Posts tagged ‘Governor Cuomo’

Three Things to Ponder As You Start Your Credit Union Day

It’s been another busy week in credit union land.  Here are some of the key things to ponder as you finish your second or third cup of coffee.

Municipal Deposits Bills Advance

Legislation that would finally permit municipalities to deposit their funds in credit unions, if that is where they think they can get the greatest benefit for their taxpayers, jumped a major legislative hurdle yesterday when A7334 sponsored by Assemblyman Pichardo was passed out of the Assembly Banks Committee. Companion legislation- S670 by Senator Sanders– was passed out of the Senate’s Bank Committee earlier this week. Now both bills are in the Finance Committees of their respective chambers with plenty of time left to get this done before the end of the session.

To Mask or Not To Mask, That is the Question

Now that the CDC has modified its mask guidance and Governor Cuomo has followed suit, credit unions in New York State are considering what changes, if any, they are going to make to mask wearing policies for both members and staff. Here are some things to consider as you implement your changes.

First, take the time to read both the entire CDC guidance and the Governor’s announcement. For instance, did you know that even as he announced that New York would defer to the CDC guidance, the Governor stressed that the state’s Department of Health continues to “strongly recommend” that masks continue to be worn in indoor settings where vaccination status of individuals is unknown. In addition, the CDC is continuing to take a more conservative approach when it comes to hopping on the plane for the long awaited return to an in-person conference.

In many ways the HR issues that your credit unions have to navigate are even trickier. For instance, to the extent you give employees more flexibility based on proof of vaccination, remember the need to provide reasonable accommodations under the ADA to disabled persons who can’t get the vaccine for health reasons.

Given these complexities, your changes should, of course, be in writing but stay flexible. With variants raging around the world and this country still nowhere near approaching herd immunity, you can bet you’re going to have to modify your procedures in the coming months.

CFPB Updates Mortgage Lending Guidance

CFPB’s Q&As on TRID compliance are in many ways the Rosetta Stone of mortgage lending. So when I heard that the CFPB had updated its guidance in response to the federal BUILD Act yours truly was a little nervous. Full Disclosure: I had not heard of the BUILD Act. 

The BUILD Act is legislation signed into law by President Trump in early January. It authorizes not-for-profits offering low-interest mortgage loans that meet certain criteria to provide modified loan estimates and closing disclosures. It is a common complaint among not-for-profits that the regulatory burdens imposed on them by TRID make it difficult to provide loans to the people who need them most. I couldn’t agree more. It’s a shame that Congress takes such a narrow view of which institutions could benefit from greater lending flexibility.

May 20, 2021 at 10:03 am Leave a comment

Governor Extends Vaccine Eligibility as CDC Extends Eviction Moratorium

In case you haven’t already heard, Governor Cuomo announced yesterday that starting today individuals 30 years and older can schedule vaccinations and individuals 16 years and older can start scheduling appointments on April 6th.

Is the CDC Guilty of Regulatory Overreach?

The Governor’s announcement came the same day that the Center for Disease Control announced that it would be extending a moratorium on evictions.  Aside from its practical significance, the CDC’s aggressive use of its regulatory authority may provide a vehicle for federal courts to further chip away at the judicial deference that has been afforded to agency determinations over the last 30 years.  As readers of this blog know, as the most heavily regulated financial institutions in the country, credit unions have a keen interest in any litigation dealing with the extent to which agencies can regulate in the absence of explicit congressional authority.

If you’re wondering why the CDC has the authority to block evictions in the first place, you are not alone.  Yesterday the United States Court of Appeals for the Sixth Circuit refused to issue a stay of a lower court ruling that ruled the CDC had exceeded its authority when it extended the eviction moratorium without Congressional authorization (Tiger Lily, LLC v United States Dept. of Hous. and Urban Dev., 21-5256, 2021 WL 1165170, at *3 [6th Cir Mar. 29, 2021]).  The ruling sets the stage for further litigation which may impact the status of evictions nationwide and could produce important rulings on how much authority agencies have to interpret federal laws.  Remember, that no matter what the court decides, states such as New York have the authority to issue eviction and foreclosure moratoriums and have done so.   

For those of you scoring at home (that’s a baseball reference since opening day is just two days away), in March of 2020 the CARES Act imposed an eviction moratorium that expired on July 25, 2020.  The CDC director extended this moratorium through December of last year.  Congress extended the moratorium until January 31st and when this authority expired, the CDC director extended the moratorium until March 31st and further extended it yesterday.  In exercising this authority, in the absence of congressional authorization, the director is relying on 42 USC § 264 which authorizes the CDC, acting through the Surgeon General to make and enforce regulations that “in his judgement are necessary to prevent the introduction, transmission or spread of communicable diseases.”  The logic of the CDC is that, in the absence of a nationwide eviction moratorium an increase in homelessness and crowded living arrangements will contribute to the spread of the disease. 

