regulatory and compliance issues and considerations

In conducting your assessments regarding forms in light of recent CARD Act and pending
TILA/Z changes, there is much being written on what Credit Unions should do with regard to
forms. I have noted many issues that do not appear to be addressed consistently, or with an
appreciation as to how Credit Unions actually conduct business day-to-day. Since I make no
more and no less regardless of which systems of forms my Credit Union clients use I have
prepared the following table to clarify some of these considerations; and to provide you with
some guidance in the assessments you will be making between now and next Spring.
NOTE: Although not required, as with the recent CARD Act, I believe there will be significant
individual assessments Credit Unions will be making in preparing for the February and July
2010 changes. Thus, as with CARD, individual conference calls to discuss legal and compliance
issues, impacts, options, etc., may be the best course of action. I found these individual
assessments to be illuminating for Credit Union and myself.
Issue/Considerations and
some Statements by Others
– Clarified / Fully Addressed
to Insure you have all the
facts needed to make proper
decisions.
Open-End Lending
Closed-end Lending
Costs / Expenses
Which Vendor
Simplicity
Flexibility
This is an operational issue; and as a lawyer I have no input into
such matters. However, in conducting your due diligence it may
be considered appropriate to address this query to three quality
vendors to likely assess a combination of OE and CE forms; or
to conduct a cost/operations assessment of OE vs. CE. You
may find an option that suits your assessment; and also saves
the Credit Union a great deal of money.
“Yo No Sé !” – “I Do Not Know.” Pick a good one that addresses
your due diligence assessment concerns; has good answers to
questions such as those that follow; and provides a good value
to your Credit Union.
OE is complex; Requires
multiple documents; and many
systems require follow up
documents or “Proceeds
Checks” with proper payees
and must be properly
endorsed to protect a Credit
Union’s Security Interests
The main advantage of OE
Lending was its flexibility. That
has been curtailed (if not
entirely diminished) by recent
laws and regulatory changes.
CE is simple; requires on
document; and you do not
have the follow up concerns of
OE plan documents.
CE loans we never flexible
(they did not need to be). They
are one-time “deals.” They are
intended to be simple.
Periodic Statements Mandatory and Costly Never required; and thus
much less costly to administer.
A coupon book is not required.
It is sometimes provided by a
lender as a payment
remainder or processing tool.
Copyright©1994-2010 by Credit Union Resources & Educational Services, LLC. All rights reserved.
Revised February 2010
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