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NEW: Registration closing soon for CUNA's Jan. 26 RBC2 webinar

WASHINGTON (1/23/15 UPDATED 12:15 p.m. ET)--Registration closes soon for the Credit Union National Association's Jan. 26 webinar on the National Credit Union Administration's revised risk-based capital proposal (RBC2).

CUNA President/CEO Jim Nussle, Chief Policy Officer Bill Hampel and Deputy General Counsel Mary Dunn will discuss how and to what extent the new proposal addressed the significant concerns of CUNA members raised with the first proposal.

The webinar will feature the CUNA economic team's analysis of the impact the proposal will have, as well as other areas of continuing concern.

CUNA staff will show credit unions what they need to assess their own outcome under the proposal and broader implications for the credit union community.

In addition to CUNA staff, NCUA Director of Examination and Insurance Larry Fazio will break down the proposal, including the NCUA's view of why they made some changes from the original proposal.

Nussle, Hampel, Dunn and Fazio will also answer questions from participants, as time allows.

The free, 60-minute webinar is scheduled for 1 to 2 p.m. (ET).

The RBC2 proposal was released at the NCUA's Jan. 15 board meeting, almost a year after the original proposal was introduced. While it contains improvements over the original, it is still a "solution in search of a problem," Nussle said.

The proposal will have a 90-day comment period, which will begin once it is published in the Federal Register, which is expected in the coming weeks.

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31 CUs fined total of $12,820 for 3Q late-filing

ALEXANDRIA, Va. (1/23/15)--Thirty-one federally insured credit unions will be subject to civil money penalties for filing late third-quarter 2014 call reports, the National Credit Union Administration announced Thursday. Those 31 have consented to pay a total of $12,820, according to the NCUA.

Individual penalties range from $138 to $1,878, with a median penalty of $176. Those funds are sent to the U.S. Treasury by the NCUA, as mandated in the Federal Credit Union Act.

Assessment of penalties primarily depends on the credit union's asset size, its recent call report filing history and the length of the delay. According to the NCUA, one of the credit unions assessed penalties had been late in a previous quarter.

Of the 31 credit unions paying penalties in the third quarter, 19 had assets of less than $10 million; seven had assets between $10 million and $50 million; and five had assets between $50 million and $250 million. No credit unions with assets greater than $250 million filed late in the third quarter.

A total of 47 credit unions filed call reports late for the third quarter. After the NCUA consulted regional offices and state supervisory authorities to review each of those cases, 42 credit unions were advised they could reduce their penalties by signing a consent agreement.

The NCUA granted waivers for 11 of those credit unions and the remaining 31 credit unions consented.

Seventy-five credit unions filed late reports in the second quarter of 2014, with 44 eventually paying a total of $17,111 in penalties. In the first quarter, 104 credit unions missed the deadline, and 62 were eventually fined a total of $57,750.

The NCUA started the civil money penalties for late filers in the first quarter of 2014, which Chair Debbie Matz said are meant to deter late filers. The third quarter of 2013 saw more than 1,000 credit unions miss the deadline, and Matz said a large portion of those credit unions were chronic late filers.

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House subcommittee to examine 'sound data breach legislation'

WASHINGTON (1/23/15)--The House subcommittee on commerce, manufacturing and trade will examine what potential data breach legislation should look like in a hearing scheduled for Tuesday.

Subcommittee Chair Rep. Michael Burgess (R-Texas) has said that working toward a federal data breach solution is a top priority for the 114th Congress.

"Data theft is a real and serious threat facing American families. With cybercrimes growing in size and scope by the day, we have a responsibility to improve cyber safeguards," Burgess said in a statement. "We need a plan in place that will help prevent data from being stolen in the first place, and will also alleviate consequences for consumers if hackers are successful. I am encouraged by the president's recent focus on this issue and call for a national standard, and I agree."

The stated goal of the hearing is to determine what elements should be included in federal legislation--legislation that the subcommittee said it hoped will result in uniform standards and better consumer protection.

"We hope that any legislation that is enacted requires merchants to follow the same type of data security standards that credit unions and other financial institutions must follow, enables consumers to be notified in a timely manner and ensures that credit unions are reimbursed for costs they incur as a result of merchant data breaches--all issues CUNA has been voicing to Congress," said Credit Union National Association President/CEO Jim Nussle in response to President Barack Obama's call for data breach notification legislation.

The hearing is scheduled to start at 10 a.m. (ET) Tuesday and will be streamed on the House Energy and Commerce Committee's website.

The full House Financial Services Committee will host a hearing, also at 10 a.m. (ET) Tuesday, titled "Sustainable Housing Finance: An Update from the Director of the Federal Housing Finance Agency."

The hearing is likely to feature agency Director Mel Watt speaking on the future of housing finance, particularly the future of government-sponsored enterprises Fannie Mae and Freddie Mac.

JPMorgan Chase, Wells Fargo to pay $35.7M for mortgage kickbacks

WASHINGTON (1/23/15)--Consent orders proposing $35.7 million in payments from Wells Fargo and JPMorgan Chase were filed Thursday in federal court by the Consumer Financial Protection Bureau (CFPB).

The bureau, along with the Maryland Attorney General, took action against the two firms for what it alleges is an illegal marketing services kickback scheme with the now-defunct Genuine Title.

The CFPB alleges Genuine Title gave the banks' loan officers cash, marketing materials and consumer information in exchange for business referrals. According to the bureau, these were offered in order to increase the amount of loan business generated.

"These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly," said CFPB Director Richard Cordray. "Our action today to address these practices should serve as a warning for all those in the mortgage market."

