Three Things That Happened While you were in a Turkey Fog….


Mortgage Consummation Bill Set To Become Law

A bill clarifying that a mortgage is consummated at closing in New York State  is on the verge of becoming law. The legislation, (S.7183/Savino A.9746/Richardson) was sent to the Governor on November 16.  The Governor has 10 days excluding Sundays to veto a bill after it has been sent to him  or it automatically becomes a law.  (N.Y. Const. art. IV, § 7).  This means that we should know by tomorrow morning at the latest  whether or not the bill has been approved by the Governor.  He is expected to approve it.

Overtime Regs Blocked

Black Friday came early for employers. In case you missed it, on Tuesday a Federal District Court in Texas blocked the Department of Labor from implementing regulations that would have increased the number of employees eligible for overtime effective December 1, 2016.

Under the Fair Labor Standards Act, non-exempt employees who work more than forty hours a week must receive overtime pay. Regulations set to take effect on December 1, 2016 would have doubled the salary threshold from $455 per week ($23,660 annually) to 921 per week ($47,892 annually). This meant that if your branch manager made  less than that amount starting December 1  she would be entitled to overtime.

It also stipulated that the salary threshold would be automatically adjusted every three years to equal the minimum salary level based on the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage region of the country.

The lawsuit brought by a group of states challenged the authority of the US DOL to automatically index the exemption threshold. Not only did a Federal District judge agree with this argument but he imposed a nationwide injunction against its imposition.

He explained that “The State Plaintiffs have established a prima facie case that the Department’s salary level under the Final Rule and the automatic updating mechanism are without statutory authority. The Court concludes that the governing statute for the EAP exemption, 29 U.S.C. § 213(a) (1), is plain and unambiguous and no deference is owed to the Department regarding its interpretation.” Nevada v. United States Dep’t of Labor, No. 4:16-CV-00731, 2016 WL 6879615, (E.D. Tex. Nov. 22, 2016)

Does this mean all that work you did reclassifying your employees was for nothing? Not at all. For one thing, the injunction could be reversed. In addition, the pending regulation provided credit unions the opportunity to examine how their employees should be classified. Finally, as explained by this Bond, Schoeneck & King blog, New York is promulgating state level regulations which will increase the exempt employee threshold.

This is yet another example of the increasing tension between an Executive branch aggressively using its regulatory powers and a Judiciary increasingly unwilling to defer to agency judgements. For those of us who believe that federal agencies have been given too much flexibility over the years to interpret laws as they see fit and not as Congress intended, this is a good thing.

Chris Christie Named Secretary of Transportation

Explaining that no one understands the importance of transportation to a political career better than he does, President- Elect Trump recently named N.J. Governor Chris Christie as his Secretary of Transportation. Trump also announced that Howard Stern will be his Communications Director.

Just joking, I wanted to make sure you were still awake.


November 28, 2016 at 9:29 am Leave a comment

Are Independent Agencies Constitutional?

What Executive Orders give, they can also take away. In this video released by President Elect Donald Trump he outlines the Executive Orders that he plans to make in the first 100 days of his Administration. Most importantly for our purposes, the President Elect says he will promulgate a requirement that for every new regulation proposed by an agency it has to eliminate two existing regulations.  It appears that the Trump Administration plans a new meaning of two-for-one.

While proposals such as this are enough to make compliance people giddier than a five-year-old on Christmas Eve, their direct impact on credit unions remains to be seen. Our good friends at the CFPB are challenging a decision by the federal Court of Appeals for the District of Columbia, which found that the CFPB was only Constitutional if its Director could be hired and fired at will by the President. PHH Corp. v. Consumer Fin. Prot. Bureau, 839 F.3d 1, 31 (D.C. Cir. 2016). The  NCUA is an independent agency with a three member board appointed to staggered six year terms. Intriguingly, federal law does not explicitly provide that NCUA board members can only be removed “for cause” by the President. Swan v. Clinton, 100 F.3d 973, 988 (D.C. Cir. 1996).

