Source: http://nafcucomplianceblog.typepad.com/nafcu_weblog/reg_d/
Timestamp: 2018-04-21 19:05:42
Document Index: 398641786

Matched Legal Cases: ['art 3', 'art 1', 'art 2', '§204', 'art 2', 'art 1', 'art 1', 'art 3', 'art 2', 'art 707']

NAFCU Compliance Blog: Reg D
Posted by NAFCU on October 24, 2016 in NCUA, Reg D, Regulatory Compliance Seminar | Permalink | Comments (1)
NAFCU's 2012 Report on Credit Unions
Yesterday was NAFCU's 20th annual visit to the Federal Reserve to discussed credit union issues. As part of the meeting, NAFCU prepared its 2012 NAFCU Report on Credit Unions. I encourage you all to take a look and, perhaps, use it for your own Board briefings or management meetings. For example, the Report includes the following on Reg D:
"Regulation D
An ongoing concern for NAFCU and its members is the outdated restriction on “convenience transfers” under Regulation D. The current law is burdensome and confusing for depositors that wish to have unfettered access to their funds. It is unreasonable to expect consumers to understand and remember the arcane limits on the number and type of transfers that are allowed from their savings account. The rule is outdated, and as a consequence, the restrictions on transfers are incoherent to even the most knowledgeable consumers. It would be helpful to consumers if the regulation was modified to reflect the current financial services environment.
In an electronic era where consumers demand the ability to transfer funds easily to and from particular accounts, the arbitrary limitation on six transfers from a savings account creates an undue burden for consumers and financial institutions alike. NAFCU believes that the six transfer limitation could be increased and still maintain a distinction between savings and transaction accounts. NAFCU strongly supports increasing the limit to at least nine convenience transfers per month." [Page 16]
The Regulatory Issues Facing Credit Unions section begins on Page 15 of the Report and also includes sections on Debit Card Interchange Fees; the CFPB; Remittances; TILA/RESPA Integration; HOEPA loans; MLO compensation; Mortgage Servicing; Appraisals; Qualified Mortgages and plenty more.
Posted by NAFCU on December 04, 2012 in Reg D, Van Beek | Permalink | Comments (0) | TrackBack (0)
Overdrafts: Linked Accounts and Regulation D - Part 3; Reg D Statement Insert
Happy Friday everyone! I wanted to continue our exploration of linked accounts and Regulation D. You can find Part 1 here and Part 2 here.
I'm sure there are a few folks wondering what has gotten Van Beek so worked up over this linked account and Regulation D issue. Is he really that adamant about the CFPB informing consumers about potential transaction limitations from Regulation D? Yes - but there is more.
Existing Exception to Regulation D. There is an exception in Regulation D which indicates a transaction to repay a loan at the same institution is not considered a Regulation D transaction. Thus, if your member makes an automatic monthly payment to their car loan from their savings account - this is not a Reg D transaction.
So why doesn't the Federal Reserve treat transfers from savings to cover an overdraft in the same manner? This is what I'm trying to find out. This is what I want the CFPB to ask the Federal Reserve. This is what would help consumers and credit unions (not to mention the benefits from the reduced headaches to compliance officers).
Shall we take a look at the lovely language of Regulation D? [Now is the time for a coffee refill]
Here is from 12 CFR 204.2(d)(2) - the definition of "savings deposit":
"(2) The term “savings deposit” also means: A deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA), that otherwise meets the requirements of §204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle (or similar period) of at least four weeks, to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order or instruction, or by check, draft, debit card, or similar order made by the depositor and payable to third parties. A preauthorized transfer includes any arrangement by the depository institution to pay a third party from the account of a depositor upon written or oral instruction (including an order received through an automated clearing house (ACH)) or any arrangement by a depository institution to pay a third party from the account of the depositor at a predetermined time or on a fixed schedule. Such an account is not a transaction account by virtue of an arrangement that permits transfers for the purpose of repaying loans and associated expenses at the same depository institution (as originator or servicer) or that permits transfers of funds from this account to another account of the same depositor at the same institution or permits withdrawals (payments directly to the depositor) from the account when such transfers or withdrawals are made by mail, messenger, automated teller machine, or in person or when such withdrawals are made by telephone (via check mailed to the depositor) regardless of the number of such transfers or withdrawals." (emphasis added).
