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Articles by Keith Schostag
"Black October" Shows the Danger Credit Unions Face
Over the past month you may have heard the phrase “Black October.” While Black October has other historical meanings, it is currently being used to refer to a series of cybersecurity crises that arose in October, mostly due to AI actors. In early October, CrowdStrike Intelligence discovered a major hacking campaign targeting South Korean financial organizations that was active from late September to early October.
Statement on the Ability to Repay and Immigration Status
On June 8, 2026, the Consumer Financial Protection Bureau (CFPB) issued a statement on the ability to repay and immigration status (the ATRIS Statement) under Regulation Z. Under the ATRIS Statement, the CFPB is expanding on a creditor’s use of immigration when making lending decision.
Comparing PALs I and PALs II Loans
Unless you have been living under a rock, you should be aware of payday loans or buy now pay later loans. Did you know that credit unions have an alternative? Through payday alternative loans (PALs) credit unions can offer small dollar loans to help their members avoid the pitfalls of payday loans. So, what exactly are payday alternative loans?
Issues in AI: Nuance and Prompt Injections
Welcome to the second part of our series on AI Issues. In April, we discussed hallucinations . Today we are going to be talking about two more issues, nuance and prompt injections. Nuance deals with an AI’s ability to understand instructions and its ability, or lack thereof, to make judgment calls. Prompt injections are the hidden minefield of AI and involve malicious instructions disguised as legitimate prompts.
Proposed Rule for Remittance Transfer Excise Tax
On April 13 th , the Internal Revenue Service (IRS) published a proposed rule on H.R. 1’s (FKA the One Big Beautiful Bill Act) excise tax on remittance transfer providers. To recap, HR. 1 imposes a 1% excise tax on certain remittance transfers. Remittance transfer providers are responsible for collecting the tax by withholding and remitting to the U.S. Treasury Department on a quarterly basis.
Issues with AI: Hallucinations
Wise old trees and eager up and comers. That was an answer a large language model or “LLM” provided my colleague. She had asked what was the difference between NCUA historical and current legal opinion letters (LOLs). The AI responded that historical LOLs were the wise old trees of the forest and current LOLs were eager up and comers ready to prove themselves. Suffice it to say, the AI was wrong. It had “hallucinated” the answer, it made it up.
Fourth Round of NCUA Deregulatory Proposals
The deregulatory march goes on at NCUA. On January 22nd, my colleague Kelsey Nelson wrote about NCUA’s first three rounds of its Deregulation Project . On January 27th, NCUA announced the fourth round of deregulation with four proposed rules. Here are those proposed rules. 12 CFR 701.32(b)(2) Section 701.32 deals with payment on shares by public units and nonmembers.
IRS Provides Transitional Guidance on H.R. 1’s Vehicle Loan Interest Deduction
As discussed in this , H.R. 1, the Budget Reconciliation Bill (the "Bill") was signed into law on July 4, 2025. The Bill established a $10,000 temporary tax deduction for passenger vehicle loan interest and new reporting requirements for lenders who receive more than $600 or more in interest on certain qualifying vehicle loans.
What’s Going on With the CFPB?
If you've been paying attention this past year, you may have noticed that there has been a lot of news regarding the Consumer Financial Protection Bureau (CPFB). Former Director Chopra was left in charge for a surprising amount of time, two acting directors, pausing CFPB work, mass layoffs, court cases, one enforcement action, etc. Finally, just yesterday CFPB Acting Director Russell Vought said that he expects the CFPB to shut down within the next two to three months.
What is Included in the Remittance Transfer Tax?
Many people today are focused on tariffs in terms of international taxes. However, did you know about another tax on international transfers that credit unions are going to have to deal with? H.R. 1, formerly known as the "One Big Beautiful Bill Act", added section 4475 to the Internal Revenue Code. Section 4475 imposes a 1% excise tax on remittance transfers after December 31, 2025.