In refusing to uphold the CDC’s previous order, the Sixth Circuit explained that “…we cannot read the Public Health Service Act to grant the CDC the power to insert itself into the landlord-tenant relationship without some clear, unequivocal textual evidence of Congress’s intent to do so. Regulation of the landlord-tenant relationship is historically the province of the states.”

NACHA Releases List of Top ODFIs

Just in time for this morning’s blog, Nacha has issued this press release detailing the most active financial institutions when it comes to ACH transactions over the past year.  This year’s statistics are more intriguing than usual because they provide a snapshot of how the pandemic has accelerated the trend towards electronic payment options.  According to Nacha the top 50 originating financial institutions processed more than $23B in payments last year, an 8.4% increase and the top 50 receiving institutions witnessed an 11% increase.  What I find intriguing about these numbers is how the ACH network continues to be dominated by a relative handful of financial institutions even as the Nacha network becomes more ubiquitous. 

March 30, 2021 at 9:55 am 2 comments

State Investigates Mortgage Lending Practices in Buffalo

Governor Cuomo and the New York State Department of Financial Services (DFS) issued a strongly worded report criticizing mortgage lending practices in the Buffalo area.  The DFS’ investigation was based on an analysis of HMDA data comprising the Buffalo Metropolitan Statistical Area (MSA), which includes the Counties of Erie, Niagara and Cattaraugus and the City of Buffalo. 

According to the Governor’s Press Release, “Buffalo remains one of the most racially segregated cities in the United States decades after the practice of redlining and other forms of housing discrimination were banned by law. DFS’ report found a distinct lack of lending by mortgage lenders, particularly non-depository lenders, continues today in Buffalo neighborhoods with majority-minority populations and to minority homebuyers in general.”

Although the report highlighted the Buffalo area, it reflects what is likely to be a strong push on the part of both federal and state regulators to use Fair Market Lending laws to tackle patterns of racial inequality.  For example, the Department begins the report by noting that much of the racial housing patterns in the area have their roots in government policies dating back to the Great Depression. Nevertheless, the Department concludes that mortgage lending practices should better address these disparities.

The report also highlights the fact that much of the lending in Buffalo is done by non-depository banking institutions, which are licensed by New York State.  It suggests that the State Community Reinvestment Act be amended to incorporate non-depository lending institutions such as mortgage banks.

My Good as Tier I Capital Super Bowl Prediction

On a much lighter note, yours truly is ready to make his good as gold Super Bowl prediction after having been half right in predicting that Tampa Bay would be meeting the Ravens this Sunday.  I apologize for underestimating the Buffalo Bills.  The Chiefs are favored by three points.  I say give the points, take the money:  Chiefs 38-Tampa Bay 20.  Enjoy your weekend, folks.

February 5, 2021 at 9:04 am Leave a comment

Data Privacy Emerges As Key Issue in NY’s Budget Debate

Among the highest-profile proposals in the Governor’s budget package this year is the New York Data Accountability and Transparency Act. It is the Governor’s first major foray into the issue of data protection, and it has already set off a debate among those who think the bill goes too far and those who think it doesn’t go far enough. Regardless of what side wins that debate, what’s clear is that this is a major legislative proposal which could have a major operational impact on your federal and state chartered credit unions that do business in New York.

The core part of the Governor’s proposal is to give consumers the right to opt out of information sharing. It also empowers the DFS to create a Consumer Data Privacy Bill of Rights. These rights would include:

  • The right to protection of their personal information by “covered entities;”
  • The right to exercise control over what personal information these entities collect from them and how it is used; and
  • The right to request that a covered entity “return, destroy, amend or otherwise alter” the personal information collected about them.

One of the main issues which we will be keeping an eye on is precisely what entities this proposal would apply to. Section 2 (b) (i) stipulates that this section shall not apply to personal information that is collected in accordance with the Gramm-Leach-Bliley Act. However, it is not entirely clear how wide a net this exemption casts, particularly since other aspects of the proposal, most notably the bill of rights, could be interpreted as giving consumers rights that goes beyond federal baselines. In addition, even if GLBA compliant entities are exempt from the statute, they would still need to make sure there was a structure in place to deal with data that doesn’t fall under the GLBA. The reach of the legislation is further restricted by the fact that it only applies to businesses that “(i) control or process the personal information of 100,000 consumers or more; or (ii) derives over fifty percent of its gross revenue from the sale, control or processing of personal information.” 

Without the possible carve outs mentioned above, this clearly would apply to large credit unions, but would also apply to credit unions of all sizes in New York, since all credit unions derive the majority of their income from processing personal information. It also would apply to many CUSOs. And for those of you breathing a sigh of relief that you aren’t headquartered in the Empire State, keep in mind that it would extend to any entity that “intentionally targets residents in New York State.”

