Archive - 2003 Comment Letters

Current Comment Letters

Archive: 1999-2013


NCUA’s Proposed Rule and Guidance on Response Programs for Unauthorized Access to Member Information
(December 23, 2003)
CUNA generally supports the proposed rule and guidance with regard to response programs for unauthorized access to member information. However, CUNA has concerns with the provisions on submitting notices to NCUA or the state regulator and the provisions on monitoring accounts, as well as suggestions on the provisions with regard to sending notices to members when there has been unauthorized access to information.

Suretyship and Guaranty/Maximum Borrowing Authority
(December 1, 2003)
CUNA supports allowing state-chartered credit unions to obtain waivers from the maximum borrowing limitation and also wants to work with NCUA to achieve the necessary statutory changes so that federal credit unions can also request such waivers. CUNA also supports providing credit unions with the option of entering into surety and guaranty agreements. However, NCUA should carefully review this rule after it has been in effect for one year in order to address operational issues that arise.

Conversion of Credit Unions to Thrifts
(November 26, 2003)
CUNA supports the Board’s proposal regarding increased disclosure requirements for federal credit unions seeking to convert to a thrift charter. Further, CUNA recommends that member disclosures regarding a conversion be separate from other information or financial disclosures provided to members. CUNA also recommends the agency require converting credit unions to provide their members with an opportunity to file written comments with the credit union on the conversion before the membership vote and to share such comments prior to the vote with the membership.

Agency Review to Reduce Regulatory Burden
(October 1, 2003)
CUNA provides numerous suggestions in response to the agency's request for comments to identify outdated, unnecessary or burdensome regulatory requirements imposed on federally insured credit unions. NCUA and the other federal financial requlators are required by a 1996 paperwork reduction law to review their regulations at least once every ten years. NCUA will seek comments on ten categories of its regulations between now and the end of the cycle (2006). In this first round, NCUA requested comments on two categories of its regulations: applications and reporting as well as powers and activities.

NCUA Examination Survey
(September 11, 2003)
CUNA supports the revised Examination Survey, which NCUA furnishes to credit unions following the completion of an examination of their credit union. CUNA commends NCUA for updating the Examination Survey to center on the agency's new risk-focused examination process and makes suggestions to further improve the Survey.

CUNA Comments on Share Insurance Proposal
(September 2, 2003)
The Credit Union National Association (CUNA) appreciates the opportunity to comment on NCUA’s proposed rule regarding changes to the share insurance regulations. The proposed rule clarifies how revocable trust accounts are established and insured, provides continuation of coverage following the death of a member and after the merger of credit unions for a limited period of time, and clarifies that there is coverage for Coverdell Education Savings Accounts. CUNA represents more than 90% of our nation’s 10,000 state and federal credit unions.

CUNA Comments on Loan Participation Proposal
(September 2, 2003)
The Credit Union National Association (CUNA) appreciates this opportunity to comment on the proposed revisions to NCUA’s loan participation rule. The proposal clarifies and amends the definition of “credit union organization” to conform to the credit union service organizations (CUSOs) rule. The definition of “financial organization” will also be broadened to include state and federal government agencies.

CUNA Comments on NCUA's MBL Proposal and Refutes ABA
(June 3, 2003)
CUNA's 15 page comment letter addresses the ABA's false or misleading charges against the proposal and NCUA. It strongly supports the proposal with several recommended changes. The letter was developed under the auspices of CUNA's Examination and Supervision Subcommittee and CUNA's Business/SEG's Services Committee.

Proposed Rule on Swap Agreements
(March 28, 2003)
CUNA supports this proposal that will amend NCUA's involuntary liquidation rules to designate swap agreements as qualified financial contracts (QFCs). This will limit swap counterparty exposure when a federally insured credit union is placed into involuntary liquidation or conservatorship by allowing the counterparty to terminate and net QFCs in order to protect itself from selective assumption of the QFCs by a liquidating agent, receiver, or conservator.

Proposed Rule on Investment Activities
(February 25, 2003)
CUNA strongly supports NCUA's efforts to review the area of investments and propose changes to its regulations that will facilitate investment activities for federal credit unions. This initiative in fully consistent with the changes in the incidental powers regulation and with NCUA's Regulatory Flexibility program, which CUNA wholeheartedly endorsed. We believe this proposal contains important and beneficial changes for federal credit unions in the area of investments and successfully incorporates a number of the comments received in response to the Advance Notice of Proposed Rulemaking (ANPR) that NCUA issued on October 18, 2001 with regard to possible changes to the investment rules.

