2024 Year in Review

By Keith Schostag

2024 was an active year for credit unions and their regulators. From the continuation of the war on fees, regulator activity, and the first action against a credit union for redlining, 2024 was busy. On top of all that, if you didn't know, there was an election and we have a new president. This means a new administration with some very different priorities. However, while there has been a lot going since the ball dropped, 2024 still happened and we can't forget about regulatory actions that took place last year. Please note, due to the ongoing changes being made to the government, especially the CFPB, some of the information in this review may be out of date. While rulemakings and operations have been paused, it is probable that they will resume later in the year. So here is a review of the major highlights from last year:

NCUA Year in Review

NCUA's Focus in 2024

In January 2024, the National Credit Union Administration (NCUA) published its Supervisory Priorities for 2024. Like with 2023, credit and liquidity risk took two of the top three spots in the priorities. However, interest rate risk fell to the bottom of the list. This could have been due to a more stable interest rate outlook from the Fed.

Consumer Financial Protection and Information Security maintained their position on the list. NCUA honed in on both of these topics in letter to credit unions 24-CU-02 on Board of Director Engagement in Cybersecurity Oversight and 24-CU-03 on Consumer Harm Stemming from Certain Overdraft and Non-Sufficient Funds Fee Practices.

Final Rules Issued by NCUA in 2024

Minority Depository Institution Preservation Program

At its February meeting, the NCUA Board unanimously approved its final interpretive ruling and policy statement that updated the Minority Depository Institution (MDI) Preservation Program's features and clarified the requirements for a credit union to receive and maintain an MDI designation, among other changes.

Quality Control Standards for Automated Valuation Models

On July 17, 2024, the NCUA, along with other agencies, issued a final rule to implement the quality control standards for the use of automated valuation models (AVMs) by mortgage originators and secondary market issuers in determining the collateral worth of a mortgage secured by a consumer's principal dwelling.

Specifically, the NCUA amended 12 CFR Parts 722 and 741. The rule applies to the use of AVMs in making determinations of collateral value, such as credit decisions or covered securitization determinations, as well as preparing evaluations for real estate transactions exempt from appraisal requirements. Effective date?

Reconsiderations of Value of Residential Real Estate Valuations

On July 18, 2024, the NCUA, along with other agencies, issued final guidance that highlights risks associated with deficient residential real estate valuations and describes how financial institutions may incorporate reconsiderations of value (ROV) processes and controls into established risk management functions. The final guidance also provides examples of policies and procedures that a financial institution may choose to implement to help identify, address, and mitigate the risk of discrimination impacting residential real estate valuations.

Fair Hiring in Banking

On September 19, 2024, the NCUA issued a final rule that codifies Section 205(d) of the Federal Credit Union Act and incorporates the NCUA's Second Chance Interpretive Ruling and Policy Statement (IRPS 19-1) and the Fair Hiring in Banking Act (FHBA) into the agency's regulations. This rule allows people with convictions for certain minor or older offenses to work in the credit union industry without applying for the NCUA Board's approval. Effective date?

Simplification of Share Insurance Rules

On September 19, 2024, the NCUA issued a final rule amending its regulations governing share insurance coverage. The final rule simplifies the share insurance regulations by establishing a "trust accounts" category that will provide for coverage of funds of both revocable trusts and irrevocable trusts deposited at federally insured credit unions (FICUs), provides consistent share insurance treatment for all mortgage servicing account (MSA) balances held to satisfy principal and interest obligations to a lender, and increases flexibility for the NCUA to consider various records in determining share insurance coverage in liquidations. The changes also increase consistency between the FDIC's federal deposit insurance rules and the NCUA's share insurance rules. Effective date?

Succession Planning

On December 17, 2024, the NCUA issued a final rule that requires credit union boards of directors to establish processes for succession planning for key positions.

