We CU, Material Financial Risk: The FFIEC Wants Your Exam Rating to Follow the Money

On By Jeremy Newman (NYCUA)In FraudLeave a comment

The usual housekeeping: this post is plain-English commentary, not legal advice, and definitely not a substitute for reading the proposal yourself. Your examiner has not read this blog. Probably.

The alphabet soup that decides your examination fate is getting a rewrite. On May 19, the FFIEC proposed a top-to-bottom revision of the Uniform Financial Institutions Rating System, the framework you know as CAMELS. The headline, if you only have time for one sentence: ratings are supposed to follow material financial risk, and stop following everything else.

The one-paragraph version

CAMELS keeps its six letters—Capital, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk—and its 1-to-5 scale. What changes is what examiners are told to weigh. The proposal pulls the spotlight off process, paperwork, and the “M,” and points it at whether something actually threatens your financial condition. For most credit unions, that’s a welcome shift.

Why the “M” is on a diet

Today, the Management component gets “special consideration” in your composite rating, and the agencies’ own data show it has quietly become the single most influential letter in the soup. The proposal strikes that special weight and says a Management rating of 3 or worse generally requires material financial risk, not just a thin succession plan or a binder that’s missing a policy update.

It also retires three evaluation factors outright: management depth and succession, responsiveness to auditor and supervisory recommendations, and “willingness to serve the community.” If you run a lean shop with a very capable spreadsheet, this one’s for you.

Good news from the compliance trenches

Here’s the change you’ll want to frame: specialty-review findings such as BSA/AML, consumer compliance, and IT, would only flow into your composite or Management rating to the extent they reflect material financial risk or significant noncompliance. In plain terms, a technical compliance ding on an otherwise financially sound credit union shouldn’t cascade into a ratings downgrade. It flows nicely with the direction FinCEN is taking on AML program expectations, too.

The fine print that still reads like a bank

Not everything got the cooperative memo. The Capital Adequacy section still talks about raising capital from shareholders, a sponsor, parent, or holding company, and the capital markets: a menu credit unions don’t generally order from. We build capital the old-fashioned way: retained earnings, one basis point at a time. NYCUA will be flagging this so the final framework doesn’t quietly treat “can’t issue stock” as “capital weakness.”

If you’re state-chartered, read this twice

The framework applies to all federally insured credit unions, including New York FISCUs. But NCUA only controls the federal side of your exam; DFS runs its own program. Until the state conforms, a NY FISCU could get a recalibrated NCUA rating sitting next to a state exam that still weighs things the old way. We’ll urge NCUA to coordinate with DFS so you’re not graded on two different curves.

The word nobody defined

The entire reform hinges on “material financial risk” and the proposal never defines it. That leaves a lot of room for interpretation at exactly the moment the agencies are trying to reduce it. We’re not asking for a rigid formula, but credit unions deserve some calibrated guidance so credit unions aren’t equally measured against the same invisible yardstick.

What this means for your next exam

  • Nothing changes today. This is a proposal, not a final rule, and each agency still has to bake it into its own exam program if finalized.
  • Document your financial story. As ratings tilt toward financial condition, the narrative that connects your risk profile to your numbers gets more valuable.
  • Watch the “M” and the specialty reviews. If finalized, process-only findings should carry less rating weight; worth tracking how your examiners actually apply it.

We want to hear from you: take the survey

NYCUA is considering a comment letter, and our member’s operational experience is the most persuasive thing we can put in it. We’ve built a short member survey (8–10 minutes) to capture how the current framework has hit your exams and where the proposal helps or misses. Watch for the survey link in this week’s edition of the New York Minute or reach out and we’ll send it your way; please complete it by July 31 so we can reflect your input before the August 17 deadline.

You can also email your thoughts and feedback to me.

Until Next Time

From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

Roundup Through May 23, 2026

On By Jeremy Newman (NYCUA)In Weekly RoundupsLeave a comment

If you had “federalism” on your May bingo card, this is your week. Federal regulators doubled down on preempting state interchange laws. State regulators doubled down on a fair lending framework the federal regulators just walked away from. And the NCUA dropped a stablecoin proposal in between. The state-versus-federal scoreboard is more active than it has been in some time.

Here’s what moved.

NCUA Joins the OCC in Preempting State Interchange Laws (and Why That Matters in Albany)

  • On May 19, 2026, the NCUA submitted an interim final rule (pending publication as of this writing) asserting that federal law preempts state laws restricting interchange fees, with the Illinois Interchange Fee Prohibition Act (IFPA) as the immediate target.
  • The NCUA’s move follows the OCC’s April 24 interim final rule and order preempting the IFPA for national banks and federal savings associations. On May 8, the Seventh Circuit vacated the district court’s February 10 judgment upholding the IFPA and remanded the case for reconsideration in light of the OCC actions.
  • For New York readers, or credit unions with members who travel to New York, this is not a faraway problem. The Association has been actively engaged on A.4017-A (Asm. McDonald)/S.5587-A (Sen. Skoufis), which would exclude state and local taxes and gratuities from the amount on which interchange is calculated.
  • The OCC and NCUA preemption actions shield only federally chartered institutions. Any New York interchange bill that becomes law would still apply to state-chartered credit unions, leaving them to comply with restrictions that their federally chartered competitors are exempt from.
  • Avoiding precisely this kind of split is a core reason the Association continues to engage directly with lawmakers in Albany.

NCUA Proposes Stablecoin Issuer Standards Under the GENIUS Act

  • On May 15, 2026, the NCUA released a Notice of Proposed Rulemaking establishing operational and risk management standards for an NCUA-licensed Permitted Payment Stablecoin Issuer (PPSI).
  • Chairman Hauptman noted the proposed standards are designed to align with those proposed for bank subsidiaries, with the explicit goal that credit unions face no disadvantage relative to banks if they want to participate.

