Episodes

  • Statement of CFPB Director Rohit Chopra, Member, FDIC Board Member, on Stopping Fintech Deposit Meltdowns

    Statement of CFPB Director Rohit Chopra, Member, FDIC Board Member, on Stopping Fintech Deposit Meltdowns
    Oct 1 2024
    Hello, this is Samantha Shares. This episode covers the Statement of C F P B Director Rohit Chopra, Member, F D I C Board of Directors, on Stopping Fintech Deposit Meltdowns The following is an audio version of that statement. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A. And now the statement. Statement of C F P B Director Rohit Chopra, Member, F D I C Board of Directors, on Stopping Fintech Deposit MeltdownsOver the past decade, we have seen a significant incursion into consumer deposit taking and payments activities by companies that aren’t banks or credit unions. These firms want the public benefits of being a bank or credit union, without the public obligations.This trend poses significant risks. We have developed a legal framework for banks over the past century designed to ensure people’s deposits are safe and that they have constant access to their funds. Deposit insurance and the special F D I C resolution process protect people if the bank fails and they retain quick access to their cash. When nonbanks engage in deposit taking, whether directly or in partnership with a bank, all these protections may not apply.Today, the F D I C Board of Directors is proposing a rule that would strengthen requirements for banks that partner with nonbanks in offering deposit-style products.This year, Synapse, a middleman between nonbanks offering deposit-style products to end users and their partner banks, filed for bankruptcy. The firm appears to have failed to properly track customer account balances and may have engaged in other shady practices. As a result, tens of thousands of customers have had their funds frozen for months. The banks have been unable to reconcile all the records necessary to get end users their funds back. This has led to severe harm, especially for people who were using the nonbank account as a primary checking or savings account.If one of the bank partners had failed, instead of Synapse, the horrible account balance tracking may have prevented the F D I C from making quick deposit insurance determinations and returning funds promptly to end users. When consumers do not have access to their funds, it can undermine confidence in the financial system and ruin lives.The proposed rule would require banks to maintain records identifying the ultimate end users, their balances, and other information for custodial accounts with transaction-style features. Banks would still be permitted to maintain these records through a third party as long as certain protections are in place, including daily reconciliations to make sure the numbers at the customer-level add up. Banks would also have to maintain constant access to the records, including in the event of the nonbank’s bankruptcy or other disruption. This framework would expedite an F D I C insurance determination if the bank fails and prevent the type of chaos we’re seeing with the Synapse bankruptcy if the nonbank fails.To be clear, this rule would not address all the risks posed by banking with a nonbank. Even if all the records are appropriately maintained, there still may be some delay in getting end users their money back as the nonbank’s bankruptcy proceeding plays out.1 In addition, nonbank deposit taking offered directly without a bank partner is generally outside the jurisdiction of the federal banking agencies.2 If the firm fails, consumers become unsecured creditors of the nonbank’s bankruptcy estate and may lose their funds.This proposal must not be the end of our collective work on this issue.First, disclosure requirements related to the intricacies of pass-through deposit insurance are woefully inadequate. Consumers should, at the very least, be told clearly and concisely that they could face delays or lose their money by banking with a nonbank.Second, we must continue to take enforcement actions against nonbanks that make misrepresentations about deposit insurance or misuse the F D I C name or logo.Finally, for nonbanks like Venmo, PayPal, and Cash App, that offer deposit-style products directly, state and federal policymakers should consider requiring these firms to promptly sweep people’s balances to their linked insured account automatically. Under their state licenses, these nonbank firms are supposed to be in the money movement business, not the banking business of keeping deposits. This concludes the C F P B Directors’ statement. If your Credit union could use assistance with your exam, reach out to ...
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    5 mins
  • The Future of Credit Unions: NCUA Vice Chairman's 2024 Vision

    The Future of Credit Unions: NCUA Vice Chairman's 2024 Vision
    Sep 24 2024

    # Show Notes: NCUA Vice Chairman Hauptman's 2024 ACU Congressional Caucus Remarks

    ## Key Points:

    1. Records Retention Policy Update
    - NCUA revising policies to limit required retention periods
    - Prompted by feedback from credit unions

    2. Overdraft and NSF Fees
    - Hauptman opposes forcing large credit unions to publicly state revenue from these fees
    - Warns against over-regulation potentially limiting financial access

    3. Technology and Innovation
    - NCUA exploring AI for fraud detection and customer service
    - Discussion on digital assets and stablecoins in credit union evolution

    ## Notable Quotes:

    - "The only people who think compliance is easy are those that don't have to do it."
    - "America's more than 140 million credit union members know their lives better than we do."
    - "My true north is making sure credit unions don't go the way of Blockbuster video because their regulator wouldn't let them compete."

