The Advocate - Legislative Update
Tuesday, February 04, 2014 8:00 AM

Federal

NCUA's Controversial Diversity Proposal

Last week, we alerted credit unions to the NCUA proposal surrounding diversity and the actions credit unions would have to take if the proposal passed as is. We want to emphasize how important it is that credit union leaders join us in sending comments to NCUA about this proposal, which could greatly impact the way you do business. The deadline for submitting your comments is this Friday, Feb. 7.

Because of its importance, here's a recap of the proposal's requirements. Credit unions would have to:

  • Include diversity and inclusion considerations in both employment and contracting as an important part of its strategic plan;
  • Develop a diversity policy with respect to suppliers and contractors and evaluate and assess the diversity of those entities;
  • Develop a workplace profile and diversity plan that uses metrics to evaluate and assess workforce diversity and hold management accountable for such efforts;
  • Make available to the public, on your website or annual communication, your diversity strategic plan, current workforce and supplier demographic profiles, etc.

Credit unions are urged to submit comment letters to the National Credit Union Administration (NCUA) no later than Friday, Feb. 7, and don't forget to copy Suzanne Yashewski, SVP Regulatory and Compliance, Cornerstone Credit Union League. A copy of the comment letter submitted by the Cornerstone Credit Union League can be found here.

For the full text of the NCUA proposal, click here. Note, the comment deadline has been extended to 02/07/14 from the original posting.

For more information on the proposal or help in crafting your letter, please click here.

NCUA Proposal on Prompt Corrective Action and Risk-Based Capital

Credit unions are urged to comment in response to NCUA’s latest regulatory proposal. The proposed regulation would:

  • Cover credit unions with assets over $50 million; 
  • Restructure NCUA’s current PCA regulation to involve calculation of a capital to risk assets ratio, analogous to Basel III for community banks, although the risk weights would be substantially different;
  • Require a well-capitalized credit union to maintain a 7% net worth ratio (unchanged from the current PCA system) and a  new, 10.5% risk based capital ratio;
  • Change many of the effective risk-weights for most of NCUA’s current asset classifications;
  • Set higher risk weights and hence higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer-term investments and some other assets;
  • Authorize the agency to require even higher capital on a case-by-case basis;   
  • Set further restrictions on the ability of a credit union to pay dividends.

NCUA has produced a calculator to help credit unions determine how the proposal would affect their net worth capital, as the bank regulators provided under their Basel III proposal.   

Comments will be due within 90 days after the proposal is published in the Federal Register. We anticipate the due date to be late April or early May. However, credit unions are urged to comment early to NCUA, and to share comments with Cornerstone’s Regulatory Compliance Counsel, Suzanne Yashewski at syashewski@cornerstoneleague.coop

View the proposal here.

View CUNA’s analysis of the proposal here.

Talking "Breach" at GAC

This week, various committees and panels across Congress will be listening to testimony about data security, including the recent Target breach; cybercrime; and protecting consumer information. Credit unions are an integral part of our push to convince Congress that they must act on this issue now. We are asking your help in urging lawmakers to carefully examine why merchants are not preventing these breaches and to ensure that merchants held accountable for the costs that their actions, including penetrable data security, impose on the financial sector.

At the end of this month, CUNA's Governmental Affairs Conference (GAC) takes place, and your GAC Hill visits are excellent opportunities to address the issue with your lawmakers.

If you haven't seen it already, please review CUNA's Summary on the costs incurred by credit unions, survey results of the breach, efforts to inform and educate the media, talking data security with members of Congress, and what our next steps ought to be as a collective credit union force.

Related documents you might be interested in: 

Preliminary CUNA Target Breach Survey Results

Estimated Costs of Target Breach by State

Arkansas

Budget Session Begins

The Arkansas General Assembly kicks off the week of Feb. 10 with a budget session. Generally during the budget session of the Legislature, lawmakers only consider bills that affect state agency budgets. A two-thirds majority vote of the members is required to raise any other issues, and neither the Republicans nor the Democrats have enough votes to do that unless they can talk their colleagues into jumping party lines. So while we are hopeful little or no bills will arise which could affect credit unions, we will nonetheless monitor activity closely.

