CURRENT Newsletter | 10 February 2022 - Virginia Credit Union League

Companion bills SB329 and HB209 will make the process easier for state-chartered credit unions to exercise the same powers as their federally chartered peers. Another parity introduced this session (companion bills HB268 and SB326) will fix the Virginia statute so that the NCUA’s Subordinated Debt Rule will not conflict with the Virginia Code. Those bills passed their respective houses early in the session.

League President/CEO Carrie Hunt recently testified before both the Senate Commerce and Labor Committee and a House Commerce and Energy subcommittee in support of our legislation, noting the importance of parity legislation that helps state-chartered credit unions remain on equal footing with federally chartered credit unions.

“With only 23 state-chartered credit unions left in Virginia, it is crucial that we do what we can to support a healthy dual chartering system. Both federally chartered and state-chartered credit unions deserve as many tools as possible in the toolbox to best serve their members," notes League President/CEO Carrie Hunt.

It’s important to maintain momentum in the legislative process and we appreciate credit unions' support of our advocacy efforts through our Grassroots Action Center. If you haven't yet reached out to your lawmakers through our email system, please do so today! We also ask you to encourage your colleagues to do the same.

Register Now: Ignite 2022 Set for April 20-22 in Roanoke

We return to the Star City for Ignite 2022 & the League Annual Meeting! We’ve secured the historic Hotel Roanoke as our host hotel.

On tap are a dozen educational offerings, networking opportunities, and our always popular Innovation Expo and vendor showcase. This year’s education lineup features sessions on cannabis banking, cryptocurrency, lending, fintech and various board and governance topics.

Governance Committee Seeks Candidates for 4 League Board Seats

The Governance Committee of the Virginia Credit Union League seeks your recommendations for candidates to be nominated for election to the Board of Directors. In 2022, four board seats are open for election. Nominations are due no later than Feb. 25.

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CFPB Launches Initiative on ‘Junk’ Fees

The Consumer Financial Protection Bureau (CFPB) recently announced that it had launched an initiative to save households billions of dollars a year by reducing “exploitive junk fees,” such as overdraft/NSF fees, charged by financial institutions.

This is an issue your League is monitoring closely, and while we acknowledge there are bad actors within the broader financial services industry, credit unions charge fewer and less-costly fees compared to for-profit institutions. We maintain fees are a necessary cost of doing business, helping a credit union cover the costs of staff time and resources in offering certain products and services.

League Board Seeks Nominees for Kirsch, Farley Awards; Due Feb. 15

The League Board is seeking nominees for its annual awards recognizing individual achievement - the James P. Kirsch Lifetime Achievement Award and Eugene H. Farley Jr. Award of Excellence. The deadline for nominations is Feb. 15.

The Kirsch Award recognizes an individual who has made significant contributions to their credit union or the credit union industry during the course of their career. The Farley Award recognizes an individual who has made a significant contribution over a period of the last three years.

Credit union professionals and volunteers are eligible for both awards.

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CUNA Offering Virtual GAC Option; Registration Now Open

Credit Union National Association (CUNA) opened registration today for “CUNA GAC On-Air,” a limited-content, virtual option to attend the 2022 Governmental Affairs Conference (GAC). “CUNA GAC On-Air,” will include CUNA President/CEO Jim Nussle’s speech, the ED (Filene) talk with Mick Ebeling, an economic update with CUNA Chief Economist Mike Schenk, and more. To register for CUNA GAC, visit cuna.org/gac.

Feb. 16 Virtual Seminar: Your Safe Deposit Service - 50 Most-Important Operating Procedures

The safe deposit operation is a unique, fast-changing service in the financial industry. It is the only product or service in which your staff members do not know the value of a consumer's assets. As a result, every vault transaction can lead to considerable liability. Effective procedures and daily sound practices can counteract and minimize this risk.

Our Feb. 16 virtual seminar covers the "nuts and bolts" and the recommended day-to-day operating procedures for your institution. In addition, you will receive information about many current safe deposit lawsuits and other nationwide horror stories.

Feb. 24 Webinar: Legal Developments in Labor & Employment

Last year was a busy year for federal regulators, and 2021's issues are still affecting workplaces in 2022. Join Woods Rogers Labor & Employment attorneys as they review recent court cases and critical updates from the EEOC, DOL, and NLRB. They'll also discuss pandemic-related issues such as implementing vaccine requirements, the CDC's updated guidance, and whether the federal contractor vaccine mandate applies to credit unions. This session is SHRM and HRCI approved for 2 hours of continuing education credit. Your cost: only $49!

Advovacy / Governmental Affairs

Digital Assets, Ledger Technology Need 'Substantial Regulation'

Credit unions have significant concerns with the potential for cryptocurrency and digital asset platforms to exploit regulatory loopholes if not subject to substantial regulation, CUNA wrote to the House Financial Services Committee Tuesday.

“Credit unions are subject to significant consumer protection and safety and soundness regulation,” the letter reads. “However, the crypto and digital currency sectors operate largely outside of the traditional financial safeguards and generally without the stabilization and protections that financial intermediaries generally provide. In fact, the fundamental innovation of cryptocurrency is the elimination of the financial intermediary.

Lawmakers Introduce Bill to Improve Crypto Tax Laws — Here’s How It Would Make Life Easier for Consumers

Legislation reintroduced to Congress last week by a bipartisan group of lawmakers aims to change the way cryptocurrency purchases are taxed and help clear up some of the confusion over how to account for certain crypto transactions on your tax returns.