Why is Reg D so confusing? Perhaps a discussion for another blog post.
Existing Exception for Repaying Loans. It's right there buried in the middle of the definition of savings deposit. Note the key - it must be a transfer to repay a loan at the same depository institution. A member's transfer, from savings, to repay a mortgage loan at your credit union is not a Reg D transaction. A member's transfer, from savings, to repay a mortgage loan at a bank across the street would be a Reg D transaction.
Back to the heartburn issue - why doesn't the Federal Reserve provide clarification that transfers from savings accounts to cover overdrafts from accounts at the same depository institution are not Reg D transactions?
I'm not sure there is good answer to this question. Perhaps they haven't thought of it. Perhaps there hasn't been another Federal regulator asking them to consider making this clarification to help consumers understand and manage their account activity.
One thing is clear - the current version of Regulation D is not doing consumers or credit unions any favors. The CFPB has the power to pick up the phone, call the Fed and ask them to get on board and make life easier for all involved.
NAFCU Members: We have a free Regulation D statement insert that is available as a NAFCU member benefit. You can see the PDF here. Additional free statement inserts for NAFCU members are here.
This statement insert might be useful to provide to members who consistently bump up against the Reg D transaction limitations. Providing this as a statement insert (or dropping it in the mail after a member calls with a concern) might be a good way to improve member understanding of Reg D.
Posted by NAFCU on March 02, 2012 in CFPB, ODP, Reg D | Permalink | Comments (2) | TrackBack (0)
Overdrafts: Linked Accounts and Regulation D - Part 2
We received some great feedback on Part 1 of Linked Accounts and Regulation D - including some great questions. Let's delve into this area a bit more - including a preliminary question.
Treating Savings Accounts as Transaction Accounts. A couple of commenters asked if their credit unions could treat their savings accounts as transaction accounts - and reserve accordingly. Yes, credit unions do have the ability to treat their savings accounts as transactions accounts and allow unlimited transactions from those accounts.
The trade-off is unlimited transactions from savings accounts so long as the CU reserves for those accounts as well.
Back to the CFPB's discussion of "linked accounts." Remember, here is Part 1 from yesterday. Here is how the CFPB described linked accounts in their blog post:
"Link your checking account to a savings account. If you overdraw your checking account, money will be taken from your linked savings account to cover the difference. You may be charged a transfer fee when this happens, but it is usually much lower than the fee for an overdraft."
This is just a casual mention of the ability to link accounts so I'm not too worried about the lack of any information regarding potential transaction limitations under Regulation D.
Penalty Fee Box. Let's move on to the CFPB's prototype "Penalty Fee Box" disclosure. The first page of this document has been getting all the press - but take a look at Page 2 (scroll down or click here). The second page includes "Three Ways to Lower these Fees" and a brief description of each method. Here is the section on "linked accounts":
"Link a savings account to your checking account.
When you overdraft your checking account, any available money will be automatically transferred first from your savings account to avoid overdrawing your account. A $5 transaction charge applies for each automatic transfer."
There is also a notation which would indicate whether or not the member currently has their accounts linked.
Again - no mention of any potential transaction limitations from Regulation D.
Why is this such a big deal? In the grand scheme of things, this isn't the biggest issue. But let's follow an example of how this could play out in the future (followed by my commentary).
The CFPB continues to encourage members to link their accounts (no problems here);
There is no mention of any potential transaction limitations (potential issue);
Member A links his accounts (no worries here);
Over the next few months, Member A occasionally overdraws his checking account and funds are transferred from his savings account each time (no worries here - this is how the set-up is supposed to work);
In August, Member A goes on a two-week vacation and overdraws his checking account 6 times during the vacation (uh-oh, Member A is up against the Reg D limit);
Later in August, Member A tries to make an online transfer from his savings account to his checking account (a Reg D transaction) which is blocked because he is at his transaction limitation for the month (big problem here).
Who does Member A call when he is furious over the inability to conduct an online transfer of funds from his savings account to his checking account? Your credit union. Member A isn't placing a call to the CFPB, yet. Depending on how frustrated Member A is, he may decide to file a complaint against your credit union to the CFPB or NCUA.