Executive Order on Fair Banking
On August 7, 2025, President Trump issued the Guaranteeing Free and Fair Banking for All Americans Executive Order (EO). Under the EO, financial regulators, such as the National Credit Union Administration, are ordered to investigate instances where financial institutions may have terminated or rejected a relationship due to political or ideological beliefs and whether these terminations may have violated laws such as the Equal Credit Opportunity Act.
The One Big Beautiful Bill Act's Car Loan Interest Deduction
The One Big Beautiful Bill (the "Bill") was passed by both chambers of Congress on July 3, 2025 and was signed into law on July 4, 2025. Section 70203 of the Bill establishes a temporary tax deduction for passenger vehicle loan interest and Section 6050AA establishes new reporting requirements for businesses receiving $600 or more in interest on certain qualifying vehicle loans. Most importantly for credit unions, these sections are already in effect.
Government Accountability Office Report on AI and Financial Services
On May 19th, the Government Accountability Office (GAO) issued a report on the use of artificial intelligence (AI) at financial institutions, including credit unions. The GAO report provides a detailed look into how the rise of AI is affecting both credit unions and the National Credit Union Administration (NCUA). Indeed, while the GAO looked at financial institutions and their regulators in general, the report's recommendations target NCUA alone.
The Compliance Implications of H.R. 1 - One Big Beautiful Bill Act
The U.S. House of Representatives passed H.R. 1, One Big Beautiful Bill Act (the "Bill"), on May 22, 2025. Below are several provisions within the bill that could impact credit unions and their compliance obligations. Keep in mind that the legislation now moves to the Senate, which is expected to make some changes.
The Big Fifty: By What Right?
With the current planned reduction in CFPB activities, there have been robust discussions on the power of the states to enforce consumer financial protection laws. On January 14, 2025, the CFPB released a report and compendium of guidance regarding the abilities of states to enforce consumer financial protection laws. This Harvard Law Article, written by Former CFPB Director Chopra and Seth Frotman, also discusses state enforcement.
Nullified and Vacated
Over the past few months, we have seen a regulatory pause and rollback. Recently, we have seen two big rollbacks. The Overdraft Lending: Very Large Financial Institutions rule and the Credit Card Penalty Fees rule. Overdraft Lending Rule On December 12, 2024, the CFPB issued a final rule limiting overdraft fees for financial institutions with more than $10 billion in assets.
Executive Order Affects CDFI Fund
On Friday March 14th, President Donald Trump signed an Executive Order (EO) that places limits on the Community Development Financial Institutions (CDFI) Fund. The EO limits the function and personnel of the CDFI Fund to the minimum statutory functions required by law.
2024 Year in Review
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.
Special Edition: Credit Union Member Concerns Regarding DOGE Access to Treasury Payments System
America's Credit Unions has heard from credit unions and leagues that credit union members are contacting credit unions regarding the Department of Government Efficiency's accessing of the U.S. Department of the Treasury Fiscal Service’s payments system. America's Credit Unions has also been directly contacted by individual members of credit unions on this matter. To assist credit unions, we have created the following statement for credit unions to share with their members.
Privacy and Data Tracking: Cookies are for Children
Growing up as the internet was first hitting its stride, I learned a lot of true and false information regarding the World Wide Web. One topic that I frequently heard about was cookies. As an aside, I always imagined Cookie Monster trying to get a job in I.T. for the cookies. I heard things like, cookies were the way the government tracked you, you better delete your cookies or your computer is going to crash, or the hackers are going to steal your information with the cookies.
The Trump Administration and the Slate of Ever Changing Orders
Do you wake up in the morning and say, “man, I just want to spend hours studying what’s going on with the government and how it affects credit unions?” If so, that’s great. However, for those of you that don’t have the time or desire to do that, I would like to introduce you to America’s Credit Unions’ Executive Order Tracker.
Auto Loan Interest Deduction Proposed Rules
Happy New Year everyone. I hope you all had a relaxing holiday, because the IRS did not. On December 31, 2025, the IRS issued proposed rules on the vehicle loan interest deduction and its reporting requirements. The rule helps clarify the reporting requirements for credit unions, including whether credit unions are required to determine if a loan qualifies for the deduction. This blog will go over some key points of the proposed rule.
