Credit Union Administration (NCUA) Board delayed the effective date of the agency’s risk-based capital rule to January 1, 2022.
The delay was meant to provide the NCUA Board time to consider additional improvements to credit union capital standards, including the equivalent of a community bank leverage ratio for credit unions.
On September 17, the Federal Deposit Insurance Corporation finalized the community bank leverage ratio rule.
The final rule implements a section of the S. 2155 regulatory reform law that directed the agencies to set a community bank leverage ratio between 8 percent and 10 percent.
Under the final rule, banks with less than $10 billion in assets may elect the community bank leverage ratio framework if they meet the 9 percent ratio and if they hold 25 percent or less of assets in off-balance sheet exposures, and 5 percent or less of assets in trading assets and liabilities.
Community banks with a leverage capital ratio of at least 9 percent will be considered to have met the well-capitalized ratio requirements under the Prompt Corrective Action regulations and will not be required to report or calculate risk-based capital.
The final rule has a two-quarter grace period for a qualifying community bank that fails to meet any of the qualifying criteria. For example, if the leverage ratio slips under 9 percent, but remains above 8 percent, the community bank will be deemed to be well-capitalized during the grace period. However, there is no grace period for a community bank if its leverage ratio falls below 8 percent.
The final rule goes into effect on January 1, 2020.
Section 1790d(c)2 of the Federal Credit Union Act states that if Federal banking agencies increase or decrease the required minimum level for the leverage limit, the NCUA Board may correspondingly adjust one or more of its Prompt Corrective Action net worth ratios in consultation with the Federal banking agencies.
The NCUA Board should use its authority to issue a proposed rule this year that is equivalent to the community bank leverage ratio.
By doing so, strongly capitalized, complex credit unions could elect to receive regulatory relief from the agency's risk-based capital rule.
Read more.
The delay was meant to provide the NCUA Board time to consider additional improvements to credit union capital standards, including the equivalent of a community bank leverage ratio for credit unions.
On September 17, the Federal Deposit Insurance Corporation finalized the community bank leverage ratio rule.
The final rule implements a section of the S. 2155 regulatory reform law that directed the agencies to set a community bank leverage ratio between 8 percent and 10 percent.
Under the final rule, banks with less than $10 billion in assets may elect the community bank leverage ratio framework if they meet the 9 percent ratio and if they hold 25 percent or less of assets in off-balance sheet exposures, and 5 percent or less of assets in trading assets and liabilities.
Community banks with a leverage capital ratio of at least 9 percent will be considered to have met the well-capitalized ratio requirements under the Prompt Corrective Action regulations and will not be required to report or calculate risk-based capital.
The final rule has a two-quarter grace period for a qualifying community bank that fails to meet any of the qualifying criteria. For example, if the leverage ratio slips under 9 percent, but remains above 8 percent, the community bank will be deemed to be well-capitalized during the grace period. However, there is no grace period for a community bank if its leverage ratio falls below 8 percent.
The final rule goes into effect on January 1, 2020.
Section 1790d(c)2 of the Federal Credit Union Act states that if Federal banking agencies increase or decrease the required minimum level for the leverage limit, the NCUA Board may correspondingly adjust one or more of its Prompt Corrective Action net worth ratios in consultation with the Federal banking agencies.
The NCUA Board should use its authority to issue a proposed rule this year that is equivalent to the community bank leverage ratio.
By doing so, strongly capitalized, complex credit unions could elect to receive regulatory relief from the agency's risk-based capital rule.
Read more.
Friday, March 8, 2019
FFIEC Issues Policy Statement on Examination Reports
As part of its ongoing exam modernization initiative, the Federal Financial Institutions Examination Council om March 6 issued a policy statement aimed at promoting clarity and consistency of examination reports. The policy statement, which is intended to reduce regulatory burden for community banks and credit unions, includes principles that “set forth minimum expectations of what should be included in all reports of examination.”
Among other things, the principles establish that all reports on examinations should present conclusions and issues in order of importance; document the condition and risk profile of the institution; discuss the adequacy of the institution’s risk management practices; and document issues of supervisory concern or warranting prompt corrective action.