What's worse? Member A's inability to transfer these funds could actually result in additional issues with his checking account. If Member A is unable to transfer these funds - his checks might start to bounce or ACH transactions get returned.
I'm not trying to present a dooms-day scenario or indicate that linked accounts are bad. Linked accounts are great options for consumers and I know quite a few credit unions offer them as the first option in the case of an overdrawn account.
But - look how this situation played out. The CFPB's discussions haven't mentioned Regulation D. Consumers don't know very much about Regulation D and are consistently flummoxed by explanations about why they cannot access their funds in certain ways (i.e., "explain to me again why I can't transfer my own money from one of my accounts to the other").
The short version: To help ensure everyone – especially consumers – are aware of the potential transaction limitations for savings account, the CFPB should take a hard look at providing information about these transaction limitations to consumers when discussing linked accounts
I've gone and done it again. I promise you this is not some master plan to keep you on the edge of your seats for the next installment of "Linked Accounts and Regulation D." However, this post is already very long so we'll address a couple of other issues in an upcoming Part 3.
Posted by NAFCU on March 01, 2012 in CFPB, ODP, Reg D | Permalink | Comments (1) | TrackBack (0)
I must confess - I haven't made it through all of the CFPB's Overdraft information from last week. I did want to discuss one issue that jumped out at me when I first glanced at the material and heard the CFPB roundtable on overdrafts.
Linked Accounts. One of the alternatives the CFPB (and others at the roundtable) mentioned was the option of members being able to "link" their checking and savings accounts. By doing this, if a member overdrew their checking account the funds would automatically transfer from the member's savings account.
Of course, this is by no means a silver bullet. In order for this to work, the member would need to have enough funds in their savings account to cover the overdrawn amount. While this is sometimes the case, it isn't always the case.
Assuming a member has enough funds in their savings account to cover the overdrawn transactions from the checking account, there is another issue that seems to float under the radar whenever overdrafts and linked accounts are discussed.
The Quandary. Regulation D did not transfer to the CFPB as it is not a consumer regulation. The Federal Reserve retained authority over Regulation D and has been resistant to numerous calls to expand the six-transaction limitation on savings accounts (although they did remove the antiquated 3/6 distinction a few years ago). Sidenote: A portion of NAFCU's latest letter to the Fed on Reg D can be found in this January 17 blog post.
Here are a couple of questions that I have for the CFPB:
To me, these are incredibly important questions to ask. First, credit unions and other financial institutions do not operate in a "one regulation" environment. It seems that every potential action a credit union makes is impacted by one regulation or another (or multiple).
This overdraft issue is a perfect example - the CFPB wants consumers to link their accounts but have they thought about Regulation D? I sure hope so but I'm afraid that sometimes regulators get "tunnel vision" and only focus on their regulations.
I wanted to add a bit more but this post has gotten a bit lengthy so we'll have Part 2 tomorrow. Stay tuned.
Posted by NAFCU on February 29, 2012 in CFPB, ODP, Reg D | Permalink | Comments (0) | TrackBack (0)
With all the discussion of the CFPB's republishing of the consumer regulations, I thought it would be a good idea to also highlight some of the regulations that did not transfer to the CFPB.
In December, we discussed how NCUA would retain Truth in Savings - Part 707 for credit unions.
There are also quite a few Federal Reserve regulations that did not transfer to the CFPB. The rationale being that these regulations do not implement the "enumerated consumer laws" and, thus, didn't fall under the CFPB's authority.
Here is a list with links to some of the Federal Reserve regulations that did not transfer to the CFPB:
Regulation II - Debit Card Interchange - 12 CFR 235
Keep in mind that the Federal Reserve retains control over these regulations. Thus, if there is a rule change to Regulation CC, for example, it would come from the Federal Reserve.
Posted by NAFCU on January 19, 2012 in CFPB, Dodd-Frank, Reg CC, Reg D, Regulation GG, Regulatory Burden | Permalink | Comments (3) | TrackBack (0)
Last Friday, Federal Reserve Board Governor Elizabeth Duke gave a speech to community bank presidents and indicated that regulators need to resist the urge to regulate using "one-size fits all" regulation and supervision.