Credit unions will be required to establish a written succession plan that addresses specific positions and contains certain information. The board of directors will be required to review this plan no less than every 24 months. The complexity of the plan should be proportionate to the size of the federally insured credit union (FICU), and its complexity and risk of its operations. Credit unions are required to comply by January 1, 2026.

Notable NCUA Guidance in 2024

Board of Director Engagement in Cybersecurity Oversight

In October, the NCUA issued letter to credit unions 24-CU-02 on Board of Director Engagement in Cybersecurity Oversight. This letter discussed the prevalence of cyberattacks on credit unions and other financial institutions, noting that, from September 2023 through August 2024, credit unions reported 1,072 cyber incidents. The letter provided four areas that a board should focus on:

  1. Recurring training
  2. Information security program
  3. Overseeing operational management and
  4. Incident response planning and resilience.

Consumer Harm Stemming from Certain Overdraft and Non-Sufficient Funds Fee Practices

In December, the NCUA issued letter to credit unions 24-CU-03. This letter discussed overdraft and non-sufficient funds (NSF) fees that could be considered an unfair or deceptive act or practice. This letter largely discussed fees/practices already targeted by the CFPB, such as "authorize positive, settle negative" (APSN). This was published after the election and could have been issued in preparation for the CFPB's withdrawal from the war on fees.

Other NCUA Guidance Issued in 2024

  • 24-FCU-02 Permissible Loan Interest Rate Ceiling Extended
  • 24-RA-01 Home Mortgage Disclosure Act Data Requirements
  • 24-FCU-01 Federal Credit Union Operating Fee Schedule for 2024

Looking Ahead to 2025

With a new administration comes a new chairman. NCUA board member, Kyle Hauptman, has replaced Todd Harper as chairman of the NCUA board. As chairman, Chairman Hauptman will be able to control NCUA board meeting agendas. Chairman Hauptman has focused heavily on technology and credit union modernization. Considering, the Trump administrations views on crypto, we will likely see some movement towards expanding credit unions access to digital assets.

Credit unions should keep in mind, that while Chairman Hauptman is in control of the meeting agendas, Board member Todd Harper and Board Member Tanya Otsuka were both appointed by Democratic presidents. As such, for any rulemakings or Board action requiring a vote, at least one Democrat member will need to vote in favor.

CFPB Year in Review

The Consumer Financial Protection Bureau (CFPB) started 2024 hot and ended hot. No matter what ice is thrown at it this year, the guidance and rules issued in 2024 affected credit unions and will continue to affect credit unions in the year/s to come. Here are some key rulemakings from the CFPB in 2024.

Credit Card Penalty Fees

On March 5, 2024, the CFPB issued a credit card late fee final rule amending Regulation Z to address late fees charged by card issuers that, together with their affiliates, have one million or more open credit card accounts (referred to as "Larger Card Issuers"). This final rule adopts a late fee safe harbor threshold of $8.00 for those issuers and provides that the annual adjustments to reflect changes in the Consumer Price Index (CPI) do not apply to this $8.00 amount. This rule has been stayed due to litigation.

Small Business Data Collection

On June 11, 2024 the CFPB issued an interim final rule extending the compliance dates for the small business data collection rule that was originally issued on March 30, 2023. Due to litigation efforts by America's Credit Unions and others, the original compliance dates were extended. A chart with the new dates can be found here. However, on February 7, 2025, the requirements to comply with the rule were stayed for 90 days by the fifth circuit court of appeals.

Personal Financial Data Rights

On October 22, 2024, the CFPB issued a final rule that implements § 1033 of the Consumer Financial Protection Act (CFPA). This rule places requirements on credit unions to provide access to certain financial data to consumers and their authorized third parties. Under this rule credit unions must take steps to make covered data readily available and must not discourage or interfere with a consumer's or authorized third party's ability to request the data. Likewise, this rule permits credit unions to become third parties that can request a consumer's covered data. While this rule will place more requirements and burdens on credit unions, it is also possible that it may help credit unions by increasing the ease with which consumers can do business with credit unions. Finally, credit unions should be aware that there is a lawsuit challenging this rule as well. No stay or injunction has been issued.