We will keep you posted on developments. In the meantime, stay warm!

January 29, 2021 at 10:07 am Leave a comment

New York to LIBOR’s Rescue!

The rulers of the financial world typically frown on the state getting involved with their business. But when it comes to LIBOR, you can hear a huge sigh of relief emanating from Wall Street this morning. As readers of this blog know, LIBOR is a discredited benchmark that has been the gold standard for contracts that use indexes. In the credit union world, LIBOR has been used by some for adjustable rate loans, and in the world of high finance, it has been used for complicated derivatives. 

Despite the fact that readers of this blog have known for years that LIBOR would come to an end, perhaps as early as this year, apparently some of the folks on Wall Street haven’t gotten around to adjusting to this new reality. But they’re in luck, because tucked away in the Governor’s Article VII budget language is a provision which will amend New York State law to ensure the continued validity of contracts that rely on LIBOR adjustments even after it is obsolete. Since so many financial contracts are executed in New York, this news benefits the financial industry at large. 

Has the CU Industry Been Impacted by the Russian Cyber Attacks?

Since at least last March, the Russian government has engaged in the most comprehensive series of cyber attacks in the internet era. The attacks, which may still be ongoing – the scope of which is still being determined – raised the very real prospect that a foreign government hostile to the United States has infiltrated the inner workings not only of corporations, but of financial institutions as well. Unfortunately, despite a letter from CUNA on the potential scale of the problem, the NCUA has done little to inform credit unions about the extent to which NCUA itself may have been victimized and the steps credit unions should take to protect member data.

As Michael Ogden succinctly put it in this CU Times piece

“We do not know if the NCUA has been impacted. We do not know if the NCUA is conducting its own investigation or audit of its network systems. We do know the Treasury Department, the Commerce Department, the State Department, the Pentagon and the Energy Department have all been compromised. We do know from reports that other federal regulatory agencies have also been compromised.”

This is one of those situations where what you don’t know can hurt you. It’s time for some clarification from our regulator.

January 21, 2021 at 9:34 am Leave a comment

PPP Open For Business – For Some

You may have seen this press release from the Small Business Administration, announcing that the Paycheck Protection Program was once again open for business, but there’s a good chance that your credit union was unable to process loans. 

The SBA announced that it was providing an exclusive window to community financial institutions. This means that unless your credit union is a CDFI or MDI, an NCUA designation which includes this list of credit unions, it is not eligible to begin processing these loans (for those of you scrolling, you can find the SBAs definition at 15 U.S.C. 636 (a)). The steps taken by the SBA are in part an understandable response to the first PPP rollout. Remember all of those articles about how the big banks and their favorite clients dominated the process? The hope is that smaller institutions, which tend to give more loans to small businesses, will be more willing and able to participate if they’re guaranteed access. Still, it does mean that many credit unions are largely excluded from this first stage of the rollout.

Credit unions with less than $10 billion in assets will have exclusive rights to lending out from a pot of no less than $15 billion that’s been set aside. However, community banks with the same asset size limits are also included in this pot, as well as institutions chartered under the Farm Credit System. The good news to take away from this is that your credit union will not have to wait in line behind big banks with infrastructure set up specifically for this type of process. (Section 1102(b) of the CARES Act (Public Law 116–136)). 

First Virtual State of the State

The Governor gave the first part of – hopefully – his only virtual State of the State address yesterday. We will be looking through his proposals, but right now, it seems like the issue that could have the greatest impact on credit unions is his plan to legalize the sale and distribution of marijuana on the state level.

January 12, 2021 at 9:58 am Leave a comment

New York Makes Big Changes to Power of Attorney Law

Governor Cuomo signed a bill yesterday that makes major changes to New York’s Power of Attorney laws. The changes will have a direct impact on whether or not your credit union decides to honor a power of attorney (POA). A.5630-A/S.3923-A was a product of the frustration of lawyers with New York’s POA laws. Specifically, they complained that third parties were too hesitant to accept POAs which didn’t include the exact language contained in New York law.

I know from my compliance days that credit unions are asked on a daily basis to take actions based on POAs. Under existing New York law (General Obligations Law 5-1501), a power of attorney must contain the “exact wording” of New York’s POA law in order to be valid. In addition, there is no penalty that can be imposed against third parties that refuse to accept POAs. Under this new law, a POA will be valid so long as it “substantially conforms” to the relevant statutory language. When a financial institution refuses to accept a POA in the future, they can be brought to court and be made to cover damages for their “unreasonable” rejection of a valid POA. Additionally, your credit union will now have 10 days to accept a POA or explain in writing its reasons for not doing so. The good news is that the new law also stipulates that a person who is asked to accept an acknowledged POA may request “and rely upon without further investigation” an agent’s certification that a POA is valid. There are also several substantive changes to the POA forms. With regard to statutory gift riders, the new law will “expand an agent’s power to make gifts in the aggregate in a calendar year from the current $500 limit to $5,000 without requiring a modification to the form.”

