Markets Wired

Learn More about the Cybersecurity Landscape for Credit Unions

ALEXANDRIA, Va. (May 4, 2016) – Credit unions can get valuable information about protecting themselves and their members from cyber threats during an upcoming webinar hosted by the National Credit Union Administration.

The webinar, “Cybersecurity: What Can You Do?” will be held on Thursday, May 12, beginning at 2 p.m. Eastern.

Tim Segerson, Deputy Director of NCUA’s Office of Examination and Insurance, and William Myers, Director of NCUA’s Office of Small Credit Union Initiatives, will provide an overview of cybersecurity risks affecting small credit unions. Topics will include:

• How small credit unions can prepare for, or recover from, a cybersecurity event;
• How to use the Federal Financial Institutions Examination Council’s cybersecurity assessment tool (opens new window);
• How to balance the impact associated with fraud risk and fraud prevention; and
• How to avoid or minimize cyber security vulnerabilities in products and services.

Online registration for this 90-minute webinar is now open here (opens new window). Participants will use this same link to log into the webinar. Registrants should allow pop-ups from this website. There is no charge for the webinar.

Participants may submit questions in advance at [email protected]. The subject line of the email should read, “Cybersecurity: What Can You Do?” Participants with technical questions about accessing the webinar may email [email protected]. This webinar will be closed captioned and then archived online here approximately three weeks following the live event.

NCUA’s Office of Small Credit Union Initiatives fosters credit union development and the effective delivery of financial services for small credit unions, new credit unions, minority depository institutions and credit unions with a low-income designation.

NCUA’s Office of Examination and Insurance is responsible for the agency’s supervision programs, which ensure the safety and soundness of federally insured credit unions.

ALEXANDRIA, Va. (May 4, 2016) – National Credit Union Administration Board Chairman Rick Metsger has named Michael Radway to be his Chief of Staff.

Radway has served as Metsger’s Senior Policy Advisor since November 2013.

“Mike Radway’s extensive background in financial issues, combined with his intelligence and judgment, have made him a valuable advisor,” Metsger said. “As Chief of Staff, he’ll serve the credit union system very well. It would be difficult to find someone with a greater breadth of experience in legislation, policy, strategic planning and outreach. I have greatly appreciated his service, and I look forward to working with him as we address the challenges ahead.”

A credit union member since his days in college, Radway served as professional staff to the U.S. House of Representatives Committee on Banking and Financial Services and its members from 1977 to 1999 and played a key role in the passage of the Credit Union Membership Access Act of 1998.

Radway also served as chairman and public interest director for the Federal Home Loan Bank of Seattle during the Clinton and Bush administrations and as chairman of the Council of Federal Home Loan Banks.

He has also served as president of the Early Care and Education Consortium, a national alliance of early education providers.

Radway holds a bachelor’s degree in political science from Yale University.

ALEXANDRIA, Va. (May 5, 2016) – The National Credit Union Administration is reminding older Americans about the agency’s online resources to help them manage money and protect themselves against fraud.

“Consumer protection and financial education are key parts of NCUA’s mission and part of the credit union model, as well,” NCUA Board Chairman Rick Metsger said. “Giving credit union members, particularly older Americans, the educational tools and security information to help them manage and protect their money is increasingly important, and I hope credit unions and their members will take advantage of the resources we offer.”

May is Older Americans Month, and NCUA’s Pocket Cents (opens new window) financial literacy website includes an entire section on issues of particular interest to older Americans (opens new window). The MyCreditUnion.gov (opens new window) website contains tips on handling personal finances and protecting against frauds and scams aimed at older adults (opens new window). NCUA also has a video (opens new window) explaining how certain financial scams specifically target older Americans and how to avoid being victimized. The agency’s Consumer Assistance Center (opens new window) is available to answer questions or handle complaints.

In September 2014, NCUA signed a memorandum of understanding with AARP to work on a series of initiatives aimed at promoting education and outreach to help older Americans become more financially secure. Those efforts have included:

Under the Federal Credit Union Act, promoting financial literacy is a core credit union mission. While credit unions serve the needs of their members and promote financial literacy within the communities they serve, NCUA works to reinforce credit union efforts, raise consumer awareness and increase access to credit union services. NCUA also participates in national financial literacy initiatives, including the Financial Literacy and Education Commission, an interagency group created by Congress to improve the nation’s financial literacy and education.

NCUA Chairman Seeks to Eliminate Calendar Year Requirement, Forming Working Group

ALEXANDRIA, Va. (May 12, 2016) – National Credit Union Administration Board Chairman Rick Metsger is initiating a review of the agency’s examination process, including the frequency of examinations, and he will form a working group to bring all stakeholders into that effort.

Metsger outlined his plans in a speech today to the Idaho Credit Union League.

