Posts filed under ‘New York State’

Are You Ready For NY’s Cyber Security Regs?

On the first day back from summer vacation my daughter has an assignment due for her Social Studies class and even though I’ve been asking her about it, I’m pretty sure there is much work that needs to be done. Summer time does not lend itself to working. Similarly, consider this blog just a friendly reminder of an impending compliance deadline. Specifically, on August 28, 2017, compliance with most parts of New York’s cyber security regulations kick in. The six month transition period is just about over. In fact, just last week the DFS opened up its cyber security portal that’ll help institutions comply with this mandate.

As I’ve highlighted in previous blogs, the regulation is applicable to covered entities which are defined as “any Person operating under or required to operate under a license, registration, charter, certificate, permit, accreditation or similar authorization under the Banking Law, the Insurance Law or the Financial Services Law.” New York clearly is trying to stretch the jurisdictional limits regarding what entities this applies to. If you haven’t done so already, your credit union should discuss the potential applicability of this regulation to its operations.

One final thought: Many, but by no means all, of the requirements outlined by the state make sense. Even if your credit union determines that the regulation doesn’t apply to your operations, it provides a handy codification of baseline expectations, particularly in relation to the encryption and storage of email and data.

On that happy note, have a great weekend. If all goes according to plan, yours truly will be headed to Jiminy Peak’s Alpine Slide for the second time this summer; only this time I will be wearing a long sleeve shirt.

 

August 18, 2017 at 9:10 am Leave a comment

Its Time To Prepare For NY’s Paid Family Leave

Today I have one message for you: It’s time to stop ignoring New York’s Paid Family Leave Law. It  Kicks-in  on January 1. Based on some of the questions that have come into our compliance department,  I get the feeling that some of you keep on hitting the snooze button when it comes to preparing for this expansive new mandate. It’s time to stop. The final regulations were released last week.

Most importantly, this law applies to your credit union and its employees regardless of how many employees it has or  whether it  is  state or federally  chartered. Employees with a regular schedule of 20 or more hours per week are eligible after 26 weeks of employment. Qualifying events triggering leave include:  leave to care for a child after birth or placement for adoption or foster care within the first 12 months after the birth or placement; for a qualifying exigency arising from the service of a family member in the armed forces of the United States; or to care for a family member with a serious health condition.

This is a big deal, especially since most credit unions aren’t subject to the FMLA.

There are nuanced regulations to learn, notices to be prepared and handbooks that have to be updated. In addition there is the practical consideration of  how best to deal with potential  absences of employees.  in other words ,  it’s time to get an HR expert in the room and get serious about complying with this new law if you haven’t done so already.

 

July 25, 2017 at 9:46 am Leave a comment

I’ve had an affair!…with Uber

This morning I’m telling the world I’ve cheated and I may do it again.

I have just taken my first Uber ride to work. I honestly felt like I was cheating on all of you medallion holders out there but the temptation of quick, simple and courteous service was too tempting.  If my experience is any indication you better make sure your loan loss reserves are in good shape.

Don’t get me wrong. This is not some starry-eyed infatuation. I know, for example, that as innovative as the Transportation network model is, credit union compliance people continue to be mindful of some of the unique issues raised by the service.  Just yesterday, our compliance Department fielded an interesting question: If insurance companies aren’t obligated to provide additional insurance for members who join Uber or Lyft how can a credit union protect its car loan collateral?

Here are some key points to keep in mind. The law authorizing TNC networks makes Crystal clear that insurance companies don’t have to provide insurance for persons acting as TNC drivers (N.Y. Veh. & Traf. Law § 1695 (McKinney).Does this mean that your collateral is at risk? No. The Association successfully argued that lenders need protection. Remember, car loans are getting to be longer and longer.

The law authorized insurers to offer additional coverage and allowed TNCs to have group plans. The insurance is available. Both the TNC’s and the drivers must ensure that it  is in place before logging onto the App. The driver I talked to this morning said that he was covered under a plan provided by the company. As an added protection TNCs are obligated to put potential drivers on notice that they need additional insurance (N.Y. Veh. & Traf. Law § 1694 (McKinney).

Keeping in mind that this blog is not a substitute for consulting with your legal counsel or your insurance provider, even with the legal protections NY has put in place I have suggested that you should put additional language into your car loan agreements stipulating that providing TNC services without adequate insurance constitutes a loan default.

If the system works as intended this language won’t be necessary but there are always glitches. At the very least it will put your member on notice that they can’t buy a car today and start offering rides tomorrow.

On that note enjoy your weekend. And remember, if you enjoy yourself a bit too much a ride home is just a couple of taps away.

 

July 14, 2017 at 9:49 am Leave a comment

NY Clarifies Station Requirements For State Charters

The NYS Department of Financial Services clarified in guidance issued yesterday that state chartered credit unions can operate temporary facilities, such as mobile service units, tents, booths, tables without first applying for permission from the DFS. As someone who has tried to advise credit unions on this issue it is a welcome clarification.

