Groundbreaking legislation. Political intrigue. Indecipherable regulations. If you get chills of excitement just thinking about these topics, this is the blog for you! Henry Meier is taking on the latest laws, regulations and political issues that impact New York credit unions, so read often and join the conversation!
In any business, there’s always going to be a tension between catering to the commercialism of the moment and remaining true to the core values that made your institution great in the first place. Some people react to this tension by pretending they are above commercialism, while others recognize that their products and offering have to change with the times. Why even Santa Clause is not immune. If you read “Twas the Night Before Christmas” by Clement Clark Moore, how exactly does the image of an elf in “a miniature sleigh and eight tiny rein-deer” square with the image of a modern day Santa — an avuncular fellow who looks like he’d be fun to throw back a few with. The answer actually has a lesson for credit unions — trust me. Believe it or not, we owe much of our image of the modern day Santa to Coca Cola.
Coke has been advertising using Santa’s image since the 1920s, but the real breakthrough came in 1931 when the Coca Cola Company commissioned Haddon Sundblom to spice up Santa’s image for advertisements to be placed in magazines including The New Yorker, Ladies Home Journal, the Saturday Evening Post and National Geographic. My guess is that there was a fair amount of elitism here. After all, the Depression had kicked by then and there was a good chance that if you had time to read these magazines, you had survived the worst of it. I am also guessing that there was some cold-blooded commercialism going on as well. Soda is easy to sell in the summer time, but how do you sell a cold drink in the dead of winter. Hitching a ride to Santa’s sleigh is pretty cynical and pretty smart. Anyway,Haddon used the image of Santa from the famous poem as his inspiration to capture the essence of Santa, but clearly took some liberty with the image. For example, Santa had a wedding ring. He wasn’t an elf but a full-fledged human modeled after a salesman and then Sundblom himself. Sundblom painted images of Santa until 1964 and the images have become so famous that they have been shown in museums around the world.
What does all this have to do with credit unions? Irrespective of the size of your credit union, the best assets that your credit union has are the values with which the public identifies the credit union movement. When people think of credit unions they think of good service, fair prices, and a financial institution that is not a bank. But good feelings don’t necessarily translate into more members. The traditional credit union model is an increasingly antiquated vestige of a different time and place. Those credit unions that will survive and prosper will be those that change with the times by, for example, offering cutting edge technology that deemphasizes traditional banking, but doing so in a way that remains true to the core values of the movement. Clement Moore might not even recognize today’s Santa, but he would recognize that he is a happy, decent guy out to give people a break. Hopefully, future generations of credit union members will think the same way about our institutions.
On that note, your blogger is going on hiatus until the new year. Thank you for reading, happy holidays, and have a very Merry Christmas.
And State Senator Griffo and Assemblywoman Robinson.
In the wee small hours of the morning the Governor officially signed legislation that gives state chartered credit unions greater flexibility in creating fields of membership. I’m not exaggerating when I say that this is the most significant piece of NYS legislation in at least the last fifteen years. It helps New York consumers by making it easier for them to join a credit union, it makes the atrophying state charter a viable option for credit unions and It helps out federally chartered institutions that benefit from a regulatory framework in which no single regulator has a monopoly. As the sponsor memo accompanying the bill explains ” A healthy dual chartering system and the ability for credit unions to reach as many New Yorkers in need of their products and services are essential elements toward their continued success.” Right now there are approximately 21 state charters
The legislation, (S 7112 Griffo, A 9408 Robinson) was vetoed last year and will be amended further in the coming months to address concerns raised by the Department of Financial Services. In its final form it allows state chartered credit unions to apply for Fields Of Membership(FOM) that combine the different FOM categories. For example a credit union composed of employees of the local library could apply to allow persons in the community in which the library is based to be credit union members. All FOMs will be subject to the approval of the DFS.
Contrary to the objections of our banking brethren the legislation doesn’t do away with traditional credit union membership requirements. No open charters are being created. Potential members will still have to belong to a category of persons a credit union is authorized to serve. However since state charters will now have more flexibility in designing their membership more consumers will have more flexibility to choose between financial institutions, As someone who believes that competition among financial institutions is the best consumer protection there is this legislation is a huge step in the right direction.
The bill takes effect in 90 days. Here is a link to the legislation.
No Fracturing in NY
New York State’s ban on high-powered hydraulic fracturing will stay in place after the state’s Acting Health Commissioner announced he was concerned by the health risks it posed. The DEC has already announced that it will defer to the commissioner’s findings, Fracturing involves shooting high volumes of water and chemicals into shale. The resulting cracks release natural gas deposits.
The Association has been following the issue closely because the leasing of mortgaged property for drilling raises concerns that should be addressed in mortgage documents and discussed with members. Remember if you provide mortgages in Pennsylvania you should already be addressing these issues.
If Nixon can go to China, then I can darn well compliment the American Bankers’ Association when it makes a good point. That is what I am doing today. Besides, if the bankers succeed in getting a petition approved the Federal Communications Commission (FCC), credit unions will benefit as well.
