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Michigan Credit Union League

Comment Letters - 2016

  • NCUA - Field of Membership (2/8/16) 

    The MCUL fully supports the NCUA’s proposed Field of Membership rule with regard to Congressional Districts as Well Defined Local Communities without change. The MCUL also appreciates and supports the NCUA’s proposed amendments including Select Employee Group (SEG) Contractors in a Multiple Common Bond and the clarification of its definition of Trade, Industry or Profession (TIP) chartered credit unions. While the MCUL fully supports the NCUA’s proposal as a whole, we believe there is work to be done prior to issuance of a final rule particular in the areas of merger process improvements and charter conversions. A strong dual chartering system is critical to the strengths of the credit union system as a whole. As such, we ask the NCUA to consider the recommendations discussed.

Comment Letters - 2015

  • DOL - Defining & Delimiting the Exemptions for Executive, Administrative, Professional Outside Sales (9/3/15) The MCUL appreciates the opportunity to comment on this significant proposal put forward by the DOL. While the MCUL understands the motivation behind the proposal and supports the efforts to improve conditions for middle-class Americans, we believe the proposal has many gaps which create many unintended consequences for both employees and employers. Because of this, the MCUL urges the DOL to reconsider the proposed rule and engage in further dialogue to craft a more narrow and reasonable proposal.
  • NCUA - Member Business Loans; Commercial Lending (8/31/15) The MCUL is supportive of the new definitions including the newly created definition of commercial loan. The new definition provides for a delineation between those loans subject to the MBL cap and commercial loans that invoke safety and soundness provisions. The proposed definition will provide relief to credit unions making loans secured by the aforementioned collateral. However, the MCUL believes more loan types should be exempt from the definition including loans that present minimal or no risk of loss to a credit union. For example, loans fully guaranteed by a federal or state agency should also be excluded from the commercial loan definition because they are risk free and thus do not present a safety and soundness concern. The MCUL also encourages the NCUA to be conscious of limitations it may impose upon credit unions by requiring a credit-risk rating system that may not be appropriate or necessary in a commercial loan policy as identified in proposed 723.4.
  • NCUA 2015 Regulatory Review (8/3/15)
  • CFPB - Delay of Effective Date; 2013 Integrated Disclosures Rule under RESPA & TILA (7/7/15)  

    The MCUL took the opportunity to advocate for a safe harbor period until the end of the year for compliance with the integrated disclosure rule. The MCUL also requested that the CFPB allow credit unions that were ready to utilize their revised forms as of August 1, 2015, be allowed to begin using them on August 15, 2015 or wait until the October 3, 2015 effective. In either event, a safe harbor should be available to all credit unions regardless of when they begin utilizing the revised forms. Additionally, the MCUL raised concerns over the discrepancy issue related to the scope of the new rule with its applicability and requirements for small financial institutions and the guidance from the CFPB on how to comply with the new rules. The Small Entity Compliance Guide no longer states that the rule does not apply to a person or entity that makes five or fewer mortgages in a calendar year. The version log states that this change made to the Small Entity Compliance Guide was a “miscellaneous administrative change.” The MCUL, along with CUNA, views this as a substantive change to the guide. Additionally, this language does not address current language within the final rule’s supplemental information which is relied upon by many credit unions that believe they qualify for the exemption under this proposed rule.The MCUL, along with CUNA, urges the CFPB to confirm that creditors that make five or fewer mortgages per year, as outlined in the supplemental information of the rule and the September 2014 Small Entity Compliance Guide, are exempt from the TILA-RESPA rule. With the extended effective date, the CFPB now has an adequate time frame and opportunity to address this inconsistency so that credit union lending operations are not negatively impacted and credit union members can continue to receive services to meet their financial needs. 

