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CA GRR 2019 Talking Points

    MEETING SCRIPT FOR LEGISLATIVE VISITS

    INTRODUCTION (5 minutes)

    • Team leaders should introduce themselves, hand the prepared legislative packet to the legislator or staff and invite the other attendees to introduce themselves. Please state your name, credit union, field of membership, size of membership, and the main cities your credit union serves.

    AB 1416 (Cooley): CONSUMER PRIVACY PROTECTION (8-10 minutes)

    Unfortunately, the California Consumer Privacy Act (CCPA) inadvertently weakens the defenses against identity theft by allowing consumers to opt-out of fraud prevention tools and services. When bad actors are allowed to opt-out under the CCPA, credit unions will face difficulties in detecting and preventing fraud.

    Assembly Bill 1416 ensures that credit unions can continue protecting consumers against identity theft while still carrying out the intent of the CCPA. The bill adds clarifying language that specifies CCPA does not prevent a business from using collected personal information to prevent and protect against illegal activity. Credit unions rely on fraud prevention tools to ensure that member accounts are only opened and accessed by the correct person. Credit unions must also be able to receive data from third-party risk assessment entities to assist with complex Anti Money Laundering (AML) and Know Your Customer (KYC) laws.

    Additionally, the bill also specifies that CCPA does not prevent a credit union from sharing collected information for the purpose of helping a government agency.

    In drafting the CCPA, stakeholders recognized that criminals could use the CCPA to their advantage, so the authors included a clarification within the “right to delete” section of the bill. AB 1416 is a similar clarification for the right-to-opt-out provision of the bill.

    AB 1416 is not peeling back any of the consumer privacy protections provided in CCPA. It simply prevents bad actors from using CCPA rights to opt-out of vital data services used to prevent and investigate crime.

    AB 857 (Chiu and Santiago): PUBLIC BANKS (3-5 minutes)

    Assembly Bill 857 would allow a local government to apply for a charter to establish a public bank.

    The main goal of these public banks, as stated by the proponents, is to allow cities to finance their own large infrastructure projects rather than finance them through a bank. Supporters believe this type of city bank would be able to offer lower interest rates and keep investments local rather than sending profits to Wall Street.

    The California Credit Union League is concerned that a public bank will be driven to offer sub-market rates, which could place millions of taxpayer dollars at risk. The League feels there is no need for a city-operated bank as credit unions and banks offer similar services at affordable rates throughout the state. If there is a void that needs to be filled, the League would welcome conversations to discuss challenges in the marketplace.

    AB 1087 (Cunningham): FINANCIAL LITERACY (5-8 minutes)

    The California Credit Union League has proudly supported legislation over the years to help improve the financial literacy of Californians. Assembly Bill 1087 specifies that the required course for economics in high school would incorporate topics on financial literacy.

    The topics would include: fundamentals of banking for personal use; principles of budgeting and personal finance; employment and factors that affect net income; and uses and effects of credit.

    Credit unions take the education of our members and our communities very seriously. With the assistance of the Richard Myles Johnson Foundation, the state foundation for credit unions in California and Nevada, credit unions host “Bite of Reality” events across the state. This program presents students with a variety of financial situations and decisions, walking them through the everyday challenges they will one day face in managing their finances. From purchasing transportation and housing to having children and handling credit card debt, students must budget properly or risk financial failure. In 2018, approximately 60 credit unions delivered nearly 200 “Bite of Reality” events to more than 23,000 students across California and Nevada (and more than 640 fairs have been held since 2012, reaching 65,000 students in total).

    Please share what your credit union has done in the community on this front.

       

State Charter Update/Prized-Linked Savings Accounts

  • State Charter Update

  • • The League-sponsored Assembly Bill 2862, authored by Assembly Banking and Finance Chair/Assemblymember Monique Limón (D-Santa Barbara), was approved and signed by Governor Brown.

    • The new provisions of law will take effect on January 1, 2019.

    • AB 2862 is an update to the state charter and includes five provisions to clean-up the code and give state-chartered credit unions parity with federally chartered credit unions. The provisions in the bill include:

  1. Allows state-chartered credit unions to purchase and sell whole loans.
  2. Allows investments in charitable donation accounts (CDAs).
  3. Clearly exempts credit unions from the California escrow law.
  4. Authorizes investments for employee benefits plan obligations without prior approval by DBO.
  5. No longer requires savings capital structure policies.

