Private Deposit Insurance: Credit Unions Largely Complied with Disclosure Rules, but Rules Should Be Clarified
Published: 2017-03-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Federal Deposit Insurance Act requires privately insured credit unions to disclose to consumers that they do not have federal deposit insurance and CFPB has implemented regulations on these requirements. The Fixing America's Surface Transportation Act includes a provision for GAO to review private deposit insurers and privately insured credit unions' compliance with disclosures. This report (1) discusses regulatory and other assessments of ASI, the sole private insurer, and (2) examines the level of compliance with disclosure requirements for privately insured credit unions. GAO reviewed documentation from and interviewed federal and state regulators, ASI management, and ASI's third-party actuarial firm. GAO reviewed certain key methods and assumptions used by the actuarial firm. GAO also analyzed regulatory ratings (2006–2015) and selected financial data (2011–2015) on privately and federally insured credit unions. In addition, GAO reviewed 102 websites for all privately insured credit unions that had websites, conducted unannounced site visits at 47 credit unions (selected based largely on asset size and geography), and reviewed printed materials from 36 of the credit unions it visited that had materials readily available.
section_title: What GAO Found
paragraphs: About 2 percent of credit unions (125) have private deposit insurance, which is provided by one company—American Share Insurance (ASI). Regulatory and other assessments have suggested that ASI's reserves have been adequate and that the company has had a strong ability to cover present and future losses for the credit unions it insures. The most recent examination of ASI by its primary regulator (Ohio Department of Insurance) determined that ASI's reserves for losses were adequate and appropriate and consistent with legal requirements. An independent actuarial firm hired by ASI reported that it had a strong ability to cover losses under different economic scenarios. The Ohio regulator and the actuarial firm both noted risk factors that could affect ASI's financial condition, including changes in macroeconomic conditions or major losses by the largest credit unions it insures. In the event of financial difficulties, Ohio law allows ASI to tap into additional sources of funding, including lines of credit and special assessments from its insured credit unions.
Privately insured credit unions largely complied with the Bureau of Consumer Financial Protection (CFPB) requirements to disclose that they do not have federal deposit insurance. For instance, 45 of 47 credit unions GAO visited displayed required disclosures at teller windows (see fig.), and 99 of 102 websites GAO reviewed included the disclosure on their main Internet page, as required. However, 7 of 17 credit unions with drive-through windows that GAO visited did not have disclosure signs at these windows. Additionally, printed materials (such as brochures and flyers) GAO reviewed from 8 of 36 credit unions did not include disclosures. The regulations require all advertising to include a disclosure, but do not define what constitutes advertising. In some cases, disclosure signs or text size were too small to be easily read, or were not placed conspicuously. CFPB's regulations on disclosures for privately insured credit unions do not specify signage dimensions or font size. Without clear disclosure requirements, state credit union supervisors and credit unions may not be consistent in how they interpret disclosure requirements and some consumers may not be informed that their deposits are not federally insured.
section_title: What GAO Recommends
paragraphs: GAO recommends that CFPB issue guidance for privately insured credit unions to clarify whether drive-through windows require disclosure, describe what constitutes clear and conspicuous disclosure, including minimum signage dimensions and font size, and explain and provide examples of which communications are advertising. CFPB agreed with these recommendations.

section_title: Letter
paragraphs: Deposit insurance enhances the stability of financial institutions and helps  protect depositors in the event of bank or credit union failures. The vast  majority of U.S. credit unions have federal deposit insurance, which is  provided by the National Credit Union Administration (NCUA) and backed  by the full faith and credit of the U.S. government. However, in certain  states, some credit unions also have the option of choosing a private  insurer. In 2015, a private company, American Mutual Share Insurance  Corporation, or American Share Insurance (ASI), provided deposit  insurance for 125 credit unions (about 2 percent of all credit unions). By  law, any credit union that does not have federal deposit insurance must  clearly and conspicuously inform consumers—through signage on  premises, on its websites, and in its advertising—that the institution is not  federally insured.
The Fixing America’s Surface Transportation Act (FAST Act) includes a  provision for GAO to review private deposit insurers and privately insured  credit unions’ compliance with certain disclosures. This report (1)  discusses regulatory and other assessments of ASI, which is the sole  private deposit insurer, and (2) examines the level of compliance with  disclosure requirements for privately insured credit unions. For the  purposes of this report, the regulatory and other assessments of ASI  include information on loss reserves, capital adequacy, and the credit  unions ASI insures. This report does not compare ASI’s reserves and  capital adequacy to those of NCUA’s National Credit Union Share  Insurance Fund.
To gather information about ASI, we reviewed documentation, such as  examination reports and state legal requirements, and interviewed its  primary regulators (Ohio Departments of Insurance and Commerce), as  well as state regulators in the other eight states in which ASI operates.  Additionally, we reviewed ASI’s annual reports, underwriting policies, and  documentation about the credit unions the company insures, and we  interviewed ASI management. We reviewed reports from the third-party  actuarial firm that ASI retains, and interviewed the actuarial firm’s staff.  We did not conduct our own independent assessment of ASI’s capital  adequacy. However, our internal actuarial staff reviewed the third-party  actuarial firm’s modeling approach and certain key methods and  assumptions for the firm’s assessment of ASI’s capital adequacy (which  incorporates loss reserves as part of a broad definition of capital).  Additionally, we reviewed the regulatory ratings, commonly known as  CAMEL ratings, for privately and federally insured credit unions, and used  financial data from SNL Financial to analyze selected financial indicators  for privately and federally insured credit unions. We assessed the  reliability of the CAMEL ratings and SNL Financial data by requesting  information about the underlying data and how they are collected, and by  conducting data reliability testing. We found the data to be sufficiently  reliable for the purposes of our review.
To determine compliance with disclosure requirements, we reviewed the  Federal Deposit Insurance Act provisions regarding disclosure  requirements, as well as the corresponding regulations (known as  Regulation I). We conducted 47 unannounced site visits at a  nonprobability sample of credit unions (41 visits to unique credit unions  and 6 visits to an additional branch of some of the 41 credit unions),  selected to achieve variation in asset size, geographic location, main  retail or branch locations, and urban and nonurban locations. We  reviewed the websites of all 102 privately insured credit unions that had  them, and obtained and reviewed examples of printed materials from 36  credit unions we visited that had them readily available. We also  interviewed representatives from the Bureau of Consumer Financial  Protection (CFPB) and state credit union supervisory authorities about  credit union compliance with disclosure requirements. For comparison  purposes, we reviewed NCUA’s disclosure requirements for federally  insured credit unions. Finally, we reviewed our previous work in this  area.