This is pure speculation on my part, but if, as seems probable, the Supreme Court decides to hear an appeal of PHH Corp, the case  could be used as a vehicle by a conservative leaning nine member Supreme Court to re-examine the broader question of whether independent agencies are themselves Constitutional.

In a case called Humphrey’s Executor v. United States, 295 U.S. 602, 624, 55 S.Ct. 869, 79 L.Ed. 1611 (1935), the Supreme Court upheld the creation of independent executive branch agencies.  But even as it upheld the Bureau, the D.C. Court questioned the premise of this decision and the existence of independent agencies.

“[I]ndependent agencies are unaccountable to the President and pose a greater threat to individual liberty because they operate free of the President’s supervision and direction. Therefore, they traditionally have been headed by multiple members who check one another. An independent agency operates as ‘a body of experts appointed by law and informed by experience.’”

Thanksgiving by Executive Order

Speaking of Executive Orders you have Proclamation 106—Thanksgiving Day, 1863 issued by Abraham Lincoln for having Thursday off.  In October of that year he proclaimed that:

“It has seemed to me fit and proper that they should be solemnly, reverently, and gratefully acknowledged, as with one heart and one voice, by the whole American people. I do therefore invite my fellow-citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next as a day of thanksgiving and praise to our beneficent Father who dwelleth in the heavens. And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans. mourners, or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty hand to heal the wounds of the nation and to restore it, as soon as may be consistent with the divine purposes, to the full enjoyment of peace, harmony, tranquility, and union.” 

CFPB Looks into Information Sharing Practices

The Bureau That Never Sleeps is in the crosshairs of the Judiciary and the incoming Administration but that is not keeping it from continuing to churn out proposals. Last week it issued a Request For Information regarding consumer access to financial records. These RFIs have been used by the Bureau to help structure more formal regulatory proposals.

It is asking a series of twenty questions starting with wanting to know what types of products and services are currently made available to consumers that rely in part on consumer permission to access consumer account data.

Your faithful blogger will be back on Monday after going over the river and thru the woods to grandma’s house on Long Island. I hope you all have a great Thanksgiving, and that no one gets too fired up when the family banter inevitably turns to politics. I have already promised my mother that I will be on my best behavior.


November 22, 2016 at 11:06 am Leave a comment

While The Nation Tweeted


imagesCARSA2ULI know there is really important stuff to discuss this morning  like the VP-elect’s  Broadway excursion, presidential tweets and SNL skits but there is this nettlesome issue of cyber-security  that keeps on popping up.

I was naïve enough to think that one of the few good things to come out of our long, national nightmare called the 2016 presidential election was the realization on the part of almost everyone, with the possible exception of the president- elect, that cyber security is a  top national security issue. After all, nation’s and groups that don’t  like us  all that much demonstrated that  they have the  ability to steal information not only from businesses and consumers  but also from our government.

This should be a top national priority. Don’t take my word for it, just listen to the Chairman of the Federal Reserve. In testimony before Congress last Thursday, Chairman Yellen was asked what the Fed was doing about cyber- security: “This is something that Congress needs to look at very carefully” She said, “It’s not just a matter of the Fed and financial institutions. Risks involve merchants and others involved in the economy and it is a very broad threat that we alone are not able to deal with adequately.” Amen Sister.

Financial institutions have a crucial part to play when it comes to  cyber security but credit unions and many banks  already do a tremendous amount.  New mandates must be based on the size and sophistication of an institution’s operations as well as the extent to which their problems can spread to the larger banking\commerce system.

Furthermore, for it to be effective a cyber security framework must be coordinated and holistic. It is the type of system that only the federal government can put in place.  Existing regulations don’t cast a wide enough net. Merchants have to have baseline responsibilities.

How big a deal is cyber security? There is much more at issue here than a fight between merchants and financial institutions. We can’t have a truly effective 21st century cyber-economy without a truly robust defense.

November 21, 2016 at 9:59 am 1 comment

The Unlikely Rise of Schumer and NYC to the Center of the Political Universe

90I am going to take a little editorial privilege this morning and channel my inner Paul Harvey.

