Newsroom
February 10, 2014
Hoffman: Small CUs affected most by Fed policy change
Feb. 11, 2014 – NAFCU Regulatory Affairs Counsel PJ Hoffman expressed the association's concern that a revision of the Federal Reserve Policy on Payment System Risk might disproportionately affect credit unions and lead to daylight overdrafts, in a letter to the Federal Reserve Board.
Hoffman notes that the changes to the PSR policy would cause a reduced average of account balances during the day for institutions that participate in the Fed's same-day automated clearing house debit and commercial check service. Ninety-seven percent of those institutions have assets under $10 billion, which Hoffman said could be problematic.
"NAFCU is concerned that these proposed changes disproportionally affect credit unions and other small banking organizations between $500 million and $10 billion and could ultimately lead to daylight overdrafts being incurred by some credit unions with an overall increase in fees for a number of credit unions," Hoffman wrote. "If the changes are implemented as proposed, some credit unions will need to hold higher balances with the Federal Reserve overnight, arrange early morning funding, or incur daylight overdrafts to fund the earlier posting of check transactions."
Hoffman noted similar concerns about a Fed proposal to revise Regulation J on check collections.
Hoffman added that NAFCU generally supports the Fed's progress in updating rules that have not been updated since 2002 and said credit unions can benefit from better alignment of settlements for checks with actual deposit and presentment times. He also suggested the proposed changes have an implementation period of longer than six months, in order to allow small institutions like credit unions enough time to prepare.
Hoffman notes that the changes to the PSR policy would cause a reduced average of account balances during the day for institutions that participate in the Fed's same-day automated clearing house debit and commercial check service. Ninety-seven percent of those institutions have assets under $10 billion, which Hoffman said could be problematic.
"NAFCU is concerned that these proposed changes disproportionally affect credit unions and other small banking organizations between $500 million and $10 billion and could ultimately lead to daylight overdrafts being incurred by some credit unions with an overall increase in fees for a number of credit unions," Hoffman wrote. "If the changes are implemented as proposed, some credit unions will need to hold higher balances with the Federal Reserve overnight, arrange early morning funding, or incur daylight overdrafts to fund the earlier posting of check transactions."
Hoffman noted similar concerns about a Fed proposal to revise Regulation J on check collections.
Hoffman added that NAFCU generally supports the Fed's progress in updating rules that have not been updated since 2002 and said credit unions can benefit from better alignment of settlements for checks with actual deposit and presentment times. He also suggested the proposed changes have an implementation period of longer than six months, in order to allow small institutions like credit unions enough time to prepare.
Share This
Related Resources
Add to Calendar 2024-04-24 14:00:00 2024-04-24 14:00:00 Optimize Liquidity, Maximize Loan Growth: The Network Lending Advantage About The Webinar Join us to learn more about network lending, a cooperative model allowing credit unions to optimize liquidity and achieve loan growth. Discover how credit unions can participate in loan pools with other institutions, allowing them to diversify portfolios, access loans with potentially lower risk and higher yields, and expand lending capacity without necessarily needing a surge in deposits. Delve into how credit unions can pool their resources, set common underwriting and pricing standards, and collectively originate, buy, and sell loans to optimize liquidity management. Hear from your peers about best practices, case studies, and practical strategies to harness the full potential of network lending and how it's helped their credit unions. Don't miss this valuable opportunity to learn how to strengthen your credit union's position in today’s competitive environment. Key Takeaways: How network lending differs from traditional lending The benefits of participating in loan pools with other credit unions How credit unions can set common underwriting and pricing standards and collectively originate, buy and sell loans to optimize liquidity management Why network lending is critical to loan growth Register Here Web NAFCU digital@nafcu.org America/New_York public
Optimize Liquidity, Maximize Loan Growth: The Network Lending Advantage
preferred partner
LendKey
Webinar
Add to Calendar 2024-04-23 14:00:00 2024-04-23 14:00:00 Monitoring the Latest Litigation Risks Credit unions’ operations pose litigation risks, with more of these cases being filed as class action lawsuits. In this Monitoring the Latest Litigation Risks for Credit Unions webinar, you’ll review some of the specific kinds of lawsuits impacting credit unions and what potential claims could be on the horizon. You’ll also examine some options for mitigating risks. Key Takeaways Review the current lawsuit trends. Understand the potential claims risks Explore options for mitigating risks. Register Now $295 Members | $395 Nonmembers(Additional $50 for USB)One registration gives your entire team access to the live webinar and on-demand recording until April 23, 2025Go to the Online Training Center to access the webinar after purchase » Who Should Attend NCCOs NCRMs Compliance and risk titles Education Credits NCRMs will recieve 1.0 CEUs for participating in this webinar NCCOs will recieve 1.0 CEUs for participating in this webinar Web NAFCU digital@nafcu.org America/New_York public
Monitoring the Latest Litigation Risks
Credits: NCCO, NCRM
Webinar
Resiliency In Your Incident Response Plan
Cybersecurity
preferred partner
DefenseStorm
Blog Post
The Bottom Line on Insurance Tracking and Collateral Protection
Strategy
preferred partner
Allied Solutions
Blog Post
Get daily updates.
Subscribe to NAFCU today.