WASHINGTON (1/28/15)--A stable law to ensure merchants are appropriately protecting consumers is needed, said Rep. Gus Bilirakis (R-Fla.) in a subcommittee hearing Tuesday on elements of potential data breach legislation.
The House subcommittee on commerce, manufacturing and trade discussed the specifics of such legislation and heard from a panel of experts on the matter.
Tuesday's hearing is likely to be the first in a series of hearings on creating data breach legislation, and it saw many of the themes that are likely to emerge when creating such a bill.
The members of the subcommittee all agreed at the outset of the hearing that data breach legislation that is universal and includes standards for consumer notification is needed. There are currently 47 different state laws dealing with data breach notification and 12 state laws governing commercial data security.
House Energy and Commerce Chair, Rep. Fred Upton (R-Mich.), said Congress has a real opportunity to set a single national data security standard, which is a key component to combating the effects of data breaches. Rep. Frank Pallone (D-N.J.) said that he would not support any bill that supersedes strong state protections with a "weak federal standard."
Rep. Leonard Lance (R-N.J.) said he wants any forthcoming legislation to avoid becoming a "48th standard," and instead it should serve as the primary standard.
A letter from the Credit Union National Association and other financial trade organizations was accepted into the record.
As previously reported
in News Now
, the letter outlined several essential characteristics of potential data breach legislation, including national protection and notification standards that pre-empt state laws and recognition of the requirements financial institutions face under the Gramm-Leach-Bliley Act.
Lance asked the witnesses if they thought the standards set forth by the Gramm-Leach-Bliley Act, created 16 years ago, were sufficiently protecting consumers, and the witnesses agreed changes are needed.
Bilirakis said effective legislation would also not likely be tied to specific technologies, such as chip-and-pin payment cards, but the law should focus on meeting the threat. (See related story: Data security legislation among FTC recommendations.)
Three of the four witnesses said that data breach notification should only be required when the exposed information can be used to commit fraud, or other crimes, for fear of consumer fatigue when it comes to notifications of breaches.
The fourth witness, Woodrow Hartzog of Samford's Cumberland School of Law, strenuously disagreed and said it is too difficult to determine how stolen data might be used in the future, and that consumers have the right to know when any of their information has been exposed.
While the others cautioned that consumers would grow weary of getting repeated notices about breached, Hartzog said he did not believe consumers were suffering fatigue when it comes to being notified about data breaches that involve their personal informaton.
WASHINGTON (1/28/15)--The Credit Union National Association is strongly encouraging credit unions to comment by an April 27 deadline on the National Credit Union Administration's second-round risk-based capital (RBC) proposal.
CUNA has posted a free, recorded version of its 60-minute Jan. 26
online. It features NCUA Director of Examination and Supervision Larry Fazio, CUNA President/CEO Jim Nussle, CUNA Chief Policy Officer Bill Hampel, and CUNA Deputy General Counsel Mary Dunn discussing in detail the revised RBC plan.
CUNA has noted "significant improvements" in the agency's revised plan and is seeking credit union comment on how the new proposal will affect their operations, and what further improvements are necessary.
CUNA soon will issue a Comment Survey asking credit unions to address specific points of the proposal.
For instance, CUNA strongly advocates for the ability of credit unions to use supplemental capital, both for this proposal and for the purposes of meeting prompt corrective action requirements. This will be one of the issues CUNA raises in its comment letter.
Also, while weighted average life was not factored into the risk weightings in the revised RBC plan, the NCUA is still focusing on interest rate risk (IRR). The agency has asked for comments on alternative approaches that could be taken in the future to address IRR within prompt corrective action.
CUNA will be reviewing this area closely and seeks to develop, with credit union recommendations, ways to address any safety and soundness issues, but without tough new requirements on well-managed credit unions.
CUNA has red-flagged other ongoing concerns regarding the RBC2 plan. They include:
- Whether a two-tiered, risk-based capital system is permitted under the Federal Credit Union Act; and
- Is there a need for complex credit unions to continually assess their overall capital adequacy on an ongoing basis.
Credit union stakeholders also are encouraged to submit questions about the proposal to CUNA at the email address
, and the organization will be posting an updated frequently-asked-questions document with answers as they become available.
CUNA is also designing a high-level breakout session dedicated to RBC2 questions, concerns and comments to be held during its upcoming
Governmental Affairs Conference
here from March 8-12.