The proposed consent orders would require $24 million in civil penalties from Wells Fargo, $600,000 in civil penalties from JPMorgan Chase and $10.8 million in redress to consumers whose loans were involved in the scheme.

An investigation by the CFPB revealed more than 100 Wells Fargo loan officers in at least 18 branches, mostly in Maryland and Virginia, participated in the scheme.

The investigation also found that at least six JPMorgan Chase loan officers in three different branches in Maryland, Virginia and New York were involved in referring settlement business on almost 200 loans to Genuine Title.

Action also has been taken against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen, for their involvement. The bureau alleged that Cohen took "substantial cash payments" in exchange for referrals. Genuine Title allegedly made tens of thousands of dollars in payments to Oliphant Cohen "in an effort to disguise the kickback nature of the payment."

The two would be required to pay a $30,000 penalty under the consent order, and Cohen would be banned from participation in the mortgage industry for two years.

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Work with management to address risk, Matz tells CU volunteers

ALEXANDRIA, Va. (1/23/15)--Credit union volunteers are the "first line of defense" against losses to the credit union system, National Credit Union Administration Chair Debbie Matz said Thursday.

Speaking at a Volunteer Leadership Institute event in Kauai, Hawaii, Matz credited credit union volunteers with helping guide their institutions through the financial crisis.

"Engaged volunteers have led credit unions diligently, from recession through recovery. You have turned unprecedented challenges into enduring opportunities," she said. "With the financial crisis behind us, we need to discuss the challenges ahead, including interest-rate risk, cybersecurity and the need for credit unions to hold adequate capital."

Interest-rate risk for the credit union system is now higher than it was before the crisis, Matz claimed. Net long-term assets have risen to 35% today from 25% of all assets 10 years ago.

The Credit Union National Association has agreed that interest-rate risk is an area credit unions should be concerned about, but believes that it can be handled in the context of existing rules, particularly since the NCUA's last interest-rate risk rule took effect just two years ago.

Matz also address the "alarming rate" of growth of cyberattacks, as the number, variety and sophistication of fraudsters and terrorists increases. She warned that hackers could use a vulnerable credit union as an entry point into the larger financial system.

CUNA has urged President Barack Obama and the U.S. Congress to work on enacting data breach legislation that would set a national notification standard for notifying consumers of breaches, as well as hold merchants to the same data security standards as apply to credit unions.

Matz also reviewed changes in the NCUA's revised proposed risk-based capital rule, saying the agency is required by law to make such a rule, and that its implementation is good public policy.

"We also need to fix the problem of inadequate capital in high-risk outliers in the credit union system," she said. "A modern rule would have helped more credit unions avoid failure and reduced losses to the Share Insurance Fund, which your credit unions all had to pay."

While CUNA believes the revised risk-based capital proposal has many positive changes compared with the original proposal, the organization has remaining concerns. A variety of information on the proposal is available at CUNA's Risk-Based Capital Action Center.

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Consumers fear inaccurate info lingers on credit reports, says FTC study

WASHINGTON (1/23/15)--Most consumers reporting unresolved errors in their credit scores believe that inaccurate information is still on their credit report, according to a study from the Federal Trade Commission (FTC).

The study, released Tuesday, is the sixth and final congressionally mandated study on national credit report accuracy from the FTC.

A full 23% of those with lingering problems told the FTC that they just do not have the time to continue the fight to get the errors cleared up.

An earlier study--one in 2012--found that 20% of consumers had an error on at least one of their three credit reports that was corrected by a credit reporting agency (CRA) after it was disputed. That study also found that approximately 20% of the consumers who identified errors in their credit reports saw a later improvement in their score that resulted in a lower credit-risk tier.

This week's study is a follow-up to the 2012 study, and it focuses on 212 consumers who had at least one unresolved dispute in the 2012 study. The 2015 report found that 37 of those consumers (31%) found the disputed information had been corrected.

The other 84 consumers continue to believe some of the disputed information on their reports is still inaccurate. Thirty-eight of those consumers (45%) said they plan to continue their dispute, 42 (50%) said they would abandon their dispute and the remaining four said they are undecided.

The 42 consumers who plan to abandon the process are involved in 93 total disputes. Of those, 40% said they were not interested in pursuing the matter, or the inaccurate information is not important. As mentioned, another 23% of those consumers indicated they do not have enough time to continue the dispute.

The 2015 study recommends that:
  • CRAs review and improve the dispute results notification process to ensure notices and explanation of investigation results are provided to consumers;

  • CRAs continue to explore efforts to educate consumers regarding their rights to review their credit reports and dispute inaccurate information; and

  • Consumers continue to examine their credit reports annually by using and follow the Federal Credit Reporting Act dispute process when inaccuracies are identified. Following the resolution of a dispute, consumers should continue to check their credit reports for potential rare instances of reinsertion.
According to the FTC, "due to the relatively small number of consumers who participated in the follow-up interview, the commission has determined not to recommend any specific legislative action regarding credit reporting accuracy at this time."

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Inside Washington (1/23/15)

  • WASHINGTON (1/23/15)--The Internal Revenue Service has released a video highlighting a "dirty dozen," a list of tax scams that are active during the 2015 filing season. Phone scams featuring aggressive IRS impersonators remain near the top of the list, as well as other scams used during peak filing season. The video is also available in Spanish and American Sign Language, and in podcast form in English and Spanish. The Treasury Inspector General for Tax Administration said nearly 3,000 victims have collectively paid over $14 million as a result of one particular phone scam since October 2013, where callers pretend to be IRS officials and demand payments sent via prepaid debit cards ...

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