NY Department of Financial Services Reaffirms Disparate Impact for State Chartered Institutions

  • A NY DFS Industry Letter dated April 22, 2026 reminds state regulated entities that under New York Executive Law § 296-a, covered credit decisions that result in a disparate impact may still constitute unlawful discrimination in New York.
  • This runs counter to both Executive Order 14281 (discussed here) and the CFPB’s final Regulation B rule, which scrubbed disparate impact references from the regulation and the Official Staff Commentary.
  • DFS cites three prior consent orders and notes the letter does not impose new requirements; it is restating obligations that have always been there under state law.

Senate Banking Advances CLARITY Act

  • On May 14, 2026, the Senate Banking Committee advanced the Digital Asset Market Clarity Act on a bipartisan vote.
  • For credit unions, the bill would clarify custodial authority over digital commodities, permit stablecoin rewards (but not deposit-like yield), and create a clearer regulatory pathway for digital asset custody services.
  • The bill still needs to be reconciled with the Senate Agriculture Committee’s version and clear a 60-vote Senate floor threshold.

Trump Nominates John Crews to NCUA Board

  • On May 12, 2026, President Trump nominated John Crews, currently Deputy Assistant Secretary for Financial Institutions Policy at Treasury, to the NCUA Board.
  • If confirmed by the Senate, Crews would replace Chairman Kyle Hauptman, who has been nominated by the SEC to the Public Company Accounting Oversight Board. Hauptman has said he intends to remain at the NCUA until a successor is confirmed.
  • The NCUA Board has been operating with a single seated member since the firings of Todd Harper and Tanya Otsuka in 2025, both of whom are challenging their removals in federal court.

    Let’s Make This Useful

    I want this blog to be as relevant as possible to the people reading it. So:

    • Got a topic you’d like me to break down?
    • Burning desire to know more about that headline you read the other day?
    • Have an industry-related question you want addressed?

    Reach out to me at jeremy.newman@nycua.org. Let’s talk.

    Until Next Time

    From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

    Taxes, Transfers, and Member Deposits: The 1% Remittance Excise Tax Proposed Regulations

    On By Jeremy Newman (NYCUA)In FraudLeave a comment

    Not legal advice. Not tax advice. If you need someone to sign their name to something, call your attorney or tax advisor. This blog is here to help translate regulatory Latin into English, not to get between you and the people you pay to keep you out of trouble.

    When Congress passed the One, Big, Beautiful Bill Act (OBBBA) last July, it included a new 1% excise tax on certain remittance transfers sent from the United States to foreign destinations. The tax technically took effect January 1, 2026. On April 13, 2026, the IRS and Treasury published proposed regulations to fill in the blanks on how it actually works.

    Here is the headline for credit unions: you are mostly spectators to this one. And that is not a bad place to be.

    Quick Refresher: What Is the Tax, and Who Pays It?

    Section 4475 imposes a 1% excise tax on the amount of a taxable remittance transfer. The sender pays it. The remittance transfer provider collects and remits it quarterly.

    A remittance transfer is the electronic transfer of funds from a consumer in the U.S. to a designated recipient in a foreign country, using a remittance transfer provider in the normal course of business. Same definition as Regulation E, which should sound familiar.

    What makes a remittance transfer taxable? Two things have to line up:

    • The transfer goes to a foreign location (domestic transfers do not trigger this tax), and
    • The sender funds it with cash, a money order, a cashier’s check, or a traveler’s check.

    That’s it. Miss either prong and there is no tax. Which brings us to the good news.

    The Statutory Carve-Out That Matters for You

    Section 4475(d)(1) exempts from the tax any remittance transfer for which the funds are withdrawn from an account held in or by, among other things, a credit union that is subject to BSA requirements. Translation: if your member’s money comes out of a share account at your credit union, the tax does not apply.

    Section 4475(d)(2) separately exempts transfers funded with a U.S.-issued debit card or credit card. So in practice, the tax hits cash, money orders, cashier’s checks, and traveler’s checks: instruments that tend to show up at money services businesses (MSBs).

    The IRS and Treasury said the quiet part out loud in the preamble: they expect banks and credit unions will “not be materially affected” by the tax because credit union -facilitated remittances are primarily funded by non-cash instruments.

    The Question We’ve Heard and How Our Answer Changes With This Proposal: Is There a Waiting Period?

    Here is the scenario. A member walks into the branch, deposits $500 in cash into their share account, and ten minutes later initiates a remittance transfer from that same account. Is that transfer exempt under §4475(d)(1), or does it look enough like tax avoidance to raise a flag?

    The conservative advice we have been giving has been to let the cash sit in the account for a few days before using it to fund a remittance, just to avoid any appearance of gaming the system. The proposed regulations do not require that, and here is why.

    The preamble and footnotes state that settlement of an instrument against an account “does not constitute a ‘withdrawal’ from an account at a financial institution for purposes of section 4475(d)(1)… Thus, the source of any funds used to purchase such instruments is immaterial.” That language is aimed at money orders and cashier’s checks, not cash deposits specifically, but the reasoning travels: once funds are in an account, they are account funds. No holding period. No look-through. Nothing in the proposed reg imposes or implies a waiting period.

    So the short answer is: there is no statutory or regulatory waiting period, and the proposed reg supports treating funds as exempt account funds once they hit the account.

    But (and it is a useful but) the proposed regulations include an anti-avoidance rule at §49.4475-1(d)(4) that lets Treasury disregard or recharacterize transactions whose “principal purpose“ is avoiding the tax. The two examples Treasury gives involve a consumer handing over cash in exchange for a general-use prepaid card and immediately using the card to fund a remittance or handing the card to a relative who does. In other words, they are targeting instruments used as pass-throughs.

