Posts tagged ‘executive order’

What The End of New York’s State of Emergency Means For Your Credit Union

When you specialize in compliance, even good news can keep you up at night. So it goes with Governor Cuomo’s announcement that he was ending the state of emergency he imposed on March 7th 2020 in response to this thing called COVID-19.

On the one hand, this is of course great news; on the other hand almost immediately, the Association started receiving phone calls about what effect this would have on existing policy and procedures put in place during the pandemic. With the caveat that this is not intended as a definitive list, here is what we know so far:

The executive orders authorized notaries to notarize documents over the internet. This authority has ended. The Department of State issued this memo informing us that effective June 24th, this authority came to an end. Clearly this prohibition is intended to apply prospectively but for those of you who do mortgages don’t be surprised if title insurers raise questions about the validity of your notarizations. They are a nervous a lot. The good news is that the legislature passed a bill to permanently authorize remote notarization.  Perhaps this will spur quicker action on that bill.

An executive order had extended the expiration date of licenses. I know credit unions have relied on this authority when opening up new accounts for members. This authority also came to an end on June 24th 2021. You may want to put a note in your files so that future employees and examiners reviewing account documentation understand that appropriate procedures were used.

Lending was of course another area where the executive orders had a big impact. But many of those early executive orders issued by the Department of Financial Services have been superseded by laws passed by the Legislature. Most importantly § 9-X of the Banking Law which mandates loan forbearance periods for individuals impacted by COVID-19 applies between March 7th 2020 and the latter of December 31st 2021, or the end of the emergency orders. In addition, pursuant to law, New York’s foreclosure moratorium remains in effect until August 31st 2021.

Then there are of course the HR issues. You still have an obligation under both New York law and general OSHA standards to protect your employees against the spread of COVID. This means that you still have to address issues such as mask mandates and vaccination requirements.

All this means that, as my man Winston Churchill would say, “Now, this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

On that note, enjoy your day.

June 28, 2021 at 10:14 am Leave a comment

Time For the Climate Change Talk

There are three ways in which the industry can react to climate change: (1) It can pretend that the issue does not really exist; (2) It can so embrace the issue that it refuses to acknowledge the tradeoffs involved in integrating climate change considerations into its core operations, such as underwriting, or (3) it can go through the hard work of developing a consensus on an issue that will be with us for decades to come. With the caveat that this is one of those blogs when I remind you that this is my opinion and only my opinion, it’s time to decide what approach to take. 

On Thursday, President Biden issued this executive order on Climate Related Financial Risk. As part of the order, the Financial Services Oversight Council, comprised of federal banking agencies, including the NCUA, will prepare a report detailing the approaches that the agencies are taking to address Climate Related Financial Risk in their respective areas. The report will include recommendations on how identified climate-related financial risk can be mitigated, including through new or revised regulatory standards as appropriate. Federal housing regulators have already been tasked with examining climate change risks and the housing market. 

In other words, we are moving past the platitudes. Within the next year we can expect to see regulators, including the NCUA, propose specific regulatory mandates. It’s one thing to discuss the impact of climate change, it’s quite another to see the direct impact that policies designed to mitigate its effects will have on your bottom line. 

As always, the purpose of this blog is not to give you my opinion on climate change but to get you thinking and preparing about future regulatory developments. The problem is that the feelings one has on the appropriate regulatory framework are inexplicably intertwined with one’s political perspective. For instance, there are individuals who believe that climate change is an unproven piece of scientific speculation which is causing policy makers to put the present-day jobs of Americans at risk. 

On the other end of the spectrum, are those who believe that climate change is a current existential threat to humanity’s existence and that it can be addressed in some way that not only makes the world safer, but reconfigures the economy in a way that creates present-day jobs for Americans. Personally, I believe that there is a huge middle ground out there which both recognizes the threats but also recognizes the reality that addressing climate change will involve tradeoffs.

Where does this leave the credit union industry when it comes to formulating responses to propose regulations in the coming months? Yours truly would love to see the industry develop and publish a set of guiding principles which it will use when analyzing regulatory and legislative proposals in this area. Industries are increasingly being pressured to take public stances on a wide range of hot-button topics. A thoughtful debate over the next six months could serve every credit union by demonstrating how credit unions don’t shy away from the tough issues that impact their membership and giving them a response when they are asked what approach they are taking to climate change.  

May 24, 2021 at 10:07 am Leave a comment

What Will the Next Nine Months Bring To Your CU?