Concurrently, the agencies are rescinding their 1993 Interagency Policy Statement on the Uniform Core Report of Examination.
Read the policy statement.
Among other things, the principles establish that all reports on examinations should present conclusions and issues in order of importance; document the condition and risk profile of the institution; discuss the adequacy of the institution’s risk management practices; and document issues of supervisory concern or warranting prompt corrective action.
Concurrently, the agencies are rescinding their 1993 Interagency Policy Statement on the Uniform Core Report of Examination.
Read the policy statement.
Thursday, November 29, 2018
Agencies Issue Update on Examination Modernization Project
The Federal Financial Institutions Examination Council (FFIEC) issued a second update on progress made to its Examination Modernization Project.
The update focuses on regulators’ work to tailor examinations based on the risk profiles of individual institutions.
After reviewing and comparing current principles and processes for tailoring community bank and credit union examinations based on risk profile, the agencies committed to issuing reinforcing and clarifying guidance where necessary. This guidance would help ensure that examiners consider the unique risk profile, complexity and business model when developing an examination plan; analyze existing information to identify areas of higher and lower risk; and appropriately tailor document requests based on risk profile, among other things.
Going forward, the issue is how well the regulators execute their plans to tailor examinations to the risk profiles of the individual institutions.
Read more.
The update focuses on regulators’ work to tailor examinations based on the risk profiles of individual institutions.
After reviewing and comparing current principles and processes for tailoring community bank and credit union examinations based on risk profile, the agencies committed to issuing reinforcing and clarifying guidance where necessary. This guidance would help ensure that examiners consider the unique risk profile, complexity and business model when developing an examination plan; analyze existing information to identify areas of higher and lower risk; and appropriately tailor document requests based on risk profile, among other things.
Going forward, the issue is how well the regulators execute their plans to tailor examinations to the risk profiles of the individual institutions.
Read more.
Tuesday, September 4, 2018
Some Thoughts on Risk-Based Capital Proposal
The National Credit Union Administration (NCUA) Board proposed to amend its definition of a “complex” credit union adopted in the 2015 for risk-based capital purposes by increasing the asset-size threshold from $100 million to $500 million.
According to the Board, the new definition of a complex credit union would exempt an additional 1,026 credit unions from the risk-based capital rule, providing these credit unions with regulatory relief. The NCUA believes that a single asset-size threshold is clearer, more logical, and easier to administer. The Board believes raising the threshold level for a complex credit union from $100 million to $500 million would not pose an undue risk to the National Credit Union Share Insurance Fund (NCUSIF).
Unfortunately, this proposal of raising the asset-size threshold for a complex credit union to $500 million would exclude numerous credit unions engaged in complex and risky activities.
A better alternative for identifying a complex credit union would involve looking at the business model of a credit union based upon its assets and liabilities.
According to the Board, the new definition of a complex credit union would exempt an additional 1,026 credit unions from the risk-based capital rule, providing these credit unions with regulatory relief. The NCUA believes that a single asset-size threshold is clearer, more logical, and easier to administer. The Board believes raising the threshold level for a complex credit union from $100 million to $500 million would not pose an undue risk to the National Credit Union Share Insurance Fund (NCUSIF).
Unfortunately, this proposal of raising the asset-size threshold for a complex credit union to $500 million would exclude numerous credit unions engaged in complex and risky activities.
- According to the proposal, increasing the asset-size threshold to $500 million would exclude approximately 800 credit unions with at least 3 complex activities, as identified by NCUA, from the agency’s risk-based capital rule.
- NCUA estimated that 284 credit unions with between $100 million and $500 million in assets would under the current rule need to raise $165 million in capital over what is required by the net worth ratio due to the credit unions’ risk profile.
- Increasing the asset-size threshold to $500 million would exclude 122 credit unions with composite CAMEL codes of 3, 4, or 5 with approximately $21.4 billion in insured shares from the risk-based capital rule, as of March 2018.
