Jan. 29, 2016
Comments are due April 26 on the overhead transfer rate (OTR) methodology under the comment call issued by the NCUA Board last week. That may be just under three months away, but the time to begin thinking about how comments should be crafted is right now.
Four specific areas of comments are being generally sought by the NCUA Board, which are: Whether the overhead transfer rate should be determined by a formula, or set at the discretion of the NCUA Board; what adjustments or changes, if any, should be made to the current calculation; the definition NCUA uses for insurance-related activities, and; alternate methodologies to arrive at an accurate and fair allocation of costs. The OTR, as defined by NCUA, represents insurance-related costs in the NCUA operating budget to be funded by the National Credit Union Share Insurance Fund (NCUSIF), the federal insurance fund for credit union member savings.
A tool box of resources is already on the NASCUS website to help the state credit union system fully understand OTR the issue and its background (and, of course, NASCUS is developing analyses and resources to help state regulators and credit unions weigh in on the specific areas sought by NCUA for comment). Among the items in the toolbox:
- The 2011 unredacted review of the OTR by Price Waterhouse Coopers, which concludes, among other things, that the “OTR Methodology should be based on a classification [of expenses] that represents a consensus (among NCUA and other stakeholders in the credit union system) with regards to such activities” associated with the agency’s role in managing the insurance fund as opposed to those expenses related to NCUA’s role as a regulator (“and thus excluded from the OTR.”)
- A brief video (just more than 1 minute), updated for 2016, which explains how the OTR works and the impact on the credit union system.
- An infographic which illustrates how federally insured, state-chartered credit unions (FISCUs) have been paying more through the OTR since 2013.
- A comprehensive legal analysis (commissioned by NASCUS last year) of the OTR, concluding that it is subject to notice and comment under the Administrative Procedures Act.
Check back frequently over the next 12 weeks as we add more to the toolbox.
OTR Resources page
Federal examiners will only expect annual privacy notices to be provided if a credit union does not meet new requirements outlined in a letter to credit unions which was sent this week to all federally insured credit unions by NCUA. NASCUS has developed and published a summary of the letter, LTCU 16-CU-03 (available to members only). The exception from providing privacy notices is the result of legislation passed late last year (in the FAST Act, H.R. 22) that excepts credit unions in certain circumstances from the statutory requirement that credit unions provide consumers with annual privacy notices. The requirements to be excepted, the LTCU notes, include that:
- A credit union’s policies and practices have not changed since it provided its most recent privacy notice to consumers, and;
- A credit union shares nonpublic personal information with nonaffiliated third parties only in accordance with requirements for certain existing GLBA exceptions (see the NASCUS summary for additional details).
NCUA notes that in addition to the amendment discussed in this letter, your applicable state law still may require annual privacy notices or other privacy notices. (See 15 U.S.C. 6807.)
Speaking of the FAST Act (the law that allowed for the privacy notices exceptions), it is one of 14 bills that is summarized in an updated chart that is now on the NASCUS website of pending (or enacted) legislation in the current Congress (the 114th) which have an impact on the state credit union system. A chart summarizing action in the previous Congress (the 113th) is also updated and loaded on the website (it notes five major pieces of legislation). Both charts detail the name and bill numbers of the measures introduced, or passed/enacted in the respective sessions, the dates that they were introduced (or enacted into law, as in the case of the FAST Act), and a description of the measure. Updates will be made as legislation is introduced and if action is taken.
Legislation is, of course, not the only subject of significant interest to state regulators and credit unions -- so are the actions of the CFPB, as displayed amply by our new CFPB chart on “rulemaking initiatives.” The resource outlines significant rulemakings that the agency is expected to take this year, or has begun. Regulatory proposals on overdraft programs, payday and auto title lending, arbitration agreements, and debt collection activities are all described, as is an expected final rule on prepaid cards and similar products. This chart, too, is updated as warranted.
New summaries about NCUA’s draft strategic plan for 2017-21, and a summary of a regulatory alert from the agency on Home Mortgage Disclosure Act (HMDA) data collection requirements, are both available now on nascus.org. Regarding its strategic plan, the NCUA Board issued a notice and request for comments on the Plan at its recent meeting. The plan outlines the agency’s analysis of internal and external factors that affect NCUA and its environment; evaluates NCUA’s programs and risks, and; provides NCUA’s goals and objectives for the next five years. The NASCUS summary focuses on the agency’s three strategic goals: ensuring a safe and sound credit union system, promoting consumer protection and financial literacy, and “cultivating an inclusive, collaborative workplace” that “maximizes productivity and enhances impact. Comments on the draft plan are due March 28.
HMDA data collection requirements for 2016, outlined in NCUA Reg Alert 16-RA-01, is the subject of a NASCUS summary (members only) which notes that a credit union which meets all three criteria outlined in the Reg Alert is required to collect HMDA data during calendar year 2016 and submit the data to the Federal Reserve Board no later than March 1, 2017. A credit union that does not meet all three criteria is exempt from filing HMDA data for calendar year 2016, the letter notes. HMDA is implemented by the CFPB’s Regulation C and is applicable to all credit unions that meet the criteria outlined in the alert.
More meetings from NASCUS for state regulators and credit unions are coming up in March, including: 2016 National Meeting, March 14-15, Washington, D.C. (for regulators only); CU Executive Forum, March 23, Seattle; Cybersecurity Workshop, March 30; Charlotte, N.C. See our education-training web page for details.
Patrick Keefe, NASCUS Communications, email@example.com or (703) 528-5974