Comment Letter to DBO, NCUA News, and FASB Roundtables

Business professionals shaking hands

The California Credit Union League has submitted a comment letter to the California Department of Business Oversight (DBO) on its proposed amendments to the California credit union regulations.

The proposed amendments would modernize the regulations in order to reflect changes to the California Financial Code (FC) and federal regulations, streamline the process for out-of-state credit unions that apply to operate in California, and allow credit unions a greater choice of permissible investments.

The League generally supports the proposed amendments; however, it offered recommendations to provide clarity and further improve the proposed regulations. 

The proposed amendments significantly broaden the investment authority for California credit unions. The League is pleased the DBO is proposing greater flexibility for credit unions in their choices of investments.

Given the less prescriptive and more principle-based nature of the proposed amendments, the DBO maintains safety and soundness oversight and may find an investment is unsafe. In such a case, the League strongly recommends the regulations “permit a credit union to develop a reasonable plan, as agreed to by the commissioner, to unwind any investment determined by the DBO to be unsafe. The plan should be based on the individual, unique circumstances and market conditions.”

The DBO also proposed to repeal a requirement that foreign (other state) credit unions identify the state where chartered in connection with the use of its name in California. The League opposed this. Many consumers choose a credit union based on the credit union’s commitment to, and investments in, the community. As one League member stated, given an informed choice, many consumers often choose to “buy local.”

For a copy of the League’s letter to DBO Commissioner Manuel Alvarez, click here.

Aug. 5 Committee Vote on NCUA Board Nominee
The Senate Banking Committee is scheduled to vote on Kyle Hauptman's nomination to the National Credit Union Administration Board (NCUA) on Aug. 5. His nomination will then move to the full Senate for consideration if approved. It is possible Mr. Hauptman will join the NCUA Board sometime in the next quarter.

NCUA Board Approves FOM Rule Changes
During this morning’s NCUA Board meeting, four items were approved:

  • A final rule amending the chartering and field-of-membership rules for credit unions applying for a community charter approval, expansion, or conversion.
  • A proposed rule that would phase-in the day-one adverse effects on regulatory capital that may result from the adoption of the Current Expected Credit Losses (CECL) accounting methodology over a three-year period.
  • A proposed rule that amends the NCUA’s regulation governing the assessment of an annual operating fee on federal credit unions.
  • A request for comment on the existing overhead transfer rate and the operating fee schedule methodologies.

The chief financial officer also briefed the board on the agency’s revised budget estimates and expenditures in 2020. You can read more here.

NCUA: Certain COVID-19 Related Loss Mitigation Options Under RESPA
The NCUA has also issued an alert to notify credit unions that the Consumer Financial Protection Bureau’s (CFPB) interim final rule that amends parts of Regulation X became effective July 1, 2020. This interim final rule added a temporary exception in Subpart C to Regulation X for certain COVID-19-related loss mitigation options. This document outlines important changes that may impact credit unions that service mortgages regulated by Regulation X.

Under this rule, a loan mortgage servicer may offer a borrower a loss mitigation option based on its evaluation of limited information collected from a borrower, if certain criteria (described in the rule) are met. The new exception permits credit unions and their affiliates to align their loss mitigation programs with the criteria of the Federal Housing Finance Agency (FHFA) COVID-19 payment deferral or other comparable programs. You can read more here.

NCUA Webinar: Lending to Small Business Exporters with EXIM Bank
Credit unions can discover new lending opportunities for small business exporters through a free webinar hosted by the NCUA and the U.S. Export-Import Bank (EXIM). The “Export Financing for Your Small Business Members” webinar is scheduled for Aug. 19 at 11 a.m. (Pacific). Online registration is now open.
 
Staff from EXIM will discuss the Working Capital Loan Guarantee program, which provides a 90 percent guarantee against loans to exporters. Loans guaranteed by EXIM are exempt from the member business lending cap. EXIM staff will also discuss export credit insurance, which protects U.S. exporters against payment risk from their foreign customers.
 
Participants may submit questions in advance at WebinarQuestions@ncua.gov. The email’s subject line should read, “Export Financing for Your Small Business Members.”
   
Sept. 18: FASB Roundtables on Accounting Standard for Leases
The Financial Accounting Standards Board (FASB) has rescheduled a public roundtable discussion on the implementation of its accounting standard on leases for Sept. 18. The morning session will take place from 5:30 – 9 a.m. (Pacific), and the afternoon session from 10 a.m. – 1:30 p.m. (Pacific).
 
These roundtable meetings will be live-streamed on the FASB website. Visit the “Attend a Meeting Remote” (live webcast) option under the Upcoming Meetings section. The roundtable meetings are archived on the FASB website for 90 days.
 
The discussions will focus on broad technical issues that companies and organizations have found challenging when applying the leases standard and will give FASB the chance to hear from stakeholders. You can read more here.

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