- Seven of the 10 costliest failures to the NCUSIF involved credit unions with between $100 million and $500 million in assets would be exempted from the risk-based capital rule.
A better alternative for identifying a complex credit union would involve looking at the business model of a credit union based upon its assets and liabilities.
Wednesday, June 13, 2018
Substituting a Higher Net Worth Ratio for Risk-Based Capital Requirement
The National Credit Union Administration's risk-based capital rule is very controversial for credit unions and their trade associations.
However, recent legislation may allow the National Credit Union Administration (NCUA) to substitute a higher net worth ratio for the risk-based capital requirement for complex credit unions with less than $10 billion in assets.
A complex credit union has assets of $100 million or more.
This would require combining Section 1790d(c)2 of the Federal Credit Union Act with Section 201 of the newly enacted S. 2155 (Economic Growth, Regulatory Relief, and Consumer Protection Act).
First, Section 201 of S. 2155 requires that the Federal banking agencies establish a community bank leverage ratio of tangible equity to average consolidated assets of not less than eight percent and not more than ten percent. Banks with less than $10 billion in total consolidated assets who maintain tangible equity in an amount that exceeds the community bank leverage ratio will be deemed to be in compliance with capital and leverage requirements. In other words, banks that adopt the heightened leverage ratio would opt out of the risk-based capital requirements.
Second, Section 1790d(c)2 of the Federal Credit Union Act states that if Federal banking agencies increase or decrease the required minimum level for the leverage limit, the NCUA Board may correspondingly adjust one or more of its Prompt Corrective Action net worth ratios in consultation with the Federal banking agencies by an amount equal to, not more than, the difference between the new minimum requirement established by bank regulators and 4 percent of total assets.
If NCUA Board decides to pursue this approach, complex credit unions would be allowed to opt for a higher minimum leverage ratio, which could be 300 to 500 basis points higher depending on the final decision by federal banking regulators, in return they would not longer be subject to NCUA's risk-based capital requirements. Complex credit unions that do not meet the higher net worth requirement would be subject to the current and future net worth regulatory regime.
For example, as of the end of 2017, 917 complex credit unions with less than $10 billion in assets had a net worth ratio of at least 10 percent and 425 complex credit unions had a net worth ratio of at least 12 percent.
This substitution of a higher leverage ratio for a risk-based capital rule would provide regulatory relief to many complex credit unions by simplifying their capital calculations.
However, recent legislation may allow the National Credit Union Administration (NCUA) to substitute a higher net worth ratio for the risk-based capital requirement for complex credit unions with less than $10 billion in assets.
A complex credit union has assets of $100 million or more.
This would require combining Section 1790d(c)2 of the Federal Credit Union Act with Section 201 of the newly enacted S. 2155 (Economic Growth, Regulatory Relief, and Consumer Protection Act).
First, Section 201 of S. 2155 requires that the Federal banking agencies establish a community bank leverage ratio of tangible equity to average consolidated assets of not less than eight percent and not more than ten percent. Banks with less than $10 billion in total consolidated assets who maintain tangible equity in an amount that exceeds the community bank leverage ratio will be deemed to be in compliance with capital and leverage requirements. In other words, banks that adopt the heightened leverage ratio would opt out of the risk-based capital requirements.
Second, Section 1790d(c)2 of the Federal Credit Union Act states that if Federal banking agencies increase or decrease the required minimum level for the leverage limit, the NCUA Board may correspondingly adjust one or more of its Prompt Corrective Action net worth ratios in consultation with the Federal banking agencies by an amount equal to, not more than, the difference between the new minimum requirement established by bank regulators and 4 percent of total assets.
If NCUA Board decides to pursue this approach, complex credit unions would be allowed to opt for a higher minimum leverage ratio, which could be 300 to 500 basis points higher depending on the final decision by federal banking regulators, in return they would not longer be subject to NCUA's risk-based capital requirements. Complex credit unions that do not meet the higher net worth requirement would be subject to the current and future net worth regulatory regime.
For example, as of the end of 2017, 917 complex credit unions with less than $10 billion in assets had a net worth ratio of at least 10 percent and 425 complex credit unions had a net worth ratio of at least 12 percent.
