Posts filed under ‘Advocacy’
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.
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.
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.
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.
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.
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.
Washington’s Decisions Have Direct Impact on New York State
There have been few instances where machinations in Washington have had a more direct impact on New York State than what we’ve seen unfolding in the last few days. Pay attention, because for those of you who join the Association in Zoom Advocacy on both the state and federal level, this will impact what we say and how we say it.
First, there is the news that Congress is coalescing around a relief package south of $1 trillion. While this is good news for persons peering over the unemployment cliff at the end of the year, it is safe to say that the reported size of the package leaves little room for the type of massive infusion of federal funds Governor Cuomo was hoping for just weeks ago. I’ve read widely varying estimates of just how big a deficit New York faces, but we could easily be talking about a $14 billion hole. A deficit of this size could lead to layoffs of state workers in the Capital Region and exacerbate local employment trends. It will also mean that now more than ever, the state should look to implement cost-free mandate relief in the form of localities being authorized to place public deposits in their credit unions.
Second, it looks like another Democratic New York Congressman is about to gain a national profile. Hudson Valley Rep. Sean Maloney has been elected to lead the Democratic Congressional Campaign Committee. This is a plum assignment for any ambitious member of Congress in normal times, but with 2022 shaping up to be a critical election cycle for the House Democratic Majority, Maloney has taken on a high-risk, high-reward responsibility. Not only will he have to reshape the party’s messaging in the aftermath of its disappointing performance this year, but he will be doing so with Republicans in reach of retaking the majority. He will also be helping to coordinate campaigns in an election cycle that will be the first impacted by redistricting.
Speaking of New York Congressional Representatives, we are still waiting to see the results of one of the nation’s closest races in NY-22 between incumbent Rep. Anthony Brindisi and challenger Claudia Tenney, the former Republican Congresswoman unseated by Brindisi in 2018.
The Financial Stability Oversight Council (FSOC): The Big Get Bigger in CU Land
The FSOC used its annual report to Congress to highlight the continuing risk to financial stability posed by the pandemic.
Though policy actions to minimize the effects of the pandemic have been effective at improving market conditions, risks to U.S. financial stability remain elevated compared to last year. In addition, the global outlook for economic recovery is uncertain, depending on the severity and the duration of the ongoing pandemic.
In the section of the report dealing with the credit union industry, the Council highlighted consolidation trends. It noted that the number of credit unions with less than $50 million in assets fell to 2,811 in the second quarter of this year, meaning that there has been a 28% decline in the number of credit unions in the last five years. On the bright side, total industry assets have grown at an average annual rate of 8.4% over the same period. According to a report, the financial performance of credit unions has been “relatively solid” – how’s that for a mealy-mouthed compliment? Incidentally, you can find the interesting credit union information on page 93 of the report.
On that happy note, enjoy your weekend. Make sure you set aside time on Sunday to watch the New York Giants, the worst first place team in the history of the NFL as they continue their unstoppable march to the playoffs with a 4-7 record.
SBA Statistics Provide Glimpse Into Credit Union PPP Participation
Yours truly believes this is a crucial time for credit unions both large and small. Pandemics come and go but legislators and the advocates who energize politics have long memories. You can bet they are going to be asking if your credit union participated in the PPP.
The SBA released an updated breakdown of PPP lending through June 6th which provides at least a partial answer to this question. For instance, it appears that the second round of the PPP has done a better job of getting smaller institutions involved in the program. According to SBA statistics, as of June 6th, 721 credit unions with less than $1 billion in assets have made more than 57,000 loans worth close to $2.9 billion. Unfortunately I can’t find any statistics breaking down the performance of credit unions with over $1 billion in assets. It is also not clear to me if the credit union total includes CDFI credit unions. Incidentally, CDFIs have made over 95,000 loans worth over $7 billion.
Looking at the big picture, California, Texas and New York companies lead the way in PPP loans and the lending program is being led by JPMorgan Chase which accounts for 4.3% of all loans being made.
If you look at the top 15 lenders, not surprisingly, the program is being dominated by larger regional banks many of which have an established comfort level with small business lending in general and SBA loans in particular. Perhaps when things get back to the “new normal” one of the areas that can be examined is the perceived difficulty in making SBA loans and whether changes can be made to help credit unions and other small financial institutions develop a greater comfort level with the SBA.