  • NCUA - Comments on Proposed Rule - Risk Based Capital (4/27/15)  The MCUL took the opportunity to commend the NCUA on its efforts in revising the proposal but also discussed the need for access to supplemental capital. The MCUL also voiced our concerns with the risk weightings for mortgage servicing assets and CUSO Investments that remain too high at 250% for mortgage servicing and 150% for CUSO Investments, indicating the NCUA is failing to recognize the role CUSOs play and the benefits of servicing mortgage loans for members. Finally the MCUL also voiced our concern with the Agency’s proposed Capital Adequacy Management Plan as this would provide examiner subjectivity to impose higher levels of capital on individual credit unions based solely on their Capital Adequacy Management Plan. Also discussed was the need to include goodwill in the numerator for merger purposes as well as the Agency’s discussion regarding a separate Interest Rate Risk Rule, which is unnecessary given the current standards and guidance already issued by the agency that credit unions are managing effectively. 
  • CFPB - Amendments to TILA Impacting Rural and Underserved Areas (3/30/15)

The MCUL generally supported most of the proposed amendments of the CFPB. However, the MCUL took this opportunity to bring to light its concerns relating to credit unions and CUSOs and looking to the Bank Holding Company Act when determining whether a business relationship constitutes an affiliate relationship. The MCUL pointed out that the CFPB’s application of the Bank Holding Company Act to credit unions and CUSOs is contrary to public policy and does not align with the Bank Holding Company Act’s historical intent. Additionally, the MCUL requested that the CFPB provide clarification on its methodology of increasing the first-lien mortgage origination from 500 to 2,000 and why a higher limit would not have been more appropriate. The MCUL also requested that the CFPB increase the asset limit threshold from $2 billion to $10 billion adding that asset size alone is not a good indicator of consumer protection but rather credit unions practice prudent lending because it is in the best interest of its members. As such, the CFPB should increase the asset limit threshold to $10 billion to allow more credit unions to partake in the regulatory relief offered by the CFPB. Additionally, while the MCUL was generally supportive of extending the application deadline to April 1, 2016 regarding balloon payment mortgages, the MCUL questioned whether the CFPB should be limiting such balloon-payment mortgage loans to small creditors operating in predominantly rural or underserved areas. Many small credit unions rely on balloon-payment mortgage structuring as a way to manage interest rate risk. The CFPB should not arbitrarily limit balloon-payment mortgage loans to specific areas. Rather, credit unions should have the autonomy and flexibility to offer the best products to its members that is commensurate with their risk profile.Credit unions are a trusted source of consumer home financing and have earned their members’ trust by conducting their lending activity on fair and reasonable terms, not because Congress or any regulatory body has required them to do so, but because it’s the right thing to do. Providing exemptions and continued regulatory relief for credit unions is vital to ensure that credit unions can continue to provide access to affordable financial services to their members and communities. Additionally, CUSOs play a pivotal role in cooperative philosophy of the credit union industry. The MCUL acknowledged and appreciated the CFPB’s ongoing efforts to continue to evaluate the impact of its regulations on small financial institutions in the post-mortgage crisis era. However, the MCUL encourages the CFPB to be more aggressive in providing regulatory relief to the credit union industry. 

The MCUL appreciates the CFPB taking further steps to offer continued regulatory relief to small servicers; allowing small servicers to exclude certain seller-financed transactions from the 5,000 loan limit is a positive step. However, the MCUL believes the CFPB could do more to have a greater impact on small servicers and their continued struggles to keep pace with the ever changing regulatory environment. The MCUL urges the CFPB to consider increasing the loan limit threshold to 10,000 to allow more credit unions to qualify as a small servicer and partake in the exemption benefits the CFPB has offered to small institutions.

Although the MCUL does not concur with the necessity of this proposed rule, there are opportunities for the FHFA to revise the proposal in order to provide parity and some regulatory relief to credit unions that will otherwise be severely negatively impacted.  The first would be to include credit unions in the definition of a Community Financial Institution.  By expanding this definition to include credit unions, it would provide a necessary exemption to the smaller institutions that would struggle with the ongoing portfolio compliance requirements. 