This substitution of a higher leverage ratio for a risk-based capital rule would provide regulatory relief to many complex credit unions by simplifying their capital calculations.
Sunday, May 6, 2018
Trade Groups Petition FCC for Clarification of Autodialer
A coalition of industry trade groups, including bank and credit union trade associations, asked the Federal Communications Commission (FCC) for new rules that would ensure that customers can receive important communications from their financial institutions and other businesses.
In a joint petition to the FCC, the groups asked the FCC to issue a new interpretation of a key term in the Telephone Consumer Protection Act (TCPA) -- the definition of an “automatic telephone dialing system,” commonly known as an “autodialer.” The TCPA imposes restrictions on calls made by financial institutions and other businesses when using an autodialer.
The petition comes after a federal appellate court in March struck down the portion of a 2015 FCC order that had defined “autodialer” expansively to include, for example, ordinary smartphones -- and potentially covering nearly every type of dialing equipment that a business would use to call its customers.
“The TCPA landscape is dysfunctional and in need of clarity from the FCC,” the groups wrote to the FCC. “The statute, originally intended to target a specific abusive telemarketing practice, has been expanded by courts and the FCC, turning it into a breeding ground for frivolous lawsuits against legitimate businesses trying to communicate with their customers.”
If the FCC reinterprets the term autodialer in line with the TCPA’s text and congressional intent, it would significantly reduce the number of calls made by banks and credit unions that are subject to the TCPA’s restrictions, lowering compliance and litigation costs.
Read the letter.
In a joint petition to the FCC, the groups asked the FCC to issue a new interpretation of a key term in the Telephone Consumer Protection Act (TCPA) -- the definition of an “automatic telephone dialing system,” commonly known as an “autodialer.” The TCPA imposes restrictions on calls made by financial institutions and other businesses when using an autodialer.
The petition comes after a federal appellate court in March struck down the portion of a 2015 FCC order that had defined “autodialer” expansively to include, for example, ordinary smartphones -- and potentially covering nearly every type of dialing equipment that a business would use to call its customers.
“The TCPA landscape is dysfunctional and in need of clarity from the FCC,” the groups wrote to the FCC. “The statute, originally intended to target a specific abusive telemarketing practice, has been expanded by courts and the FCC, turning it into a breeding ground for frivolous lawsuits against legitimate businesses trying to communicate with their customers.”
If the FCC reinterprets the term autodialer in line with the TCPA’s text and congressional intent, it would significantly reduce the number of calls made by banks and credit unions that are subject to the TCPA’s restrictions, lowering compliance and litigation costs.
Read the letter.
Friday, March 2, 2018
GAO: Regulators Failing to Assess Cumulative Burden of Rules on CUs and Community Banks
The Government Accountability Office (GAO) found that depository institution regulators fail to assess the cumulative burden of all rules imposed on community banks and credit unions.
The GAO conducted interviews and focus groups with over 60 representatives from community banks and credit unions regarding the most burdensome regulations.
These representatives identified regulations for reporting mortgage characteristics, reviewing transactions for potentially illicit activity, and disclosing mortgage terms and costs to consumers as the most burdensome.
GAO was told that these regulations were time-consuming and costly to comply with, in part because the requirements were complex, required individual reports that had to be reviewed for accuracy, or mandated actions within specific timeframes.
GAO made 10 recommendations to the Consumer Financial Protection Bureau (CFPB) and the four depository institution regulators.
GAO recommended that the CFPB "assess the effectiveness and guidance on mortgage disclosure regulations and publicly issue its plans for the scope and timing of its regulation reviews and coordinate these with other regulators' review process."
In addition as part of their regulatory burden reviews, the depository institution regulators should develop plans to report quantitative rationales for their actions and addressing the cumulative burden of regulations.
Read the report.
The GAO conducted interviews and focus groups with over 60 representatives from community banks and credit unions regarding the most burdensome regulations.
These representatives identified regulations for reporting mortgage characteristics, reviewing transactions for potentially illicit activity, and disclosing mortgage terms and costs to consumers as the most burdensome.
