CURRENT Newsletter | 23 March 2021 - Virginia Credit Union League

Many credit unions are asking how to keep their employees safe at work from COVID-19. On January 27, 2021, the Virginia Department of Labor and Industry (DOLI) enacted a Permanent Workplace Safety Standard that answers this question.

This article from our partner law firm -- Woods Rogers -- summarizes what credit unions must do to comply with this law. The good news is most CUs already took many of the steps needed for compliance. However, the Permanent Safety Standards add some new formal requirements.

Among the updates you'll want to address:

Updated Preparedness and Response Plans and employee training (or re-training) are required by March 26, 2021.
Employers may need to change their policy on masks.
Return-to-work policies may need to be updated.
Notifications to the Virginia Department of Health (VDH) for Positive COVID tests

Read the Woods Rogers Guidance (League website password required. Register here if you need one.)

March 24 NCUA Webinar Will Cover COVID-19 Credit Risk Issues

NCUA is hosting a webinar on March 24 about potential areas of credit risk resulting from the COVID-19 pandemic.

“COVID-19 has had a significant impact on the economy, credit unions, and their members,” NCUA Chairman Todd M. Harper said, “Going forward, the top priority for the NCUA will be ensuring that credit union members, the credit union system and the Share Insurance Fund are prepared to weather any economic fallout related to the pandemic. I encourage credit unions to take advantage of our webinar to learn more about how they can minimize potential risks to their balance sheets.”

Online registration is now open for the “Pandemic-Related Credit Risks for Credit Unions” webinar. The webinar is scheduled to begin at 2 p.m. and run approximately for 60 minutes.

Topics that will be covered during the webinar include:

Credit markets’ status;
Current federal regulations;
What NCUA examiners look for;
Suggestions on reporting risk to a credit union’s management and board; and
Advice for proactively managing credit risks.

Source: NCUA

Free Webinar March 25: Boost Interchange Income, Reduce Expenses and Ready Your CU for the Future

Learn how your credit union can maximize its interchange income, reduce expenses and plan for future solutions -- all through a strong network optimization plan! The “Durbin world” has been around for a while, but it’s not always easy to navigate, so let our partners at Fiserv help you!

We’re providing free training on March 25 on “Network Optimization” strategies with Carol Specogna and Patti Bart- Jagodzinski.

Let’s Have an Uncomfortable Conversation: Diversity, Inclusion & Bias

Where are you in your diversity journey? Find out by joining us for The No Nonsense Experience, starting Thursday, May 6.

Offered as a one-hour, weekly course May 6-27, The No Nonsense Experience will be guided by a team of expert facilitators from JP Enterprises, and will focus on building conversation skills around your thoughts, intentions, actions and behaviors regarding Diversity, Inclusion and Bias.

Learn more / Register

Online Training for Supervisory Committees

Popular credit union consultant Ancin Cooley has created a web-based course for supervisory committee members, offering the most comprehensive overview of the role, duties, responsibilities and resources available to committee members. The five modules offer you a fun, interactive learning experience with bonus content and even quizzes to test your content retention.

Learn more
Register Now (Your League is offering volume discounts for multiple registrations from the same credit union. Use our registration to ensure you receive the discount.)

Credit Union Philosophy Workshops

The Foundation will host four online Exploring Why™ Workshops tailored to important audiences within the credit union movement. These workshops provide a cooperative learning environment that builds an understanding of the credit union difference and how we can leverage that difference to improve our organization’s culture and service. The audiences and workshop dates are:

Thursday, May 27 - Board of Director - REGISTER
Thursday, June 24 - Young Professionals - REGISTER
Wednesday, July 14 - CUSO Employees - REGISTER
Tuesday, July 27 - New Employees - REGISTER

The Credit Union Difference is about building a connection to our roots, our purpose, our values and how we live those values every day. The Foundation believes that credit unions only grow stronger when all people across the movement and within our organizations have a deeper understanding of what the credit union difference is and how they connect to it.

Learn more

Compliance / Regulatory Affairs

CUNA/Leagues Call for PCA Relief

CUNA and Leagues called on the NCUA board to adopt an interim final rule to provide Prompt Corrective Action (PCA) relief. The 2020 interim final rule (IFR) on PCA expired December 31, 2020.

“We ask the NCUA to adopt an IFR essentially identical to the 2020 IFR adopted last year that provided relief to credit unions experiencing PCA issues related to an increase in share growth,” the letter reads. “The relief should remain in effect until the end of the pandemic as determined by the Centers for Disease Control (CDC) or other federal entity authorized to make such a determination.”

