Sept. 18, 2015
OTR: The real issue is proper division of NCUA’s roles
We noted – and appreciated -- comments by NCUA Vice Chairman Rick Metsger in this month’s NCUA Report (published this week) that “it seems reasonable for NCUA to invite comments on the OTR’s application and methodology.” We are, however, a tad flummoxed by his following statement that “perhaps commenters could persuade us that federally chartered credit unions need to pay more, or maybe state-chartered credit unions haven’t been paying enough and need to up their contribution,” after stating that FCUs currently pay 66.4 % of the cost of NCUA’s budget, compared to 33.6% for state charters. But a closer look reveals what those numbers really represent. Wrapped up in that 66.4% paid by FCUs is the cost of their charter – 28.2% in operating fees. Strip that out and FCUs are paying 38.2% of NCUA’s operating budget compared to 33.6% by state-chartered CUs. What’s the difference? The amount of insured shares held by each type of charter. Both state and federal charters pay for the insurance operations of the NCUA at exactly the same rate -- 71.8% (that’s the OTR) -- based on their insured shares. The real question regarding states and federals “paying their fair share” is whether that 28.2% in operating fees represents the full cost of chartering federals, or whether some of that cost has been re-characterized as “insurance related” and is now being paid, in part, by state-chartered credit unions. When stakeholders have the opportunity to comment on the OTR, we will urge them to focus on the appropriate division between NCUA’s roles as regulator and insurer—because that’s the real issue.
‘Small entity’ rule notes our suggestion
The NCUA Board has approved a new rule defining a “small credit union” at less than $100 million in assets, noting, in the process, our recommendation that it consider that definition as the asset threshold for a number of its rules. In our comment letter in May, we recommended that NCUA revisit current rules containing asset thresholds to evaluate the substitution of the small credit union definition for the articulated asset size in those rules. We made that recommendation in support of raising the threshold from $50 million – but we also noted that the Regulatory Flexibility Act (RFA) classification of “small credit union” does not directly convey any immediate regulatory relief to credit unions. Our comment letter commended the agency for taking steps to bifurcate the application of recent final rules by asset size risk analysis – but we noted that none of those rules incorporate the definition of small credit union in the rule. Rather, those rules specifically cite an asset threshold, generally $50 million. In its analysis, NCUA responded to our suggestion – stating that it would separately consider whether to align thresholds in existing rules, such as those applying interest rate risk and liquidity requirements, with the RFA threshold. “The NCUA’s regular three-year review cycle provides appropriate opportunities for these considerations,” the agency stated. “Individual reviews will facilitate transparent considerations of unique risks and compliance burdens specific to those rules, rather than encouraging a one-size-fits-all approach.” That’s a positive step. We look forward to future reviews of the “small credit union” definition especially in the context of relative risks posed by similarly sized credit unions and community banks.
NASCUS comment letter on Proposed Rule 791 and IRPS 15–1 (Refer to "Definition of small credit union")
Final rule and Interpretive Ruling and Policy Statement 15-1
Up to speed on BSA? Law enforcement is watching
Remarks this week by a high-ranking official of the Financial Crimes Enforcement Network (FinCEN) should be reason enough for everyone in the credit union space to be sure they are up to speed on their Bank Secrecy Act (BSA) requirements. FinCEN Director Jennifer Shasky Calvery told a meeting of the National Association of Federal Credit Unions (NAFCU) in Washington this week that a “high number” of credit unions have not filed in “some time” either currency transactions reports (CTRs) or suspicious activity reports (SARs), noting that a “statistically relevant and unusual number of credit unions” over almost a two-year period filed neither of the reports mandated by BSA. The data may have problems, she acknowledged, but she also expressed surprise at the number – and indicated FinCEN is looking into it. If you are looking into whether you need an update on BSA, consider the NASCUS/CUNA BSA Conference, Nov. 15-18 in Fort Lauderdale – the best way to keep current on BSA changes (and requirements).
Summit session looks at top projects from Filene
What are the most popular projects within the credit union movement from its think tank this year? Find out, in a lively and informative session at the 2015 NASCUS State System Summit, Oct. 21-23 in New Orleans. Cynthia Campbell, Director of Impact + Labs for the Filene Research Institute, will present the five most-downloaded presentations/projects by Filene during her session at the 2015 Summit. As Director of Impact + Labs, Cynthia Campbell leads Filene’s Accessible Financial Services Incubator and takes the best of Filene’s research and innovation and works with credit unions to implement key findings that will impact their members and organization in positive and meaningful ways. To get a feel for what Cynthia will be discussing at the 2015 Summit, take a peek at the video she provided to us – and consider joining us at our conference in New Orleans, now less than six weeks away!
New top regulator takes reins in WV
Dawn E. Holstein has been appointed Acting Commissioner of the West Virginia Division of Financial Institutions. A veteran of nearly 19 years’ experience with the Division of Financial Institutions, she has a long resume as a supervisor, serving in the roles of safety and soundness examiner, information technology examiner, staff analyst and most recently the Director of Depository Institutions. She succeeds Sally Cline, who left the position as Commissioner Sept. 1
Around the states: Dawn Holstein named acting commissioner
BRIEFLY: Summit hotel rate, full education schedule, position opening
IMPORTANT: Our negotiated hotel rate for Summit expires Sept 19 – that’s tomorrow (Saturday)! If you have temporized on a decision, time is getting short (really). See the links below to get it done! … We are in the midst of a crowded education calendar for the month, which includes … Nearly 100 credit union representatives participated in our Connecticut Cybersecurity Basics Conference for Credit Unions this week in Cromwell, focusing on outreach to law enforcement, threat trends, source of losses to credit unions, board responsibility and more. The conference was a joint project between NASCUS, the Credit Union League of Connecticut and the Connecticut Department of Banking … Next week, we have two sessions available: The Ohio “Credit Union Day” (an “industry day” for Buckeye state credit unions) and the Colorado Directors College in Denver; both are on Tuesday, Sept. 22 – and there is still time to register for both! … In two weeks (Sept. 28-30) we are hosting in the San Francisco area our Regulatory Roundtable, which explores issues essential to examining state credit unions effectively. See the links below for information on the latter three sessions … NASCUS is hiring for our Legislative and Regulatory Affairs Department; interested candidates should see our Career Opportunities section on this website (or the link below).
Patrick Keefe, Director of Communications, firstname.lastname@example.org or (703) 528-5974