Dealing With Disaster
As I am writing this blog, Hurricane Milton is barreling towards Florida, not even two weeks since Hurricane Helene made landfall. For those of you that are in Milton’s path, we hope that you are safe and stay safe. As with many natural disasters, the hurricane is just the beginning. Devastation is often left in its wake leaving the survivors to pick up the pieces. That’s why it is so important that credit unions meet their members’ needs.
2025 Agency Resolutions
Happy new year! It’s that time of year again, a time of resolve. Millions of Americans have made or are making New Year’s resolutions. Much like the citizens it serves, the federal government also makes resolutions in the form of its semi-annual unified regulatory agenda. The fall unified agenda was released just last December, just in time for winter. The unified agenda contains the planned proposed and final regulations for the coming months and year.
Dr. Changelove: Or How I Learned to Stop Worrying and Love the Initial HELOC Terms
If your credit union is like most credit unions, it makes loans. Often something changes after the loan is made and the credit union would like to change certain terms. The question is, can they? Well for most open-end loans, contract permitting, you can flip open the Code of Federal Regulations to 12 CFR 1026.9 and provide a change in terms notice. But it’s not so easy for every loan.
CFPB orders Bank of America to pay $12 million
On November 28, 2023, the Consumer Financial Protection Bureau (CFPB) announced a $12 million civil penalty and the filing of a consent order against Bank of America, N.A. (BoA) for allegedly reporting false mortgage data. Alleged conduct In the Consent Order, CFPB alleges the following conduct: Failed to accurately collect and report HMDA data: continue reading »
FinCEN Orders Bank of America to Pay $12 million
Dec 13, 2023 Categories: Examination & Enforcement Home-Secured Lending FinCEN Orders Bank of America to Pay $12 million On November 28, 2023, the Consumer Financial Protection Bureau (CFPB) announced a $12 million civil penalty and the filing of a consent order against Bank of America, N.A. (BoA) for allegedly reporting false mortgage data.
Is bankruptcy the end of the road for credit unions?
Generally, once a bankruptcy case closes, the bankruptcy judge issues an order of discharge and the debtor is discharged of all dischargeable debts. Once a debt has been discharged, a credit union is barred from attempting to collect on that debt. However, if your credit union has a security interest in the debtor’s property, all may not be lost. A bankruptcy discharge does not normally void a creditor’s security interest in the debtor’s property.
Is Bankruptcy the End of the Road for Credit Unions?
Generally, once a bankruptcy case closes, the bankruptcy judge issues an order of discharge and the debtor is discharged of all dischargeable debts. Once a debt has been discharged, a credit union is barred from attempting to collect on that debt. However, if your credit union has a security interest in the debtor’s property, all may not be lost. A bankruptcy discharge does not normally void a creditor’s security interest in the debtor’s property.
HELOC application and account opening disclosures
Happy November everyone! I hope you had a great Halloween. We’ve now entered my favorite two months of the year. Food, holidays, and sweaters, the perfect trifecta. What’s not always perfect? Disclosures. Today on the compliance blog, I am going to be discussing application and account opening disclosures for Home Equity Lines of Credit (HELOCs).
HELOC Application and Account Opening Disclosures
Nov 01, 2023 HELOC Application and Account Opening Disclosures Happy November everyone! I hope you had a great Halloween. We’ve now entered my favorite two months of the year. Food, holidays, and sweaters, the perfect trifecta. What’s not always perfect? Disclosures. Today on the compliance blog, I am going to be discussing application and account opening disclosures for Home Equity Lines of Credit (HELOCs).
An update on state data privacy laws
In 1999, the Gramm-Leach Bliley Act (GLBA) created a federal data privacy rule. This rule, implemented by Regulation P, governs how financial institutions can share a consumer’s information. Specifically, Regulation P requires that a financial institution disclose its privacy policy and, with some exceptions, provides a consumer the ability to opt-out of the institution’s sharing their nonpublic personal information. For years, the GLBA and Regulation P were the only game in town.