    A genuine cash deposit into a real, ongoing share account, processed through the credit union’s normal BSA and CIP procedures, is a different animal.

    Practical takeaway: If the proposed regulations is finalized as is, you can stop telling members to wait three days. What you should keep doing is making sure cash deposits go through your normal front line procedures (CIP verification, CTR thresholds, SAR monitoring, the usual). Where the member is actually your member, and the account is actually their account, the exemption applies.

    A Few Compliance Housekeeping Notes

    Even though your credit union is not the one collecting and remitting the tax, a few operational points deserve attention:

    • Cashier’s checks and money orders issued by your credit union. If a member takes a cashier’s check drawn on your credit union and hands it to Western Union, that transfer is taxable to the sender. The settlement of the check between you and the MSB is not treated as a withdrawal from the member’s account for §4475(d)(1) purposes. The tax attaches because the MSB received a cashier’s check regardless of where the funds backing it came from. This mostly matters for member education. You are not the collector, but your members may be surprised to learn that “I used a cashier’s check from my credit union” does not save them the 1%.
    • Check cashing at MSBs. If a member cashes a payroll or personal check at an MSB and immediately uses the proceeds to fund a remittance, the proposed regs treat that as a cash-funded remittance and therefore taxable. Again, not your compliance burden, but useful to know when members ask.
    • International wires from member accounts. The exemption applies regardless of whether the wire goes through your credit union directly or through a correspondent. As long as the funds come out of the member’s account at a BSA-covered financial institution, §4475(d)(1) applies.
    • The Reg E safe harbor does not travel. Regulation E’s 500-transfer-or-fewer safe harbor for low-volume providers does NOT apply for purposes of this tax. Treasury was explicit on this point. If your credit union does fewer than 500 remittance transfers a year, you are still a “remittance transfer provider” for §4475 purposes. In practice, it does not matter much because the transfers you facilitate are from member accounts, which are exempt anyway but it is a useful footnote for anyone on your team who was counting on the safe harbor.
    • Form 720 and semimonthly deposits. For the handful of transfers where your credit union might actually be collecting the tax (cash-funded remittances from non-members, for example, if your CU offers that service), you would be filing Form 720 quarterly and making semimonthly deposits. Notice 2025-55 provides failure-to-deposit relief for the first three calendar quarters of 2026, so there is a soft-landing period built in.

    Comment Period and What to Push For

    Written comments on the proposed regulations are due June 12, 2026. If there is one thing worth asking Treasury to address more explicitly, it is the cash-deposit-then-remit fact pattern. The proposed reg supports the conclusion that it is exempt, but the support is by analogy rather than by direct example.

    The New York Credit Union Association is reviewing the proposal so you can send comments and feedback to be considered for a comment letter.

    The Bottom Line

    The new 1% remittance excise tax is a rare regulatory development that genuinely benefits credit unions without requiring you to do much of anything. The statute carves you out. The proposed regulations confirm the carve-out. The anti-avoidance rule targets synthetic workarounds, not genuine member relationships.

    Your job is less about compliance and more about communication. Let your members and your communities know that sending money home from a share account is cheaper than sending it from the storefront down the block. That is not new. The tax just made it a little more true.

    And, one more time, because we like our licensed colleagues: this blog is not legal or tax advice. Consult your attorney and your tax advisor on the specifics of your operation.

    And, one more one more time: this is just a proposal. Things can change.

    Until Next Time

    From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

    Roundup Through April 6, 2026

    On By Jeremy Newman (NYCUA)In Weekly RoundupsLeave a comment

    Spring has arrived in New York, and with it comes a fresh crop of economic crosswinds, regulatory developments, and federal budget drama that credit unions will need to navigate.

    Here’s what’s moving and what’s looming.

    Your Members’ Wallets: Tariffs, Energy Prices, and a Labor Market on Pause

    If it feels like your members are getting squeezed from every direction right now, that’s because they are. A convergence of tariff policy, geopolitical disruption, and a sluggish labor market is creating real pressure on household budgets. And credit unions, as the original choice for affordability, are in a unique position to help.

    The Iran conflict and energy prices
    • The U.S.-Israeli military operations in Iran have disrupted the Strait of Hormuz, through which roughly 20% of the world’s oil supply flows, sending energy prices sharply higher
    • The national average for a gallon of regular gas topped $4.06 as of April 1, the highest since 2022, with diesel at $5.45. For context, the national average was $2.81 per gallon in early January
    • Contrary to the Federal Reserve (which forecasts inflation to hit 2.7% this year), the OECD projects U.S. inflation could reach 4.2% in 2026, well above the 2.68% average in 2025. The February Consumer Price Index came in at 2.4%, but economists expect the March reading (due April 10) to jump significantly as energy costs work through the economy
    • Higher fuel costs hit low- and middle-income households hardest, acting as what Moody’s economists have called a “tax on households” that reduces real disposable income
    Tariffs are still in the mix
    The labor market: technically fine, actually flat
    • The March jobs report showed 178,000 jobs added—well above the 59,000 expected—but the headline obscures a broader stagnation
    • The economy has added just 260,000 total jobs over the past 12 months, an average of about 22,000 per month. Federal government employment continued to decline
    • The unemployment rate edged down to 4.3%, but largely because nearly 400,000 people left the labor force. The number of workers who’ve stopped looking for jobs jumped by 144,000 in a single month
    • Wage growth slowed to 3.5% year-over-year, the lowest since May 2021, while hours worked also declined
    • With inflation above target and energy prices surging, markets expect the Fed to hold rates steady through the end of the year, with virtually no probability of a cut at the April FOMC meeting
    What this means for credit unions

    Add it up—higher gas prices, rising food costs, tariff pass-through, flat wages, and an uncertain job market—and your members are navigating the most challenging affordability environment in years. If they’re asking why everything costs more, the honest answer is: it’s complicated, and it’s coming from multiple directions at once.

