WASHINGTON (12/19/13)--The National Credit Union Administration will not be expecting "compliance perfection" with new mortgage rules as soon as they go into effect, according to the Credit Union National Association's CompBlog
CUNA asked the NCUA during its webinar Wednesday afternoon whether credit unions will have reasonable time after a Jan. 10 effective date to come into full compliance with the Consumer Financial Protection Bureau's new mortgage rules.
Gail Laster, director of the NCUA's Office of Consumer Protection, responded that CFPB Director Richard Cordray and others understand the compliance challenges sparked by the new rules. "We are not expecting compliance perfection" right away, she said.
Examiners will be looking for good-faith compliance efforts first, and then "substantial compliance" in due time, Laster told CUNA.
In today's webinar--the second part of a series on the new mortgage rules--NCUA staff provided a high-level overview of the upcoming CFPB mortgage rules. Specific topics covered this afternoon included: ability-to-repay and Qualified Mortgages, high-cost mortgage and home ownership counseling, loan originator compensation and ECOA appraisals and valuations.
An archived version of this free webinar, as well as written Qs-and-As, will be available on the agency website in the next couple of weeks.
WASHINGTON (12/19/13)--Mark McWatters will be President Barack Obama's pick to fill a National Credit Union Administration board seat when it is vacated by board member Michael Fryzel, whose term ended Aug. 2 this year.
The president announced his intent to nominate McWatters Wednesday. To achieve the NCUA slot, McWatters will go through a process that includes a nomination hearing by the Senate Banking Committee and a confirmation vote by the full U.S. Senate.
McWatters was a member of the TARP Congressional Oversight Panel in Washington, D.C. from December 2009 to April 2011. TARP--or the Troubled Asset Relief Program--refers to the $700 billion fund established in 2008 to help stabilize the economy after the downturn caused by a burst housing market bubble. The supervision panel was charged with overseeing the investment of TARP funds in an array of systemically significant and other institutions including megabanks like Citigroup, Bank of America, Wells Fargo, Goldman Sachs, AIG, GM, GMAC, Chrysler as well as approximately 700 additional financial institutions.
All three NCUA board members welcomed McWatters' consideration in a Wednesday statement.
McWatters served in 2009 as counsel for Rep. Jeb Hensarling (R-Texas), who has been the chairman of the House Financial Services Committee since January 2013. McWatters is currently dean for graduate programs at Southern Methodist University's School of Law in Dallas, Texas.
The NCUA has a three-member board and no more than two members can be from the same political party. The political party occupying the White House generally dominates the board's makeup, although existing NCUA board members are often left in place even after a transition in the Oval Office.
McWatters would fill Fryzel's Republican slot on the board. Fryzel was confirmed for NCUA board member in July 2008 and served as chairman until August 2009. The other members of the regulatory panel are NCUA Chairman Debbie Matz and board member Richard Metsger, confirmed this year.
WASHINGTON (12/19/13)-The Credit Union National Association is keeping focus on patent law reforms, even as the U.S. Congress is wrapping up its 2013 session. The latest example of CUNA advocacy came in the form of letters of support to Sens. Charles Schumer (D-N.Y.) and Orrin Hatch (R-Utah), who have introduced bills in their chamber for CUNA-supported changes in the patent system.
One letter supports Schumer's Patent Quality Improvement Act of 2013 (S. 866) which would make the Section 18 program created by the America Invents Act permanent.
The Section 18 program protects credit unions and other businesses from outside claims that some specific customer service, payment and marketing practices have already been claimed under existing business method patents. These patent challenges, which are often brought by non-practicing entities, can become expensive for credit unions and others if they are heard in court.
"By making the program permanent, you ensure that that full spectrum of low-quality business method patents will be subject to review if asserted under the threat of litigation." The bill shines a light on patent quality and patent litigation abuse, "and is critical to clear the landscape of poor quality patents that are most often used by assertion entities in meritless litigation," the letter said.
In a separate letter, the cosigners expressed support for Hatch's Patent Litigation Integrity Act of 2013 (S. 1612.) That bill would enable fee shifting in unsuccessful patent infringement lawsuits, a change that would help to discourage PAEs from filing frivolous lawsuits.