The Virtual Currency Tax Fairness Act was introduced on Feb. 3 by Rep. Suzan DelBene (D-Wash.) and Rep. David Schweikert (R-Ariz.) and is co-sponsored by Rep. Darren Soto (D-Fla.) and Rep. Tom Emmer (R-Minn.), Accounting Today reported. The bill would exempt personal transactions made with cryptocurrency when the gains are $200 or less.

Under current tax laws, all gains from virtual currency must be reported as taxable income regardless of the size or purpose of the transaction. Taxpayers are required to calculate and report any changes in the currency’s value against the dollar from the time they bought the currency until it’s used in a transaction, according to Accounting Today.

Under the proposed legislation, taxpayers would no longer have to worry about the tax implications of smaller transactions — a major benefit, considering the rise of crypto as a consumer currency and the confusion over how crypto is taxed.

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Compliance / Regulatory Affairs

Beneficial Ownership Database Could Provide Significant Relief

Credit unions are highly supportive of the creation of a beneficial ownership database and hope it will greatly ease meeting customer due diligence obligations under the Bank Secrecy Act (BSA) CUNA wrote to the Financial Crimes Enforcement Network (FinCEN) Monday.

CFPB Posts Reference Chart for 2022 Reportable Data

The CFPB has posted Reportable HMDA Data: A Regulatory and Reporting Overview Reference Chart for HMDA Data Collected in 2022, a 38-page reference chart covering each of the data points required to be collected, recorded, and reported under Regulation C. This is the latest in the Bureau's series of annual data reporting compliance aids.

Register Now for NCUA’s Capital Adequacy Framework Webinar

Credit unions can get valuable information on changes to the NCUA’s Capital Adequacy Framework Webinar during an upcoming webinar hosted by the NCUA on Wednesday, Feb. 23. Register here

New Topic Added to 'Tax Issues' InfoSight Channel

A new topic, Individual Taxpayer Identification Number (ITIN), has been added under the Tax Issues channel. This topic provides a summary and resources to assist credit unions with the requirements associated with an ITIN.

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Financial Services / Economy

Mortgage Rates Reach Highs Not Seen in More Than Two Years

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average jumped to 3.69 percent with an average 0.8 points. It was 3.55 percent a week ago and 2.73 percent a year ago. The last time the 30-year fixed average was this high was January 2020. Freddie Mac, the federally chartered mortgage investor, aggregates rates from about 80 lenders across the country to come up with weekly national averages. The survey is based on home purchase mortgages. Rates for refinances may be different. It uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.

The 15-year fixed-rate average climbed to 2.93 percent with an average 0.8 points. It was 2.77 percent a week ago and 2.19 percent a year ago. The five-year adjustable rate average rose to 2.8 percent with an average 0.3 points. It was 2.71 percent a week ago and 2.79 percent a year ago.

Read more (Washington Post subscription may be required.)

Inflation Spiked 7.5% In January—Hitting Nearly 40-Year High

Consumer prices rose 7.5% in the 12 months ending in January, according to data released Thursday by the Labor Department, climbing more than economists expected amid an inflationary surge that’s pushed the Federal Reserve to ease its pandemic-era stimulus more quickly than previously anticipated.

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Fed Designs Digital Dollar That Handles 1.7 Million Transactions Per Second

As the race against China’s development of its central bank digital currency (CBDC) known as the digital yuan continues, the U.S. Federal Reserve accomplished a feat in testing a design for a U.S. digital dollar that in one of two tests, managed to handle 1.7 million transactions per second.

A report released last Thursday provided the initial findings of research conducted as a collaboration between the Boston Fed and the Massachusetts Institute of Technology (MIT). Dubbed ‘Project Hamilton’, the report describes a theoretical high-performance and resilient transaction processor for a CBDC that was developed using open-source research software called ‘OpenCBDC’.

According to the Fed’s Report, a core processing engine for a hypothetical general purpose CBDC was created that produced one code base capable of handling 1.7 million transactions per second. According to the Fed, the vast majority of transactions reached settlement finality in under two seconds.

"It is critical to understand how emerging technologies could support a CBDC and what challenges remain," said Boston Fed Executive Vice President and Interim Chief Operating Officer Jim Cunha. "This collaboration between MIT and our technologists has created a scalable CBDC research model that allows us to learn more about these technologies and the choices that should be considered when designing a CBDC."

The Fed revealed the design of the CBDC transaction processor was also released on GitHub. According to the Boston Fed, the second phase of Project Hamilton will demonstrate how OpenCBDC will build upon the initial model to allow flexibility in design that will incorporate how policymakers may implement an actual CBDC.

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Risk Management

CISA Issues Alerts Relating to Russian Cyberthreats, Ukraine Cyber Incidents

The U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) issued two alerts addressing risks from Russian State-Sponsored cyber threats and highlighting recent malicious cyber incidents suffered by public and private entities in Ukraine.

DHS Launches Cyber Safety Review Board

The U.S. Department of Homeland Security has announced the establishment of the Cyber Safety Review Board (CSRB), as directed in President Biden’s Executive Order 14028 on Improving the Nation’s Cybersecurity. The CSRB is a public-private initiative that will bring together government and industry leaders to elevate national cybersecurity. The CSRB will review and assess significant cybersecurity events so that government, industry, and the broader security community can better protect the country's networks and infrastructure. The CSRB’s first review will focus on the vulnerabilities discovered in late 2021 in the widely used log4j software library. The CSRB is composed of 15 highly esteemed cybersecurity leaders from the federal government and the private sector.

Education / Training

CUNA IRA Advanced eSchool Provides Guidance on Complex Issues

CUNA IRA Advanced eSchool, to be held Fridays from Feb. 25 through April 15, will help credit union staff assist members with complex IRA needs including death, trusts, distributions and other legal issues.

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