Posts tagged ‘elder abuse’

A Tale Of Two Budgets: Why It Matters To Your Credit Union

Nothing underscores the sharp differences between Congress and the New York State legislative processes more than the differences between how legislators in New York and Congressmen in Washington decide how to spend money.

Senate Budget Chairman, Republican Mike Enzi, greeted President Trump’s proposed $4.8 trillion dollar budget by announcing that he would not bother holding a hearing on the proposal. According to the Wyoming Senator, “nobody has listened to the President in the 23 years that I’ve been here.”

Meanwhile, New Yorkers and legislators anxiously awaited the Governor’s budget proposal with an increasing number of legislators grousing that he has too much power.

Why am I talking about this now? Because the Governor has proposed legislation in his budget, such as one addressing financial abuse of the elderly and disabled, that would have a direct operational impact on credit unions. In addition, the distinctions are important to understand as the lobbying season goes into high gear. Besides, I really enjoy the subject, so humor me a little.

Article I, section 9 of the U.S. Constitution provides that “no money shall be drawn from the Treasury, but in consequence of appropriations made by law”. In other words, the power of the purse belongs to Congress, not the President which is why the senator can be so dismissive of the President’s proposal and the President can devise a budget plan catering to his political supporters secure in the knowledge that it has not practical consequences. Given the give and take of the political process, for much of the last century, the President and Congress would ultimately engage in negotiations that resulted in a functioning spending plan. On paper the Federal fiscal year begins on October 1st and there are twelve subcommittees with jurisdiction over virtually all discretionary spending on the Federal level each of which crafts a bill for Congress to pass and the President to sign or veto.

But the system has largely broken down—a trend which pre-dates the Trump Administration. Appropriation bills are cobbled together in a last second omnibus appropriations bill, assuming one can be agreed to. Today the Federal Government is run by a series of continuing resolutions which are short term spending plans intended to keep government functioning until the President and Congress reach a final agreement.

Meanwhile on the state level the Legislature has no choice but to consider the Governor’s spending plans. As early as 1915, Henry Stimson proposed amending the state’s constitution to give the Governor the responsibility of implementing a unified executive budget. At the time, appropriations were made with little regard for the overall impact on state spending.

Stimson’s initial efforts failed but in 1927 Article 7 section 4 of the State Constitution was enacted.

In contrast to the Federal Constitution, this provision provides that the Governor must propose a budget for the upcoming fiscal year and that the “…legislature may not alter an appropriation bill submitted by the governor except to strike out or reduce items therein, but it may add thereto items of appropriation provided that such additions are stated separately and distinctly from the original items of the bill and refer each to a single object or purpose.”

This is incredibly powerful language. It means that the Governor’s executive budget has the force of law unless it is acted on by the Legislature which only has the ability to reduce or increase suggested appropriations. In addition, a series of important cases in the early 2000’s further strengthened the Governor’s hand by holding that the Governor’s budget powers applied not only to the actual amount appropriated but to the language accompanying an appropriation. That is why you have seen every Governor since George Pataki put more and more of his legislative priorities in his proposed budget.

The Governor has the right to amend his proposals and that is what will be taking place up until April as staff persons and legislative leaders haggle over the state’s spending priorities. But the legal structure means that the Governor starts these negotiations from a position of strength. The legislature could simply refuse to enact a budget by April 1st, but unlike the Federal Government the political consensus in New York has been that the public has little appetite for a government shutdown.

February 13, 2020 at 9:46 am Leave a comment

Devastating Toll of Elder Financial Crimes Highlighted in FinCEN Report

The last six years have seen a dramatic rise in the filing of Suspicious Activity Reports (SARs) related to elder financial crimes according to a report released by FinCEN on Wednesday, which tracked the number of SARs tracked between 2013 and August 2019. Even assuming that part of this rise reflects increased sensitivity to the issue by financial institutions, the statistics underscore just how sickening this trend is, and how it is likely to continue for the foreseeable future.

For example, FinCEN reports that the amount of money stolen by individuals in on the rise. According to studies, FinCEN cites “$50,084 as the average activity amount and $15,964 as the median amount.” In other words, billions of dollars are being stolen annually from vulnerable seniors, precisely when they are most in need of these funds.