The bill, the letter said, aims to ensure that fee shifting will be effective by empowering the court, on a motion from the defendant, to order the party alleging infringement to post bond to cover the other party's expenses. This change "will hold PAEs financially accountable and ultimately deter them from filing frivolous lawsuits that unnecessarily harm financial services providers and the consumers they serve," the letter added.
The letters are cosigned by the American Bankers Association, American Insurance Association, The Clearing House, Financial Services Roundtable, Independent Community Bankers of America, NACHA--The Electronic Payments Association, National Association of Federal Credit Unions and the National Association of Mutual Insurance Companies.
CUNA witness John Dwyer, who is president/CEO of New England FCU, Williston, Vt., described the growing threat' of patent trolls to Senate Judiciary Committee members this week. (See Dec. 18 News Now
story: CUNA Describes 'Growing Threat' of Patent Trolls to Lawmakers.) CUNA and others have also written to Senate Committee on Commerce, Science and Transportation members, urging them to protect businesses of all sizes from the "smash and grab tactics" employed by patent trolls. (See Dec. 12 News Now
story: CUNA Urges Hill Action on 'Main Street' Patent Reform.)
FARMERS BRANCH, Texas (12/18/13)--Saying "there is much to admire in the credit union not-for-profit model," Consumer Financial Protection Bureau Director Richard Cordray met with a group of Texas credit union leaders last week, according to the Cornerstone Credit Union League.
Cordray said he wanted to hear concerns Texas credit unions have about the CFPB, and noted several times that the comments he heard were "fair."
Among the issues discussed were the new CFPB qualified mortgage rules; the new remittance rules; concerns about overregulation; the perception that CFPB lacks appreciation for the credit union "difference," especially considering credit unions did not contribute to the financial crisis; and concerns about upcoming CFPB overdraft regulations, said the Cornerstone Credit Union League (The Advocate
During the discussion of the remittance rule, Cordray asked for a show of hands by credit unions that had discontinued offering remittances in response to new regulations. Most audience members raised their hands. Cordray then asked how many remittances, on average, each credit union previously had annually processed. The number ranged from a few hundred to a thousand per year. Cordray said he was not aware that the regulation had created such a dramatic impact.
In addressing the qualified mortgage rules set to take effect Jan. 10, Cordray said that in the early months examiners are will not look for perfection, but rather a good faith effort by financial institutions.
One audience member suggested that while finding a good faith effort may be the CFPB's goal, the reality in the field when examiners visit credit unions may be different. Cordray said he had discussed the issue with National Credit Union Administration Chairman Debbie Matz, who agreed with the CFPB's approach. If credit unions have a different experience, he suggested they take the matter to their league, which could intercede with CFPB on their behalf.
One participant asked if the CFPB could consider not only a financial institution's asset size, but also the not-for-profit structure of credit unions in the rulemaking process. Cordray said it was not within CFPB's power to treat credit unions differently in rulemaking, since the agency was created to regulate markets as a whole and on an even-handed basis.
ALEXANDRIA, Va. (12/19/13)--Reassessing and retooling the credit union business model to stay ahead of the curve is one of many priorities laid out in the National Credit Union Administration's draft 2014-2017 strategic plan.
The agency said the plan outlines how it will address "a growing system where credit unions are offering new services, engaging in greater portfolio diversity, and presenting new risk challenges."
Coming challenges cited in the plan include:
- More and different products;
- Diversified holdings;
- Growing real estate concentration;
- Rapid changes in technology;
- Escalating threats to cyber-security; and
- Increasing member business loan portfolios.
"Each of these are risks that require continual monitoring and mitigation strategies," the NCUA said.
To deal with these risks, the NCUA plans to continue to modernize its regulatory approach to create a framework "that encourages innovation while protecting safety and soundness." Ensuring the progress of the credit union system "while continuously protecting the consumer's rights and benefits, effectively overseeing the credit union system, and insuring nearly 96 million members' deposits in federally insured credit unions" will be another agency focus, the NCUA said.
