Posts filed under ‘Advocacy’

Do Vacation Policies Help Prevent Fraud?

In 1996 New York’s Banking Department issued a guidance strongly encouraging financial institutions to mandate two weeks of consecutive vacation for employees holding sensitive positions.  Its rationale was that two weeks would provide adequate time to uncover malfeasance on the part of employees who would not be able to cover up their mismanagement away from the office. 

It seems that about for as long as the policy has been in existence, state chartered credit unions and banks have argued that the guidance is an outdated relic of a bygone era which needlessly burdens financial institutions and does little to accomplish its laudable goal of detecting insider abuse. 

So yours truly was pleased to see that on January 4th DFS issued this request for information seeking feedback from financial institutions about potential changes to this guidance.  The Association has already talked to some of our state charters and will certainly be commenting to the DFS as it considers changes. 

Just rereading the guidance demonstrates how outdated it truly is.  For example, it explains that mandatory vacation policies should apply to “… those officers and employees involved or engaged in transactional business or having the ability to change the official records of the institution. This policy should also cover all other staffers who are capable of influencing or causing such activities to occur.”

Suffice it to say that a lot has changed since 1996.  Many of us still did not know what the internet was, let alone conceived of online banking.  It was 11 years before Steve Jobs introduced the iPhone!  And today, average consumers can electronically deposit checks and expect almost immediate access to their funds.  As a result, virtually every employee can, on some level, be considered a key employee who holds a sensitive position and a fraudster can do in a matter of minutes what used to take two weeks. 

The NCUA manages to address the same issues that New York addresses without adopting a stringent two week requirement.  It’s time DFS follows suit.  The existing guidance hinders both big and small institutions. 

January 20, 2022 at 9:22 am 1 comment

Three Things You Should Know To Start Your Credit Union Day

Municipal Deposit legislation, A8289, gained a key sponsor yesterday when the new Chairwoman of the Assembly Banks Committee became the prime sponsor of the legislation in that chamber.

Assemblymember Pat Fahy is the new chairperson of the Banks Committee. She replaces former Bronx Assemblymember Victor Pichardo who resigned from the Legislature this past summer. Pichardo’s departure means that the legislation will have to be reconsidered by the Banks Committee. Last year the legislation advanced to the Assembly Ways and Means Committee.

Assemblymember Fahy is a familiar face in the Capital Region who represents parts of Albany and Bethlehem. In September, the Association met with her office to discuss credit union priorities.

Court Clarifies Foreclosure Notice Requirements

When it comes to foreclosing in New York, minute mistakes can make a huge difference. Most readers of this blog know that state law requires mortgage holders to mail a 90 day pre-foreclosure notice to delinquent homeowners before commencing foreclosure (RPAPL 1304). When there are multiple borrowers, how is this requirement satisfied? In this recent decision a New York Appellate Court addressed this issue for the first time. It ruled that lenders must mail a separate 90 day notice to each borrower in separate envelopes.

Is this arcane? You bet it is. But if this procedure isn’t followed, a foreclosure will be dismissed, at least in Long Island, Westchester, Brooklyn, Queens and Staten Island over which this court exercises its jurisdiction. Wells Fargo Bank, N.A. v Yapkowitz, 2021 N.Y. Slip Op. 05139, 2021 WL 4448061

Yellen Continues To Push For Transaction Monitoring

Treasury Secretary Janet Yellen continues to insist that requiring banks and credit unions to report almost every account transaction by their members is no big deal. Ironically, she is making this argument even as America wakes up to the danger of Facebook controlling so much of our personal information. People don’t trust the IRS any more than they trust Mark Zuckerberg, although it might be close at this point. 

Yellen’s continued advocacy underscores that we have to continue to tell anyone that will listen that intrusive transaction reporting is a bad idea.

I will be back on Tuesday.  Enjoy your long weekend. This year’s World Series prediction, which has been certified as acceptable Secondary Capital by the NCUA, is the Milwaukee Brewers against the Houston Astros, with the Brewers winning in a seven game classic.