While the report is instructive and important, there is little else in it that will come as a surprise to anyone who has tracked the issue. For example, financial crimes often involve manipulation by trusted third parties or relatives. Statistically, these are the types of circumstances that will most likely involve your credit union. In contrast, scams such as those, in which a friend or relative calls in need of transferred funds typically utilize money service businesses.

Reports like these understandably pull at the heartstrings, and many legislators have taken steps to deal with the issue. However, let’s keep in mind that the report also underscores that we already have a framework in place to report suspected abuse. What I would like to see is stricter distribution of SARs involving elder financial crimes to law enforcement and district attorney offices. There is no need to reinvent the wheel, and these types of changes can be done without the need for additional legislation.

Georgia Senate Pick has FinTech and NY Connection

Georgia Governor Brian Kemp announced that he has chosen Kelly Loeffler to be Senator Isakson’s replacement following his retirement from the United States Senate. Once you get beyond all the standard political gobbledygook, the pick is intriguing because, as Law360 pointed out this morning (subscription required), she comes to the Senate with extensive knowledge of digital coin issues. She secured a trust charter from New York’s Department of Financial Services to offer bitcoin future contracts that were traded on the Intercontinental Exchange. As one legal observer commented to the website, it “will be very powerful to have a Senator who is absolutely conversant in this area and really knows the details.” Of course, no matter how knowledgeable she is about one of the most important emerging fields, it remains doubtful that her expertise will be utilized in creating legislation anytime soon given the tribalism that has consumed national politics.

December 5, 2019 at 8:41 am Leave a comment

Would More Information Sharing Prevent Elder Abuse?

Image result for elderly person bankingMaybe it’s because I hit one of those depressing milestones the other day when the young lady whom I was buying tickets from at the Museum of Natural History coyly asked if there was anyone I was buying tickets for who was 60 or older? Considering that my twin brother wasn’t on line and my daughters were the only ones with me, I can only assume she was talking about me even though I don’t look a day over 49 ½.

But as this article underscores,  issues surrounding the elderly and financial mismanagement are  getting more and more attention. A suggestion by a researcher at the Federal Reserve Bank in Philadelphia is to authorize and encourage the sharing of information among financial institutions about potential financial exploitation in much the same way they have been encouraged to share information about potential money laundering and terrorist activity since passage of the Patriot Act in 2001. I want to be absolutely clear here. Currently sharing such information among financial institutions is illegal. This is a suggested policy which would require amendments to federal law in order to take effect. Would this be worth the risks?

The first question we have to answer is what exactly we are seeking to prevent? If our goal is to prevent  criminal financial exploitation then the existing framework may well be good enough.  State laws either mandate reporting by  or protect financial institutions that  choose to report suspected abuse.  And federal law keeps getting more and more robust more and more robust. Financial institutions can   file Suspicious Activity Reports specifically dealing with elder financial exploitation and  S.2155 included provisions that will soon   start shielding institutions from lawsuits  when they report suspected exploitation  provided  they comply  certain training requirements.   

In contrast, if our goal is to spot early signs of dementia or general cognitive decline so we can put the member and their loved ones on notice  than expanded information sharing makes sense. For example, chances are that the elderly person you are dealing with has money not only at your credit union but with a brokerage firm as well. In addition, one of the more disturbing trends we are seeing is an  increase in borrowing among older individuals. If we really want to stop the effects that cognitive decline can have on a person’s ability to manage their resources as well as spot financial exploitation then shouldn’t we give institutions the ability to holistically examine how their members are handling their finances? Furthermore, data analytics seems ideally suited to spotting signs of financial mismanagement.

The simple truth is, if we want to really protect the elderly from financial abuse and mismanagement  then we have to have an honest discussion about how to balance the rights of individuals to financial privacy against the increased risks of mental deterioration and exploitation that come with age. I for one will never be comfortable about any group of institutions, no matter how well intentioned, being able to make judgments about what I can and can’t do based on my age. Besides, I am so grossly disorganized that no lesser expert than my wife has commented that it will take her years to realize I have gone senile.



November 27, 2018 at 9:24 am Leave a comment

Handle With Care: New Protections For Financial Institutions that Report Suspected Elder Abuse

One of the many provisions tucked away in S.2155, which was signed into law on May 24, was one providing protections to credit unions and other financial institutions when certain employees act in good faith and reasonable care to report suspected financial exploitations of a person at least 65 years old to law enforcement or selected agencies. While the statute is important, particularly in states like New York, which has among the narrowest of protections for financial institutions reporting suspected elder abuse, implementation is trickier than one might suspect. Read §303 carefully and make sure you put the proper procedures in place.

What has me a little nervous is that for an individual to be given immunity from a lawsuit after reporting a suspected abuse, such individual must serve as a supervisor, a compliance officer or in a “legal function” (which, by the way, includes a BSA officer). The person must make the disclosure in good faith and with reasonable care. This means that only specific individuals can report suspected elder abuse. In other words, if your credit union decides to implement this framework, it is absolutely crucial that frontline staff in particular understand that they cannot, no matter how well-intended they may be, report suspected elder abuse. Instead, they must know what individuals to report suspected abuse to.

Similarly, financial institutions shall only be protected against liability if the supervisor, compliance officer or persons serving in a legal function who make the report has received the necessary training.

And what is the necessary training? Interestingly, the training material shall be maintained and made available by the agency with examination authority over the institution. In plain English, that means NCUA has to get to work. This training has to be provided not later than one year after a person becomes employed by the credit union. The credit union would be responsible for maintaining records of training.

Is the law better than nothing? Absolutely. But there are plenty of potential loopholes and trip wires to deal with.

I’m cynical. I believe this is one area where a good deed will not go unpunished and your credit union will find itself on the opposite end of a lawsuit if it does the right thing and reports a suspected elder abuse enough times.


May 31, 2018 at 11:14 am 1 comment

What Is the Best Way to Prevent Financial Exploitation?

The Senate Republican’s inclusion of a Financial Abuse Proposal in their house budget resolution means that the question of what powers New York banks and credit unions should have to prevent the financial abuse of the elderly and disabled is sure to be part of the negotiations as the legislature and governor move to put a budget in place by the April 1st deadline.

The core of the senate’s plan would authorize credit unions and banks to refuse to execute financial transactions involving suspected financial abuse of a vulnerable adult. For purposes of this new section, a vulnerable adult means an individual who because of mental and/or physical impairment, is unable to manage his or her own resources, or protect himself or herself from financial exploitation. This power would extend to accounts including trust funds in which the vulnerable adult is a beneficiary. Institutions would also be authorized to forward account information to social service departments and law enforcement officials.

All of the powers outlined in the bill are discretionary, meaning that credit unions couldn’t face liability for refusing to block transactions. Financial institutions and their employees would receive qualified immunity from civil or criminal actions if they act in good faith in reporting incidents. Finally the Department of Financial Services would be required to develop a voluntary education program for financial institutions.

Once again this is simply a proposal. Nevertheless, it appears more and more likely that credit unions will now have additional powers to block certain types of transactions. Keeping in mind that the opinions I express in this blog are mine and mine alone, yours truly has always been an unabashed dinosaur when it comes to bills such as this one. The senate’s proposal, however, goes a long way to addressing issues involving liability and the discretion institutions should have.

One area that needs further clarification is the interplay between fiduciaries, including persons given powers of attorney authority and the new statute. The legislature already has an extensive framework in place to ensure that vulnerable adults are adequately protected from unscrupulous fiduciaries. In contrast giving banks and credit unions the power to effectively override fiduciary powers could create a great deal of confusion about what fiduciaries can and can’t do. You can find the proposed section in Part RR of Senate Bill 2006-B.


March 22, 2017 at 9:23 am Leave a comment

NY Budget Proposal Includes Major Financial Abuse Reform


New York State’s budget typically does not have a major impact on credit unions. This year is an exception. Among the Governor’s proposals is one authorizing financial institutions to impose transaction holds when they believe that individuals are being victimized by financial exploitation? The bill would have major operational implications for credit unions by giving them substantial new power and responsibility when dealing with suspected financial abuse.

