From Financials to the NCUA, Schumacher Takes What Comes to Him

You would have thought that they were at one of our conferences. I am sure our conference this year will cover many of the topics that they discussed and more. Can't wait!!!!!
What was billed as a presentation on essentials in credit union board financial education essentials evolved into discussion of topics ranging from the NCUA’s director education requirements to peer comparisons. *** Read More; From Financials to the NCUA, Schumacher Takes What Comes to Him: MAUI —

A New Accounting Model For Loan Loss Allowances

What’s going on? Well, the Generally Accepted Accounting Principles (GAAP) in the U.S. is based on the “incurred loss” model. This framework requires that before an allowance for loan loss is established, it must be probable, based on events that have already occurred, that a lender will not be able to collect principal and interest payments that are required under the contractual terms of the loan. If the impairment event has not already occurred, or if it is less than probable that a loss will be incurred, then at least in theory, no allowance is established.

A New Accounting Model For Loan Loss Allowances

Updated Reg B Adverse Action Address

Updated Reg B Adverse Action Address:

Written by Steve Van Beek

As part of their Regulation B adverse action notices, credit unions are required to provide the name and address of the Federal agency which administers compliance with the Equal Credit Opportunity Act (ECOA) for the credit union. Until recently, FCUs needed to include the appropriate NCUA Regional Office. NCUA's creation of its Office of Consumer Protection (OCP) resulted in the OCP taking over the requirements from each Regional Office.

The Problem? While NCUA send out a few generic notices regarding updating the address to the Office of Consumer Protection, the language in Regulation B - specifically Appendix A - was not updated.

Thus, credit unions looking at the language of Regulation B were being provided with different information than the informal notices sent by NCUA.

The Clarification? The CFPB's republishing of Regulation B into 12 CFR 1002 also included an update of Appendix A to reflect the new address for NCUA's OCP that should be used for adverse action notices.

The underlying requirement for including the agency address on adverse action notices comes from 12 CFR 1002.9(a)(2) and (b)(1).

The CFPB's Appendix A now includes this information (for FCUs under $10 billion on assets):

"d. Federal Credit Unions: National Credit Union Administration, Office of Consumer Protection (OCP), Division of Consumer Compliance and Outreach (DCCO), 1775 Duke Street, Alexandria, VA 22314."

Note: Credit unions over $10 billion need to include the CFPB's name and address.

The Timing? The CFPB's republishing indicates that institutions have until January 1, 2013 to make the change. Here is from 12 CFR 1002.9(b)(1) of Regulation B:

"(b) Form of ECOA notice and statement of specific reasons. (1) ECOA notice. To satisfy the disclosure requirements of paragraph (a)(2) of this section regarding section 701(a) of the Act, the creditor shall provide a notice that is substantially similar to the following: The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The Federal agency that administers compliance with this law concerning this creditor is [name and address as specified by the appropriate agency or agencies listed in Appendix A of this part]. Until January 1, 2013, a creditor may comply with this paragraph (b)(1) and paragraph (a)(2) of this section by including in the notice the name and address as specified by the appropriate agency in Appendix A to 12 CFR Part 202, as in effect on October 1, 2011."

Appendix A to the Federal Reserve's Regulation B (12 CFR 202) is located here and reflects the Regional Offices.

My understanding is state-chartered credit unions would continue to include the FTC information on their adverse action notices. See Item 9 under Appendix A for "All Other Creditors Not Listed Above."

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The CFPB discussed the January 1, 2013 timeframe in more detail in the preamble to the republished Regulation B. I know quite a few FCUs have already made the address changes to their adverse action notices, but those who haven't should begin the process now.

A potential benefit of the CFPB's January 1, 2013 timeframe is it clarifies that notices that were not updated previously were still in compliance with Regulation B. If an examiner or auditor indicates your credit union should have updated your notice earlier, I'd show them the language in 12 CFR 1002.9(b)(1) and then work towards getting the notice updated.

Frequently Asked Questions (FAQs) about the January 2010 advisory on Interest Rate Risk

"The Federal Financial Institutions Examination Council today released answers to Frequently Asked Questions (FAQs) about the January 2010 advisory on Interest Rate Risk Management. These FAQs are being adopted by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the National Credit Union Administration, and the State Liaison Committee (collectively, the “financial regulators”). "
 Interagency Advisory on Interest Rate Risk Management Frequently Asked Questions. Click here to view the FAQs. ​

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Bucks Blog: Big Banks Struggle to Help Customers on Twitter

Customers like the speed of sending a question to their bank by Twitter, but big banks find this form of customer service to be challenging. Bucks Blog: Big Banks Struggle to Help Customers on Twitter:

Why did you leave your last job?

Why did you leave your last job?” The question can strike fear in even the most confident candidate. Whether your answer is simple or complex, being asked to talk about it puts you on the spot, and it can be tricky to balance the truth while still painting yourself in the best possible light to your hopefully-soon-to-be employer. **** The Secret to Answering "Why Did You Leave Your Last Job?" - Forbes

How to Track Profit and Loss

"Credit cards have long been a high profit product for credit unions, which historically have been able to count on average Return on Assets of 3-6% on their card programs. A recent combination of economic forces and regulatory changes, however, has seriously impaired profitability. With 1-in-8 card portfolios losing money," How to Track Profit and Loss:

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Best Bank Account Interest Rates - Summary for Week Ending January 7, 2012

"The New Year didn't start off good for savers. Several banks and credit unions lowered their savings and checking account rates. The rate cut that we learned about in December took effect at Alliant Credit Union this week. " **** Best Bank Account Interest Rates - Summary for Week Ending January 7, 2012:

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CUs Reminded on Overdraft Consistency

Northwest Credit Union Association bulletin stresses transparency, cites new class action suit against bank. CUs Reminded on Overdraft Consistency:

NCUA Conserves Philadelphia CDCU

NCUA ends first week of 2012 with first conservatorship of year: Philadelphia's People for People CDCU. **** NCUA Conserves Philadelphia CDCU: