Compliance Blog

Last week, financial regulators, including NCUA, issued proposed revisions to the Interagency Questions and Answers Regarding Flood Insurance.  The goal is to help financial institutions better understand their responsibilities in this arena.  I've paged through them, and personally, I think the new version is better organized.  You can view the proposed Q and A guidance document here.

Comments are due May 20, 2008. 

Here's some food for thought.  Quite a few banks have been hit with civil money penalties for alleged violations of flood insurance requirements in the past few years.  Don't believe me?  Go here (maintained by Banker's Online) to see a running list of banks that have been hit with civil money penalties for flood issues.  The list is fairly long. 

The high number of civil money penalties leads me to believe that there is some basic confusion regarding financial institution responsibilities.  Building on that, one would think that the clarifications/amendments to the Q and A guidance would be designed to eliminate some of that confusion.  (At least that's my take.)  I'd forward the proposed Q and A to the person at your credit union that handles flood insurance issues.   (Keep in mind that it is a proposal.)

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Here ye, here ye.  NAFCU would love to here your comments on NCUA's advance notice of proposed rulemaking on mergers, conversions from credit union charter, and account insurance termination. Comments due to NCUA by April 30.   Here is a link to the NAFCU Regulatory Alert. (Member log-in needed.)

The ANPR covers very important issues.  For example, here are two of the issues on which we'd love to hear your thoughts:

• Currently, NCUA has no rules regarding the merger or conversion of a federally insured credit union (FICU) into a financial institution other than a mutual savings bank (MSB). In your opinion, should NCUA promulgate new regulations for credit union mergers or conversions into financial institutions other than an MSB? If so, please indicate what these regulations should cover.
• While it is clear that a fiduciary duty exists, neither the FCU Act nor NCUA regulations establish a standard of care for credit union boards of directors. Should NCUA establish, by regulation, a uniform federal standard of care for credit union boards of directors who are considering the types of transactions discussed in the ANPR? Please explain your response.

Feel free to contact Pamela Yu at pyu@nafcu.org with your thoughts, concerns and feedback.