Posts tagged ‘CUSOs’

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

Are CUSOs Friend or Foe?

Part of the deluge of regulations proposed by NCUA in recent weeks is, depending on your perspective, either a wolf in sheep’s clothing or a lamb in sheep’s clothing. Either way, it gets to a policy issue that all credit unions should have an opinion on.

What I am talking about is NCUA’s proposed rule that would permit CUSOs to originate any type of loan that a federal credit union may originate. It would also give NCUA the ability to expand the list of permissible CUSO activities without going through the notice and rulemaking procedure. On a practical level, the regulation would permit CUSOs to make car loans, purchase retail installment contracts and, in NCUA’s own words, “engage in payday lending.” A similar request was made in 2008 but rejected by the board.

So why does yours truly consider this such an important issue for the industry to debate? Because when I started learning the issues, I always thought of CUSOs as compliments to and not competitors against credit unions. As compliments to credit unions, they are a wonderful mechanism to pool resources and cost-effectively provide a broader range of services to their members that would not otherwise be available. Since my original indoctrination, I have grown increasingly perplexed and a little bit frustrated (albeit not anywhere near as frustrated as I am by my New York Giants) by the resistance of credit unions to engage in this type of activity. 

There’s a second, more practical reason for CUSOs which supporters of this proposal recognize: non-depository institutions are growing in significance and are only going to get larger. For example, if I predicted 15 years ago that non-depository institutions would originate the majority of mortgages in this country, you would have said I was nuts. Today, technology has fundamentally changed the way things are done. CUSOs provide the most practical mechanism for credit unions to at least try to compete in this new world. Not only can a CUSO invest in the resources necessary for smartphone lending, but they aren’t constrained by field of membership restrictions. 

I don’t know what side of the debate I come down on, but this is not an issue that the industry should decide without robust consideration of both the pros and the cons. 

Sorry, Bills fans!

I’m sorry the joyride came to an end, Bills mafia. On the bright side, you can look forward to years of high-level football with a great coach and one of the best young quarterbacks in football. Unfortunately for you folks, so can Kansas City Chiefs fans. 

January 25, 2021 at 9:39 am Leave a comment

How NCUA’s Revised Capital Proposal Will Affect Your Credit Union

Now that NCUA has taken its mulligan and released the brand new Risk-Based Capital proposal, it’s time to start digesting how its suggested framework will impact the industry. While the ultimate impact will be unique to each credit union, there are certain things that are crystal clear.

In a nutshell, if your credit union has $100 million or more in assets and specializes in certain types of MBL or real estate loans, for example, then there is very little NCUA has suggested in its do over that will make this proposal more palatable. In contrast, if your credit union has under $100 million in assets or over $100 million in assets but has a fair share of longer term investments and avoids loan concentrations, NCUA’s new proposal is a noticeable improvement over its original framework. Still, there are many questions that the industry should be asking and many areas that need to be refined.

The most dramatic improvement of the proposal is that is raises the threshold after which credit unions must comply from those with $50 million to those with $100 million in assets. In New York State, this means that under the old proposal 111 credit unions were subject to an enhanced RBC framework, but now only 75 will be. This is a huge step in the right direction since an RBC framework should be designed to guard against systemic risk as opposed to trying to prevent every individual credit union from failing. My question is: why $100 million? As I talked about in yesterday’s blog, all but the biggest credit unions are struggling and increasingly there are big differences between a $500 million credit union and a $100 million one.

NCUA also took a huge step back when it decided not to use its proposed RBC framework to control interest rate risk. This is obviously good news for those of you with longer term investments, but don’t fool yourselves, interest rate risk remains NCUA’s primary concern and it will be coming out with additional proposals to deal with it.  Still the proposal does away with  “weighted average life” tiers that weighted longer term investments against credit unions simply due their term.

Common sense prevailed and if your credit union is subject to the RBC framework, you will have until January 1, 2019 as opposed to 18 months from issuance to comply with this mandate. I have no idea what NCUA was thinking when it came up with this initial timeline.