Under the proposal financial institutions would be empowered to impose a transaction hold based on a good faith belief that exploitation of a vulnerable adult; may have occurred, may have been attempted or is being attempted. Interestingly the transaction holds can be placed not only on the vulnerable adults account, but also to accounts of which such person is a beneficiary, including trust and guardian accounts. Within a day of placing a transaction hold, institutions would have to report the transaction hold to Adult Protective Services and to “a law enforcement agency.” A vulnerable adult means an individual who, because of mental and/or physical impairment is potentially unable to manage his or her own resources or protect himself from financial exploitation. The Department of Financial Services would be authorized to develop a certification program, but it does not appear that training would be mandatory.

One of the key questions that I always have when analyzing a proposal like this one is how much protection financial institutions will have? After all a poorly drafted statute, no matter how well intended, could make a credit union subject to litigation for every bad financial decision made by an elderly or disabled individual. The only opinion I will offer about the draft proposal so far is that the liability protections should be strengthened.

The good news is the governor is proposing to shield institutions that impose transaction holds from criminal, civil and administrative liability for all good faith actions, including determinations not to apply a transaction hold on an account. The bad news is this protection only applies where there is a reasonable basis for such a determination. It also does not apply where an employee or financial institution acts recklessly or engages in intentional misconduct in making the determination, or the determination results from a conflict of interest.

As I have explained in previous blogs, the most unequivocal protection from liability that I have seen for credit unions is for the filing of suspicious activity reports. Comparing these protections to what NYS is proposing shows why more work has to be done if the ultimate goal is to create an environment in which institutions are confident that they can protect their vulnerable members without exposing themselves to liability.

This year’s Super Bowl pick

My Bet the Mortgage, Super Bowl pick, which is already recognized as acceptable supplemental capital for complex credit unions is…. Falcons 31 – New England 24. The Falcons use a ball control offense to keep the ball out of Brady’s hands and ultimately score a couple of late touchdowns.

There will be no blog on Monday as I am a celebrant of the new DASB, Day After Super Bowl holiday!

Peace out!!!

February 3, 2017 at 9:15 am Leave a comment

Four things you need to know about New York today

giantI have New York on my mind this morning, and it is not just because I am suffering from post-traumatic stress disorder after watching the second half of the yesterday’s Packers-Giants game. Is the second half over yet?

Instead, I am thinking about New York because there is a lot going on both regulatory and legislatively that financial institutions should be keeping an eye on.

Time to fill out your exemption claim forms

Once again, with a huge assist from Joan Lannon, in the Associations, compliance department, here is a link to the form that your credit union will to claim an exemption from the requirement to maintain abandon property. Remember you have until February 28, 2017 to apply for the exemption, but it makes no sense to wait.

Elder Abuse Legislation to be a top priority for Cuomo

Today marks the unofficial start of the 2016-2017 legislative sessions. This year the governor is foregoing the tradition of speaking before a joint legislative session in Albany. Instead, he is unveiling his State of the State priorities in regional speeches, the first of which is today. On Friday, he announced he would be proposing comprehensive elder abuse legislation.  The specifics have yet to be released, but according to the press release, the governor’s plan would include an Elder Abuse certification program for banks as well as measures to empower banks to place holds on “potentially fraudulent transactions”. Incidentally, I don’t know if the exclusive reference in the press release to banks is an oversight or an indication that credit unions won’t be covered by these measures. I strongly suspect that it is the former.

Rocky start to Legislative Session

A hallmark of the Cuomo administration has been an end to New York’s dysfunctional budget process; most importantly every budget proposed by the governor has been enacted pretty much on time. This run will be put to a test this year. As these legislative preview articles indicate, both the governor and legislature are angry at the lack of progress in negations held late last year and there isn’t quite as much money to spend as there used to be. This could be a very interesting session.

Expressions Hair Design to be argued tomorrow

Expressions Hair Design v. Schneiderman, a case challenging New York’s ban on credit card surcharges above an items headline price, is to be argued before the Supreme Court tomorrow. Both CUNA and NYCUA wrote amicus briefs in support of New York’s law. There will be no blog tomorrow, as yours truly and Michael Lieberman will be headed to D.C to watch the arguments first hand.

As for all you depressed Giant fans, remember, we still have the Knicks. WOW it’s going to be a long winter. Maybe I will start getting ready for fantasy baseball.

January 9, 2017 at 8:45 am Leave a comment

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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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