WEBVTT NOTE This file was generated by Descript 00:00:00.660 --> 00:00:02.620 Samantha: Hello, this is Samantha Shares. 00:00:03.220 --> 00:00:07.210 This episode covers N C U A’s April 2024 Board Meeting. 00:00:07.800 --> 00:00:11.680 After skipping March this meeting has only one agenda item: Records 00:00:11.680 --> 00:00:15.420 Preservation Program and Appendices – Record Retention Guidelines; 00:00:15.709 --> 00:00:18.150 Catastrophic Act Preparedness Guidelines 00:00:18.836 --> 00:00:21.316 The following is the audio of this board meeting. 00:00:21.856 --> 00:00:25.026 This podcast is educational and is not legal advice. 00:00:25.486 --> 00:00:29.466 We are sponsored by Credit Union Exam Solutions Incorporated, whose 00:00:29.466 --> 00:00:32.466 team has over two hundred and Forty years of National Credit 00:00:32.466 --> 00:00:34.376 Union Administration experience. 00:00:34.896 --> 00:00:38.566 We assist our clients with N C U A so they save time and money. 00:00:39.076 --> 00:00:43.016 If you are worried about a recent, upcoming or in process N C U A 00:00:43.016 --> 00:00:47.426 examination, reach out to learn how they can assist at Mark Treichel DOT COM. 00:00:47.826 --> 00:00:52.176 Also check out our other podcast called With Flying Colors where we provide tips 00:00:52.176 --> 00:00:54.746 on how to achieve success with N C U A. 00:00:55.483 --> 00:00:59.233 And now here is the National Credit Union Administrations Board meeting 00:00:59.233 --> 00:01:00.643 for April twenty twenty four. 00:01:01.281 --> 00:01:03.841 Good morning everyone and welcome. 00:01:03.911 --> 00:01:07.271 I call this meeting of the NCUA board to order. 00:01:08.431 --> 00:01:12.321 In addition to those joining us in the boardroom, I want to note for the record 00:01:12.591 --> 00:01:16.871 that today's meeting is open to the public through a live webcast as well. 00:01:17.301 --> 00:01:21.181 In fact, I am participating virtually in today's proceedings. 00:01:22.301 --> 00:01:26.421 As we begin today's agenda, it's my pleasure to welcome the newest member 00:01:26.561 --> 00:01:31.631 of the NCUA Board's team, Renita Murselin, who recently joined as the 00:01:31.631 --> 00:01:34.051 Senior Advisor to Board Member Otsuka. 00:01:34.511 --> 00:01:36.071 Renita, welcome aboard. 00:01:36.261 --> 00:01:40.261 I, along with the rest of the NCUA team, look forward to working together 00:01:40.261 --> 00:01:45.231 with you to achieve the agency's many mandates, including protecting consumers, 00:01:45.521 --> 00:01:49.581 advancing safety and soundness, and safeguarding the Share Insurance Fund. 00:01:49.581 --> 00:01:49.721 everyone. 00:01:50.871 --> 00:01:55.751 The sole item of business today is the Advanced Notice of Proposed Rulemaking, 00:01:56.021 --> 00:01:59.341 Part 749, Records Preservation Program. 00:01:59.781 --> 00:02:04.701 Staff presenting are Kelly Lay, Director, Office of Examination and Insurance, 00:02:05.041 --> 00:02:09.991 and Matt Houston, Policy Officer, Office of Examination and Insurance. 00:02:10.411 --> 00:02:13.551 And joining them to answer questions is Ghira Bose. 00:02:13.961 --> 00:02:16.761 Senior Staff Attorney, Office of General Counsel. 00:02:17.191 --> 00:02:19.471 Good morning, Kelly, Matt, and Vera. 00:02:19.881 --> 00:02:23.611 Matt, I understand that this is your first presentation at an open board 00:02:23.611 --> 00:02:25.871 meeting, so welcome to the board table. 00:02:25.971 --> 00:02:26.881 You're going to do great. 00:02:26.881 --> 00:02:29.061 Please be ready when everyone is ready. 00:02:31.271 --> 00:02:35.101 Good morning, Chairman Harper, Vice Chairman Hopman, and Board Member Otsuka. 00:02:35.741 --> 00:02:39.321 Today we are seeking the board's approval to publish an Advanced Notice 00:02:39.321 --> 00:02:45.001 of Proposed Rulemaking, or ANPR, addressing Insuee Regulation Part 749. 00:02:45.131 --> 00:02:48.371 And it's appendices with a 60 day comment period. 00:02:48.941 --> 00:02:52.681 I would like to extend my appreciation to the members of the INSU A Working 00:02:52.681 --> 00:02:56.401 Group who reviewed this issue in detail over the last several months. 00:02:57.061 --> 00:03:00.961 This included representatives from the Office of Examination and Insurance, the 00:03:00.971 --> 00:03:05.241 Office of General Counsel, the Office of National Examinations and Supervision, 00:03:05.241 --> 00:03:06.841 and And, of course, the regions. 00:03:07.311 --> 00:03:10.141 Their contributions and input were critical in helping bring 00:03:10.141 --> 00:03:11.421 this matter before you today. 00:03:12.301 --> 00:03:15.561 I will now turn it over to Policy Officer Matt Houston for additional 00:03:15.561 --> 00:03:17.771 background and support for this ANPR. 00:03:18.331 --> 00:03:19.021 Thank you, Kelly. 00:03:19.571 --> 00:03:24.331 Good morning, Chairman Harper, Vice Chairman Hopman, and Board Member Otsuka. 00:03:24.521 --> 00:03:27.461 It's an honor to be here today and present this material to you all. 00:03:27.911 --> 00:03:31.841 As Kelly mentioned, we are here to present for your approval an ANPR on 00:03:31.841 --> 00:03:36.921 the topic of NCUA Regulations Part 749, Records Preservation Program, 00:03:37.221 --> 00:03:41.781 and its two appendices, Records Retention Guidelines and Catastrophic 00:03:41.781 --> 00:03:43.111 Act Preparedness Guidelines. 00:03:43.186 --> 00:03:48.676 The ANPR we present today was developed by the NCUA in part due 00:03:48.676 --> 00:03:51.816 to recent feedback we received from a small credit union committee. 