RegWatch - CUNA CFO Council

CUNA Regulatory Affairs (edited by the CFO Council Regulatory Committee)
June 12, 2008 | COMMENTS

Regulatory Issues of Interest to CUNA CFO Council Members

In This Issue:

• NCUA’s Executive Director Discusses the Agency’s Data Collection with CUNA Groups
• CUNA Comments on Two Fed Proposals
• Interchange Heats up on the Hill
• NACHA Issues Proposal on ACH Stop Payment Issues

> Read the Full Version of RegWatch
> View Recent Comment Calls

EDITORS NOTE: Please pay particular attention to the NCUA proposed regulation highlighted below that could result in your credit union's senior executive compensation being made public.

NCUA's EXECUTIVE DIRECTOR DISCUSSES THE AGENCY'S DATA COLLECTION WITH CUNA GROUPS 

CUNA's Federal Credit Union Subcommittee, chaired by Marc Schaefer, hosted a conference call recently during which NCUA Executive Director Len Skiles and NCUA Senior Attorney Tonya Green reviewed in detail the agency's data collection program for federal credit unions.  CUNA's Governmental Affairs Committee, Small Credit Union Committee, Community Credit Union Committee, and Examination and Supervision Subcommittee all participated in the call. Click here for a summary of the discussion and here for a summary of the May NCUA Board meeting when the program was adopted.  CUNA continues to oppose very strongly NCUA's recommendation that senior executive compensation data be reported to credit union members; this issue is yet to be addressed by the NCUA Board.

-  Mary Mitchell Dunn, SVP and Deputy General Counsel

CUNA COMMENTS ON TWO FED PROPOSALS

CUNA responded to the Federal Reserve Board's (Fed's) request for comment with respect to proposed changes to the automated clearinghouse (ACH) debit transfers that are processed by the Reserve Banks' FedACH service and also on proposed changes to its Payments System Risk (PSR) Policy.

The Fed is proposing to change the posting time for commercial and government ACH debit transfers (ACH debit transfers), which are processed by the Reserve Banks' FedACH service, from 11:00 a.m. EST to 8:30 a.m. EST to coincide with the posting of commercial and government ACH credit transfers (ACH credit transfers). This would significantly increase the burden on corporate credit unions in managing their Reserve Bank balances. Currently, corporate credit unions have two and a half hours after ACH transactions are credited in order to fund their Reserve Bank balances before ACH transactions are then debited.

CUNA does not believe the Fed has substantiated the need for the change and believes it would create an extreme hardship for corporate credit unions and their constituents in managing their balances with the Reserve Banks. CUNA, therefore, opposes the Fed's proposal to change the posting times of ACH debit transfers that are processed by the Reserve Banks' FedACH service.

In an effort to eliminate credit risk associated with intraday overdrafts, the Fed is also proposing to adopt a policy of supplying intraday balances to healthy depository institutions. This would predominantly be done through collateralized daylight overdrafts.

CUNA believes that permitting corporate credit unions to provide approved collateral for securitization of intraday credit would minimize or eliminate the risk of conversion into impermissible discount window credit.

If the Fed determines that changes to the ACH debit posting time are justified, CUNA urges the Fed to permit corporate credit unions to pledge collateral for intraday overdrafts with an implementation date equal to the change in posting times, as other depository institutions would be permitted to do.

Click here to read CUNA's letter.

-  Lilly Thomas, Assistant General Counsel

INTERCHANGE HEATS UP ON THE HILL

On the heels of an Interchange bill introduced in the House by Congressman Conyers (D-Mich.), Senator Durbin (D-Ill.) introduced a Senate bill also regulating Interchange fees.

Interchange fees are paid to credit card issuers (including credit unions) by merchants and are paid with respect to each credit card sales transaction as a contractually-fixed percentage of the amount of the sale.

Both bills would set up a three-member panel of judges for a final ruling of Interchange rates if a voluntary agreement between the transacting parties could not be reached. CUNA opposes these bills and has been working against the legislative efforts in both the House and Senate.

-  Lilly Thomas, Assistant General Counsel

NACHA ISSUES PROPOSAL ON ACH STOP PAYMENT ISSUES

NACHA is proposing amendments that would re-align its Operating Rules (Rules) with the requirements of Regulation E regarding the intent of and processing requirements for, stop payment orders on ACH transactions.

Currently, NACHA's Rules allow a consumer receiving ACH debits to place a stop payment order on a single entry, similar to the way a stop payment order can be placed on a particular check in the check collection system. If a Receiver wishes to stop all debits from a specific Originator, the Rules require authorization to be revoked with the Originator, which is inconsistent with Regulation E.

In its proposal, NACHA clarifies that the stop payment order would remain in effect until all entries related to the Receiver's request to stop payment have been fulfilled, whether it is one entry, multiple entries, or all future entries related to a specific authorization. Additionally, the proposal would increase the number of entries to which a stop payment order would apply.

For more information on this proposal, click here for CUNA's comment call. Comments are due to NACHA by June 27, 2008. Please submit your comments to CUNA by June 13, 2008.