    ## Context:
    - Speech delivered on September 9, 2024
    - Hauptman's term on the NCUA Board ends in August 2025

    ## Call to Action:
    For assistance with NCUA exams, contact Mark Treichel at marktreichel.com or on LinkedIn.
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    9 mins
  • FED Chairman Powell Cuts Rates 50BP: His Words on Why

    FED Chairman Powell Cuts Rates 50BP: His Words on Why
    Sep 19 2024
    Hello, this is Samantha Shares. This episode covers Transcript of Chair Powell’s Press Conference Opening Statement September 18, 2024 The following is an audio version of that transcript. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A. And now Chairman Powell’s opening statement. Transcript of Chair Powell’s Press Conference Opening Statement September 18, 2024 CHAIR POWELL. Good afternoon. My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. Our economy is strong overall and has made significant progress toward our goals over the past two years. The labor market has cooled from its formerly overheated state. Inflation has eased substantially from a peak of 7 percent to an estimated 2.2 percent as of August. We are committed to maintaining our economy’s strength by supporting maximum employment and returning inflation to our 2 percent goal.Today, the Federal Open Market Committee decided to reduce the degree of policy restraint by lowering our policy interest rate by 1/2 percentage point. This decision reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2 percent. We also decided to continue to reduce our securities holdings. I will have more to say about monetary policy after briefly reviewing economic developments.Recent indicators suggest that economic activity has continued to expand at a solid pace. GDP rose at an annual rate of 2.2 percent in the first half of the year, and available data point to a roughly similar pace of growth this quarter. Growth of consumer spending has remained resilient, and investment in equipment and intangibles has picked up from its anemic pace last year. In the housing sector, investment fell back in the second quarter after rising strongly in the first. Improving supply conditions have supported resilient demand and the strong performance of the U.S. economy over the past year. In our Summary of EconomicProjections, Committee participants generally expect GDP growth to remain solid, with a median projection of 2 percent over the next few years.In the labor market, conditions have continued to cool. Payroll job gains averaged 116 thousand per month over the past three months, a notable stepdown from the pace seen earlier in the year. The unemployment rate has moved up but remains low at 4.2 percent. Nominal wage growth has eased over the past year and the jobs-to-workers gap has narrowed. Overall, a broad set of indicators suggests that conditions in the labor market are now less tight than just before the pandemic in 2019. The labor market is not a source of elevated inflationary pressures. The median projection for the unemployment rate in the SEP is 4.4 percent at the end of this year, 4 tenths higher than projected in June.Inflation has eased notably over the past two years but remains above our longer-run goal of 2 percent. Estimates based on the Consumer Price Index and other data indicate that total PCE prices rose 2.2 percent over the 12 months ending in August; and that, excluding the volatile food and energy categories, core PCE prices rose 2.7 percent. Longer-term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets. The median projection in the SEP for total PCE inflation is 2.3 percent this year and 2.1 percent next year, somewhat lower than projected in June. Thereafter, the median projection is 2 percent.Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. For much of the past three years, inflation ran well above our 2 percent goal, and labor market conditions were extremely tight. Our primary focus had been on bringing down inflation, and appropriately so. We are acutely aware that high inflation imposes significant hardship as it erodes purchasing power,especially for those least able to meet the higher costs of essentials like food, housing, and transportation.Our restrictive monetary policy has helped restore the balance between aggregate supply and demand, easing inflationary pressures and ensuring that inflation expectations remain well anchored. Our patient ...
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    9 mins
  • Chairman Todd Harper: We've Only Just Begun

