One of the benefits of your credit union's League membership is access to InfoSight--a valuable online compliance resource. This newsletter contains some timely highlights, and access to InfoSight is a benefit of League affiliation, so it is password-protected. If you have a specific compliance issue or concern, contact our Consulting Department at (800) 285-5300. Replies to this email will be directed to SVP, League Services & Regulatory Analysis Joe Guilfoy .
InfoSight News
Truth in Lending – The Truth in Lending Act topic in the Loans and Leasing channel was updated in many places to include references to the effect COVID-19 may have on borrowers, based on a recent CFPB interpretive rule.
 
Central Liquidity Facility – The Central Liquidity Facility topic under the Investments Channel was enhanced as part of the recent interim NCUA final rule.
 
Pandemic Preparedness – The Pandemic Preparedness topic in the Security Channel has been revised to include more information on the Main Street Lending Program established by the Federal Reserve. For credit unions interested in providing loans through this program, the updated content includes a model policy, loan term sheets and frequently asked questions.
Compliance and Advocacy News & Highlights
NCUA Outreach Related to COVID-19 Impact
In a letter to credit unions recently issued, the NCUA has indicated that beginning on May 4, the NCUA has started contacting credit unions to review their COVID-19 response. The letter also included a list of “ COVID-19 Outreach Questions ” for review, and encouraged open discussion with the NCUA examiner to “ask questions, and express challenges you may be facing.”
 
Source: NCUA
NCUA seeks CECL exemption
NCUA Chairman Hood has  written a letter  urging the Financial Accounting Standards Board to exempt credit unions from complying with the current expected credit losses methodology, or CECL. Hood noted that the NCUA uses the incurred loss model when it supervises and examines the 5,236 credit unions under its purview for safety and soundness — nearly 70 percent of which are less than $100 million in assets. Hood said that attempting to recognize all expected credit losses is fraught with data collection challenges for the smallest credit unions that the agency supervises.
 
Source: NCUA
SBA adds to PPP FAQs
The Small Business Administration has  updated its FAQ on Paycheck Protection Program Loans  to add questions 40–42.
  • Question 40 indicates that a borrower's PPP loan forgiveness amount will not be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer. An interim final rule to that effect can be expected soon.
  • Question 41 addresses seasonal employers' ability to make all the required certifications on the Borrower Application Form if the employer elects to use the summer months of 2019 to calculate its maximum PPP loan amount.
  • Question 42 clarifies the borrower-eligibility status of nonprofit hospitals exempt from taxation under section 115 of the Internal Revenue Code.

Source: SBA
FFIEC Issues Statement on Risk Management for Cloud Computing Services
The Federal Financial Institutions Examination Council (FFIEC) issued a statement addressing the use of cloud computing services and security risk management principles in the financial services sector.
 
Security breaches involving cloud computing services highlight the importance of sound security controls and management’s understanding of the shared responsibilities between cloud service providers and their financial institution clients. The statement does not contain new regulatory expectations, though it highlights that management should not assume that effective security and resilience controls exist simply because the technology systems are operating in a cloud computing environment.
 
The statement highlights examples of risk management practices for a financial institution’s safe and sound use of cloud computing services and safeguards to protect customers’ sensitive information from risks that pose potential consumer harm. The statement also provides a list of government and industry resources and references to assist financial institutions using cloud computing services.
 
Additional information on general risk management and outsourcing practices is available in the FFIEC Information Technology Examination Handbook’s “Outsourcing Technology Services” booklet and other documents published by FFIEC members.
 
Source: FFIEC
New IRS guidance on tax impact of PPP loan forgiveness
IRS Notice 2020-32   provides guidance regarding the deductibility for Federal income tax purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a loan (covered loan) pursuant to the Paycheck Protection Program under section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)). Specifically, this notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to CARES Act.
 
Source: IRS
The IRS Answers COVID-19 Related IRA Questions
The IRS recently posted “ Coronavirus-related relief for retirement plans and IRAs ” to provide additional guidance on this topic.
 
Source: IRS
CFPB posts ECOA appraisal factsheets and FAQ
The CFPB has released two factsheets on the ECOA valuation rule that provide information on  transaction coverage  under the rule and the  delivery method and timing requirements  for appraisals and other written valuations. A  COVID-19-related FAQ on the appraisal rule  was also published.
Bureau updates COVID-19 stimulus relief guide
The CFPB has updated its blog article, " A guide to COVID-19 economic stimulus relief ," with new information.
 
Source: CFPB
Articles of Interest
CUNA's Advocacy Resources
Weekly Regulatory Advocacy Report
The Weekly Advocacy Report provides links to information about a number of recent League, CUNA and NCUA regulatory and advocacy activities. 
   
League Consulting Department Staff
(800) 285-5300
Compliance Calendar
There's more available from InfoSight
InfoSight content is available anytime to get sample policies, links to federal regulations and summaries of issues that are hot-topics at your credit union. 
 
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