NCUA is sticking to its legal guns and insisting that it has the right to delineate credit unions as either well capitalized or adequately capitalized. I don’t have the time or space to delve into the legal nuances, but suffice it to say that this distinction would be at the core of any legal challenge to NCUA’s ultimate regulation. The good news is that NCUA has lowered the threshold for well-capitalized credit unions from 10.5% to 10%.

Now for the bad news. The biggest change in tone and substance in the new proposal deals with the adequacy of credit union buffers. In criticizing the initial proposal, many credit unions pointed out that they preferred to have capital buffers. As a result, even though the vast majority of credit unions were already well capitalized, the industry pointed out that many would feel the need to increase their capital cushions. As I pointed out in an earlier blog, NCUA seemed to be indifferent to this concern in marked contrast to the position taken by other financial regulators. Not any more. In yesterday’s proposal, NCUA puts credit unions on notice that it has the authority to impose additional capital requirements on credit unions where unique risks justify safety and soundness concerns. The Board will be coming out with additional guidance and all credit unions are going to want to take a close look at what the NCUA says is an appropriate buffer.

One other concern I have with this proposal is that it still creates the impression that investing within the credit union industry is a bad idea. Specifically, it only reduces its proposed risk rating for investing in corporate perpetual capital from 200 to 150 and investments in CUSOs are still among the most negatively weighted. With regard to the corporate weightings, it’s unfair to encourage credit unions to invest in corporates only to penalize them for making such investments. Furthermore, we need a viable corporate system. With regard to investments in CUSOs, I still say that absent a showing that all CUSOs pose a systemic risk, credit unions should not be penalized for investing in services for credit unions. NCUA has given itself more than enough power to deal with CUSOs on a case-by-case basis.

I could say much, much more, but I am running out of space and time. Have a good weekend and enjoy the football games.

January 16, 2015 at 8:37 am 1 comment

When It Comes To CUSO Regulation, Can’t We All Just Get Along?

A day after the CU Times reported that NACUSO issued a call-to-arms urging credit unions to help fund regulatory and potential legal actions designed to protect CUSOs against regulatory encroachments by the NCUA, it is being reported that Home Depot’s data theft was much more serious than initially reported.  Not only were a mere 56 million credit card accounts compromised, but 53 million email addresses were also stolen.  It now appears that access to the system came from a password stolen from one of the company’s vendors.  Just how many issues does this raise?  Let me count them.

    • Look to you left, look to your right.  Then look down the hallway.  Think about the most technologically incompetent person you have working for your credit union.  Realize that your data security is only as safe as that employee can make it.  Data security starts with your employees.  Only give access to databases to those who truly need it.  The hackers are so sophisticated now that once they have access to a password, they can virtually sneak around your system and find more and more vulnerabilities.
    • I’ve said it once and I’ll say it again, and I expect NCUA will be saying it to you shortly:  your vendor contracts are absolutely crucial.  Given the explosion of technology, it is only natural that credit unions are going to turn to vendors.  If they don’t they won’t be able to provide the type of services that members expect.  But turning to the vendor doesn’t absolve the credit union of ultimate responsibility for the services the vendor is providing or the continuing need to protect member information.  Consequently, just like Warren Buffet never invests in a business he doesn’t understand, your credit union should never contract for technology it doesn’t comprehend.  Your vendor relationships must include ongoing monitoring by knowledgeable employees on your staff.  You should make sure that your vendors document on an ongoing basis that they are compliant with the latest data security standards.
    • CUSOs provide a crucial mechanism for credit unions to pool resources. Given the importance of vendor management, is it really that unreasonable for NCUA to seek a more holistic view of the CUSO industry? Personally, I don’t think so. The problem is that NCUA has sought to exercise powers it doesn’t yet have. Mandating that credit unions force their CUSOs to agree to NCUA audits is a blatant attempt to boot strap its jurisdiction.  But at the end of the day, it makes sense for NCUA to have a clear picture of what a CUSO is doing, Not only are these organizations providing services for credit unions, but their financial success or failure directly impacts credit unions’ bottom line. The middle ground is for everyone to be a lot less dogmatic and a lot more pragmatic. NCUA should seek specific legislative authority to regulate CUSOs. But it should only exercise enhanced oversight over those CUSOs that represent a truly systemic risk to the industry. This means that NCUA should base its enhanced auditing not on the type of services the CUSO provides, but on how many credit unions use its services.  In addition, NCUA should reduce its proposed risk rating for CUSOs.  Credit unions should be encouraged to use CUSOs as opposed to third-party vendors with no connection to the industry.