GAO was told that these regulations were time-consuming and costly to comply with, in part because the requirements were complex, required individual reports that had to be reviewed for accuracy, or mandated actions within specific timeframes.
GAO made 10 recommendations to the Consumer Financial Protection Bureau (CFPB) and the four depository institution regulators.
GAO recommended that the CFPB "assess the effectiveness and guidance on mortgage disclosure regulations and publicly issue its plans for the scope and timing of its regulation reviews and coordinate these with other regulators' review process."
In addition as part of their regulatory burden reviews, the depository institution regulators should develop plans to report quantitative rationales for their actions and addressing the cumulative burden of regulations.
Read the report.
Friday, January 26, 2018
NCUA Proposed Changes to Its Call Report
The National Credit Union Administration (NCUA) is proposing to modernize its Call Report, so as to reduce reporting burdens.
The current Call Report has 1,523 account codes.
According to the new prototype Call Report, NCUA is proposing to eliminate 1,017 account codes, as most of the account codes are no longer needed.
NCUA will add 413 new account codes. Most of the new account codes are associated with ASC Topic 326, Financial Institutions Current Expected Credit Losses, and the new risk-based capital rule, which is scheduled to go into effect on January 1, 2019.
As a result, the total number of account codes in the new prototype Call Report will fall by almost 40 percent to 919.
NCUA will also reorganize Schedules and improve Call Report instructions.
In addition to modernizing its Call Report, NCUA plans to streamline its credit union Profile Form.
NCUA is seeking comments on these proposed changes and poses seven questions for commenters.
Go to NCUA's Call Report Modernization webpage to view proposed changes.
Call Report and Profile slideshow.
The current Call Report has 1,523 account codes.
According to the new prototype Call Report, NCUA is proposing to eliminate 1,017 account codes, as most of the account codes are no longer needed.
NCUA will add 413 new account codes. Most of the new account codes are associated with ASC Topic 326, Financial Institutions Current Expected Credit Losses, and the new risk-based capital rule, which is scheduled to go into effect on January 1, 2019.
As a result, the total number of account codes in the new prototype Call Report will fall by almost 40 percent to 919.
NCUA will also reorganize Schedules and improve Call Report instructions.
In addition to modernizing its Call Report, NCUA plans to streamline its credit union Profile Form.
NCUA is seeking comments on these proposed changes and poses seven questions for commenters.
Go to NCUA's Call Report Modernization webpage to view proposed changes.
Call Report and Profile slideshow.
Monday, November 20, 2017
GOP Lawmakers Urge HUD to Review and Amend Out-of-Date Disparate Impact Rule
A group of Republican lawmakers wrote Housing and Urban Development Secretary Ben Carson on November 15th about the agency's out-of-date disparate impact stating that the rule is inconsistent with current Supreme Court precedents on disparate impact theory and could be negatively affecting HUD’s housing goals.
“Local governments, commercial and residential lenders, issuers, developers, and other mortgage industry service providers are less inclined to participate in housing projects because HUD’s disparate impact rule does not comply with the Supreme Court’s rulings,” the lawmakers wrote. “This inconsistency will reduce housing production, which in turn will increase housing expenses for many Americans, including those who can least afford it.”
The lawmakers urged HUD to make changes to the rule, adding that it “is a prime candidate for reconsideration” under an executive order issued by President Trump earlier this year calling on agencies to evaluate outdated, unnecessary or ineffective regulations, as well as those that impose costs that outweigh benefits.
Below is the letter.
“Local governments, commercial and residential lenders, issuers, developers, and other mortgage industry service providers are less inclined to participate in housing projects because HUD’s disparate impact rule does not comply with the Supreme Court’s rulings,” the lawmakers wrote. “This inconsistency will reduce housing production, which in turn will increase housing expenses for many Americans, including those who can least afford it.”
The lawmakers urged HUD to make changes to the rule, adding that it “is a prime candidate for reconsideration” under an executive order issued by President Trump earlier this year calling on agencies to evaluate outdated, unnecessary or ineffective regulations, as well as those that impose costs that outweigh benefits.
