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Some guidance on examiner flexibility for CARD Act issued by NCUA
WASHINGTON (8/31/09)--Noting that some credit unions may have technical difficulties in complying with the CARD Act, NCUA Board Chairman Debbie Matz today (Friday) issued a statement citing the "need for examiners to work with credit unions on a case-by-case basis." "The amount of time necessary to come into full compliance will likely vary, depending on the type of credit arrangements a credit union offers its members and, in many cases, the cooperation of third party vendors in revising billing procedures and statements," Matz stated. "All credit unions are expected to come into full compliance as early as reasonably possible, and to demonstrate their efforts to do so. "In the interim, credit unions should follow the alternative allowed by the Federal Reserve. Like any regulatory compliance matter, examiners will review credit union efforts to achieve compliance." The NCUA Board chairman added that "In no event can credit unions impose a late fee or change terms except as permitted by the Credit CARD Act and the Federal Reserve's regulation." Under the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) and the Federal Reserve Board's interim final rule, financial institutions must mail or deliver periodic statements for open-end consumer credit plans at least 21 days before the payment due date or lose the ability to treat the payment as late if it is made after the 21-day period. Congress established an Aug. 20, 2009, effective date for the requirement. However, the Federal Reserve has stated that for a "short period of time" a creditor may technically comply by prominently disclosing elsewhere on or with the periodic statement that the consumer's payment will not be treated as late for any purpose if received within 21 days after the statement was mailed or delivered. Matz' statement acknowledged that the Fed's failure to define "short period of time" has "caused credit unions and their representatives to ask for guidance as to the duration of the short period of time for which credit unions may use this alternative." Matz' statement today (Friday) was intended to provide some additional guidance. CUNA Senior Vice President of Regulatory Advocacy and Deputy General Counsel Mary Dunn described the NCUA Board Chairman's statement as "a useful step in the right direction" which "provides more indication of the agency's awareness of credit unions' compliance hurdles." She said CUNA will continue its efforts with NCUA to ensure examiners provide needed flexibility to credit unions that are making good faith efforts to comply. Earlier this month, CUNA sent a letter to the agency leadership urging it to instruct examination staff to be flexible as credit unions struggle to comply with aspects of the CARD Act. "There is no question that the CARD Act is inflicting a significant toll on the credit union system," CUNA President and CEO Dan Mica wrote. "In recognition of this and the range of other issues credit unions are facing, including the sagging economy and funding for NCUA's corporate stabilization program, we urge you to direct NCUA examiners to work with credit unions as they reasonably determine what is their best approach for compliance."


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