00:03:52.526 --> 00:03:57.726 Specifically, we learned that several small credit unions find Part 749 00:03:58.036 --> 00:04:02.876 to be confusing and increasingly costly and unclear as to whether the 00:04:02.876 --> 00:04:06.716 appendices included in this regulation are requirements or guidance. 00:04:07.816 --> 00:04:09.896 While Section 749. 00:04:10.416 --> 00:04:15.331 0B states Appendix A and Appendix B Provide guidance concerning appropriate 00:04:15.331 --> 00:04:19.711 length of time credit unions should retain various types of records and for 00:04:19.711 --> 00:04:24.721 developing a program for Responding to catastrophic act we understand credit 00:04:24.731 --> 00:04:29.551 unions may be confused as to whether these appendices are requirements given 00:04:29.551 --> 00:04:34.936 their inclusion in NCUA's regulations In addition to the helpful feedback 00:04:34.936 --> 00:04:40.456 from the industry, the NCOA identified Part 749 as an area potentially in 00:04:40.456 --> 00:04:42.486 need of updating in recent years. 00:04:43.186 --> 00:04:46.576 Part 749 has not been substantially updated since it 00:04:46.576 --> 00:04:48.046 was established in August 2001. 00:04:49.366 --> 00:04:52.636 Since then, there have been significant changes in credit union 00:04:52.636 --> 00:04:56.756 operations, including an increased reliance on technology and the 00:04:56.766 --> 00:05:00.946 accelerated demand for digital products, services, and technologies 00:05:00.956 --> 00:05:02.286 for operations and membership. 00:05:03.146 --> 00:05:07.886 There have also been changes to formats, methods, and practices credit unions 00:05:08.126 --> 00:05:11.996 use to store their records in accordance with the requirements of Part 749. 00:05:13.016 --> 00:05:17.366 As a result, we are recommending approval and issuance of this AMPR 00:05:17.796 --> 00:05:22.426 to allow the NCOA to seek input from stakeholders and to better understand 00:05:22.456 --> 00:05:27.676 and analyze specific costs or issues that may exist regarding Part 749. 00:05:28.426 --> 00:05:33.306 This feedback, as well as information the NCUA received or gathers, will 00:05:33.306 --> 00:05:36.546 allow the Board to determine whether to propose updates to the rule. 00:05:37.446 --> 00:05:41.706 This AMPR is broken out into four sections with 20 total questions 00:05:41.726 --> 00:05:45.196 within these sections on which we would like feedback from the industry. 00:05:46.496 --> 00:05:51.320 Section A requests input from stakeholders on recommended changes to the definitions 00:05:51.320 --> 00:05:56.816 and what, if any, minimum retention period should be incorporated in Part 749. 00:05:56.896 --> 00:05:57.226 for your time. 00:05:58.306 --> 00:06:02.836 Section B relates to record retention practices and requests credit unions 00:06:02.856 --> 00:06:06.806 provide what processes they are currently using to comply with Part 749. 00:06:07.556 --> 00:06:12.076 In this section, we ask about any impediments encountered in complying 00:06:12.076 --> 00:06:16.666 with the rule, feedback on documents that should be retained permanently, 00:06:17.296 --> 00:06:21.076 suggested timeframes for retention for other documents, and other 00:06:21.076 --> 00:06:22.806 program framework suggestions. 00:06:23.836 --> 00:06:28.046 Section C incorporates four questions that clarify what stakeholders have 00:06:28.066 --> 00:06:32.696 understood to be regulation versus guidance in the appendices of Part 749. 00:06:32.696 --> 00:06:37.126 It has been a long standing agency practice to incorporate guidance 00:06:37.156 --> 00:06:38.566 into an appendix of the rule. 00:06:39.436 --> 00:06:43.466 However, we are interested to learn whether the structure in Part 749, 00:06:43.886 --> 00:06:48.606 particularly Appendix A, the inclusion of Appendix A in Appendix B, is 00:06:48.606 --> 00:06:49.466 confusing, confusing, confusing. 00:06:49.766 --> 00:06:54.206 Or if alternative approaches for providing guidance in this area would benefit, 00:06:54.326 --> 00:06:56.136 would provide a benefit to credit unions. 00:06:56.956 --> 00:07:00.756 We would also like input on what content should be incorporated in future 00:07:00.756 --> 00:07:04.396 guidance related to records retention and catastrophic act preparedness. 00:07:05.246 --> 00:07:09.866 The last section, Section D, is one question related to whether 00:07:09.866 --> 00:07:13.336 records retention provisions and other NCOA regulations should 00:07:13.346 --> 00:07:15.506 be incorporated in Part 749. 00:07:15.506 --> 00:07:15.526 All right. 00:07:16.466 --> 00:07:20.606 We would like input from stakeholders on whether specific document retention 00:07:20.606 --> 00:07:26.156 requirements and other regulations should be included as a vital record in Part 749. 00:07:27.426 --> 00:07:31.656 In conclusion, our primary goal with this ANPR is to collect 00:07:31.656 --> 00:07:36.436 information from stakeholders to give the NCUA insight into existing 00:07:36.436 --> 00:07:40.596 and potential records preservation methods, systems, and technologies. 00:07:41.156 --> 00:07:44.196 This feedback would be used to enhance any potential future 00:07:44.196 --> 00:07:46.206 Part 749 rulemaking efforts. 00:07:47.316 --> 00:07:50.926 Thus we are requesting the Board approve the issuance of this ANPR 00:07:51.256 --> 00:07:55.036 to allow stakeholders to provide their feedback and recommendations 00:07:55.036 --> 00:07:57.306 regarding Part 749 and its appendices. 00:07:58.461 --> 00:07:59.461 Thank you for your time. 00:07:59.711 --> 00:08:03.411 We will be happy to answer any questions you may have. 00:08:04.591 --> 00:08:09.461 Thank you, Matt, for that detailed presentation and for Kelly and Ghira 00:08:10.011 --> 00:08:13.971 for being at the table to help answer any questions about this advance 00:08:13.971 --> 00:08:15.571 notice of proposed rulemaking. 