When Alice comes to the branch…

March 3, 2015 at 9:31 am Leave a comment


One of the things that I have learned about the credit union industry since I joined it about eight years ago is that there are few places as alert to subtle changes in communities as is the credit union branch.  By- and-large you really do know your members.

So there are few people as well positioned as your average credit union employee to sense when an older member is being exploited or is becoming confused.

So I emphasize with New York’s Department of Financial Services , which  recently issued a Guidance urging financial institutions to make greater use of existing federal and state laws that allow financial institutions to report   suspected cases of elder abuse.  According to the Department NY has the third largest elderly population in the country but financial institutions are underreporting suspected abuse.

The Department “recommends that financial institutions in New York make greater efforts to protect the elderly from financial exploitation by adopting red flag protocols, enhancing staff training, and reporting suspected financial abuse to Adult Protective Services (“APS”) or other authorities.” I added the underline.  The Department goes onto describe existing legal protections for financial institutions as well as best practices for financial institutions to follow.

Credit unions want to help and protect their members but we don’t need more Guidance. The single best step regulators can take to aid detection of financial abuse is to authorize the wider and faster distribution of SARS or the creation of state level facsimiles.

Financial institutions already use SARS to report elder abuse. The Manhattan DA’s office already extensively uses  them   to investigate elder abuse.  Using SAR reporting as a model regulators could prioritize disseminating SARS involving elder abuse to local police and prosecutors and state legislators could give financial institutions reporting suspected elder abuse to local welfare agencies  the   identical protections they currently  get for reporting SARS These steps would quickly aid the elderly without imposing additional mandates on financial institutions,

Here is the Guidance


It’s nice to have a strict constructionist in high places but….

NCUA board member Mark McWatters told CU Times that he would vote against any Risk Based Capital plan that  includes  capital levels for both Adequately Capitalized and Well capitalized credit unions.  McWatters’s line in the sand makes board member Rick Metsger  and  not Chairman Matz the most important figure in the RBC  debate.  It also highlights yet again the question of NCUA’s authority   to mandate that complex credit unions be anything more than adequately capitalized.

This may sound boring but as a CEO and reader of this blog pointed out to me recently,   the distinction is a crucial one for those  credit unions ultimately subject to an  RBC framework since they will have much more flexibility if they only have to worry about being Adequately capitalized.  Under the latest NCUA  RBC proposal   for a complex credit union to be Well Capitalized it would have to have a Net-Worth Ratio of 7% or greater and an RBC ratio of 10.0 or greater. To be Adequately Capitalized that same credit union would have to have a Net-Worth Ratio of 6% or greater and an RBC ratio of  8%      Remember NCUA is proposing that only credit unions with $100 million or more in assets be  subject to  am RBC requirement.

The industry certainly has a good faith basis for questioning the extent of NCUA’s powers-if it didn’t NCUA would not have spent money on a legal opinion letter addressing the issue-but the argument is by no means a sure-fire winner for credit unions.  Let’s not lose sight of the fact that NCUA has responded to industry concerns by proposing a vastly improved though by no means perfect RBC framework.  Rather than obsessing about legalities the industry should be patting itself on the back for a successful lobbying effort and focusing on ways to make the revised RBC proposal even better. Here is a link to the article,

Here ihttp://www.cutimes.com/2015/03/02/mcwatters-pledges-vote-against-two-tier-rbc-rules.



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

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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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