  • DOD - Limitations on Terms of Consumer Credit To Service Members (12/26/14)
    While the MCUL strongly supports protection of all consumers from predatory lending while ensuring they have access to affordable credit. The MCUL has concerns with the DOD’s proposal as issued. While the MCUL is supportive of the goals of the Proposed Rule and the Department’s intent to protect service members and their dependents, for the reasons discussed in this comment letter the MCUL encourages the Department to modify the Proposed Rule.  Specifically, the MCUL strongly encourages exempting credit unions and other depository institutions (as presented as a possibility by the DOD in the proposal) or providing an exemption from aspects of the proposed changes for credit unions, such as the proposed expansion of the term “consumer credit.” Additionally the DOD should consider exempting certain credit unions products, including PALs. The DOD should also reconsider the proposed approach regarding use of the MLA database and related “safe harbor,” and should allow an extended implementation period to provide adequate time for credit unions and others to implement the necessary changes.

Comment Letters - 2014

  • 2014 COMMENT CALL / LETTER SUMMARY CHART
     
  • CFPB - HMDA (10/29/14)
    The MCUL prefaces this comment letter with significant concerns associated with the tremendous amount of new regulation being imposed on credit unions.  Individually, credit unions, along with other financial institutions have spent thousands of dollars to comply with the CFPB Mortgage Rules that became effective at the beginning of 2014.  Additionally, credit unions are in the process of spending thousands of additional dollars for changes required under the CFPB’s Integrated Mortgage Disclosures.  After all the changes to technology systems, policies, and procedure takes place, along with employee training, they will again have to spend additional capital and employee time to comply with the necessary changes in this proposed rule. The MCUL strongly urges the CFPB to take into account the negative and unnecessary impact these proposed regulations are having on an industry that did not contribute to the financial crisis. The avalanche of new regulations has become a primary driver for our smaller institutions to merge as the burden of compliance has accelerated.  The MCUL does not believe it is the intention of the CFPB to cause community based institutions to struggle or close – yet, the pressure of all the new regulations is having this effect.
     
  • NCUA - Ownership of Fixed Assets (10/9/14)
    Given the current regulatory environment, the MCUL strongly supports the NCUA’s proposal to eliminate the waiver requirement as relief from an undue burden. The MCUL also appreciates the proposed revisions, such as the grandfathering provisions and the elimination of the requirement to submit a waiver request within 30 months after property is acquired.  However, the MCUL encouraged the NCUA to consider further relief by refining the “fixed asset” definition, to coincide with other state credit union and banking laws.
     
  • FinCEN - Customer Due Diligence (10/3/14) 
    While the MCUL is supportive of FinCEN’s efforts to strengthen methods of identifying terrorist financing and money laundering, we urge FinCEN to evaluate the burden the proposal would have on smaller institutions. Additionally, the MCUL urges FinCEN to continue to engage and coordinate with the NCUA and other federal and state financial institution regulators and law enforcement authorities to minimize regulatory burden but still obtain pertinent information to aid in any investigation as done with SAR filings. The MCUL also questions why the proposed rule does not extend to check cashing facilities. FinCEN should continue to strengthen the BSA/AML rules, including CDD, on financial services entities that are not financial institutions. Credit unions rank among the most heavily regulated entities with specific requirements that must be adhered to under FinCEN’s regulations, and consistency in application to other providers may very well be appropriate for FinCEN’s overall goals.The MCUL respectfully asks FinCEN to consider our comments in developing a final rule to enhance customer due diligence requirements. We understand the importance of such rules but wish to assist credit unions in alleviating undue regulatory burden.
     
  • CFPB Consumer Complaint Narrative Data (9/22/14) 
    The MCUL understands the importance of a sound complaint system for consumers as well as the benefit regulators provide by investigating consumer complaints.  However, credit unions were not the bad actors in the financial crisis that resulted in the passage of Dodd-Frank and the creation of the CFPB. The National Credit Union Administration (NCUA) and credit union state examiners evaluate credit unions’ member complaint processes thoroughly, and as previously discussed, credit unions take great care in managing and responding to any and all complaints received.  Therefore the MCUL does not believe the proposed complaint narrative is necessary, and may in fact be actively harmful from a reputational standpoint.
     