00:08:15.916 --> 00:08:20.026 Related to Part 7 49, which covers the NCAA's records 00:08:20.026 --> 00:08:21.856 preservation program requirements. 00:08:22.436 --> 00:08:25.826 It's important that federally insured credit unions maintain a 00:08:25.826 --> 00:08:30.656 robust records preservation program, a program whereby vital records 00:08:30.866 --> 00:08:32.636 can be readily reconstructed. 00:08:33.306 --> 00:08:38.136 Maintaining vital records is central to a credit union's ability to properly serve 00:08:38.136 --> 00:08:43.746 its members and to the NCAA's ability to fulfill its supervisory enforcement, 00:08:43.956 --> 00:08:45.696 and even liquidation functions. 00:08:46.326 --> 00:08:49.266 It's also important for credit unions to understand the necessary 00:08:49.276 --> 00:08:53.636 legal requirements and the agency's guidance about records preservation. 00:08:54.266 --> 00:09:00.586 Part 749, last updated about 15 years ago, was last updated about 15 years ago. 00:09:01.086 --> 00:09:02.026 Times change. 00:09:02.336 --> 00:09:03.646 Technology changes. 00:09:04.036 --> 00:09:08.386 There are modern needs and best practices that should be incorporated in policies 00:09:08.606 --> 00:09:10.846 for records retention and preservation. 00:09:11.496 --> 00:09:14.986 For these reasons alone, I support this advance notice of proposed 00:09:14.986 --> 00:09:20.766 rulemaking and welcome comments from all stakeholders on how the NCOA can update. 00:09:21.236 --> 00:09:25.496 Modernize and streamline its Records Preservation Program regulations 00:09:25.746 --> 00:09:26.976 and accompanying guidance. 00:09:27.566 --> 00:09:30.466 Before I wrap up, I do have a few questions for staff. 00:09:31.276 --> 00:09:36.036 First, would you provide a few examples of what constitutes vital records? 00:09:36.306 --> 00:09:39.586 That is, what records must a credit union preserve and why? 00:09:40.996 --> 00:09:42.446 Yeah, I'll take that question. 00:09:43.056 --> 00:09:45.926 A few examples of vital records include members share and loan 00:09:45.926 --> 00:09:50.606 records, bank account information and reconcilements, Insurance policies 00:09:50.766 --> 00:09:52.866 and emergency contact information. 00:09:53.336 --> 00:09:55.736 You can find a list of these vital records in Section 749. 00:09:55.736 --> 00:09:58.096 1 of the regulation. 00:09:58.796 --> 00:10:02.266 Regarding why a credit union must preserve these records, they are viewed 00:10:02.266 --> 00:10:05.756 as essential so a credit union could identify and reconstruct its vital 00:10:05.756 --> 00:10:09.276 records to promptly restore operations in case these records are destroyed. 00:10:09.956 --> 00:10:13.646 For example, several credit unions experienced an outage due to 00:10:13.646 --> 00:10:16.036 a cyber incident in late 2023. 00:10:16.686 --> 00:10:20.326 By maintaining vital records, such as a list of member account balances, 00:10:20.951 --> 00:10:23.851 Those credit unions were able to continue servicing their members. 00:10:24.561 --> 00:10:28.561 I'll also share another good example that highlights why we ask questions related 00:10:28.561 --> 00:10:29.871 to third party vendors in this ANPR. 00:10:29.871 --> 00:10:34.811 A credit union in New Jersey impacted by Hurricane Ida had significant 00:10:35.701 --> 00:10:40.011 damage to its building and equipment and operated out of another local 00:10:40.021 --> 00:10:41.661 federal credit union for a few months. 00:10:42.581 --> 00:10:46.001 Since all the credit union's files were wet, they used a third party 00:10:46.011 --> 00:10:48.121 freeze and dry company for restoration. 00:10:48.621 --> 00:10:50.111 That concludes my response. 00:10:51.421 --> 00:10:53.301 And Matt, that's really helpful. 00:10:53.301 --> 00:10:57.761 I can also think of a credit union that ultimately had to be 00:10:57.761 --> 00:11:00.271 liquidated after Hurricane Katrina. 00:11:00.626 --> 00:11:04.226 Because all of its account profiles and all of its records were flooded. 00:11:04.576 --> 00:11:08.916 Uh, it really does emphasize the point that a credit union needs these vital 00:11:08.916 --> 00:11:11.036 records in order to continue its work. 00:11:11.636 --> 00:11:15.706 Um, second, would you provide an example of current industry's standards 00:11:15.916 --> 00:11:20.316 or methodologies that should be considered for preserving vital records? 00:11:22.476 --> 00:11:23.106 Thank you, Chairman. 00:11:23.106 --> 00:11:24.266 I'll take that question. 00:11:24.646 --> 00:11:28.391 I think a good example of that is, uh, Um, storing your vital records 00:11:28.391 --> 00:11:32.171 electronically and having a backup such as the cloud that can be accessed to 00:11:32.171 --> 00:11:33.741 get a credit union backup and running. 00:11:34.101 --> 00:11:38.531 But that's really, uh, I think your question highlights, um, the information 00:11:38.541 --> 00:11:42.041 that we are seeking in this ANPR to really determine what some of those 00:11:42.051 --> 00:11:46.521 standards and methodologies are that exist out there in the industry, um, so 00:11:46.521 --> 00:11:50.711 that we can plan to use that information to better help inform any future 00:11:50.711 --> 00:11:52.041 work that we do in this regulation. 00:11:52.386 --> 00:11:52.686 Thank you. 00:11:52.686 --> 00:11:53.686 That concludes my response. 00:11:54.376 --> 00:11:56.646 Kelly, thank you so much for that information. 00:11:56.996 --> 00:12:02.076 And finally, with respect to Part 749 compliance, what has the NCUA done to 00:12:02.076 --> 00:12:04.596 make records retention more efficient? 