Regulatory Compliance Weekly Roundup: November 17, 2023

It's been a busy week in our Regulatory Compliance world! Let's take a look at some headlines.

NCUA

This week the NCUA held its November board meeting as well as a hearing on the 2024-2025 budget justification. The Board meeting agenda included a quarterly update on the share insurance fund. We covered yesterday the rise in CAMELS 3 credit unions and assets in those credit unions that were showcased in the report. You can find the full update on the share insurance fund here.

Another interesting note from the hearing was the progress NCUA has made in building its overnight investment portfolio to improve liquidity. With overnight investments now exceeding $4 billion, and with the rise in yields, it was stated in the meeting that the NCUSIF's overnight investments now earn more than $770,000 every 24 hours from those investments.

CU Today has an excellent analysis of the board meeting, which you can find here. The Board also approved a final rule, expanding the scope of qualified charities credit unions could donate to through a charitable donation account. The list, which previously only included 501(c)(3) organizations, was expanded to include 501(c)(19) veteran organizations.

Later in the afternoon, the Board conducted a hearing on the 2024-2025 Budget Justification, which was released in October. NCUA releases its "staff draft" budget and invites stakeholders to provide testimony, both written and oral. Yesterday's hearing also offered stakeholders a chance to question NCUA about the budget and the agency's budget process. After receiving and reviewing input, the NCUA Board will approve a final budget, likely at the December Board meeting. While it's a two-year budget, this process is conducted annually.

League President/CEO Carrie Hunt was among the five stakeholders who testified on the budget yesterday, along with representatives from CUNA, NAFCU, NASCUS and the GoWest Credit Union Association, which is the League for six western states. In her testimony, Carrie highlighted the challenges credit unions face from a variety of fronts, and questioned how the growing regulatory burden would enable credit unions to thrive. She also urged the agency to not forget the "missing middle" of mid-size credit unions. Several stakeholders pushed back on the NCUA's emphasis on resource allocation for consumer protection, questioning whether additional examiners were needed in this area, as is proposed in the budget.

The testimony offered -- Carrie's in particular -- sparked conversation in the Q&A portion of the meeting. NCUA Vice Chairman Kyle Hauptman quoted part of Carrie's testimony that resonated with him: “I do not understand how credit unions will continue to thrive with the ever-increasing cost of doing business and additional regulatory scrutiny."

He asked the NCUA if they agreed that credit unions were facing additional regulatory scrutiny. He also asked NCUA Chairman Todd Harper if he understands how credit unions will continue to thrive with the ever-increasing cost of doing business and additional regulatory scrutiny, before noting that he sides with Carrie on this question.

Testimony opportunities like this are a critical check on the growth of the NCUA's budget, which is funded by credit unions. You can watch the full budget session here: 2023 NCUA Budget Briefing and read more about the testimony of stakeholders here.

FDIC

As eventful as the week proved for NCUA, it's been even more so for our banking counterparts at the FDIC. On Monday, the Wall Street Journal published a story detailing a toxic work environment at the FDIC. Over the next two days, the heads of the federal banking regulators, including FDIC Chairman Martin Gruenberg, appeared before the Senate Banking Committee and the House Financial Services Committee. Naturally, the story became one of the main questioning points in those hearings.

On Wednesday, the WSJ posted an additional story on Gruenberg and the FDIC. The FDIC canceled an open meeting of its board of directors this week, and some members of Congress are calling for Gruenberg to resign. Gruenberg has stated that harassment and discrimination are unacceptable at the FDIC, and told lawmakers this week that an independent firm would conduct a "top-to-bottom assessment" of the agency.

CFPB

This week the CFPB issued its Fair Debt Collection Practices Act Annual Report. The report provides some background, insight, and data into the state of debt collection. Of note, the report found that 15% of the complaints the CFPB received last year were about debt collectors trying to settle an allegedly unpaid medical bill. Improving medical debt collection has been a priority for the Bureau, which in September proposed a rulemaking that would remove medical bills from consumers' credit reports, stop creditors from relying on medical bills for underwriting decisions, and stop coercive collection practices.

That's all for now - I hope everyone has a great week.