“We need to see how we meet our statutory responsibility to examine credit unions for safety and soundness with as small a footprint as possible,” Metsger said. “My number one priority this year is to focus on continual quality improvement. Part of that is looking at our examinations. I want a thoughtful, thorough review of how we might reduce the time we spend onsite and the frequency with which we conduct examinations where performance standards for safety and soundness justify an extended cycle.

“To begin this process,” Metsger said, “we must first remove the requirement that every federal credit union, and all federally insured, state-chartered credit unions with more than $250 million in assets, be examined each calendar year. This prescriptive requirement creates a logjam of exams at the end of each year, which is neither effective nor efficient.”

The goal, Metsger said, is to implement this change within the next two months. Removing the calendar year requirement will not alter the general objective of examining credit unions every 12 months, he said, but it is a necessary first step towards establishing an extended examination cycle for well-managed, financially sound credit unions.

Metsger also said he will form an internal working group, similar to the one that developed the agency’s proposed field-of-membership rule, so the agency can hear from stakeholders and make further changes to the examination process “sooner rather than later.”

Metsger said enhanced technology tools should enable NCUA’s examiners to collect more data without having to make onsite visits, benefitting both credit unions and NCUA’s workforce.

Joint Release:

• Federal Deposit Insurance Corporation
• Federal Housing Finance Agency
• Federal Reserve Board of Governors
• National Credit Union Administration
• Office of the Comptroller of the Currency
• Securities and Exchange Commission

ALEXANDRIA, Va. (May 16, 2016) – Six federal agencies are inviting public comment on a proposed rule to prohibit incentive-based compensation arrangements that encourage inappropriate risks at covered financial institutions. The deadline for comments on the proposed rule, which was submitted for publication in the Federal Register, is July 22, 2016.

Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the agencies to jointly prescribe such regulations or guidelines. There is evidence that flawed incentive-based compensation packages in the financial industry were one of the contributing factors in the financial crisis that began in 2007.

The proposed rules would apply to covered financial institutions with total assets of $1 billion or more. The requirements are tailored based on assets, and covered institutions would be divided into three categories:

• Level 1: institutions with assets of $250 billion and above;
• Level 2: institutions with assets of $50 billion to $250 billion; and
• Level 3: institutions with assets of $1 billion to $50 billion.

Much of the proposed rules would address requirements for senior executive officers and employees who are significant risk-takers at Level 1 and Level 2 institutions. All institutions that would be covered by the proposed rules would be required to annually document the structure of incentive-based compensation arrangements and retain those records for seven years. Boards of directors of covered institutions would be required to conduct oversight of the arrangements. All covered institutions would be subject to general prohibitions on incentive-based compensation arrangements that could encourage inappropriate risk-taking by providing excessive compensation or that could lead to a material financial loss.

Interested parties may find a copy of the
proposed joint agency rule online here. The proposed rule approved by the NCUA Board and a
summary document explaining its applicability to credit unions is available online here.

ALEXANDRIA, Va. (May 16, 2016) – Twenty-two federally insured credit unions subject to civil monetary penalties for filing late Call Reports in the fourth quarter of 2015 have consented to penalties, the National Credit Union Administration announced today.

Twenty-eight credit unions consented to penalties in the fourth quarter of 2014.

The late filers will pay a total of $13,548 in penalties. Individual penalties range from $157 to $2,580. The median penalty was $356. The Federal Credit Union Act requires NCUA to send any funds received through civil monetary penalties to the U.S. Treasury.

“In fewer than four years, the number of late filers has been reduced from 1,744 to 30, and overall compliance is now at more than 99.6 percent,” NCUA Board Chairman Rick Metsger said. “Our new policies have successfully facilitated compliance, with no additional burden on the vast majority of credit unions that file on time and with relatively small penalties for those who file late.

“NCUA will continue working diligently to help credit unions get their Call Reports in on time, and we’ll keep at it until we have full compliance,” Metsger said. “I hope any credit union that is running into problems meeting the deadline will take advantage of the assistance the agency offers.”

A list of credit unions filing late in the fourth quarter and agreeing to pay civil monetary penalties is available online here (opens new window).

The assessment of penalties primarily rests on three factors: the credit union’s asset size, its recent Call Report filing history and the length of the filing delay. Of the 22 credit unions agreeing to pay penalties for the fourth quarter of 2015:

• Fifteen had assets of less than $10 million;
• Five had assets between $10 million and $50 million; and
• Two had assets between $50 million and $250 million.

No credit unions with assets greater than $250 million were subject to civil money penalties for filing late Call Reports in the fourth quarter. Seven of the late-filing credit unions had been late in a previous quarter.