An Update on State Data Privacy Laws
In 1999, the Gramm-Leach Bliley Act (GLBA) created a federal data privacy rule. This rule, implemented by Regulation P, governs how financial institutions can share a consumer’s information. Specifically, Regulation P requires that a financial institution disclose its privacy policy and, with some exceptions, provides a consumer the ability to opt-out of the institution’s sharing their nonpublic personal information. For years, the GLBA and Regulation P were the only game in town.
CFPB Files Suit Against Southern Lending Conglomerate
Sep 11, 2023 CFPB Files Suit Against Southern Lending Conglomerate On August 22, 2023, the Consumer Financial Protection Bureau (CFPB) announced the filing of a complaint against Heights Financial Holding Co. f/k/a Southern Management Corporation (Southern) for “illegal loan-churning practices” that amount to UDAAP violations. Specifically, the CFPB alleges that Southern’s business model relied on stressed borrowers to repeatedly refinance their loans and pay more and more fees to Southern.
NCUA's 2023 Spring Rule Making Agenda
On June 14th, the Office of Information and Regulatory Affairs released the Spring 2023 Unified Agenda of Regulatory and Deregulatory Actions. This Agenda includes expected regulatory actions for the rest of the year and beyond. Here are the expected final rules, pre-rules, and proposed rules for the Consumer Financial Protection Bureau (CFPB), Financial Crimes Enforcement Network (FinCEN), and the National Credit Union Administration (NCUA). In this blog, we’ll go over NCUA’s planned agenda.
NCUA proposes change to open donations to veterans' organizations
On May 25th, the NCUA Board approved a NAFCU-sought proposed rule to amend NCUA’s regulation on charitable donation accounts (CDAs) to allow donations to 501(c)(19) veterans’ organizations. Currently, the rule only permits donations to 501(c)(3) organizations. Because of the proposal, I thought it would be a good time for a refresher on CDAs. NCUA regulation, section 721.3(b), permits a credit union to make charitable donations and create charitable donation accounts.
NCUA Proposes Change to Open Donations to Veterans' Organizations
May 31, 2023 NCUA Proposes Change to Open Donations to Veterans' Organizations On May 25th, the NCUA Board approved a NAFCU-soughtproposed ruleto amend NCUA’s regulation on charitable donation accounts (CDAs) to allow donations to 501(c)(19) veterans’ organizations. Currently, the rule only permits donations to 501(c)(3) organizations.
FinCEN takes action against Kingdom Trust Company
On April 26, 2023, the Financial Crimes Enforcement Network (FinCEN) announced a $1.5 million civil penalty and the filing of a consent order against Kingdom Trust Company (Kingdom) for violations of the Bank Secrecy Act and its implementing regulations.
FinCEN takes action against Kingdom Trust Company
On April 26, 2023, the Financial Crimes Enforcement Network (FinCEN) announced a $1.5 million civil penalty and the filing of a consent order against Kingdom Trust Company (Kingdom) for violations of the Bank Secrecy Act and its implementing regulations.
CFPB issues final 1071 rule on small business data collection
On March 30th, the CFPB issued a final rule under section 1071 of the Dodd-Frank Act. A little history behind this rule, section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act (ECOA) and required financial institutions to collect data on small business loans. The final rule published on March 30th enacts this requirement. The CFPB has also published an executive summary and factsheet that may be helpful, as the final rule is 888 pages long. Is Your Credit Union Covered?
CFPB enforcement actions on military lending violations
In continuing with a busy start to 2023, the Consumer Financial Protection Bureau (CFPB) has brought a couple of interesting enforcement actions for violations that predominantly affect military families. CFPB’s Action Against TitleMax The first action is the CFPB’s enforcement action against TMX Finance LLC (TitleMax). On February 23rd, the CFPB filed a Consent Order in the action.
