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April 21, 2015

This week in Congress: NCUA to bring regulator view to House hearing on burden

WASHINGTON (4/21/15)--A U.S. House subcommittee hearing on regulatory burden from a regulator's perspective highlights activities in Congress this week.
On Thursday, the House Financial Services subcommittee on financial institutions and consumer credit will conduct a hearing with a number of witnesses from federal regulatory agencies, including the National Credit Union Administration.
Larry Fazio, director of the NCUA's Office of Examination and Insurance, has been confirmed as a witness. The subcommittee has not released the full witness list for the hearing, set for 9:15 a.m. (ET) Thursday.
CUNA will also be monitoring the following hearings this week:
  • Today and Thursday, 10 a.m. (ET): Senate Banking Committee, "Surface Transportation Reauthorization: Building on the Success of MAP-21 to Deliver Safe, Efficient and Effective Public Transportation Services and Projects." Transportation officials and other stakeholders will speak;
  • Wednesday,  10 a.m. (ET): House Financial Services Committee task force to investigate terrorism financing, "A Survey of Global Terrorism and Terrorist Financing;"
  • Wednesday, 11 a.m. (ET): House Small Business Committee, "Small Business Big Threat, Protecting Small Businesses from Cyberattacks ;" and
  • Thursday, 2 p.m. (ET): Senate Finance Committee, hearing to consider departments of the Treasury and Health and Human Services nominations.
The House will also consider a number of bills this week, including three of interest to CUNA:
  • The Bureau of Consumer Financial Protection Advisory Board Act (H.R. 1195), which would codify the bureau's Credit Union Advisory Council and create a small business panel. CUNA supports this bill;
  • Protecting Cyber Networks Act (H.R. 1560), which would enable private companies to share cyberthreat indicators with each other, and with the federal government, although on a voluntary basis, and not through the National Security Agency or Department of Defense; and
  • National Cybersecurity Protection Advancement Act of 2015 (H.R. 1731), which would amend the Homeland Security Act of 2002 to enhance information sharing and strengthen privacy protections.

Symantec: 59% of compromised info linked to retailer breaches

CU System
MOUNTAIN VIEW, Calif. (4/21/15)--A recent report from the Internet security firm Symantec revealed just how devastating an attack on a retailer can be for consumers.

The 2015 Internet Security Threat Report found that retailers were responsible for exposing roughly 59% of all personal data compromised last year, despite only representing 11% of all breaches recorded ( April 20). 

Given the sheer quantity of personal data in the possession of retailers nationwide, it's no surprise CUNA continues to urge lawmakers at the national level to pass legislation that would require merchants to protect data as strongly as financial institutions do.

It's also not just the mega-retailers that are vulnerable, the report found, as roughly 60% of the targeted organizations last year were either small- or medium-sized. This may be especially concerning, as smaller organizations often have more difficulty defending themselves ( ).

Additional findings from the report:
  • The percentage of breaches in which financial information was compromised doubled to 36% from 18% during the year;
  • Symantec counted 23% more breaches in 2014;
  • Spear-phishing--an email spoofing fraud method that targets an organization by seeking unauthoriezed access to confidential data--climbed 8%, while the cybercriminals behind such attacks became more efficient. Criminals sent 14% fewer emails to 20% fewer targets, while their success improved;
  • Malware continued to flourish, with more than 317 million new pieces of malware created last year, or nearly 1 million per day; and
  • Digital extortion, or ransomware attacks jumped 113% in 2014, including a 4,000% increase in crypto-ransomware attacks where cybercriminals freeze a victim's files or systems until they receive a payment, or a ransom.

Media collect CU memories of Okla. City bombing

CU System
OKLAHOMA CITY (4/21/15)--The bomb that tore through the Alfred P. Murrah Federal Building in downtown Oklahoma City 20 years ago this past Sunday left in its wake unspeakable destruction.

Among the 168 lives lost were 18 employees of Federal Employees CU (FECU), which was housed in the building and was totally destroyed that day.

A number of media outlets have asked several of those who were in the credit union and survived to recount what happened April 19, 1995.

Perhaps the most vivid recollection of the terrible event comes from Florence Rogers, then president/CEO of FECU, which is now known as Allegiance CU.

Rogers had been in the middle of a meeting with a number of staff members during the explosion, she told Buffalo News recently. The bomb killed everyone in the meeting but her.

In addition to Rogers' harrowing tale, a member of the credit union also recounted what happened to her that day to .

Susan Walton was inside the credit union when the bomb went off, and was the most severely injured individual to survive the bombing.

Walton suffered a basal skull fracture, among other fractures to her head, a ruptured spleen and severe breaks to both her legs below the knees, according to .

When she was rescued, while she couldn't verbally communicate, she helped doctors identify her by using sign language.

A local CBS affiliate KXII-TV also covered a talk given by a different survivor of the blast--another credit union employee.

Terri Talley told students from Southeastern Oklahoma University last week about being directly in the heart of the blast.

"When the bomb went off, I went down three floors and had to be rescued," Talley said ( KXII-TV ). "It was just so fast. It was just like a vacuum sucked me down."

