Fiduciary Duties; This and That
Posted By Anthony Demangone
Here are a few thoughts about NCUA's recently issued fiduciary duties rule.
Training and existing directors. Â As I pointed out on Friday, NCUA's new fiduciary duties rule requires that new directors obtain a basic level of financial literacy within six months of election or appointment. Â When the rule becomes effective, it is easy enough to identify those new directors. Â But what about existing directors? Â Are they grandfathered? Â The rule is silent on this issue. Â NCUA did indicate that it will issue additional guidance in the near future to clarify expectations. Â On one hand, we can wait for further guidance. On the other hand, if your federal credit union has a director who does not feel comfortable reading financial reports or does not understand basic accounting, what are you waiting for? Â Training in that area would make them a more effective director, whether the training is required or not.Â
Business practices. Â A savvy reader brought this to my attention. Â The new fiduciary duties rule mandates that a board directs management's operation of the federal credit union in conformity with the FCU Act, NCUA regulations, other applicable law, and sound business practices. Â I raise the last point, because the reader brought this thought to my attention. Â If an examiner wants your credit union to do something that goes against a sound business practice, such as something that doesn't conform to GAAP, it looks like your board has a fiduciary duty to ignore the examiner. How about that? (Hat tip to Peter.)
Here are a few other items of interest...
WikiLeaks.Â Â You see that a member wants to use your credit union to make a payment to WikiLeaks. Â Do you allow the member to make the transaction? Â There's no official guidance, but some banks are saying "no."Â (Washington Post.)
CFPB. Â Elizabeth Warren has reportedly chosen the new head of enforcement for the CFPB, and he has quite sharp teeth.Â (Cleveland Leader.)Â
Question of the Day. Â Are you "Astroturfing?"Â Â (Kaufman and Canoles.)Â Yes, this is compliance related. Â I promise.Â
Unsolicited Marriage Advice of the Day. Â Never hold anything that your spouse says after 2 a.m. against them. Â Or anything that they say while assembling IKEA furniture. Â For some reason, sleep deprivation or furniture "activation" brings strange words out of one's mouth. Â Of course, I'm the one that usually benefits from this guidance in my household.Â