Compliance Blog

Posted By Anthony Demangone

Here are a few thoughts about NCUA's recently issued fiduciary duties rule.

Training and existing directors.  As I pointed out on Friday, NCUA's new fiduciary duties rule requires that new directors obtain a basic level of financial literacy within six months of election or appointment.  When the rule becomes effective, it is easy enough to identify those new directors.  But what about existing directors?  Are they grandfathered?  The rule is silent on this issue.  NCUA did indicate that it will issue additional guidance in the near future to clarify expectations.  On one hand, we can wait for further guidance. On the other hand, if your federal credit union has a director who does not feel comfortable reading financial reports or does not understand basic accounting, what are you waiting for?  Training in that area would make them a more effective director, whether the training is required or not. 

Business practices.  A savvy reader brought this to my attention.  The new fiduciary duties rule mandates that a board directs management's operation of the federal credit union in conformity with the FCU Act, NCUA regulations, other applicable law, and sound business practices.  I raise the last point, because the reader brought this thought to my attention.  If an examiner wants your credit union to do something that goes against a sound business practice, such as something that doesn't conform to GAAP, it looks like your board has a fiduciary duty to ignore the examiner. How about that? (Hat tip to Peter.)

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Here are a few other items of interest...

WikiLeaks.  You see that a member wants to use your credit union to make a payment to WikiLeaks.  Do you allow the member to make the transaction?  There's no official guidance, but some banks are saying "no." (Washington Post.)

CFPB.  Elizabeth Warren has reportedly chosen the new head of enforcement for the CFPB, and he has quite sharp teeth. (Cleveland Leader.) 

Question of the Day.  Are you "Astroturfing?"  (Kaufman and Canoles.) Yes, this is compliance related.  I promise. 

Unsolicited Marriage Advice of the Day.  Never hold anything that your spouse says after 2 a.m. against them.  Or anything that they say while assembling IKEA furniture.  For some reason, sleep deprivation or furniture "activation" brings strange words out of one's mouth.  Of course, I'm the one that usually benefits from this guidance in my household.