May 6, 2016
As of May 3rd, NCUA has posted 39 letters filed in response to its notice for comments on its Overhead Transfer Rate (OTR) Methodology. The letters--14 from credit unions, 7 from state regulatory agencies, 12 from credit union leagues, and 6 from associations, other organizations and individuals--cited the current OTR Methodology’s inequitable treatment of state chartered credit unions and urged NCUA to reconsider its approach. Many of the comments filed echoed the comprehensive letter filed by NASCUS questioning the rationale behind the ever-increasing allocation of costs to the National Credit Union Share Insurance Fund.
The response to the request for comments on the OTR Methodology stands out compared to similar requests for comment on technical rules and procedures and demonstrates a broad concern with the Methodology. For example, the 4 Economic Growth and Regulatory Paperwork Reeducation Act (EGRPRA) comment notices garnered an aggregate total of only 26 comments over the nearly 2-year comment period. An October 2015 request for comments on bank notes garnered 8 comments and the March 2015 request for comments on federal credit union holding of fixed assets drew 16 comments.
NASCUS anticipates additional comments will be posted to the NCUA website in the coming days, increasing the number of comments submitted to over 40. Comments submitted are available at the NASCUS OTR Resources page, or under the Board Actions tab of the NCUA website.
NASCUS has enjoyed a productive working relationship with Rick Metsger as NCUA Vice Chairman, and looks forward to that continuing with Mr. Metsger as NCUA Chairman. With the announcement on Monday of the President’s decision to name Mr. Metsger Chairman, NASCUS CEO Lucy Ito observed, “By acting swiftly on Chairman Metsger’s appointment, President Obama not only demonstrated his confidence in Chairman Metsger, the President also sent a clear message that NCUA is a critical agency and the credit union system should benefit from uninterrupted leadership and direction.” We are confident that Chairman Metsger and Board Member McWatters will work together to provide leadership for the credit union system and continue the regulatory review and relief initiatives underway at NCUA. Both Chairman Metsger and Board Member McWatters have consistently expressed their support for a robust dual charter system. Today, important issues lie before the credit union system, including FOM modernization for FCUs, equitable corrections to OTR, and supplemental capital reform for risk-based capital. NASCUS, state regulators, and our state credit union members, look forward to working with NCUA to ensure the credit union system remains safe, sound, and viable.
Comments on proposed revisions to a revised, uniform interagency consumer compliance rating system are being sought for 60 days by federal financial institution regulatory agencies – including the NCUA – under the auspices of the Federal Financial Institutions Examination Council (FFIEC). Notable, NCUA and most state agencies have already incorporated the existing rating system into their CAMEL structures, and no individual rating number is issued. NCUA and the states will similarly incorporate the revised rating system once finalized. According to a release issued last week by the council, the proposal would revise the existing, 35-year-old “Uniform Interagency Consumer Compliance Rating System” to reflect “regulatory, supervisory, technological and market changes since the system was established.” The release states that the rating system is a supervisory policy for evaluating financial institutions’ adherence to consumer compliance requirements. “The proposed revisions were not developed with the intention of setting new or higher supervisory expectations for financial institutions; their adoption will represent no additional regulatory burden,” the release states. With regard to NCUA’s involvement in the rating system, a footnote in the FFIEC filing documents for the comment period states that NCUA integrates the principles and standards of the current CC Rating System into the existing credit union CAMEL rating structure, in place of a separate rating. “When finalized, the revised CC Rating System will be incorporated into NCUA's risk-focused examination program,” the footnote states. “Using the principles and standards contained in the revised CC Rating System, NCUA examiners will assess a credit union's ability to effectively manage its compliance risk and reflect that ability in the Management component rating and the overall CAMEL rating used by NCUA.” NASCUS has learned that most state regulatory agencies either now use or will use a similar approach.
Consumers continue to encounter mortgage servicing problems when they are unable to make payments, according to the latest “Complaint Snapshot” from the CFPB – this one focusing on mortgage servicing. According to the April 27 report, the Bureau received approximately 223,100 mortgage complaints as of April 1 (over a 2.5-year period). The top consumer complaint (51%): problems they faced when they had difficulty making payments. In a release, CFPB stated that “consumers complained of prolonged loss mitigation review processes in which the same documentation was repeatedly requested by their servicer. Consumers also complained that they received conflicting and confusing foreclosure notifications during the loss mitigation review process.” Other top complaints included: confusion over loan transfers, and; communication issues with servicers. Servicers complained about the most (between November 2015 to January 2016): Wells Fargo, Bank of America, Ocwen, and Nationstar Mortgage.
A new summary from NASCUS outlines the CFPB’s proposal to reopen the comment period on a particular aspect of its proposed amendments to certain mortgage servicing provisions under Regulation X and Regulation Z. Among other things, the NASCUS summary notes, the proposal addresses requiring servicers to provide modified statements under Regulation Z to consumers who have filed for bankruptcy (subject to certain exceptions).The original comment period for the proposed rule closed on March 16, 2015, the NASCUS summary states. The Bureau conducted consumer testing on the periodic statement forms for consumers in bankruptcy after the close of the comment period. Comments will now be accepted until May 26, 2016. Meanwhile, NASCUS has posted another summary, this one about submission of credit card agreements under the Truth in Lending Act (Regulation Z). The summary points out that the notice reminds credit card issuers they are required by the Truth in Lending Act (TILA) and Regulation Z to submit their currently offered credit card agreements to the CFPB to be posted on the Bureau’s website.
The Cybersecurity Symposium, sponsored jointly by NASCUS and CUNA, is now less than three months away – and registration is ready and waiting. The 2016 edition of this popular event is the third annual, - picking up where the first two, very popular programs left off. Held in Chicago Aug. 1-2 at the Westin River North Hotel, the event focuses on cutting-edge techniques, best practices and procedures that protect organization from the latest threats. Among the working agenda highlights of this year’s program: Six Things You Can Do Right Now to Improve Your Information Security; Choosing the Right Cybersecurity Risk Assessment Tool; Building a Cyber Threat Intelligence Capability; Cybersecurity, Anti-Money Laundering, and Identity Theft Red Flags; Cybersecurity and AIRES – and much more. Overall, the program contains 13 hours of educational presentations, discussions, demonstrations and panel/group discussions, as well as presentations and group discussion led by cybersecurity experts. Leading the program again this year will be Tom Schauer of CliftonLarsonAllen in Seattle (formerly CEO of TrustCC). Schauer has practiced IT security, audit and compliance since 1986, starting his career as a security analyst and BCP coordinator at a $3.5-billion regional bank.
Patrick Keefe, NASCUS Communications, email@example.com or (703) 528-5974