"I do believe in the community bank model and its future. Indeed, I believe there is a real place for the customization and flexibility that community banks can exercise to meet the needs of local communities and small business customers. Still, the disproportionate cost of regulatory compliance for smaller institutions is real. Financial supervisors must be vigilant in efforts to maintain financial system stability and ensure that consumers are able to understand their financial product choices, no matter where they choose to bank. However, as we and other agencies craft regulations to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and adjust supervisory practices to meet these priorities, I think we must avoid a one-size-fits-all approach to supervision."
"The current law is burdensome and confusing for depositors that wish to have unfettered access to their funds. It is unreasonable to expect consumers to understand and remember the arcane limits on the number and type of transfers that are allowed out of their savings account. For example, under the current rule, transfers among the consumer’s accounts via online banking are limited; however, a consumer can make unlimited transfers via mail or by messenger. The rule is outdated and as a consequence, the restrictions on transfers are incoherent to even the most knowledgeable consumers. It would be helpful to consumers if the regulation was modified to reflect the current financial services environment."
Updating the Regulation D transaction limitation requirements is a win-win as consumers obtain greater access to their funds and credit unions would need to spend less time and resources classifying and monitoring transactions.
On January 25th, NAFCU will host a special 2-hour webcast on Share Insurance featuring yours truly. The early-bird pricing ends at the end of day tomorrow - so you can save $100 by signing up today or tomorrow.
We are going to be covering Share Insurance issues from a couple of different angles:
How Share Insurance is Calculated Per Account - Based on Ownership Type;
NCUA's Share Insurance Calculator; and
Detailed Examples of Certain Accounts and the Amount of Insurance Coverage Available.
Questions & Answers. As usual, we'll be answering questions during the webcast. Due to complex nature of share insurance questions - we'll also be posting a detailed Q&A document that will be available to attendees after the webcast. If you are registered and have questions ahead of the webcast - please send them in (compliance@nafcu.org) and I'll try to add the issue into the presentation. At a minimum, we'll include the question in our Q&A document.
Posted by NAFCU on January 17, 2012 in Reg D, Regulatory Burden, Share Insurance | Permalink | Comments (2) | TrackBack (0)
I hope everyone is having a good week. I'm back in the office after a great week in Orlando and still trying to find my way to the top of my email box. Below are just a few things I've found swimming around in it that I don't think have made it to the blog yet.
NCUA Letter to Credit Unions 11-CU-17. NCUA issued a letter to credit unions to provide information about its new Office of Consumer Protection, which, among other things will be processing consumer complaints. This letter also mentions NCUA's consumer-oriented website www.mycreditunion.gov. When you have a free moment, go take a look at this website. It's always good to know what information your regulator is communicating to consumers.
Reg D reserves annual adjustments. The Fed has announced its annual adjustment for reserve calculations and deposit reporting for Regulation D.
FinCEN Speech. If your interested in BSA matters, you may want to read the speech James Freis, Director of FinCEN, gave at the Nebraska Bankers Association Summit on Regulatory Issues last week. There's nothing earth shattering, but it talks about the usefulness of the reports financial institutions provide and of information sharing.
Fair Lending Webinar. The Federal Reserve's Consumer Compliance Outlook is hosting a webinar on fair lending issues and hot topics. The webinar is tomorrow, 2 p.m. Eastern time. Follow this link for more information and to register.
Posted by NAFCU on November 01, 2011 in CFPB, Member Complaints, NCUA, Reg D | Permalink | Comments (0) | TrackBack (0)
Reg D adjustments. The Fed has announced its annual adjustment for reserve calculations and deposit reporting for Regulation D.
Reg E. The Fed has issued Consumer Affairs Letter CA 10-12, which announces revised inter-agency exam procedures for Regulation E. It is a fantastic resource for Regulation E issues.
Board minutes. Here's a great article that discusses numerous issues regarding board minutes. (The Metropolitan Corporate Counsel, written by Christopher S. Connell of Stradley, Ronon, Stevens & Young, LLP) Who should take the notes? What should the minutes contain? Can and should individual directors take notes? Pass this along to your board parliamentarian.
