Jan. 4, 2019 NASCUS Report

New Congress means new nominations
for NCUA Board, other regulators

Now that the new Congress is in place, it will be up to Trump administration to begin considering who will be its latest nominees for positions on NCUA Board, among other things.

On Wednesday, the Senate by voice vote confirmed 77 nominations, but Republican Rodney Hood – nominated by President Donald Trump for a seat on the NCUA Board last summer – was not one of them. With the completion of the 115^th Congress on Thursday (and the start of the 116^th Congress the same day), his nomination and others (including two nominated but not confirmed for seats on the Federal Reserve Board) will be returned to President Trump, who can choose to resubmit the nominations, present some new names for the seats, or do nothing.

That means there is more work ahead on NCUA nominations for the White House this year: two of the seats on the NCUA Board remain open. The term of current Board Member Rick Metsger, a Democrat, expired in August, 2017; he is serving as a holdover until a successor is confirmed (which would have been Hood). Meanwhile, the seat held by former Democratic Chairman Debbie Matz – who left the board in 2016 – also remains open; the White House never nominated anyone for that seat.

In addition, the term of NCUA Board Chairman J. Mark McWatters, a Republican, runs out in August of this year. McWatters can continue to serve in his position until the Senate confirms a successor (also nominated by the president).

But the White House has even more work to do: nominations for both of the Fed board seats will need to be presented, as well as nominations for a vice chairman and member of the FDIC Board of Directors (current member, and former chairman, Martin J. Gruenberg is serving as a holdover, his term having expired last month).

SUMMARY NOTES EXTENT OF FIDELITY BOND PROPOSAL …

A new NASCUS summary of NCUA’s proposal on fidelity bond coverage notes that it applies in part to state credit unions – but also points out that the changes proposed by the agency only apply to federal credit unions. In November, the NCUA Board proposed (and issued for comment, until Jan. 22) new rules on fidelity bond requirements for corporate and natural-person credit unions that would (among other things) codify authority for coverage of certain service organizations.

The proposal (part of NCUA’s regulatory reform agenda) is intended to (among other things) strengthen a board of directors’ oversight of a credit union’s fidelity bond coverage. The NASCUS summary points out that federally insured, state-chartered credit unions (FISCUs) are subject to Part 741.201 of NCUA rules (one of the parts of the agency’s rules for federally insured natural person credit union and corporate credit union for fidelity bond requirements for fidelity bond coverage), the agency is not proposing changes to that section. “Currently, Part 741.201 does not appear to incorporate by reference ALL of Part 713 (the other part of the agency rules on fidelity bonds),” the NASCUS summary states.

NASCUS has also pointed out (when the proposal was issued in November) that, as with all rules that apply to FISCUs, “there is ongoing concern that the manner in which NCUA’s rules are organized may lead to confusion among credit unions and federal and state examiners regarding which rules apply to state charters,” according to President and CEO Lucy Ito. She said then that, over the course of the 60-day comment period for the proposal, NASCUS will carefully review the proposed fidelity bond requirements to determine the extent of the impact of state-chartered credit unions.

LINK:
NASCUS Summary: Proposed rule, Part 713 and Part 704 Fidelity Bond Coverage (741.201)

… WHILE ANOTHER OUTLINES ESCROW ACCOUNT INSURANCE COVERAGE

A summary of the second (and final for 2018) legal opinion issued by NCUA in 2018 has been posted by NASCUS, and is available for members only. In December, the agency posted the opinion addressing “other similar escrow account” share insurance coverage. The opinion was issued in a letter dated Aug. 30. In the letter, NCUA determined that a particular 529 savings account offered by State Employees Credit Union (SECU) in North Carolina appears to qualify for pass-through coverage by the federal Share Insurance Fund. NCUA General Counsel Michael McKenna wrote that the subject 529 account, if offered in North Carolina by SECU, “qualifies to pass-through share insurance coverage as an ‘other similar escrow account.’” He wrote that this is based largely on SECU’s factual representations regarding the nature and structure of the particular account, the structure of the North Carolina State government and its political subdivisions and agents, and applicable North Carolina state law. “NCUA’s finding is specific to North Carolina and does not mean all other state 529 plans would qualify”,” the NASCUs summary points out. “NCUA makes these determinations on a case-by-case basis.”

LINK:
NASCUS Summary: Other Similar Escrow Account Share Insurance Coverage – North Carolina 529 Account (members only)

BUREAU DETAILS HMDA DATA CHANGES FOR COMING YEAR

Final policy guidance describing mortgage lending data that will be disclosed publicly in 2019 – including information that will be excluded from disclosure — was announced Dec. 28 by the CFPB (formerly known as BCFP). In a release, the agency said the final policy guidance describing Home Mortgage Disclosure Act (HMDA) data – which the agency said will also include modifications to protect consumer privacy – will exclude from public disclosure items such as the property address and the applicant’s credit score.  The agency said it would also disclose certain information “with reduced precision,” such as by disclosing ranges rather than specific values for an applicant’s age, the loan amount and the number of units in a dwelling.

CFPB noted that the changes in the policy guidance reflect comments received on its proposal issued in September. “The Bureau has considered whether and how HMDA data should be modified prior to its disclosure to the public, in order to protect applicant and borrower privacy while also fulfilling HMDA’s public disclosure purposes,” the agency said in its release.