00:12:06.006 --> 00:12:06.696 Thank you, Chairman. 00:12:06.696 --> 00:12:08.036 I'll, I'll take this question. 00:12:08.146 --> 00:12:12.036 Um, to improve the efficiency of a credit union's record retention program, 00:12:12.686 --> 00:12:18.106 the NCUA has issued guidance in Part 749, Appendix A, concerning suggested 00:12:18.106 --> 00:12:19.576 guidelines for record retention. 00:12:19.586 --> 00:12:19.711 Thank you, Chairman. 00:12:19.991 --> 00:12:23.321 and Appendix B to guide credit unions in developing a program for 00:12:23.321 --> 00:12:24.911 responding to a catastrophic act. 00:12:25.591 --> 00:12:27.331 Also, our ncua. 00:12:27.361 --> 00:12:31.571 gov website includes a page to aid credit unions in efficiently managing 00:12:31.571 --> 00:12:32.971 their records retention program. 00:12:33.791 --> 00:12:36.651 In addition, Section 749. 00:12:36.651 --> 00:12:39.651 4 of the rule allows credit unions to preserve records in any 00:12:39.651 --> 00:12:43.211 format, as long as they can be used to reconstruct their records. 00:12:43.831 --> 00:12:47.341 This flexibility in the rule, as well as the agency's guidance in the 00:12:47.411 --> 00:12:51.956 appendices, And on our website, promote efficient records retention practices. 00:12:52.396 --> 00:12:53.746 That concludes my response. 00:12:53.926 --> 00:12:54.336 Thank you. 00:12:55.596 --> 00:12:58.456 Oh, thank you again, Matt, Kelly, and Ghira. 00:12:58.606 --> 00:13:01.176 And thank you to everyone in the Office of Examination and 00:13:01.176 --> 00:13:05.086 Insurance and the Office of General Counsel who worked on this item. 00:13:05.406 --> 00:13:06.936 That concludes my remarks. 00:13:06.956 --> 00:13:09.176 And I now recognize Vice Chairman Hoffman. 00:13:09.946 --> 00:13:10.406 Thank you, Mr. 00:13:10.406 --> 00:13:10.826 Chairman. 00:13:10.826 --> 00:13:13.576 Thank you, Kelly and Matt, for the presentation and Ghira for 00:13:13.576 --> 00:13:14.706 being available for questions. 00:13:14.716 --> 00:13:16.706 I want to also thank Kelly for taking the time. 00:13:17.151 --> 00:13:21.241 I would like to look into the impact of NCOA regulations on records 00:13:21.241 --> 00:13:23.271 preservation as they're currently written. 00:13:23.571 --> 00:13:27.361 And I definitely want to thank the leaders of small credit unions, which 00:13:27.361 --> 00:13:28.721 I think are the reason we're here. 00:13:29.111 --> 00:13:32.231 We had a meeting a few months back, these small credit unions, they 00:13:32.231 --> 00:13:33.771 brought up a few actionable items. 00:13:34.951 --> 00:13:39.221 And I believe that meeting and then our subsequent ones and discussions 00:13:39.221 --> 00:13:41.341 with Kelly are why we're here today. 00:13:42.401 --> 00:13:47.151 My point is a broader one, that we actually do listen and there is a point to 00:13:47.151 --> 00:13:49.271 talk to us and it can actually have value. 00:13:49.341 --> 00:13:53.071 So, I think there are only maybe three or four credit union leaders on that 00:13:53.161 --> 00:13:58.271 call we had, but they're going to wind up helping thousands of other people. 00:13:59.341 --> 00:14:01.321 So, I want to thank those folks. 00:14:01.321 --> 00:14:04.691 They did a real job and I want to thank our staff for that, that meeting, 00:14:04.961 --> 00:14:06.381 bringing something to our attention. 00:14:06.906 --> 00:14:10.456 Actually, it's going to bring, uh, real results to a lot of people. 00:14:13.186 --> 00:14:16.156 To wit, the crush of regulatory burden weighs more heavily 00:14:16.156 --> 00:14:17.426 on small credit unions. 00:14:17.946 --> 00:14:21.966 We cannot talk about financial inclusion or talk about helping small credit unions 00:14:22.176 --> 00:14:25.226 unless we're doing the sort of things we're doing here today, providing clarity 00:14:25.266 --> 00:14:29.126 that frees up scarce resources to focus on their actual credit union members. 00:14:29.546 --> 00:14:33.636 If you go to the extreme, regulatory burden is often cited as a reason 00:14:33.636 --> 00:14:35.436 why otherwise healthy credit unions. 00:14:36.011 --> 00:14:38.021 Uh, merge out of existence. 00:14:38.731 --> 00:14:40.921 But you know what's worse than a regulatory burden? 00:14:41.581 --> 00:14:45.851 Finding out you're doing things that your regulator didn't even need you to do. 00:14:48.301 --> 00:14:53.841 We found out credit unions were storing boxes of records from decades ago because 00:14:53.841 --> 00:14:56.101 they thought that we at NCUA wanted them. 00:14:57.271 --> 00:15:00.291 Now we're aware that other agencies, et cetera, may require records, but 00:15:00.311 --> 00:15:01.961 they said we thought you wanted that. 00:15:03.431 --> 00:15:05.161 Some were paying for storage facilities. 00:15:05.441 --> 00:15:10.541 And unfortunately, it made sense to do all of this hoarder like record retention. 00:15:11.301 --> 00:15:17.301 Because as long as you get in trouble for not having a document, and you never 00:15:17.301 --> 00:15:22.021 get in any trouble for having extra documents, the behavior is fairly obvious. 00:15:22.721 --> 00:15:25.831 Credit unions and banks talk about this with suspicious activity 00:15:25.831 --> 00:15:27.211 reports, why they file so many. 00:15:27.211 --> 00:15:28.101 They never get in trouble. 00:15:28.651 --> 00:15:29.521 for filing too many. 00:15:29.521 --> 00:15:31.301 They only get in trouble for not filing one. 00:15:31.431 --> 00:15:33.861 Their behavior obviously flows from that. 00:15:34.981 --> 00:15:38.991 Uh, yesterday, and I wish you thought of it earlier, we had the idea to email 00:15:38.991 --> 00:15:43.821 two people and ask about their specific, uh, credit unions records practices. 