Credit Union Exam Solutions Presents With Flying Colors

Set up a call:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Check out our website:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

# With Flying Colors Podcast: Equal Credit Opportunity Act (ECOA) Part Two

## Episode Summary
In this episode, Mark Treichel continues his discussion with Joe Goldberg, diving deeper into the Equal Credit Opportunity Act (ECOA) and Regulation B. They focus on the second primary purpose of ECOA: encouraging the informed use of credit through adverse action notices.

## Key Points
1. Adverse Action Notices
   - Purpose: Inform applicants of reasons for credit denial or less favorable terms
   - Must provide specific reasons in detail
   - Optimal to provide 3-4 main reasons for adverse action

2. Special Purpose Credit Programs
   - Allow creditors to meet credit needs of specified classes of persons
   - Different rules for for-profit and non-profit organizations

3. Department of Justice Referrals
   - Required when there's reason to believe an institution has engaged in a pattern of illegal discrimination
   - DOJ guidance available for identifying practices that may lead to referrals

4. New ECOA Section (Effective August 29, 2023)
   - Requires collection and reporting of small business lending data to CFPB
   - Applies to creditors with at least 100 originations to small businesses for each of the prior 2 years

5. Enforcement and Legal Actions
   - NCUA enforces for federal credit unions
   - Private actions allowed, including class actions

6. Compliance Best Practices
   - Familiarize with ECOA and Regulation B
   - Implement sufficient compliance management system
   - Provide regular training for staff involved in lending
   - Oversee third-party vendors
   - Conduct self-testing and audits

## Resources Mentioned
- NCUA Fair Lending Guide
- NCUA Regulatory Alerts and Letters to Credit Unions
- Federal Consumer Financial Protection Guide on NCUA website
- CFPB website (consumerfinance.gov) - Fair Lending section

## Guest Information
Joe Goldberg: Attorney with 40 years of experience, former NCUA staff member, and consumer compliance expert.

## Hosted By
Mark Treichel

www.marktreichel.com

https://www.linkedin.com/in/mark-treichel/

## Episode Overview
A detailed discussion on what makes an effective board package for credit unions, drawing from Todd Miller's 34 years of experience at NCUA. Learn how to create board reports that help directors make informed decisions while satisfying regulatory requirements.

## Key Points on Board Packages

### Foundation and Purpose
- Board packages should reflect management's responsibility to demonstrate compliance with:
  - Business plan
  - Board policy
  - Risk appetite standards
- Purpose is to help board members make good decisions regarding their responsibilities
- Must balance what boards need to know vs. want to know

### Components of Effective Board Packages

#### Quantitative Reports
- Key Performance Indicators (KPIs)
- Key Risk Indicators (KRIs)
- Financial reports
- Budget updates
- Strategic plan progress
- Peer comparisons
- Dashboard-style summaries preferred over excessive detail

#### Qualitative Reports
- Clear, concise explanations providing context
- Explanations for deviations from plans
- Discussion of emerging risks and opportunities
- Summaries of committee activities
- Analysis of significant trends or changes

### Best Practices
1. Maintain consistent formatting across all reports
2. Use standardized indicators (e.g., red/yellow/green) throughout
3. Present data in consistent order (e.g., oldest to newest)
4. Include peer comparisons
5. Make detailed data available but focus on summaries
6. Regular review and updating of package contents
7. Address material risks clearly and directly

### Common Pitfalls to Avoid
- Information overload/data dumping
- Inconsistent formatting
- Burying significant risks in details
- Failing to provide context for decisions
- Including outdated or unnecessary reports
- Not disclosing material information

## Regulatory Considerations
NCUA guidance states that "reports to directors should support complete, understandable, and accurate information appropriate to the size and complexity of the credit union."

## Key Takeaways
1. Focus on helping board members make good decisions
2. Provide clear understanding of current situation
3. Keep focus on future actions and strategic direction
4. Balance detail with clarity
5. Maintain consistency in reporting structure

Set up a call:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Check out our website:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

## Episode Summary
In this episode of With Flying Colors, host Mark Treichel welcomes back Joe Goldberg, a veteran attorney with 40 years of experience and former NCUA official. They dive deep into the Equal Credit Opportunity Act (ECOA) and its significance in fair lending practices for credit unions.