Section 461 of New York’s banking law requires state charters to apply for permission anytime they change location or open station within the state.  The process is cumbersome and must be accompanied by a board resolution. Yesterday’s guidance explains that this requirement does not apply to a state charter that simply wants to set up a temporary location to   sign up new members, receive loan and credit card applications, and  advise members and potential members about the products and services offered by the credit union.

Credit unions must, however, provide advance notice of their plans to the DFS and provide a schedule showing upcoming times and locations where the temporary facility will operate, the number and title of qualified individuals who would be involved in offering such services, and any further information the Department may require. Furthermore, the facilities cannot engage in most  banking activities. For example, they cannot be used to accept loan payments, conduct wire transfers, accept deposits, make withdrawals, issue ATM debit or credit cards, or accept any payments.

 

CFPB Finalizes Technical Amendments

The CFPB has issued a final rule making what it describes as “several non-substantive corrections” to 2016 amendments to the servicing regulations. Yours truly has not read the regulations but I wanted to get the word out.

Besides, it reminds me of one of the lessons I learned from my old boss at the Legislature who taught me everything I know about reading and analyzing legislation. He never allowed me to describe a change as technical because (1) There is really no such thing as a technical amendment – every change is technical and (2) All too often “technical amendment” is used to describe changes that no one really understands or wants to explain. In other words,  always read the regulation and understand it no matter how insignificant it may seem to the drafter. In the immortal words of Henry Kissinger even paranoids have real  enemies

June 29, 2017 at 10:21 am Leave a comment

Uber Claims Another CU

LOMTO Federal Credit Union based in NYC was placed into conservatorship by NCUA yesterday for what the NCUA described as  “unsafe and unsound practices at the credit union”  the $236 million asset credit union  becomes the third NYC based CU specializing in taxi medallion loans to be conserved following Melrose and Montauk, which was merged into Bethpage FCU.

The credit union is the latest example of how the rise of Transportation Network Companies has transformed the NYC taxi industry,  turning taxi medallions from arguably the  safest and best performing loans into  toxic liabilities in the blink of an eye. When Uber started offering rides in NYC in 2011 the credit union had a ratio of delinquent loans to total assets of 0.00.  In March,   that ratio had risen to 20.55 and  its net worth  to total ratio has tumbled from over 15% to  5.96%.

Before you pass too much judgement on credit unions in trouble because of these loans remember that taxi credit unions prospered for decades.  LOMTO was chartered in 1936 . This is not just  a banking parable; it is an example of how rapidly technology is being harnessed to upend erstwhile  business models.

June 27, 2017 at 9:02 am 3 comments

And down the stretch they come…

With the legislative session scheduled to end sometime tomorrow, this is the time when most of the really important stuff is voted on, amended, or left to wither on the vine until next January.

While there are a bunch of bills that I will be talking about in the coming weeks there is of course one that continues to grab the attention of all faithful bloggers; I am talking about the Banking Development District bill which continues to advance. Yesterday it passed the Assembly without being laid aside for debate. The final tally was 83 to 9.

Remember now is the time to be contacting all those Senators and debunk all the nonsense the banks have been telling them. For one thing, credit unions do pay taxes, lots of them. You may also want to point out that this bill does nothing more than allow credit unions to participate in a program that would assist areas with a dearth of banking services.

A second issue that came up yesterday doesn’t deal with legislation, but it is a pressing concern not only in NY, but to anyone who offers mortgage loans across the country. State Comptroller, Thomas DiNapoli, issued a report calling for enhanced state/federal coordination of water quality standards. This gives me the opportunity to sound off on one of my personal pet peeves.

No one is ever going to accuse me of being a tree-hugger, but my research of issues surrounding the water contamination in Hoosick Falls and the potential ramifications of hydro-fracking has demonstrated to me that lenders must get clearer guidance from the federal government and the GSE’s in particular about baseline environmental standards including water quality.

As it stands right now any time a mortgage is sold to the secondary market the seller is making strict liability guarantees regarding the environmental safety of the area in which the property is located. If these warranties are breached the lender can be made to repurchase the mortgage. Obviously, this makes sense if someone is selling land in love canal, but most environmental issues are not as clear cut as the extreme cases that get national attention. The result is that lenders who work with the GSE’s are forced to make tough decisions about the long term environmental impacts dealing with issues such as water quality and mediation, often with little guidance from the Federal Government.

Furthermore, many of the areas in need of environmental remediation are already suffering from economic decline. The hesitancy of lenders to lend in these areas (even for a short time) makes these declines even more dramatic.

I applaud Comptroller DiNapoli for highlighting the importance of this issue, but I would suggest that any comprehensive analysis is incomplete unless it also highlights the need for the GSE’s to work more closely with lenders, lending in areas where the water quality is in need of mediation. One of the most basic things they can do is limit the scope and or length of warranties.

 

June 20, 2017 at 9:44 am Leave a comment

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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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