NCUA. NCUA has released its board meeting schedule for 2011. It may be worthwhile to place these dates on your calendar, as these are the dates when new rules and proposals would be issued from NCUA. Those rules have a tendency to throw a wrench into the works of an otherwise normal compliance officer workday.
Social media. Are attorneys and compliance officers "social media killers?" Here's a nice discussion of the issue. (Bank Lawyer's Blog.)
Compliance. Here's a nice discussion on the role of compliance within a corporate entity. (The Metropolitan Corporate Counsel, Hubert Klein, Lily Bradow.)
Posted by NAFCU on October 28, 2010 in ADA, Advertising, Board of Directors, Reg D, Reg E | Permalink | Comments (1) | TrackBack (0)
Reg D and Excess Transfers
During a presentation on Reg D at Compliance School, I was discussing the transaction limitations on savings accounts, and mentioned that Footnote 4 provides that you can either prevent excessive transactions or you can monitor them on an ex-post-facto basis. If you monitor them, footnote 4 provides that you should contact members that violate the excessive transaction limitations on “more than an occasional basis”. If they continue to violate the restrictions, then you are to close/reclassify the account, or remove from the account transfer and withdrawal capabilities. This begs the question what does “more than an occasional basis” mean? The Federal Reserve has stated that, in general, if a member exceeds the limitations more than 3 times in a 12 month period, then they have done so on more than occasional basis.
I have since received a few inquiries as to where I found this information. It’s in a Federal Reserve Questions and Answers document that Anthony has linked to previously.
One of Q&As, on page 180, discusses a proposed monitoring plan for money market accounts. Below is an excerpt of the discussion:
Ideally, controls on excess transfers should be sufficiently flexible to address both excess transfers in nonconsecutive months as well as the level of excess transfers in a particular month. Such controls would help depository institutions distinguish inadvertent violations of the transfer limits from abuses of the transfer limits. Thus, when a customer ignores the transfer limits applicable to an MMDA, the depository institution should take steps to close the account more quickly than it would an account from which the depositor inadvertently, and occasionally, exceeds the transfer limits by a single transfer. Nevertheless, a monitoring system that would detect and prevent all excess transfers may be costly to administer. For this reason, the staff has applied a general rule that an institution may continue to consider an account an MMDA even if there are excess transfers so long as those excess transfers are not the result of an attempt to evade the transfer limits, and if the excess transfers occur in not more than three months during any 12-month period. This working rule is not absolute, however, and the facts and circumstances must be considered in each case.
Posted by NAFCU on April 06, 2010 in Reg D | Permalink | Comments (0) | TrackBack (0)
HUD has issued a number of civil money penalties against financial institutions. In addition, HUD has settled allegations of non-compliance with several others. The number of items in this notice makes me wonder whether HUD's enforcement office has been pressed to kick it up a notch.
Speaking of HUD, NAFCU is hosting a webcast this Thursday. Barton Shapiro, Deputy Director for RESPA and Interstate Land Sales from HUD will be one of the speakers. If you have concerns with the looming compliance deadline, this might be right up your alley. Sign up here.
NAFCU Members: Don't forget about our "Year-End Review," a NAFCU member-only conference call on Thursday, Nov. 19, from 4-5 p.m. EST. NAFCU President Fred Becker and the association's senior staff will report on the latest developments in Washington affecting credit unions. Our Call-In is free, but you must register to participate. Call our Member Service Center at (800) 344-5580 or (703) 522-4770; or you may register online at http://www.nafcu-training.org/callin.
NCUA has issued Regulatory Alert 09-RA-12 to highlight recent changes to Regulation D regarding reserve requirements.
NCUA has issued Regulatory Alert 09-RA-11 to remind us about recent changes to Reg Z closed end lending brought about by MDIA. Old news, right? Not quite. The Reg Alert also contains the new questionnaire that NCUA examiners will use to measure your compliance.
Finally, this caught my eye when reviewing the Reg Z open end proposal. File this one under: paternalism.
As you may recall, credit card lenders will have to make disclosures regarding the cost if consumers only make the minimum payment on their balance. If the estimated payoff time is less than two years, it can be disclosed in months. If it is more than two years it must be disclosed in years AND rounded to the nearest year. But, here is what caught my eye.