  • NCUA - Appraisals (8/25/14) 
    The MCUL is pleased by the NCUA’s efforts to modernize their regulations and better align them with the rules of the CFPB as well as those of the Other Banking Agencies, while also reducing costs for FICUs and their members, and removing outdated regulatory requirements. However, the MCUL encouraged the NCUA to continue to take heed in reviewing comments submitted by credit unions and trade association when proposing regulations as to continue to assist credit unions and alleviate regulatory burden. With the NCUA maintaining appraisal requirements for subordinate lien loans for Federal Credit Unions, the requirements differ between NCUA and that of the CFPB’s Regulation B Valuations Rule. The MCUL strongly encouraged the NCUA to harmonize its proposed rule with the CFPB rule for first-liens, to avoid confusion and the risk of inadvertent non-compliance with either.
     
  • NCUA - Asset Securitization (8/25/14) 
    The MCUL is generally supportive of both the Asset Securitization and Safe Harbor rules.  However, the MCUL strongly encouraged the NCUA to consider expanding the ability to securitize loans that are purchased by the credit union, as well as originated.  If the NCUA believed there to be a safety and soundness issue with the practice, the MCUL encouraged the NCUA to consider criteria to mitigate that perceived risk as opposed to a blanket prohibition of the activity.  As credit union portfolios evolve, the MCUL believes tools such as asset securitizations will be extremely important for credit unions to have access to.
     
  • CFPB - Regulation P Annual Privacy Notice (7/14/14)
    The MCUL is supportive of regulatory revisions that provide relief to credit unions and that are less confusing for credit union members. Although the MCUL believes the proposed revisions to Regulation P will provide relief to a significant number of credit unions, we believe the scope could be expanded, even if an opt-out alternative is provided and certain information shared. The MCUL strongly disagrees with the CFPB’s belief that the proposed alternative delivery method might not be as effective in alerting members of their ability to opt out of certain types of information sharing as the current delivery method. Providing notification to members through statement messages regarding important account information is permissible under other regulations now overseen by the CFPB, such as TISA and Regulation E. Discounting this method of delivery would be inconsistent and unjustified.
     
  • CFPB - Amendments to 2013 Mortgage Rules (7/7/14)
    The MCUL supports any exemptions provided for entities considered small servicers and those with an affiliate relationship; however the MCUL strongly encourages the CFPB to provide additional exemptions beyond the proposed exemption for certain “non-profits.” The MCUL is also supportive of the CFPB’s proposed “points and fees” cure mechanism for loans originated with good-faith expectation of qualified mortgage status that inadvertently exceeded the points and fees limitations to be considered a qualified mortgage. The MCUL does not feet that the proposed 120-day post consummation period provides an adequate amount of time for credit unions to review all loans originated and engage in appropriate procedures to cure the overage, as such, the MCUL urges the CFPB to expand the post-consummation period to 180 days. Additionally, the MCUL is supportive of a debt-to-income cure or correction mechanism in situations where the creditor incorrectly calculates the 43% debt-to-income ratio when originating a general definition qualified mortgage. The MCUL also used this opportunity, as in past letters to the CFPB to advocate for increases in the small creditor threshold.
     
  • NCUA - Chartering & Field of Membership (6/30/14)
    The MCUL supports the NCUA’s proposal to automatically approve certain associations. However, the MCUL has significant concerns about the NCUA’s proposed review of associations within FCUs’ existing fields of membership, and the potential for the NCUA to require credit unions to remove an association from their field of membership. The MCUL strongly supports the NCUA’s proposal to grandfather existing members in these situations and encourages the NCUA to grandfather previously approved associations as well. Even though an automatic approval component for some associations certainly helps ease some expansion and provide some regulatory relief, the MCUL believes the NCUA should be more innovative and progressive in allowing for multiple and combined field of membership types, and especially in the case of credit union mergers.
     
  • CFPB - 2014 Amendments to Reg E (6/6/14)
    The MCUL is generally supportive of any exception to the CFPB rules that will provide regulatory relief to credit unions. In this proposed rule, the CFPB would extend a temporary exception that allows covered remittance transfer providers to estimate fees and exchange rates in certain circumstances to July 21, 2020 (from July 21, 2015). The MCUL agrees with the CFPB’s analysis that allowing the sunset of this exception, which provides one of the few elements of relief in this bill, would negatively affect credit unions’ ability to continue to provide the service. The MCUL appreciates the CFPB’s proposed revisions aimed at further clarification and providing commentary to the existing rules. However, the MCUL believes the CFPB is missing an opportunity to consider material revisions, including the increase of the safe harbor threshold that will directly benefit consumers. As discussed in the letter, the CFPB has limited consumer choices and caused providers to charge higher fees. Without intervention and further expansion of a safe harbor, credit unions (and other financial institutions) will continue to limit or eliminate this service for their members, and without a competitive market, costs will continue to soar while provider options continue to deteriorate.
     
