California Wildfires; Reg E and "Reasonable Period"
NCUA has activated its "Disaster Assistance" in response to the California wildfires. In short, NCUA (when necessary):
- Encourages CUs to make loans with special terms and reduced documentation to affected members
- Will reschedule routine examinations of affected credit unions if necessary
- Guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund
- Make loans to meet the liquidity needs of member credit unions through the Central Liquidity Facility
You can access the guidance here. Worth noting: you do not need to be a California credit union to have members who are affected by the wildfires.
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All credit unions are aware of Regulation E and how it governs member responsibility for unauthorized electronic funds transfers (EFTs). The rationale behind the system is simple; members only have so long to bring evidence of unauthorized transfers to the attention of a credit union. (Two, four, and sixty days, depending on the situation.) If the member misses the deadline, then the member is responsible for the loss. Regulation E, however, builds in a safety net. If a member's delay in notification was due to "extenuating circumstances," then a credit union must extend the deadlines to a "reasonable period." 12 C.F.R. 205.6(b)(4). If you read the Official Staff Interpretation to Regulation E, the Fed indicates that extended travel and hospitalization are examples of "extenuating circumstances." Is there an example of "reasonable period?" Of course not. So, here's my question to you: at your credit union, what constitutes a "reasonable period." In other words, if a member is away on extended travel or hospitalization, how long would you extend Regulation E's normal deadlines. The Compliance Guy looks forward to reading your comments.