Regulatory Roundup - January, 2010
Final Rule Issued for Second Stage of The Credit CARD Act of 2009
The Federal Reserve issued its final Regulation Z rule related to the provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) that become effective on February 22, 2010. Click here to access the final rule. Be advised this rule is 1155 pages long.
Website Posting of Credit Card Agreement
One major action of the final rules for the Credit Card Act of 2009 is requiring credit unions with 10,000 credit cards or more to post their agreement on their website and submit a copy to the Federal Reserve. The first submission is due February 22, 2010. Click here for guidance on submitting your Credit Card Agreement to the Federal Reserve.
Corporate Stabilization Task Force to Meet
The MCUL is reconvening the Corporate Stabilization Task Force to review NCUA's proposed changes to the corporate credit union system. This group was formed initially in early 2009 to review and comment on NCUA's ANPR regarding possible changes to the corporate credit union system. Over 500 comment letters were received by NCUA and the feedback provided the content for the proposed rule issued by NCUA in late 2009. The task force will be meeting on February 8 and leading the meeting will be CenCorp CEO, Bill Walby. Comments will be shared with affiliated credit unions once completed.
Financial Regulators Issue Interest Rate Risk Advisory
The Federal Financial Institutions Examination Council (FFIEC) released an advisory reminding institutions of supervisory expectations for sound practices to manage interest rate risk. NCUA adopted this advisory which reiterates the importance of effective corporate governance, policies and procedures, risk measuring and monitoring systems, stress testing, and internal controls related to the IRR exposures of depository institutions. It also clarifies elements of existing guidance and describes some IRR management techniques used by effective risk managers. Click here for the press release and advisory.
HUD Offers New RESPA Guidance
HUD's latest version of the RESPA FAQs is dated December 30, 2009, available here. The revised Settlement Cost Booklet has been released. The new 49-page booklet, which reflects the new RESPA rules, contains 13 sections, including detailed explanations to the borrower for what each line item represents on the new forms, and is available by clicking here.
Check Processing Regions Consolidated
The Fed has announced the final consolidation of its check processing regions. The Cleveland office will now be the single check processing and adjustments site. The Appendix of Regulation CC has been amended to reflect this change, which requires credit unions to eliminate references to non local checks in their funds availability disclosures, eliminate non local check holds and send a change in terms notice to its members. Click here for more information.
Interagency Guidance on Cross-Border Transfers
NCUA, along with the federal financial institution regulators, has issued guidance clarifying their perspective on certain points in the Basel Committee on Banking Supervision May 2009 paper, including expectations for intermediary banks on Office of Foreign Assets Control sanctions screening and transaction monitoring to comply with Bank Secrecy Act/anti-money laundering requirements. Click here for the press release.
Regulator / MCUL Staff Meetings
MCUL staff will continue its spring and fall meetings with NCUA and OFIR in 2010. The spring meetings have been scheduled for March 23 with OFIR and April 20 with NCUA. The meetings will take place in Lansing between representatives from each Regulator and MCUL Staff. Credit Unions are invited to send comments or concerns to Veronica Madsen, Director of Compliance and General Counsel via email before each meeting. An email notice soliciting input from affiliated credit unions will be sent prior to the meetings.
NCUA PROPOSED RULES
Part 701: Chartering and Field of Membership Manual
NCUA has proposed to amend its chartering and field of membership manual in order to use objective and quantifiable criteria to determine the existence of a local community and defining the term “rural district.” The amendments clarify NCUA‟s marketing plan requirements for credit unions converting to or expanding their community charters and define the term “in danger of insolvency” for emergency merger purposes. This proposed rule can be found here. .
Reverse Mortgages
The Federal Financial Institutions Examination Council (FFIEC), which includes NCUA, has proposed changes to its Reverse Mortgage Products: Guidance for Managing Compliance and Reputation Risks (guidance). The amendments to the guidance is in furtherance of the FFIEC’s efforts to ensure that their risk management and consumer protection practices adequately address the compliance and reputation risks raised by reverse mortgage lending. This proposed rule can be found here.
Interest Rate Risk Management
The Federal Financial Institutions Examination Council (FFIEC), which includes NCUA, released an advisory today reminding institutions of supervisory expectations for sound practices to manage interest rate risk (IRR). This advisory reiterates the importance of effective corporate governance, policies and procedures, risk measuring and monitoring systems, stress testing, and internal controls related to the IRR exposures of depository institutions. It also clarifies elements of existing guidance and describes some IRR management techniques used by effective risk managers. This advisory can be found here.
FEDERAL RESERVE BOARD FINAL RULES
Regulation Z: Credit CARD Act (Phase II)
The Federal Reserve issued its final Regulation Z rule related to the provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) that become effective on February 22, 2010. The rule establishes a number of new substantive and disclosure requirements to establish fair and transparent practices pertaining to open-end consumer credit plans, including credit card accounts. In particular, the rule limits the application of increased rates to existing credit card balances, requires credit card issuers to consider a consumer’s ability to make the required payments, establishes special requirements for extensions of credit to consumers who are under the age of 21, and limits the assessment of fees for exceeding the credit limit on a credit card account. This final rule can be found here.
FACT Act: Risk-Based Lending Notice
The Federal Reserve Board and the Federal Trade Commission today announced final rules that generally require a creditor to provide a consumer with a notice when, based on the consumer's credit report, the creditor provides credit to the consumer on less favorable terms than it provides to other consumers. Consumers who receive this "risk-based pricing" notice will be able to obtain a free credit report to check the accuracy of the report. The final rules are effective January 1, 2011. This final rule can be found here.
Home Mortgage Disclosure Act
The Federal Reserve Board published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The asset-size exemption for depository institutions will remain $39 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2009. As a result, depository institutions with assets of $39 million or less as of December 31, 2009, are exempt from collecting data in 2010. An institution's exemption from collecting data in 2010 does not affect its responsibility to report the data it was required to collect in 2009. The adjustment is effective January 1, 2010. This final rule can be found here.
NCUA LEGAL OPINIONS OF INTEREST
09-1067: Share Insurance Coverage for 529 Accounts
The first question in this opinion letter was whether 529 accounts are insured as public units or as member accounts. The answer provided was that under NCUA share insurance rules, 529 accounts may be insured as public units or, on a pass-through basis, so long as membership and traceability requirements are met. The second question posed was whether there is a limit on the number of custodians a state can designate for its 529 program funds to receive share insurance coverage. The answer to this question was “no,” there is no limit on the number of custodians a state can have. The maximum amount of all public units a federally-insured credit union may accept, however, cannot exceed the greater of 20% of its total shares or $1.5 million, unless the credit union has a waiver from the regional director or is a RegFlex credit union. This Legal Opinion Letter can be found here.
All Legal Opinions available at:
http://www.ncua.gov/RegulationsOpinionsLaws/opinion_letters/opinion_letters.html
OFAC Updates SDN List
Credit unions are reminded that the OFAC SDN lists have been updated through January 8, 2010 with the deletion of six individuals and one entity. The full 2010 listing as of January 8, 2010 can be found here.
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