    But here’s the thing: this is exactly the environment credit unions were built for. Credit unions have been the OGs of affordability since long before “OG” was a thing. Lower loan rates, fewer fees, higher savings yields, and a not-for-profit structure that puts members first: that’s not a marketing pitch, it’s a business model. When a member’s household budget gets tighter, the difference between a credit union’s auto loan rate and a bank’s isn’t a rounding error. It’s a car payment they can actually make.

    FY2027 Budget Proposal: CDFI Fund Cuts (Take Two)

    • The White House released its FY2027 budget proposal on Friday, and for the second year running, it proposes cutting $204.5 million in discretionary awards for the Community Development Financial Institutions Fund
    • Nearly 900 credit union branches serve as the sole financial institution in their census tracts making CDFI funding a lifeline, not a luxury
    • The budget also includes an industry opposed administrative fee on lenders participating in SBA guaranteed business lending programs
    • If this feels like déjà vu, that’s because it is. Last year’s budget attempted the same thing, and after the New York Credit Union Association and other industry partners fought these cuts, Congress ultimately funded the CDFI Fund for FY2026
    • Expect the New York Credit Union Association to fight as fiercely for New York’s credit unions this time around

    NCUA Releases 2025 Annual Report

    • The NCUA released its 2025 Annual Report on April 1 and no, it wasn’t a joke
    • Chairman Hauptman highlighted that the Share Insurance Fund and the credit union system remained well-capitalized with sufficient liquidity throughout 2025
    • The agency touted “millions in cost savings” delivered to credit unions through its reorganization and efficiency efforts
    • Key priorities carrying into 2026 include: the ongoing agency reorganization, GENIUS Act implementation, and developing a simplified regulatory framework
    • The report documents NCUA’s performance against its 2022–2026 Strategic Plan, which is being replaced by the new 2026–2030 plan

    NCUA Board Meeting: April 9

    • The NCUA Board meets Thursday, April 9 (livestreamed here) with a packed agenda that includes:
      • Brokered and Reciprocal Deposits: A briefing on a topic that’s been a persistent pain point for credit unions managing liquidity. Watch for signals about whether the NCUA is considering regulatory changes in this space
      • Deregulation Project Update: The Board will review the ongoing deregulation initiative, now eight rounds deep
      • 2026–2030 Strategic Plan: The new strategic plan will set the agency’s direction for the next five years
      • 2026 Annual Performance Plan: How the NCUA plans to measure itself against those strategic goals

    Mark Your Calendar: 2026 State Governmental Affairs Conference

    Advocacy is a year-round effort, but this is the main event for New York’s credit union movement. The 2026 State Governmental Affairs Conference is coming up April 27–28 at the Renaissance Albany Hotel. This is your chance to connect directly with the lawmakers, regulators, and insiders who shape New York’s financial services landscape.

    State-level legislative decisions increasingly affect every credit union in New York—state and federally chartered alike. If we’re not at the table, we’re on the menu. Registration closes April 22, so don’t wait.

    Register here.

    Let’s Make This Useful

    I want this blog to be as relevant as possible to the people reading it. So:

    • Got a topic you’d like me to break down?
    • Burning desire to know more about that headline you read the other day?
    • Have an industry-related question you want addressed?

    Reach out to me at jeremy.newman@nycua.org. Let’s talk.

    Until Next Time

    From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

    CU Later, Scammers: Credit Unions and the Fight Against Fraud

    On By Jeremy Newman (NYCUA)In FraudLeave a comment

    Fraud is having a moment. Unfortunately, it’s not the good kind.

    The numbers are jarring: $132 billion in payment fraud losses in 2023, $12.5 billion in consumer scam losses in 2024, and a record-breaking $16.6 billion in cyber-related crime losses that same year. And it’s getting worse. Deloitte projects that AI-enabled fraud could reach $40 billion in the United States by 2027. Fraudsters aren’t just opportunists anymore. They’re organized, AI-powered, and, frankly, extremely motivated. Deepfakes that can clone your loan officer’s voice. Synthetic identities that spend months building credit before vanishing. Romance scam bots managing dozens of victims simultaneously without a human ever touching the keyboard. If it sounds like a streaming crime series, that’s because it basically is, except the victims are your members and the losses are very real.

    Credit unions have been fighting this battle largely on their own, absorbing resources, staff time, and emotional energy trying to protect members from criminals who don’t respect regulatory, or frankly, any boundaries.

    The good news? Washington is starting to pay attention.

    The Executive Order

    Earlier this month, President Trump signed an Executive Order directing a comprehensive review of the tools available to combat transnational criminal organizations behind cybercrime and fraud. The order calls for an action plan to identify and dismantle criminal networks, prioritizes prosecution of cyber-enabled fraud, and directs the Attorney General to explore returning seized funds to victims.

    Is this a magic wand? No. But it signals that fraud is now a whole-of-government priority  which is exactly what the industry has been calling for. As many credit unions can attest, law enforcement’s resource limitations often mean they can’t engage unless losses are large enough; a threshold that feels pretty cold comfort when your member just wired their savings to a romance scammer.

    The TRAPS Act

    New York Credit Union Association members made the TRAPS Act—the Taskforce for Recognizing and Averting Payment Scams Act—a top priority at America’s Credit Unions’ Governmental Affairs Conference last week, and it’s easy to see why.

    The bipartisan bill would establish a Treasury-led federal task force drawing from the NCUA, CFPB, FCC, FTC, DOJ, credit unions, banks, digital payment networks, consumer groups, and the tech sector. The task force would examine fraud trends, coordinate prevention, and issue annual reports for three years.

    In other words: someone would actually be in charge of a national strategy. Imagine that.