## Key Points Discussed
- The purpose and significance of ECOA and Regulation B
- NCUA's increased focus on fair lending examinations
- Coverage of ECOA across various forms of credit
- The nine prohibited bases for discrimination in lending
- Specific examples of potential ECOA violations in credit union practices

## Highlighted Quotes
- "ECOA requires creditors to make decisions related to providing credit and the terms of credit based solely on credit related factors." - Joe Goldberg
- "NCUA has increased its focus on fair lending in the last several years. They even started when I was there. I left there at the end of 2021, but that's still true. And, in fact, the agency is expanding its fair lending examination program." - Joe Goldberg

## Important Takeaways for Credit Unions
1. Review policies and procedures for potential age or marital status discrimination
2. Be aware of the expanding fair lending examination program at NCUA
3. Understand the nuances of the nine prohibited bases for discrimination
4. Consider the risks associated with Department of Justice referrals for ECOA violations

## Next Episode
Tune in for Part 2 of this discussion, where Mark and Joe will continue their exploration of ECOA, including special purpose credit programs and the referral process to the Department of Justice.

## About the Guest
Joe Goldberg is a former NCUA official who led the division responsible for HMDA, fair lending, and consumer compliance. With 40 years of experience as an attorney, he now works as a consultant in the credit union industry.

## Resources Mentioned
- NCUA Letter to Credit Unions: 22-CU-04 (February 2022)
- Equal Credit Opportunity Act (ECOA)
- Regulation B

## Get in Touch
For more information on achieving success with NCUA, visit [marktreichel.com](https://marktreichel.com).

www.marktreichel.com

https://www.linkedin.com/in/mark-treichel/

Host: Mark Treichel
Guests: John McKechnie and Jeff Pacino

Key Topics Discussed:

1. Leadership Changes:
- Discussion of Trump's election victory and its potential impacts
- Changes in Senate Banking Committee leadership with Sherrod Brown's defeat
- Tim Scott expected to chair Senate Banking Committee
- Elizabeth Warren potentially becoming ranking Democrat on Banking Committee

2. NCUA Board Implications:
- Anticipated leadership transition from Chairman Todd Harper to Kyle Hauptman
- Analysis of NCUA Board dynamics and chairmanship powers
- Discussion of Hauptman's term expiring in August 2025
- Need for credit union industry experience on the NCUA Board

3. Critical Industry Issues:
- Potential tax reform efforts in 2025
- Importance of credit union advocacy and GAC attendance
- Changes in regulatory approach under new leadership
- Consumer compliance and budget considerations

4. Political Dynamics:
- Discussion of Republican control of Congress
- Two-year window for administration priorities
- Importance of maintaining relationships across party lines
- Changes in House Financial Services Committee leadership with McHenry's retirement

Expert Analysis: The episode features experienced regulatory and industry veterans providing insights on navigating the changing political landscape and its implications for credit unions.

Set up a call:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Check out our website:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

With Flying Colors Podcast: Understanding Credit Culture with Vin Vieten

## Episode Summary
In this episode, host Mark Treichel interviews Vin Vieten, a retired senior credit specialist from NCUA, about credit culture in credit unions. Vin shares insights from his extensive experience in commercial banking, industry, and regulation, offering valuable perspectives on developing and maintaining a strong credit culture.

## Key Topics Discussed
- Definition of credit culture and its importance in credit unions
- Who is responsible for establishing credit culture
- How to implement and reflect credit culture in policies and practices
- The role of credit culture in credit proposals and actions
- Balancing member service with safety and soundness in lending

## Notable Quotes
- "What credit culture is, is your approach to providing credit to your customers, your members... It's how you're going to, why you're providing commercial financing and, and then really how you're going to do it."
- "We're not here just to say yes or no to loans. We're here to provide the right financing for that borrower."
- "Appropriate financing for the borrower. That's really what your job is. And that means financing that is paid back within the ability that's structured."

## Guest Bio
Vin Vieten is a retired senior credit specialist from the NCUA with 11 years of experience at the agency. Prior to his role at NCUA, Vin worked as a commercial banker, senior loan officer, and controller for a large ready-mixed concrete company, giving him a unique perspective on all sides of the commercial lending process.