A total of 30 credit unions filed Call Reports late for the fourth quarter of 2015. NCUA consulted regional offices and, when appropriate, state supervisory authorities to review each case. This review determined mitigating circumstances in eight cases that led to credit unions not being penalized. NCUA informed the remaining 22 credit unions of the penalties they faced and advised them they could reduce their penalties by signing a consent agreement. NCUA also said it would initiate administrative hearings against credit unions that did not consent.

NCUA sends reminder messages about Call Report filing deadlines that include information on how to receive technical support to handle filing problems. The agency also has created an automated reminder email system that contacts credit unions that have not filed their Call Reports and confirms successful filing.

NCUA’s Office of Small Credit Union Initiatives has dedicated an Economic Development Specialist to assist small credit unions in filing Call Reports on time. Credit unions that would like assistance should send an email to [email protected]. NCUA also has produced a video (opens new window) describing how to file Call Reports.

ALEXANDRIA, Va. (May 17, 2016) – As long as financial institutions have existed, there been bank robbers—meaning that all credit unions regardless of asset size are tempting targets.

In the latest issue of the National Credit Union Administration’s monthly newsletter, the featured article by the Office of Continuity and Security Management examines how the implementation of a few well-proven security devices and measures can effectively deter or respond to most robbery attempts.

The May 2016 issue of The NCUA Report is now available online here. (opens new window)

The agency’s newsletter features a column from NCUA Board Chairman Rick Metsger and articles from several NCUA offices on the agency’s initiatives and information on supervisory, regulatory and compliance issues that are important to all federally insured credit unions.

Articles in this month’s issue include:

• Chairman’s Corner: Asking the Right Question: How Do We Make Things Even Better?
• NCUA’s Resources Can Help Credit Unions Detect, Prevent and Report Elder Financial Abuse
• Board Actions: Rules on Incentive Compensation and Partial Occupancy Proposed
• Understanding Your Technology Risk Profile Can Help You Get Back Online during a Disruption
• Key Aspects of the Proposed Inter-Agency Rule on Incentive Compensation and How It Applies to Federally Insured Credit Unions
• NCUA Opening $2 Million Grant Round June 1

Published monthly, The NCUA Report is NCUA’s flagship publication. The newsletter highlights important Board actions and key issues that credit union managers, staff and volunteers need to know. If interested, you can subscribe to the online version of the newsletter here (opens new window). Previous issues of The NCUA Report are available online here. (opens new window)

ALEXANDRIA, Va. (May 17, 2016) – The video recording of the April 2016 open meeting of the National Credit Union Administration Board is now available on the agency’s website.

Archived videos of past Board meetings may be viewed here, and each video remains on the site for one year.

At the April open meeting, the NCUA Board unanimously approved two items:

• A proposed rule to provide regulatory relief to federal credit unions by eliminating the full occupancy requirement in the current occupancy rule.
• A proposed joint agency rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act to regulate in federally insured credit unions with assets of $1 billion or greater incentive-based compensation plans that encourage inappropriate risk-taking.

The Chief Financial Officer also briefed the Board on the performance of the National Credit Union Share Insurance Fund, which had a net income of $24 million in the first quarter of 2016 and a decline in the provision for insurance losses.

NCUA posts these videos as part of the agency’s ongoing efforts to provide transparency and to allow those unable to attend Board meetings the opportunity to become better informed. An interval between the meeting and posting is necessary for the videos to comply with Section 508 of the Rehabilitation Act for the hearing and visually impaired.

The
Board Actions page of NCUA’s website has more information, including Board agendas, which are posted at least one week in advance of each open meeting, copies of Board Action Bulletins, which summarize the meetings, copies of Board memorandums and other documents.

ALEXANDRIA, Va. (May 18, 2016) – Credit union system stakeholders will have an opportunity to hear National Credit Union Administration Board Members discussing issues prior to taking action under a new procedural direction announced today by NCUA Board Chairman Rick Metsger.

“Due to federal sunshine laws, and the fact that NCUA has never had more than three Board members, we cannot deliberate on policy issues, except at open meetings,” Metsger said. “What we’re doing is giving Board Members an opportunity to talk directly to one another, exchange thoughts and ideas. It also provides the broader credit union community with insight into our thought process. Since no action is being taken, stakeholders will also have the opportunity to consider our discussion and provide early input before any rulemaking begins.”

The first briefing is scheduled for the May 19 open Board meeting and will cover agency plans to modernize the Call Report and Profile and the system for reporting and storing credit unions’ information. Metsger said that, in the future, when time allows, NCUA Board meetings will include briefings in order to give Board Members a chance to talk about evolving issues.