00:15:43.881 --> 00:15:46.531 Um, we got a couple photos at 5. 00:15:46.531 --> 00:15:46.721 30 p. 00:15:46.721 --> 00:15:46.881 m. 00:15:46.891 --> 00:15:47.401 last night. 00:15:47.401 --> 00:15:48.041 Slide, please. 00:15:52.711 --> 00:15:53.651 Franz, you got a slide? 00:15:54.621 --> 00:15:55.161 Yeah, alright. 00:15:55.191 --> 00:15:57.141 This is what we got back last night at 5. 00:15:57.141 --> 00:15:57.276 30. 00:15:58.106 --> 00:16:01.596 Uh, you can see on the right how deep, this is just one credit 00:16:01.596 --> 00:16:04.546 union, which by the way is not particularly large, I can say it's 00:16:04.576 --> 00:16:06.466 under 100 million in assets, okay? 00:16:07.426 --> 00:16:13.856 They're paying for this, um, you can see the yellowed old papers, and so, 00:16:14.506 --> 00:16:18.466 if someone says, you know, these days we have cloud storage, just scan it. 00:16:19.726 --> 00:16:23.056 Well, anyone that thinks the answer is just scan it hasn't had to go through 00:16:23.056 --> 00:16:25.721 all those, and even if, You will scan. 00:16:25.831 --> 00:16:29.241 Wouldn't it be a pain to find out you scanned a hundred boxes of documents 00:16:29.241 --> 00:16:30.611 and you only had to scan five? 00:16:32.201 --> 00:16:36.591 You have to often do it one at a time for old crinkled documents because 00:16:36.591 --> 00:16:37.751 you have to get the whole document. 00:16:37.751 --> 00:16:38.961 Otherwise, why are you retaining it? 00:16:39.611 --> 00:16:41.611 You can even see if any of you are old enough to remember 00:16:41.611 --> 00:16:42.881 the old dot matrix printers. 00:16:43.381 --> 00:16:47.381 You literally can't feed them in a stack into a modern scanner. 00:16:47.611 --> 00:16:51.211 They have those perforated edges on the side with the holes in it 00:16:51.211 --> 00:16:52.171 and you have to pull them off. 00:16:52.211 --> 00:16:52.841 I just looked it up. 00:16:52.871 --> 00:16:54.911 That's called continuous feed paper. 00:16:55.421 --> 00:17:00.451 Um, and so it's not very easy to do. 00:17:00.951 --> 00:17:05.331 Um, nobody can argue the need for keeping records. 00:17:05.711 --> 00:17:06.261 It's important. 00:17:06.271 --> 00:17:07.391 It's important for NCWay. 00:17:07.391 --> 00:17:08.421 It's important for the credit union. 00:17:08.991 --> 00:17:12.301 If I was a new credit union CEO, I'd want them to have good practices. 00:17:12.301 --> 00:17:13.891 It's very helpful for new management. 00:17:15.076 --> 00:17:18.866 But we, after 15 years, it's time to re evaluate the unforeseen effects of 00:17:18.866 --> 00:17:21.496 Part 749, as it's currently written. 00:17:22.216 --> 00:17:25.796 Uh, even if they are maintaining, um, documents digitally, 00:17:25.806 --> 00:17:26.806 do they have to do that? 00:17:27.366 --> 00:17:28.416 That costs money too. 00:17:28.616 --> 00:17:30.576 Uh, this agency pays for cloud storage as well. 00:17:30.586 --> 00:17:31.046 We get it. 00:17:31.816 --> 00:17:36.426 Uh, and I will say that those boxes, uh, to credit this small guy, It's 00:17:36.556 --> 00:17:39.916 piles of old boxes that probably the people who put the ones in the back 00:17:39.956 --> 00:17:41.356 aren't, don't work there anymore. 00:17:41.876 --> 00:17:43.196 And I'll say, I had a storage unit. 00:17:43.206 --> 00:17:45.126 This is more organized than the one I had. 00:17:45.886 --> 00:17:49.876 And, uh, I want to thank a couple people at NCUA that cleaned out our supply 00:17:49.876 --> 00:17:51.666 closets in the hallway on this floor. 00:17:51.666 --> 00:17:53.316 I can tell you they were a lot messier than that. 00:17:56.136 --> 00:17:59.462 So even if you have the wherewithal to digitize, do we actually need to digitize 00:17:59.462 --> 00:18:02.036 papers from 1985 because you think NCUA? 00:18:04.121 --> 00:18:07.371 If the unintended consequences of a regulation run counter to what was 00:18:07.371 --> 00:18:10.781 intended, a responsible regulator will re evaluate and adjust. 00:18:12.006 --> 00:18:14.766 Many of you know that NCWA annually reviews one third of its regs 00:18:14.876 --> 00:18:16.506 for updates over three years. 00:18:16.506 --> 00:18:17.636 That means all of them are addressed. 00:18:18.076 --> 00:18:21.856 On many occasions, the NCA has taken that opportunity to clarify, re 00:18:21.856 --> 00:18:24.596 evaluate the impact of the regulations. 00:18:25.266 --> 00:18:26.746 Today's action is an example of that. 00:18:26.886 --> 00:18:32.006 And although I do want to take credit for bringing this to the board's 00:18:32.006 --> 00:18:35.776 attention, I'll take credit for that, I want to clarify that I don't 00:18:35.806 --> 00:18:39.236 think that the reg was written wrong. 00:18:39.296 --> 00:18:41.646 I don't think it was written incorrectly. 00:18:42.091 --> 00:18:46.551 I think back then I may well have written the exact same thing, um, 00:18:46.601 --> 00:18:50.001 it's just the result of it and the incentives that it winds up giving 00:18:50.001 --> 00:18:51.381 to any regulated institution. 00:18:52.201 --> 00:18:55.801 And one more thing, uh, we talk a lot about how important it is for small 00:18:55.801 --> 00:18:58.191 credit unions to have, uh, well, any credit union, but particularly small 00:18:58.191 --> 00:19:00.141 credit unions to have succession planning. 00:19:00.261 --> 00:19:03.901 Well, one way we can help with that as an agency is make the job more appealing. 00:19:06.136 --> 00:19:09.246 Records retention is the example of the straw that can break the camel's back. 00:19:09.256 --> 00:19:12.006 It's one of the many important but tedious requirements that can make 00:19:12.106 --> 00:19:15.626 running a small credit union less attractive than it could otherwise be. 00:19:16.206 --> 00:19:19.416 Thus right sizing the regulatory burden is one way that NCUA can 00:19:19.416 --> 00:19:23.276 make it easier for credit unions to survive once a long time CEO retires. 