## Resources Mentioned
- NCUA regulation 723 on Member Business Loans and Commercial Loans
- Preambles to the proposed and final rules on commercial lending (July 2015 and February 2016)

## Upcoming Topics
Mark teases future episodes covering:
- Credit proposals
- Underwriting
- Regulatory resources
- Credit risk rating systems
- Global cash flow analysis

## Get in Touch
For follow-up questions or to discuss how Mark and Vin can assist your credit union:
- Email: [email protected]
- Website: www.marktreichel.com

www.marktreichel.com

https://www.linkedin.com/in/mark-treichel/

1. Risk Management Framework Components:
- Risk Culture - Established by board and management, sets tone from top
- Risk Appetite - Formal statements and limits that define acceptable risk levels
- Risk Management System - Including the three lines of defense

2. Risk Appetite:
- Should be commensurate with institution's size and complexity
- Must be supported by capital levels
- Requires clear metrics and reporting systems
- Needs documented processes for when limits are approached or breached
- Should be consistently communicated throughout organization

3. Three Lines of Defense:
- First Line: Front-line business units conducting transactions and operations
- Second Line: Risk management department (in larger institutions) led by Chief Risk Officer
- Third Line: Internal audit function testing controls and verification

4. Key Risk Management Principles:
- Risk management culture is foundational to effectiveness
- Smaller institutions can accomplish goals without full three lines structure
- Need to avoid managing risks in silos
- Importance of aggregating risks across organization
- Chief Risk Officer role should support but not have veto power

5. Best Practices:
- Document and communicate risk appetite clearly
- Establish appropriate metrics and reporting
- Have action plans for when limits are approached
- Ensure staff feels comfortable raising risk concerns
- Maintain independence of risk oversight functions

6. Resources Available:
- OCC Director's Reference Guide contains useful guidance on risk governance
- Includes questions to consider and potential red flags
- Contains comprehensive references on risk and corporate governance

The episode emphasized that while sophistication levels vary by institution size, core risk management concepts remain consistent and should be applied appropriately based on each credit union's specific circumstances.

Set up a call:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Check out our website:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

## Episode Summary
Mark Treichel discusses Credit Union Service Organizations (CUSOs) and CUSO examinations, drawing from his experience as a former NCUA Regional Director. He compares CUSO exams to credit union exams and provides insights into what credit unions and CUSOs can expect during these reviews.

## Key Points
1. CUSO exam frequency and types:
   - Less frequent than credit union exams
   - Three types: integrated exams, standalone exams, and independent reviews

2. NCUA's authority to examine CUSOs:
   - Based on agreements between credit unions and CUSOs
   - Allows NCUA complete access to CUSO books and records

3. Types of CUSOs likely to be examined:
   - Those offering new or growing services (e.g., commercial loans, student lending, FinTech)

4. NCUA's focus during CUSO exams:
   - Systemic risks
   - Individual credit union risks
   - New or growing services

5. Documents NCUA may request:
   - Strategic plans
   - Disaster recovery plans
   - Organizational charts
   - Board minutes
   - Customer lists
   - Policies and procedures

6. Corporate veil considerations:
   - Ensuring independence between CUSO and credit union operations

7. "Primarily serves" requirement:
   - Case-by-case determination
   - Based on totality of circumstances

## Notable Quotes
"Getting a CUSO review, if your books and records are clean and your services are well documented and you can do a good job of controlling the narrative when NCUA comes in, when that happens, it's actually, can be a plus."

## Upcoming NCUA Developments
- Proposed rule on eligible obligations and loan participations expected between July and September

## Resources Mentioned
- Credit Union Exam Solutions: marktrico.com
- CUSO Law: cusolaw.com
- Previous podcast episode with Brian Lauer on CUSO regulation changes (episode number to be added in show notes)

## Call to Action
Subscribe to "With Flying Colors" on your favorite podcast app for more expert insights on achieving success with NCUA.

www.marktreichel.com

https://www.linkedin.com/in/mark-treichel/

Guest Speakers:
- Todd Miller 
- Steve Farrar 

Key Topics Covered:

1. Definition of Corporate Governance
- Set of processes, customs, policies, and laws affecting how a corporation is directed and controlled
- Structure of rules, practices, and processes that determine corporate culture
- Board responsibility for setting corporate culture