We conducted this performance audit from February 2016 to March 2017  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. Appendix I contains additional  information on our objectives, scope, and methodology.
subsections: section_title: Background
paragraphs: Credit unions can be federally or state-chartered, which determines their  primary regulator for safety and soundness and also their options for  deposit insurance. Federally chartered credit unions are regulated by  NCUA and must be federally insured by the National Credit Union Share  Insurance Fund, which is administered by NCUA and provides up to  $250,000 of insurance per depositor for each account ownership type.  State-chartered credit unions are usually regulated by credit union  supervisors in their respective state. These credit unions can be federally  insured (and thus also supervised) by NCUA or, in some states, can  choose to be privately insured. As of February 2017, ASI was the only  company providing private primary deposit insurance. ASI provides up  to $250,000 of insurance per account (rather than per depositor for each  ownership type, as with NCUA). Deposit insurance covers deposit  products such as checking and savings accounts, money market deposit  accounts, and certificates of deposit. It does not cover other financial  products, such as investments in stocks, bonds, or mutual funds.
subsections: section_title: Overview of Credit Union and Deposit Insurance Markets
paragraphs: The vast majority of credit unions are federally insured. As seen in figure  1, in 2015, there were more than 6,000 federally insured credit unions  with more than $1 trillion in insured deposits, and 125 privately insured  credit unions with $13 billion in insured deposits.
The mix of asset sizes is largely similar for federally and privately insured  credit unions, and the majority of both have assets of less than $100  million. Between 2011 and 2015, the number of federally and privately  insured credit unions declined by about 15 percent, due largely to  mergers and liquidations. Some credit unions chose to convert between  private and federal deposit insurance and appendix II contains  information about the reasons that some credit unions switch insurers.
section_title: American Share Insurance
paragraphs: ASI is a private, not-for-profit company, headquartered in Ohio. The  company is governed by Ohio law and licensed by the Ohio Department  of Insurance, and its primary regulators are the Ohio Departments of  Insurance and Commerce, although regulators in the other eight states in  which ASI operates also have an oversight role. ASI has provided  deposit insurance since 1974 and the company is owned by the credit  unions for which it provides deposit insurance. The company does not  normally charge premiums, which are common in the insurance industry,  but instead requires its credit unions to maintain a capital contribution with  the company, adjusted annually, equal to a rate of 1.3 percent of the  credit union’s total insured deposits. In addition, ASI has the authority to  charge special premium assessments under certain conditions with  regulator approval, as it did in 2009–2013.
ASI is overseen by a board of directors that is made up of six chief  executives from the credit unions it insures, as well as one ASI  management representative. Quarterly, according to ASI management,  ASI’s board of directors meets to review and monitor the company’s  financial statements, investment activities, risk management practices,  information technology issues, and sales and marketing activities. An  independent auditor annually audits and renders an opinion on ASI’s  consolidated financial statements prepared in accordance with generally  accepted accounting principles. Additionally, ASI retains an independent  actuarial firm to conduct a capital adequacy study (at least every 3 years),  annually review and help estimate loss reserves, and render an annual  actuarial opinion on the adequacy of its loss reserves.
section_title: Federal Law and Regulation I
paragraphs: Federal law requires that any depository institution that does not have  federal deposit insurance clearly and conspicuously disclose that the  institution is not federally insured. CFPB and the Federal Trade  Commission (FTC) are the federal entities responsible for enforcing these  requirements. In December 2011, CFPB issued an interim final rule  restating the implementing regulation, which had been promulgated by  FTC. This regulation, known as Regulation I, contains the disclosure  requirements for credit unions that do not have federal deposit insurance.  CFPB published a final rule in April 2016, which adopted its 2011 interim  final rule without changes.
Regulation I requires disclosure that an institution does not have federal  deposit insurance (1) at locations where deposits are normally received  (stations or windows) except enumerated exceptions, (2) on the  institution’s main Internet page (website), (3) in all advertising except  enumerated exceptions, and (4) in periodic statements and account  records. Regulation I generally requires depository institutions to obtain  a written acknowledgment from depositors that the institution does not  have federal deposit insurance.
section_title: FAST Act and Federal Home Loan Bank System
paragraphs: The FAST Act amended the Federal Home Loan Bank Act to permit  privately insured credit unions to apply for membership in a Federal  Home Loan Bank (FHLBank) and, if approved, obtain the benefits of  membership, including access to loans (known as advances). The  FHLBank System is a government-sponsored enterprise, composed of 11  regional banks. Federally insured credit unions have been allowed to  apply for membership since 1989; other members of the FHLBank  System include commercial banks, thrifts, and insurance companies.  The FHLBank of Cincinnati approved ASI as a member in June 2011.
The Federal Housing Finance Agency (FHFA) regulates the FHLBanks  and issued a proposed rule in September 2016 to implement provisions of  the FAST Act. By law, certain types of prospective FHLBank members  must have at least 10 percent of their assets in residential mortgage loans  to be eligible. As of December 31, 2015, FHFA estimated that 78 of the  125 privately insured credit unions met this eligibility criterion. As of  December 31, 2016, the FHLBanks had approved 16 privately insured  credit unions for membership.
section_title: Regulatory and Other Assessments Indicate ASI Has Had Adequate Reserves and Strong Claims- Paying Ability
subsections: section_title: Regulators Have Not Cited Concerns about ASI
paragraphs: The Ohio Department of Insurance’s most recent examination of ASI,  which covered 2008–2012, did not identify any deficiencies in ASI’s  financial condition and determined that ASI’s reserves for losses were  consistent with Ohio’s legal requirements and were adequate and  appropriate. According to Ohio Department of Insurance staff, the  department has not identified any issues and was not aware of any  problems with ASI’s loss reserves in at least the past 10 years. They  noted that ASI is classified as a nonpriority insurer by the department,  which means that the company is considered low-risk and does not  require enhanced oversight. This determination was based on factors  such as ASI’s Insurance Regulatory Information System (IRIS) ratios and  management competency. As a result of this classification, the  department conducts full-scope examinations of ASI every 5 years, rather  than annually or every 3 years as conducted for insurers deemed riskier.
Ohio Department of Insurance staff told us that as part of their full-scope  examinations every 5 years, the examination team reviews ASI’s audited  financial statements, analyzes estimates for loss reserves, and evaluates  any risks to the company by reviewing legal issues, corporate  governance, and management. In particular, the department’s actuary  performs an analysis of ASI’s information to derive the department’s own  estimate for ASI’s loss reserves. The department compares its derived  estimate to ASI’s held reserves, as well as to the range of estimates  reported by ASI’s third-party actuarial firm. Staff said that if the  department were to identify significant differences in the estimates, it  would request additional information from ASI to understand the reasons  for the differences. Additionally, the department uses the IRIS ratios to aid  in evaluation of the adequacy of ASI’s loss reserves. According to  representatives from the National Association of Insurance  Commissioners (NAIC), the procedures the department uses for  assessing ASI’s capital, including its loss reserves estimates, are  consistent with NAIC’s guidelines for conducting such assessments.
Ohio Department of Insurance staff also told us that on an annual basis  they review the statement of actuarial opinion of ASI’s loss reserve  estimates (as rendered by the third-party actuarial firm and discussed  later in this report) and ASI’s audited financial statements, and also  compute financial ratios. According to the staff, as part of this review,  analysts review ASI’s capital position and monitor ASI’s asset quality to  ensure they did not deteriorate significantly in a given period. Under Ohio  law, ASI is required to maintain at least $5 million in capital, and as of  December 31, 2015, ASI’s capital was roughly $219 million. In addition,  Ohio Department of Insurance staff said they consider any risks that  could affect ASI’s financial condition. For example, they said they  evaluate risk in terms of growth, underwriting, how the company invested  its assets, and any legal concerns. In addition, the department analyzes  the risk-based capital ratio. They also said that a company’s risk-based  capital ratio must be at least 200 percent of its calculated authorized  control level risk-based capital. From 2009 through 2015, according to  examination records from the Ohio Department of Insurance, ASI’s risk- based capital ratio was well above this standard. Ohio Department of  Insurance staff told us that ASI management is very transparent about  disclosing risk that new credit unions may pose to the company. The staff  said that they engage in quarterly discussions with ASI management  about the company’s quarterly financial statements and the credit unions  for which ASI is considering providing deposit insurance coverage.
Ohio Department of Insurance staff said that their concern with ASI, as  with any insurer, generally has been the risk posed by macroeconomic  issues. For example, they stated fluctuations in the economy could pose  significant concerns for insurers such as ASI. Therefore, a decline in the  economy could have a significant (negative) impact on a company like  ASI. The staff further noted that while the frequency of claims for losses  for ASI would be low, the severity of such losses could potentially be high,  which could pose a risk to the company. According to ASI management,  roughly 2 percent of its privately insured credit unions failed during or  since the 2007–2009 financial crisis (as compared to roughly 2 percent of  federally insured credit unions, according to NCUA). In 2009, ASI  reported that almost all of its loss expense was related to just two of its  insured credit unions, both in Nevada. One of these credit unions merged  with another. The second troubled credit union had approximately $1  billion in total assets when it received assistance from ASI. Department  staff told us that during and just after the financial crisis, they monitored  ASI more frequently and met monthly with ASI management to discuss  the company’s exposures and potential losses, but the department never  determined there was a need to conduct an additional full-scope  examination.
In addition to the Ohio Department of Insurance’s oversight, the Ohio  Department of Commerce annually performs a risk-based safety and  soundness examination of ASI in collaboration with the eight other state  credit union supervisors that regulate privately insured credit unions.  However, the Ohio Department of Commerce could not share with us the  results of these examinations because, as interpreted by the department,  it is prohibited by law from providing details about its examination findings  to third parties other than those specified in the regulations. According  to Ohio Department of Commerce staff, their annual safety and  soundness examination of ASI focuses on risk areas similar to those  reviewed during the examination of a credit union. As a part of this  process, the Ohio Department of Commerce reviews ASI’s audited  financial statements, statement of actuarial opinion, and reports from  ASI’s internal system used to monitor insured credit unions. Ohio  Department of Commerce staff told us that on a quarterly basis,  examiners review quarterly financial statements and monitor any troubled  credit unions that ASI insures.
As well as participating in the Ohio Department of Commerce’s annual  examination of ASI, the eight other state credit union supervisors told us  that they monitor ASI’s financial condition on an annual or quarterly  basis. This process generally involves a review of ASI’s annual audited  or quarterly unaudited financial statements and its actuarial reports. None  of the eight state supervisors with whom we spoke raised concerns about  ASI’s financial condition at the time of our review. But one state credit  union supervisor expressed concern that during volatile economic times,  ASI might not be able to cover losses once it had exhausted its capital  because ASI is not backed by the full faith and credit of the U.S.  government and has no access to state guaranty funds. According to the  National Conference of Insurance Guaranty Funds—whose funds provide  protection for various property and casualty lines of insurance written by  its member insurers––private deposit insurers are not covered.  Additionally, representatives from the state credit union supervisors also  told us that none of the states in which ASI operates, including Ohio, had  a state guaranty fund to assist in covering losses or credit union member  deposits if ASI ran into financial difficulties. However, in the event of  potential impairment of ASI’s funding, Ohio law allows ASI to charge a  special assessment, with regulator approval, against the credit unions it  insures.
Moreover, FHFA reviews information about ASI as part of its oversight of  the FHLBanks. As noted earlier, ASI is a member of the FHLBank of  Cincinnati and bank representatives told us that they monitor ASI’s  financial condition by reviewing ASI’s annual audited financial statements,  statutory quarterly financial filings, and reports on ASI’s loss reserves.  FHLBanks protect against credit risk on advances by requiring members  to pledge collateral. Representatives from the FHLBank of Cincinnati told  us ASI, like all FHLBank members (including privately insured credit  unions), must pledge collateral to receive advances. According to FHFA  staff, while FHFA may review ASI information as part of its supervision of  FHLBanks, FHFA has no supervisory authority over ASI and no plans to  independently assess the company’s financial condition. The FAST Act  does require ASI to provide FHFA a copy of its annual audit. The audit  must be conducted by an independent auditor and must include an  assessment by the auditor that ASI follows generally accepted accounting  principles and has set aside sufficient reserves for losses. This FAST Act  requirement allows FHFA to review the independent auditor’s opinion to  confirm that ASI has met these requirements. FHFA staff told us FHFA  planned to use the ASI audited financial statements to prepare for its next  annual examination of the FHLBank of Cincinnati.
