REGular Blog Weekly Roundup: August 30

Happy Friday! As we head into the holiday weekend, let's take a look at some of this week's happenings in credit union regulatory compliance

NCUA

This week the NCUA issued a Letter to Credit Unions (Permissible Loan Interest Rate Ceiling Extended | NCUA) regarding their recent decision to hold the interest rate ceiling for FCUs at 18%. The letter notes that during their Board meeting in July of 2024, the Board voted to continue the temporary 18% interest rate ceiling for an additional 18 months. This action extends the ceiling until March 10, 2026. The Board will likely consider this issue again in January 2026. The letter notes that the interest rate ceiling for payday alternative loans (PALs) remains at 28%. While not in the letter, it's also worth noting that this cap only applies to federal credit unions. Interest rate caps for state chartered credit unions are set by the states.

This has not been a particularly active year for Letters to Credit Unions. This year there have only been 4 Letters to Credit Unions - one detailing the operating fee schedule for FCUs in 2024, one listing NCUA's Supervisory Priorities for 2024, one on HMDA data requirements, and now this letter. It's the first letter issued by the agency since February of this year.

After their customary August skip, NCUA's next Board meeting will be on September 19.

FinCEN

On Wednesday the Financial Crimes Enforcement Network (FinCEN) issued two final rules. The rules will extend anti-money laundering (AML) obligations to real estate agents and investment advisers. The rules takes some of the AML requirements credit unions and banks are already subject to and extends them to these non-bank entities. 

These rules take effect in 2025, and our initial review does not indicate any major impact on credit unions, since the rules target obligations of real estate agents and investment advisers, but if there is any impact we will keep you posted.

FFIEC

This week the Federal Financial Institutions Examination Council (FFIEC) announced that the agencies will sunset the Cybersecurity Assessment Tool on August 31, 2025. Released in June of 2015, many credit unions have used the NCUA's Automated Cybersecurity Examination Tool (ACET) for assessing cybersecurity preparedness and as part of the IT examination process. The ACET is tailored for credit unions and includes additional information and capabilities beyond those in the FFIEC's CAT.

After the announcement from the FFIEC, the NCUA announced that it will continue to support the ACET and make it available for credit union uses, even after the FFIEC sunsets its tool. This may be welcome news for credit unions who have invested considerable time and resources into use of the ACET.

CFPB

In a blog post from the "Director's notebook" this week, the CFPB wrote about ATM fees and access to cash. 

The post states that the CFPB has been studying trends in how people use cash and coins. The Bureau writes that people are paying more for their cash at out-of-network ATMs and at retailers. Even with increased adoption of electronic banking, physical cash is still a critical component of a resilient financial system. They reference the recent CrowdStrike outage, highlighting one software failures reminds us of the reliability of cash.

The post notes that in many parts of the country, people can struggle to find easy and free access to their own cash.

"In our discussions with elected officials from small towns and rural areas, they’ve described the impact of the last bank branch closing or how services degraded after a bank merger. We heard how people in these communities encounter high fees to withdraw cash, small businesses struggle to make change in cash transactions, and there are fewer safe places to make cash deposits."

Finally, the post writes about how retailers have stepped in to fill this void by offering cash-back when using debit cards. However, the CFPB finds, this has increasingly become a fee service rather than a free service.

It's disheartening to read about the CFPB's generalization that "the banking system" is abandoning communities through branch closures and mergers. Credit union's aren't creating banking deserts - they are curing them. A recent study from the Philadelphia Fed found that when a banking desert was created, the last financial institution to close (thus creating the desert) was a credit union only 8% of the time. However, when a banking desert was cured (a financial institution opened a branch in an are where there wasn't one before) that FI was a credit union 35.7% of the time. 

Community banks also play a key role in curing banking deserts. While they closed a branch that created a banking desert 29.9% of the time, they opened a branch in a banking desert 45% of the time. Compare that with the largest banks ($50 billion+ in total assets), who created the banking desert 45.2% of the time while curing it 15.5% of the time.

The CFPB once again paints with a broad brush, positioning the entire banking system as abandoning communities and leaving them without access to cash, when this just is not true.

That's all for this week - I hope everyone has a great holiday weekend, and we'll be back soon!