CUNA Supports Proposed Revisions to Corporate FCU Bylaws
(February 25, 2003)
CUNA commends NCUA's move to modernize the current Bylaws, which were last formally updated in 1983. In particular, CUNA applauds the amendments to the Bylaws that provide for electronic delivery of communications between a corporate and its member credit unions. CUNA supports the amendment stating that a member of a corporate may remain a member of that corporate until the person or entity withdraws or is expelled. CUNA does not believe the costs of credit unions to retain membership in corporates will increase as a result of the proposed changes. Instead, these proposed amendments should allow for greater technological and operational efficiencies for corporates, which ultimately will benefit credit unions and their members.

NCUA Proposes Field Of Membership Policy Changes For Federal Credit Unions
(February 3, 2003)
CUNA strongly supports the agency's comprehensive and ongoing effort to review and modify its Chartering and Field of Membership Manual for Federal Credit Unions (Interpretative Ruling and Policy Statement 02-5) to enhance the ability of federal credit unions to add new groups, make charter changes, and better serve their fields of membership. CUNA requests that NCUA include additional recommendations to: expand and clarify the concept of a common bond based on a trade, industry, or profession to remove unnecessary limitations; permit multiple group credit unions to add groups based on a trade, industry or profession; allow credit unions that have a substantial interest in an ATM network or machine to include new members based on ATM locations, as long as there is sufficient, demonstrable indication of support from the credit union for the area to be served; and allow credit unions to use a shared service facility for purposes of adding new members even if the credit union does not have an ownership interest in the facility as long as the credit union's participation in the facility results in a demonstrable connection with the service area.

Revision of the Definition of Small Credit Union
(February 3, 2003)
CUNA strongly supports the agency's efforts to review its definition of "small entities" (currently defined as credit unions with assets under $1 million) to determine whether more credit unions should be covered by NCUA's analyses under the Regulatory Flexibility Act (RF Act). Based on CUNA's review of the RF Act and its legislative history, CUNA believes that the threshold could be reasonably higher than the agency's proposal of credit unions with assets of less than $10 million. We believe it is entirely appropriate for NCUA to consider raising the threshold to at least $50 million in assets or higher. CUNA also urges NCUA to agree to a one-year review of its new definition and to reconsider the threshold every year thereafter. CUNA also supports the clarification that NCUA will review one-third of existing agency regulations every year and that the public will receive notice of the rules that will be subject to review. CUNA urges the agency to announce at its December Board meeting every year which rules will be reviewed by the agency in the following year and include this information throughout the year on the agency's website.

NCUA Proposes Abbreviated Net Worth Restoration Plan Under PCA
(January 28, 2003)
CUNA strongly supports the concept of providing meaningful relief for credit unions that are earning at sufficient rates to capitalize significant growth, but are concerned about the approval of net worth restoration plans (NWRPs). While CUNA appreciates the Board's efforts to consider those concerns and consider innovative approaches in response, CUNA believes the Tier I NWRP is not responsive to credit unions' concerns and will not afford meaningful relief. Credit unions are concerned that despite a strong income statement and balance sheet that will restore net worth, and faced with significant uninduced savings growth, they may not have a NWRP approved for any number of reasons. The maintenance of the requirement to submit a statement about controlling risks associated with new activities retains that regulatory risk of a NWRP. They receive no guidance ahead of the fact about how much net income is enough, and what is a "reasonable assumption." CUNA suggests that the "default" or safe harbor option only be available to credit unions that are "inadequately" capitalized (net worth ratio over 4%) and not to those that are "significantly" or "critically" undercapitalized.

Proposed Changes to the Suspicious Activity Report (SAR) Form
(January 3, 2003)
CUNA supports the three minor proposed revisions to the SAR report: (1) updating the language in the Safe Harbor provision of the Instructions section to conform to the wording of Safe Harbor provision regarding suspicious activity reporting contained in the USA PATRIOT Act and (2) adding two new check boxes in Part III - Suspicious Activity Information (Box 35, Summary Characterization of Suspicious Activity) -- Terrorist Financing and Identity Theft. CUNA suggests that the SAR form provide more detailed guidance on when those boxes should be checked.