“The Board believes that disclosing the estimated minimum payment repayment period in years (if the estimated payoff period is 2 years or more) allows consumers to better comprehend longer repayment periods without having to convert the repayment periods themselves from months to years.”
There are so many things I want to type right now. But I won't. (Sigh.)
Posted by NAFCU on November 09, 2009 in MDIA, Reg D, Reg Z, RESPA | Permalink | Comments (0) | TrackBack (0)
HUD has updated its RESPA FAQs again.
The FTC settled charges against an apparel company for alleged violations of COPPA. You don't see these very often, so the settlement serves as a nice reminder that COPPA is alive and well. And yes, it applies to credit unions. The announcement also provides background information on COPPA.
Earlier this month, the Fed announced its annual adjustments to the Regulation D reserve tranches. I like this update each year, because it is the only time get to use the word tranche.
NCUA issued Letter to Credit Unions 09-CU-21to remind credit unions about how to properly use the NCUA official sign. This would be a good piece of guidance to share with marketing.
HOEPA's higher-priced mortgage loans will affect HMDA reporting. The OTS has updated its exam procedures, and they do a great job of highlighting these changes.
Posted by NAFCU on October 29, 2009 in Advertising, Privacy, Reg D, Reg Z, RESPA | Permalink | Comments (1) | TrackBack (0)
No, we have not forgot about Section 106 and the 21-day requirement. We will be discussing Section 106 in detail in a future blog posting.
Section 109 - Consideration of Ability to Repay
Section 109 adds a new Section 150 to the Truth in Lending Act (TILA). This new section requires that credit unions consider the member's ability to repay before opening a credit card account or increasing the credit limit on an existing account. Section 150 reads as follows:
Sec. 150. Consideration of Ability to Repay.
"A card issuer may not open any credit card account for any consumer under an open end consumer credit plan, or increase any credit limit applicable to such account, unless the card issuer considers the ability of the consumer to make the required payments under the terms of such account."
Section 109 does not require the Federal Reserve to issue regulations. However, it is likely the Fed will amend Regulation Z to provide further information and guidance to card issuers on the standards to use when considering a consumer's ability to repay. This new section, Section 150 of TILA, has an effective date of February 22, 2010.
Regulation D. Effective tomorrow - July 2, 2009 - credit unions can allow members to make up to six transfers out of their savings accounts regardless of the type of transaction. In late May, the Federal Reserve amended Regulation D - removing the three/six distinction for withdrawals from savings accounts. In the words of the press release:
"The Board has revised Regulation D's restrictions on the types and number of transfers and withdrawals that may be made from savings deposits. The final amendments increase from three to six the permissible monthly number of transfers or withdrawals from savings deposits by check, debit card, or similar order payable to third parties. Technological advancements have eliminated any rational basis for the distinction between transfers by these means and other types of pre-authorized or automatic transfers subject to the six-per-month limitation."
NAFCU has received quite a few inquiries from credit unions on this issue. Let's cover a few of the issues.
No Change Required. Credit unions are not required to amend their policies. The credit union could continue to retain the three/six distinction for its share accounts. However, this would be a business decision for the credit union. When explaining the restrictions to its members, a credit union retaining the three/six distinction would no longer be able to state the "restrictions are required by Federal law" because Reg D allows six transactions regardless of type.
Notification? If the credit union makes a change to it policy, it does not appear that notification is necessary. Even if not necessary - notification to the membership might be useful. Notification could help prevent confusion and, since the change is beneficial to members, you may want to include the change in the periodic statement message.
Disclosures/System. The credit union would want to make sure it's system can handle the changes before it notifies members of the changes or updates its disclosures. Once your system can handle the changes, you could proceed to give members the additional flexibility in transactions allowed by the Fed under Regulation D.
NAFCU Statement Insert. NAFCU has created a statement insert on Regulation D that may be useful in explaining Regulation D issues to your members. The insert "What You Need to Know About Transaction Limitations" explains Regulation D to members and why certain transactions are limited.
The statement insert may be useful in notifying members of the Reg D changes. Additionally, if your credit union has a policy of notifying members when they exceed the allowed transaction threshold - including this insert with the notification could reduce member confusion as well as reducing the number of calls to the credit union's call center. An order form is available here.
