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 2024-05-03 14:00:00 2024-05-03 14:00:00 Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing About the Webinar In January 2024, Pentegra conducted a survey of retirement plan sponsors and their perspectives on retirement plan management and fiduciary outsourcing. The survey measured how sponsors are using fiduciary outsourcing to help better manage their retirement plans. It also captured their perspectives on what outsourcing does to help them better position their plans and drive improved retirement plan outcomes. Key Takeaways: What is the full scope of your responsibilities as a plan sponsor? What is fiduciary outsourcing and how does it work? How does fiduciary outsourcing help reduce workloads and minimize risk? How can a credit union best position its plan to drive improved outcomes? Register Here Web NAFCU digital@nafcu.org America/New_York public
Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing
preferred partner
Pentegra
Webinar
Ensuring Safety and Soundness with AI
Management, Consumer Lending, FinTech
preferred partner
Upstart
Blog Post
Turning Lemons into Lemonade: Capitalizing in a Post-Banking Crisis Era
Strategy
preferred partner
Allied Solutions
Blog Post
Add to Calendar 2024-05-02 14:00:00 2024-05-02 14:00:00 Mastering Resilience in Incident Response Plans About the Webinar An Incident Response (IR) plan is crucial for guiding credit unions through major incidents efficiently and effectively. However, many IR plans lack resilience, making them less adaptable to the evolving threat landscape. Join us for our webinar Mastering Resilience in Incident Response Plans where DefenseStorm cyber experts Elizabeth Houser and James Bruhl will delve into the importance of resiliency within cybersecurity IR plans. Don’t miss out on the opportunity to learn how to: Ensure IR plan accessibility so that all team members with assigned roles are prepared for effective incident response. Conduct efficient and regular reviews to ensure roles and responsibilities are current, tools are relevant, and compliance requirements are met. Implement and utilize tabletops to regularly test the effectiveness of your IR plan. Enhance preparedness, efficiency, and confidence among responders. View On-Demand Web NAFCU digital@nafcu.org America/New_York public
Mastering Resilience in Incident Response Plans
preferred partner
DefenseStorm
Webinar
Get daily updates.
Subscribe to NAFCU today.