October 7, 2021 at 9:55 am Leave a comment

The Good, The Bad, and The Ugly as Albany’s Session Comes To A Close

Early this morning, the NYS Legislature came to its unofficial end as the Assembly passed the last measures of an extremely active session. Here is a first look at some of the key legislation that will impact CUs if it is approved by the Governor.

In a major legislative accomplishment, credit unions successfully lobbied for legislation which will allow them to participate in the Excelsior Linked Deposit program. The program gives lenders access to state deposits in return for making qualifying small business loans of up to two million dollars. Just how long have credit unions been seeking to participate in the program? Well, one of our volunteer board members lobbied for passage of the bill by showing legislators a letter he wrote in support of credit union participation to the Governor… Governor Pataki.

Credit Unions came up short on legislation which would allow municipalities to place their funds in credit unions but for the first time in at least 15 years, legislation has been voted out of the Senate and Assembly Banks committees. This means that the finance committees will be hearing from plenty of credit unions over the next year.

Finally, credit unions successfully lobbied for passage of legislation which will help bring banking into the 21st century by authorizing the use of remote online notarization. This bill is a win for consumers in general and the elderly and disabled, in particular, who will now be able to more easily get their documents notarized without having to go to a branch. The legislation would also make it easier to sell mortgages on the secondary market.

Now for the bad news. The legislature passed a measure to cap the interest that can be charged on judgements related to consumer debts at 2%. As drafted, the new interest rate would apply to judgements which have been filed but not yet executed prior to the bill becoming effective. If you think that is a recipe for a confusing mess, you’re correct.

Earlier this year, New York’s Court of Appeals wrote a series of decisions restoring a level of common sense to New York’s foreclosure process. The legislature passed a series of measures which chip away at these rulings. For example, Assembly 2502A imposes additional pleading requirements on lenders seeking to foreclose that could otherwise be waived by a homeowner.

Another bill passed by the legislature would extend CRA requirements to licensed mortgage bankers. Crucially, this bill would not apply to credit unions. It would apply to mortgage CUSOs.

Looking ahead, the table has been set for a debate over legislation to impose a California-style data protection framework on NYS. Legislation has been introduced and the Association is seeking to exempt GLB compliant institutions. Get your talking points ready for the trip to Albany next winter.

June 11, 2021 at 9:50 am Leave a comment

Albany Moves On CU Priorities

Yesterday saw some important movement on legislation impacting credit unions.

First, legislation that would permit municipalities to deposit money in credit unions has been placed on the Senate Banking agenda which meets this Tuesday, May 18th. S670 sponsored by Banking Committee Chairman Sanders is of course a key priority for the industry.

Currently, municipalities, including school districts and local towns throughout the state, are prohibited from placing their money in credit unions even when it could help New York’s taxpayers by generating more interest on public funds and providing much needed competition in an area where banks currently hold a monopoly. We will be coming out with a Call To Action later today.

Secondly, yesterday the Governor signed legislation to exempt from levy and restraint COVID-19 stimulus payments. More specifically, the bill exempts from collection any payment to individuals under the Federal Family First Coronavirus Response Act exemption for emergency relief funds. Any payments to individuals, including tax refunds, recovery rebates, refundable tax credits, and any advances of any tax credits, under the Federal Families First Coronavirus Response Act (FFCRA), Coronavirus Aid, Relief, and Economic Security Act of 2020  (CARES Act), Consolidated Appropriations Act of 2021, and the American Rescue Plan Act Of 2021 (ARPA). The exemption does not apply to child and family support payments. In addition, the bill prohibits financial institutions from exercising a right-of-set-off on these funds. 

The Association joined with CUNA in advocating for stimulus payments to be exempt from levy and restraint.  Congress did not exempt the latest round of stimulus payments from levy and restraint apparently because doing so would have violated budget reconciliation rules which allowed the measure to be passed in the Senate by a simple majority.

May 14, 2021 at 9:22 am Leave a comment

Gov Approves HERO’s Act

Good morning folks, with a special shout out to those of you who work in the great state of New York.

The Governor has approved the HERO Act, legislation which mandates that all businesses in NYS implement policies addressing a wide range of issues related to airborne illnesses, such as COVID. For those of you with ten or more employees, you also must give your employees the option of creating committees to address work place health related issues on an ongoing basis.