ACH transactions jump to 23B in 2014: NACHA

HERNDON, Va. (4/21/15)--Automated Clearing House (ACH) transactions grew to nearly 23 billion electronic payments in 2014, an increase of 5% (or 1 billion transactions) from 2013, according to NACHA-The Electronic Payments Association.
A total of more than $40 trillion was transferred over the ACH network last year, an increase of more than 3% compared with 2013.
NACHA announced its 2014 statistics last week, statistics that reflect a growing use of "native" electronic payments, meaning transactions that start and end as electronic. Native transactions rose 6.3% to 2014 from 2013 and constituted 90% of ACH network volume.
Online payments, which occur when authorization is provided on the Internet or wireless network, grew 10.2% in 2014. A total of 3.6 billion Web transactions were exchanged via the network last year, including 7.4 million Web credits that were person-to-person (P2P) payments.
NACHA also released data on its National System of Fines program, which evaluates parts of the payments system for rules violations, correcting them when they occur. In 2014, NACHA assessed fines in 148 cases, for a total of $369,000 in fines.
For 2014, the overall unauthorized debit return rate was 0.028% (less than three out of every 10,000 transactions), which NACHA described as "very low."

Freddie, Fannie revise PMI requirements

WASHINGTON (4/21/15)--Fannie Mae and Freddie Mac have issued revised requirements for private mortgage insurance companies insuring mortgages either owned or backed by Fannie or Freddie. These requirements are effective Dec. 31.
The revised rules include financial requirements designed to ensure that approved insurers can meet obligations during times of economic stress. There are several options for approved insurers to meet these requirements, which include raising capital, entering into reinsurance contracts and replacing illiquid assets with liquid assets.
Both Fannie and Freddie have posted the new requirements online, along with frequently asked questions documents.
The Federal Housing Finance Agency, operating as conservator for Fannie and Freddie, directed the two enterprises to align and strengthen their risk management requirements for mortgage insurance counterparties. 
The agency solicited input from a number of stakeholders, including state insurance commissioners, private mortgage insurers, consumer advocates and seller/servicers, between July and September 2014 to create the new guidelines.

Healing borrowers will boost housing market: NAR

CU System
WASHINGTON (4/21/15)--A large chunk of those who lost their homes in the throes of the housing market crash have re-entered, or will re-enter, the housing market in the coming years, according to recent research from the National Association of Realtors (NAR).

But an even greater amount of formerly distressed homeowners will be left out of the market, the research found.

NAR analyzed nearly 9.3 million homeowners who either went through foreclosure, received a deed-in-lieu of foreclosure, or made a short sale between 2006 and 2014, to determine how many now-creditworthy borrowers will re-enter the market in the coming years.

Nearly 1 million of these former homeowners have already bought a home, the research found, with an additional 1.5 million likely to purchase a home in the next five years.

On the other hand, millions will not be able to purchase a home because of lingering credit problems.

"While loose lending standards in the mid-2000s led to the rise in subprime buyers who ultimately became distressed owners, falling home prices and rising unemployment resulted in a large share of prime borrowers also defaulting or going through a short sale," said Lawrence Yun, NAR chief economist.

The research found that roughly 950,000 formerly distressed homeowners who were considered prime borrowers have regained eligibility for Federal Housing Administration or other similar financing programs, and have likely bought a house after reviving their credit.

But "the extended time needed to repair credit scores or save for a down payment, combined with overlapping post-distress factors on credit quality such as missed auto loan or credit card payments, will limit the ability for many to buy in the current credit environment," Yun said.

World Council, Liberia revive CU program as Ebola ebbs

CU System
MONROVIA, Liberia (4/21/15)--After a nine-month suspension due to the Ebola virus outbreak in Liberia, World Council of Credit Unions has revived its model credit union building project that aims to serve 40,000 Liberians who previously were without access to financial services.

Click to view larger image World Council of Credit Unions, United Nations Capital Development Fund and Liberian Credit Union National Association representatives watch as a member of In God We Trust Multi-Purpose CU makes a deposit in Paynesville, Liberia. (World Council of Credit Unions Photo)
The Ebola virus, which compelled World Council to withdraw its project manager from the country, has been on the wane since March. This month, World Council Chief of Party Patrick Muriuki returned to Liberia to resume his management position.

World Council, with MasterCard Foundation funding through United Nations Capital Development Fund (UNCDF), has partnered with the Liberian Credit Union National Association (LCUNA) to rebuild the credit union sector devastated from 15 years of civil war. Representatives from each organization met recently in Monrovia to discuss next steps.

"Although we had to place the project on hold, LCUNA and its credit union members never stopped their efforts to bring in new members and provide loans to help Liberians thwart Ebola's destructive impact," said Peter Graves, World Council senior vice president for technical services. LCUNA Board Chair Saye Biyie was especially grateful to UNCDF and World Council for re-engaging in Liberia.

"This project is our heart," said Biyie. "It represents the difference--literally--between life and death for many Liberians. We are grateful to UNCDF and World Council on their decision to restart the project."

Prior to the civil wars that started in 1989, Liberia had a thriving credit union sector that World Council helped create in the 1970s. The current project's objective is to develop four regional credit unions to serve as models for the rest of the sector, and strengthen the national association so it can better serve its members.

Google Wallet funds now FDIC-insured

MOUNTAIN VIEW, Calif. (4/21/15)--Mobile payments made through Google Wallet will soon be insured through the Federal Deposit Insurance Corp. (FDIC) ( Yahoo! Finance April 20).

Typically, the FDIC insures banking funds up to $250,000, but funds stored in prepaid debit cards and most mobile wallet services are not protected.

As of now, Google Wallet's user agreement says balances are not FDIC-insured. However, a Google spokesperson confirmed in a statement to Yahoo! Finance that its current policy has changed.

The company will hold wallet balances in multiple banking institutions that are FDIC-insured, which means if anything were to happen to the company, users funds' would be protected.

Other prominent mobile wallet services, such Venmo and PayPal, do not offer FDIC insurance for users who leave cash in their accounts.

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