Prized-Linked Accounts

• Senate Bill 1055, authored by Sen. Steve Bradford, was unanimously approved and would authorize state- and federally chartered credit unions located in California to offer prize-linked savings accounts to their members.

•These accounts would not be considered a lottery or raffle under California law and would not be held to lottery or raffle rules.

• Credit union members could open a prize-linked savings account and for example, for every $25 deposit a member would earn one entry into a monthly and quarterly cash prize drawing.

• Each financial institution could structure these accounts in their own way, but important conditions must be satisfied. Depositors cannot be charged to participate, each entry in the savings promotion must have an equal chance of winning and participants are not required to be present to win.

• Depositors cannot be charged to participate.

• Each entry in the savings promotion must have an equal chance of winning.

• Participants are not required to be present to win.

• SB 1055 will allow credit unions to reward current, successful savers but also attract first-time savers.

  • 2017-2018 Legislative Updates

      CCUL Supported:

      Assembly Bill 2596 (Cooley)

    • • Requires the Governor’s Office of Business and Economic Development (GO-Biz) to develop a statewide economic development plan that will help build a market-based, inclusive economy in California.

      • Calls for a critical third-party peer review of the state’s competitiveness and brings together a diverse advisory group of local, regional, and industry experts to work with GO-Biz in developing a statewide plan.

    • The bill was approved by the California State Assembly by a vote of 78-0 and Senate, 39-0.
    • Assembly Bill 2685 (Calderon)

    • • Defines blockchain technology and established a blockchain working group, appointed by the Secretary of the Government Operations Agency, to evaluate the use of blockchain technology by California’s businesses and state government.

    • • AB 265 recognizes blockchain technology in California law and the important development of this technology that has potential to enable secure and efficient business transactions.

      • The bill was approved by the California State Assembly by a vote of 76-0 and Senate, 39-0.

      Assembly Bill 2913 (Wood)

    • • Provides building projects with more time to begin construction by extending building permit deadlines.

    • • Extends the permit deadline to allow every permit issued to remain valid if the work on the site is commenced within 12 months after its issuance.

      • AB 2913 is especially important in fire-impacted areas of CA that are rebuilding and facing a shortage of construction workers.

      • The bill was approved by the California State Assembly with a vote of 74-0 and the Senate, 38-0.

      CCUL Opposed Unless Amended:

      Senate Bill 1201 (Hannah-Beth Jackson)

    • • Creates new foreign language translation requirements for mortgage loan modifications that are negotiated primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean.

      • CCUL negotiated amendments with the author’s office and removed its opposition to the bill.

    • • As amended, follows the statutory model adopted during the past several years wherein the Department of Business Oversight, furnishes translated model forms for use by covered entities.

      • These forms are now available on the DBO website, but are not required until Jan. 1, 2019.

      Senate Bill 1412 (Bradford)

    • • Requires employers, including credit unions, to only consider “particular convictions” relevant to the position when screening job applicants using a criminal background check.

    • • The bill conflicts with credit union requirements under federal law, including 12 USC 1785(d).

      • Credit unions must consider the complete criminal history of an applicant to review for disqualifying records.

      • League negotiated amendments stating that if the employer must do a background check or consider crimes when hiring a potential employee, they do not have to comply with the provisions of this bill.

      Assembly Bill 2159 (Chu)

    • • Specified that a willful failure to report financial abuse by a mandated reporter, including credit union employees, would result in a civil penalty not exceeding $5,000 and full reimbursement to the victim for the financial loss suffered as a result of the financial abuse.

    • • The bill would have required the civil penalty and full reimbursement to be paid by the employer of the money transmitter to the party bringing the action.

      • This legislation opened credit unions up to substantial litigation and financial losses.

      • CCUL negotiated amendments to remove credit unions from the bill.

      • The bill failed to pass the Assembly Appropriations Committee.

      Assembly Bill 2708 (Reyes)

    • • Would have amended current statute to require businesses to put contracts in the language spoken by the consumer when the consumer uses a minor to negotiate the transaction.

    • • Current statute requires a translated version of the contract if the business owner or agent negotiates in a language other than English.

      • The League expressed concerns to the author’s office regarding altering the trigger for when a translated contract must be furnished.

      • CCUL submitted amendments to the author’s office to clarify current law.

      • The author chose to hold her bill for the year and not move forward with this issue.

