NCUA Wants To Give CU’s Greater Compensation Flexibility

April 22, 2019 at 8:45 am Leave a comment

Responding to what it sees as a need to update “outdated and burdensome” regulations, the NCUA on Thursday issued an Advanced Notice of Proposed Rulemaking requesting information on how to update regulations related to how senior executives are compensated. Remember, this is an Advanced Notice of Proposed Rulemaking, meaning it is just the informational stage during which NCUA will gather information which it will use to come out with proposed amendments. It is the latest in a series of proposed amendments the agency has made to update its regulations and provide greater clarity.

The NCUA’s focus is 12 CFR 701.21(c)(8)(iii) which authorizes federal credit unions to pay an incentive or bonus to an employee “based on the credit union’s overall financial performance.” I have not dug in and done independent research yet on this provision. According to NCUA, the language has caused confusion for credit unions to provide appropriate incentives to their executives.

This regulation applies not only to executives but employees as well. For those of you who provide mortgage loans and are looking for greater flexibility regarding sales incentives, keep in mind that whatever you propose also has to comply with the CFPB’s wonderfully nuanced and complicated loan originator compensation rule. The Association will be coming out with a survey on this ANPR and I am curious how much interest it generates.

FinCen Stakes A Claim to Cryptocurrency Oversight

Although it doesn’t directly impact credit unions, it’s worth noting that FinCen took regulatory action against an individual who executed peer-to-peer exchanges of virtual currency without registering as a money service business or complying with Bank Secrecy Act requirements such as filing CTR’s. In announcing the fine, FinCen wanted everyone to know that “this is its first enforcement action against a peer-to-peer virtual currency exchanger and the first instance in which it has penalized an exchanger of virtual currency for failure to file CTRs.” While we are a long way away from a settled regulatory framework when it comes to virtual currencies – after all, there is still a debate about what a virtual currency is in the first place – it’s inevitable that as the industry matures, credit unions will have to incorporate procedures and policies related to virtual currencies into their regulatory frameworks.

Good Work Governor Cuomo

With the caveat that this has nothing to do with credit unions, on Friday my wife and I dropped my kids off at LaGuardia Airport so that they could fly down to North Carolina. For years the Governor has talked about the need to renovate LaGuardia. I didn’t realize how right he was. I’m not exaggerating when I say the place is a dump. The renovation can’t get done quick enough.

Having blown off some steam, have a pleasant day.

Entry filed under: Compliance, Regulatory, technology. Tags: , , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, 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. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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