Among the many strange twists and turns that have taken place over the past two weeks, it is easy to overlook the ascendency of New York City as the center of the political universe, but that is exactly what has taken place.

Consider this:  in the aftermath of a landslide Republican victory, New York City, which to many social conservatives deserves a place alongside Sodom and Gomorrah, and to many Trumpicans personifies elitist disregard for the little guy, is now home base of the most powerful politicians in America.  Think of it, Donald Trump from Queens is going to be the President, Chuck Schumer from Brooklyn is now the defacto leader of the opposition as the leader of the Senate democrats, former NYC Mayor Rudolph Giuliani is rumored to be Trump’s choice as our Nation’s Secretary of State, and transplanted Brooklynite Bernie Sanders is the nation’s leading Socialist turned Democrat.  How’s that for New York values, Ted Cruz?

You all know about Donald Trump’s rise to power, but the rise of Senator Schumer, while much more traditional, has some very intriguing twists and turns of its own that offer important clues as to how he will lead as Senate Minority Leader.

He started his political career in 1974 as a 23 year-old Assemblyman from Brooklyn with a knack for getting media attention and driving policy. As Newsday pointed out in this 2015 profile, there aren’t many freshmen who can get Assemblymen to agree on anything, but as a freshman he was able to get 39 of them to attend a press conference protesting education cuts.  He successfully ran for a congressional seat in 1980.  In Congress, he became known not only for his intelligence and attention to district concerns, but for his eagerness for the spotlight.  Former Senate Majority Leader Bob Dole once said that the most dangerous place in Washington is the space between Chuck Schumer and a TV camera.  In 1998, Schumer knocked off Al D’Amato, no easy task considering that D’Amato himself was a master political operative and also a long serving senator who always put state interests first.

The story gets especially interesting when, in 2000, Hillary Clinton successfully ran for NY’s open US Senate seat. There were more and more press reports speculating  that Schumer was frustrated that even thought that he was the senior Senator from New York, next to Clinton his role was diminished.

This speculation came to a head when Schumer pulled off one of the great political power plays in NY history. Fresh off an easy re-election, he openly flirted with the idea of running for Governor. As reported by the New York Times “Top Democrats vigorously campaigned to keep him in Washington, promising him a spot on the powerful Finance Committee and persuading him to lead the Democratic Senatorial Campaign Committee through the midterm elections of 2006.”

This was the key moment in the Rise of Chuck. Nothing gets you friends quicker in politics than helping get someone elected.  Plus, he had a close working relationship with Senator Reid who endorsed him as his chosen successor when he announced he was stepping down.

Through it all, the Senator has never lost his enthusiasm for constituent work or his love of the spotlight. His Sunday press conferences are a staple of local news and when my uncle, who had met the Senator while working on neighborhood crime fighting initiatives, retired from the NYPD, the Senator posted a tribute in the Congressional Record. Touches like this still matter.  It’s why one former Republican I used to work with called him the best politician in New York.

Why does all this matter? For one thing if I had to come up with a political Moniker for the Senator it would be: “It’s the middle class stupid!” which makes him a natural ally of credit unions as evidenced by his support for MBL reform.

Secondly, no thanks to political or demographic trends, New York City will now be hosting its greatest fight since the Thriller in Manilla. Trump knows how to communicate and doesn’t back down from a fight, neither does Schumer, this should be a darn good show.

Now you know the rest of the story.

November 17, 2016 at 10:10 am Leave a comment

Republicans to Agencies: The Clock Has Struck 12

cinderallaIn the fairytale Cinderella knows her night of magical powers ends when the clock strikes 12.  In the fairytale land of Washington real live people quibble over when midnight arrives.

Yesterday, House Republicans leaders sent a letter to all agency heads requesting that they halt promulgating regulations until President-Elect Trump takes office.   This is part politics as usual – a similar request was made by incoming President Obama in 2008.  But given the robust use of regulatory powers by the Obama Administration, it also makes a heck of a lot of sense.

In my ever so humble opinion, no administration this side of FDR has used its regulatory powers more aggressively than has the Obama Administration. In addition, he championed the creation of the CFPB with a single director authorized to exercise dictatorial control over every federal consumer protection law.