In addition to the policy guidance, CFPB also indicated that other changes are coming to HMDA disclosures. “The Bureau has decided that it would be beneficial to conduct a separate notice-and-comment rulemaking to incorporate any modifications of HMDA data into the text of Regulation C.  That rulemaking will enable the Bureau to further consider, on the basis of additional comments, what HMDA data will be disclosed in future years.  The Bureau intends to commence such a rulemaking in 2019,” the agency said.

The release from the agency also reiterated CFPB’s intention to reconsider aspects of its 2015 HMDA regulation. “In 2015 the Bureau finalized changes to Regulation C, the CFPB’s rule implementing HMDA, updating the quality and type of data that lenders must collect and report,” the release stated. “These changes also shifted the responsibility for disclosing loan-level HMDA data from lenders to the HMDA supervisory agencies.”

LINK:
Consumer Financial Protection Bureau Announces Policy Guidance on Disclosure of Home Mortgage Data

IN REVERSAL, MORE CARD PROGRAMS OFFERED THROUGH COLLEGES

Reversing a long-standing trend, credit card programs offered with colleges and universities or their affiliated entities increased in 2017, according to a report issued last week by CFPB. In its College credit card agreements, Annual Report Congress, the agency said the number of agreements between credit card issuers and educational or affiliated entities sponsoring credit card programs increased last year. The bureau also said that the number of issuers maintaining at least one such agreement also rose. “However, accounts open pursuant to such agreements and the total amount paid by issuers to entities pursuant to such agreements continued to decline,” the agency said.

Other key findings of the report include:

• Alumni associations remain the predominant type of educational or affiliated entity which partners with issuers in offering credit cards to students. “Fluctuations in the proportion of the agreements between issuers and entities attributable to each type of entity were small and did not appear to represent an obvious trend,” the report states.
• The largest agreements continue to account for a large share of the payments made by issuers to educational or affiliated entities, with the 10 most-lucrative agreements representing 41% of all payments by issuers.

LINK:
College credit card agreements 2018

CFPB WORKERS LIKE JOBS, INDICATE UNEASE FOR ‘SENIOR LEADERSHIP’

More than four in every five of the workers at the federal consumer financial protection agency acknowledge that the work they do is important (and a similar number say they like the work that they do), but less than one in four say they are satisfied with the policies and practices of their senior leaders, according to the results of a workforce survey.

Results of the CFPB annual employee survey released late last week show that 83.2% of respondents to the survey — conducted online Aug. 6-31, and which was filled out by 72% of the agency’s “employee population” of 1,540 full time equivalent agency employees  – agree or agree strongly with the statement that “the work I do is important.” At the same time, 83% also agreed or agreed strongly with the statement “I like the kind of work I do,” according to the results.

However, the results also indicated unease with the agency’s senior leadership. Less than one-quarter (24.9%) of the respondents said that they agreed or agreed strongly with the statement that “In my organization, senior leaders generate high levels of motivation and commitment in the workforce.” About the same percentage (24.6%) expressed satisfaction (both “satisfied” and “very satisfied”) with the statement “how satisfied are you with the policies and practices of your senior leaders?”

LINK:
2018 BCFP Annual Employee Survey Results

FLOOD INSURANCE STILL AVAILABLE, DESPITE SHUTDOWN

Confusion over whether new federal flood insurance policies would be available in home sales was apparently cleared up late last week, as the agency that administers the National Flood Insurance Program (NFIP) said it would resume the normal sale of new insurance policies and the renewal of expiring policies. The confusion erupted in the wake of the partial federal government shutdown, which includes FEMA and is programs. As a result, for a time issuance of the insurance policies ground to a halt. The federal banking agencies even issued a notice to financial institutions late last week urging them to continue making loans as if federal flood insurance was still available. However, later that day, FEMA rescinded its earlier decision, and opened the door to new policies being written. The about-face came after financial institutions – including credit unions – loudly objected to halting the sales of policies. They said halting the sales would disrupt the housing market, and that FEMA was ignoring Congress’ intent to keep the NFIP operating during a shutdown (as expressed in Dec. 21 legislation that reauthorized the NFIP until May 31).

LINK:
FEMA Resumes Selling Flood Insurance Policies During Appropriations Lapse

AROUND THE STATES: Transitions in CO, MI, NM, TX

Denice Schultheiss is the new director of the Office of Credit Unions for the Michigan Department of Insurance and Financial Services (DIFS), succeeding John Kolhoff in the position (Kolhoff is now commissioner of the Texas Credit Union Department, succeeding Harold Feeney, who has retired). Schultheiss began her service in the new role Monday. She joined DIFS in 1996 and was promoted to regional supervisor in 2004.

Meanwhile, in Colorado and New Mexico: Patty Salazar has been named executive director of the Colorado Department of Regulatory Agencies (DORA), effective Jan. 8. Salazar is the former commissioner of the division of financial services for the state. Assuming her duties in that role, until a permanent commissioner is named, will be Deputy Commissioner Mark Valente. She is succeeding as executive director Marguerite Salazar, who is joining the cabinet of New Mexico Governor-elect Michelle Lujan Grisham (D) as superintendent of the New Mexico Regulation and Licensing Department.

BRIEFLY: Process for streamlined CDFI process opens Jan. 13

The qualification process for streamlined certification of federally insured, low-income credit unions as Community Development Financial Institutions (CDFIs) will be open Jan. 13 through Feb. 9, NCUA said this week. The agency also highlighted a variety of web-based resources in its announcement, including its application guide containing necessary instructions for the qualification process, and resources about the CDFI certification and streamlined process.

LINK:
Intake Period to Qualify for Streamlined CDFI Application Runs Jan. 13 to Feb. 9