CURRENT Newsletter | 1 June 2021
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Headlines
- Can Employers Follow CDC’s 'Vaccination or Mask' Rule?
- Register Now for CU PolicyPro Training!
- Financial Education Boot Camp July 20
- Social Responsibility Awards: Get Recognized for Your Good Works!
- CU Loan Growth Slows, But Bump Expected As Year Progresses
- NCUA Says It Is Reviewing Executive Order to Agencies on Climate Change
Advocacy / Governmental Affairs
Compliance / Regulatory Advocacy
- NCUA Issues Regulatory Alert on QM Rule Delay
- Asset Threshold IFR Will Provide ‘Substantial’ Relief to Some CUs
- Proposed Fed Regulation Could Increase Regulatory Burden, CUNA Says
- Court Dismisses Class Action Lawsuit Over Military Lending Act Exception for Automobiles
Operations
Headlines
Can Employers Follow CDC’s 'Vaccination or Mask' Rule?
Employers subject to state-level COVID-19 workplace safety standards are wondering what the CDC’s recent “vax or mask” rule means for them. Virginia, for example, is one of a handful of states with a state-level workplace safety agency, as are California, Michigan, and some others. OSHA partially addressed the issue from a federal perspective on May 17.
Then late Wednesday, May 19, Virginia’s Department of Labor & Industry posted new FAQs on the topic. These developments have answered some questions, but raised new questions, too.
This article focuses on the situation in Virginia, which was the first state to create its own COVID-19 workplace safety rules, to give an example of how employers reckoning with fast-developing state and federal rules should think about proceeding. If you have employees in several states with such plans, you’ll need a multilateral analysis. Discuss an appropriate plan with counsel as this situation continues to develop.
CUNA Mutual Group has also issued a RISK Alert on the mask/no mask issue, noting the CDC’s Interim Public Health Recommendations for Fully Vaccinated People caught many by surprise and sent businesses scrambling to adapt to the practical implications of allowing some but not all people to go maskless. Credit unions are now reviewing the recommendations and weighing the health, legal and cultural implications of waiving mask requirements.
CUNA Mutual Group’s RISK Alert
Register Now for CU PolicyPro Training!
League partner CU Solutions Group will offer a series of live training webinars to introduce you to (or reacquaint you with) CU PolicyPro. The training sessions are FREE, but registration is required.
Click here to view the session listing and descriptions, and to register for each class. (Sessions start June 2!)
(Please note: there is no session on June 23, and all times are EDT.)
Your League recently hosted similar training with CU Solutions Group, though this latest training will offer a deeper dive into new and enhanced features. You can access that training here:
Session 1: General Overview of the new platform
- The slide deck is available here.
- You can also access the recording of the session here.
Session 2: A deep dive for administrators and content creators
- The PPT can be accessed here.
- The recording of the session is available here.
Financial Education Boot Camp July 20
Looking to whip your credit union's financial education program into shape? Stumped on where to start? The Virginia Credit Union League's Financial Education Committee is here to get the program at your credit union into tip-top shape!
- Save the Date: July 20, 11 a.m. – 1 p.m.
- Format: Virtual Workshop
- Cost: $20.
Whether you are new to providing financial education or consider yourself a pro, this low-cost, high-impact workshop is guaranteed to provide tools and tips you can use immediately at your credit union. Now, more than ever, financial education can demonstrate the Credit Union Difference -- building member loyalty and providing an important opportunity to serve your community.
Register early and attend for a chance to win special prizes! More information and registration available soon!
Social Responsibility Awards: Get Recognized for Your Good Works!
The League-CUNA Social Responsibility awards are a way for you to showcase the extraordinary efforts you are taking to serve your members. The deadline is June 30!
There are four entry categories:
- Desjardins Youth Financial Education Award for excellence in youth financial education
- Desjardins Adult Financial Education Award for excellence in adult financial education
- Louise Herring Philosophy in Action Award for excellence in member service.
- Dora Maxwell Social Responsibility Award for excellence in community service and outreach.
Start your entry here. The time period covered for your application should be the calendar year through June 30, 2021. If you have additional questions after reading this FAQ, please don't hesitate to contact your League’s Mary Amyx - 800.768.3344, ext. 630.
CU Loan Growth Slows, But Lending Expected to Pick Up as Year Progresses, Trends Report Forecasts
Credit union loan growth dipped in March, but expect growth to pick up as the year progresses and to rise markedly in 2022, according to CUNA Mutual Group in its latest Trends Report.
The report does caution, however, that industry capital ratios could fall to 9.5% by year-end as the capital growth rate remains low but asset growth surges 14%. Data also continue to show membership growth remains largely among the big CUs while smaller institutions are losing members.
Overall, credit union loan balances rose 0.22% in March, below the 0.33% reported in March 2020 and 4.9% during the last 12 months.
March is historically the third weakest loan growth month of the year, with seasonal factors typically shaving off 0.24 percentage points from the underlying trend growth rate. The lending season for credit unions begins in earnest in April and continues through August, CUNA Mutual noted.
Learn more
Related: New Car Sales Slow in May, Down 6.5% for Credit Unions
Related: Economic Recovery is Uneven
NCUA Says It Is Reviewing Executive Order to Agencies on Climate Change
NCUA said it is “reviewing” an executive order from President Biden that directs federal agencies to launch or expand efforts to analyze and lessen economic risks stemming from climate change.
A spokesperson for NCUA told CUToday.info that the review is currently underway within the agency.
“However, the order does not appear to direct any specific action for the agency,” the spokesperson said. “Instead, the order directs the Secretary of the Treasury to engage with members of the Financial Stability Oversight Council (FSOC), to consider several actions, including an assessment of the financial risks climate change poses.”
