Compliance Blog

Posted by Anthony Demangone

Not too long ago in the distant year of 2010, NCUA offered a free webinar on indirect lending.  Viewers were able to submit questions and answers during the webinar.  NCUA has released the archived version of the webinar, and they also released this FAQ document.  

Gold, Jerry.  Gold. This FAQ document is filled with clues concerning NCUA expectations.  Such as...

20. Can CUs outsource underwriting decisions to a third party?

No. CUs must establish policies used to make the loan decision. A third party can execute the credit union policy on behalf of the credit union; however, the credit union must make sure the policy is adhered to.Credit unions may agree to use the underwriting standards of a third party. However, the board must approve those standards after determining if they meet the credit union’s risk tolerance, and management must be able to reconcile and incorporate the standards within their own policies.

I'd forward a copy of the FAQ document to whomever is responsible for your indirect lending program. And you may want to consider saving a copy of this document for your files.  For some reason, these FAQ documents are not integrated into NCUA's website.

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The Fed's recent proposal on debit card interchange fees is fairly complex.  Here's a link to the proposal, and a link to NAFCU's overview. (Members only.)  My colleague Dillon is knee deep in this issue, and he uncovered a gem of an item. 

You may recall that the Fed, in the proposal, discusses the prohibition on network exclusivity arrangements mandated by Dodd-Frank.  You'll find the discussion on page 121 of the proposal. In short, the Fed provided two alternatives, saying one alternative would require one PIN debit network and one signature debit network.  The second alternative would require card issuers to provide two PIN debit networks and two signature debit networks. The Fed noted the following:

“For example, although an issuer may prefer to offer a single payment card network (or the network’s affiliates) on its debit cards to reduce its processing costs or for operational simplicity, the statute’s exclusivity provisions do not allow that.” (Emphasis added.)

As Dillon said, "That’s right.  Making decisions based on cost and operational efficiency is so 2001."

Happy 2011, everyone.