Regulatory Update 1-27-2020, Weekly Regulatory Advocacy Report

by Tim Pierce, David Hawkins | Jan 27, 2020
NCUA Board Meeting Includes Credit Union Combination Transactions
At its January meeting, the NCUA Board took the following actions:
  1. Approved the 2020 Annual Performance Plan.
  2. Approved Inflationary Adjustments for Civil Money Penalties. The adjustments will be effective upon publication in the Federal Register.
  3. Approved a Credit Union Combination Transactions Proposal. Combination transactions include those where a federally insured credit union (FICU) proposes to assume liabilities from a non-credit union, including a bank. 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.
All such transactions require the NCUA’s approval, and state-chartered, federally insured credit unions also must obtain approval from their state regulator. The comment deadline will be 60 days following publication in the Federal Register.
  1. Approved a Subordinated Debt Proposal that would count as capital. This proposed rule outlines the process for issuing subordinated debt for credit unions with a low-income credit union (LICU) designation or complex credit unions (assets >$500 million). Non-LICU, complex credit unions will be able to include the subordinated debt only for purposes of risk-based capital, not net worth. This proposed rule would replace the existing secondary capital rules available to LICUs. In particular, the proposed rule would:
  • Add a new section to NCUA’s regulations addressing limits on loans to other credit unions;
  • Clarify application requirements to issue subordinated debt;
  • Expand requirements for note disclosures and offering documents;
  • Update the borrowing rule to clarify that federal credit unions can borrow from any source; and
  • Add new safe harbors for repudiation and interest payments.
Any secondary capital issued before the effective date of a final rule would be grandfathered under the new rule. The comment deadline is 120 days following publication in the Federal Register.
  1. Extended the 18% Federal Credit Union Loan Interest Rate Ceiling to September 10, 2021.
New IRA Rules Now in Effect
The SECURE Act was signed into law on December 20, 2019 with most of the provisions taking place as of January 1, 2020. The top provisions are as follows:
·         Traditional IRA owners can now contribute after age 70½.
·         Traditional IRA required minimum distributions will now start at age 72.
·         IRA and qualified retirement plan beneficiaries are now restricted to a 10-year time frame for distributions.
·         More Flexible IRA Contributions.
·         The 529 plan monies can now be used to pay for registered apprenticeships.
For more information, visit Ascensus website.
CFPB Publishes Updates HMDA Small Entity Compliance Guide
The Consumer Financial Protection Bureau (CFPB) has published an updated version of the Home Mortgage Disclosure Act (HMDA) Small Entity Compliance Guide. The updated guide incorporates changes from the October 2019 HMDA final rule.
CUNA Updates the Credit Card MLA Fee Comparison Spreadsheet
The fourth-quarter 2019 update to the credit card Military Lending Act (MLA) Fee Comparison Spreadsheet is now available. This spreadsheet is useful, because the MLA rule has a safe harbor that allows a credit union to exclude a bona fide credit card fee from the MAPR.
CFPB Issues Policy Statement on “Abusive Acts or Practices”
The Consumer Financial Protection Bureau (CFPB) issued a policy statement Friday outlining its approach to the “abusiveness” standard in supervision and enforcement matters. CUNA has long recommended the CFPB act to clarify the scope and meaning of “abusiveness,” including in its comprehensive white paper sent to the CFPB on common-sense reforms.
The key principles in this statement include:
  • Citing or challenging conduct as abusive in supervision and enforcement matters only when the harm to consumers outweighs the benefit;
  • Generally avoiding “dual pleading” of abusiveness and unfairness or deception violations arising from all or nearly all the same facts, and alleging “stand alone” abusiveness violations that demonstrate clearly the nexus between cited facts and the Bureau’s legal analysis; and
  • Seeking monetary relief for abusiveness only when there has been a lack of a good-faith effort to comply with the law, except the Bureau will continue to seek restitution for injured consumers regardless of whether a company acted in good faith or bad faith.
CUNA Has 2019 Checklist for CUs to Update Policies and Procedures
CUNA’s 2019 Year in Review Checklist is now available to help credit unions review and update policies and procedures to reflect regulatory changes of 2019. The checklist is designed to accompany CUNA’s 2019 Year in Review document, which consolidates resources and information available on finalized rules and regulations over the course of 2019. It also covers the one-year delays of implementation of both NCUA’s risk-based capital rule and the Financial Accounting Standards Board’s current expected credit loss (CECL) standard.
Pending Regulatory Comment Call
Upcoming Effective Dates
Regulatory Update is a compliance resource delivered by email only. All Regulatory Updates are available on the League's website. If you have any questions, please don't hesitate to contact Joe Guilfoy, Tim Pierce or Dave Hawkins. If there is someone else at your credit union who should receive these updates, or if you would like to be removed from our list, please send a reply e-mail.