Regulatory Compliance Weekly Roundup: June 30, 2023

Happy Friday all! As the second quarter winds to a close, the regulatory agencies have been busy this week, with a number of annual reports and information issued. Here's a quick recap of some of this week's highlights.

NCUA

Yesterday the NCUA, along with the OCC, Federal Reserve, and the FDIC, issued an Interagency Policy Statement on Prudent Commercial Real Estate Loan Accommodations and Workouts. For credit unions involved in commercial real estate, the statement can be a resource for you when engaging with borrowers facing financial difficulties.

This new statement replaces the previous Policy Statement on Prudent Commercial Real Estate Loan Workouts, which was issued and adopted in 2009. In addition to reaffirming key risk management principles of the 2009 statement, the new version adds language on short-term loan accommodations, updates information on changes in accounting principles, and adds to the examples of commercial real estate loan workouts.

The NCUA also released a cybersecurity report to the House Financial Services Committee and the Senate Banking Committee. The Cybersecurity & Credit Union Resilience Report is issued annually and provides information on policies and procedures to address cybersecurity risks, activities to ensure effective implementation of these controls, and current or emerging threats.

The report highlighted the ways that NCUA promotes cybersecurity best practices in credit unions and prioritizes it in its supervision. They highlighted the agency's 72-hour incident reporting requirement, their risk-focused approach to credit union IT reviews, the value of modernized examination tools like MERIT and ACET, and the agency's investment in cyber resources and training.

Throughout the report, the NCUA highlighted their lack of direct examination authority over third-party vendors and CUSOs. A bill was introduced last Congress which would have given them this authority. The bill was opposed by the League, as well as other Leagues and the national trade associations. While the bill has yet to be introduced again in this Congress, NCUA still wants the authority and did not waste the opportunity provided by this report to ask for it.

You can find the new Commercial Real Estate statement here:

The Cybersecurity Annual Report can be found here:

CFPB

This week the CFPB released its Fair Lending Annual Report to Congress, highlighting their "fair lending activities in enforcement and supervision; guidance and rulemaking; interagency coordination; and outreach and education for the calendar year 2022." The report highlighted the agency's focus on consumers and communities most affected by unlawful discrimination.

In the Rulemaking and Guidance section of the report, the CFPB noted their proposed rule amending Regulation B to implement changes to the ECOA, their participation in an interagency rulemaking to implement quality control standards for AVMs, and their final rule amending two HMDA (Regulation C) thresholds.

Chapter 6 of the Report, titled "Looking Forward: The Future of Fair Lending," noted the growing role of technology in the financial services marketplace and the risks they pose to individuals, businesses, communities, and the market as a whole. They warned that the agency will remain vigilant against these risks and that creditors and service providers will be held accountable for compliance with fair lending and other laws, regardless of the technology they choose to use.

You can find the full report here
Related: Read more about the report from CUNA:

Federal Reserve

Yesterday the Federal Reserve announced the 57 early adopters of the FedNow service. These are banks, credit unions, and financial services providers who have completed formal testing and certification in advance of the FedNow Service's anticipated launch in late July. These organizations are expected to be among the first to go live and be ready to send or receive transactions when the service launches.

FedNow is a real-time payments system with the ultimate goal of helping businesses and people send and receive instant payments.

Here in Virginia, we've heard from our credit unions about their members calling in and asking if their credit union will be participating. 12 credit unions are among the early adopters, as well as one corporate credit union: Vizo Financial. Vizo is the corporate for many of the credit unions in Virginia.

Additionally, many core processors and payments providers to Virginia's credit unions are among the service providers on the early adopters list, including Fiserv, Jack Henry, FIS, Finastra, and others.

The full list of early adopters can be found here.

To learn more about the FedNow program, please visit https://explore.fednow.org/

That’s all for this week – Happy 4th of July, and safe travels to those who are hitting the road or taking to the skies this weekend!