Overdraft Lending: Very Large Financial Institutions

On December 12, 2024, the CFPB issued the very large financial institutions overdraft final rule that amends Regulations E and Z to update regulatory exceptions for overdraft credit provided by financial institutions with more than $10 billion in assets. Under the rule, overdraft transactions are treated as if they were extensions of credit, unless the overdraft fee is a "breakeven overdraft credit" or the fee is $5 or less. These overdraft transactions would be subject to the same disclosure requirements as other extensions of credit. The effective date is currently in question due to ongoing litigation that was, in part, initiated by America's Credit Unions. America's Credit Unions has requested a preliminary injunction and, more recently, the CFPB has also filed a motion to stay proceedings and delay the effective date.

Guidance Documents

In addition to finalizing rules, the CFPB issued guidance on a variety of topics, mostly in the form of circulars. Here are some key items from the CFPB in 2024.

What to Look for in the CFPB in 2025

With the rise of the Trump CFPB, we are going to see a very different bureau than we have for the last four years. Here are three things to watch out for in 2025:

  • War on fees
    • It is unlikely that the CFPB will continue its crusade on fees.
  • Effective dates
    • Watch for extensions, pauses or, if possible, withdrawals of rules that have not gone into effect yet. On January 20, 2025, President Trump ordered a regulatory freeze on proposed rules, final rules that have not been published, and upcoming effective dates. This has been built upon and reinforced by both Former Acting Director Scott Bessent and Current Acting Director Russel Vought.
  • Litigation
    • The CFPB is involved in multiple lawsuits, the CFPB may change its mind about pursuing or defending current litigation. Pursuant to orders from acting directors, the CFPB has currently paused efforts in ongoing litigation or is seeking to pause ongoing litigation. Keep in mind that other parties may step into the CFPB's/DOJ's place if the government chooses not to defend against a lawsuit, such as America's Credit Unions' lawsuit on overdraft fees.

Looking Ahead to 2025

Regulatory Rollback

The Trump administration is expected to rollback Biden era regulations, rules, and initiatives. Some of this rollback will take place rather quickly. For example, forgoing certain proposed rules. Other rollbacks will take time. Rolling back final rules will need to go through the whole rulemaking process which can take significant time. Final rules that are being litigated may see the DOJ drop their defense of the final rule. However, courts do not like this, and another person or entity may take the government's place in defending the rule. For example, a member of congress may step in.

The CFPB Still Has a Job to Do

While we can expect the CFPB to be less active in 2025, they are not going to be silent. There will still be new proposed and final rules, they will continue to conduct examinations, and they will still carry out enforcement actions. Just because Rohit Chopra is no longer in charge, does not mean that it is now a free for all. For example, during the first Trump administration, the CFPB issued 114 enforcement actions, while under the Biden administration, the CFPB issued just 101 enforcement actions.

Hiring Freezes and Firings May Affect Examinations

One of the goals of the administration is to reduce the federal workforce and end remote work. Among other positions, this may affect examiners at the NCUA and CFPB. If the NCUA loses examiners and is unable to hire more, this may affect credit union examinations and lead to potential administrative delays.

Customer Due Diligence Rule?

FinCEN is required to issue a new Customer Due Diligence (CDD) rule that will take into account changes made under the Beneficial Ownership Information (BOI) rule.

The Corporate Transparency Act and the BOI rule are currently being litigated. Here is a news alert breaking down the status of the litigation, as of January 24th, that may be helpful. Credit Unions should continue to watch for updates from FinCEN regarding these two rules.

Digital Assets

The Trump administration is a fan of digital assets, such as cryptocurrency. Just one day before his inauguration, President Trump issued his own meme coin. Credit unions should be prepared for new flexibility that may allow credit unions to hold or issue digital assets.

Keith Schostag
Federal Regulatory Compliance Senior Counsel
America's Credit Unions