2. Resources for Directors
- NCUA has limited specific resources on corporate governance
- FDIC resources recommended:
  * Pocket Guide for Directors
  * 2016 Supervisory Insights
  * Proposed guidance for larger institutions
  * YouTube video on corporate governance

3. Key Board Responsibilities:
- Setting appropriate tone and corporate culture
- Approving and overseeing strategic planning (3-5 year outlook recommended)
- Establishing and approving policies
- Creating code of ethics
- Providing active oversight of management
- Selecting qualified executive officers
- Ensuring ongoing director training
- Conducting board self-assessments
- Overseeing compensation and performance management

4. Important Considerations:
- Board composition and diversity of skills/backgrounds
- Documentation of strategic plan changes
- Importance of independent but cooperative relationship with management
- Training and self-assessment requirements
- Three lines of defense in risk management:
  * Frontline units
  * Independent risk management
  * Internal audit

Notable Quotes:
"By and large, directors are very dedicated and do a very good job of keeping our system safe and sound." - Todd Miller

Resources Mentioned:
- FDIC Director's Resource Center
- NCUA Required Policies List
- Quantum Governance (board training resource)

Set up a call:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Check out our website:

https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

Fair Lending Basics with Joe Goldberg

In this episode, Mark Treichel interviews Joe Goldberg, a former NCUA official, about the basics of fair lending for credit unions. Key topics covered include:

- Definition and importance of fair lending
- Major fair lending laws: Equal Credit Opportunity Act (ECOA), Fair Housing Act, Home Mortgage Disclosure Act (HMDA)
- Types of discrimination: disparate treatment vs. disparate impact 
- NCUA's fair lending examination program
- Tips for credit unions to protect themselves and ensure compliance:
  - Know the laws and regulations
  - Implement a robust compliance management system 
  - Provide adequate training
  - Maintain oversight of lending practices and third parties
- Resources for credit unions to learn more about fair lending requirements

Key quotes:
"Fair lending is usually looked at by what is prohibited rather than what is required." - Joe Goldberg

"Intent is not an element of violating ECOA." - Joe Goldberg

"Credit unions try to get it right, but they don't always do that. The more they can educate themselves, the better off they will be and the better off their members will be." - Joe Goldberg

Resources mentioned:
- NCUA Fair Lending Guide
- NCUA Federal Consumer Financial Protection Guide
- FFIEC website (ffiec.gov)
- CFPB website 
- NCUA regulatory alerts and letters to credit unions

www.marktreichel.com

https://www.linkedin.com/in/mark-treichel/

www.oldenlane.com

1. Mike Macchiarola from Olden Lane discusses NCUA-assisted credit union mergers and why we may see more of them in the near future.

2. Current industry challenges:
   - 10% of credit unions are now CAMEL 3, 4 or 5
   - ROA is at 69 basis points, lowest in a decade (excluding COVID dip)
   - 764 credit unions have zero or negative ROA
   - Rising cost of funds, asset quality concerns, fee compression

3. Importance of pursuing mergers while credit unions still have "self-determination" rather than waiting for NCUA to dictate terms.

4. Overview of the NCUA's Merger Partner Registry and how it's used when an assisted merger is needed.

5. Process for NCUA-assisted mergers:
   - NCUA identifies potential acquirers from registry
   - Interested credit unions sign NDA and receive bidder's package
   - Acquirers evaluate opportunity under time pressure
   - NCUA seeks lowest-cost alternative but considers multiple factors

6. Advice for credit unions considering assisted mergers:
   - Hire experienced advisors to help navigate the process
   - Be prepared to make decisions with imperfect information
   - Understand NCUA's preference for full mergers over purchase & assumptions

7. Importance of maintaining strong capital position to be an attractive merger partner.

8. Discussion of how NCUA balances cost considerations with ensuring long-term stability when selecting merger partners.

Key Quote: "Don't get yourself to the place where the NCUA is dictating terms because your option set is closing. You owe it to your membership, your staff, your management team, your legacy of your institution, its brand and its community not to get there." - Mike Macchiarola

Call to Action: Credit unions considering mergers or concerned about their long-term viability should visit www.oldenlane.com to learn how Olden Lane can assist with strategic planning and merger navigation.