ASI has several processes in place to mitigate risk and help prevent and  control losses to the company. ASI management told us that applicant  credit unions undergo an insurability assessment that includes a review of  the credit union’s financial data, corporate governance, and CAMEL  rating, and an evaluation of its operating policies and procedures.  Additionally, the company continuously monitors the financial condition of  the credit unions the company insures. ASI management said that  quarterly they compare their credit unions against federally insured credit  unions in terms of capital adequacy, earnings, and liquidity. The company  conducts an examination of about 70 percent of its credit unions annually,  and the rest on a 2–3 year cycle. ASI management noted that they  conduct most of their examinations jointly with state credit union  supervisors. For credit unions with at least $100 million in assets, ASI has  a process of enhanced monitoring, which includes quarterly reviews, as  well as on-site reviews annually or semiannually. As needed, ASI can  issue a corrective action, such as advancing funds to an insured credit  union on a short-term basis to aid in the credit union’s liquidity needs.
section_title: Independent Actuarial Reviews Found That ASI Had a Strong Financial Ability to Pay Claims under Different Scenarios
paragraphs: ASI retains an independent actuarial firm to conduct analyses for the  company. The actuarial firm conducts a study of the adequacy of ASI’s capital every 3 years, which looks at  the company as a whole and its ability to pay present and future  claims for losses experienced by the credit unions it insures, under  different economic scenarios; and an annual study of ASI’s loss experience to help estimate loss  reserves and render an annual statement of actuarial opinion on the  adequacy of its loss reserves.
subsections: section_title: Capital Adequacy
paragraphs: The four most recent capital adequacy studies, which covered calendar  years 2009–2015, indicated that ASI’s ability to pay claims was strong.  The 2010 capital adequacy study—conducted near the end of the  financial crisis—indicated ASI’s ability to pay claims was strong, but it  also reported that ASI’s ability to pay claims had decreased. For the  most recent capital adequacy study, the actuarial firm’s analysis found  that ASI’s ability to pay claims was strong under each of three economic  scenarios (expansion, recession, and depression). For example, the  actuarial firm estimated the probability that ASI could withstand a 1-year  and 5-year recession as 99.7 percent and 97.3 percent, respectively.  According to staff from the actuarial firm, the capital adequacy study  serves as a financial model to assist ASI management in its decision  making. They noted ASI’s management is as important as the study’s  findings because even with adequate capital, a company could fail based  on mismanagement or fraud, which cannot be modeled.
According to staff from the actuarial firm, ASI could face difficulty paying  claims for losses if one or more of its largest credit unions were to suffer  severe losses. The firm reported that as of December 31, 2015, ASI had  $218 million in assets (cash and investments) readily available to pay  claims, but as of year-end 2015, 14 of its credit unions each had more  than that amount in total insured deposits. However, the actuarial staff  told us they factored this risk into their analysis and that the larger the  credit union (by asset size), the smaller the probability of a severe loss  (expressed as a percentage of the credit union’s total assets).
Additionally, the actuarial firm analyzed the capital adequacy of ASI’s  wholly owned subsidiary, Excess Share Insurance Corporation, which can  affect ASI’s financial condition because ASI offers it various funding  sources and a guarantee. The actuarial firm’s 2016 study showed the  subsidiary’s ability to pay claims under the three economic scenarios was  strong. ASI management told us they believe the risk posed by its  subsidiary to be small, and that multiple adverse events would have to  occur simultaneously for it to impair ASI’s financial condition. To transfer  some of this risk, the subsidiary carries a reinsurance policy for its excess  insurance line of business.
The actuarial studies also noted that ASI has other sources of funding to  help pay claims, including special assessments, lines of credit, and  increases to the capital contribution rate it charges. For example, during  and after the 2007–2009 financial crisis, ASI (1) charged its insured credit  unions a special premium assessment each year in 2009–2013; (2)  borrowed $22 million from its line of credit to pay initial claims in 2009  (which according to ASI management was repaid in full within 6 months);  and (3) increased the credit unions’ capital contributions rate in 2010,  from a rate ranging between 1 percent and 1.3 percent to a rate of 1.3  percent of total insured deposits, which ASI management told us  enhanced the company’s capital adequacy.
section_title: Loss Reserves
paragraphs: Each of the actuarial firm’s annual loss reserve studies conducted during  2011–2015 found that ASI’s reserves for losses were reasonable and  consistent with amounts computed based on actuarial standards of  practice, and met the requirements of Ohio insurance laws. ASI  maintains a reserve for losses to cover its estimated unpaid liability for  reported and unreported loss claims. To assist management with its  determination of loss reserves, the actuarial firm annually analyzes ASI’s  loss reserve experience and reviews the assumptions ASI uses to  determine its reserves for losses. The reserve studies identified some  potential risks—for example, the possibility that some of ASI’s credit  unions could cancel their deposit insurance coverage and withdraw their  capital contributions, which would reduce ASI’s capital (but also reduce its  exposure to potential losses).
In its 2016 loss reserve study, the actuarial firm stated that it did not  believe that significant risks and uncertainties were present that could  result in material adverse deviation of ASI’s loss reserves. The firm  based its conclusion on the presence of certain favorable factors that  offset the risks and uncertainties identified in previous years. These  factors included the low ratio of the company’s held reserves to its capital,  and that ASI’s held reserves were at the high end of the actuarially- determined range of reserves estimated to be reasonable. However, the  actuarial firm staff stated that the absence of such risks and uncertainties  did not imply that factors could not be identified in the future that could  have a significant influence on ASI’s reserves.
section_title: Privately and Federally Insured Credit Unions Had Similar Regulatory Ratings, but Differed in Geographic and Deposit Concentration
paragraphs: ASI’s risk profile depends in large part on the financial condition of the  privately insured credit unions that it insures. We reviewed the CAMEL  ratings (which regulators use to rate a credit union’s performance and risk  profile) of privately insured credit unions, and compared them to those of  federally insured credit unions. We found that, in the aggregate,  privately and federally insured credit unions had similar CAMEL ratings  during 2006–2015. For example, as seen in figure 2, roughly the same  percentages of privately and federally insured credit unions were rated  satisfactory (CAMEL ratings of 1 or 2). For both groups, the percentage of  troubled credit unions (CAMEL ratings of 4 or 5) peaked in 2011 and then  declined. These similarities remained roughly the same (for both  satisfactory and troubled credit unions) when we reviewed the percentage  of assets in credit unions by CAMEL rating rather than percentage of  individual credit unions.