    The New York Credit Union Association and America’s Credit Unions have been clear that this kind of collaborative, whole-of-government approach is exactly what’s needed and that credit unions also need broader safe harbor protections for information sharing and greater regulatory clarity on liability, particularly around electronic transfers.

    What This Means for New York Credit Unions

    The pressure on credit unions is real. Fraud losses are outpacing loan losses at some institutions. Staff are spending considerable time on education and monitoring. And members are increasingly targeted by AI-enhanced schemes that exploit trust and urgency in equal measure.

    The Executive Order and the TRAPS Act won’t solve the problem overnight, but they represent meaningful momentum toward a coordinated national strategy the industry has been seeking. In the meantime, credit unions should continue investing in staff training, member education, and fraud transaction monitoring because no amount of federal coordination fully compensates for a member who has decided to trust a scammer.

    The fight against fraud is a team sport. New York credit unions have been showing up to practice for years. Nice to see the rest of the team finally suiting up.

    Until Next Time

    From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

    Roundup Through January 26, 2026

    On By Jeremy Newman (NYCUA)In Weekly RoundupsLeave a comment

    January has a reputation for being slow. Compliance, apparently, did not get the memo.

    This roundup touches on some familiar themes for credit unions heading into 2026: credit cards, interchange pressure, supervisory priorities, and the ever-present possibility of a government shutdown, all unfolding at once.

    Here is what’s moving, what’s stalled, and what deserves a closer look as we head toward the end of the month.

    Government Shutdown Looms as DHS Funding Stalls

    • Federal funding expires January 30, 2026, with Senate Democrats threatening to block the spending package over DHS funding disputes following fatal ICE shootings in Minneapolis
    • The House passed $1.2 trillion spending package on January 22, but Senate opposition creates high shutdown risk

      Credit Card Competition Act : Interchange Revenue Remains Under Threat

      • Talk about Senators Durbin and Marshall introducing their revised Credit Card Competition Act as an amendment to crypto legislation in Senate Agriculture Committee were mitigated Monday afternoon
      • However, attacks on interchange remain as the White House and various legislators continue to support the Credit Card Competition Act

      10% Credit Card Rate Cap Moves from Social Media Post to Proposed Legislation

      • What began as a social media post by President Trump proposing a one-year 10% APR cap has evolved into serious bipartisan legislation gaining congressional attention
      • Senate bill S.381 by Sanders (I-VT) and Hawley (R-MO), and House bill H.R.1944 by Ocasio-Cortez (D-NY) and Luna (R-FL) propose five-year 10% caps with enforcement mechanisms
      • America’s Credit Unions warns that an estimated two-thirds of credit card users carrying a balance would have their credit lines reduced or eliminated and virtually all of the 47 million Americans with a sub-prime credit score would be unable to obtain or keep a credit card

      $8 Credit Card Late Fee Cap: From Dead CFPB Rule to Legislative Revival

      • The Senate introduced the Credit Card Fairness Act to codify $8 late fee cap into federal law after CFPB’s rule was vacated in April 2025
      • Current Regulation Z safe-harbor amounts remain in effect for now

      NCUA Sets 2026 Examination Priorities

      • The NCUA released its 2026 Supervisory Priorities Letter, emphasizing “No Regulation by Enforcement” while zeroing in on credit unions’ weakest loan performance in over a decade
      • Examiners will focus on underwriting standards, credit risk management, and liquidity planning
      • Operational risk remains a priority, with continued emphasis on fraud prevention and payment systems security and BSA makes an appearance after being off the list for a few years

      Looking Ahead

      The next few days are critical with committee hearings (weather dependent) and the end of the month government shutdown deadline.

      Let’s Make This Useful

      I want this blog to be as relevant as possible to the people reading it. So:

      • Got a topic you’d like me to break down?
      • Burning desire to know more about that headline you read the other day?
      • Have an industry-related question you want addressed?

      Reach out to me at jeremy.newman@nycua.org. Let’s talk.

      Until Next Time

      From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

      When UCC Article 4A Meets Regulation E: Why Credit Unions Are Watching the Citibank Case

      On By Jeremy Newman (NYCUA)In Fair LendingLeave a comment

      Today, we’re doing something a little different and turning the blog over to someone who brings real insight and experience to the topic. Our guest contributor brings deep expertise on wire transfers, Regulation E, and Article 4A and unpacks why a closely watched federal case in New York could have real implications for credit unions. Please welcome Mitch Pollack, the New York Credit Union Association’s General Counsel and managing member and founder of Mitchell Pollack & Associates.

      For decades, credit unions and banks have operated under clear and predictable rules for fund transfers. Consumer electronic fund transfers are governed by Regulation E, while wire transfers fall under UCC Article 4A. That distinction has rarely been questioned—until now.

      The New York Attorney General’s lawsuit in New York v. Citibank challenges whether a wire transfer initiated by a consumer, through online or mobile banking, remains an Article 4A transaction, or whether it should instead be treated as a Regulation E electronic fund transfer.

      The New York Attorney General’s Theory

      The Attorney General alleges that Citibank failed to adequately prevent account takeovers, allowed fraudsters to initiate wire transfers from compromised consumer accounts, and improperly denied reimbursement by asserting that Regulation E did not apply.

      The state’s central argument is that when a consumer initiates a wire through online or mobile banking, the transaction qualifies as an “electronic fund transfer” under the Electronic Fund Transfer Act—despite long-standing industry practice and case law treating wire transfers exclusively under Article 4A.

      To support this position, the Attorney General advances a “transaction-splitting” theory, dividing a wire transfer into three steps:

      1. The consumer submits payment instructions through online or mobile banking;
      2. The financial institution processes the payment and sends funds through a wire network; and
      3. The recipient’s account is credited

      Under this approach, steps one and three are characterized as Regulation E transactions, even if the wire itself remains governed by Article 4A.

