NCUA Board Approves Final Rule to Codify Interagency Statement

The National Credit Union Administration Board has approved a final interagency rule that would codify the 2018 Interagency Statement Clarifying the Role of Supervisory Guidance. The final rule adopts the proposed rule without changes and confirms that the agencies will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities.

As noted in the 2018 Statement, the agencies issue various types of supervisory guidance to their respective supervised institutions, including, but not limited to, interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions. Supervisory guidance outlines the agencies’ supervisory expectations or priorities and articulates the agencies’ general views regarding appropriate practices for a given subject area. Supervisory guidance often provides examples of practices that mitigate risks, or that the agencies generally consider to be consistent with safety-and-soundness standards or other applicable laws and regulations, including those designed to protect consumers.

The 2018 Statement restates existing law and reaffirms the agencies’ understanding that supervisory guidance does not create binding, enforceable legal obligations. The 2018 Statement reaffirms that the agencies do not issue supervisory criticisms for “violations” of supervisory guidance and describes the appropriate use of supervisory guidance by the agencies. In the 2018 Statement, the agencies also expressed their intention to (1) limit the use of numerical thresholds in guidance; (2) reduce the issuance of multiple supervisory guidance on the same topic; (3) continue efforts to make the role of supervisory guidance clear in communications to examiners and supervised institutions; and (4) encourage supervised institutions to discuss their concerns about supervisory guidance with their appropriate agency contact.

Question of the Week
Q. What is the protected amount in a garnishment of an account that contains a Federal Benefits Payment?    

A. The Protected Amount means the sum of all electronically posted benefits payments during the lookback period, or the available balance of the account — whichever is lesser.

The following examples illustrate the definition of protected amount.

Example 1 — Account balance less than sum of benefit payments

A financial institution receives a garnishment order against an account holder for $2,000 on May 20. The date of account review is the same day, May 20, when the opening balance in the account is $1,000.  The lookback period begins on May 19, the date preceding the date of account review, and ends on March 19, the corresponding date two months earlier. The account review shows that two Federal benefit payments were deposited to the account during the lookback period totaling $2,500, one for $1,250 on Friday, April 30 and one for $1,250 on Tuesday, April 1. Since the $1,000 balance in the account at the open of business on the date of account review is less than the $2,500 sum of benefit payments posted to the account during the lookback period, the financial institution establishes the protected amount at $1,000.

Example 2 — Three benefit payments during lookback period

A financial institution receives a garnishment order against an account holder for $8,000 on Dec. 2. The date of account review is the same day, Dec. 2, when the opening balance in the account is $5,000. The lookback period begins on Dec. 1, the date preceding the date of account review, and ends on October 1, the corresponding date two months earlier. The account review shows that three Federal benefit payments were deposited to the account during the lookback period totaling $4,500, one for $1,500 on Dec. 1, another for $1,500 on November 1, and a third for $1,500 on October 1. Since the $4,500 sum of the three benefit payments posted to the account during the lookback period is less than the $5,000 balance in the account at the open of business on the date of account review, the financial institution establishes the protected amount at $4,500 and seizes the remaining $500 in the account consistent with State law.

Example 3 — Intraday transactions

A financial institution receives a garnishment order against an account holder for $4,000 on Friday, Sept. 10. The date of account review is Monday, Sept. 13, when the opening balance in the account is $6,000. A cash withdrawal for $1,000 is processed after the open of business on Sept. 13, but before the financial institution has performed the account review, and the balance in the account is $5,000 when the financial institution initiates an automated program to conduct the account review. The lookback period begins on Sunday, Sept. 12, the date preceding the date of account review, and ends on Monday, July 12, the corresponding date two months earlier. The account review shows that two Federal benefit payments were deposited to the account during the lookback period totaling $3,000, one for $1,500 on Wednesday, July 21, and the other for $1,500 on Wednesday, Aug. 18. Since the $3,000 sum of the two benefit payments posted to the account during the lookback period is less than the $6,000 balance in the account at the open of business on the date of account review, the financial institution establishes the protected amount at $3,000 and, consistent with State law, freezes the $2,000 remaining in the account after the cash withdrawal.

The regulation provides more examples that may be helpful in determining the protected amounts.

Related Links

Guidelines for Garnishments
Appendix C to Part 212: Examples of Lookback Period and Protected Amount
31 CFR 212

Legal Briefs

National Credit Union Administration

Register Now for NCUA Chairman’s Webinar on Feb. 11
The NCUA will hold a webinar on Thursday, Feb. 11, that will provide participants with an update on Chairman Todd M. Harper’s priorities, the agency’s supervisory activities, and recently issued guidance and regulations, among other topics.

CFPB Publishes 2021 Threshold Adjustments Under Regulation C, Regulation Z, and Regulation V
The NCUA issued Regulatory Alert 21-RA-02 to inform credit unions of recent annual adjustments for exemption thresholds under the Home Mortgage Disclosure Act (Regulation C) and the Truth in Lending Act (Regulation Z). The asset-size thresholds exempt certain credit unions from data collection under Regulation C and from escrow account requirements for higher-priced mortgage loans and specific qualified mortgages under Regulation Z.

Federal Crimes Enforcement Network

Paycheck Protection Program FAQs
FinCEN released FAQs regarding the implementation of the Paycheck Protection Program to explain the requirements under the Bank Secrecy Act and how lenders can meet those requirements when issuing a PPP loan.

Oregon OSHA

Oregon OSHA proposed a permanent rule addressing COVID-19 in all workplaces
Oregon OSHA has proposed a permanent rule that largely maintains the measures required by the current temporary emergency rule. The proposed rule would replace the temporary rule, which expires on May 2.

Office of Foreign Assets Control

OFAC has updated the SDN list as of Jan. 19. The last update prior to this was Jan. 15.

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

Posted in Compliance, Compliance News.