00:19:23.286 --> 00:19:25.386 The job shouldn't have to be a labor of love. 00:19:26.626 --> 00:19:29.596 NCUA can't control what records a credit union is required for 00:19:29.596 --> 00:19:31.216 their state or other agencies. 00:19:31.726 --> 00:19:35.236 But we can reduce unnecessary burden by ensuring our rules are clear and 00:19:35.236 --> 00:19:36.656 do not require more than is needed. 00:19:37.751 --> 00:19:43.041 And so the next step here is we're going to look for ideas from the public 00:19:44.391 --> 00:19:50.931 on what should we actually write, what will actually help that, right? 00:19:51.001 --> 00:19:52.441 That's what a credit union is going to want. 00:19:52.621 --> 00:19:58.931 So we can find ideas that reduce the cost, make it less so people are 00:19:58.931 --> 00:20:00.501 digging through old heavy documents. 00:20:00.951 --> 00:20:03.961 You probably don't need anything that uses the dot matrix printer. 00:20:04.431 --> 00:20:06.411 But we need to actually publish something. 00:20:06.851 --> 00:20:10.411 The good news is, we can probably get some easy ideas from other agencies. 00:20:10.431 --> 00:20:11.961 Just, second slide, Franz, please. 00:20:13.601 --> 00:20:16.461 From my Wall Street days, I remember everything was seven years, okay? 00:20:16.461 --> 00:20:17.661 This is from the SEC. 00:20:18.041 --> 00:20:19.811 This is kind of what we're looking at. 00:20:20.421 --> 00:20:23.861 Seven years records, and then they say what exactly that means. 00:20:23.871 --> 00:20:24.781 Seven years, okay? 00:20:24.781 --> 00:20:27.471 I remember anything we wrote, even in our Bloomberg chats. 00:20:27.996 --> 00:20:28.996 With seven years, right? 00:20:29.036 --> 00:20:30.106 And you knew that, right? 00:20:30.106 --> 00:20:31.246 This is just an example. 00:20:31.536 --> 00:20:33.976 Uh, it happens across government. 00:20:33.996 --> 00:20:39.906 Um, if you filed your taxes on Monday, the IRS, just so you know, is, you are 00:20:39.906 --> 00:20:44.356 supposed to only have three years worth of records to back up that 2023 return. 00:20:44.776 --> 00:20:48.346 If they audit your 2023 return, they can ask you for 00:20:48.346 --> 00:20:51.626 information related to your 2021. 00:20:52.596 --> 00:20:53.926 The IRS itself is published. 00:20:53.926 --> 00:20:55.706 We're not going to ask you about 2015, 2021. 00:20:55.996 --> 00:20:58.416 Uh, uh, records, okay? 00:20:58.756 --> 00:21:00.406 It's, it's the exact same reason. 00:21:00.906 --> 00:21:03.336 It's the same reason that in criminal justice, there's a statute 00:21:03.336 --> 00:21:04.756 of limitations for most things. 00:21:05.076 --> 00:21:06.616 Because over time, memories fade. 00:21:06.666 --> 00:21:09.416 Uh, uh, things get lost. 00:21:09.636 --> 00:21:10.236 People die. 00:21:11.166 --> 00:21:15.586 Um, and in terms of which year they can audit, just so you guys know, 00:21:15.616 --> 00:21:19.286 uh, Chairman Harper, you're off the hook from 2017 and earlier to C& L. 00:21:19.646 --> 00:21:22.446 Uh, they can only even audit the last seven years, uh, from 00:21:22.446 --> 00:21:23.496 when you filed it, at least. 00:21:23.496 --> 00:21:23.856 Okay? 00:21:24.471 --> 00:21:26.791 Um, yeah, right. 00:21:28.271 --> 00:21:29.951 So thanks again for the staff working this. 00:21:29.981 --> 00:21:32.891 I just have one question, which is, uh, what I alluded to. 00:21:33.401 --> 00:21:36.991 I think credit unions, you know, the people who sent that photo in are gonna be 00:21:36.991 --> 00:21:38.791 like, oh man, I'm glad they're doing this. 00:21:39.021 --> 00:21:40.191 What happens next? 00:21:40.191 --> 00:21:44.461 They can't, after this meeting, go and throw out the old stuff just yet. 00:21:44.771 --> 00:21:45.881 What is the next? 00:21:47.371 --> 00:21:49.561 I can take that question, Vice Chairman. 00:21:49.571 --> 00:21:52.891 So, what happens next is really a question for the board. 00:21:52.931 --> 00:21:57.971 Today's action is an advance notice of proposed rulemaking to solicit feedback 00:21:57.971 --> 00:22:02.651 from commenters and stakeholders, and we expect to get robust feedback 00:22:02.681 --> 00:22:06.571 which can then inform any future action that the board decides to take. 00:22:06.571 --> 00:22:09.711 And that could be, well, be a notice of proposed rulemaking, 00:22:09.711 --> 00:22:10.991 but that would be a future action. 00:22:11.091 --> 00:22:14.151 Somebody wants to send us a link, an idea, you know. 00:22:14.821 --> 00:22:15.681 Can they do that today? 00:22:16.361 --> 00:22:16.901 They can. 00:22:17.261 --> 00:22:17.601 Okay. 00:22:17.611 --> 00:22:21.921 They can provide feedback all the time, just as you received feedback prior to. 00:22:21.921 --> 00:22:26.811 So, uh, to have an easy idea that would also serve NCOA's 00:22:26.811 --> 00:22:28.651 purposes, we do need records kept. 00:22:29.191 --> 00:22:31.121 Um, khautman, ncoa. 00:22:31.151 --> 00:22:32.331 gov, um. 00:22:33.361 --> 00:22:36.271 But a lot of these things, the notice comment period, it has an official 00:22:36.271 --> 00:22:39.621 start date, it has an official end date, and the comments are public. 00:22:40.091 --> 00:22:43.661 Uh, anyone can email or call anybody anytime. 