We all know that identity and data theft prevention are all the rage. Suppose that you are approached by a vendor with a great new system that will send out automated voice messages to a member’s cell phone anytime there is an indication that fraudulent activity may be taking place. Given the volume of potential fraud alerts, as well as the speed at which hackers can do their damage, using automated voice messaging and texting is the quickest, most cost effective way of getting the word out. In addition, since the cell phone has become an adult umbilical cord, it makes perfect sense to send the message right to the smart phone, provided that a member has given the number to the financial institution.
However, these services have run up against a compliance speed trap. The Telephone Consumer Protection Act (TCPA) generally prohibits companies from calling cell phones using an automatic dialer telephone system or artificial pre-recorded voice unless the call is “made with the prior consent of the party called.” See 47 USC 227(b)(1).
The problem is that Congress never defined prior expressed consent. As a result, banks and businesses fear that using pre-recorded voices to notify cell phone users of problems with their accounts may result in class action litigation. They have a point. There has already been litigation in this area and even though I think the courts would ultimately rule that a person who has provided financial institutions with a cell phone number has consented to these notifications, nobody should have to go through litigation to find out.
To resolve this issue, the American Bankers’ Association submitted a petition to the FCC, which enforces the TCPA. In the petition they are asking for the authority to send the following messages using either automated phone calls or text messages to a cell phone:
- Fraud and Identity Theft Alerts;
- Data and Security Breach Notices;
- Money Transfer Notifications and notifications of actions needed to arrange for receipt of pending money transfers; and
- Messages informing consumers of “steps they can take to prevent or remedy harm caused by data security breaches.”
Presumably, if the bankers’ petition is successful, credit unions would have the same authority. So in reality, this is a win-win. The proposal makes good sense: we should all be able to reach out and touch someone when doing so protects their assets.
Your email policy probably isn’t legal; It may have been perfectly appropriate last week but there is a good chance it is a hopelessly outdated relic of labor law today.
Is this just a pathetic attempt to get your attention as my blog competes with your overloaded Inbox? Kind of but it also reflects the fact that late last week the NLRB fundamentally changed the legal rights of employees to use email on company time, At the very least you should grab your email\electronic communications policy and see if a call to your HR attorney may be in order. If you don’t have a policy then get to work creating one.
Our story begins with a company in California that provides interpreting services for the hard of hearing, The employees spend most of the day at their desks and are given a company email account. The employees decided to unionize but argued that their right to vote for representation was illegally inhibited by a company email policy that I bet reads a lot like yours it explained that:
Employees are strictly prohibited from using the computer, internet, voicemail and email systems, and other Company equipment in connection with any of the following activities:
- Engaging in activities on behalf of organizations or persons with no professional or business affiliation with the Company.
. . . .
- Sending uninvited email of a personal nature.
As recently as 2007 the NLRB and a federal court in the District of Columbia reviewed a similar policy and upheld a straightforward rule: Employers can limit the use of employer owned equipment to work related activities. Email service is an investment in company property and as such is subject to a company’s rules prohibiting its use for non-work related activities,( In Re the Guard Publ’g Co., 351 NLRB 1110 (2007))
In last week’s decision the NLRB overturned this earlier ruling and created a new legal framework for analyzing what limits can be placed on the use of company email by employees. Now there is “a presumption that employees who have been given access to the employer’s email system in the course of their work are entitled to use the system to engage in statutorily protected discussions about their terms and conditions of employment while on nonworking time, absent a showing by the employer of special circumstances that justify specific restrictions.”Purple Commc’ns, Inc. & Commc’ns Workers of Am., Afl-Cio, 361 NLRB No. 126 (Dec. 11, 2014)
What does this mean?
First, as I have explained in previous blogs an employee has a right to engage in concerted activity to discuss workplace conditions with their fellow employees irrespective of whether or not they belong to a union. This ruling could impact your credit union. For instance employees exchanging emails critical of a new marketing initiative that they think is bad for the credit union might be legally protected.
Second the fact that you might allow your employees to bring their tablets and iPhones to work doesn’t alter your obligation to allow the use of email. A dissenting opinion to the Board’s decision argued that employees have more than enough ways of communicating with work- mates irrespective of their access to a company’s email system. To the NLRB majority this doesn’t matter.
Third, the decision doesn’t mean you can’t regulate email use. It just applies to email use during non- work time such as a lunch hour. The majority made clear that you can still monitor email. And remember most communication is not concerted activity. For example, employees still don’t have the right to sexually harass each other over the internet Furthermore companies that can prove that their workplace has unique attributes that require it to adopt more restrictive email policies will be allowed to impose restrictions. But this is going to be an extremely difficult argument to make.
Fourth, this is not the last word on this case. The NLRB’s In Re the Guard Publ’g Co decision on this issue ended up in court and I would bet you that this decision ends up before the courts in the not so distant future.