November 7, 2014 at 8:26 am Leave a comment

Taxes and Title Insurance Highlight Enacted Budget

Late Monday, Legislators and sleep-deprived staffers put the finishing touches on the 2014-2015 New York State Budget.  For credit unions, the two most important take aways I have deal with title insurance and state tax policy. 

As for title insurance, the Legislature agreed to the Governor’s proposal, which I talked about in a previous blog, to establish licensing requirements for title insurers.  For those of you who want to take a closer look, you can find the relevant language in Part V in S.6537-D.  In addition to establishing title insurer licensing requirements, the legislation imposes new disclosure requirements whenever lenders suggests using a title insurer with whom they are affiliated.

As a result, this bill will have its largest impact on the relative handful of credit unions that have mortgage lending CUSOs that provide title insurance services.  The legislation is also significant because it gives the Department of Financial Services the authority it was seeking to more directly regulate title insurers by, for example, establishing minimum standards for the profession. 

A second part of the budget that doesn’t directly impact credit unions but could be helpful in seeking needed reforms has to do with corporate tax reform.  Specifically, the Legislature agreed to the Governor’s proposal to scrap Article 32 of the Tax Law, which imposed a tax specifically on banks.  As a result, banks will be subject to the same tax treatment as other corporations in New York State.  The proposal was perhaps the most controversial of the Governor’s Tax Package since some groups argued that it was essentially a tax cut for banks when New York is still suffering the effects of the Great Recession.  However, this argument overlooks the fact that New York may be the capital of the banking industry, but is not guaranteed to remain so. The bank tax is a vestige of the time when banks simply didn’t have the ability to shift from state to state the way they do today. 

Besides, the tax indirectly benefits credit unions.  How’s that, you say? Because credit unions are also seeking authority to help New York’s economy grow by allowing municipalities to invest their funds in credit unions.  Frankly, the argument that credit unions are somehow less deserving of these funds because they don’t pay corporate taxes rings all the more hollow now that the banks have successfully argued for their own tax breaks. 

One generic point,  Governor Cuomo and the Legislature deserve a tremendous amount of credit for four on-time budgets.  But the Governor and all future Governors should give a big thank you to former Governor Pataki.  It was his administration that laid the groundwork for these on-time budgets by successfully arguing that the Legislature could not amend the Executive’s Budget proposal without the Governor’s consent.  On a practical level this means that the Governor has a tremendous amount of leverage since the legislature must ultimately choose between accepting the Governor’s recommendations or shutting down the Goverrnment.  Simply put, the legislature doesn’t have as much leverage as they used to have in budget negotiations.

April 2, 2014 at 8:23 am Leave a comment

5 Things You Really Need To Know For The Weeks And Months Ahead

You can tell we’re on the brink of the holiday season.  Our regulators and policy makers are rushing to get stuff out the door before things slow to a snail’s pace.  Here are the major things in descending order of importance that you should take a look at when you get a chance.

1.  NCUA announced that, barring unforeseen developments, there shall be no corporate stabilization fund assessments in 2014.  The announcement follows the Justice Department’s record settlement with J.P. Morgan over allegations of mortgage fraud which included $1.4 billion for NCUA.  Let’s give credit where it’s due, the NCUA deserves a lot of credit for leading the charge on this one.