BITS Revised Framework on IT Outsourcing
(October 29, 2003)
CUNA supports the proposed revisions to update the Framework regarding requirements for disaster recovery and business continuity. CUNA agrees with the inclusion of high-level expectations for security providers that deal with the protection of a financial service company's information and security assets. CUNA recommends several changes in the section on ongoing vendor relationship management.


Proposed Rule on Farm Credit System Lending
(October 10, 2003)
CUNA supports this proposal that will reduce the amount of capital that a Farm Credit System Bank needs to hold with regard to loans made to credit unions; will allow credit unions to apply for services from any System Bank, regardless of location; and will allow System Banks to disclose credit union information, upon consent of the credit union.


Unsolicited Fax Rule
(September 4, 2003)
CUNA requests that the Office of Management and Budget (OMB) deny approval under the Paperwork Reduction Act for the information collections that are required under the Federal Communications Commission's rule regarding unsolicited faxes. OMB's denial would prevent the rule from going into effect.


Proposed Guidance on the Anti-Tying Restrictions of the Bank Holding Company Act
(September 30, 2003)
CUNA urges the Federal Reserve Board to review carefully its proposed guidance regarding the anti-tying restrictions of the Bank Holding Company Act. The Act is intended to control tying arrangements, in which banks pressure consumers to purchase additional products and services that they may not want or need. CUNA urges the Fed to review this guidance to ensure that consumer choice is not limited and to ensure that credit unions can compete effectively when faced with these types of bank practices.

Fed Consumer Advisory Council Meeting
(June 26, 2003)
In connection with the June meeting of the Federal Reserve Board's Consumer Advisory Council, CUNA offers comments on the preemption provisions of the Fair Credit Reporting Act, financial privacy and the possible uses of short form notices, examples of practices to combat predatory lending, and the issuance of additional debit and credit cards.

Proposed Revisions to the Regulation C Commentary
(April 8, 2003)
CUNA supports these changes to the Regulation C official staff commentary, which will reduce the burden for credit unions as they continue their preparation for compliance with the Home Mortgage Disclosure Act rules that will be effective on January 1, 2004.

Proposed Expansion of Fedwire Operating Hours
(March 4, 2003)
CUNA supports this proposal to expand the operating hours of Fedwire by starting service at an earlier time. This proposal should be beneficial to credit unions. In addition, CUNA believes that the Federal Reserve Banks should retain the discretion to grant extensions to the Fedwire closing time in emergencies.

Proposed Revisions to the Regulation Z Commentary
(January 27, 2003)
CUNA supports the proposal of the Federal Reserve Board that will permit the issuance of more than one credit card as a renewal or substitute for a previously accepted card. However, CUNA opposes any requirement to change the disclosure requirements in connection with ordering a credit card in an expedited manner or for making an expedited credit card payment. CUNA also opposes the inclusion of fees in connection with a "bounce protection" service as a "finance charge" that would be included in the annual percentage rate.


Reporting Requirements for Coverdell Education Savings Accounts.
(October 17, 2003)
CUNA comments to the IRS on the reporting requirements in IRS Notice 2003-53 for Coverdell Education Savings Accounts (ESAs). Although the current transition rules in the IRS Notice help credit unions meet the reporting requirements, it is only a temporary fix. CUNA urges that the IRS maintain current reporting requirements, where basis and earnings calculations are the responsibility of each ESA account holder.


Federal Government Participation in ACH
(October 20, 2003)
Overall, CUNA opposes this proposal because it creates rules for ACH transactions processed by the federal government that differ significantly from the rules for ACH transactions processed by the private sector. As discussed below, specifically, CUNA opposes Treasury's proposal to convert items that have traditionally been ineligible for ACH processing and Treasury's proposal to expand the usage of Accounts Receivable Entry (ARC). These changes would impose inefficiency on the ACH system and create burdens for ACH participants.

Additional Comments re. Member/Customer ID Program (CIP) Regs - Identification
(July 23, 2003)
CUNA does not believe that the final rule should be changed to eliminate or prohibit the use of Matricula or other consular identification cards. Rather than changing the rule, CUNA would encourage Treasury and the other regulators to work together to develop guidelines to assist institutions that choose to rely on such documents. Such guidelines should not be mandatory for those institutions accepting consular identification cards, but rather, should be a resource to help institutions comply with the rule’s requirements concerning the use of documents to verify identity.