    Chairman Todd Harper: We've Only Just Begun
    Sep 17 2024

    - Topic: NCUA Chairman Todd Harper's vision for the future of credit unions
    - Occasion: 90th anniversary of the Federal Credit Union Act
    - Key principles for credit union success over next 90 years:

    1. Transparency
    - Public disclosure of executive compensation (proposed rule)
    - Reporting of overdraft/NSF fees for large credit unions
    - Advocating for third-party vendor authority

    2. Fairness
    - Focus on serving underserved populations
    - Advancing diversity, equity, inclusion, and accessibility
    - New rule on quality control for automated valuation models

    3. Vigilance
    - Active management of risks, especially cybersecurity
    - Proposed rule on incentive-based compensation for large credit unions

    4. Foresight
    - Addressing credit union consolidation trend
    - Proposed rule requiring succession planning

    - Emphasis on long-term stewardship and positive impact
    - Call for continued innovation and focus on member needs

    The podcast notes avoid reproducing any copyrighted song lyrics or extensive quotes from the article.
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    8 mins
  • CFPB Rohit Chopra's Remarks at the National Housing Conference

    CFPB Rohit Chopra's Remarks at the National Housing Conference
    Sep 10 2024

    # Show Notes: CFPB on Housing - Prepared Remarks of CFPB Director Rohit Chopra

    ## Episode Overview
    This episode covers the prepared remarks of CFPB Director Rohit Chopra at the National Housing Conference on September 9, 2024. The remarks focus on mortgage refinancing and its potential impact on homeowners and the economy.

    ## Key Points
    1. Interest rates and their impact on mortgage decisions
    2. Current state of the mortgage refinancing market
    3. Expectations for lower interest rates in the future
    4. Potential benefits of refinancing for homeowners and the economy
    5. Obstacles to refinancing, including closing costs and complexity
    6. CFPB actions to improve the refinancing process

    ## Detailed Notes

    ### Current Mortgage Market
    - Interest rates peaked at 7.79% in October 2023, now eased to 6.35%
    - Over 12 million mortgages have interest rates above 5%
    - Potential for millions of borrowers to benefit from refinancing as rates decline

    ### Obstacles to Refinancing
    - High closing costs
    - Complexity of the refinancing process
    - Potential disparities in refinancing opportunities for minority homeowners

    ### CFPB Actions
    1. Monitoring implementation of new mortgage technology, including AI
    2. Exploring changes to mortgage regulations to streamline refinancing
    3. Pursuing rules to accelerate "open banking" in mortgages

    ### Conclusion
    - Lower interest rates expected
    - Focus on ensuring benefits reach a broad range of homeowners
    - Potential economic boost from widespread refinancing

    ## Sponsorship
    This podcast is sponsored by Credit Union Exam Solutions Incorporated, offering assistance with NCUA examinations.

    ## Additional Resources
    - Check out the "With Flying Colors" podcast for tips on NCUA success
    - For credit union exam assistance, visit marktreichel.com or connect on LinkedIn
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    13 mins
  • Joint Statement on Banks’ Arrangements with Third Parties to Deliver Bank Deposit Products and Services

    Joint Statement on Banks’ Arrangements with Third Parties to Deliver Bank Deposit Products and Services
    Sep 3 2024


    Key Points:

    1. Federal banking agencies released a statement on potential risks of banks using third parties to deliver deposit products and services.

    2. Highlights risk management practices for banks to consider when managing these arrangements.

    3. Reemphasizes existing guidance; does not create new requirements or expectations.

    4. Identifies potential risks in areas like:
    - Operational and compliance issues
    - Growth and liquidity management
    - Misrepresentation of deposit insurance

    5. Provides examples of effective risk management practices, including:
    - Robust governance and third-party risk management
    - Managing operational and compliance implications
    - AML/CFT and sanctions compliance
    - Managing growth, liquidity and capital impacts
    - Addressing deposit insurance misrepresentations

    6. Includes list of existing regulatory resources and guidance for banks to reference

    Key Takeaways:
    - Increasing use of third parties for deposit products raises potential risks
    - Banks remain responsible for regulatory compliance even when using third parties
    - Effective risk management and oversight is crucial as these arrangements evolve
    - Banks should review existing guidance and ensure appropriate controls are in pla
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    24 mins
  • Proposed Incentive-based Compensation Rule

    Proposed Incentive-based Compensation Rule
    Aug 27 2024

    NCUA's Proposed Incentive-based Compensation Rule

    This episode, hosted by Samantha Shares, provides a detailed summary of the NCUA's proposed incentive-based compensation rule, which implements Section 956 of the Dodd-Frank Act. This regulation is designed to address flawed compensation practices contributing to the 2008 financial crisis, covering financial institutions with $1 billion or more in assets.