00:22:44.221 --> 00:22:47.871 But, so if someone today is hearing about this, they can 00:22:47.871 --> 00:22:49.381 send something in today to whom? 00:22:52.451 --> 00:22:57.661 They could send comments in to the NCUA on our website, but specifically in 00:22:57.661 --> 00:23:05.831 response to this ANPR, this Uh, document once the board approves it, it will be 00:23:05.841 --> 00:23:09.621 published in the federal register and we provide specific instructions for 00:23:09.621 --> 00:23:15.991 how the public can comment and it's a transparent process available to all. 00:23:16.051 --> 00:23:19.401 But if it is top of mind for anybody out there who watches this or hears 00:23:19.401 --> 00:23:22.721 about it, there's nothing stopping anybody every time, uh, for, you know, 00:23:22.931 --> 00:23:24.671 Calling or emailing say, here's an idea. 00:23:24.681 --> 00:23:26.281 Here's what my state regulator does. 00:23:26.301 --> 00:23:27.361 You know, something like that. 00:23:27.401 --> 00:23:29.911 Uh, if it's top of mind, that's the time to take action. 00:23:30.211 --> 00:23:32.451 I'm pleased that I believe all three board members are. 00:23:33.051 --> 00:23:36.871 Uh, supporting this item and that I believe all three board members 00:23:37.991 --> 00:23:42.821 know how important it is to not make the life of a small credit union 00:23:42.821 --> 00:23:45.271 CEO any harder than it has to be. 00:23:45.831 --> 00:23:49.831 And I think the board is all in agreement that we know that sometimes regulations 00:23:49.831 --> 00:23:53.581 can make that less attractive, that when a little credit union goes away 00:23:53.591 --> 00:23:58.121 and that field of membership loses their own credit union, sometimes 00:23:58.161 --> 00:24:02.121 that's because government has made the job harder than it needs to be. 00:24:02.471 --> 00:24:03.491 That concludes my remarks. 00:24:03.491 --> 00:24:04.311 Back to Chairman Harper. 00:24:06.226 --> 00:24:09.376 Thank you, uh, Vice Chairman, uh, Board Member Otsuka. 00:24:12.091 --> 00:24:15.731 Thanks, Chair Harper, and thank you to the Vice Chairman for his comments. 00:24:15.791 --> 00:24:19.151 Um, I guess before we get into the substance, I just want to thank 00:24:19.161 --> 00:24:22.851 Chairman Harper for his remarks at the top about, um, welcoming my 00:24:22.851 --> 00:24:24.511 new Senior Policy Advisor Renita. 00:24:24.921 --> 00:24:28.071 Also, I want to thank the Vice Chairman and his office, who have been very 00:24:28.071 --> 00:24:30.551 welcoming to, uh, my new staff. 00:24:30.551 --> 00:24:31.991 So, just thank you all. 00:24:32.001 --> 00:24:34.221 It's great, uh, to have them part of the team. 00:24:34.871 --> 00:24:40.066 Um, So, uh, Kelly, Matt, I really appreciate your, uh, presentation, 00:24:40.066 --> 00:24:44.076 and Ghira, thank you for being here to answer any other, other questions. 00:24:44.076 --> 00:24:46.526 Thanks to all the staff for their work on this AMPR. 00:24:47.146 --> 00:24:52.356 Um, sound record retention practice is, you know, not a topic often discussed, uh, 00:24:52.386 --> 00:24:55.876 but critical to ensuring the continuity and longevity of credit unions and 00:24:55.876 --> 00:24:57.446 the credit union system as a whole. 00:24:57.996 --> 00:25:00.426 The purpose of these important rules and guidance is to make sure 00:25:00.426 --> 00:25:04.366 that credit unions, especially smaller ones, can continue running. 00:25:04.566 --> 00:25:09.716 in the event of a natural disaster or some other catastrophic or unforeseeable event. 00:25:10.016 --> 00:25:14.446 I think that is really the point of these rules and guidance is so that 00:25:14.986 --> 00:25:19.296 credit unions can continue their operations and serve their members. 00:25:20.256 --> 00:25:23.486 The pandemic and its aftermath, for example, showed us how important it is 00:25:23.486 --> 00:25:27.236 for credit unions to have prudent business continuity practices and fail safes. 00:25:28.646 --> 00:25:31.716 Additionally, as the frequency and intensity of weather related events like 00:25:31.726 --> 00:25:36.446 wildfires, hurricanes, floods, and cyber related security threats continue to 00:25:36.506 --> 00:25:41.236 increase, it's even more important that the NCOA is clear about what is needed to 00:25:41.236 --> 00:25:45.346 ensure credit unions can withstand risks to their business operations so they can 00:25:45.346 --> 00:25:46.936 continue to serve their members well. 00:25:47.036 --> 00:25:48.416 When they need it the most. 00:25:50.106 --> 00:25:54.596 To that end, um, we strongly encourage credit unions, members, advocates, 00:25:54.646 --> 00:25:58.006 other stakeholders to weigh in on what current practices are working or 00:25:58.006 --> 00:26:01.936 not, and where the NCUA can provide clearer direction on which records 00:26:01.946 --> 00:26:06.476 should be retained for how long, in what format, and for what purpose. 00:26:06.976 --> 00:26:11.566 As institutions move away from paper filing systems, as, uh, my colleagues 00:26:11.566 --> 00:26:17.396 have pointed to, um, You know, they're starting to explore cloud computing and 00:26:17.416 --> 00:26:19.086 other electronic means of storing data. 00:26:19.116 --> 00:26:21.016 This rule is right for updating. 00:26:21.486 --> 00:26:26.496 Um, and we need to understand what, you know, we want to have a better 00:26:26.496 --> 00:26:29.796 sense of the feedback that we're going to get from all stakeholders that. 00:26:30.261 --> 00:26:33.881 Um, we'll be impacted by record retention policies. 00:26:34.311 --> 00:26:37.531 You know, I think there is a shift away from paper. 00:26:37.541 --> 00:26:42.071 But, you know, as we all know, electronic is not infallible either. 00:26:42.071 --> 00:26:48.041 And so it's important that institutions and the and others really think through, 00:26:48.411 --> 00:26:50.741 you know, What do I really need? 00:26:50.741 --> 00:26:56.261 What is really needed for, um, business operations and continuity? 