2.  As you probably already know, on Wednesday afternoon the CFPB released its final regulations (http://www.consumerfinance.gov/blog/a-final-rule-that-makes-mortgage-disclosure-better-for-consumers/) replacing the Good Faith Estimate the “early TILA” and the HUD-1 with two new disclosures; one to be given at the beginning of the mortgage selection process, the other to be given three days before closing.  First, the good news.  The CFPB backed away from its initial proposal to increase the number of fees that would have to be included in calculating the APR on mortgage documents.  This means that we don’t have to worry about learning new calculations or explaining to prospective home buyers that their mortgages aren’t any more expensive than they used to be, they just look that way.  In addition, the CFPB has given us until August 2015 to fully implement these new disclosures.

The only really bad news I can find so far is that the CFPB didn’t back away from its requirement that closing notices be provided three business days before the closing, but even this has a silver lining.  The CFPB gave homebuyers much greater flexibility to waive the three-day requirement.

3.  Yesterday, the NCUA finalized its most controversial proposal in recent years.  (http://www.ncua.gov/about/Documents/Agenda%20Items/AG20131121Item3b.pdf)  CUSOs will now be mandated to file financial reports directly with the NCUA.  CUSOs that engage in activities that could systemically impact the industry such as those providing information technology support and mortgage servicing will be required to provide detailed financial reports to the agency.  In contrast, CUSOs that provide services such as marketing will only be required to provide basic pedigree information such as the name of the company and its tax identification number.

NCUA has no authority to directly regulate CUSOs so this new oversight power will be exercised by mandating that credit unions only contract with CUSOs that are willing to abide by these requirements.  In my ever so humble opinion, this is an extremely aggressive interpretation of its regulatory powers.  There is nothing that NCUA is going to accomplish through this regulation that could not have been accomplished by more aggressively holding individual credit unions responsible for lax due diligence.

4.  Nuclear fall out.  Yesterday’s news was dominated by the decision of Senate Democrats to exercise the so-called nuclear option (http://www.politico.com/story/2013/11/harry-reid-nuclear-option-100199.html).  Before the rules change, a minority party could require that three-fifths of the Senate (60 votes) be required to affirmatively vote in favor of Presidential appointments.  Reacting to Senate Republican attempts to categorically refuse to fill vacancies to the federal D.C. Circuit. the Senate majority rammed through a rules change yesterday under which presidential appointments to both the Judiciary and Executive Branch Offices can be approved by a simple majority.  As it stands right now, the rule change wouldn’t apply to Supreme Court nominations or legislation.  But now that the Rubicon has been crossed, it’s hard to believe you won’t see the 60 vote threshold eliminated for everything.

Several of the appointments have important consequences.  For instance, Congressman Mel Watt was nominated to be the head of the Federal Housing Finance Administration, which is a hugely important position as it oversees both Freddie Mac and Fannie Mae.  When Watt was nominated by the administration I blogged that it was a blatantly political choice as the Congressman had no chance of being approved by the Senate.  Now, he will most likely take the helm of this important post,

In addition, although no one really thought that Janet Yellen’s nomination to be the next Chair of the Federal Reserve was in danger, the Senate’s move eliminates any possibility of last-minute glitches for Yellen to become the Fed’s first female Chairman.

And remember, all this started because of Republican intransigence over nominations to the D.C. Circuit.  Don’t underestimate just how important this Circuit is.  It has aggressively moved to curtail the power of agencies to promulgate regulations that go beyond the plain reading of the statute.  The best example of this is, of course, the recent ruling on the Durbin Amendment.  The Court is also where future challenges to CFPB rulemaking will play out.

5.  Although it doesn’t directly impact credit unions, you should take a look at a guidance issued yesterday by the OCC and the FDIC (http://www.occ.gov/news-issuances/news-releases/2013/nr-occ-2013-182.html) cautioning banks against the use of so-called “deposit advanced products” without having proper underwriting procedures in place.  Critics of these types of loans argue that they share many of the same characteristics as pay-day loans.

November 22, 2013 at 8:15 am Leave a comment

The CUSO Made Me Do It Is No Defense

imagesOn Thursday, the National Consumer Law Center sent a letter to NCUA criticizing 9 federally chartered credit unions for engaging in pay-day lending practices.  This was not the first time the Center had criticized these credit unions.  Lest our enemies outside the industry get too excited about this, the NCLC stressed that the vast majority of credit unions do not offer these loans.