  • NCUA - Comments on Proposed Rule: PCA – Risk-Based Capital (5/28/14)
    The MCUL, while supportive of the NCUA's efforts to construct a risk-based capital system that would provide credit unions parity with corporate credit unions and community banks, the MCUL believes the NCUA has missed the mark in a number of significant ways.The MCUL is advocating for the NCUA to go back to the drawing board and start over with this proposal as discussed in our comments to the NCUA. The proposal, in its current form, would disadvantage credit unions in the marketplace, choke off innovation and cooperation and stifle appropriate risk taking – all to the detriment of credit union members and local neighborhoods across Michigan. The proposal does not meet the needs of the credit union industry or adequately address concerns that such a system should be designed to do. As the NCUA attempts to regulate interest rate risk, concentration risk and CUSO investments with this proposal, the agency essentially fails at providing regulatory relief from current, unnecessary regulatory net worth requirements that place credit unions at a disadvantage to competing institutions. The agency creates serious pressures that will drive more mergers and increase costs to the NCUSIF – not a result that either the NCUA or the industry would see as favorable. More liquidity (i.e. less lending and product offering), and less CUSO collaboration will result from this regulation, both of which are negative and counterproductive results for the industry and the members we serve. The MCUL believes the NCUA is listening and looks forward to significant modifications to the proposal that will best serve the credit union industry and avoid any potential negative consequences for currently affected credit unions and those that will be in the future.
     
  • FRB Availability of Funds & Collection of Checks-Reg CC (5/2/14)
    The MCUL believes the proposed revisions to Regulation CC raise significant concerns for the necessary technological growth and advancement within the industry that consumers expect, and increasingly demand. Portions of this proposal would negatively impact credit unions’ desire and ability to offer RDC services for their members, given the unpredictable and arbitrary risk of having to indemnify an unknown and speculative number of institutions in the event of manual fraud, no matter what precautions they may have taken. Those that do make the risk-based decision to continue the service will be forced to decide upon increased fees to mitigate risk and keep the product viable. RDC usage has more than doubled among credit unions over the past year – this service is increasingly necessary to accommodate members’ needs and to keep pace with other industry actors. The MCUL strongly encouraged the FRB to reconsider the shift of liability as proposed.
     
  • NCUA- Interagency Statement Assessing Diversity Policies (2/7/14)
    The MCUL commented on the Proposed Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Procedures of Regulated Entities. As written, the MCUL believes that the proposal lacks justification for further “self-assessment” which inevitably will require additional staff time and increased costs, with little explanation of how this proposal provides information that is any more useful or informative than what is captured by the Equal Employment Opportunity Commission (EEOC) – who has the authority under existing statue to take disciplinary actions for violations of these respective federal laws. The MCUL agrees that greater diversity and inclusion promotes stronger, more effective and more innovative businesses, but believes that the existing federal framework provides the necessary information that can be evaluated to determine compliance with required diversity. With this groundwork already in place, the MCUL believes the NCUA should work with this existing regulatory framework, along with the EEOC, instead of adding requirements for credit unions that have made a commitment to, and strongly support workplace diversity, and have policies and procedures to ensure it.
     
  • NCUA - Home FCUs (1/23/14)
    On January 23, 2014, the MCUL commented on the NCUA’s proposed a rule to amend part 701 to require examinations and other contacts between NCUA staff and staff or officials of a FCU to occur in an FCU’s business offices or other public location (this does not include a private residence). The proposal would also require all FCUs to obtain and maintain a business office, not located on the premises of a private residence address, no later than two years following the effective date of the final rule. The MCUL strongly disagreed with the NCUA’s approach to broadly apply regulations that will detrimentally impact many credit unions for issue that could easily be addressed
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