The law takes effect in early June of 2021, and POAs valid before that date will remain effective. If I helped run your credit union’s compliance department, I wouldn’t let too much time pass before looking at this bill and updating your policies and procedures, and making sure the relevant staff knows of these changes. 

On that note, enjoy your day. I didn’t get to address the two other major headlines – that the Northeast gets big snowstorms in December, and that the Electoral College reflects the will of the voters – what a concept. 

December 16, 2020 at 9:54 am 2 comments

State Enacts New Restrictions on State Charter Inactivity Fees

Governor Cuomo has approved legislation requiring state chartered credit unions to provide additional notices to account holders prior to imposing inactivity fees. S.4188 (Kennedy) / A.9140 (Abinanti) takes effect in 90 days.

Under the bill, financial institutions will have to provide 30 days written notice before fees can be imposed, and the notice will have to include full contact information, including a phone number, for the account holder to use in reaching a representative from the financial institution. 

Although this is a legal determination that you should confirm with counsel, the bill does not apply to federally chartered institutions. First, the new law only applies to financial institutions subject to this chapter. This generally limits its jurisdiction to state licensed and chartered financial institutions, but there are some exceptions. Secondly, even if the state was to attempt to apply this provision to federally chartered credit unions, NCUA has repeatedly and clearly opined that inactivity fees are preempted as applied to federal credit unions. The bottom line is that the state has imposed another meddlesome mandate which makes the state charter less attractive, even though there are relatively few state chartered institutions left to regulate.

Here We Go Again?

New York State appears to be edging closer to reinstituting lockdowns. Reacting to a dramatic and uncontrolled spike in COVID-19 cases, the Governor yesterday released new restrictions on when restaurants, gyms and bars have to close by, as well as limits on the number of people permitted to meet at once. Look on the bright side: you know there are people you’d rather not spend Thanksgiving with, and this year you have the perfect excuse to disinvite them. This is a great solution for avoiding the inevitable political debate which will accomplish nothing besides ruining the day. 

New York Adviser Named to Biden Transition Team 

Even as Donald Trump refuses to concede that he lost the election, President-elect Joe Biden is moving ahead with his transition team. The ever-informative Washington Credit Union Daily gave me a heads up this morning that Leandra English has been named to the Biden Administration’s CFPB Review team, which will help set priorities for the Bureau under the new President. Nationally, English is best known as the Deputy Director under Richard Cordray, who argued that she could not be replaced as the Bureau’s acting director following Cordray’s departure. Locally, English has served as an adviser to New York State’s Department of Financial Services. If the past is prologue, this means the rest of the country should quickly expect a heavy emphasis on servicers offering forbearance options for individuals facing economic hardship as a result of the pandemic. 

November 12, 2020 at 9:17 am 2 comments

New York State Considers Extending Forbearance to Commercial Properties

Yours truly is back and better than ever!

Unfortunately, I have some potentially bad news for New York State charters.  Yesterday, the Assembly Banks Committee voted in favor of a bill, A.10532/S.08744, which would extend forbearance protections to persons who have mortgage loans or lines of credit on small commercial and investment properties.  Specifically, if a borrower has a mortgage loan on investment property or rental property containing up to four units, the property holder would be eligible for up to a year of mortgage forbearance upon a showing that they have been negatively impacted by the COVID-19 pandemic if 30% of their income is derived from these rentals.  This would apply to second homes which your member is renting out.

At first glance measures like this have a certain facial appeal; after all, no one wants to see a business fail and the measure is similar to previous legislation extending protections to homeowners.

But there is a fundamental distinction between the legislature taking steps to keep consumers in their homes as opposed to forcing banks and credit unions to effectively subsidize business arrangements which have traditionally been negotiated without government interference.  Absent evidence that a financial institution is not acting in good faith to work with commercial property owners, the legislature should not be involved.  If we aren’t careful, virtually all property in New York State on which state chartered institutions have a security interest will be shielded from collection.

The legislature seeks to address the potential harm that measures like this could inflict on state chartered lending institutions by allowing them to seek an exemption from its provisions by demonstrating to the DFS that it cannot comply with this mandate in a safe and sound manner.  Obviously this is of little benefit to institutions simply trying to avoid liquidity problems in the first place.

Right now there are less than 20 state chartered credit unions in New York State.  Although the Cuomo Administration has taken important steps in recent years to make the state charter more attractive, if the legislature continues to pass measures which go far beyond what is required under federal law, the legislature may find itself having no banking institutions left to regulate.

The bill is now before the Assembly Codes Committee.  We will keep you posted.

July 14, 2020 at 9:41 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

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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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