NCUA went on to note that Chairman Todd Harper has stated previously that FSOC should focus on the financial risks related to climate change and that each agency needs to manage climate risk within their regulatory and supervisory frameworks.
“For the NCUA that means measuring, monitoring, and mitigating such risks to promote the safety and soundness of credit unions, protect consumers, and safeguard the Share Insurance Fund,” the spokesperson said. “These actions will ensure that credit unions remain resilient against all material risks, including the financial risks posed by climate change.”
Advocacy / Governmental Affairs
Biden Budget: CDFI, CDRLF, CDP Funding Included
The Biden administration released its Fiscal Year 2022 budget proposal Friday with increased funding to several credit union priorities.
The proposal allocates $330 million for the Treasury’s Community Development Financial Institutions (CDFI) Fund, up from $270 million in the previous year.
The CDFI Fund makes capital grants, equity investments and awards for technical assistance to CDFIs for community development initiatives such as small businesses, community facilities, and low-income housing.
NCUA’s Community Development Revolving Loan Fund (CDRLF) is funded at $2 million, up from $1.5 million last year.
The CDRLF assists credit unions serving low-income communities to provide financial services, stimulate economic activities and operate more efficiently.
It also includes $18.5 million for the U.S. Agency for International Development’s Cooperative Development Fund, the same amount as last year.
The CDP is a global initiative that focuses on building the capacity of cooperative businesses and cooperative systems for self-reliance, local ownership and sustainability.
Compliance / Regulatory Advocacy
NCUA Issues Regulatory Alert on QM Rule Delay
NCUA this week issued a Regulatory Alert (21-RA-06) to federally insured credit unions addressing the Consumer Financial Protection Bureau (CFPB) finalizing the delay of its Qualified Mortgage (QM) rule. The mandatory compliance date is now Oct. 1, 2022.
NCUA calls on credit unions to read the provisions of the final rule, and notes the CFPB has provided a compliance guide and other resources.
This final rule affects two categories of QMs:
- General QMs: Extends the mandatory compliance date of General QM loans from July 1, 2021, to October 1, 2022, to preserve flexibility for consumers, particularly those affected by the COVID-19 pandemic. The final rule does not make other changes to the General QM loan definition.
- Temporary GSE QMs: Extends the termination date of new GSE QMs to October 1, 2022, or when the applicable GSE exits federal conservatorship, if that happens earlier. The provision that created this loan category is commonly known as the GSE Patch.
NCUA issued a Regulatory Alert (21-RA-01) in January covering changes the CFPB made to the QM rule in December 2020.
Asset Threshold IFR Will Provide ‘Substantial’ Relief to Some CUs
CUNA supports NCUA’s Interim Final Rule on asset thresholds, believing it will provide certain large credit unions substantial regulatory relief. CUNA submitted comments on the Interim Final Rule Monday, which became effective March 23.
The Interim Final Rule allows a credit union to use March 31, 2020, financial data when determining whether it is subject to capital planning and stress testing requirements under NCUA’s regulations and supervision.
“Complying with these more stringent regulatory standards would impose additional transition and compliance costs on credit unions that otherwise may not have become subject to these requirements at this time,” the letter reads. “Given the rapid and unexpected nature of credit union asset growth in 2020, many credit unions are unlikely to have planned for these transition costs. The IFR gives affected credit unions more time to either reduce their balance sheets, or to prepare for higher regulatory standards.”
Proposed Fed Regulation Could Increase Regulatory Burden, CUNA Says
A proposed Federal Reserve regulation could adversely impact credit unions by increasing regulatory burden, CUNA wrote to the Senate Banking, Housing, and Urban Affairs Committee. The committee heard semiannual testimony from Fed Vice Chair for Supervision Randal Quarles during a hearing this week.
“The Board’s proposed updates to Regulation II (12 C.F.R. pt. 235) that seeks to provide ‘clarification’ to the regulation of debit card routing requirements,” the CUNA letter reads. “In our view, the proposal represents much more than a clarification but instead would add new requirements to Regulation II that would increase the complexity and costs associated with debit cards.”
Credit unions can comply with the existing regulations by issuing debit cards carrying a signature network and an unaffiliated network. The proposed rule would require issuers to offer two unaffiliated networks that must also be capable of processing transactions under a new framework of expectations surrounding merchant type, transaction and location.
Court Dismisses Class Action Lawsuit Over Military Lending Act Exception for Automobiles
The U.S. District Court for the Eastern District of Virginia has dismissed a class-action lawsuit related to the Military Lending Act's (MLA) exception for motor vehicles. Among the points in the decision, the court determined Guaranteed Auto Protection (GAP) insurance is directly related to the purchase of a vehicle loan.
The plaintiffs in the class-action lawsuit argued that including GAP insurance, as well as other fees associated with a vehicle loan, brings the loan outside of the MLA's exception, NAFCU noted in its review of the decision.
In 2020, the Department of Defense (DoD) reverted language for Question No. 2 related to GAP insurance of its MLA interpretive guidance after a revision in 2017 created confusion. NAFCU noted that it and the Defense Credit Union Council had pressed the DoD to completely rescind the question.
The court also determined that the 2016 guidance – to which Question No. 2 was reverted – only applies to personal property and does not address motor vehicles.
Operations
CUNA Mutual Group to Host Webinar on Employee/Workplace Safety
CUNA Mutual Group (CMG) will host a live webinar on June 16, at 2 p.m. for credit unions with questions for a risk consultant on employee and workplace safety. Join CMG for this live question-and-answer session where industry experts will address your top-of-mind concerns.
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