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October 15, 2008
Exam Procedures Approved for 'Red Flags,' and More
Federal credit union, bank and thrift regulators have approved the examination procedures required to determine a financial institution's compliance with rules regarding identity theft "red flags" (12 CFR 222.90) and other regulations under the Fair Credit Reporting Act (FCRA).
The other FCRA regulations addressed by the Federal Financial Institutions Examination Council's (FFIEC) Task Force on Consumer Compliance address the Duties of users regarding address discrepancies (12 CFR 222.82); and Duties of card issuers regarding changes of address (12 CFR 222.91).
The FFIEC is comprised of representatives of the National Credit Union Administration, the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposits Insurance Corp., and Office of Thrift Supervision.
The FFIEC release announcing examination procedures also reviewed the requirements of the attendant regulations.
- The "red flags" rule requires an institution must to develop and implement a written identity theft prevention program designed to detect, prevent, and mitigate identity theft in connection with any new or existing "covered account." A covered account generally is a consumer account or any other account the institution determines carries a foreseeable risk of identity theft.
- The address discrepancy rule, in part, requires a user of consumer reports to develop reasonable policies and procedures to confirm that the report relates to the consumer whose report was requested when there is an address discrepancy.
- The card issuer rule requires credit and debit card issuers to develop reasonable policies and procedures to assess the validity of a change of address that is followed closely by a request for an additional or replacement card. In such situations, the card issuer must not issue an additional or replacement card until it assesses the validity of the change of address in accordance with its policies and procedures.
Examiners are asked to include an evaluation of a financial institution's compliance with these provisions during the next regularly scheduled examination or supervisory cycle after the mandatory compliance date of November 1, 2008.
Smaller Auto Loan Market but More Opportunity?
According to a GMAC Financial Services press release the company recently implemented a more conservative purchase policy for consumer auto financing in the U.S. as a result of the lack of stability in the global capital and credit markets. The changes include limiting purchases to contracts with a credit score of 700 or above.
CUDL Autosmart Northeast Regional Director Bob Nealon indicated that this is an unprecedented move that “opens the door even wider for credit union lenders.” This kind of move will “ruin GMAC’s dealer relationships and will lead them to being completely priced out of the market,” said Nealon. The announcement severely limits the number of GMAC loans that auto dealers will be able to write which in turn will create tremendous opportunity for credit unions to gain quality market share.
GMAC explained that they made the move because of the current market environment, which has reduced access to funds and increased the cost of funds. The company currently expects these actions to remain in place until the credit markets stabilize and accessibility improves.
Expanded Share Insurance Webinar PowerPoint Is Available Online
The National Credit Union Administration (NCUA) has posted the Expanded Share Insurance 101 Webinar PowerPoint (the session was held on October 7) presentation on its website in several locations. The detailed slides include essential information providing the fundamentals of share insurance that credit unions and members will find beneficial.
The PowerPoint is available on NCUA website locations:
A media release will be issued when the full Share Insurance 101 Webinar is permanently archived online at www.ncua.gov. The archive will include the original webcast and slide presentations as well as a Frequently Asked Questions document. | 