The previous interim final rule provided credit unions PCA relief by:

Permitting the NCUA Board to issue an order to temporarily waive the earnings retention requirement for any credit union classified as adequately capitalized; and
Permitting credit unions to submit simplified net worth restoration plans if the reduction in capital was caused by share growth resulting from a temporary condition due to the pandemic.

Along with PCA relief, CUNA and Leagues are asking the NCUA to temporarily exclude certain assets from net worth ratio.

Learn more

Fed’s Quarles Aims to Clear Up Confusion About Libor Deadline

The Federal Reserve continues to encourage credit unions and other financial institutions to stop writing contracts using the London Interbank Offered Rate, or LIBOR, by the end of 2021. After that, the one-week and two-month LIBOR rates for short-term borrowing will no longer be published.

Federal Reserve Vice Chair of Supervision Randal Quarles said examiners will be looking at FIs' specific exposures to the transition away from Libor, which will no longer be published after Dec. 31 of this year. The Fed will be interested in whether banks are updating contractual language and operating rules with vendors who have relied on Libor, he said.

Quarles said despite guidance in November from the Fed and other U.S. regulators about Libor’s end date, some are not getting the message.

“Market participants have had many years to prepare for the end of Libor, yet over the last few years they have actually increased use of Libor,” Quarles said.

And, even though the LIBOR administrator announced in late November 2020 that it will publish the remaining dollar-denominated LIBOR rates through the end of June 2023 to allow legacy contracts to mature, credit unions should begin preparing now for the transition to a new benchmark.

The Secured Overnight Financing Rate (SOFR) is expected to replace the LIBOR reference rate for U.S. transactions, and LIBOR users are understandably anxious about the conversion. After all, LIBOR has been around for decades and is the most widely used short-term lending benchmark in the world. (American Banker, March 22)

Pandemic Response

New Interim Rule on PPP Leads to New Application Forms for Borrowers, Lenders

Following the issuance of an interim final rule to incorporate changes made to the Paycheck Protection Program (PPP) by the American Rescue Plan Act, the Small Business Administration (SBA) has published new application forms for borrowers and lenders.

The IFR detailed changes to:

Eligibility, size, affiliation waivers, and certifications requirements for various types of businesses and grants
Forgiveness of first- and second-draw PPP loans related to payroll cost exclusions

The SBA has also subsequently released revised application forms for:

Lenders for PPP loan guarantees for first- and second-draw loans
Schedule C filers using gross income for both first- and second-draw loan applications (learn more about the Schedule C filer changes here)
General PPP borrowers for first- and second-draw loans.

Pandemic Hearings, Consideration of PPP Extension This Week

Both chambers of Congress are in Washington, D.C. this week, with the House scheduled for a committee work week. CUNA will be engaged with multiple hearings, including on several related to pandemic policies and relief.

The Senate is expected to consider the House-passed Paycheck Protection Program (PPP) Extension Act of 2021 (H.R. 1799), which would extend the PPP through June 30. It is currently scheduled to expire March 31.

Learn more

News From Credit Unions

Chartway Federal Credit Union Welcomes Jon Savio, Vice President of Finance

Chartway Federal Credit Union is proud to welcome Jon Savio to serve as its vice president of finance. Savio joins Chartway following more than 20 years of asset-liability management, investment portfolio management, balance sheet strategy, financial reporting, and credit union experience.

Learn more

ValleyStar Credit Union Announces Hiring of Its First-Ever Chief Experience Officer

ValleyStar Credit Union announces Karen DeSalvo as its first chief experience officer (CXO) to further the Credit Union’s vision “to improve the quality of life and the financial well-being of our members, community and employees.”

Learn more

Training / Education

Expanding Your Service to the Hispanic Community as a CDFI Credit Union

Inclusiv, in collaboration with Coopera Consulting and Border Federal Credit Union, invite you to join us on for our first Juntos Avanzamos Webinar of 2021: Expanding Your Service to the Hispanic Community as a CDFI Credit Union.

?We extend a special invitation to credit unions that have the NCUA MDI designation, and those that serve the Hispanic community and are interested in CDFI certification eligibility. The webinar is free of charge and open to all credit unions.

“Expanding Service to the Hispanic Community: CDFI Certification” is slated for March 25, 2 p.m.

Financial Services / Marketplace

Fed Rule Change Could Push Deposit Growth Downstream as New Surge Builds

Deposits have continued to accumulate ahead of what could be a second epic surge during the pandemic era. But the Federal Reserve's decision to sunset an emergency relaxation of capital rules could channel some of the growth away from the biggest banks to smaller competitors and money market funds.

