Compliance Update with Amy K

​A FREE webinar on making a successful credit union; NCUA financial education newsletter; new rulemaking agendas released by regulatory agencies; and more! 

by Amy Kleinschmit, Chief Compliance Officer

FREE Webinar - Keys to Credit Unions’ Success
The National Credit Union Administration (NCUA) is hosting a free webinar on January 18 to discuss “What Makes a Successful Credit Union?” webinar. The webinar will conclude with a question-and-answer period afterwards.

Registration for this event is now open. Brian McDonough, from the NCUA’s Office of Examination and Insurance, will moderate a panel of credit union executives. Teri Robinson, CEO of Ironworkers Federal Credit Union; Randy Chambers, president of Self-Help Credit Union; and Jay Williamson, president and CEO of American Southwest Credit Union, will discuss topics related to governance, management, and strategic planning and execution.

Participants can submit questions during the presentation or in advance by emailing [email protected]. The email’s subject line should read, “Successful Credit Union.”

NCUA Financial Literacy Newsletter
Credit unions are encouraged to subscribe to the NCUA’s Financial Literacy & Outreach Newsletter which will focus on consumer finance and education, including insights and data on important consumer topics, NCUA initiatives, and resources that support credit unions in developing and enhancing financial education programs that support consumers at all stages of their financial journey.

The newsletter will cover topics such as: teaching members about credit unions; starting and maintaining checking and savings accounts; understanding consumer rights as they relate to property appraisals and housing discrimination; building and maintaining credit; learning about cryptocurrency; spotting fraud and scams; and upcoming webinars and conferences. Subscribe for this newsletter here.

Rulemaking Agendas Released
A number of regulatory agencies have recently issued their fall 2022 rulemaking agenda. A review of the agencies’ rulemaking agendas can provide the credit union with insight on what potential compliance changes are on the horizon which can assist with strategic planning for compliance resources as well as products and services that the credit union offers or plans to offer in the future. While obviously it is just an agenda and subject to change, it is still a good idea to take an opportunity to review what may be coming in the new year.

CFPB Agenda
The Consumer Financial Protection Bureau (CFPB) issued their agenda which can be found here. An item that has been anticipated for quite a while is the final rule on the Small Business Lending Data Collection (HMDA for business loans). Per the agenda, we might see the final rule in January – but it will most likely be a sooner than later item. As you will recall, this rulemaking is required to implement Section 1071 of the Dodd-Frank Act. Section 1071 requires financial institutions to report information concerning credit applications made by women-owned, minority-owned, and small businesses.

In the proposed rule category, the CFPB includes rulemaking on Credit Card Penalty Fees. Following up on the advanced noticed of proposed rulemaking issued last year, the CFPB intends to issue a proposed rule perhaps in January as well. The CFPB is considering whether to propose amendments to the rules implementing the CARD Act relating to penalty fees levied by card issuers, including the safe harbors for penalty fees. 

PACE Financing, or Property Assessed Clean Energy Financing, might see a proposed rule in April. Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) defines PACE financing as a tax assessment on a consumer’s real property and covers the costs of home improvements. The required regulations must carry out the purposes of TILA’s ability-to-repay (ATR) requirements, currently in place for residential mortgage loans, with respect to PACE financing, and apply TILA’s general civil liability provision for violations of the ATR requirements the CFPB will prescribe for PACE financing. 

In March, we might see an interagency proposed rule regarding amendments to FIRREA Concerning Automated Valuation Models. The FIRREA amendments require implementing regulations for quality control standards for automated valuation models.

In the pre-rule category of things the CFPB is considering rulemaking on include – fees for insufficient funds and overdraft fees.

NCUA Agenda
The National Credit Union Administration’s (NCUA) rulemaking agenda can be found here.

Of the nine items in the final rulemaking stage a few include: cyber incident notification requirements, succession planning, overdraft policy, and central liquidity facility. With regard to the overdraft final rulemaking, this relates to the proposed rulemaking from 2021 in which the NCUA sought to modify the requirement that an FCU’s written overdraft policy establish a time limit, not to exceed 45 calendar days, for a member to either deposit funds or obtain an approved loan from the FCU to cover each overdraft. The proposed rule would remove the 45-day limit and replace it with a requirement that the written policy must establish a specific time limit that is both reasonable and applicable to all members, for a member either to deposit funds or obtain an approved loan from the credit union to cover each overdraft. Consistent with U.S. generally accepted accounting principles, overdraft balances should generally be charged off when considered uncollectible.  

There are ten items in the proposed rulemaking process. To highlight a few – simplification of share insurance rules. Specifically, the NCUA is considering issuing a proposal to amend its regulations governing share insurance coverage. The proposal would simplify the share insurance regulations by establishing a trust accounts category that governs coverage of shares of both revocable trusts and irrevocable trusts using a common calculation and provide consistent share insurance treatment for all mortgage servicing account balances held to satisfy principal and interest obligations to a lender. These amendments would be substantially similar to ones adopted by the Federal Deposit Insurance Corporation.

The NCUA is also looking at Field of Membership for FCUs. The NCUA’s Advancing Communities through Credit, Education, Stability, and Support (ACCESS) initiative is designed to refresh and modernize regulations, policies, and programs in support of greater financial inclusion within the NCUA and the credit union system. As part of the ACCESS initiative, the Board is considering the issuance of a proposed rule to amend its chartering and field of membership regulations. The proposed regulatory amendments would remove outdated requirements, simplify the charter approval process, and clarify regulatory language.

Another area the NCUA is looking to modernize relates to investment and deposit activities under part 703. As explained in the rulemaking agenda, the NCUA believes there may be certain provisions in part 703 that are overly restrictive and unnecessary from a safety and soundness perspective. A revised part 703 would provide federal credit unions with more flexible investment options.

One item is listed in the pre-rulemaking stage, specifically, climate related financial risk. The NCUA will be seeking public input on current and prospective climate-related financial risks to federally insured credit unions (FICUs), related entities, and the National Credit Union Share Insurance Fund (SIF). The NCUA also will get input on opportunities to strengthen its supervision and regulation of credit unions' management of and reporting on the physical and transition risks that may arise from climate change.

Amy K Contact Update
Please update your contact information for Amy Kleinschmit. The 701.214.9721 has been discontinued. Contact Amy at 701.250.3964 or anytime by email at [email protected].

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