Posts tagged ‘Congresswoman Maloney’

“Ugh.”

That is how a trusted colleague of mine responded to this article in the CU Times reporting that veteran Congresswoman Carolyn Maloney, who sits on the House Financial Services Committee called for a moratorium on taxi medallion foreclosures during a committee hearing dedicated to debt collection practices. In addition, none other than Rep. Alexandria Ocasio-Cortez referred to some of the taxi medallion loans as “criminal.”

These comments are the latest sign that the taxi medallion issue is not going to go away anytime soon. As policymakers discuss how best to aid drivers in financial straits, let’s hope that some basic facts are understood. Most importantly, the medallion crisis cannot be separated from the rise of Uber and Lyft. We would not be having this discussion today if these two companies did not upend the entire structure of the taxi industry and destroy the value of medallions.

In addition, many medallion loans are now being serviced directly by NCUA. NCUA has to do more to publicly explain to policymakers on both the state and federal level what steps it is taking to modify these loans. Many credit unions are working with members, but that message is not getting out to the public as effectively as it should be with NCUA in control of so many of the lending decisions.

Finally, I hope legislators think long and hard before advocating for a foreclosure moratorium. The reality is that the price of medallions has tumbled and may very well continue to do so. A moratorium would do nothing except put further downward pressure on medallion prices, and extend the time it will take to get the medallion crisis behind both drivers and lenders alike. Instead of talking about moratoriums, policymakers should look at the example of the HAMP Program and see if there are mechanisms to assist both lenders and borrowers in making financially responsible modifications. Stay tuned.

A Phase-in for CECL

In addition to a delay in its effective date, another piece of good news on the CECL front is that Chairman Hood has indicated that NCUA will be joining with banking regulators in permitting credit unions to phase in recognition of loan losses triggered by the new standards over a three-year period.

CECL requires financial institutions to recognize lifetime expected credit losses, and not just credit losses incurred as of a reporting date. In addition, it implements a lower threshold for financial institutions to recognize a potential credit loss. As a result, many institutions could experience a reduction in their retained earnings as they increase buffers to guard against potential losses.

Many banks and credit unions have expressed concern that they could face dramatic losses on paper if they are not allowed to phase in the recognition of losses caused by this new standard. Earlier this year, the OCC and FDIC finalized regulations giving banking organizations that experienced a reduction in retained earnings as a result of adopting CECL the option of phasing in its effects over a three-year period. At a presentation before NAFCU earlier this month, Chairman Hood indicated that NCUA will be proposing similar regulations for credit unions.

 

September 27, 2019 at 9:51 am Leave a comment

Examination Angst

I’ve never had the pleasure of going through an NCUA examination but I’ve never fallen off a cliff either, yet I know that it must be painful as hell.  When discussing examinations, I’ve seen grown men break into cold sweats and grimace as if they were recounting a trip to the dentist’s office, something with which I am unfortunately all too familiar.

New York Democratic Congresswoman Carolyn Maloney has cosponsored legislation with West Virginia Republican Shelly Capito that seeks to level the playing field between financial institutions that feel they have little choice but to comply with incorrect and, at times, misguided examination findings.  H.R. 3461 would, among other things, require examiners, upon request, to provide an appendix “listing all examination or other factual information relied upon by the agency in support of a material determination.”  In addition, it would allow all financial institutions, including credit unions, to appeal examiner determinations to a newly created office of examination ombudsman to be housed in The Federal Financial Institutions Examination Council.

The idea of being able to appeal examiner determinations to an independent body is a good one, particularly when contentious issues arise.  Furthermore, a documented record providing the basis of an examiner’s determination would go a long way toward cooling frazzled nerves by demonstrating to the credit union the basis for an examiner’s determination and ensuring that the examiner does not mistake his view of what the credit union should do with what safety and soundness actually requires.

I have no idea whether this bill will become law, but even without this legislation there is much that credit unions can do to empower themselves in the examination process. 

First, it is perfectly acceptable to ask an examiner the basis for his findings. Many of you know the regulations extremely well and if an examiner is saying something that doesn’t sound right, you should clarify the basis for his opinion.

Secondly, bad examiners remind me of bad teachers: everyone knows who they are but no one complains about them out of fear of retribution.  One way to overcome this trepidation would be to write a joint letter with other credit unions to an examiner’s supervisor.  This way NCUA knows that it is dealing with a pattern of inappropriate conduct rather than a single disgruntled credit union.

Thirdly, it is inevitable that some examinations will become acrimonious. When that happens and the stakes for the credit union are high enough, the credit union has every right to have an attorney present at the exit meeting and even tape the meeting. Having a third-party involved in the conversation might actually make the meeting more constructive and a tape recording will provide all parties with a precise record of any agreements.

 

December 7, 2011 at 7:17 am 1 comment


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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