00:26:56.871 --> 00:26:59.801 Credit union members should also feel empowered to provide their 00:26:59.801 --> 00:27:03.551 experiences dealing with credit unions during the pandemic, during natural 00:27:03.581 --> 00:27:08.051 disasters, or other events that cause lapses in credit union continuity. 00:27:08.351 --> 00:27:12.651 Members actually have a unique perspective on how well their credit unions, um, 00:27:12.681 --> 00:27:16.741 can continue to offer services and allow members to access their funds quickly 00:27:17.111 --> 00:27:18.791 during these types of emergencies. 00:27:20.301 --> 00:27:23.321 Um, credit unions exist to serve their members and their broader community, 00:27:23.321 --> 00:27:25.601 which is also central to the NCUA's work. 00:27:25.981 --> 00:27:29.401 Getting feedback from the public is an important step towards making sure 00:27:29.401 --> 00:27:33.681 that credit unions are well prepared to continue serving their members, um, and 00:27:33.701 --> 00:27:38.991 that is why I support issuing the ANPR, um, and appreciate your presentation. 00:27:39.351 --> 00:27:44.841 Um, just one question, um, And I think my colleagues alluded to this 00:27:44.841 --> 00:27:47.641 a little bit, so just if there's anything to add that you hadn't 00:27:47.771 --> 00:27:52.381 already said, um, how will NCY use this information obtained through the ANPR? 00:27:53.971 --> 00:27:58.181 Um, that we get in response. 00:27:59.181 --> 00:28:01.471 Thank you, Board Member Otsuka, for the question. 00:28:02.191 --> 00:28:06.941 Yes, so we will use the feedback that we get from stakeholders to evaluate 00:28:07.251 --> 00:28:11.701 whether we should consider updating things like the vital records definitions 00:28:11.961 --> 00:28:14.441 or preservation program requirements. 00:28:14.441 --> 00:28:19.101 So, some of the things that are in the regulation currently, how we might want to 00:28:19.101 --> 00:28:22.571 change that, whether additional guidance is needed, and then it will be up to 00:28:22.571 --> 00:28:24.031 the Board to determine those next steps. 00:28:24.356 --> 00:28:24.726 Okay. 00:28:24.766 --> 00:28:25.056 Great. 00:28:25.056 --> 00:28:25.626 Thank you. 00:28:26.066 --> 00:28:30.676 And I, I just want to say, I know, This has been discussed, but, you know, I, 00:28:30.746 --> 00:28:35.856 I, I think, I think it was Matt, you responded to this earlier about the 00:28:35.856 --> 00:28:40.426 importance of vital records and what it means for credit unions when they're, 00:28:40.626 --> 00:28:45.756 you know, um, they need to continue their business operations and in case something 00:28:45.766 --> 00:28:47.516 that, you know, catastrophic happens. 00:28:48.846 --> 00:28:50.696 You know, you mentioned a few examples. 00:28:50.736 --> 00:28:55.466 I've also heard some examples, not just cyber events or cyber incidents, but 00:28:55.886 --> 00:29:02.026 flooding where records are destroyed, um, even domestic terrorist acts, you 00:29:02.026 --> 00:29:06.796 know, the tragedy in Oklahoma City, um, in the nineties, you know, credit 00:29:06.796 --> 00:29:11.511 unions, may have been impacted by that and preserving vital records allowed 00:29:11.531 --> 00:29:15.451 them to continue to operate their, their institutions and serve their members. 00:29:15.841 --> 00:29:21.451 So, you know, I think we need to really understand how to continue that purpose 00:29:21.521 --> 00:29:25.651 of why we keep these records and why vital records are so important while 00:29:25.651 --> 00:29:28.961 understanding what best practices are right now and what will allow 00:29:28.961 --> 00:29:33.491 institutions to continue to serve their members in these, um, Types of events. 00:29:37.511 --> 00:29:38.731 Indeed board member otsuka. 00:29:38.761 --> 00:29:44.441 There was a credit union that was operating in the murrow building during 00:29:44.441 --> 00:29:50.111 oklahoma city that had to Re establish its records and that's it's a very 00:29:50.111 --> 00:29:54.921 hard task to go about and certainly a task We all need to prepare for we 00:29:54.921 --> 00:29:59.311 hope that it would never will happen, but we need to be ready in case it 00:29:59.311 --> 00:30:01.931 does with that vice chairman Hoffman. 00:30:01.931 --> 00:30:02.741 Is there a motion? 00:30:03.251 --> 00:30:03.781 Yes, sir. 00:30:03.811 --> 00:30:07.061 I move that the board approve advance notice of proposed rulemaking part 00:30:07.061 --> 00:30:11.681 749 records preservation program for a 60 day comment period as attached 00:30:11.681 --> 00:30:13.001 to the board action memorandum. 00:30:14.351 --> 00:30:15.231 Is there a second? 00:30:16.171 --> 00:30:16.571 Second. 00:30:17.571 --> 00:30:19.211 There is a sufficient second. 00:30:19.601 --> 00:30:21.231 All those in favor say aye. 00:30:21.491 --> 00:30:21.801 Aye. 00:30:21.851 --> 00:30:22.171 Aye. 00:30:22.991 --> 00:30:23.411 Aye. 00:30:23.791 --> 00:30:25.151 All opposed say nay. 00:30:25.821 --> 00:30:30.451 The ayes have it and let the record show the motion passed 3 to 0. 00:30:31.351 --> 00:30:33.661 That is the end of our agenda today. 00:30:33.861 --> 00:30:36.661 There being no further business, we are hereby adjourned. 00:30:36.761 --> 00:30:37.921 Thank you all for attending. 00:30:38.457 --> 00:30:40.457 This concludes the April board meeting. 00:30:41.139 --> 00:30:45.299 If your Credit union could use assistance with your exam, reach out to Mark Treichel 00:30:45.299 --> 00:30:48.079 on LinkedIn, or at mark Treichel dot com. 00:30:48.629 --> 00:30:51.279 This is Samantha Shares and we Thank you for listening.