Legislative goals detailed in the draft plan include:
- Providing the NCUA with vendor authority through statutory changes that achieve parity with the other federal financial regulatory agencies to regulate, examine, and take enforcement actions against vendors and Credit Union Service Organizations;
- Restoring the NCUA's access to back-up liquidity by re-establishing NCUA's emergency borrowing authority of $30 billion which sunset on December 31, 2010, and revising Title III of the Federal Credit Union Act to modernize the Central Liquidity Facility; and
- Improving the NCUA's ability to manage the National Credit Union Share Insurance Fund by providing more flexibility in setting the normal operating level and building retained earnings for the NCUSIF in a manner consistent with the size and complexity of the credit union industry and financial stability goals.
For the full draft plan, use the resource link.
MADISON, Wis. (12/19/13)--The market reaction to the Federal Open Market Committee's decision Wednesday to taper its asset-buying program is good news for housing and auto lending, according to a Credit Union National Association economist.
"The fact that interest rates did not jump after the taper announcement is good news for interest-rate sensitive sectors like housing and autos," said Steve Rick, CUNA senior economist. "This will keep these very important credit union lending categories growing strong well into 2014."
CUNA is forecasting overall credit union loan growth to exceed 7% in 2014 as the economy's growth rate approaches 3%, Rick added.
After its two-day meeting, the Fed policy-making group announced it would "modestly reduce the pace" of its monthly asset-bond purchases to $75 billion per month from $85 billion, beginning in January.
"It's important to realize that this taper is not equivalent to Fed tightening monetary policy," Rick said. "It is a slowing in the expansion of monetary policy, which still remains highly accommodative."
He added that it appeared the taper of quantitative easing (QE) was priced into the bond market, which saw little movement in the 10-year Treasury interest rate after the announcement. The equity markets, however, rallied over 1% in the first hour of trading after the Fed's announcement.
During his final press conference as Fed chairman, Ben Bernanke said similar, moderate taper steps would continue throughout 2014 to bring QE to an end later next year.
In a 9-1 vote, FOMC also reaffirmed the low target rate of the federal funds rate at 0% to 0.25%.
The monetary policy committee also gave more clarity on "forward guidance" related to its interest-rate target for Fed funds, Rick noted. "The forward guidance is for exceptionally low short-term interest rates until the jobless rate falls 'well past' 6.5%. The unemployment rate is currently running at 7%.
"Translation: Don't expect the Fed to raise short-term rates until well into 2015, if not 2016. This will keep credit union cost of funds at record low levels and asset yields under downward pressure," said Rick.
To offset this "rate effect," Rick said that credit unions would continue to alter the mix of their balance sheet toward higher-yielding assets.
Voting for the FOMC monetary policy action were Bernanke, Vice Chairman William Dudley, James Bullard, Charles Evans, Esther George, Jerome Powell, Jeremy Stein, Daniel Tarullo and chair nominee Janet Yellen. Eric Rosengren, who voted against the action, said he believes that with an elevated unemployment rate and below-target inflation rate, changes in the purchase program are premature.
See related News Now
story, Fed Tapers Bond-Buying Program by $10B a Month, by using the link.
For the full statement from FOMC, use the link.
WASHINGTON (12/19/13)--The SAFE Act Confidentiality and Privilege Enhancement Act (S. 947) was passed by the U.S. Senate this week, and will now move on to the House for consideration.
Under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), employees of financial institutions, or their subsidiaries that act as residential loan originators, are required to register with the Nationwide Mortgage Licensing System and Registry.
The bill would amend the SAFE Act to grant all state and federal financial regulatory officials access to NMLS and Registry information without jeopardizing privilege or confidentiality provided under federal and state law.
Currently, only state and federal regulators with mortgage oversight authority are allowed access to the NMLS and Registry data.
WASHINGTON (12/19/13)--While the budget deal approved by the Senate on Wednesday does not directly impact credit unions, it could help speed issues like tax reform along when Congress returns in early January, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.
House Budget Committee Chairman Paul Ryan (R-Wisc.) on a recent episode of NBC's "Meet the Press" encouraged viewers to pay attention to the House Ways and Means Committee in the first quarter of next year. "The House will continue to pursue tax reform in 2014. And Sen. Max Baucus (D-S.D.) of the Finance Committee shows no signs of slowing down in the release of his tax reform proposals," Donovan noted.
Tax policy writers on Capitol Hill had intended to launch into tax reform and prepare for a vote during this past Fall, but tax reform fell by the wayside as other issues came to the fore.