CFPB releases proposed rule on credit card late fees
As we blogged about last November, the CFPB is on a quest against “junk” fees. So far, this has included regulatory enforcement actions, guidance on surprise overdraft fees, and guidance on depositor fees. Recently, the CFPB has found a new “junk” fee. On February 1st, the CFPB published a proposed rule to limit credit card late fees by amending Regulation Z, section 1026.52(b).
Is one of your members a California resident?
Do any of your members take the 405 to Santa Monica and then, when they see the Jack in the Box, take a left onto Lincoln in order to get to Bay Cities Italian Deli and Bakery? If so, they might be a…Californian. On January 1, 2023, the amendments, created by the California Privacy Rights Act (CPRA), to the California Consumer Privacy Act (CCPA) went into effect. To be clear, the CPRA is not a replacement for the CCPA, but rather amends the CCPA. Who does the CCPA apply to?
Is One of Your Members a California Resident?
Do any of your members take the 405 to Santa Monica and then, when they see the Jack in the Box, take a left onto Lincoln in order to get to Bay Cities Italian Deli and Bakery? If so, they might be a…Californian. On January 1, 2023, the amendments, created by the California Privacy Rights Act (CPRA), to the California Consumer Privacy Act (CCPA) went into effect. To be clear, the CPRA is not a replacement for the CCPA, but rather amends the CCPA. Who does the CCPA apply to?
Serving the Dearly Departed: Accounts of Deceased Members
If a member died today, would your staff know what to do? Unfortunately, the law governing death and the treatment of a deceased person’s property is mostly a mish-mash of state law. However, here are some common issues credit unions face when dealing with a deceased member and their accounts. Share Accounts Generally, NCUA is silent on issues regarding share accounts and deceased members.
CFPB highlights low SCRA benefit utilization among military reserves and guard
On December 7, 2022, the Consumer Financial Protection Bureau (CFPB) released a report detailing how few active duty reservists or active duty national guard members take advantage of the Servicemembers Civil Relief Act (SCRA) benefits. The CFPB found that reservists and national guard members called to active duty are missing out on $9 million in interest savings every year. This is because the SCRA provides active duty servicemembers the right to a cap on interest on their loans.
CFPB Highlights Low SCRA Benefit Utilization Among Military Reserves and Guard
Dec 19, 2022 CFPB Highlights Low SCRA Benefit Utilization Among Military Reserves and Guard On December 7, 2022, the Consumer Financial Protection Bureau (CFPB) released a report detailing how few active duty reservists or active duty national guard members take advantage of the Servicemembers Civil Relief Act (SCRA) benefits. The CFPB found that reservists and national guard members called to active duty are missing out on $9 million in interest savings every year.
What's going on: The fifth circuit and the CFPB
In the beginning of October we blogged about some spooky Consumer Financial Protection Bureau (CFPB) enforcement actions. Well, later that month the Fifth Circuit Court of Appeals (Fifth Circuit) issued a ruling that caused some to wonder whether or not the CFPB was soon to be a campfire story told to scare new compliance professionals. On October 19, 2022 the Fifth Circuit ruled that the CFPB was unconstitutional and that the 2017 Payday lending rule was therefore vacated.
Spooky CFPB enforcement actions on remittance transfers and overdraft fees
It’s October! If you’re like me, you have already started decorating for Halloween. If you haven’t, it’s time to get into the spirit of things. In order to help you, I thought I would go over some spooky CFPB enforcement actions. Oooooo. CFPB’s Action Against Regions Bank The first action I will be discussing is the CFPB’s enforcement action against Regions Bank. On September 28th, the CFPB filed a Consent Order in the action.
A refresher on the statutory lien
Have you ever had a member who refused to make payments on a loan? You try and try to work with them and they just push you to your wit’s end? Well, suffer no more and let me tell you about the statutory lien. Under the Federal Credit Union Act and Section 701.39 of NCUA’s Rules and Regulations credit unions are granted a statutory lien in its member’s shares and dividends. This allows credit unions to use funds deposited in a member’s account to satisfy outstanding defaulted loans.
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