The Treasury Department, which had about $1.6 trillion in its account at the Fed at the beginning of the year, has started drawing funds as it distributes aid under President Joe Biden's $2 trillion relief package — including roughly $250 billion in direct checks to households that the government said had already gone out the door by March 17. Along with $120 billion of bond purchases by the central bank each month, FIs' holdings of reserves, and their balance sheets, could pop again in the coming months. (S&P Global Market Intelligence, March 23)

Northam Extends Due Date for Virginia Income Taxes to May 17

Virginia Gov. Ralph Northam (D) said Friday that he has extended the deadline for filing state income tax returns to May 17 to align it with the extended deadline for filing federal income taxes.

Virginians usually must file their taxes by May 1. The federal due date is usually April 15 but was extended this year by the Internal Revenue Service to give taxpayers extra time to adjust to uncertainties created by the coronavirus pandemic. (Washington Post, March 19)

IRS Will Send Second Round Of Stimulus Payments This Week—Including Paper Checks And Debit Cards

The Internal Revenue Service announced Monday that it will begin sending out the second batch of $1,400 stimulus payments this week, this time via paper checks and prepaid debit cards sent through the mail as well as by direct deposit.

Mortgage Rates Keep Climbing, Hit Nine-Month High

Mortgage rates continued their upward march this week, propelled higher by rising long-term bond yields.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average rose to 3.09 percent with an average 0.7 point. The 30-year fixed average, which began the year at 2.65 percent, has gone up 44 basis points. (Washington Post, March 18)

What's Keeping America's Top Economists Up at Night

There's a reason economics is frequently called the "dismal science."

What's happening: The US economy is on track for a boom, with the Federal Reserve predicting last week that it would expand by 6.5% this year. That would mark the fastest growth since 1984, when Ronald Reagan was serving his first term as president.

But a survey of the country's top economists published by the National Association for Business Economics on Monday shows that many in the field are still worried about what could be coming down the pike. A majority of the 205 members surveyed said they believe risks to inflation are greater than those seen in the past two decades.

Almost half of NABE respondents think the central bank could roll back some stimulus measures by the end of 2022, while 40% don't think that will happen until at least 2023.

Learn more

‘We Don’t Need to Rush’ on Fed Digital Dollar, Powell Says

Though Democratic leaders have endorsed the concept of a government-operated digital currency to give underserved consumers more banking options, Federal Reserve Chair Jerome Powell indicated the central bank will take its time to study the idea before moving forward.

Speaking on a virtual panel hosted by the Bank for International Settlements Monday morning, Powell said it is better to weigh all the factors that would go into a central bank digital currency than racing to become the first county to offer one to the public.

As soon as July, officials at the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology, which have been developing prototypes for a digital dollar platform, plan to unveil their research, said James Cunha, who leads the project for the Boston Fed.

A digital currency could fundamentally change the way Americans use money, leading some financial firms to lobby the Fed and Congress to slow its creation — or at least ensure they're not cut out. (American Banker, March 22)

Merchants Respond to DOJ Probe of Visa Debit Card Practices

The Justice Department is reportedly exploring whether Visa’s debit card practices are anti-competitive, and merchants say an investigation is long overdue.

The primary focus of inquiries conducted by the agency’s antitrust division is whether Visa’s policies limit merchants’ ability to choose the lowest-cost approach to routing debit card transactions online, according to Friday reports in the The Wall Street Journal and Bloomberg News. (American Banker, March 19)

Risk Management

Another CU Hit With Overdraft Lawsuit

Another credit union is facing a lawsuit that alleges unfair overdraft practices. This time it’s the $391-million Credit Union of New Jersey, Ewing, N.J., that’s being accused of “deceptive” and “unfair” practices based on the language in its overdraft contract, according to the complaint.

The complaint alleges the credit union has violated the promise it made to account holders that overdraft fees would only be enforced when an account does not have enough funds to cover a transaction.

Learn more

CUNA Mutual Group Resources:

CUs Face New Threats of Lawsuits Related to Overdraft Fees (May 2020)
Overdraft / NSF Fee Demand Letters and Lawsuits Continue (May 2020)
Spike in Overdraft / NSF Fee Demand Letters Witnessed By Credit Unions (August 2019)
Overdraft / NSF Fee Lawsuits Again Target Credit Unions (April 2019)
Credit unions Face Overdraft Fee Lawsuits (July 2018)

CUs, Banks Allegedly Used for Illegal $10 Million Virtual Currency Exchange Business

A six-person New Hampshire crime ring allegedly scammed credit unions and banks into opening accounts claiming they represented religious organizations. In reality, the phony churches were fronts for operating accounts to support an illegal $10 million virtual currency exchange business, federal prosecutors alleged in a 20-felony count indictment on Monday filed in U.S. District Court in Concord, N.H.

Learn more

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