ALEXANDRIA, Va. (12/12/13, UPDATED: 11:25 A.M. ET)--A final rule on charitable donation accounts has been approved at this morning's just-concluded National Credit Union Administration open board meeting.
Under the final rule, credit unions will be permitted to invest in hybrid charitable and investment vehicles known as charitable donation accounts (CDAs). These CDAs will allow federal credit unions to make investments that are otherwise prohibited, provided that the proceeds are primarily for charitable purposes.
The rule includes a Credit Union National Association supported change that limits total investment in CDAs to 5% of the credit union's net worth for the duration of the account. A minimum of 51% of the total return from such an account would have to be distributed to one or more qualified charities. Distributions could be made to qualified charities no less frequently than every five years and when the account terminates.
CUNA Deputy General Counsel Mary Dunn noted that while the final rule made clear there is no requirement that a trust vehicle be used for investments, CUNA continues to have questions regarding regulatory oversight should a trust vehicle be used. "We will be talking more with NCUA about this," she said.
WASHINGTON (12/12/13)--Sens. Sherrod Brown (D-Ohio) and Rob Portman (R-Ohio) introduced bipartisan legislation today intended to make it easier for privately insured credit unions to offer loans through the Federal Home Loan Bank (FHLB) system.
Currently, privately insured credit unions are unable to gain access to the FHLB system, which prevents them from receiving secured loans to make mortgage, small business, and other economic-development loans to their members.
Brown said that expanding the eligibility of the FHLB system to privately insured credit unions is long-overdue. "By providing these financial intuitions with the ability to join the federal home loan bank system, we help these community institutions keep more local dollars invested in local communities."
The legislation is supported by the Credit Union National Association and the Ohio Credit Union League.
Brown and Portman said their legislation would provide more than 150 privately insured credit unions in nine states--including their own--access to additional forms of liquidity through membership in the FHLB system. The current prohibition on these institutions' participation stems from a 1989 statutory change that expanded FHLB membership only to commercial banks and federally insured credit unions.
The FHLB system is comprised nationally of 12 banks and more than 8,000 member institutions.
ALEXANDRIA, Va. (12/12/13, UPDATED: 10:25 A.M. ET)--The 2014 Temporary Corporate Credit Union Stabilization Fund Oversight Budget will be just over $4.5 million, the National Credit Union Administration said at this morning's open board meeting.
The $4,525,000 budget represents a decrease of 26% from the oversight budget approved for 2013.
Credit unions will not be billed for this budget, and NCUA Chairman Debbie Matz said the budget will not change the agency's projected assessment for 2014. There will be no change in staffing as a result of the budget.
The funds will be used to cover certain corporate system resolution costs, including external valuation experts, tax consultants, attorneys, financial specialists and accountants.
Watch News Now for more on the ongoing board meeting.
WASHINGTON (12/12/13)--Federal regulators should be mindful of placing additional burdens on credit unions as they develop regulations that would implement provisions in the Biggert-Waters Flood Insurance Reform Act of 2012 that require a lending institution to accept private flood insurance, the Credit Union National Association said this week.
The CUNA comments follow the October release of a joint agency proposal co-signed by the National Credit Union Administration, the Federal Reserve, the Farm Credit Administration, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.
The joint agency proposal would also require that regulated lending institutions satisfy mandatory purchase requirements outlined in that bill. The proposal would impose new escrow rules, create new and revised sample notice forms and clauses, and outline the circumstances under which a lender must terminate force-placed flood insurance coverage and refund payments to a borrower.
In the CUNA letter, Deputy General Counsel Mary Dunn requested that the agencies extend compliance dates or provide waivers when an institution is unable to meet a compliance date due to circumstances beyond its control.
Dunn said CUNA supports the private flood insurance provision in the proposal, but noted it should be at a lender's discretion whether to accept this insurance. Further, state insurance regulators should be required to provide documentation similar to what is required for statutory private insurance, she wrote.