"Congress is still miles from an agreement on comprehensive tax reform, but we know that important decisions on issues like the credit union tax status and others are being made in these early stages of tax reform, so even if Congress doesn't complete tax reform next year, our efforts now will help put us in a good position when Congress is closer to completing the process," Donovan said. CUNA continues to encourage credit unions and their members to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"
Another 2013 priority, housing finance reform, has missed a deadline and will also have to wait until 2014, Donovan noted.
The Senate Banking Committee has been very active on this issue this year, holding more than one dozen hearings on the matter. However, committee Chairman Tim Johnson (D-S.D.) said their progress was pushed back somewhat by the government shutdown.
CUNA has been involved in the Committee's discussion, providing advice and testifying at hearings in July and November. "Our read of the Committee is that there is an intense interest in getting housing reform done properly, as opposed to getting it done quickly, because consequences of enacting a bad bill are severe. We now expect a new bill to be released early in the new year, and it is possible that a banking committee mark-up could occur shortly thereafter," Donovan said.
BEAVERTON, Ore., and SEATAC, Wash. (12/19/13)--Credit unions in Oregon and Washington posted higher loan and asset growth than the region's banks, according to an analysis of third-quarter numbers from the National Credit Union Administration.
"Northwest credit unions continued to post strong growth in the third quarter," said Dan Hein, vice president of finance at the Northwest Credit Union Association (Anthem
Buoyed by autos loans and first mortgages, loans grew by 2.48% at Northwest credit unions, compared with 0.95% at banks.
Credit unions and banks both saw an increase in assets: Credit unions grew 1.4% to $52.4 billion, and banks had 1% growth to $87 billion.
Delinquent loans continued to decline for Northwest financial institutions overall. Credit union delinquency ratios of 68 basis points remain well below that of banks' 158 basis points.
Other states with notable third-quarter growth include Idaho, Iowa, Missouri, Minnesota, and Cornerstone Credit Union League's members--Arkansas, Oklahoma and Texas (News Now
OMAHA, Neb. (12/19/13)--A 7.7% surge in first mortgages led Nebraska credit unions to the highest level of growth in that category since the recession, according to the Nebraska Credit Union League.
The league's analysis of data from the National Credit Union Administration found that credit unions added $53.5 million in first mortgages through the third quarter, resulting in a total of $752.6 million in first mortgages and a 7.7% annual growth rate.
The level of overall loans outstanding reached $2.41 billion.
Also, the number of members that have auto loans at their credit unions rose 33 basis points, or 21.2% annually, for the third quarter. That penetration is higher than the national credit union average of 16.5%.
Credit union shares rose to $3.17 billion--a 4.1% increase compared with a year ago. Nebraska credit unions showed positive annual growth in all core deposit categories, said the league.
Membership at Nebraska credit unions reached 452,798 with a 2.1% growth rate that is on par with the national average.
ST. LOUIS, Mo. (12/19/13)--A credit union professional "TweetUp" in St. Louis, Mo., was hailed as "a smashing success" by the Missouri Credit Union Association.
|Missouri credit union professionals met at a restaurant in St. Louis on Dec. 10 to discuss social media strategy at the first "#TweetUpTuesday"--organized by Vantage CU Social Media Manager Kenny DeShields. (Photo provided by Missouri Credit Union Association)|
Employees from eight credit unions--Anheuser-Busch Employees' CU, American Eagle CU, Vantage CU, Alliance CU, Arsenal CU, West Community CU, Scott CU and Purina CU--met at a restaurant on Dec. 10 to discuss holiday content and social media strategies (The Missouri Difference
Discussions focused on the optimal time for social media posts, outreach to fans and encouraging employees to become social media advocates. Participants also discussed sources for social media strategy analysis, including a blog maintained by internet marketing consultant Jon Loomer.
The next "#TweetUpTuesday" will be held on Jan. 14 at the Blue Sky Tower Grill in St. Louis. The group is slated to discuss content calendars and best practices for both finding and scheduling updates.
Kenny DeShields, social media manager for the Bridgeton, Mo.-based Vantage CU initially proposed the idea to hold "TweetUpTuesdays" to foster collaboration (News Now
"Tweetups are a great way for like-minded individuals to gather and share ideas on everything ranging from business to everyday life," said DeShields.