Will the next six months bring about a rise in delinquencies as government support begins to wane or will your credit unions be in store for a boom in lending activity as consumers break out of the plastic bubbles otherwise referred to as their houses and break out the credit cards, splurge on big ticket items and generally feel better about their economic prospects? Even as NCUA understandably makes examining your credit union’s ALLL policies it’s top priority for 2021, there is mounting evidence that the more optimistic scenario is the one most likely to unfold. 

Most importantly, credit unions have been telling me for a long time that the problem isn’t deposits, it’s getting members to spend some of that money.  How right they are.  Worldwide consumers have squirreled away an extra $2.9 Trillion in savings with the Unites States alone accounting for half of the total.  In fact, according to Bloomberg if consumers decide to spend all that extra savings, the economy would grow at a 9.6% rate this year.  While such speculation is crazy talk, the increased savings are in addition to the checks that many of your members will be receiving, assuming Congress passes another economic relief package within the next couple of weeks.

In another sign that things are going to end up better than anyone would have predicted a year ago, many states are not suffering the decline in tax revenue they anticipated.  In fact, the New York Times ran this front page story yesterday reporting that by some measures many states will end up with almost as much revenue this year as they took in last year.  Some states have even benefitted from the crisis with Idaho seeing an increase in population and tax revenue.  So much for my Own Private Idaho. 

To be sure, there are also signs that for many the economic recovery is not strong enough.  On Monday, the CFPB released a report detailing the millions of Americans dependent on forbearance programs to stay in their homes and Janet Yellen has been quick to point out that the economy is still down ten million jobs.  Still, my guess is that the biggest concern that your credit union will face in the coming year will be interest rate risk as examiners turn their attention from the adequacy of the reserves to the possibility that inflation will once again start appearing on the horizon.

Legislature to Scale Back Governor’s Powers

The Legislature has agreed to pass legislation to curb the Governor’s power to issue Executive orders which he has used to run the state since the COVID crisis started last March.  According to the Times union the new restrictions “will prohibit the governor from unilaterally issuing new executive orders related to the pandemic without legislative review. He will retain the ability to tweak or renew existing orders relating to slowing the spread of COVID-19, including the state’s mask mandate or business restrictions”

We will have to examine just how this will affect Executive Orders that have impacted CU operations.  For example, as readers know, the Governor has established the criteria for vaccine shot eligibility and he has authorized the use of remote notarization. In addition, even though the Legislature has passed mortgage forbearance legislation-Section 9X of the Banking Law-these protections expire with the end of the EO’s.  We will keep you posted.

March 3, 2021 at 9:32 am Leave a comment

Withholding Tax Deferral Takes Effect: Now What?  

When Wimpy from the Popeye cartoons gladly promised to pay on Tuesday if he could have a hamburger today, it was just a joke.  In contrast, today marks the first day of President Trump’s Executive Order permitting employers to defer withholding the 6.2% Social Security Tax from employees making up to $4,000 on a bi-weekly basis.  The good news is that the Treasury and IRS issued a joint guidance late Friday night explaining the Executive Order.  The bad news is that there is still much confusion about how the tax is going to work.

What we know for sure is that the President has instructed the Treasury to defer the mandatory collection of the Social Security Withholding Tax from September 1 to December 31, 2020.  This tax is typically collected by employers who withhold it from the pay of their employees.  Employers are ultimately responsible to the Treasury for making sure the tax is collected and paid.  Starting January 1, 2021 through April 30, 2021 employers will be authorized to collect the amount of money deferred from employee’s paychecks. In other words, the employee who opts not to have his or her taxes collected will have to repay the deferred amount in addition to having their Social Security taxes automatically deducted from their paycheck once again.  This will be a great surprise as they start paying off the credit card bills from the holiday season.

Can the employer decide not to participate in this program?  According to the press release, the guidance “allows” employers to defer collecting the taxes.  The actual notice does not speak directly to this issue.  Please check with your accountant and/or attorney, but in my opinion, and simply my opinion, since Federal law indemnifies employers responsible for collecting withholding taxes from being sued and employers are still ultimately responsible for ensuring that the taxes gets paid, the most logical reading of the guidance is that employers may, but are not required to, defer collecting the tax.  Hopefully we will get more guidance on this issue in the coming days.

For those of you who decide that the safest thing to do is to defer collecting the tax, I would send out a notice to your employees explaining to them that they remain responsible for paying the tax and that starting in January your credit union will start collecting the taxes they have chosen to defer.