Whether you agree or disagree with these initiatives, it makes no sense for businesses to have to comply with the costs of implementing pending mandates from executive branch agencies until they know for sure what direction the new administration is going to take. For example, the Department of Labor’s decision to raise the threshold for exempt employees will be scaled back. In addition, If the CFPB ‘s director is answerable to President Trump its regulations limiting arbitration clauses and payday loans are on life support.

It is time for everyone to calm down, take a breath and stop imposing regulations to do nothing more than  score political points on the way out the door. I know this is politics as usual in D.C., but in case you haven’t noticed, politics as usual doesn’t exist anymore. The clock has struck 12:00

November 16, 2016 at 9:05 am 2 comments

Why Interest Rate Risk is On The Rise

fredgrfredgraphaph Look at the rising rate being offered to purchasers  of the ten year treasury bond since November 8t,h 2016 and it’s clear that, far from triggering a flight to safety as  prognosticators predicted, many investors expect the economy to get an immediate and positive jolt from the Trump presidency.  You see a similar trend with the Dow Jones Industrial Average.

What’s going on is the first direct impact that Donald Trump’s presidency is having on your credit union. A good argument can be made that these rising rates reflect, in part, early speculation about the size and scope of a fiscal stimulus the likes of which this country hasn’t seen since, at least, the early eighties. It’s time to start  dusting off all those NCUA warnings about interest rate risk.

President-elect Trump and Hillary Clinton both agreed on the need for large investments in our nation’s roads and bridges and airports but disagreed about how much should be spent and how it should be funded.  Trump  argues on his website that he would  “Transform America’s crumbling infrastructure into a golden opportunity for accelerated economic growth and more rapid productivity gains with a deficit-neutral plan targeting substantial new infrastructure investments.”  He has said that  he would double Clinton’s proposed $275 billion on infrastructure spending over five years. Remember, unlike President Obama, he has both the Senate and House on his side — he’s going to get at least some of what he wants.. Combine his pledge on infrastructure spending with  his pledges to increase  military spending and dramatically reduce corporate and personal tax rates and what you have is a stimulus on  steroids. .

The sudden likelihood that Congress will spend money means that the Federal Reserve has effectively been looking out over the economic horizon through the wrong end of the telescope. Fed Officials have grumbled for years that Congress has not done enough to support economic stimulus.  Now the question is not whether or not to raise interest rates, but by how much and how quickly.  Remember we will be stimulating an economy with low unemployment and moderate wage growth.

November 15, 2016 at 7:23 am 2 comments

Does your credit union Have WorkPlace Prisoners?

According to the WSJ  about 8% of employees are “workplace prisoners,” a category described by consultant  Aon Hewitt as people who stay at their jobs despite feeling unmotivated, disengaged and generally negative about their employers . (Full Disclosure-I’ve been saving this for a day when I want  to get as far away from politics and policy as I possibly can).

We all know that every workplace has a certain number of dissatisfied employees and that’s not all together a bad thing. After all,  employees  leaving for greener pastures makes it easier to hire  people who may be a better fit. But prisoners feel trapped.  What intrigues me so much about the this report is that it tried to quantify just how pernicious an influence prisoners can have.  It estimated that your longest serving best paid employees are most likely to be the ones most disengaged and least likely to leave.  Specifically it reports that “Among workers with 26 years or more at their company, 17.1% are prisoners,” In contrast,  your  newest employees are the ones most engaged.

Can you get these employees to improve their attitudes? Maybe, maybe not but what Aon suggests is that you emphasize quantifiable and clear expectations.

One of the reasons we have so many prisoners is because new jobs are hard to come by. According to the US DOL, new  hires edged down to 5.1 million in September  and total separations was little changed at 4.9 million. Within separations, the quits rate was unchanged at 2.1 percent and the layoffs and discharges rate decreased to 1.0 percent.

On that note your faithful blogger is taking a couple of days off but will be back on Tuesday. Enjoy your workday.

November 10, 2016 at 9:18 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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