For further review, we also selected one indicator in each of five  categories––capital adequacy, asset quality, loss coverage, profitability,  and liquidity––regulators commonly use to assess the financial health of  credit unions. The median values for all of these indicators were similar  for privately and federally insured credit unions from 2011–2015.
The sizes of privately and federally insured credit unions also were  roughly similar. In 2015, the majority of insured credit unions had less  than $100 million in total assets (see table 1). For privately and federally  insured credit unions, respectively, the median total assets were roughly  $34 million and $27 million, and the median numbers of members were  roughly 4,300 and 3,200.
However, our analysis shows that privately insured credit unions have  higher geographic and deposit concentration than federally insured credit  unions, which can present risks. Specifically,
Privately insured credit unions are much less geographically diverse  than federally insured credit unions because they operate solely in  nine states. Forty-two percent of ASI-insured credit unions are in Ohio  and an additional 30 percent are in Illinois (18 percent) and Indiana  (12 percent). This geographic concentration may create risks for ASI  because economic downturns are sometimes concentrated in  particular regions of the country. NCUA staff noted that previous  private deposit insurers have failed mostly as a result of severe  regional economic shocks (or in some cases a single major fraud).
The total insured deposits of privately insured credit unions are  concentrated in a much smaller number of credit unions than for  federally insured credit unions. In 2015, ASI’s 2 largest credit unions  (by total assets) represented 15 percent of its total insured deposits,  and its 10 largest represented 54 percent of its insured deposits. In  comparison, NCUA’s 10 largest insured credit unions (by total assets)  made up 15 percent of total insured deposits in 2015. This  concentration of insured deposits may be viewed as a risk to ASI  because, as discussed previously, ASI could face difficulty paying  claims for losses if one or more of its largest credit unions were to  suffer severe losses.
section_title: Credit Unions We Reviewed Largely Complied with Disclosure Requirements, but Some Disclosure Provisions Lack Specificity
paragraphs: Privately insured credit unions we reviewed largely complied with  requirements to disclose that they are not federally insured. But a lack of  specificity in Regulation I provisions that relate to disclosure location  (drive-through windows), format (signage dimensions and font size), and  advertising (printed materials) may have contributed to some variations  we saw in compliance with disclosure rules.
Disclosure signage at teller and drive-through windows. The 47  privately insured credit unions we visited were largely in compliance with  CFPB’s requirement for disclosures at each station or window where  deposits are normally received. For example, 45 of the 47 credit unions  displayed a disclosure at teller windows. Of the two that did not display  signs at teller windows (both of which were small employer-based credit  unions), one had a disclosure on the front door and the other had a  disclosure on a bulletin board outside the credit union, but still within the  employer’s building. However, 7 of the 17 credit unions we visited that  had drive-through windows did not have disclosures at the window (see  fig. 3). While Regulation I states disclosures are needed at each station or  window where deposits are normally received, it does not specifically cite  drive-through windows. In contrast, the regulation specifically excludes  certain other places of deposit from requiring the disclosure. For example,  it states that disclosure is not needed at automated teller machines or  point-of-sale terminals. CFPB staff told us that, in their view, a plain  reading of Regulation I would include a drive-through window as a  “station or window where deposits are normally received,” and thus  require disclosure.
We also observed that the dimensions and font sizes of the disclosure  signage varied among credit unions, with some having signage too small  to be easily read, or not placed conspicuously. At 28 of 47 credit unions  we visited the signs measured smaller than 3 by 7 inches. The sign we  commonly observed measured 2-¼ inches by 4 inches, which is larger  than a business card, but smaller than an index card (see fig. 4).  Additionally, in more than half the credit unions we visited, we found the  font size of the disclosures was too small to be easily read when standing  at the teller window. Further, at 7 of 47 credit unions, disclosures were  placed where they were not easily noticed. For example, one was placed  on a windowsill across the room, another at a teller station covered with  other materials, and another at the bottom of an 8 by 10 inch sign  containing a lot of other information about the credit union’s policies.
CFPB does not provide official signage to privately insured credit unions  and Regulation I does not specify signage dimensions or font size  requirements. Instead, Regulation I states the disclosures must be “clear  and conspicuous and presented in a simple and easy-to-understand  format, type size, and manner” but does not provide definitions,  parameters, or illustrative examples of what would constitute simple and  easy to understand. By comparison, NCUA provides official signs to  federally insured credit unions to display at each station or window where  insured account funds or deposits are normally received. NCUA’s  regulation notes credit unions should not alter the font size of the official  sign when used for this purpose. The sign itself, which measures 3 by 7  inches. can be ordered and downloaded from NCUA’s website.
Disclosures on websites. We also reviewed 102 privately insured credit  union websites and found that almost all of these websites complied with  CFPB’s requirement to disclose on their main Internet page that the  institution is not federally insured. Three credit unions did not have the  disclosure on their main Internet page (each of the three had the  disclosure on a different page of its website). However, on many websites  (28 of 99) the disclosures were not easily seen or readable. For example,  the overall space the disclosure occupied or its placement next to or  between colorful or larger graphics made it difficult to notice the  disclosures in these cases. Additionally, we observed that more than half  the websites (60 of 99) used a font size that was smaller than that used  for the other text on the same webpage (see fig. 5).
CFPB’s Regulation I states that the website disclosures, like all other  required advertising and premises disclosures, should be “clear and  conspicuous and presented in a simple and easy to understand format,  type size, and manner,” but CFPB does not define these terms or specify  font size requirements for websites. In comparison, NCUA’s regulation  for federally insured credit unions specifies that the disclosure must be in  a size and print that is clearly legible and no smaller than the smallest font  size used elsewhere.
