Compliance Blog

As 2019 winds down, many are already looking ahead to next year including the key federal regulators that issue rules impacting credit unions. Two times a year, the Office of Management and Budget, Office of Information and Regulatory Affairs issues a unified agenda from various federal regulators. The most recent versions were published in November 2019 and give us a look ahead to what agencies like NCUA and the CFPB will be working on in the coming months.

NCUA

NCUA has several proposed and final rules on its agenda. Some address issues stemming from the agency’s regulatory reform agenda like compensation in connection with loans. Other agenda items tackle challenging capital issues like transitioning to the Current Expected Credit Loss (CECL) methodology and subordinated debt/regulatory capital.

Here is a snapshot of the agenda:

Notice that many of the items in the “final rule stage” are already completed such as: public unit and nonmember shares; delay of the effective date of the risk based capital rules; the “second chance” Interpretative Rule and Policy Statement; Payday Alternative Loans; fidelity bond and insurance coverage; and real estate appraisals. Some key proposals to look out for in 2020 include:

• Compensation in Connection with Loans to Members – specifically, the limitations set forth in section 701.21(c)(8), NAFCU members can find more information here;
• Credit Union Service Organizations (CUSOs) – which will consider expanding the permissible lending activities for CUSOs under Part 712;
• Transition to CECL – NCUA has indicated that the agency has the authority to phase-in the effects of CECL on credit union net worth ratios; and
• Purchase, Sale, and Pledge of Loans – which will “clarify” what FCUs are able to do under the loan participation and eligible obligations rules.

The full NCUA rulemaking agenda can be found here, and the links in the right column labeled “RIN” provide additional details.

Exam Modernization

In addition to rulemaking activity, in 2020 credit unions will begin to see changes in NCUA exam tools as well. For the past few years, NCUA has worked on various exam modernization initiatives.  As part of these efforts, NCUA has created the Modern Examination and Risk Identification Tool (MERIT) which will replace the current AIRES software and questionnaires. MERIT will have a central user interface with a secure connection where credit unions can provide status updates and have secure, online access to complete exam reports. In the fall of 2019, the agency began using MERIT with some of the over $10 billion asset level credit unions examined by the Office of National Examinations and Supervision (ONES). Sometime in 2020, it is anticipated that the broader exam staff will be trained on using MERIT so that by late 2020, the tool will begin being used for examining credit unions under $10 billion as well. NCUA has a set of FAQs on MERIT.

The CFPB

What about the CFPB’s recent rulemaking agenda? Here’s a snapshot:

The CFPB has also already made progress on some of these items, such as releasing a proposal on the remittance transfer rule. Keep an eye out for a proposal on first party debt collection, public release of HMDA data, and a proposal to reconsider the discretionary data points added by the 2015 HDMA rule.  The agency’s full rulemaking agenda can be found here.

As 2019 winds down, we will see what 2020 and a new decade brings. 2020 marks the tenth year since the passage of the Dodd-Frank Act, and more regulatory reform is in the works. It is also a leap year, giving us an extra day to enjoy; a summer Olympics year if you’re a sports aficionado; and a big election year as well. Thanks to you all for reading this blog, we look forward to keeping you all up to date in 2020 which promises to be another fun year in credit union compliance!