    Nevada

    Nevada GRR 2019 Talking Points

    MEETING SCRIPT FOR LEGISLATIVE VISITS

    INTRODUCTION (5 minutes)

    • Team leaders should introduce themselves, hand the prepared legislative packet to the staffers, and invite all other participants to introduce themselves. Please state your name, credit union, field of membership, asset size, and main cities you serve.

    NEVADA CREDIT UNIONS—OVERVIEW

    • Nevada has 15 credit unions headquartered in the state, with 353,000 members and more than $5 billion in assets.

    • Credit unions are not-for-profit cooperatives. We focus on providing the best service and best-priced products for our members—not on making profits for shareholders.

    • Credit unions are committed to helping our members and our communities. Keeping Nevadans in their homes and in their cars has always been a priority for credit unions.

    • Credit unions avoid the predatory lending market, follow conservative underwriting guidelines, and have a strong record of helping our members. Nevada credit unions have extremely low numbers of home foreclosures because we work proactively with our members when they have problems. Our leave-behind materials demonstrate this through statistics derived from our lending and savings programs.

    • Although credit unions offer many of the same products and services as banks, we are inherently different in our structure and our not-for profit nature: our members are our owners and serving them comes first.

    • As an industry, we are always concerned about legislation written to address issues associated with big banks and bad actors. Such bills often have unintended consequences for smaller, locally-owned financial institutions, such as credit unions.

    There are two specific issues we wanted to bring to your attention today:

    BDR 148—NCUL PRIVATELY INSURED CREDIT UNIONS: MORTGAGE LOAN OFFICERS (8-10 minutes)

    Background

    • This bill will repeal NRS 658.210, removing Nevada Privately Insured Credit Unions (PICUs) from the state licensing and registration requirements for mortgage loan originators (MLOs) and instead become registered as MLOs through the National Credit Union Administration (NCUA).Nevada has 15 credit unions, 6 of which are PICUs.

    • The SAFE Act of 2008 mandates a nationwide licensing and registration system for MLOs. An exception was given to financial institutions regulated by a federal agency, with one of those agencies being the National Credit Union Administration (NCUA).

    • At first, the NCUA did not allow PICUs to register through NCUA, which led to Nevada passing NRS 658.210 to allow PICUs to meet the SAFE Act registration requirements through the Nevada Mortgage Lending Division.

    • In 2010, the NCUA reconsidered their position and allowed PICUs to register if their state supervisory authority entered into a Memorandum of Understanding (MOU) with the NCUA, thereby giving NCUA oversight of the PICUs in this area.

    • Nevada is only one of two states with PICUs that currently do not have a MOU with the NCUA.

    • FID has indicated its willingness to enter into a MOU with the NCUA for this purpose.

    • This will reduce the regulatory burden on PICUs and provide them with the same MLO registration process as other depository institutions in the state.

    OUR “ASK”:

    We ask that you pass this bill to allow MLOs employed by Nevada Privately Insured Credit Unions to register through the NCUA. The commissioner for FID could then enter into a MOU with the NCUA. Privately Insured Credit Unions in Nevada could then utilize the same MLO registration process as is used by other depository institutions in the state while still being subject to appropriate oversight.

    PRIVACY AND DATA SECURITY (5 minutes)

    Background

    • We agree that consumer privacy and data protection are of the utmost importance. Nevada credit unions are regulated by the National Credit Union Administration (NCUA) and/or the Nevada Financial Institutions Division (FID). As part of this, credit unions are heavily regulated in the areas of member privacy and data collection and protection. Credit unions are subject to many privacy and data security laws and regulations, including those outlined below:

    • Gramm-Leach-Bliley Act (GLBA)—signed in 1999, requires disclosures on how nonpublic personal information is used by the financial institution.

    • Regulation P—the regulation that implements GLBA, requires disclosures of sharing nonpublic information and privacy policies

    • Nevada Security and Privacy of Personal Information—Nevada passed SB 538 in 2017, requires internet website operators/online services that collect certain information to notify the consumer about what information is being collected.

    • The Right to Financial Privacy Act of 1978—protects the personal financial privacy of credit union members by restricting federal government access to financial records.

    • Fair and Accurate Credit Transaction Act (FACTA) / Regulation V—signed in 2003, amends the Fair Credit Reporting Act and imposes new obligations on the financial institutions regarding identify theft protection, fraud, and consumer reporting.

    OUR “ASK”:

    We ask that, in the event Nevada debates enhanced privacy protection for consumers, that you recognize the tough standards for privacy protection already required for credit unions under state and federal laws and regulations.