Now for a personal observation: The NLRB is pushing for employee email protections precisely when we have a real life example of just how detrimental email can be to a company’s reputation courtesy of hackers who have published embarrassing emails from executives at Sony. For example one Email from an executive had the audacity to question the talent of Angelina Jolie! Now in “LA LA land this is big news since you don’t want stars to pass on making your studio’s next movie. The point is there are some conversations businesses should be allowed to keep in-house or comments that simply shouldn’t be made by an employee in the first place. Now some of those comments might be legally protected.
Here is a link to the decision and an earlier blog I did on this case.
How bad was Cleveland Quarterback Johnny Manziell in his first game as a starting quarterback? My brother summed it up well: He was so bad me made Geno Smith of the Jets look like a good quarterback. …
The Supreme Court on Friday decided to take two nuts-and- bolts bankruptcy cases that could have an operational impact on your credit union. As explained by the Fifth Circuit “A debtor who is unwilling or unable to continue paying creditors under a Chapter 13 plan may convert his case to a Chapter 7 liquidation at any time.11 U.S.C. § 1307(a). Because of the differences between a Chapter 13 estate and a Chapter 7 estate, such a conversion raises an inevitable question: does the Chapter 7 estate include all property held by the debtor at the time of conversion, or does it include only the property held at the time of the original Chapter 13 filing?” In Bullard v. Hyde Park Savings Bank the Court will decide if money in the possession of a Chapter 13 trustee can be distributed by that trustee after the debtor has converted to a chapter 7 bankruptcy or must be returned to the debtor? At least one court in New York that has examined the issue has held that a trustee is free to distribute funds to creditors- In re Bell, 248 B.R. 236 W.D.N.Y. 2000)- but other courts have disagreed.
A second case, Vieglelahn-v.-Harris–13-50374–5th-Cir.-2014, will rule on whether a debtor has a right to appeal a court’s refusal to confirm a bankruptcy plan. The case involves an underwater homeowner who filed for bankruptcy protection. The homeowner proposed a repayment plan which would have reduced the secured value of the mortgage loan. Hyde Park Savings Bank understandably objected and the court refused to confirm the plan instead ordering our homeowner to come up with another plan within 30 days. The Homeowner is seeking to appeal the court’s refusal to confirm his plan. It seems to me that if the Court rules in favor of the homeowner we face the prospect of even longer delays in resolving disputes involving delinquent mortgages. Oh Boy!
Starting today the Credit Union Association of New York is the New York Credit Union Association. Henceforth anyone who refers to the Association as CUANY can be shot on sight. This is bad news for me because it takes me about six months to remember anyone’s name and I still refer to the Tampa Bay Rays as the Devil Rays….
Session not Lame for Banks
The banks did pretty well in the lame Duck session. The budget deal the Senate signed off on s Saturday waters down a swaps provision in Dodd Frank designed to prevent banks from gambling-I mean investing-with Insured deposits. Smaller bank holding companies will also benefit from legislation allowing those with $1 billion or less in assets more flexibility in the amount of debt they can take on before being subject to greater over site by the Federal Reserve .
Democracy is working better in some countries than in others. Conservative Japanese Prime Minister Shinzoe Abe scored a decisive victory in parliamentary elections he called just days after his country slipped back into recession. That’s right he won a decisive election weeks after it was confirmed that the world’s third largest economy is still in the tank. Why should you care? Because Abe is a proponent of quantitative easing and is likely to put off taxes meant to reduce Japan’s National debt in order to emphasize economic growth. In contrast the US is cutting back its government spending and ending quantitative easing on the assumption that the economy doesn’t need the stimulus. If our policymakers are wrong the economy is in for another five years of anemic economic growth even as corporate profits continue to grow
New York State’s Department of Financial Services issued a letter to all New York State chartered and licensed banking institutions yesterday informing them that cybersecurity will be an increased emphasis of the examination process. The Department’s head, Benjamin Lawsky said: “the Department encourages all institutions to view cybersecurity as an integral aspect of their overall risk management strategy rather than solely as a subset of information technology.”
The heightened examinations include:
- An analysis of an organization’s reporting structure for cybersecurity related issues;
- An organization’s management of cybersecurity issues including the interaction between information security and core business functions;
- An examination of information policies and procedures as well as assessing whether such policies are periodically reviewed in light of changing risks; and
- A requirement for protections against intrusion including the use of multi-factor authentication.
This list is by no means definitive and you should take a look at the entire letter.
Although the letter is applicable to all of New York State’s charges, its more detailed requirements are clearly geared to the largest institutions DFS regulates. An accompanying press release explains that “institutions will be examined as part of new, targeted DFS cybersecurity preparedness assessments.” Nevertheless, all New York State credit unions should be ready to demonstrate that they have cybersecurity policies commensurate with the risk posed with the services they provide and the vulnerability of their systems to cyber attacks. As I explained in a previous blog, cybersecurity preparedness has become a major point of emphasis for the DFS. Remember, hackers are demonstrating an increased interest in attacking small to medium sized financial institutions.
Since I am on the subject of cyber security here’s a post from the Motley Fool investment site that is worth a look. It explains what it thinks investors should expect banks to be investing in when it comes to building and maintaining a cyber infrastructure.
On that note, have a nice day.