Please forgive me, but I need to include this disclaimer: "These Inserts are property of NAFCU and may not be reproduced without authorization."
Posted by NAFCU on July 01, 2009 in CreditCardReform, Reg D | Permalink | Comments (2) | TrackBack (0)
Extends $250,000 credit union share insurance protection to 2013;
Enables credit unions to spread the cost of corporate stabilization over 7 years;
Extends replenishing the National Credit Union Share Insurance Fund through premiums to 8 years;
Increases NCUA borrowing authority to $6 billion; and
Establishes $30 billion NCUA emergency borrowing authority.
How much relief will this law give your credit union in 2009? NAFCU has created this calculator to show you. We've also prepared this chart to show the relief for different peer groups. Download Stabilization Plan_Estimated Costs by Asset Peer Group.
In the spirit of regulatory relief, here's some good news regarding Reg D. The Fed has approved a final rule to loosen requirements concerning the dreaded Reg D tranfer limitations.
This becomes effective 30 days after publication in the Federal Register. Read the Federal Reserve notice here. Here are some thoughts:
Your online banking transaction limits may need to be updated.
Alert your marketing folks. Brochures will need to be updated. And your website as well.
Look for disclosures that talk about the limitations. Reg E, for example. Or perhaps your membership disclosure booklet.
Your core processor may need to be updated if it flags transfers from savings accounts.
Posted by NAFCU on May 21, 2009 in Corporate Stabilization, Reg D | Permalink | Comments (2) | TrackBack (0)
A beefed up FTC
We'll have to stay tuned. Changes of these sorts take time and a whole lot of cat-herding on the Hill.
Note that NCUA issued Regulatory Alert 08-RA-04 to notify credit unions that Reg D's reserving requirement indexes have been updated for 2009. Read all about it here.
Posted by NAFCU on November 25, 2008 in Privacy, Reg D | Permalink | Comments (1) | TrackBack (0)
Interest Rate for Reserves Changed...Again
Yesterday, the Federal Reserve announced that it will change the formulas used to pay interest on required and excess reserves. Again.
Read the official press release here. Here's my take on this. This is the second change to the formula since the Fed announced that it would begin paying interest on reserves. I'm sure many of you estimated how the Fed's decision would affect your balance sheet and whether it made sense to alter how you reserve funds. But if you haven't estimated the effect of the amendments, you no longer have an accurate picture. In addition, since this is the second amendment this year, this is something you'll want to keep an eye on. Or at least let your CFO know.
Posted by NAFCU on November 06, 2008 in Reg D | Permalink | Comments (0) | TrackBack (0)
Interest on Reserves; Share Insurance Questions Remain
On Monday, the Federal Reserve announced that it will begin paying interest on financial institution required and excess reserve balances.
In the Fed's words:
The rate paid on excess balances will be set initially as the lowest targeted federal funds rate for each reserve maintenance period less 75 basis points. Paying interest on excess balances should help to establish a lower bound on the federal funds rate. The formula for the interest rate on excess balances may be adjusted subsequently in light of experience and evolving market conditions. The payment of interest on excess reserves will permit the Federal Reserve to expand its balance sheet as necessary to provide the liquidity necessary to support financial stability while implementing the monetary policy that is appropriate in light of the System’s macroeconomic objectives of maximum employment and price stability.
Here's a Fed FAQ regarding the change.
NCUA will hold a share insurance webinar today. There may still be time to sign up here. There are a few questions that I hope NCUA will clear up soon.
Do credit unions have to replace all their share insurance signs at teller windows? What about the share insurance advertising statement?
The interim final rule for revocable trust accounts created different insurance rules for accounts at or below $500,000 and for those above. Did the legislation that recently increased insurance amounts also increase that rule threshold? The FDIC has indicated that it did for banks and thrifts. There's no word yet from NCUA on this issue.
As I've stated before, stay tuned.
Posted by NAFCU on October 07, 2008 in Reg D, Share Insurance | Permalink | Comments (1) | TrackBack (0)
More Insurance Info; Flood and Reg D
It seems I have an FDIC insurance update each day. Well, here's another. Press reports indicate that the FDIC will ask Congress to bump up FDIC amounts from $100,000 to $250,000. If this were to go through, I would bet that the NCUSIF would be given parity. However, the last time I checked, I am not the FDIC. Nor am I Congress. So stay tuned!
