NCUA Board Approves Proposed Rules on Mergers, Appeals

The NCUA Board recently approved three proposed rules and released them for comment. The proposed rules cover member communications in voluntary mergers, enhancement of due process in supervisory appeals, and appeals of some agency decisions.

Comments on each of the proposed rules must be received within 60 days of publication in the Federal Register.

Proposed Rule Opens Up Member Communications in Voluntary Mergers

Members whose federal credit unions are seeking a voluntary merger would have better access to information about that merger and more time to consider their votes under this rule.

The proposed rule would:

  • Increase the required time for notice to members before a merger vote to at least 45 days;
  • Require the merging credit unions to disclose all merger-related compensation for certain employees and officials of the merging credit union;
  • Clarify the contents and format of the members’ notice to provide better information; and
  • Create a member-to-member communications process similar to that found in NCUA’s regulations covering credit union conversions to or mergers with banks.

Due Process in Supervisory Appeals Enhanced by Proposed Rule

Appeals of material, examination-related supervisory determinations would benefit from greater due process under this rule.

Changes in the appeals process under the proposed rule would include:

  • Expanding the number of material supervisory determinations that can be appealed to the agency’s Supervisory Review Committee;
  • Creating an optional intermediate level of review before an appeal goes to the Committee; and
  • Changing the nature and composition of the Committee.

Under the proposed rule, an appeal at any level would not affect, delay, or impede any formal or informal supervisory or enforcement action in progress. Likewise, it would not affect NCUA’s authority to take any supervisory or enforcement action against a federally insured credit union.

Appeals of Some Agency Decisions Improved under Proposed Rule

A proposed rule would create a more uniform process for appealing certain program office decisions to the Board.

Several existing NCUA regulations provide a right of appeal, but these generally lack uniformity and may be confusing to parties who might seek to appeal an adverse decision to the Board. The proposed rule would bring these under a uniform set of procedures and would enhance due process for all parties.

The new rule would affect chartering and field of membership, investment authority, conversions and mergers, creditor claims in liquidations, and share insurance determinations. Certain areas, such as formal enforcement actions, prompt corrective action, and material supervisory determinations, would be excluded from coverage under the proposed rule.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Compliance Question of the Week

What can we do if a member has declared bankruptcy and the member only wants to reaffirm on one, but not all, of the loans the member has with us?      

Reaffirmation is completely voluntary for both the member and the credit union. While the member does not have to reaffirm, the credit union can refuse to accept a reaffirmation that it does not like. If a member wants to reaffirm on the car loan so that she can keep her car, but the credit union wants her to reaffirm on both the car loan and the Visa, the credit union can reject the member’s offer to reaffirm on only the car loan. This is risky because the member might decide to reject this offer, and then the credit union will not have any reaffirmation. Of course, if the member does not reaffirm, the credit union can repossess the car. Using this tactic is a business decision on the credit union’s part.

Related Links:

Chapter 7 Discharge

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Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Legal Briefs

National Credit Union Administration (NCUA)

The second quarter edition of the NCUA Report is now available.

The NCUA released the Board Action Bulletin from its most recent board meeting. During the meeting, the NCUA approved a proposed rule to provide greater transparency to members when a federal credit union is seeking a voluntary merger, a proposed rule to enhance consistency in the supervisory appeals process, and a proposed rule to provide uniform, comprehensive procedures to govern the NCUA’s regulatory appeals process.

In light of the recent “WannaCry” ransomware attack, the NCUA issued a press release reminding credit unions of its Cybersecurity Resource Center.

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Consumer Financial Protection Bureau (CFPB)

The CFPB announced that it is assesses the effectiveness of its Ability to Repay/Qualified Mortgage Rule. The CFPB is requesting public comment to help improve the assessment of the rule.

CFPB Director Cordray delivered prepared remarks at the Financial Literacy and Education Commission Meeting. Cordray’s remarks highlighted the data that the Organisation for Economic Cooperation and Development compiled worldwide in 2015.

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Federal Housing Finance Agency (FHFA)

FHFA Director Watt delivered prepared remarks at the Federal Home Loan Bank Directors’ Conference. Watt’s remarks focused on the statue of the FHLB system, stating that 2016 was the most profitable year in the history of the FHLBank System.

The FHFA issued a Request for Input regarding issues facing qualified mortgage borrowers with Limited English Proficiency (LEP) throughout the mortgage life cycle process. The request is aimed at helping the FHFA identify obstacles that LEP borrowers face when accessing mortgage credit.

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Federal Reserve Board (FRB)

The FRB released its Report on the Economic Well-Being of U.S. Households. The report shows that American’s overall financial well-being has a modest upward trend.

The FRB released its list of institutions that are exempt from the Interchange Fee Standards under the Dodd-Frank Act.

The FRB released the May 2 and 3, 2017 Federal Open Market Committee meeting minutes and statement.

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Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of May 24 2017. The last update prior to this was May 19, 2017.

Questions? Contact the Compliance Hotline: 1.800.546.4465; compliance@nwcua.org.

      

Posted in Compliance News, Compliance News, NCUA.