Proposals Would Relax Hiring Restrictions for Banks, Credit Unions

The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) recently released proposed rules to give banks and credit unions more flexibility to hire people who have committed relatively minor crimes.

The proposed rules would revise FDIC and NCUA regulations to comply with the newly enacted Fair Hiring in Banking Act (FHBA), which amended Section 19 of the Federal Deposit Insurance Act to broaden the ability of job candidates with minor criminal records to work in the banking industry.

The two proposals are similar. Individuals and organizations can submit comments on the NCUA proposal until Jan. 8 and on the FDIC proposal until Jan. 16.

“One of the biggest challenges that banks face today is recruiting and retaining qualified employees,” Rohit Chopra, director of the Consumer Financial Protection Bureau in Washington, D.C., said in a press release. The proposals “will create opportunities for more individuals to access employment opportunities and for banks to recruit qualified individuals.”

“A more diverse talent pool for banking jobs that includes second-chance candidates will benefit job seekers and the economy as a whole,” said Greg Baer, president of the Bank Policy Institute in Washington, D.C., which represents banks. “This FDIC action is an important step providing greater clarity to second-chance job candidates and welcoming them into the banking workforce.”

Types of Crimes Covered

Previously, banks and credit unions could not hire a person convicted of an offense involving dishonesty, breach of trust or money laundering without first seeking consent from the FDIC or NCUA.

The proposed rules would allow banks and credit unions to hire people who committed misdemeanors if more than a year has passed since the offense occurred or if it occurred when the person was 21 years old or younger. Convictions related to drug possession or theft of less than $1,000 in goods or services also would be excluded from the hiring restriction. Other offenses could be excluded if it has been more than seven years since the offense occurred.

“Many of these individuals are not violent or career criminals. They are people who made poor choices at some point and who have since paid their debts to society,” Todd Harper, chairman of the National Credit Union Administration in Alexandria, Va., said in a press release. “A disproportionate number of these individuals come from communities of color. If we are to advance financial inclusion and equity within the credit union system, we must facilitate the access of all demographic groups to credit union employment opportunities.”

The proposed rules maintain restrictions for people convicted of crimes of dishonesty, such as bank fraud, money laundering, forgery and identity theft. It’s still unlawful for banks and credit unions to hire people who committed other serious offenses, such as robbery, burglary, mail fraud, wire fraud and check fraud, according to Joseph Silvia, an attorney with Dickinson Wright in Chicago.

The excluded crimes will depend on the state because states keep their own lists to classify the seriousness of crimes. States also consider the context of the crime, such as the level of danger to other people and whether the accused person is a repeat offender. Examples of lower-degree crimes include shoplifting less than $500 in merchandise, assault and battery, and driving under the influence of alcohol.

Silvia recommended reviewing all hiring procedures and protocols to determine what needs to be updated, while paying special attention to state laws and state-specific categorizations of crimes.

“Folks can work on the assumption that some version of the [FDIC] rule will be finalized, substantially similar to the rule as proposed,” he said. “The substance in my mind is unlikely to change.”