CUNA also supports the proposed escrow requirements, but also requested additional clarification for home equity lines of credit and other second liens, which CUNA believes should not be covered. The comment letter also asked regulators to compare escrow requirement exceptions contained in the Biggert-Waters Act with Regulation Z to ensure consistency.
"We are concerned that the proposal complicates the new statutory escrow exception by creating multiple escrow schemes under which credit unions will be required to establish escrow accounts for flood insurance but possibly not for taxes and other related items," Dunn wrote.
For the full CUNA comment letter, use the resource link.
MONTVALE, N.J. (12/12/13)--Ten U.S. PIN debit networks have formed a new company, Debit Network Alliance (DNA), to provide a structure for the governance, deployment and implementation of the Euro Mastercard Visa (EMV) debit standard.
The collaboration is designed to help facilitate the adoption of an interoperable EMV standard for debit payments in the U.S.
"Formation of the Debit Network Alliance further advances a common U.S. debit application identifier (AID) and its harmonized profiles and parameters," said Stan Hollen, president/CEO of CO-OP Financial Services, one of the alliance founders. "This is extremely important to credit unions because it preserves their routing and network choices in connection with the emerging EMV standard."
The group seeks to provide members equal access to EMV chip technology under terms that support competition, choice, innovation and delivery of value.
Members will share governance of debit application identifiers, including how the underlying technology is configured on the chip and terminal.
The group said it will provide support for all cardholder verification methods and access to technology that supports future developments.
The debit networks have a history of working collaboratively, usually on network security. The networks have worked together on chip standards under the support of the Secure Remote Payment Council's Chip and PIN Work Group since April 2012.
In addition to CO-OP Financial Services, the founding networks of Debit Network Alliance include:
WASHINGTON (12/12/13)--Noting that social media use can impact a financial institution's risk profile, the National Credit Union Administration and its Federal Financial Institutions Examination Council partners released guidance addressing social media policy. It explores how consumer protection and compliance laws, regulations, and policies could be applied to the use of online social media platforms by financial institutions.
A financial institution, the FFIEC wrote, "should have a risk management program that allows it to identify, measure, monitor, and control the risks related to social media." The FFIEC said the size and complexity of such a program should be commensurate with the breadth of the financial institution's involvement in this medium.
Compliance, technology, information security, legal, human resources, and marketing specialists can all contribute to the development of the plan, and financial institutions should also provide guidance and training for employee official use of social media, the FFIEC said.
According to the guidance, components of a risk management program should include:
A clear governance structure;
Policies and procedures for the use and monitoring of social media;
Rules to ensure social media use complies with all applicable consumer protection laws and regulations;
An employee training program that incorporates the institution's policies and procedures for official, work-related use of social media, and potentially for other uses of social media, including defining impermissible activities;
An oversight process for monitoring information posted to proprietary social media sites;
Audit and compliance functions; and
Parameters for providing appropriate reporting to the financial institution's board of directors or senior management that enable periodic evaluation of the effectiveness of the social media program and whether the program is achieving its stated objectives.
The FFIEC was formed in 1978 to promote uniformity in financial institution regulation. In addition to the NCUA, the council is comprised of the heads of the Federal Reserve Board, the Federal Deposit Insurance Corp., the Comptroller of the Currency, and the Consumer Financial Protection Bureau.
For the full FFIEC guidance, use the resource link.
ALEXANDRIA, Va. (12/12/13)--A charitable donation account final rule will be the top item of interest when the National Credit Union Administration holds its last open meeting of 2013 today.
Other items on today's open board meeting agenda include:
A board briefing on a supplemental interagency rule on appraisals for higher-priced mortgage loans;
A final rule that will make technical amendments to the corporate credit union rating system;
The 2014 Temporary Corporate Credit Union Stabilization Fund oversight budget; and
A proposed rule addressing requirements for federal credit union examination sites.