Below is the letter.
Monday, October 2, 2017
Arbitration Rule Could Raise the Cost of Credit by 25 Percent
A study by the Office of the Comptroller of the Currency (OCC) found that the Consumer Financial Protection Bureau’s arbitration rule is likely to increase the cost of credit by about 25 percent once lenders factor in the cost of class action litigation, Acting Comptroller Keith Noreika said on September 28 at the Philadelphia Fed's fintech conference.
“What we found is that there could be as high as a three-and-a-half percent annual percentage rate increase for consumers who would be subject to the rule,” Noreika said. “That’s a 25 percent increase in credit costs for people who may live week to week. There’s a real, tangible economic effect that it may have on consumers.”
He said the OCC conducted the study because it wanted to review the effects of the CFPB’s rule -- which virtually bans mandatory arbitration agreements in contracts for financial products and services -- on banks and the customers they serve. “What originally caught my eye...was the potential impact that [the rule] may have on small institutions...that really may face a massive litigation exposure,” he said.
Bank and credit union trade groups ares backing efforts in Congress to overturn the arbitration rule. A Congressional Review Act resolution passed the House this summer and is awaiting action in the Senate.
“What we found is that there could be as high as a three-and-a-half percent annual percentage rate increase for consumers who would be subject to the rule,” Noreika said. “That’s a 25 percent increase in credit costs for people who may live week to week. There’s a real, tangible economic effect that it may have on consumers.”
He said the OCC conducted the study because it wanted to review the effects of the CFPB’s rule -- which virtually bans mandatory arbitration agreements in contracts for financial products and services -- on banks and the customers they serve. “What originally caught my eye...was the potential impact that [the rule] may have on small institutions...that really may face a massive litigation exposure,” he said.
Bank and credit union trade groups ares backing efforts in Congress to overturn the arbitration rule. A Congressional Review Act resolution passed the House this summer and is awaiting action in the Senate.
Tuesday, September 5, 2017
OMB Stays EEOC Revised Data Collection Requirement
The Office of Management and Budget (OMB) on August 29 stayed an Equal Employment Opportunity Commission (EEOC) rule that would have required the collection data on wages and hour worked by race/ethnicity and gender, while the OMB conducts a review to determine whether the revised form meets the standards of the Paperwork Reduction Act.
The stay on this data collection requirement will provide needed regulatory relief for banks and credit unions that are required to file the EEO-1 form.
The old EEO-1 required federal contractors and any company with more than 100 employees to submit data about their workforces — including breakdowns by race, ethnicity, gender and job category.
The new EEO-1 form would have lead to a 20-fold increase in data points to be collected to 3,660 data items per report.
The new data collection requirements were scheduled to go into effect on March 2018.
In announcing the stay, OMB expressed concerns that the revised data collection "lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues."
Credit unions and banks will be required to complete the old EEO-1 form for fiscal year 2017.
Read the stay memorandum.
The stay on this data collection requirement will provide needed regulatory relief for banks and credit unions that are required to file the EEO-1 form.
The old EEO-1 required federal contractors and any company with more than 100 employees to submit data about their workforces — including breakdowns by race, ethnicity, gender and job category.
The new EEO-1 form would have lead to a 20-fold increase in data points to be collected to 3,660 data items per report.
The new data collection requirements were scheduled to go into effect on March 2018.
In announcing the stay, OMB expressed concerns that the revised data collection "lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues."
Credit unions and banks will be required to complete the old EEO-1 form for fiscal year 2017.
Read the stay memorandum.
Friday, June 23, 2017
NCUA Calls on Congress to Give It Regulatory Flexibility
In testimony before the Senate Committee on Banking, Housing, and Urban Affairs on June 22, National Credit Union Administration (NCUA) Acting Chairman J. Mark McWatters requested legislation to ease regulatory burdens on credit unions.
His testimony discussed steps that the agency had already taken or plans to take to provide regulatory relief to credit unions. But he also noted that there are limits on the agency's ability to provide regulatory relief.