In his Executive Order, President Trump encouraged the Treasury to work with Congress.  Perhaps this will end up being nothing more than a game of legislative chicken with President and the Congress ultimately agreeing to waive collection of the taxes.  But making financial plans for your credit union based on the assumption that Congress and the President will agree on anything in the coming months is an awfully risky bet.  It would be like predicting that the Mets would lose to the Yankees even though they have a 5 run lead with two outs in the bottom of the last inning.

September 1, 2020 at 9:37 am Leave a comment

Travel Quarantine Presents New Challenges for Your CU

At 12:01 a.m. this morning Governor Cuomo joined the Governors of New Jersey and Connecticut in imposing a 14 day quarantine on persons entering the Tri-State area from states experiencing spikes in the COVID-19 virus.  According to press reports, the quarantine currently impacts persons traveling from Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Utah and Texas.  The initial list of states covered by the order is not static but instead applies to all states “…with a positive test rate higher than 10 per 100,000 residents, or higher than a 10% test positivity rate, over a seven day rolling average”.

Here are some issues for your credit union to take into consideration.

Most importantly, you should put your employees on notice that you need to be informed of their travel plans and updating your policies to enforce the quarantine.  There is a lot of disagreement over whether or not employers can be successfully sued by employees for contracting the illness.  What everyone can agree on is that the safest way for employers to protect themselves against potential claims is to follow state and federal guidance.  Besides, violations of this executive order can result in a fine of up to $10,000.

I had a quick chat with my friend and colleague Chris Pajak yesterday evening who pointed out some interesting complications this announcement raises regarding paid family leave laws.  It’s important to start asking the right questions.  For example, New York’s paid sick leave benefits don’t apply to employees subject to quarantine after traveling to a country which the CDC has designated as a COVID-19 hotspot.  No such limitation is imposed on persons who travel out-of-state.  Does this mean that an employee whose work can’t be performed from home can take a week’s vacation to Cape Hateras, NC—my favorite summer vacation spot—and then insist on being paid for the next two weeks?

I said it before and I’ll say it again, what makes the pandemic so challenging from a legal standpoint is the speed at which regulators, legislators, employees and employers are trying to react to an unprecedented situation for which there is by definition very little guidance.  This travel ban is the latest, but probably not the last twist as we grapple with the pandemic.

June 25, 2020 at 9:38 am Leave a comment

Five Things You Need To Know To Start Your Credit Union Week

New York State extended until July 6th an increasingly important Executive Order permitting the use of remote notarization.  In recent weeks as we have gotten feedback from credit unions about the key issues to champion going forward, remote notarization has emerged as a top priority.  We will be reaching out to all of you in the not too distant future.  So stay tuned and be ready.  Oh boy!

CUNA Board Passes Racial Justice Resolution

This time really is different.  The protests over the death of George Floyd are sparking discussions not only about police tactics but what industries large and small are doing to make America a fairer place.  The credit union industry is, of course, not immune.  On Thursday, CUNA’s Board passed a resolution committing the organization to come up with concrete steps that the industry could take to address racial inequality by August 10th.

New York State DOH Reduces Quarantine Period From 14 to 10 Days

With New York City beginning the first phase of reopening today, anxious employers should be taking a look at this updated guidance from New York’s Department of Health, generally reducing the quarantine period for persons who are either exposed or who have contracted the virus from 14 to 10 days.  Here is a link to the guidance as well as an analysis provided by Bond, Schoeneck and King, LLC.

Will The Shutdown Hasten The Branches’ Demise?

That is a question that you should all be pondering after reading this article in today’s Wall Street Journal reporting that some early analysis is suggesting that the shift towards remote transactions necessitated by the shutdown may lead to a permanent decrease in branch use.  I will have more to say on this in a future blog.  How exciting is that?

A Summer Without Baseball?

Nothing at all to do with credit unions, but could someone please explain to me why a sport structured to ensure social distancing between competitors can’t figure out a way to play a season while basketball, soccer, hockey and most likely football can?  These are the great questions that keep me up at night.

Have a great day.

June 8, 2020 at 9:37 am 2 comments

State Passes Mortgage Forbearance Legislation  

Good morning folks.  I don’t know about you but that was one long and depressing weekend.

On Friday the legislature approved measures placing modifying forbearance requirements on state chartered institutions holding primary mortgages.  Although the bill is far from perfect, it’s an improvement over legislation that had been acted on just days earlier.  It still must be signed by the Governor.