WASHINGTON (1/28/15)--Rep. Frank Lucas (R-Okla.) expressed reservations about proposed changes in the Federal Home Loan Bank (FHLB) membership requirements during a House Financial Services Committee hearing Tuesday.
The hearing, which featured testimony from Federal Housing Finance Agency (FHFA) Director Mel Watt, also delved into discussions on the agency's proposed low down-payment loans.
The FHLB proposal would set forth several ongoing requirements for FHLB members that are more burdensome than current requirements. The Credit Union National Association is
to the proposal, citing the additional compliance burden the new requirements would create.
Watt said the agency received more than 1,300 comments on the proposal and is in the process of reviewing the comments. He pledged to consider those comments, as well as those of the committee.
Lucas said the committee would be "very sensitive" about doing anything to alter the current FHLB model, which he said is working well. He specifically mentioned how the proposal could adversely affect community financial institutions.
According to Watt, the proposal is to ensure the FLHB system is in compliance with statute, a claim that was disputed by Lucas, who said he does not believe the proposal is in line with anything intended by Congress.
"Every time that Congress has amended the Federal Home Loan Bank Act with respect to membership eligibility, the intent has been to make the banks more accessible--not less accessible--to lenders and other members," said Ryan Donovan, CUNA's chief advocacy officer. "The FHFA proposal does just the opposite."
Members of the committee also questioned Watt about the FHFA's proposed 3% down-payment loans. Committee Chair Rep. Jeb Hensarling (R-Texas) said he is concerned that loans with a loan-to-value (LTV) ratio of higher than 95% (the FHFA's 3% down payment option would have a 97% LTV) have seen a rise in default rates.
Watt responded by saying the loans don't only require a 3% down payment, rather, as part of Fannie Mae (MyCommunityMortgage) and Freddie Mac's (Home Possible Advantage)
low down-payment products
, potential homebuyers must complete borrower education programs and meet other requirements that lessen the overall risk to the lenders.
RICHARDSON, Texas (1/28/15)--Texans CU, a credit union under the conservatorship of the National Credit Union Administration, saw its loans and net worth continue to grow in 2014, the agency reported Tuesday.
The $1.4 billion-asset credit union in Richardson, Texas, was placed into conservatorship in April 2011 to address service and operational weakness.
According to the NCUA, since then Texans management and staff have "worked dramatically" to improve the credit union's condition. Texans CU is a state-chartered, federally insured credit union.
Texans CU posted a year-end 2014 net income of $21.7 million, which marked 36 consecutive months of positive earnings. Its consumer and real estate-loan portfolios grew by more than $31 million and $27 million, respectively, and its net worth ratio at year's end was 4.49%.
C. Keith Morton, Region IV director for the NCUA, said all signs point to Texans being able to continue its growth in 2015.
Texans CU, chartered in 1953, operates 13 branches and served more than 112,000 members in the Dallas metropolitan area. Membership is open to individuals and their family members who live, work or attend school in Collin, Dallas, Grayson, Rockwall, Travis, Williamson counties and parts of Denton County. Texans additionally serves employees of various companies in the credit union's field of membership, including Texas Instruments, Raytheon and Ericsson.
ALEXANDRIA, Va. (1/28/15)--New resources are available from the National Credit Union Administration to help consumers protect themselves from identity theft and take action if they believe they have been victimized. According to the NCUA, more than 16 million Americans were victims of identity theft in 2012, the most recent year data is available, which resulted in more than $24 billion in losses.
This week has been
Tax Identity Theft Awareness week by the Federal Trade Commission, and the NCUA has updated its
website in conjunction with those efforts. The new NCUA
explains the basics of identity theft, how to uncover it and how to repair potential damage.
Steps to prevent identity theft include:
- Get an Identity Protection (IP) PIN from the IRS. An IP PIN is a six-digit number assigned to eligible taxpayers that helps prevent the misuse of Social Security numbers on fraudulent federal income tax returns;
- Check mail and credit union account statements every month. If you discover an account you did not open, balance discrepancy or a purchase you did not make, contact the financial institution or creditor immediately to report the activity;
- Monitor your credit reports on a regular basis. Information on credit reports, why they matter and how to obtain three free credit numbers annually is available at the NCUA's Credit Reports and Credit Scores learning center; and
- Talk to your credit union about the identity theft resources they may offer. Most credit unions offer or partner with companies that offer services and materials to help their members safeguard their accounts.
Other resources available from the NCUA include: a
Frauds and Scams
page, fraud prevention
identity theft prevention