Mass. regulator finalizes Reg Z changes, moves to CAMELS

December 31, 2014

MARLBOROUGH, Mass. (1/2/15)--The Massachusetts Division of Banks has made two moves that affect credit unions--one aligns a state consumer credit regulation with that of the Consumer Financial Protection Bureau (CFPB) and the other updates the risk management examination for state-chartered credit unions.

The division filed final amendments to 209 CMR 32.00: Disclosure of Consumer Credit Costs and Terms, changing its title to Truth in Lending to reflect the CFPB's Regulation Z.

The regulation, effective today, aligned state standards of compliance with Reg Z compliance. Certain Massachusetts differences that were deemed more advantageous to consumers were preserved in the amended regulation, the Massachusetts Credit Union League noted (Daily CU Scan Dec. 31). Also, the definitions and rules of construction were amended to be consistent with federal provisions.

At the public hearing on the changes, the league indicated its support of the majority of these amendments, Daily CU Scan reported. By streamlining regulations so compliance with parallel federal regulations constitutes compliance with the state regulations, the regulatory burden on credit unions is eased, with improved consistency and simplified compliance, the league noted.

The league also commended the division for its success in streamlining the majority of this regulation's sections.

In December, the division also notified state-chartered credit unions that it will assess sensitivity to market risk as its own component instead of being factored within the liquidity rating.

Thus, the rating system acronym will be CAMELS--capital, asset quality, management, earnings, liquidity and sensitivity to market risk--for all examinations beginning after April 1.

The Dec. 18 letter from Commissioner of Banks David Cotney said, "Please note that the implementation of this change will not increase burden for your staff or result in any additional examiner expectations," adding that five other state credit union examiners have adopted the CAMELS system for credit union examinations.

"Nevertheless, it is the division's position that the separation of these component ratings will provide more clarity to the examination process," Cotney wrote.