      Citibank moved to dismiss the Complaint arguing that Regulation E doesn’t apply and UCC Article 4A governs wire transfers. The U.S. District Court for the Southern District of New York declined to dismiss the Regulation E claims at the pleading stage, allowing the theory to proceed. This was not a decision on the merits. The case is now on appeal before the Second Circuit, with final briefing due in January 2026.

      Why Credit Unions Should Care

      Article 4A was designed to promote certainty, speed, and finality in wire transfers. It allocates risk based on whether the financial institution employed commercially reasonable security procedures and acted in good faith. When those standards are met, courts have historically placed fraud losses on the customer, rather than treating the institution as an insurer.

      The Attorney General’s lawsuit seeks to upend that framework by reclassifying consumer-initiated wires as Regulation E transactions. If that position ultimately prevails, the implications for credit unions could be significant:

      • Article 4A’s loss-allocation rules may no longer apply to consumer wires;
      • The commercially reasonable security defense may lose its protective value;
      • Regulation E notice, investigation, and reimbursement requirements could be imposed on wire transfers; and
      • The long-standing principle of finality in wire payments could be eroded.

      In practical terms, this would increase fraud exposure, operational burden, and reimbursement risk for credit unions offering online or mobile wire capabilities.

      What Credit Unions Should Do Now

      While the Citibank case remains unresolved, credit unions should treat it as a regulatory warning sign and take proactive steps to mitigate potential exposure—particularly for consumer-initiated wire transfers through online or mobile banking.

      Review consumer wire disclosures and agreements. Ensure account agreements, wire transfer disclosures, and online banking terms clearly describe how consumer-initiated wires are handled, including governing law, security procedures, and member responsibilities. Ambiguities may be scrutinized if Regulation E arguments gain traction.

      Reevaluate wire fraud controls for consumer channels. Assess whether existing wire security procedures—especially those tied to online and mobile banking—remain commercially reasonable in light of evolving fraud tactics. This includes authentication, anomaly detection, callback procedures, and transaction monitoring.

      Document good-faith compliance efforts. Maintain clear records showing how wire transfers are reviewed, approved, and processed, and how security controls are evaluated and updated. Demonstrating good-faith adherence to Article 4A standards remains critical.

      Train staff on consumer wire risk. Front-line staff should be trained to identify account takeover indicators and social engineering red flags, particularly when members request urgent or unusual wire transfers.

      Monitor legal and regulatory developments. A Second Circuit decision could reshape expectations nationwide. Credit unions should stay engaged through Association updates and be prepared to adjust policies quickly if the legal landscape shifts.

      The New York Credit Union Association Response

      Recognizing the stakes, the Association—along with other industry participants—filed an amicus brief supporting Citibank’s position that Article 4A governs consumer-initiated wire transfers. We will continue to closely monitor the case. A decision from the Second Circuit could come in early 2026 and may have broad implications for wire transfer risk management across the credit union system.

      Until Next Time

      From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

      The New York Credit Union Association’s Year-Long Legislative Battle: Comprehensive Advocacy Efforts Face Final Test

      On By Jeremy Newman (NYCUA)In Fair LendingLeave a comment

      Throughout the 2025 legislative session, the New York Credit Union Association has conducted a comprehensive advocacy campaign to advance legislation supporting credit union members while protecting the industry from statutory overreach. The Association’s multifaceted efforts now face their ultimate test as Governor Hochul decides the fate of 161 bills awaiting her action.

      (And for those faithful readers who don’t have time to read this full post, click here to register for the webinar on January 14th.)

      Comprehensive Advocacy Strategy

      The Association’s 2025 legislative work encompassed the full range of advocacy activities to serve New York’s credit union community:

      • Championed member-friendly legislation to expand credit union services and reduce operational burdens
      • Opposed bills that would impose unnecessary statutory requirements on credit unions
        Engaged proactively with bill sponsors to seek amendments and carve-outs protecting credit unions
      • Testified at committee hearings to educate lawmakers about credit union operations and member benefits
      • Built coalitions with consumer groups, business organizations, and other financial services stakeholders
      • Submitted detailed position papers analyzing legislation’s impact on credit union members and operations
      • Educated members about pending legislation and mobilized grassroots advocacy efforts

      Four Bills at The Top of the Opposition List

      While the Association’s advocacy agenda included supporting numerous pro-credit union measures, four bills required particularly intensive opposition efforts due to their potential negative impact on credit union operations:

        S6953B – The RAISE Act (Artificial Intelligence Regulation)
        The Association worked extensively with Senator Gounardes’ office, committee staff, and stakeholder groups to seek appropriate exemptions for financial institutions. Despite the Association’s detailed advocacy explaining how the bill’s training requirements and compliance obligations could disproportionately burden credit unions, the legislation advanced without adequate protections for member-owned cooperatives. Similar legislation has been vetoed across the country and with the talk of federal legislation voiding state AI legislation, the future of RAISE is uncertain. This legislation is pending the Governor’s signature, and the Association (along with many other business groups) is actively advocating for a veto.

        S929 – New York HIPA (Health Information Protection)
        The Association’s advocacy team engaged intensively with Senator Krueger’s office and stakeholders to push for explicit carve-outs for financial institutions and insurance carriers. The Association’s analysis demonstrated how the broad language could inadvertently capture credit unions processing health-related information, creating duplicative privacy requirements that conflict with existing federal frameworks. The Association has joined a large coalition requesting this bill be vetoed.

        S1353B – Coerced Debt Relief
        The Association mounted perhaps its most comprehensive opposition campaign around Senator Cleare’s coerced debt legislation. The Association worked with bill sponsors, committee staff, and stakeholder groups to seek amendments that would protect legitimate collection activities while still addressing genuine economic abuse. Despite extensive engagement, the bill’s expansive definition of “coercion” remained problematic for credit union operations. Hopefully if this is signed into law, subsequent chapter amendments will ease some of the burden.