When I say this type of thing to grizzled veterans they get a bemused look on their face and brace for me to start singing “kumbaya”.
Five Things You Need To Know To Start Your Credit Union Week
New York State extended until July 6th an increasingly important Executive Order permitting the use of remote notarization. In recent weeks as we have gotten feedback from credit unions about the key issues to champion going forward, remote notarization has emerged as a top priority. We will be reaching out to all of you in the not too distant future. So stay tuned and be ready. Oh boy!
CUNA Board Passes Racial Justice Resolution
This time really is different. The protests over the death of George Floyd are sparking discussions not only about police tactics but what industries large and small are doing to make America a fairer place. The credit union industry is, of course, not immune. On Thursday, CUNA’s Board passed a resolution committing the organization to come up with concrete steps that the industry could take to address racial inequality by August 10th.
New York State DOH Reduces Quarantine Period From 14 to 10 Days
With New York City beginning the first phase of reopening today, anxious employers should be taking a look at this updated guidance from New York’s Department of Health, generally reducing the quarantine period for persons who are either exposed or who have contracted the virus from 14 to 10 days. Here is a link to the guidance as well as an analysis provided by Bond, Schoeneck and King, LLC.
Will The Shutdown Hasten The Branches’ Demise?
That is a question that you should all be pondering after reading this article in today’s Wall Street Journal reporting that some early analysis is suggesting that the shift towards remote transactions necessitated by the shutdown may lead to a permanent decrease in branch use. I will have more to say on this in a future blog. How exciting is that?
A Summer Without Baseball?
Nothing at all to do with credit unions, but could someone please explain to me why a sport structured to ensure social distancing between competitors can’t figure out a way to play a season while basketball, soccer, hockey and most likely football can? These are the great questions that keep me up at night.
Have a great day.
Why Robocall Crackdown Is Hurting Your Credit Union
Contrary to popular belief the biggest obsession in DC right now isn’t the impeachment trial; it’s auto dialing. While it’s hearting to see that the Democrats and Republicans can agree to something, the result of this bi-partisan obsession is that it’s trickier for your credit union to legally communicate with its members than it should be.
First we have yet another decision– Glasser v. Hilton Grand Vacations Co., LLC, No. 18-14499 (11th Cir. 2020)- interpreting what an auto dialer is for purposes of the Telephone Communications Protections Act. Remember, whether or not your credit union is subject to the TCPA is totally dependent on whether or not it is using an auto-dialer when it reaches out and touches someone. Law 360 is reporting that the 11th Circuit refused to allow an individual to go forward with this class action lawsuit claiming a violation of the TCPA.
The case got my attention because the court agreed with an earlier decision by the Court of Appeals for the D.C. Circuit which I have blogged about – ACA International v. Federal Communications Commission- which rejected an expansive interpretation of auto-dialer championed by our friends on the West Coast. The split between the circuits increases the likelihood that the Supreme Court will have to decide how to interpret the TCPA.
Of course, the more logical step would be for Congress to amend the TCPA to make sure that it outlaws abusive telemarketing as opposed to acting as a tripwire for class action lawsuits. But the odds of anyone in Congress voting for a bill which could be attacked as weakening the TCPA are about as good as Donald Trump being removed from office by the Senate.
All this is happening against the backdrop of heightened regulatory vigilance of auto dialers. For example, the DOJ is seeking to shut down two auto dialer companies that facilitated auto dialer operations based in New York and Arizona, which the government claimed specialized in ripping-off the elderly. In addition, regulators are continuing to review whether even more TCPA regulations should be amended. As a matter of fact, it was this comment letter from CUNA last night that got me thinking about this subject for today’s blog.
There is a reason I am providing you with this parade of horribles. No one likes robocalls, or has sympathy for companies that facilitate shams intended to pressure people into giving up their money. But there are legitimate businesses, such as credit unions, which use this technology every day to communicate with their members about legitimate topics. The current frenzy has regulators using a hatchet to deal with legitimate issues when they should be using a scalpel. I don’t see this ending any time soon. So for those of you who haven’t done so already, take a good look at the type of technology you are using and start thinking of ways that you can avoid getting caught in the regulatory dragnet.