Some of the criticized credit unions responded by pointing out that it was a CUSO they were affiliated with that was actually making the pay-day loans.  As for the other credit unions, they are exceeding the 18% interest rate cap on federal credit union loans only if the application fee charged is included in these calculations.

I find myself disagreeing a lot with the NCLC, but this is not one of those times.

Although the credit union activity was perfectly legal, it is a prime example of how credit unions can get in trouble if we abide by the letter rather than the spirit of the law.  NCUA permits credit unions to make short term loans that exceed the interest rate cap.  This regulation also permits credit unions to charge an application fee in the amount of up to $20.  In other words, there is a way of offering pay-day loan alternatives without offering pay-day loans.  To be sure, this alternative has been less than enthusiastically embraced by the industry as a whole, in part because its strictures mean that its cost outweigh its benefits for most credit unions.  But the answer is not to evade the spirit of NCUA’s regulations, but rather to work within the existing regulatory structure for a change that reflects a broad-based consensus.

Some of the 9 credit unions point out that they simply referred members to CUSOs that made the offending loans.  Chairwoman Matz pointed out that NCUA lacks the authority to directly regulate CUSOs.  Again, this is the type of response that lawyers love but that make the public so distrustful of lawyers.  If anyone could name me one person outside the credit union industry who knows what a CUSO is, I’d be more surprised than finding out that Stephen Hawkins is going to be on Dancing with the Stars.  Part of your third-party due diligence obligation should be to assess the reputational risk that a CUSO’s activities cause your credit union.  Explaining to a member who can’t repay a pay-day loan that the credit union told them about in the first place that the credit union isn’t the bad guy isn’t exactly the type of answer that is going to engender good will within your community.

Let’s keep in mind that there is still a proposed regulation out to give NCUA expanded authority to directly regulate CUSOs.  From everything we have been told, this proposal is all but dead.  However, if credit unions start hiding behind CUSOs to justify activities in which they themselves would not engage, NCUA might take another look at this whole issue.  I hope not.

FCU’s authorized to do PAC payroll deductions

Last week, I scared the bejeebies out of a few people in the office when I blogged about proposed regulations by New York State’s Department of Labor that would ban employers from making payroll deductions to facilitate voluntary political contributions.  I also said that we would have to get clarification on whether or not this regulation would be preempted by federal law.  With a little help from our good friends at CUNA, we were sent a Federal Election Commission opinion letter clearly indicating that regulations such as New York’s would be preempted as applied to contributions made for federal political activities (FEC Advisory Opinion 1982-29).  On that happy note, let’s all have a great week, shall we?

May 20, 2013 at 9:46 am Leave a comment

On Frogs, Scorpions and MBL Reform

imagesLet’s face it, this is a lousy day for the industry.  With CUNA’s public acknowledgement that it doesn’t have the 60 votes it needs to get MBL Legislation passed in the Senate, it appears that the most significant legislative push of the industry is dead for another year.  In the end, it wasn’t so much opposition to MBL legislation on its merits that did in the measure as it was the lack of legislation that the banking industry as a whole needed badly enough to let us get something in return.  This brings us to my favorite fable for politics:  the frog and the scorpion.

For those of you who don’t know, a scorpion needs to ride on a frog’s back to get across a raging river or it will surely drown.  The frog is nervous about helping out the scorpion, but the scorpion says that he has nothing to fear because by killing the frog, he would also be sure to drown.  Wouldn’t you know it, about halfway across the river the scorpion stings the frog and when the dying frog asks why, explains that it’s his nature.

It’s the nature of community and independent banks to instinctually oppose everything that credit unions want even if it hobbles their ability to build a positive agenda that actually helps their own members.  In the end, the legislation that independent banks desperately wanted was an extension of the TAG program, which extends insurance protections to accounts in excess of $250,000.  What killed the TAG legislation was the public opposition of the Financial Roundtable, which represents some of the largest banks in the world.  They argued that extending the insurance guarantee sent the wrong signal of the safety and soundness of the American banking system, but considering these are the same fellows who were more than willing to hide behind Government protections when it was in their interest to do so, their protests ring a little hollow.

