Three Things You Should Read About Over Your Long Weekend

May 24, 2019 at 9:21 am Leave a comment

So you’re sitting there with your cup of coffee, looking around at your half empty office and bemoaning the fact that you didn’t take the day off after all. But you did the right thing; you now have extra time to read up on all the issues I want to tell you about this morning.

Most importantly, for you federally chartered low-income designated credit unions out there, you will have more flexibility to accept non-member deposits if the NCUA follows through and promulgates regulations it proposed yesterday. Currently, under 12 CFR 701.32 the total amount of non-member shares that an FCU may have is generally limited to the greater of 20% of a credit union’s total shares or $3 million. The proposal would increase the maximum limit to 50%. The regulation would also increase the amount of shares an FCU may receive from “public units” which refers to the funds of political subdivisions. State credit unions will be allowed to exercise the same authority provided that it is consistent with state law.

Its soapbox time. This is yet another advantage to designating your credit union as a low-income credit union provided it meets the criteria. I continue to be befuddled over the fact that there are credit unions which qualify for low-income status which choose to forgo the designation.

The second thing you will be the first one to know about because you came into the office this morning is the news that acting New York State DFS Superintendent Linda Lacewell is continuing to reorganize the office in a way that signals her priorities. Her latest move was to announce the creation of a division within DFS to focus specifically on protecting consumers and industries from digital threats. The office will be run by Justin Herring who is currently the Chief of the Cybercrimes Unit of the US Attorney’s Office in New Jersey. This is yet another sign that those of you subject to New York’s cybersecurity regulations better make sure that you are going about complying with them the right way.

Finally, as erstwhile readers of this blog will know, I have always been critical of a trend in recent years in which state and federal regulators and prosecutors have pressured both banks and credit unions to restrict their services to lawful businesses that engage in activity that policy makers don’t like.

So I’m happy to report that the FDIC has settled a lawsuit brought against it by payday lenders who claim that supervisors were pressuring banks to stop doing business with legal payday lending companies. The settlement includes this statement of policy and a letter which I would keep in your files for the next time over-zealous regulators try to pressure you into closing accounts of legitimate businesses. As part of the settlement, the FDIC explains that: “Financial institutions that properly manage customer relationships and risks are neither prohibited nor discouraged from providing services to customers operating in compliance with applicable federal and state law. Financial institutions are responsible for determining whether providing services to any particular customer is consistent with the institution’s business plan, risk profile, and management capabilities. The FDIC’s role is to examine institutions’ processes and procedures to ensure that they are sufficient and conform to all legal requirements.”

On that note, enjoy your long weekend. Peace out.

Entry filed under: Legal Watch, New York State, Regulatory. 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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