Proposed Regulations

As directed by the Bank Secrecy Act (BSA), the Department of Treasury's FinCEN requires financial institutions, including credit unions, to report transactions in currency in excess of $10,000. The Money Laundering Suppression Act of 1994 amended the BSA by establishing a statutory system of exempting transactions by certain customers of depository institutions. This system devised two types of exemptions: mandatory exemptions and discretionary exemptions.

The proposed rule would modify the calculation of net worth ratio in cases involving mergers of natural person credit unions so that the post-merger ratio would be calculated by dividing the sum of the acquiring credit union's retained earnings and the merging credit union's retained earnings by the total assets (under GAAP, total assets are the sum of the acquiring credit union's total assets at book value and the merging credit union's total assets at fair value).

Recently, the National Credit Union Administration (NCUA) issued a proposed rule to revise its rules relating to the accuracy of advertising and notice of insured status. Specifically, the proposed changes seek clarify and reduce the burden of existing rules regarding shared branch networks which include nonfederally-insured credit unions.

Corporate credit unions have played an important role in the credit union industry. They provide critical services to natural person credit unions, including payment and clearing services, enabling access to wire transfer facilities and automated clearing house transactions, as well as loan and investments services that provides small credit unions to achieve economies of scale and access to greater market returns otherwise unavailable to them. They have also been an important source of liquidity for credit unions, and have served as agents for the NCUA on loans funded by the NCUA's Central Liquidity Facility.

In response to questions concerning the interagency guidelines issued by the National Credit Union Administration (NCUA), Federal Reserve, and Office of Thrift Supervision (OCC), the agencies issued new, amended guidelines.

Recently, the Federal Housing Finance Agency (FHFA) issued an Advance Notice of Proposed Rulemaking (ANPR) regarding the duty for the Federal Home Loan Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) to serve underserved markets.

The proposed rule would make significant changes to Part 704 of NCUA's rules and regulations, which pertains to corporate credit unions (corporates). The issues addressed include: capital requirements, investment authority, asset and liability management (ALM), corporate governance and corporate credit union service organizations (CUSOs).

On December 14, 2001, NACHA Rules Work Group #35 proposed amendments to the NACHA Board that would modify certain aspects of the Rule Enforcement Procedures.

The Federal Accounting Standards Board (FASB) has issued the final Statements on Business Combinations, Number 141 and Goodwill and Other Intangible Assets, Number 142. These Statements could potentially change accounting methods for credit union mergers in significant ways.

The Federal Reserve Board is requesting comments on a proposed rule amending Regulation Z to address concerns related to predatory practices in mortgage lending. The proposed amendments extend the protections of the Home Ownership and Equity Protection Act (HOEPA) to more loans, prohibit certain acts or practices such as loan flipping, strengthen HOEPA's prohibition on loans based on homeowners' equity without regard to repayment ability and revise HOEPA disclosures received by consumers before closing.

The Federal Reserve Board has issued a proposed rule amending the Official Staff Commentary on Regulation E. The commentary applies and interprets the requirements of Regulation E and assists financial institutions in compliance with the regulation.

On November 26, 2002, the Board of Governors of the Federal Reserve issued proposed revisions to the official staff commentary on Regulation Z, which applies and interprets the requirements of Regulation Z.

The Internal Revenue Service has published a proposed regulation on the reporting requirements for interest on deposits maintained at U.S. Offices of certain financial institutions and paid to nonresident alien individuals that are residents of specified countries.

On April 12, 2002, Rules Work Group #52 of the National Automated Clearing House Association (NACHA) published proposed amendments that would clarify the NACHA Operating Rules to address inconsistencies identified within the Rules and to modify certain aspects of various applications to function more efficiently in today's marketplace.

On September 24, 2003, NCUA issued a proposed rule updating its rule regarding the conversion of insured credit unions to mutual savings banks. The proposed rule seeks to increase disclosure requirements to ensure that the credit union's notice of conversion to its members provides full disclosure and transparency

On March 27, 2003, the National Credit Union Administration published proposed revisions to the member business loan regulation and related provisions in the prompt corrective action, corporate credit union, and credit union service organization rules.

As required by the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), the proposed regulation improves the notice that informs consumers of their right to opt-out of prescreened solicitations for credit or insurance. The proposed rule: 1) establishes certain baseline requirements for language and syntax that effectively convey the intended message to the reader, and 2) establishes guidelines for presentation and format that call attention to the notice and enhance its readability.

The proposed amendments are meant to clarify the relationship between the prior notice provision and the commencement of service provision, so as to eliminate potential confusion. Additionally, the amendments attempt to reorganize the requirements in the current rule making it easier to understand.

Recently, the Federal Reserve Board (Board) issued a notice of study and request for information regarding disclosure practices with regard to debit card purchases. Specifically, the Board is concerned about fees imposed in point-of-sale (POS) debit transactions when customers provide their personal identification number (PIN). The current rules governing fee disclosure are the Electronic Fund Transfers Act (EFTA), and Regulation E.