Disclosures in advertising (printed materials). On our visits to privately  insured credit unions we obtained printed materials (such as brochures,  promotional flyers, and newsletters which could be considered  advertisements), and 8 of the 36 credit unions from which we obtained  samples of printed materials had at least one item that did not contain a  disclosure. Regulation I states “all advertisements” except those  specifically enumerated must disclose a lack of federal deposit insurance,  but the regulation does not define what constitutes an advertisement.  CFPB staff told us the agency does not have any guidance or  commentary on what constitutes “all advertisements.” In comparison,  NCUA’s regulation for federally insured credit unions defines advertising,  and also provides examples. In NCUA’s regulation, an advertisement is “a  commercial message, in any medium, that is designed to attract public  attention or patronage to a product or business.” Furthermore, NCUA’s  regulation specifies that advertising includes print, electronic, or  broadcast media, displays and signs, stationery, and other promotional  material.
Disclosures in periodic statements, account records, and signature  cards. Representatives of all nine state credit union supervisors with  whom we spoke told us that privately insured credit unions were generally  compliant with the requirements to (1) disclose on periodic statements  and certain other account records a lack of federal deposit insurance, and  (2) obtain written acknowledgment from depositors on this lack of federal  insurance, as is generally required. The state credit union supervisors  said they checked a sample of periodic statements, account records, and  signature cards for new accounts as part of their routine examinations of  privately insured credit unions.
Reviews of compliance. Overall, compliance levels with disclosure  requirements have improved since our 2003 review of privately insured  credit unions, which included an assessment of their compliance with  federal disclosure rules. In 2003, we found that 36 of 57 credit unions  had the required disclosures on premises. Similarly, in 2003, 39 of 78  websites and 93 of 227 printed materials we reviewed had the required  disclosures.
CFPB has not had any findings, observations, or evaluations regarding  privately insured credit unions’ disclosures. CFPB staff told us the  agency has not received any complaints related to private deposit  insurance. CFPB staff said they have reviewed privately insured credit  unions’ websites at a very informal level and the websites seemed to be  complying with Regulation I. As previously noted, CFPB shares  enforcement authority for Regulation I with FTC. CFPB staff told us that state credit union supervisors and attorneys general also have the  authority to enforce Regulation I, as necessary.
The state credit union supervisors in the nine states with privately insured  credit unions similarly told us that compliance with disclosure  requirements has not been a problem in recent years. They said that their  routine examinations of state-chartered credit unions check for  disclosures on premises, on websites, in advertising materials, and, as  noted earlier, by reviewing selected periodic statements, account records,  and signature cards. They said that if examiners observe  noncompliance with disclosure requirements, they cite it as an  examination finding and expect the credit union to promptly correct the  issue and display the proper signage or disclosure.
While we generally found that compliance levels were high, Regulation I  may be interpreted and enforced differently by different credit unions and  state regulators. Without clarity on whether or not drive-through windows  are required to have disclosures, some credit unions may continue to not  display them at these windows. Additionally, without more clarity or  guidance around dimensions and font sizes for disclosures, the  disclosures may be too small to be easily read or noticed. Further, there  may continue to be confusion about what constitutes “advertising” and  whether certain printed materials are required to include disclosures. As a  result, the state credit union supervisors and the credit unions themselves  may face challenges consistently monitoring and complying with  Regulation I. In turn, credit union members may not always be  consistently and adequately informed that deposits are not federally  insured.
section_title: Conclusions
paragraphs: Deposit insurance helps protect depositors from losing their money in the  event a financial institution fails. By law, any institution that does not have  federal deposit insurance must clearly and conspicuously inform  consumers that the institution is not federally insured and privately  insured credit unions we reviewed largely complied with disclosure  requirements. However, the instances we observed of missing  disclosures or disclosures that were too small to be easily read or  inconspicuous suggest that the lack of specificity in some provisions of  Regulation I has led to inconsistencies in interpretation. By clarifying  Regulation I, CFPB would facilitate state credit union supervisor  monitoring and credit union compliance and would better ensure that  consumers were informed that their deposits are not federally insured.
section_title: Recommendations for Executive Action
paragraphs: We are making three recommendations to help state credit union  supervisors and privately insured credit unions better interpret Regulation  I and inform consumers when an institution is not federally insured. CFPB  should issue guidance to (1) clarify whether drive-through windows  require disclosures; (2) describe what constitutes clear and conspicuous  disclosure, including minimum signage dimensions and font size for  disclosures; and (3) explain and provide examples of which  communications are advertising.
section_title: Agency Comments
paragraphs: We provided CFPB, FHFA, and NCUA with a draft of this report for review  and comment. In its written comments, reproduced in appendix III, CFPB  agreed with our recommendations. CFPB noted that the agency  recognizes that providing guidance clarifying Regulation I may improve  privately insured credit unions’ understanding of and compliance with the  federal disclosure requirements. Additionally, CFPB stated that the  agency intends to explore options that will most effectively provide  guidance regarding Regulation I, such as issuing a bulletin that could be  published in the Federal Register or posted on the agency’s website.  CFPB, FHFA, and NCUA also provided technical comments, which we  incorporated as appropriate. We also provided selected relevant portions  of the draft to ASI, its third-party actuarial firm, the Ohio Departments of  Insurance and Commerce, and the other eight state credit union  supervisory authorities for their technical review, and we incorporated  their comments as appropriate.
We are sending copies of this report to the appropriate congressional  committees, agencies, and other interested parties. In addition, this report  will be available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-8678 or cackleya@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report (1) discusses regulatory and other assessments of American  Share Insurance (ASI), the sole private deposit insurer, and (2) examines  the level of compliance with disclosure requirements by credit unions that  do not have federal deposit insurance. The Fixing America’s Surface  Transportation Act (FAST Act) includes a provision for us to review  private deposit insurers and privately insured credit unions’ disclosure  compliance in the United States. Our scope includes the nine states that  permit credit unions to use private deposit insurance and have credit  unions that have chosen to do so: Alabama, California, Idaho, Illinois,  Indiana, Maryland, Nevada, Ohio, and Texas. Some credit unions in  Puerto Rico are insured by a quasi-governmental entity––the Public  Corporation for the Supervision and Insurance of Cooperatives––and  these credit unions are not included in the scope of this report. In  addition, this report does not compare ASI’s reserves and capital  adequacy to those of the National Credit Union Administration’s (NCUA)  National Credit Union Share Insurance Fund because the two entities  have different legal requirements and risk profiles, use different models to  help estimate reserves, and use different assumptions and methods to  help determine capital adequacy. Based on this, we limited the scope of  the report to solely cover regulatory and other assessments of ASI,  instead of an analysis or comparison of the two entities.
