CURRENT Newsletter | 8 January 2021 - Virginia Credit Union League

The 2021 Virginia General Assembly session kicks off Jan. 13 and your League has for months been preparing for a session that will be unlike any we have previously seen. Coming off a months-long special session, Republicans in the Senate and House of Delegates intend to keep the session to the 30-day constitutional limit.

The legislature typically extends short sessions to 45 days, but any extension requires approval from two-thirds of both chambers. A 30-day session poses logistical challenges in moving bills through committees and out of each chamber in two weeks – all while meeting virtually. Both chambers have set bill limits. Each Delegate may introduce seven bills and each Senator may introduce 12.

This session will see lawmakers tackle several major issues, including funding for schools to address COVID-19, various budget priorities identified by the governor and lawmakers, criminal justice reform and recreational marijuana use.

There is a long list of pre-filed bills we are reviewing for their impact on credit unions.

Financial Institution Regulators to Host PPP Relaunch Webinar Jan. 11

Last week, following the enactment of Phase 4 coronavirus relief provisions, the Small Business Administration (SBA) has released two new interim final rules (IFRs) to address changes to the paycheck protection program (PPP) made by the Economic Aid Act, as well as guidance for providing minority, underserved, veteran, and women-owned businesses with access to capital through the program.

Learn more

Bankruptcy & Collections Training Jan. 12 & 13

Much has happened over the last few months that directly impact your Collections Department. From understanding the virtual workflow to new ways to assess default risk and improving your collections calls to understanding your rights in bankruptcy, our informative and interactive Bankruptcy & Collections Training session (Jan. 12 and 13) is sure to have something for you!

Sharpen your collections skills and better position your credit union to assist troubled members who want to work with you during these unprecedented times and maximize the recovery from everyone else.

This virtual training program is hosted by the Kentucky Credit Union League.

Learn more / Register

Overdraft Services Webinar: 10 High-Risk Issues You Need to Address

Join us a for a Jan. 13 webinar through TRGroup for a discussion of overdraft-related risks, including:

Per item per time issues
Debit Card Pending Issues—what are good funds?
Timing of disclosures when you open accounts off-premise
Opt-In and Opt-Out Procedures for one-time debits and ATM transactions
The Regulations, the guidance, the exam

2021 and Your CU: Why Text Messaging is Essential

An astounding 76% of consumers say they prefer to interact via a channel like texting. So, meet your members where they are looking to be met. Doing so will heighten your member experience and deepen your relationship with them. Join us Jan. 13 at 2:30 p.m. for a TRGroup-sponsored webinar from Eltropy CEO and founder Ashish Garg, who will share how Eltropy’s secure and compliant platform can aid your Credit Union in communicating effectively into 2021 and beyond.

Small Credit Unions: CUNA Mutual Group Providing 13 GAC Scholarships

Thanks to CUNA Mutual Group, small credit unions have a chance to win one of 13 scholarships to CUNA’s Governmental Affairs Conference, which is being held virtually March 2-4.

Learn how to qualify for one of these scholarships.

Advocacy / Governmental Affairs

What a New Democrat-Controlled Congress Could Mean for Credit Unions

With the final tally in Georgia’s special election tipping the Senate to Democratic control by the razor-thin margin of VP-Elect Kamala Harris’ tie-breaking vote, analysts are now focused on what it might mean moving forward, including for credit unions.

Two areas credit unions will be watching are federal laws related to cannabis and additional stimulus/legislation for electric vehicles, in addition to other changes at the agency level, such as the CFPB.

As more and more states have legalized cannabis usage over the last decade credit unions and their trade groups have pressed Congress to change federal laws that make cannabis illegal. As a result, most credit unions have declined to serve cannabis-related businesses due to the federal threat, while those that have taken the risk have gone to great—and expensive—lengths related to compliance.

Democrats have been more inclined to change federal law, and members of both parties have found the potential income from taxation to be another reason for making the change.

