|
May 9, 2008 - From new information technology (IT) issues to ongoing Bank Secrecy Act (BSA) compliance, the NASCUS Red Flags and Compliance Examination Seminar, May 5-7 in Columbus, Ohio, highlighted emerging risks for credit unions and what regulators and examiners are keeping an eye on in 2008.
Beyond IT issues and BSA compliance, the training covered member business lending (MBL) red flags, the economic climate, ID theft concerns, third-party and vendor due diligence as well as how to avert problems in foreclosures and what to keep in mind regarding credit union mergers.
 |
| Seminar attendees work in small groups on IS&T case studies in credit unions. (NASCUS Photo) |
With foreclosures on the rise across the nation, Frank Drake, frequent NASCUS speaker and partner, Smith Debnam, LLP in Raleigh, NC, highlighted need-to-know facts about credit unions involved in foreclosures. Drake explained that credit unions have a lot more experience with repossessions than foreclosures, bringing some credit unions into unfamiliar territory.
Drake emphasized that one of the mistakes credit unions make is not looking at the property first before starting the foreclosure process. “A truck that doesn’t run is like a house that has gone through foreclosure,” said Drake. “You must see the condition of the house or property. Find out who lives there and the visible risks.”
Drake also discussed credit union mergers focusing on the importance of a regulatory compliance officer’s involvement in the pre-merger due diligence team. He likened the merger situation to “a marriage,” where an expansion of compatibly aspects, for example database systems, software, archives and other regulatory issues, can minimize future unexpected problems.
 |
| Jeffrey Hirsch, banking supervisor of the Federal Reserve Bank of Cleveland, highlights risks bank examiners are seeing and the challenges of the economic climate. (NASCUS Photo) |
Jeffrey Hirsch, banking supervisor of the Federal Reserve Bank of Cleveland, spoke to attendees about the risks and implications of current banking conditions. He provided a picture of the current financial environment, cited as “very unusual times” by Hirsch. The market problems are “very prevalent” among financial institutions, he said, “everyone is feeling some kind of duress.” While earnings, asset quality and liquidity are down, capital remains strong which is good news, said Hirsch. He concluded his presentation with a list of what he believes will be the 10 major stories of 2008 in the financial sector. The list included liquidity and funding risks, a return to traditional banking and consumer/commercial lending risk and exposure.
In addition, attendees spent a morning discussing member business lending (MBL) red flags with Doug Lacy-Roberts, a senior staff member of the Washington state credit union agency. Lacy-Roberts, financial examiner supervisor of the Washington Division of Credit Unions, covered the latest “watch list” of risks associated with credit union MBL programs. Lacy-Roberts pointed out that credit unions and their communities are benefiting from member business loans, but the programs must be operated with the proper risk assessment, sufficient lending expertise and due diligence of third-party vendors and loan participations, if applicable.
Brent Moeggenberg of the Michigan Office of Financial and Insurance Regulation updated the group on IS&T red flags and what examiners should keep an eye on in terms of data security and compliance with the Gramm-Leach-Bliley Act. NASCUS management also served as faculty for the training. NASCUS Senior Vice President Brian Knight provided an update on BSA and anti-money laundering compliance. Knight told the audience that BSA was “here to stay” and that compliance continues to deepen in complexity, especially for smaller institutions. Jenny Champagne, NASCUS Vice President for Education and Regulatory Development, briefed the audience on changes to the Fair and Accurate Credit Transactions Act (FACTA) that must be in place by November 2008.
To read more about NASCUS’ educational programs, click here or email Ryan Taylor at ryan@nascus.org.
|
 |
|
|
NASCUS Education and Training
NISCUE
NASCUS News Story Archive
Pressroom |
