Page 24 - MCUL: Contact Magazine - Q4 2019

known as Generally Accepted Accounting Principles (GAAP). The NCUA Board has also signaled it will be issuing pro-
Credit unions follow GAAP and are audited in accordance posed rules regarding alternative capital and Credit Union
with them. In June 2016, FASB issued a new standard, Service Organizations while we also await a fi nal rule delay-
Current Expected Credit Losses (CECL). Under this new ing the agency’s risk-based capital rule.
model, credit unions will be required to use historical infor-
mation, current conditions and reasonable forecasts to The Consumer Financial Protection Bureau (CFPB) also
estimate the “expected” loss throughout the life of a loan. remained busy this year. Under new leadership, the CFPB
In short, this change will mean signifi cantly greater data has started evaluating overdraft regulations, specifi cally the
requirements and changes to accounting methodologies opt-in form for ATM and one-time debit transactions. Earlier
to accurately account for losses. this year, the CFPB sought comment on the regulatory
burden of its overdraft regulation. The topic of overdrafts
Due to the signifi cant impact CECL will have on credit unions remains very volatile, and we will keep a close eye on
(as well as community banks), the industry has been advo- potential regulation.
cating to FASB for an exemption. While no exemptions have
been issued, FASB has agreed to delay the implementation The CFPB also issued proposed rules with a request for
of CECL until January 2023. comments addressing the burden of the Home Mortgage
Disclosure Act and associated data points. Additionally,
Moving on to more positive news, the National Credit Union the CFPB announced potential rulemaking regarding unfair,
Administration (NCUA) Board has been busy this year with deceptive or abusive acts or practices (UDAAP). UDAAP has
a few regulatory relief efforts. With a new board chair- been utilized by the CFPB, which can issue enforcement
man, Rodney Hood, and new board member, Todd Harper, actions against institutions it does not directly regulate.
the Board has issued several proposed and fi nal rules.
Noteworthy fi nal rules include one addressing Supervisory Th e topic of overdraft s remains very
Committee Audits. The fi nal rule implements recommenda-
tions outlined in the NCUA’s Regulatory Reform Task Force volatile, and we will keep a close eye
Agenda and will provide additional fl exibility and relief to
federally insured credit unions. on potential regulation.

The NCUA Board also adopted a fi nal rule that updates, With the ability to “regulate through enforcement,” we hope
clarifi es and simplifi es Federal Credit Union Bylaws. The to see a change in this process, as most credit unions are
Board also updates and conforms the Bylaws to numerous not under regulation or examination by the CFPB. The Bureau
legal opinions issued by the Offi ce of the General Counsel has indicated any UDAAP regulation will be a longer-term
and provides federal credit unions with greater fl exibility project yet remains a priority on its rulemaking agenda.
while also removing outdated and obsolete provisions.
Congratulations, we made it through another year! Thanks
Additionally, the NCUA Board adopted a fi nal rule establish- for hanging in there with us. We’re in this together, and
ing a payday alternative loans (PALs II) program separate the Michigan Credit Union League is here to help with
from the NCUA’s existing PALs I program. As proposed your compliance needs through InfoSight, CU PolicyPro®,
and adopted, the PALs II program provides the following: ComplySight®, Affi rmX and our Compliance Helpline. ■

• Loan amounts up to $2,000
• Loan terms up to 12 months
• Eliminates the minimum membership requirement
(PALs I requires a minimum membership of at least
one month)
• No more than three loans in a rolling six-month
period to a single borrower
• A credit union may not offer more than one PAL (PAL
I or PAL II) to a borrower at a time

24 FOURTH QUARTER 2019 I CONTACT
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