In What Order Do You Process Your Checks?

July 29, 2014 at 8:20 am Leave a comment

There are some issues that are hanging over the industry like a sword of Damocles.  This morning an article in the Wall Street Journal provides further evidence for those who feel that the CFPB should do more to regulate overdraft fees. 

According to a survey conducted by the paper, hundreds of small, regional banks, and credit unions are “clinging to the practice” of processing checks on a high to low basis.  The paper’s survey revealed that smaller depository institutions are continuing this practice even as larger institutions are backing away from it.

What exactly to do about overdraft fees has been debated for more than a decade now.  In 2010, the Federal Reserve promulgated regulations requiring that members opt in to bank payment on debit card overdrafts.  I was silly enough to think that this would put the issue to a close, but it hasn’t.  For example, in a statement accompanying a 2013 report on overdraft processing, CFPB warned that if “policies and practices do not protect consumers in accordance with consumer protection law, it will use it authorities to provide such protection.”  

The more I look at the issue, the more I feel that overdraft fees are the most misunderstood practices engaged in by depository institutions.  Do they represent an important source of income for many banks and credit unions?  Absolutely, but I bet if you asked your average consumer if they are willing to pay more to make sure that their mortgage or car payment doesn’t bounce, they’d agree.  In other words, overdraft fees are a product that some consumers want and need.

Regulatory Update

I’ve been AWOL for a couple of days and based the volume of work that regulators pumped out over the last week it’s obvious that many of our regulatory overlords intend on being AWOL for most of August. Here are a couple of regulatory proposals to review in preparation for Fall.

CFPB’s HMDA Proposal  Empowered by the Dodd-Frank Act , the Bureau that never sleeps is proposing revisions to the Home Mortgage Disclosure Act. It may not sound like a page turner, but for those credit unions that have to comply with it, properly reporting mortgage loan information can be one of the great compliance headaches. If the regulation goes forward as proposed the types of mortgages subject to reporting requirements will be expanded to include “all mortgage loans secured by a dwelling, regardless of the purpose of the loan” including HELOCS and commercial loans secured by a home.  Here is a link.

NYS moves to regulate Bitcoin New York State’s Department of Financial Services is rushing ahead of federal and state regulators by proposing licensing requirements and a comprehensive regulatory framework for institutions that buy, sell, transfer or store virtual currencies. Here’s a link to NYS’s proposal.

Entry filed under: Compliance, General, New York State, Regulatory. Tags: , , , .

On “The Talk,” Fixed Assets, And Settlement Money 5 Steps to Minimize Your Cyber-liability

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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