To gather information about ASI, we identified the company’s regulators  and legal requirements and reviewed laws and regulations pertaining to  the company. We reviewed Ohio law and implementing regulations, which  establish the powers and authorities governing credit union guaranty  corporations, such as ASI. We interviewed the company’s primary  regulators (Ohio Departments of Insurance and Commerce), as well as  representatives from the state credit union supervisors in the other eight  states in which ASI operates. To determine how the Ohio Department of  Insurance assessed ASI’s financial condition, we reviewed documentation  such as the most recent examination report covering calendar years  2008–2012 and financial analyses of ASI covering calendar years 2013– 2015. We also compared the department’s process with the guidelines  recommended by the National Association of Insurance Commissioners  (NAIC) and confirmed with NAIC staff that the department’s procedures  were consistent with NAIC guidelines. Finally, we interviewed staff at the  Federal Housing Finance Agency (FHFA), which oversees the Federal  Home Loan Bank (FHLBank) System, and the FHLBank of Cincinnati (of  which ASI is a member) to determine their oversight role with regard to  ASI and to obtain information about the number and status of privately  insured credit unions applying for membership to the FHLBanks.
We reviewed ASI’s annual reports and audited financial statements for  2008–2015 and other documentation, such as the company’s investment  policy, its examination and insurance policy, and its application form and  process for credit unions seeking private deposit insurance. We  interviewed ASI management about the company’s history, governance  structure, regulatory and financial reporting requirements, underwriting  policies, and capital and reserves requirements. We also reviewed  reports from the third-party actuarial firm that ASI retains, including the  firm’s analyses of ASI’s capital adequacy for 2009–2015 (conducted  every 3 years), annual analyses of ASI’s unpaid loss and loss adjustment  expense for 2011–2015, and annual statements of actuarial opinion for  2011–2015, as well as the firm’s analysis of capital adequacy for ASI’s  wholly-owned subsidiary for 2015. We interviewed the actuarial firm’s  staff about their analyses related to these studies and obtained  information about the assumptions and methods used. For the most  recent capital adequacy study, our internal actuarial staff reviewed the  actuarial firm’s modeling approach and certain key methods and  assumptions, including those related to the three economic scenarios  used in the study. Additionally, we inquired about the firm’s internal peer  review process and steps taken to ensure the completeness and  accuracy of the models used to assess ASI’s capital adequacy and  reserves for losses. We did not conduct our own independent  assessment of ASI’s capital adequacy and reserves for losses and  therefore cannot make our own actuarial determination or opinion.
To review information about the credit unions that ASI insures, we  reviewed CAMEL ratings for privately and federally insured credit unions  for 2006–2015. We also used financial data from SNL Financial (2011–2015) to analyze selected financial indicators for privately and federally  insured credit unions. We selected these financial indicators for further  review because they had been previously identified by regulators as  metrics to assess a credit union’s financial health and used in prior  reports looking at credit unions. For our previous work, we had obtained  information from NCUA on the indicators it typically uses to assess credit  unions’ financial health and we selected one indicator in each of the  following five categories: capital adequacy, asset quality, loss coverage,  profitability, and liquidity. We analyzed data from SNL Financial in  September 2016 for year-end 2011–2015. We presented median rather  than the mean because means can be skewed by extremely high or low  values. We assessed the reliability of the CAMEL ratings for privately and  federally insured credit unions, as well as the SNL Financial data for the  five financial indicators, by requesting information about the underlying  data, how they are collected, and data reliability testing. We found the  data to be sufficiently reliable for the purposes of our review.
To determine compliance with disclosure requirements, we identified  disclosure requirements for credit unions that do not have federal deposit  insurance by reviewing the Federal Deposit Insurance Act disclosure  provisions and the Bureau of Consumer Financial Protection’s (CFPB)  corresponding Regulation I. To review on-site disclosure requirements  (at stations or windows), we selected a nonprobability sample of 53  privately insured credit unions and conducted in-person, unannounced  site visits at 47 of these 53 (41 site visits to unique credit unions and 6  site visits to multiple locations of the 41 credit unions). We were unable to  enter the other six credit unions, usually because they were closed when  we attempted our visit. The sample was selected to ensure diversity  across a number of criteria related to possible differences in compliance.  We selected credit unions for their geographic diversity (credit unions in  different regions of the country and different states), and to achieve a mix  of credit unions of different asset sizes, main retail and branch locations,  and urban and nonurban areas. We also took proximity to GAO offices  into account as a secondary criterion. Because there may be variation in  how state regulators and examiners check for compliance with disclosure  requirements, we conducted site visits in four different states. We  selected these states to obtain a mix of states in terms of numbers of  privately insured credit unions––two with many (Ohio and Illinois), one  with a moderate number (California), and one with few (Maryland)––and  for geographic diversity. For the geographic distribution (by number and  percentage) of all the privately insured credit unions across the nine  states that have them, see table 2.
We selected privately insured credit unions of varying sizes, as defined by  total assets, and selected credit unions for site visits that were roughly  representative of the overall population of credit unions. For instance,  almost 75 percent of privately insured credit unions had total assets of  less than $100 million and therefore the majority of credit unions we  selected for our site visits did as well.
We conducted site visits at both main retail and branch locations. We  selected locations to include both urban and nonurban areas. We roughly  defined “urban” as a downtown area where consumers are more likely to  walk to the credit union and “nonurban” as an area where they are more  likely to drive. Credit unions in nonurban areas were more likely to have  drive-through teller windows. Staff conducted site visits between June  and August 2016. On each visit, staff followed a protocol to help ensure  consistency and completed a data collection instrument to record their  observations. The protocol included checking for signs at teller and drive- through windows and observing sizes and clarity of signs, among other  items. When possible, we obtained photographic evidence to document  examples of disclosure signage. Two GAO analysts recorded their  observations at each site, and any discrepancies were reconciled by  discussions and photographic evidence where available. We aggregated  the site visit data and present summary-level information in this report.