        S8416 – FAIR Business Practices Act
        The Association engaged extensively with Senator Comrie’s office and the Attorney General’s staff to seek modifications to the legislation’s vague standards for “unfair” practices. The Association’s advocacy emphasized how credit unions’ cooperative structure and member-focused mission distinguish them from for-profit institutions, warranting different treatment under enforcement provisions.

        The Stakeholder Engagement Challenge

        The Association’s advocacy work requires careful navigation of complex stakeholder dynamics by balancing supporting consumer protection goals while ensuring credit unions aren’t inadvertently harmed by well-intentioned legislation. This requires extensive engagement with consumer advocacy groups, legislative staff, and other financial services organizations to build understanding of credit union operations and member benefits.

        Federal Validation of the Association’s Balanced Approach

          NCUA’s recently announced Deregulation Project validates the Association’s balanced advocacy approach. While the federal credit union regulator works to eliminate obsolete and burdensome requirements, the Association has consistently advocated for legislation that supports credit union members while opposing measures that would create unnecessary statutory burdens. This alignment between federal burden reduction efforts and the Association’s  state-level advocacy reinforces the Association’s strategic approach.

            What the Association’s Comprehensive Advocacy Achieved

            The Association’s sustained advocacy efforts throughout 2025 accomplished multiple critical objectives:

            • Advanced member interests through support of beneficial legislation
            • Protected operational flexibility by opposing or seeking amendments to problematic bills
            • Educated lawmakers about credit union operations, member benefits, and cooperative principles
            • Built upon relationships with legislators, staff, and stakeholder organizations
            • Demonstrated thought leadership on complex financial services policy issues
            • Mobilized grassroots engagement from credit union members and leaders
            • Confirmed the Association as the authoritative voice on credit union policy in New York

            The Final Test

            Now, after months the Association’s comprehensive advocacy work supporting good bills and opposing problematic ones, key decisions rest with Governor Hochul.

            Lessons in Comprehensive Legislative Advocacy

            The Association’s 2025 campaign demonstrates the sophistication required in modern legislative advocacy. The Association successfully managed a complex portfolio of legislative priorities, supporting measures that benefit members while opposing those that would impose unnecessary burdens. This comprehensive approach enhanced the Association’s credibility and effectiveness with lawmakers and stakeholders.

            But Wait, There’s More!

            The Association is hosting a webinar on Wednesday, January 14th at 11:00 a.m. to provide further insight on these legislative changes, answer questions, and provide practical guidance on what credit unions should be prepared for in 2026. This session will equip attendees with the insights needed to navigate compliance impacts, operational adjustments, and emerging opportunities stemming from New York State’s latest legislative actions.

            Register Here!

              Until Next Time

              From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

              Cents and Sensibility

              On By Jeremy Newman (NYCUA)In RegulatoryLeave a comment

              The U.S. Mint, in a federal cost-saving measure, officially ended penny production on November 12, 2025. This concluded a 232-year history, where the final production cycle cost for each coin amounted to 3.69 cents. The end of the penny marked the beginning of new operational headaches. For New York credit unions, those headaches are compounded by statutory and regulatory uncertainty, pending legislation, and practical constraints that make handling cash more complicated than it should be.

              The Current Issue: More Than Just Heads or Tails

              The numbers tell the story: the Federal Reserve Bank of New York suspended penny orders on September 22, 2025, joining over half of the Fed’s 170 coin distribution terminals nationwide in halting penny services. For New York credit unions, this means no new pennies are coming, and existing inventory must be carefully managed and strategically deployed.

              Unlike the gradual phase-outs seen in other countries, America’s penny elimination has been abrupt and largely unplanned. Treasury initially projected production would continue into early 2026, but penny blanks ran out months ahead of schedule. This has left financial institutions scrambling to adapt in real time without clear federal guidance or regulatory frameworks.

              New York’s Legal Landscape: Navigating Uncertainty

              Here’s where New York credit unions face a particular challenge: the absence of clear regulatory guidance on how to handle the penny shortage creates legal uncertainty. Unlike some other states where businesses have begun implementing rounding practices, New York institutions operate without specific authorization for such measures.

              The good news? Relief may be coming. On November 14, 2025, the New York State Senate introduced Senate Bill S8580, dubbed the “New Yorkers for Common Cents Act.” This proposed legislation would require merchants to round cash purchases to the nearest five cents using a specific framework:

              • Totals ending in 1, 2, 6, or 7 cents would round down
              • Totals ending in 3, 4, 8, or 9 cents would round up
              • Transactions of 4 cents or less would be exempt
              • Non-cash payments would remain exact to the penny

              S8580 represents the most comprehensive state-level response to the penny crisis. But until it becomes law, New York credit unions must navigate the shortage without clear statutory authority to implement rounding practices and without any existing NYDFS regulations on point, though the bill would empower DFS to issue them.

              Federal Developments to Monitor

              While New York grapples with state-specific challenges, several federal legislative proposals could help create a national standard:

              The Common Cents Act (S. 1525 and H.R. 3074). The most comprehensive federal response comes in the form of bipartisan legislation known as the Common Cents Act, co-sponsored in the Senate by New York’s Kirsten Gillibrand which would among other things:

              • Authorize cash transaction rounding to the nearest five cents
              • Allow continued production of numismatic (collector) pennies if profitable
              • Preempt state laws that conflict with federal rounding standards

              This legislation represents the most likely path to national standardization, potentially resolving a patchwork of state laws currently complicating the transition.

              Make Sense Not Cents Act (S. 1554) takes a different approach by letting market forces naturally phase out penny usage rather than mandating rounding.

              The Currency Optimization, Innovation, and National Savings (“COINS”) Act (H.R. 1401) proposes a more cautious approach with a 10-year suspension of penny production and a study of consumer and business impacts.