“If these initial briefings and discussion are valuable because they provide stakeholders with better visibility into the workings of the agency, I’d like to expand the practice,” Metsger said. “When a Board agenda is light enough that it gives us the luxury of time for thoughtful analysis and discussion while providing greater visibility to the regulated community on what we’re contemplating, I want to take advantage of that opportunity.”

Board Action Bulletin

NCUA to Request Comments on Modernizing Call Reports, Credit Union Profile

ALEXANDRIA, Va. (May 19, 2016) – The National Credit Union Administration Board held its fifth open meeting of 2016 at the agency’s headquarters here today and discussed two issues:

• The Chief Financial Officer briefed the Board on the performance of the Temporary Corporate Credit Union Stabilization Fund, including plans to pay down $700 million of borrowings from the U.S. Treasury by May 31, 2016.
• The Office of Examination and Insurance informed the Board about proposed plans to modernize the Call Report and Credit Union Profile content and improve data collection.

Stabilization Fund Payment to Reduce Treasury Borrowing to $1 Billion

By the end of May, NCUA plans to make a $700 million payment to the U.S. Treasury against prior borrowings by the Stabilization Fund.

When that payment is made, the Stabilization Fund’s outstanding borrowings from the U.S. Treasury will decrease to $1 billion. The payment largely comes from the net proceeds from approximately $700 million in recent NCUA legal recoveries from Goldman Sachs, UBS and Credit Suisse, some of which came in after the close of the first quarter.

“NCUA’s corporate resolution plan remains on the right track, thanks to an improving economy, strong legacy asset performance and the continued hard work of the NCUA staff in successfully pursuing legal recoveries and ably managing the Stabilization Fund,” NCUA Board Chairman Rick Metsger said. “NCUA is committed to staying on this prudent course to achieve the Stabilization Fund’s ultimate lowest-cost resolution.”

For the quarter ending March 31, 2016, the Stabilization Fund’s net position increased by $78.2 million to a positive $618.6 million, up from $540.4 million at the end of the previous quarter, based on the best available preliminary and unaudited information.

While the Stabilization Fund continued to have a positive net position in the first quarter, no funds are available to provide federally insured credit unions with an immediate rebate. NCUA must first repay all outstanding borrowings from the U.S. Treasury and satisfy any outstanding NCUA Guaranteed Notes obligations. Future changes in the economy or the performance of the legacy assets, which secure the NCUA Guaranteed Notes, could change the value of the assets NCUA and the Stabilization Fund can eventually access at the end of the NCUA Guaranteed Notes Program.

The change in net position primarily resulted from guarantee fees earned and improvements in projected cash flows relating to the legacy assets that secure the NCUA Guaranteed Notes.

Created by Congress in 2009, the Stabilization Fund assumed the losses associated with the failure of five large corporate credit unions and allowed the credit union system to absorb these losses over time. By law, the Stabilization Fund is scheduled to expire in 2021.

Agency to Seek Stakeholder Views on Updating Call Report and Profile

NCUA plans to consult with credit union system stakeholders as the agency conducts a comprehensive review and modernization of the Call Report and Credit Union Profile content to leverage technology, improve data collection and enhance the examination process.

“NCUA is committed to continual quality improvement,” Metsger said. “We are therefore carefully examining our processes and operations, asking how NCUA can make these better and more efficient for stakeholders and useful for NCUA. Through this request for information, NCUA will seek to identify ways to reduce or eliminate any potentially unnecessary Call Report burdens and improve NCUA supervision. We will also use this information to find ways to streamline the quarterly reporting process, especially for smaller, non-complex credit unions.”

NCUA uses the data collected in the Call Report to monitor and supervise risk in credit unions and protect the National Credit Union Share Insurance Fund.

Stakeholders will be invited to submit written comments electronically or by mail, and instructions for submission will be included in the upcoming
Federal Register posting. The agency will be gathering information through an open and public process of comment and review that may include using online surveys, focus groups, workshops and other forums. NCUA will also form an internal working that will consult with external stakeholders.

“Once NCUA publishes this request for information, I urge all interested individuals in the credit union system to assist us by providing their insights and suggestions during this comment process,” Metsger said.

NCUA will use stakeholder comments to help improve the user experience, enhance the utility of supervisory data and help minimize the burdens associated with reporting without compromising the agency’s ability to monitor and supervise risk in federal credit unions.

Comments must be received within 60 days of the publication of the request for information in the
Federal Register. NCUA also plans to seek clearance from the Office of Management and Budget to form workgroups that would provide feedback on improvements to the Automated Integrated Regulatory Examination System, or AIRES, and Credit Union Online systems for submitting and storing information.

NCUA tweets all open Board meetings live. Follow

@TheNCUA (opens new window) on Twitter, and access Board Action Memorandums and NCUA rule changes at

www.ncua.gov. NCUA also live streams, archives and posts

videos of open Board meetings online.