To determine compliance with disclosure requirements for the credit  unions’ main Internet page, we reviewed the websites of all 102 privately  insured credit unions that had a website during the time of our review.  Analysts followed a protocol to help ensure consistency of observations  about the clarity, placement, and font size of disclosures observed and  completed a data collection instrument for each credit union. A second  analyst independently reviewed each credit union’s website to verify the  accuracy of information collected by the first analyst. Any discrepancies  between the two analysts were identified, discussed, and resolved by  referring to the source websites.
To determine compliance with disclosure requirements for advertising  (printed materials), we obtained samples of printed materials (such as  brochures, promotional flyers, and newsletters) from 36 of the 41 unique  credit unions we visited where such printed materials were readily  available. We assessed whether these printed materials had proper  disclosures, taking into account the specified exclusions regarding  advertising noted in Regulation I. To determine compliance with the  requirement to (1) provide disclosures in periodic (monthly) statements  and account records, and (2) get written acknowledgment from depositors  that the institution does not have federal deposit insurance, we relied on  testimonial evidence from the nine state credit union supervisors we  interviewed because we determined that their compliance review in this  area was adequate for our purposes—for example, each state reviews a  sample of new accounts as part of the routine examination each credit  union receives.
Because CFPB is the federal entity responsible for issuing disclosure  regulations, we interviewed CFPB staff about the agency’s oversight and  findings related to compliance with these disclosure requirements. We  compared CFPB’s disclosure requirements for credit unions that do not  have federal insurance with those of NCUA for federally insured credit  unions. Because privately insured credit unions are state-chartered, we  interviewed the respective state credit union supervisors in each of the  nine states about their annual examinations of privately insured credit  unions, including their review of compliance with requirements to disclose  a lack of federal insurance. We also interviewed representatives from the  Credit Union National Association, National Association of State Credit  Union Supervisors, and the Ohio Credit Union League to ask whether  they were aware of any issues or concerns related to compliance with  disclosure requirements for privately insured credit unions.
To determine reasons why credit unions chose private or federal deposit  insurance and to obtain views on the benefits and risks of each, we  interviewed representatives from 10 credit unions that had switched to or  from private insurance in recent years. We identified these credit unions  by reviewing NCUA’s Insurance Activity Reports (from January 2008 to  July 2016), which identify deposit insurance conversions, and then  confirmed these conversions with NCUA and ASI. We interviewed  representatives from five of the eight credit unions that converted from  federal insurance provided by NCUA to private deposit insurance  provided by ASI within the past 5 years. Additionally, we interviewed  representatives from five credit unions that most recently converted from  private (ASI) to federal (NCUA) deposit insurance. The conversions took  place in 2008–2009. These selection criteria were chosen because  representatives from credit unions that recently converted should be able  to provide reasons why their credit union made the choice to switch from  federal to private deposit insurance, or vice versa, and have the most up- to-date information. We also interviewed representatives from credit union  trade associations, NCUA, and ASI about the reasons credit unions  choose private versus federal deposit insurance.
We conducted this performance audit from February 2016 to March 2017  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Reasons Credit Unions Chose Private or Federal Deposit Insurance
paragraphs: Credit unions in the United States can be federally or state-chartered,  which determines their primary regulator for safety and soundness and  also their options for deposit insurance. Federally chartered credit unions  are regulated by the National Credit Union Administration (NCUA) and  must be federally insured by NCUA’s National Credit Union Share  Insurance Fund, which provides up to $250,000 of insurance per  depositor for each account ownership type. State-chartered credit unions  are regulated by credit union supervisors in their respective state and also  can be federally insured by NCUA or, in some states, choose a private  insurer. American Share Insurance (ASI) is the sole insurer for private  deposit insurance to credit unions and provides coverage up to $250,000  per account. Credit unions sometimes change deposit insurers—for  example, converting between federal and private deposit insurance.  According to information provided by NCUA, eight credit unions converted  from federal to private deposit insurance in 2012–2016, and five  converted from private to federal deposit insurance in 2008–2009 (the  most recent such conversions).
Representatives of some credit unions that converted from federal to  private deposit insurance cited the following reasons:
Greater coverage for members. ASI insures $250,000 per account,  whereas NCUA insures $250,000 per depositer for each account  ownership type. Thus, ASI provides more coverage for members with  more than $250,000 in a particular deposit type because they can  structure their deposits into multiple accounts of $250,000 or less.
Reduced federal oversight. Representatives of some state- chartered credit unions described state regulation and oversight,  including the examination process, as less burdensome than federal  regulation and oversight.
Cost savings. Credit union representatives said that private deposit  insurance was less expensive than federal deposit insurance following  the 2007-2009 financial crisis because ASI’s special premium  assessments were lower than the premiums of the National Credit  Union Share Insurance Fund, and state regulatory fees are less than  those of NCUA.
Comparable business models. A credit union representative noted  that the credit union business model aligns well with ASI—both are  not-for-profit organizations that exist to serve their members, and  member credit unions sit on ASI’s board of directors.
Representatives of some credit unions that converted from private to  federal deposit insurance cited the following reasons:
Full faith and credit of U.S. government. Deposits are backed by  the full faith and credit of the U.S. government, which provides  depositors with greater confidence and security.
Concern about private insurer during financial crisis. A  representative of one credit union told us the main reason it switched  to NCUA insurance was because it was concerned that ASI might not  survive the 2007–2009 financial crisis.
Access to additional funding source. One credit union  representative told us the credit union switched to federal deposit  insurance in 2008 to allow it to join a Federal Home Loan Bank, which  provided it with access to an additional funding source.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact name above, Jason Bromberg (Assistant  Director), Beth Faraguna (Analyst in Charge), Caitlin Cusati, Paul  Foderaro, Alice Hur, Risto Laboski, Yola Lewis, Ned Malone, Scott  McNulty, Marc Molino, Barbara Roesmann, Jessica Sandler, Frank  Todisco, and Shana Wallace made key contributions to the report.