In my ideal world, independent banks and credit unions would get together and realize that there are many issues when it is the small banks against the large banks, and the large banks are winning.  Of course, this will never happen, but in the end, this is really the only way that either of us are going to get the things our respective industries need to help our members.  In the meantime, I hope that the industry doesn’t start playing the game of zero-sum politics.  CUNA has now come out against the TAG legislation and, although there are some good arguments to be made against the bill, in the end, zero-sum politics benefits no one.

NCUA Puts Controversial Regs On Hold

I couldn’t listen to the whole webinar yesterday, but at an event sponsored by the Credit Union Times, a top NCUA examiner signaled that it will be at least several months before NCUA takes action on some of its most controversial proposals, including restrictions on loan participations, CUSOs and emergency liquidity arrangements.  I might be the only person in the industry who thinks that the lack of emergency liquidity requirements is a bad thing, but that is a blog for another day.

Speaking of new regulations, NCUA’s monthly board meeting is today.

December 6, 2012 at 7:34 am Leave a comment

Four Questions Every Regulator Should Not Be Afraid to Ask

NCUA is grappling with how best to regulate credit unions in a post-financial crisis world. Here are four questions it should ask (and as a public service, the suggested answers) before further regulating CUSOs or promulgating any other regulation not mandated by federal law.

 1. Do CUSOs pose a systemic risk?  No.  In the most recent NCUA newsletter, Board Member Michael E. Fryzel of the NCUA explains that the proposal was crafted in response to financial harm “caused to some credit unions as a result of their investments in CUSOs and CUSO subsidiaries.”  I have no doubt that there are poorly managed credit unions and poorly managed CUSOs, but if NCUA really thinks it should react to every credit union  mistake it spots with a regulation, then there is no end to who or what can be regulated.  The vast majority of CUSOs are well-managed entities that perform well and provide crucial services.

2.  Are CUSOs already regulated?  Why, yes they are.  CUSOs do not exist in a vacuum.  They are for-profit entities subject to a state’s laws and regulations to the same extent as any other business formed in New York or any other state.  Their managers and board members owe a fiduciary obligation to their investors just as credit union board members.  They are subject to audit requirements and liability for mismanagement.  Also, the Banking Department would not hesitate to question a state charter’s CUSO investment that was impacting its safety and soundness.  Federal charters must even contract with CUSOs so that NCUA can examine their books on a case-by-case basis.  This doesn’t sound like an area where regulatory oversight is lacking.

3. Would NCUA’s increased oversight improve credit union operations?  No. Increased CUSO oversight would come at the cost of credit union autonomy.  NCUA argues that by mandating financial reports from CUSOs it will get a sense of a CUSO’s entire operation and its potential impact on credit unions.  Fair enough.  But credit unions are given the authority to invest in CUSOs and credit unions are in the best position to know if a CUSO investment makes sense.  Hold credit unions responsible when they don’t perform adequate due diligence rather than presume that mistakes can be avoided by making every institution with which a credit union invests subject to NCUA oversight.

 4.    Do CUSOs pose a direct and systemic threat to the Share Insurance Fund?  No, they don’t.  In Monday’s speech (read last blog), Chairman Matz explained her intent is to target  areas that pose the greatest threat to the Share Insurance Fund.  The problem with this formulation is that virtually any activity, if mismanaged enough, can pose a risk to the Share Insurance Fund.  That is why only those activities that have a direct and immediate impact on the fund should be subject to regulation.  Otherwise, state charters will be subject to duplicative oversight and all credit unions will be stifled by a regulatory environment that is so concerned with potential threats to credit union stability that credit unions are robbed of their capacity to grow and take appropriate risks to meet member needs.

September 21, 2011 at 7:00 am Leave a 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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