NCUA Chairman Michael E. Fryzel wasted no time in voicing his support and urging that any changes include the NCUSIF. Here's what a press release issued by NCUA last evening stated:
September 30, 2008 – National Credit Union Administration (NCUA) Chairman Michael E. Fryzel today voiced support for an increase in insurance limits for accounts backed by both the National Credit Union Share Insurance Fund (NCUSIF) and the Federal Deposit Insurance Corporation (FDIC).
“Increasing federal insurance coverage for credit union members would send an important signal of reassurance at a time when confidence in depository institutions generally has been compromised by market events,” Chairman Michael Fryzel said.
“The NCUA has been in constant contact with our fellow regulators as well as congressional leaders. I commend FDIC Chairwoman Sheila Bair for her leadership on this issue, and I cannot overstate how important it is that the protections offered by our two insurance funds remain parallel. The funds of working Americans are equally important, whether those accounts belong to credit union members or bank customers.”
The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of over 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.
Here'sa NAFCU Today article on the subject. And here's another NAFCUToday article detailing NCUA plans for a national share insurance awareness campaign. (Be sure to check it out; the poster they designed sure grabs your attention.)
Here's a few other things that have taken place:
The National Flood Insurance Program has been extended until March 2009. Read all about it here. (USA Today.)
The Fed has amended (increased) the Reg D reserve requirement exemption and low reserve tranche for 2009. Read all about it here.
Posted by NAFCU on October 01, 2008 in Flood Insurance, Reg D, Share Insurance | Permalink | Comments (0) | TrackBack (0)
Questions and Answers Regarding Reg D. This document comes from the Philadelphia Fed, and it contains a ton of information on Reg D. There are questions and answers. There are legal interpretations. There are staff opinion letters.
Reg D Official Interpretation Letters. This 4-page document (also from the Phily Fed) lists major legal letters from the Fed that clarify Reg D issues. Good stuff.
Posted by NAFCU on September 16, 2008 in Reg D, Research | Permalink | Comments (0) | TrackBack (0)
Fed Proposes Changes to Reg D
The Federal Reserve is seeking comments on a proposal that would, among other things, end the three/six distinction for regulated transfers under Regulation D.
Here's a NAFCU Today article about the proposal.
Here's a link to the Fed proposal.
In the words of the Fed:
The second of the proposed substantive amendments would eliminate the provision in the “savings deposit” definition of Regulation D limiting certain kinds of transfers from savings deposits to not more than three per month. As a result, all kinds of transfers and withdrawals from a savings deposit that must be limited in number per month would be subject to the same numeric limitation of not more than six per month.
Food for thought: In my humble opinion, this would be a move in the right direction. Although for years NAFCU has advocated the entire elimination of the six-limit transfer limitation in favor of a more reasonable, and hopefully higher, number of allowable transfers, erasing the three/six distinction should make transfers easier to track for credit unions. But should this be approved, you'll need to review your disclosures where you address Reg D's limitations to ensure their accuracy.
NAFCU is preparing comments regarding this rule. Please feel free to email Pamela Yu at pyu@nafcu.org with your feedback.
Posted by NAFCU on February 12, 2008 in Reg D | Permalink | Comments (0) | TrackBack (0)
For you non-NAFCU people, here's a snippet from the Book of Answers.
Question: If a member has a direct deposit into a share account and funds are then automatically dispersed into other of his/her accounts, do these dispersals count as part of the allowable monthly transactions under Regulation D?
Answer: No. According to the Federal Reserve, “(w)here a deposit is made directly to one account but within a very short time routine disbursements of a portion of a payroll deposit are made to family member accounts or other accounts of the depositor, such disbursements are an element of the deposit transaction and are not to be regarded as transfers.” Where credit unions and members have made agreements for these allocations of a direct deposit, such transfers do not make the account in which the payroll funds have been initially deposited a transaction account. 2-302.8, Q15, Federal Reserve Regulatory Service Volume I, Regulation D (Questions and Answers).
Posted by NAFCU on December 18, 2007 in HMDA/Regulation C, Reg D, Research | Permalink | Comments (0) | TrackBack (0)