    Introduction
    Overview of the Proposed Rule
    Scope of the Regulation
    Tiered Structure and Definitions
    Requirements for Covered Institutions
    Additional Requirements for Level 1 and Level 2 Institutions
    Regulatory Flexibility and International Context
    Public Comments and Enforcement Provisions
    Conclusion and Contact Information
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    4 mins
  • Final Interagency Guidance on Reconsideration of Value (ROV) for Residential Real Estate Valuations

    Final Interagency Guidance on Reconsideration of Value (ROV) for Residential Real Estate Valuations
    Aug 20 2024
    Hello, this is Samantha Shares. This episode is a high level summary of the final interagency guidance on reconsiderations of value (R O V) for residential real estate valuations This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A. And now the summary.1. Purpose and Scope: - The guidance is issued by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency. - It aims to highlight risks associated with deficient residential real estate valuations and describe how credit unions can incorporate R O V processes into their risk management functions. - The scope is limited to real estate-related financial transactions secured by single 1-4 family residential properties. 2. Background and Importance: - Credible collateral valuations, including appraisals, are essential to the integrity of residential real estate lending. - Deficient valuations can result from prohibited discrimination, errors, omissions, or inappropriate valuation methods. - Such deficiencies can prevent individuals and families from building wealth through homeownership and pose risks to credit unions. 3. Regulatory Context: - The guidance references several relevant laws and regulations, including: - Equal Credit Opportunity Act (ECOA) and Regulation B - Fair Housing Act (FH Act) - Truth in Lending Act (TILA) and Regulation Z - Uniform Standards of Professional Appraisal Practice (USPAP) - It emphasizes that credit unions must comply with these laws and operate in a safe and sound manner. 4. Reconsideration of Value (R O V) Process: - An R O V is a request from the financial institution to the appraiser or valuation preparer to reassess the report based on potential deficiencies or new information. - R O Vs can be initiated by the institution's review process or after consideration of consumer-provided information. - The guidance allows credit unions to implement R O V policies and procedures to review relevant information not considered in the original valuation. 5. Use of Third Parties: - The use of third parties in the valuation review process does not diminish an institution's responsibility to comply with applicable laws and regulations. - Credit unions are expected to manage risks arising from third-party valuations and valuation review functions. 6. Complaint Resolution Process: - Credit unions can capture consumer feedback on potential valuation deficiencies through existing complaint resolution processes. - The process should cover complaints from various channels and sources. - Complaints can be an important indicator of potential risks and risk management weaknesses. 7. Recommendations for Policies, Procedures, and Control Systems: - Consider R O Vs as a possible resolution for valuation complaints - Establish processes for identifying, managing, analyzing, escalating, and resolving valuation-related complaints - Inform and educate consumers on how to raise valuation concerns early in the underwriting process - Identify stakeholders and outline roles and responsibilities for processing R O V requests - Establish risk-based R O V systems to route requests to appropriate business units - Use standardized processes to increase consistency in handling R O V requests - Ensure relevant staff, including third parties, are trained to identify valuation deficiencies, including practices that may result in discrimination 8. Flexibility in Implementation: - The guidance is principles-based and does not mandate specific requirements. - It allows credit unions flexibility in implementation based on their size, complexity, and risk profile. - Smaller credit unions may have policies and procedures that differ from larger credit unions. 9. Regulatory Expectations: - While the guidance does not have the force of law or regulation, it outlines supervisory expectations for how credit unions should handle R O Vs and valuation-related complaints. - Credit unions are expected to incorporate these considerations into their risk management practices. 10. Potential Impact: - The guidance aims to improve the integrity of the residential real estate lending process by addressing potential deficiencies in valuations. - It may help mitigate risks ...
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    6 mins