    CONCLUSION (2 minutes)

    • Thank the legislator and/or staff for their time. Be sure to give them the leave behind and a business card.

    FREQUENTLY ASKED QUESTIONS

    BDR 148—NCUL PRIVATELY INSURED CREDIT UNIONS: MORTGAGE LOAN OFFICERS

    1. Who is the author of the bill and is the bill set for a hearing? BDR 148 will be a committee bill from the Senate Committee on Commerce, Labor and Energy. Currently, the bill has not been set for a hearing.
    2. What is an MLO? Under the SAFE Act regulation, a mortgage loan originator (MLO) is an individual who both: i. takes a residential mortgage loan application; and ii. offers or negotiates terms of a residential mortgage loan for compensation or gain.
    3. What is the SAFE Act? The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) mandates a nationwide licensing and registration system for mortgage loan originators: the Nationwide Mortgage Licensing System and Registry (NMLSR). MLOs employed by a federally insured depository institution can register through their federal regulatory agency. For credit unions this is the National Credit Union Administration (NCUA).
    4. Who is covered under the NCUA’s SAFE Act regulation? All credit unions (both federally and privately insured) and their employees who are mortgage loan originators making residential mortgage loans. Privately Insured Credit Unions (PICUs) are allowed to register under the federal system only if the NCUA has a specific Memorandum of Understanding (MOU) for the SAFE Act with the applicable state regulatory authority. Otherwise, the state-licensing system applies.
    5. Can Nevada Privately Insured Credit Unions register through the National Credit Union Administration (NCUA) without an MOU? No, they are not subject to NCUA’s oversight without the appropriate state supervisory authority entering into a Memorandum of Understanding (MOU) with the NCUA.
    6. Which states with PICUs have already entered into a MOU with the NCUA? Alabama, California, Idaho, Illinois, Indiana, Ohio, and Texas, as well as Puerto Rico. Only Nevada and Maryland have not yet taken this action.
  • PRIVACY AND DATA SECURITY
    1. Are credit unions regulated on privacy and data security? Yes, credit unions are subject to many regulations regarding member privacy, data collection, and data protection. Credit unions are regulated by the National Credit Union Administration (NCUA) and/or the Nevada Financial Institutions Division (FID).
    2. What are some examples of privacy laws and regulations that credit unions are subject to? The Gramm-Leach-Bliley Act (GLBA) and its implementing Regulation P; SB 538— Nevada Security and Privacy of Personal Information; the Right to Financial Privacy Act of 1978 (RFPA); and the Fair and Accurate Credit Transaction Act (FACTA) and its implementing Regulation V.
    3. In addition to the laws and regulations, how are credit unions going above and beyond to protect their member’s information? Credit unions continuously work on best practices to protect and serve their members, such as exceeding technology requirements, and implementing clear desk policies, reimbursing fraudulent charges, and reissuing payment cards due to retailer data breaches, etc.
  • CANNIBIS
    1. Where do credit unions stand on cannabis banking? Credit unions support the ability to lawfully serve businesses that engage in activities that are authorized under their state law, even when such activity may be inconsistent with federal law.

    CONTACT US

      Diana Dykstra, President/CEO
      dianad@ccul.org

      Bob Arnould, SVP Advocacy
      boba@ccul.org

      Jeremy Empol, VP Federal Government Affairs
      jeremye@ccul.org

      Robert D. Wilson, VP State Government Affairs
      robertw@ccul.org

      Emily Udell, Advocacy Specialist
      emilyu@ccul.org

      Sharon Turley, VP Regulatory Advocacy
      sharont@ccul.org

      Heather deNecochea, Manager Political Advocacy
      heatherd@ccul.org   

    Patti Neumaier, Executive Assistant, Advocacy
      pattin@ccul.org

    CONTACT US

      Diana Dykstra, President/CEO
      dianad@ccul.org

      Bob Arnould, SVP Advocacy
      boba@ccul.org

      Jeremy Empol, VP Federal Government Affairs
      jeremye@ccul.org

      Robert D. Wilson, VP State Government Affairs
      robertw@ccul.org

      Emily Udell, Advocacy Specialist
      emilyu@ccul.org

      Sharon Turley, VP Regulatory Advocacy
      sharont@ccul.org

      Heather deNecochea, Manager Political Advocacy
      heatherd@ccul.org   

    Patti Neumaier, Executive Assistant, Advocacy
      pattin@ccul.org