April 15, 2016

Video offers 5 key points for OTR comments

Comments on the overhead transfer rate (OTR) methodology are due to NCUA by April 26 – just 11 days away – and NASCUS President and CEO Lucy Ito is strongly urging stakeholders to offer their comments by the deadline, taking into account five key points. In a brief, new video, Ito offers an outline of the points, which are:

  • The OTR is flawed and threatens the dual chartering system. By shifting supervisory costs to the insurance fund, NCUA uses FISCUs to subsidize agency responsibilities. Thus, state and federal charters compete on costs -- with one charter having its costs artificially lowered.
  • NCUA – as a chartering authority – has safety and soundness obligations. The agency’s role goes beyond just protecting the insurance fund.
  • State-chartered, federally insured credit unions must be treated equitably. NCUA’s unique role as both chartering authority and deposit insurance administrator obligates the agency to fairness.
  • The OTR is subject to federal notice and comment requirements. That’s clear under the Administrative Procedure Act – as outlined by the 2015 NASCUS legal study.
  • There are better ways. The agency can be consistent with Congress’ intent for the insurance fund – and adopt a more equitable approach.

“NCUA should not have carte blanche in spending credit union system dollars; let’s tell them so,” Ito concludes in the video, urging viewers to visit the NASCUS “OTR Resources” page on the association’s website for more information. Working on a comment letter? Check out the video (click here or on the image above), as well as the website, for ideas and key points.


NASCUS OTR Resources


A solid example of an effective comment letter on the OTR was filed this week by the Texas Credit Union Department, in which Commissioner Harold Feeney wrote that NCUA seems to reason that it has virtually no safety and soundness responsibilities for the federal credit unions it charters. “The asserted notion that all safety and soundness-related costs are only insurance-related costs is not supported by a plain reading of the Federal Credit Union Act (FCUA) and is inherently implausible,” Feeney wrote. He noted that embedded within the provisions of the legislation passed by Congress creating the agency was an obligation on the part of NCUA to ensure that FCUs operated in a safe, sound manner and complied with applicable laws. He also pointed out that Congress has “made clear that safety and soundness is also a responsibility of the chartering authority, including state chartering authorities. Thus, all safety and soundness costs related to federal credit union examinations cannot be insurance related,” he wrote.

NCUA’s OTR methodologies are “incompatible with the spirit and intent of the Federal Credit Union Act and result in the inequitable treatment of federally insured, state chartered cred it unions,” the Texan wrote. He added that the NCUSIF, based on a plain reading of the law, was meant to be a supplementary, and not the primary, source of funding for the NCUA budget. That, he stated, leads to a “strong argument” that the fund, through the OTR, is not being managed equitably. “We encourage NCUA to carefully consider modifying the methodology to ensure it does not inadvertently discriminate in any manner against state-chartered cred it unions by indirectly subsidizing federal credit unions,” Feeney wrote.


Texas CU Department OTR comment letter


A proposed interagency rule on incentive-based executive compensation is among the items up for consideration by the NCUA Board at its next regular meeting Thursday (April 21) at agency headquarters in Alexandria, Va. Also on the agenda: a proposed rule on FCU powers related to acquired and abandoned properties (including occupancy, planning and disposal), and; an insurance fund report. Next week’s meeting will also be notable as it will be the last meeting at which NCUA Board Chairman Debbie Matz will preside; she has announced her intention to retire from the board at the end of the month. There is no word yet on a successor to Matz as chairman.


NCUA Board meeting agenda, April 21


Now that a one-year suspension has expired, credit card issuers must submit their currently offered card agreements to the Consumer Financial Protection Bureau to be posted on the bureau’s website, the agency recently reminded in a notice (which NASCUS has summarized on its website). The submission is required under the Truth in Lending Act (TILA) and Regulation Z. The NASCUS summary points out that, last year, CFPB amended Regulation Z (which implements TILA and the official interpretation of that regulation) to temporarily suspend the submission obligation for one year. The suspension is now up, and the next submission is due on May 2 (the first business day on or after April 30, 2016). The NASCUS summary notes that the submission must include credit card agreements that were offered to the public


NASCUS Summary, CFPB notice of expiration of suspension/credit card agreements


Two key developments on upcoming conferences – today’s deadline for big registration fee savings on the 2016 NASCUS State System Summit, and the opening of registration for the NASCUS/CUNA BSA Conference. For the 2016 Summit, Oct. 5-7 in Chicago, those who register today save $100 on registration fees. The NASCUS Summit is the only annual event for the nation's state credit union system, bringing together credit union regulators and practitioners for mutual exchange and dialog with educational workshops, insightful discussions and networking events geared specifically toward CEOs, state regulators and industry leaders.  Meanwhile, registration has opened for NASCUS/CUNA BSA Conference, Nov. 13-16 in San Antonio. The NASCUS/CUNA Bank Secrecy Act conference is the largest and most established credit union system-specific BSA/AML training in the country. Just as with past conferences, the 2016 event will offer the latest information essential to examination and compliance responsibilities related to BSA. Registration information is at the links below:


NASCUS 2016 State System Summit (Oct. 5-7, Chicago)

BRIEFLY: Cybersecurity concern tops poll

Online poll results can be a mixed bag – typically reporting a combination of whatever the poll designer had in mind when throwing it together, and the particular bias of the group of respondents to the poll – who can be anybody. But, knowing the interest of NASCUS members in cybersecurity, the April 10 results of a Credit Union Journal poll, captured our attention. In response to the comment “NCUA examiners will be receiving specialized training on evaluating interest rate risk (IRR) this month. I think …” 61% responded “IRR is important, but I'm more concerned with cybersecurity.” The other two responses: 26% responded “IRR is important, but I'm more concerned with credit risk,” and the remaining 13% went with “IRR is especially important now that rates are finally starting to rise.” No indication was given of the number of respondents to the survey.


CU Journal polls

MBL School, June 7-8, New Orleans

Information Contact:
Patrick Keefe, NASCUS Communications, pkeefe@nascus.org or (703) 528-5974