Wall Street is already anticipating a more favorable environment for cannabis businesses. CNN Business reported cannabis-related stocks have soared in the wake of President-Elect Joe Biden’s election and the expansion of legalized marijuana for recreational and/or medical use by voters in several more states.

Learn more

Compliance / Regulatory Affairs

Next Step in AML Overhaul: Simplify SARs

As the 20th anniversary of the USA Patriot Act approaches, reform of the Bank Secrecy Act and anti-money-laundering regulation is on the horizon.

Congress recently passed the Anti-Money Laundering Act of 2020 as part of an annual military spending bill, paving the way for sweeping changes to an AML compliance framework that has remained mostly unchanged for decades. Fincen has unveiled various innovation programs and requested comment on its own set of foundational changes to AML regulations. And the federal banking agencies updated their BSA/AML exam manual and, alongside Fincen, issued guidance to “enhance transparency” regarding enforcement.

That reform is necessary should surprise no one.

Financial institutions in the United States reportedly spend upward of $25 billion each year to maintain their financial crimes compliance. A report from the U.S. Government Accountability Office last September estimated that small banks dedicate on average about 2% of operating expenses specifically to BSA/AML compliance — with the smallest banks facing disproportionately higher burdens — and that programs for reporting suspicious activity are among the most costly.

At the same time, although banks alone filed more 1.1 million suspicious activity reports in 2019, few would dispute that only a small number of those SARs will prove valuable to law enforcement.

Recommendations for relieving these burdens abound and perhaps nowhere more than in the SAR context. In fact, in December the Federal Deposit Insurance Corp. announced a proposed rule designed to foster innovation in banks’ SAR compliance programs. But one straightforward reform with potentially substantial benefits is rarely discussed: revoking the federal banking agencies’ standalone SAR regulations altogether. (American Banker, Jan. 6)

NCUA Board to Issue RBC Proposal, ANPR at Jan. 14 Meeting

The NCUA board will propose a risk-based net worth rule to raise the asset threshold for defining a credit union as complex, among other items, at its Jan. 14 meeting agenda. The board will also hear a briefing on the Consolidated Appropriations Act of 2021, a summary of which the agency released this week.

The meeting is scheduled to begin at 10 a.m. (ET), and will be live-streamed on NCUA.gov.

The complete agenda is:

Board briefing, ACCESS Initiative;
Proposed rule, Part 712, Credit Union Service Organizations;
Board briefing, final rule, Part 747, statutory inflation adjustment of civil monetary penalties;
Final rule, Part 704, corporate credit unions;
Notice of proposed rulemaking, Parts 700, 701, 703, 704 and 713, CAMELS rating system;
Proposed rule, Part 702, risk based net worth, complex threshold;
NCUA’s 2021 Annual Performance Plan;
Board briefing, Consolidated Appropriations Act, 2021; and
Advance notice of proposed rulemaking, Part 702, simplification of risk-based capital requirements.

Learn more

NCUA Issues Letters to FCUs: Community Charter Conversions & Expansions, Operating Fee Schedule Adjustments

The National Credit Union Administration (NCUA) recently issued two letters to federal credit unions. The first provides updated guidance and templates in a letter to federal credit unions (21-FCU-01) to assist federal credit unions seeking to convert to a community field of membership or expand their existing community field of membership.

The second details the NCUA Board’s approved changes to its regulations and associated methodologies for computing the annual operating fee charged to federal credit unions, as well as the resultant Operating Fee Schedule for 2021.

NCUA Provides Summary of the Consolidated Appropriations Act, 2021

The National Credit Union Administration (NCUA) yesterday issued a letter to credit unions (21-CU-01) on its Summary of the Consolidated Appropriations Act, 2021. The letter provides information about the provisions of the Consolidated Appropriations Act, 2021 that directly affect credit unions and their members.

Learn more

Education / Training

CUNA Announces New Way to Earn Enterprise Risk Management Designation

CUNA announced a new option to earn the Credit Union Enterprise Risk Management Expert (CUERME) designation virtually. CUNA Enterprise Risk Management Certification eSchool will consist of seven sessions held on Mondays and Thursdays from February 1-22, except on Presidents Day (February 15).