Additional Comments re. Member/Customer ID Program (CIP) Regs - Recordkeeping
(July 23, 2003)
CUNA opposes any new requirement to photocopy documents provided at account opening. In CUNA's view, the recordkeeping requirements under Section 326 of the USA PATRIOT Act are substantial, and CUNA questions whether proponents of additional, photocopying requirements are aware of what the final rule requires now. CUNA does not think sufficient evidence has been presented to justify the imposition of additional photocopying requirements on institutions; such requirements would be a substantial regulatory burden on a number of institutions. CUNA urges the Treasury Department to continue the final rule as adopted.

Revision of Regulations Governing the Endorsement and Payment of Checks Drawn on the Treasury
(June 23, 2003)
CUNA responds to the Treasury proposal that would revise regulations governing the endorsement and payment of checks drawn on Treasury. The proposal limits the time Treasury has to reverse final payments; allocates losses for forgeries and counterfeits; and clarifies protest procedures against Treasury decisions.


The Uniform Commercial Code Exception to the Electronic Signatures in Global and National Commerce Act (E-SIGN Act)
(February 24, 2003)  


  • CUNA believes that check truncation legislation currently being considered by Congress may facilitate the use of electronic negotiable instruments (electronic checks). As a result, the E-SIGN Act exception should be maintained for the present to see how that legislation progresses. This exception prevent e-checks from being considered the functional equivalent of paper checks, under the laws that apply to paper checks.

  • If check truncation legislation is not forthcoming, then amending the E-SIGN Act may be necessary. These amendments can be done without harming consumers since there are sufficient consumer protections in other current laws. However, removing the UCC exception should be done only after adequate public hearings have been held and public comments have been received.

E-Sign Exception for Housing Foreclosure, Repossession, and Default Notices
(January 31, 2003)
CUNA believes that the E-Sign Act exception for residential default and foreclosure notices should only be removed if adequate consumer protections are maintained, which is not clear at this time. Credit unions' current ability to provide mortgages electronically has not been hampered by this exception with regard to these notices.

Financial Crimes Enforcement Network (FinCEN)

Proposed Revisions to the Currency Transaction Report (CTR) Form
(July 18, 2003)
CUNA supports the proposed revisions to the CTR form because they would serve to improve the usefulness of the CTR to law enforcement. In particular, the addition of two distinct data collection blocks designated for transactions involving foreign currency -- “Foreign cash in” and “Foreign cash out” -- would assist law enforcement to better identify potential money laundering or terrorist financing activities. CUNA encourages FinCEN to designate a Web site for financial institutions to use to obtain exchange rate information for CTRs.

Anti-money Laundering re: Real Estate
(June 9, 2003)
FinCEN anticipates that persons that are already subject to separate anti-money laundering program rules will not also be subject to the anti-money laundering rules for persons involved in real estate closings and settlements. CUNA supports this position as it would exempt credit unions from being covered by such a rule.

CUNA Supports Use of Name and Address in Funds Transmittals
(April 21, 2003)
CUNA supports FinCEN's decision to require the use of the true name and address of a member on funds transmittals greater than $3,000 because credit unions will be able to comply with this rule by June 1, 2003. This is currently required by the Banks Secrecy Act and FinCEN is allowing an exception to that law to expire.


Consumer Opt Out for Conversion of Checks to ACH
(December 2, 2003)
CUNA supports the modification to the NACHA Operating Rules to require that a merchant provide the consumer with notice that the consumer has the ability to choose not to allow the merchant to convert his or her share draft into an ACH item. CUNA supports a one-time notice about this option and opposes the proposed requirement for more frequent notification.

ACH Returns Issues: ACH Operator Requirements
(August 18, 2003)
CUNA supports the proposed changes to: (1) remove an ACH Operator edit related to the Original Receiving DFI (Depository Financial Institution) Identification Field within the addenda records of the dishonored return and contested dishonored return entries that is inconsistent with the definition of the field and (2) require ACH Operators to settle return entries no earlier than the effective entry date in the original Company/Batch Header Record.