Oklahoma

Legislature Kicks Off Amid Political Jockeying

The Oklahoma Legislature began its session yesterday, after Governor Mary Fallin delivered her State of the State Address. Today, committees will meet and begin work in earnest. Over 4,300 bills are up for consideration this year. Of those, over 700 have the potential to impact credit unions; however, the list is being reviewed closely and should be trimmed significantly in the next few days.

Politics in Oklahoma are in flux. On the Senate side, some Democrats have tired of life in the minority and made plans to resign after this session. Senators Ivestor, Burrage, and Ballenger will not return next year. The Burrage seat will most likely be won by local Republican State Rep. Marty Quinn (leaving the Quinn seat open). The Ivester and Burrage districts are leaning Republican, meaning the minority caucus could very well be reduced to only 12 members after November.

In the House, at least ten seats will be contested; however, there is less likelihood of a major partisan swing. Congressman James Lankford and Speaker of the Oklahoma House T.W. Shannon have both announced their intentions to run for the U.S. Senate. Predictably, the Senate race has created a domino effect. Corporation Commissioner Patrice Douglas, State Senator Clark Jolley, and a field of lesser-known candidates have announced intentions to run for Lankford's congressional seat.

Though it's unclear when or if Shannon will step down as Speaker, his lame-duck status creates a leadership void, since many members see him as irrelevant whether or not he retains his current title. Hopefully, amid all the political jockeying, Oklahoma lawmakers will be able to function as a legislative body that gets things done.

Texas

Committee Interim Charges

The Speaker of the Texas House has issued interim charges for study to various state committees. Of interest to Texas credit unions are the following committees and assigned charges:

  • Appropriations:  executive director salaries at state agencies.
  • Business and Industry:  data security on credit cards, changes needed to lien laws, the implementation of SB 247, and reviewing mechanic’s liens on motor vehicles.
  • Insurance:  several issues relating to auto insurance coverage and TWIA.
  • Investments and Financial Services:  home equity laws; also conducting oversight of the agencies under its jurisdiction, including the TCUD.
  • Judiciary and Civil Jurisprudence :  how state agencies use electronic legal documents and the possible adoption of the Uniform Electronic Legal Materials Act; also, the use of wills and probate.
  • State Affairs:  Title 15 of the Elections code, which regulates political funds and campaigns.
  • Technology:  state regulatory and tax policy to ensure that investment in technology infrastructure, goods, and services are unfettered and that Texas is able to capitalize on innovation to fuel additional job growth, business expansion, and investment. (Joint charge with the House Committee on Ways and Means.)

 

Generations' Haegelin Honored for Wegener Award at GAC

Tim Haegelin, Generations FCU The National Credit Union Foundation (NCUF) is honoring Texas's own Tim Haegelin, retired president/CEO of Generations FCU in San Antonio, Texas, with the 2014 Herb Wegner Memorial Award for Lifetime Achievement. Haegelin is one of several honorees who will receive their awards at a special dinner hosted by NCUF at the Grand Hyatt Washington on Monday, Feb. 24, during CUNA's 2014 Governmental Affairs Conference.

Haegelin is perhaps best known for his role in the establishment of Credit Unions for Kids, the program through which credit unions raise funds for Children's Miracle Network Hospitals. It was so successful that the Credit Union for Kids model was launched on a nationwide level in 1996 and now helps support programs and facilities that benefit 17 million children annually.

Haegelin and, under his leadership, Generations FCU have been recognized for many additional accomplishments within the community, which you can read about here. We congratulate Tim Haegelin on his well-earned award, and regard him with admiration and respect, as a man to be emulated in the community and in the credit union industry.

Are You Attending the CUNA GAC? 

For more details or if you have questions, contact Gretchen Ziegler at 800-442-5762, ext. 6484, or gziegler@cornerstoneleague.coop.

 To see a complete list of speakers or to register for this event, please go to events.cuna.org/gac14.

For information on the Cornerstone League hotel block, please contact Cookie Dorsey at cdorsey@cornerstoneleague.coop or call 469-385-6635.