“CUNA Enterprise Risk Management Certification eSchool provides in-depth, credit union-specific training on the core components of a sound enterprise risk management (ERM) program,” said Melisa Kallestad, director of compliance education, CUNA. “Attendees will gain the knowledge to implement and support a robust ERM framework that improves risk decision-making and oversight, enabling their credit union to open up new financial possibilities for more members.”

Students will learn to understand risk identification, scenario development and assessment from industry experts at Rochdale Paragon Group. They will also participate in group exercises and meet and network with other credit union risk professionals.

For more information, visit cuna.org/ermes.

Operations

CUNA Announces New Culture Assessment for CUs

CUNA announced today a new offering for credit unions to get the pulse of their credit union and elevate their overall culture to position it for success.

CUNA Culture Action Plan provides credit unions an unbiased and holistic view of their organizational culture with staff and members along with analysis and action steps to enhance working with all stakeholders. This assessment is more important now than ever because of the changes that have been brought on due to the pandemic.

“CUNA is making this assessment available to assist credit unions in navigating their culture for growth during this time that we’re facing COVID-19 and employees working from home,” said Kristin Ryan, director of learning events for CUNA. “This assessment identifies specifically what in your culture, is keeping you from delivering consistently outstanding experiences and how to position your culture to do it in the future.”

Credit unions engaging in CUNA Culture Action Plan will benefit from evaluating 10 core areas spanning staff and member experiences to build a common approach and language to leverage strengths, close gaps and drive credit union growth.

For more information on the assessment, please visit cuna.org/cultureactionplan.

Financial Services / Economy

Clarida: US Outlook 'Brightened' But No Rush to Reduce Fed Support This Year

The U.S. economy's 2021 prospects have "brightened" as COVID-19 vaccines begin to be rolled out, although the next few months will continue to be challenging, Fed Vice Chairman Richard Clarida said Jan. 8.

The U.S. could see some "very, very impressive growth" later in the year assuming vaccines are widely distributed over the next few months, Clarida said, though he indicated the Fed is in no hurry to start reducing its support for the economy this year.

"While the recent surge in new COVID cases and hospitalizations is cause for concern and a source of downside risk to the very near-term outlook, the welcome news on the development of several effective vaccines indicates to me that the prospects for the economy in 2021 and beyond have brightened and the downside risk to the outlook has diminished," he said.

Clarida spoke hours after the latest U.S. jobs report showed job losses of 140,000 in December, the first decline since the record loss of nearly 21 million jobs in April.

The report was "disappointing" but not a surprise, given that the surge in COVID-19 cases has prompted more declines in the leisure and hospitality sectors, Clarida said. More positive items in the report included increases is construction and manufacturing jobs, as well as positive revisions to prior months.

"If you add all that together [it was] clearly a step back in December … but right now not something that I would expect to continue into the new year," Clarida said. (S&P Global Market Intelligence, Jan. 8)

Many Americans Expected to Save, Not Spend, Most Recent Stimulus Payments

The recent stimulus funds that recently hit many members’ savings and checking accounts is unlikely to flow back out, according to one national report. For credit unions, it will mean ongoing strains for loan-to-share ratios and capital levels.

“…The reality is that most Americans right now are much more likely to save the money they receive,” reported the New York Times. That analysis gels with a report in CUToday.info in mid-December in which Moebs $ervices reported that of the $3.4 trillion in stimulus money from April, much of it is still in deposit accounts at financial institutions, and a large percentage is in checking—$1.3 trillion or 38.3%.

The Times report included interviews with numerous people who said they had no real need for the funds. But it also noted many have a dire need.

“Of course, the money will be a lifesaver for the roughly 20 million people collecting unemployment benefits and others who are working reduced hours or earning less than they used to,” the Times reported. “Yet, for the majority of the estimated 160 million individuals and families who will receive it, spending the money is expected not to be a high priority.”

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