The meeting is scheduled to begin at 10 a.m. (ET). Watch News Now
Supervisory activities, personnel issues and an appeal under Part 701.14(e) and Part 747, Subpart J of the NCUA's Rules and Regulations are on the closed board meeting agenda.
Parts 701.14 and 747 of NCUA regulations address senior executive officer changes.
For the full agenda, use the resource link.
WASHINGTON (12/12/13)--A final rule that sets the definition of "qualified mortgage" (QM) for single-family residential mortgage loans was released by the U.S. Department of Housing and Urban Development Wednesday.
The rule was published in the Federal Register
. HUD was required under the Dodd-Frank Act to issue its own qualified mortgage rule, separate from the one issued earlier this year by the Consumer Financial Protection Bureau. The QM rule will replace the CFPB's QM definition for Federal Housing Administration loans or certain other HUD insured loans.
The HUD definition is similar to the CFPB definition, with some distinct differences. For instance, HUD's rule does not have a debt-to-income ratio requirement. The HUD rule also:
Requires FHA streamlined refinances to comply with the rule;
Modifies the CFPB's rebuttable presumption standard to clarify that a presumption is rebutted if the lender does not meet the underwriting requirements applicable to the transaction;
Maintains the existing regulatory structure for FHA-insured single-family mortgage programs for purposes of defining qualified mortgages, but augment these programs with certain features;
Defines all FHA-insured single-family mortgages to be qualified mortgages, except reverse mortgages insured under HUD's Home Equity Conversion Mortgage program; and
Incorporates safe harbor and rebuttable presumption standards.
The rule will become effective on Jan. 10, at the same time as the CFPB's QM rule takes effect, and will apply to mortgages with a case number assignment on or after that date.
KANSAS CITY, Mo. (12/12/13)--This month's "Community Collaboration" column from Mazuma CU focuses on how in-kind contributions support credit unions and their commitment to corporate social responsibility (CSR).
Brandon Michaels, president/CEO of the Kansas City, Mo.-based credit union, has been addressing CSR and how it is an asset to credit union growth.
In-kind contributions are the largest segment of corporate philanthropy and include resources, services, product donations and education.
"The optimal in-kind contribution for a credit union is to use the knowledge and experience of its employees to teach members of the community valuable lessons in financial literacy," he wrote.
Specifically he used the example of teaching young adults to read their credit scores. A credit union can share how credit scores are used, what determines the score and ways to improve a less-than-desirable score.
"Using a credit union's inherent in-house expertise to educate on financial matters such as credit scores creates an auto-catalytic reaction," he said. By providing financial education and advice to the public, credit unions build their brands and create good will. It also increases the number of financially literate potential customers who are more likely to make use of a credit union's services, he noted.
The next article in the five-piece series is "Why Giving Your Employees Financial Education Makes Smart Business Sense."
WASHINGTON (12/12/13)--What does the Federal Reserve get for its 100th
birthday later this month? Intense oversight.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Monetary Policy and Trade Subcommittee Chairman John Campbell (R-Calif.) Wednesday announced the "Federal Reserve Centennial Oversight Project" for 2014, calling it an "aggressive series of hearings…that will culminate with the development of legislation to reform how the nation's central bank operates."
Hensarling said his panel will "intensify and amplify" its oversight started in 2013 through a series of five hearings on the Fed and its conduct of monetary policy during.
"The Federal Reserve Centennial Oversight Project will be the most vigorous and sustained assessment and evaluation the Fed has received in its history," Hensarling said. "Our committee has an obligation to carefully scrutinize the Federal Reserve's decisions, especially since the Fed has either implicitly or explicitly assumed so many mandates and has, historically, been subject to little or no congressional oversight."
In addition to hearings, the oversight project will include: Research to examine a number of areas, including the Fed's multiple mandates; its role in the growth of the national debt; the central bank's accountability and transparency; the lines between monetary and fiscal policy; the Federal Reserve's independence; its role as lender of last resort; and the impact the Fed's monetary policy has on seniors and those nearing retirement.