Acting Chairman McWatters pointed out that the Federal Credit Union Act contains numerous rigid statutory requirements that ties the agency's hands. NCUA asked Congress to provide it with greater discretion to write rules to limit additional burdens on credit unions.
In addition, McWatters called on congressional action with regard to field of membership issues. NCUA believes that all federal credit unions, just not multiple common bond credit unions, should be allowed to add underserved areas. In addition, Congress should eliminate the requirement that the underserved areas be local communities and Congress could simplify the “facilities” test for determining if an area is underserved.
McWatters further requested that Congress eliminate the provision that requires a multiple common bond credit union to be within “reasonable proximity” to the location of a group the credit union wishes to serve.
He also asked Congress for the explicit authority for web-based communities as a basis for a credit union charter.
Other legislative initiatives advanced in his testimony included support for the Credit Union Residential Loan Parity Act (S. 836) and allowing more credit unions to access supplemental capital.
Read testimony.
His testimony discussed steps that the agency had already taken or plans to take to provide regulatory relief to credit unions. But he also noted that there are limits on the agency's ability to provide regulatory relief.
Acting Chairman McWatters pointed out that the Federal Credit Union Act contains numerous rigid statutory requirements that ties the agency's hands. NCUA asked Congress to provide it with greater discretion to write rules to limit additional burdens on credit unions.
In addition, McWatters called on congressional action with regard to field of membership issues. NCUA believes that all federal credit unions, just not multiple common bond credit unions, should be allowed to add underserved areas. In addition, Congress should eliminate the requirement that the underserved areas be local communities and Congress could simplify the “facilities” test for determining if an area is underserved.
McWatters further requested that Congress eliminate the provision that requires a multiple common bond credit union to be within “reasonable proximity” to the location of a group the credit union wishes to serve.
He also asked Congress for the explicit authority for web-based communities as a basis for a credit union charter.
Other legislative initiatives advanced in his testimony included support for the Credit Union Residential Loan Parity Act (S. 836) and allowing more credit unions to access supplemental capital.
Read testimony.
Thursday, May 25, 2017
McWatters to CFPB: Provide Reg Relief to CUs
In a May 24th letter to Consumer Financial Protection Bureau (CFPB) Director Cordray, Acting National Credit Union Administration (NCUA) Chairman McWatters requested that the CFPB provide regulatory relief to credit unions.
Specifically, McWatters asked that the CFPB alleviate the compliance burden for credit unions with respect to the Home Mortgage Disclosure Act and Unfair, Deceptive, or Abusive Acts or Practices requirements of the Dodd-Frank Act.
McWatters noted that Section 1022(b)(3)(A) of the Dodd-Frank Act permits the CFPB to "exempt any class of persons, service providers, or consumer financial services from certain regulations." However, this section of the Dodd-Frank Act has been underutilized by the CFPB.
McWatters points out that the unique structure and small size of many credit unions warrants this regulatory relief. The median size for credit unions is less than $30 million in assets and the median staff size is a mere 8 employees.
The letter is below.
Specifically, McWatters asked that the CFPB alleviate the compliance burden for credit unions with respect to the Home Mortgage Disclosure Act and Unfair, Deceptive, or Abusive Acts or Practices requirements of the Dodd-Frank Act.
McWatters noted that Section 1022(b)(3)(A) of the Dodd-Frank Act permits the CFPB to "exempt any class of persons, service providers, or consumer financial services from certain regulations." However, this section of the Dodd-Frank Act has been underutilized by the CFPB.
McWatters points out that the unique structure and small size of many credit unions warrants this regulatory relief. The median size for credit unions is less than $30 million in assets and the median staff size is a mere 8 employees.
The letter is below.
Monday, May 22, 2017
Banks and CUs Are Seeking Part of The Payday Lending Market
The Wall Street Journal is reporting that banks and credit unions are hoping that the Trump Administration will block the Consumer Financial Protection Bureau (CFPB) proposed payday lending rule and will scrap 2013 guidelines that forced banks to abandon the short-term loan market.