The bill is phased-in over a six month period with the first requirements taking effect in 30 days. Adopting an approach similar to what we saw when the state passed sexual harassment legislation, the state will be providing sample policies that your credit union can adopt.

One other piece of good news is a reminder that this law applies to both federal- and state-chartered credit unions.

Stay tuned, the Association will be hosting a webinar next Wednesday to take a first look at this important new mandate.

Remote Notarization Hearing Today

At 10 o’clock today, the Assembly will be holding a virtual hearing to analyze issues related to authorizing remote notarization on a permanent basis in New York. Remote notarization refers to the ability of a notary to verify the authenticity of a signature without the signer being physically present. Lisa Morris from Hudson Valley Credit Union will be testifying for the Association.

He’s Back!

The former Benign Dictator of Consumer Finance is back. Ricard Cordray has been given a high profile job at the U.S. Department of Education from which he will oversee issues related to the federal student loan program.  Not coincidentally, his portfolio gives him a high-level platform to address one of the key issues the Biden administration is being pressured to address — whether to forgive or not to forgive all of those student loans — while not being so high as to require Senate confirmation.

California Chimes In

California joined  Illinois’s  financial regulator in prohibiting lending platform Chime from implying in its advertisements and websites that it was a bank as opposed to a lending platform that passes through loans. The state’s actions come as federal and state regulators continue to grapple with the issue of when FinTechs should be classified as banks with the accompanying regulatory requirements that this classification would impose.

Earlier this week the Federal Reserve board issued proposed guidance for the Federal Reserve banks to consider when deciding whether or not FinTechs should be given access to the Federal Reserve System. Don’t underestimate this power: remember it was a Federal Reserve Bank which blocked Colorado from starting a state-level bank to provide marijuana banking services.

Captain obvious here: this is an issue that Congress needs to address sooner rather than later.

On that note, enjoy your weekend. If all goes according to plan, yours truly will be gathering with a group of vaccinated middle age men to play his first round of in-person poker in more than a year.

May 7, 2021 at 9:35 am 1 comment

Get Ready For A Bigger Tax Collection Role

The White House is planning on financial institutions to play an important role in helping to pay for the $1.9 trillion spending plan the President will unveil tonight. 

As explained by the Wall Street Journal, the Biden Administration is proposing increasing the IRS’s budget with the hope of taking in more tax revenue.  An important part of the plan is to expand the reporting obligations of financial institutions.  As explained in this fact sheet released by the White House.  “It would require financial institutions to report information on account flows so that earnings from investments and business activity are subject to reporting more like wages already are.”

Because I’m such a helpful fella, I provided this link to the IRS website just in case you are a little rusty about how backup withholding works.  Call me wacky, but if this plan goes through, it’s going to increase the incentives some people have to be less than truthful about their income. 

Of course this is just a proposal, but if history is any guide, a President’s initial budget proposals are among the most impactful and Congress will have to come up with ways of paying for all of this increased spending. 

Assembly To Hold Hearing On Remote Notarization

One of the initiatives being advocated for by the Association is to make remote notarization – the ability of notaries to certify documents in a virtual environment – a permanent part of New York State law.  An important step towards that goal will take place a week from Friday with the announcement that the Assembly Government Operations, Banks, Consumer Affairs and Protections and the Judiciary Committees will be holding a joint virtual hearing on the subject.  We will be following up with additional information in the coming days.

This Can’t Be Good…

According to a statement released by the CFPB yesterday, mortgage servicer Mr. Cooper made unauthorized withdrawals resulting in hundreds of thousands of consumer bank accounts being debited for multiples of their mortgage payments.  In a terse statement, the CFPB said it is taking immediate action to “understand and resolve the situation”.  This sounds like it is going to get worse before it gets better.  Brace yourself for the reactionary guidance that will undoubtedly be issued by financial regulators in the coming days.

On that note, enjoy your day.

April 28, 2021 at 9:35 am Leave a comment

Three Things You Need To Know To Start Your Credit Union Day

Good news!  I just heard that Ted Lasso is coming back for another season starting July 23rd.  Nothing at all to do with your credit union day but I’m passing this on as a public service to those of you with Apple+ who want to watch an above average show that’s almost family friendly. 