Here’s what the legislature did (PART C of A10530).  Individuals suffering financial hardship as a result of COVID-19 would be eligible for a forbearance for up to 180 days and a possible additional six month extension.  Individuals applying for this forbearance would have to demonstrate that they are suffering a financial hardship.  In other words, a borrower is not eligible for an automatic one year forbearance.  If your borrower has already been granted a forbearance pursuant to the Executive Order, then that constitutes compliance with this new measure.    Once a forbearance is granted, it forbids financial institutions from collecting “all monthly payments” due on the mortgage.  A previous version of the bill mandated that all interest be waived.

With regard to modifying the loan, the parties can negotiate to change the terms but in the event that an agreement cannot be reached between the lender and borrower, the outstanding payments will be owed as a separate loan payable at the end of the mortgage.

The most unique part of the final bill is that it allows financial institutions to effectively apply for a waiver by demonstrating to the Department of Financial Services that granting forbearances would constitute an unsafe and unsound practice.

And just the Governor’s previous Executive Order, the bill only applies to state regulated institutions holding mortgages which are not backed by GSEs.

June 1, 2020 at 9:36 am Leave a comment

Governor Extends Executive Order; IRS Issues Guidance on Checks To Deceased Persons

Yesterday evening the Governor extended all of his Executive Orders through at least June 6, 2020.  He also further extended the moratorium on foreclosures.

Last evening’s orders specify that there shall be no foreclosure of residential or commercial property

“…for nonpayment of such mortgage, owned or rented by someone that is eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic…”

Remember that even without this order, the New York courts are not processing foreclosure cases at this time.  The moratorium will remain in effect at least through August 19, 2020.

On another note, you know these are strange times when guidance from the IRS makes national news, but sure enough I was planning on telling you about how the IRS has issued guidance informing members how to return stimulus money to which they are not entitled when NPR broadcast the report about this very subject.

The Association’s Compliance Department will be providing you an excellent analysis of the issue in its weekly newsletter.  Yours truly will just emphasize that the IRS guidance imposes no additional requirements on financial institutions.

That being said, in a non-ACH transaction, when you have advance notice that a stimulus check is made out to a deceased individual, such as a joint check with one of the recipients having recently passed away, I would not negotiate that check.

Now it’s time for me to get ready for my South Korean Fantasy Baseball League Draft.  Play Ball!… and with Sunday being Mother’s Day, it’s time for my favorite quote from former baseball great and Mets announcer Ralph Kiner: “Happy Mother’s Day to all you Father’s out there”.

May 8, 2020 at 8:34 am Leave a comment

How Immigration Reform May Impact Your Credit Union

President Obama’s decision to grant resident status to more than 4 million undocumented aliens may well have a direct impact on your credit union’s operations and procedures. Specifically, you may want to take a look at your credit union’s BSA customer identification policies and procedures.

The ability of credit unions and banks to open accounts for undocumented aliens is one of the few compliance issues that gets the non-compliance geek fired up. Read this 2007 article from the Wall Street Journal and you’ll see what I mean. Under existing customer identification program requirements, credit unions must have policies and procedures in place to verify a customer’s identity. As explained in a FinCEN guidance, the CIP regulations do not provide a definitive list of the type of documents that banks and credit unions must use to verify the identity of an account holder. Instead, the ultimate requirement is that whatever forms of identification your credit union uses enables it to “form a reasonable belief that it knows the true identity of the customer.” The regulation provides that for a non-U.S Citizen an acceptable form of identification could include a government issued document evidencing nationality or residence so long as it has a photograph. See 31 CFR 1020.220. This flexibility in the regulation is what makes it acceptable for some financial institutions to accept consular identification cards while others do not. My guess is that with the President’s Executive Order you will see many states pass laws requiring financial institutions to accept specific types of identification.

The second stumbling block to opening accounts for undocumented persons involves tax-payer identification numbers. The regulations are unequivocal in requiring that persons opening accounts must either have or be applying for a tax-payer identification number. 31 CFR 1020.220. Since many undocumented aliens work off the books, this has been one of the biggest challenges to opening an account. The President’s Executive Order will allow qualifying individuals to legally have jobs and start paying taxes. I would hope that FinCEN will provide guidance to financial institutions explaining the type of documentation that may be available to individuals eligible for legal protections under the President’s Executive Action.

Whether or not you agree with the President’s Executive Action it is not the role of your credit union to get involved with the immigration debate. If you disagree with what the President did last night, write your Congressman, but don’t make it more difficult than it has to be for a person to go into a credit union and open an account. As for the argument that doing so is aiding lawbreakers, let’s make a common sense distinction between individuals who come into the country to earn a living and individuals who earn a living by breaking the law.

November 21, 2014 at 8:40 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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