The article notes that "[s]ome credit unions continue to offer payday alternative loans"; however, the proposed requirement that lenders assess borrowers’ ability to repay could make this product too expensive to offer.
Proponents argue that letting banks and credit unions offer payday loans would benefit U.S. households that have paid billions in fees annually to payday and auto title lenders.
Read the article (subscription required).
The article notes that "[s]ome credit unions continue to offer payday alternative loans"; however, the proposed requirement that lenders assess borrowers’ ability to repay could make this product too expensive to offer.
Proponents argue that letting banks and credit unions offer payday loans would benefit U.S. households that have paid billions in fees annually to payday and auto title lenders.
Read the article (subscription required).
Tuesday, April 25, 2017
Bank and Credit Union Executives Express Concerns over Examinations and Regulations
Members of the Federal Reserve’s Community Depository Institutions Advisory Council (CDIAC) raised concerns about compliance examination processes and the current regulatory landscape in a recent meeting, according to minutes released on Friday by the Fed.
CDIAC members are selected from representatives of banks, thrift institutions, and credit unions serving on newly created local advisory councils at the twelve Federal Reserve Banks. One member of each of the Reserve Bank councils is selected to serve on the CDIAC, which meets twice a year with the Board of Governors in Washington.
“The council is very concerned that the working partnership that has existed for many years between examiners and bankers and credit unions is no longer working well, as manifested by increased examination timeframes, less risky concerns being mentioned as matters requiring attention or documents of resolution, and a lack of exam focus on an institution’s overall risk profile,” the group said.
CDIAC members noted heightened concerns over examination activities related to fair lending, Bank Secrecy Act (BSA), cybersecurity, and vendor management. For example, fair lending exams "seem to continue indefinitely, as if examiners must continue to review until they find a problem."
CDIAC members expressed frustration that agencies are using opaque statistical analyses, but are not willing to share their methodologies with financial institutions. CDIAC members stated: "Being able to use the same tools as examiners would help ensure compliance on their own part and would provide examiners with sound, reliable data analysis, thereby reducing examination burden and allowing examiners to focus on higher-risk areas."
Council members said they observed regulatory expectations for large institutions “trickling down” to community institutions, and they emphasized the need for regulators to tailor examinations based on the risk profiles of individual financial institutions.
They also raised concerns about the reduction in the overall level of examiner experience and expertise, noting that less-experienced examiners tended to take a “check-the-box” approach when conducting an examination, rather than focusing on the bank’s risk profile.
Read questions 4 and 5 of the CDIAC minutes.
CDIAC members are selected from representatives of banks, thrift institutions, and credit unions serving on newly created local advisory councils at the twelve Federal Reserve Banks. One member of each of the Reserve Bank councils is selected to serve on the CDIAC, which meets twice a year with the Board of Governors in Washington.
“The council is very concerned that the working partnership that has existed for many years between examiners and bankers and credit unions is no longer working well, as manifested by increased examination timeframes, less risky concerns being mentioned as matters requiring attention or documents of resolution, and a lack of exam focus on an institution’s overall risk profile,” the group said.
CDIAC members noted heightened concerns over examination activities related to fair lending, Bank Secrecy Act (BSA), cybersecurity, and vendor management. For example, fair lending exams "seem to continue indefinitely, as if examiners must continue to review until they find a problem."
CDIAC members expressed frustration that agencies are using opaque statistical analyses, but are not willing to share their methodologies with financial institutions. CDIAC members stated: "Being able to use the same tools as examiners would help ensure compliance on their own part and would provide examiners with sound, reliable data analysis, thereby reducing examination burden and allowing examiners to focus on higher-risk areas."
Council members said they observed regulatory expectations for large institutions “trickling down” to community institutions, and they emphasized the need for regulators to tailor examinations based on the risk profiles of individual financial institutions.
They also raised concerns about the reduction in the overall level of examiner experience and expertise, noting that less-experienced examiners tended to take a “check-the-box” approach when conducting an examination, rather than focusing on the bank’s risk profile.
Read questions 4 and 5 of the CDIAC minutes.
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