ACH Returns - Invalid SEC Codes and Fraudulent Entries
(August 18, 2003)
CUNA opposes the creation of a return reason code that a Receiving Depository Financial Institution could use to return entries it believes are fraudulent. CUNA recommends that NACHA establish 2 new return reason codes: one code fore returning a corporate entry that was initiated to a member/consumer account and subsequently reported as unauthorized and another code for returning an entry with an SEC Code that is inappropriate for the type of account being debited or credited.

ACH Requirements for Social Security Number Security
(July 15, 2003)
CUNA responds to the various alternatives proposed regarding modification of the NACHA Operating Rules (Rules) to comply with state laws that forbid that mailing of social security numbers (SSNs). Specifically, the proposal addresses the issue of whether the Rules should be amended to address the inclusion of a consumer’s SSN within an automated clearing house (ACH) entry.

ACH Data Security Requirements
(July 15, 2003)
CUNA basically supports NACHA’s proposal to enhance Internet data security requirements for all automated clearing house (ACH) transactions, not just Internet-initiated (WEB) Entries. The proposed changes would apply to any banking information (including ACH entries, ACH entry data, routing numbers, account numbers and PINs or other personal identification symbols) that is transmitted or exchanged between ACH participants via an Unsecured Electronic Network. CUNA makes recommendations regarding the definition of “banking information” and suggests a later compliance date.

Operational Efficiency of the ACH Network
(June 27, 2003)
CUNA generally supports NACHA's proposal to enhance the operational efficiency of the ACH network

Proposed Warranties for Third-Party-Service Providers
(April 1, 2003)
CUNA supports NACHA's proposal to make Third-Party Senders and Originators more accountable to the NACHA Operating Rules in those cases where ODFIs do not have contracts directly with the Originators.

CUNA Supports Electronic Conversion of Corporate Checks
(January 31, 2003)
In general, CUNA this proposal that would allow the conversion of corporate checks; limit the maximum amount of share drafts/checks eligible for conversion to $25,000; eliminate the requirement that an Originator (usually a merchant) retain a copy of the back of the Receiver's (consumer or corporate that pays the ACH debit) share draft for two years; and establish a requirement that the receiving depository financial institution (RDFI) send or make available to the Receivers the check serial number for certain applications. However, CUNA recommends delaying the effective date until 9/04.

CUNA Supports Mandatory Arbitration of ACH Disputes
(May 30, 2003)
CUNA supports mandatory arbitration of smaller ACH disputes at the request of one party and supports the usage of one arbitrator for these smaller disputes. For larger disputes, CUNA support the usage of three arbitrators to decide a claim. The largest disputes would still require both parties to agree before arbitration could be used. In addition, CUNA supports extending the deadline to three years to submit arbitration claims. In contrast to the proposal, however, CUNA supports fixed stipends for arbitrators instead of stipends that vary with the amount of the award.


Updated OFAC Internal Economic Sanctions Enforcement Guidelines
(March 31, 2003)
CUNA believes that publishing the Guidelines in the Code of Federal Regulations as an appendix to the other OFAC regulations will assist regulated entities in better understanding the OFAC enforcement process. CUNA makes 3 recommendations with regard to the Guidelines. We feel the $50 million figure would also be a reasonable threshold for OFAC to consider in determining whether a warning letter should be sent instead of a prepenalty notice. While we do not think the list of mitigating factors in the Guidelines should be exhaustive, it is important that the Guidelines include small asset size as a mitigating factor; we recommend that the penalty be pro-rated to the size of the entity involved. In our opinion, no penalty should be assessed for reporting first offenses; and penalties for subsequent violations that are voluntarily reported should be mitigated by at least 50% or more.


Personal Commercial Solicitation on DoD Installations
(August 22, 2003)
CUNA comments on the DoD's policy governing personal commercial solicitation of insurance sales and securities on DoD installations. The DoD is in the process of rewriting its Directive (DoDD) Number 1344.7. CUNA recommends that a new provision should be added explicitly permitting financial institutions to offer life insurance, securities and other financial services directly and/or through subsidiaries or CUSOs.


Proposal re. Allowance for Credit Losses
(September 18, 2003)
CUNA generally supports the proposed standards regarding the recognition and measurement by creditors of the allowance for credit losses related to all loans, as that term is defined in FAS No. 114, with certain exceptions. The proposed standards are consistent with NCUA's guidance regarding methodologies used to calculate the allowance for loan and lease losses and related documentation requirements.

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