Links in “Credit Unions”

On Friday, the NCUA placed $12 million Bethex FCU into conservatorship. The credit union will continue operations under new management and new operational  procedures. On the same day, the New York State Department of Financial Services placed $178 million Montauk CU in conservatorship. As conservator, the NCUA will work with the credit union to address operational issues while the credit union continues to serve its members. [9/21/15]

A CUNA task force had recommended sweeping changes to CUNA’s membership, advocacy, and governance practices. However, the CUNA Board has rejected all three recommendations. Specifically, the Board decided not to provide credit unions with the option of joining either their state league or CUNA, or both. It rejected a recommendation to reduce the size of its board. Lastly, a recommendation for CUNA to enter into an agreement with its members regarding advocacy practices and procedures  resulted in renaming the Government Affairs committee to the Advocacy Committee and a commitment that the committee will serve the needs of credit unions rather than a specific written agreement. [9/21/15]

At yesterday’s board meeting, NCUA directors unanimously approved a final rule that extends the definition of a “small credit union” under the Regulatory Flexibility Act from credit unions with assets up to $50 million to credit unions with assets up to $100 million. This action means that an additional 733 credit unions will be eligible for regulatory relief in the future and eligible for consulting and educational assistance from the Office of Small Credit Unions. The Board also approved three other final rules. [9/18/15]

Recent revisions to the Military Lending Act expanded coverage of the Act from just payday loans, auto title loans and tax refund anticipation loans to a much broader array of loan products. The new rule, which is effective October 1, 2015 (compliance is voluntary until 10/02/2016 with the exception of credit cards which require mandatory compliance by 10/03/2017) will cover all credit approved for personal, family and household purposes that is either subject to a finance charge or payable by written agreement in four or more installments. Residential mortgages and loans extended for the purchase of and secured by personal property (such as vehicle purchase loans) are exempt. [9/18/15]

NCUA Chair Debbie Matz stated that she will seek approval to streamline the process for federal credit unions to obtain approval for community charter expansion requests. Currently, federal credit unions serving communities with more than 1 million residents must obtain approval from the NCUA board. Matz wants to allow these credit unions to receive approval from the Office of Consumer Protection, which could shorten the process by about two months. Denials could be appealed to the Board. [9/18/15]

During his testimony yesterday before the House Committee on Small Business Growth, Tax and Capital Access, Dixies FCU President/CEO Scott Eagerton reported that compliance costs at his $42 million credit union have risen from $20,000 per year to $100,000 per year since the passage of the Dodd-Frank Act. Julie Gordon, Senior Director of the Housing and Consumer Finance Center testified that small financial institution should be exempt from many of the CFPB’s rules. [9/18/15]

Commenter to this blog post about the FinCEN director's recent speech wondering why so many credit unions haven't filed a single CTR or SAR for the past seven quarters offers this possible explanation: many of their members are of modest means and don't deal with $10,000 in cash. "Thus, Madam Director, it makes sense that many credit unions have not filed CTRs in the last two years - if not five, if not ever." [9/18/15]

Scott Credit Union, a $1 billion credit union in Edwardsville, IL, probably thought things couldn’t get worse when it was sued by two members for millions of dollars claiming fraud and negligence on the part of the credit union. However, the FBI has announced that it is now investigating the credit union, as well. The lawsuit, which names the CEO, all of the directors, the chief executives and vice presidents as defendants, alleges that the credit union opened lines of credit in the defendants’ names without authorization or signatures, made unauthorized withdrawals of funds from one of the member’s checking account and used the members’ names and credit to extend commercial lines of credit to multiple fictitious or random limited liability companies. [9/17/15]

The NCUA Board will be considering three final rules at today’s board meeting. The first is a rule that would allow corporate credit unions to more easily make bridge loans for interim funding to CLF borrowers. The second rule would implement  a statutory inflation to civil money penalties and the third rule would decrease the asset threshold used to define “small entity” under the Regulatory Flexibility Act from $100 million to $50 million. [9/17/15]

NCUA Vice Chair Rick Metsger is advocating a return to a two-year budget cycle for NCUA. Metsger says that the challenge of a one-year budget is that it doesn’t always provide visibility into the actual costs for staffing or for major projects that often involve multi-year development and costs. Metsger believes that a two-year cycle would provide for more transparency. [9/17/15]