House Passes SAFE Act, Again.

Yesterday the House Of Representatives passed legislation, supported by CUNA and NYCUA, permitting financial institutions to legally provide banking services to cannabis businesses as a matter of federal law in states such as New York where the sale and possession of marijuana is legal.  Similar legislation was passed last year only to die in the Senate.  It would appear that with 50 Democrats in the senate odds for Senate passage this time around have improved but this is by no means a sure thing.  The legislation may get caught up in a larger debate about criminal justice reform… stay tuned.

It’s a Watershed Moment For CDFIs

 That is the gist of this American Banker article which points out that recent months have seen a dramatic increase in funding for CDFIs.  Once again your credit union should at least take a look at whether or not it qualifies for a CDFI designation and if it does it should consider the costs and benefits of getting and maintaining this designation.

CFPB Issues Emergency Rule To Block COVID Related Evictions

Yesterday the CFPB issued an interim regulation mandating that debt collectors provide tenants information about the CDC’s eviction moratorium which bans tenants from being evicted while COVID emergency orders remain in effect.  The CFPB is taking this step out of concern that “…consumers are not aware of their protections under the CDC Order’s eviction moratorium and that FDCPA-covered debt collectors may be engaging in eviction-related conduct that violates the FDCPA.” 

I’m sure a few of my Compliance hotshots are squirming right now because they know that the Fair Debt Collection Practices Act and its accompanying Regulation F does not apply to employees of creditors provided that they are collecting on a loan they originated or that was not delinquent at the time it was purchased (15 USCA § 1692a).  But I think you are well advised to track developments in this area particularly if your credit union provides credit to commercial landlords. 

Enjoy your day folks.

April 21, 2021 at 9:47 am Leave a comment

Preparing for the COVID-19 Endemic

“Vaccination drives hold out the promise of curbing Covid-19, but governments and businesses are increasingly accepting what epidemiologists have long warned: The pathogen will circulate for years, or even decades, leaving society to coexist with Covid-19 much as it does with other endemic diseases like flu, measles, and HIV.”

So said the Wall Street Journal earlier this week. This reality several important legal issues for your credit union to manage as it transitions from pandemic to endemic operations. For instance, one of the key questions with which you should all be grappling, if you haven’t done so already, is whether or not to mandate that your employees receive the vaccine. As I explained in this blog, the EEOC has provided guidance for those institutions which choose to make the vaccine mandatory. Keep in mind that this is a very fluid area of the law. For example, one case that will provide some guidance to New York State businesses on the interplay between the Americans With Disabilities Act (ADA) and vaccine requirements is Norman v. NYU Langone Health System. The district court ruled in September that an employee’s allergy did not qualify them for an exemption from a mandatory vaccination under the ADA. But this case is being appealed, giving the court the opportunity to explain its thinking on this important area of the law just as businesses look to determine their new policies. 

Another important source of information is this guidance issued by OSHA within days of the Biden Administration taking over. It suggests that employers should make COVID-19 vaccinations available to eligible employees, as well as to provide information and training on the benefits and safety of vaccinations. Against this backdrop, you should all consider updating your policies to – at the very least – encourage your employees get voluntarily vaccinated. A voluntary policy avoids many of the legal complications involved with a vaccine mandate while still effectively stressing the importance of workplace safety. In the meantime, the Association has stressed to both the Department of Financial Services and the Governor’s office the importance of making frontline financial workers eligible for the vaccine as soon as possible. 

Another issue for your credit union to consider as it learns to live with COVID is to recognize that even after vaccination becomes widespread, many of the new conditions you put in place are here to stay. As the Wall Street Journal pointed out, there are already burgeoning industries based on that assumption. In the future, rapid testing – not only for COVID-19, but for the flu – will probably become par for the course.  What this means is that one should not assume that the conditions you have put in place today like increased social distancing and an emphasis on healthier buildings will disappear with the pandemic. 

On that note, enjoy your long weekend. Yours truly has no idea what he will do with all the free time he has now that the football season has come to an end.

February 12, 2021 at 9:30 am Leave a comment

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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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