              H.R. 1270 would suspend production of both pennies and nickels for 10 years while requiring, among other things, studies on coinage efficiency and a review of consumer payment behavior changes.

              While Congress deliberates, federal agencies have issued limited guidance.

              Practical Next Steps for New York Credit Unions

              • Develop Penny Policies: Create interim operational policies for managing penny shortages and member requests while federal or state guidance remains pending.
              • Implement Collection Programs: Consider member penny collection initiatives to address immediate inventory needs like penny collection jars at teller windows, cross-promotional opportunities with local businesses, and community engagement through penny drives.
              • Prepare Member Communications: Prepare clear communications explaining how rounding works, when it applies, and what members can expect.
              • Prepare Systems: Assess technology readiness for potential rounding implementation under either state or federal frameworks.

              Looking Forward

              The penny may be going away, but the need for clear guidance, fair practices, and member-focused leadership isn’t. Credit unions that navigate this moment thoughtfully won’t just weather the shortage; they’ll prove their value through clarity, fairness, and member-centered decision-making.

              After all, in times of change, people need institutions they can trust to help them make cents (sorry, couldn’t resist) of it all. That’s exactly what credit unions do best.

              Final Thought

              If rounding legislation passes, does that mean my $.02 will officially be worth $0.00?

              Until Next Time

              From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

              Reach out to me at jeremy.newman@nycua.org  Let’s talk.

              CU Later, Reputation Risk: NCUA’s Reputation Risk Proposed Rule

              On By Jeremy Newman (NYCUA)In RegulatoryLeave a comment

              The NCUA’s newest proposal didn’t come with fireworks, but it might be one of the most impactful regulatory moves of the year.  By formally eliminating reputation risk from supervision, the agency is swapping subjectivity for something every credit union employee can appreciate: clarity.  This proposal isn’t just bureaucratic housekeeping to align with the NCUA’s September announcement. It is a fundamental shift toward objective, measurable regulatory standards that credit unions have been requesting for years.

              What Happened

              The NCUA issued a Notice of Proposed Rulemaking that formally codifies what the agency announced on September 25th: reputation risk is officially dead as a supervisory tool. But the proposal goes further, creating explicit anti-debanking protections and establishing clear guardrails around what examiners can and cannot do.

              The “Why” Behind the Move

              Let’s be honest: reputation risk was always the regulatory equivalent of “I know it when I see it.” The NCUA finally acknowledged what credit unions have long argued: assessing reputation risk is “subjective, ambiguous, and lacks measurable criteria.” Translation: it was too often in the eye of the beholder, creating unpredictable examination outcomes.

              The agency’s new approach prioritizes “data-driven conclusions” over individual perspectives. For compliance officers who’ve spent sleepless nights wondering how an examiner might interpret their institution’s “reputation,” this is the closest thing to predictability we’ve seen in a while.

                The Anti-Debanking Shield

                Here’s where things get particularly interesting. The proposed rule explicitly prohibits the NCUA from instructing credit unions to close accounts or terminate services based on a customer’s protected class status or political views. This isn’t just about reputation risk; it’s about preventing politically motivated “debanking.”

                This provision directly implements Executive Order 14331, “Guaranteeing Fair Banking for All Americans,” but it also reflects broader concerns about financial institutions being pressured to cut ties with certain industries or political viewpoints. Credit unions now have regulatory cover to serve members based on legitimate business criteria, not political considerations.

                  What Stays, What Goes

                  The NCUA isn’t throwing the baby out with the bathwater. Issues previously categorized under reputation risk—like financial liability from active litigation or insider abuse—will still be examined when they pose actual safety and soundness concerns. The difference? These will be evaluated as concrete financial risks, not nebulous reputational concerns.

                  Think of it this way: if your credit union faces a lawsuit that could result in significant financial damages, that’s still an examination issue. But if your credit union serves a controversial but legal industry, that’s no longer grounds for supervisory concern.

                  The Broader Regulatory Context

                  This move fits perfectly with the current administration’s deregulatory agenda and the NCUA’s recent “No Regulation-by-Enforcement” policy. We’re seeing a consistent theme: clearer rules, more predictable outcomes, and less subjective interpretation.

                  The timing also aligns with similar moves by other banking regulators. The FDIC and OCC have proposed rules limiting the use of reputation risk, creating a more uniform approach across the federal banking system.

                  Practical Implications for Credit Unions If the Proposal Is Finalized

                  For Compliance Officers:
                  • Review current policies that may reference reputation risk
                  • Update board reporting to focus on measurable risks
                  • Document business decisions based on objective criteria
                  For Management:
                  • Consider previously avoided but legal business opportunities
                  • Strengthen documentation of member due diligence processes
                  • Prepare for examinations focused on quantifiable risks
                  For Boards:
                  • Review risk appetite statements for reputation risk references
                  • Focus governance discussions on measurable risk metrics
                  • Consider strategic opportunities previously constrained by reputation concerns

                  What’s Next

                  The proposed rule is now open for public comment through December 22, 2025.

                  Credit unions should consider engaging in the comment process, particularly to provide examples of how reputation risk assessments previously created uncertainty or limited legitimate business activities.

                  The Bottom Line

                  This proposed rule represents more than regulatory cleanup—it’s a fundamental shift toward objective, fair supervision. For an industry built on serving members regardless of their political views or controversial but legal business activities, this provides welcome clarity and protection.

                  The NCUA deserves credit for acknowledging that good regulation requires clear, measurable standards. This proposal lets credit unions focus on what they do best: serve their members and communities without worrying about subjective regulatory second-guessing.

                  Until Next Time

                  From the big picture to the fine print, we’ve got you covered. Thanks for reading, and CU in the next post.

                  Reach out to me at jeremy.newman@nycua.org  Let’s talk.