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News Now: September 23, 2014

CUNA cites accuracy concerns with CFPB's consumer narrative proposal

WASHINGTON (9/23/14)--The Credit Union National Association does not support the disclosure of narrative complaint data, the organization told the Consumer Financial Protection Bureau (CFPB) in a letter filed Monday.

The letter, signed by Luke Martone, CUNA senior assistant general counsel, outlines a number of concerns with the CFPB's proposal that would allow it to post narrative consumer complaint data to its database.

Currently, the database includes basic information about a complaint and its resolution. The proposal would allow the CFPB to post a complaint to the public database after the institution has responded to the complaint, or after the institution has had the complaint for 15 days, whichever comes first.

CUNA cites potential "negative unintended consequences" of publicly releasing narrative complaint data, particularly that complaints could include inaccuracies, exaggerations and even intentionally false information.

"Under the proposal, we believe it is possible that institutions may effectively be unable to respond to a sufficient degree to consumers' narrative description of complaints," the letter reads. "We have concern that such financial institutions will be at risk of suffering severe reputational harm that violates basic principles of fairness."

The proposal states that the CFPB will disclose only narratives in which informed consumer consent has been obtained and personal information has been scrubbed. CUNA urged the bureau to only do so after a "fail-proof" method for scrubbing such information has been developed.

"We have great concern that various privacy laws, including the Gramm-Leach-Bliley Act, and other existing privacy protections could effectively prohibit financial institutions from responding to a narrative complaint, at least with any degree of detail," the letter reads. "Essentially, the institution will be prohibited from effectively addressing the complaint in its response due to consumer privacy protections."

CUNA's letter outlines several recommendations for the bureau to improve its consumer complaint process. This includes:
  • Developing a process for filtering out clearly frivolous consumer complaints;
  • Refining its answer choice format for questions in the complaint form, as well as avoiding narratives entirely;
  • Collecting information on a consumer's complaint history against financial institutions, similar to the National Credit Union Administration's Ombudsman form; and
  • Including language on the form encouraging consumers to first attempt to resolve the issue with the institution directly before filing a formal complaint with the CFPB.
CUNA had previously expressed concerns with similar proposals involving the CFPB's consumer complaint database in May 2011 and January and July 2012.

Use the resource link below to access CUNA's comment letter.

Other Resources

GAO wary of CFPB data collection controls

WASHINGTON (9/23/14)--The Government Accountability Office (GAO) released a report Monday citing concerns that the Consumer Financial Protection Bureau (CFPB) must take additional efforts to reduce the risk of improper collection, use and release of consumer financial data.

The GAO reviewed 12 large-scale data collections from the bureau, finding that three included individual consumer identification information, though CFPB staff indicated those three were not subject to restrictions on such collection.

The large-scale data collections varied from about 11,000 consumer arbitration case records from a trade association to 173 million mortgage loans from a data aggregator. The GAO found that the bureau has taken steps to protect and secure these data collections as well as implement an information security program consistent with Federal Information Security Management Act requirements.

According to the GAO report, additional efforts needed include:
  • Addressing the lack of written procedures and comprehensive documentation for a number of processes, including data intake and information security risk assessments. The lack of written procedures could result in inconsistent application of the established practices;

  • Implementing of privacy and security steps, which the bureau has not fully done. This could hamper the agency's ability to identify and monitor privacy risks and protect consumer financial data; and

  • Obtaining Office of Management and Budget (OMB) approval for the data sharing agreement between the CFPB and the Office of the Comptroller of the Currency (OCC). The agencies share data related to the ongoing collection of credit card data from different institutions, representing approximately 87% of outstanding credit card balances. The GAO recommends additional consultation with the OMB regarding these collections and to help both agencies ensure they are fully complying with the law.
A total of 11 recommendations were made, meant to enhance the CFPB's privacy and information security. One recommendation was made to the OCC to ensure its data collections comply with appropriate disclosure requirements.

According to the GAO, both agencies agreed with GAO's recommendations and have noted steps they plan to take or have taken to address them.

Use the resource link below to access the full report.

White House honors N.M. CU employee for Hispanic fin. lit.

CU System

WASHINGTON (9/23/14)--Shana Runck is both a credit union employee and a teacher, and it's the marriage of those two roles that earned her recognition by the White House Monday as a Latino Champion of Change

Click to view larger imageModerator Eric Waldo, executive director, Reach Higher Initiative, leads a panel of Latino educators who were named Champions of Change by the White House. From left, Pat Sanchez, superintendent, Adams County (Colo.) School District 14; Pedro Rivera, superintendent, Lancaster (Pa. ) School District; Gonzalo La Cava, area superintendent, Fulton County (Ga.) Schools' Central Learning Community; Shana Runck, assistant vice president of community relations and financial capabilities, New Mexico Educators FCU, Albuquerque, N.M.; and Daniel King, superintendent, Pharr-San Juan-Alamo (Texas) Independent School District.

Runck, assistant vice president of community relations and financial capabilities for New Mexico Educators FCU, Albuquerque, N.M., with $1.5 billion in assets, helped design a course that teaches students about jobs in the financial services industry (KRQE Sept. 21).

"The students also learn about products and services that you would need to know about (when) working at a credit union: checking accounts, savings, investment, that type of thing," Runck told KRQE.

For creating the class, Runck was nominated by her peers, and the White House chose her from a long list of finalists to receive the award, which honors Americans who are doing "extraordinary things in their communities to out-innovate, out-educate, and out-build the rest of the world." 

Runck was one of 10 financial literacy educators to be honored Monday in Washington, D.C. The award presentation and a roundtable on financial education in Latino communities were streamed live on the White House's website.

"New Mexico Educators FCU is honored that Shana will receive this prestigious national honor for her work with the community and helping students pursue education and careers in the financial services industry," said CEO Terry Laudick. "The credit union has long been committed to the principles of education and community impact, and this work turns those commitments into reality."

The course Runck developed was created in collaboration with Albuquerque Mayor Richard Berry's Running Start for Careers program, which offers high school students an opportunity to earn dual credits for high school and college.

Runck's program culminates in an interview with New Mexico Educators FCU for a paid internship where the students can continue to receive hands-on training and credit towards graduation.

Last year the credit union employed 14 interns, more than any other organization in the state participating in the Running Start for Careers program.

"The students have very, very positive feedback," Runck said, adding that the internships are mutually beneficial, as they provide valuable experience to the students as well as an opportunity for credit unions to recruit qualified applicants, according to KRQE.

World Council: Basel 'weak bank' guidelines could work against co-ops

WASHINGTON (9/23/14)--The World Council of Credit Unions has outlined several concerns with draft supervisory guidance from the Basel Committee that could discriminate against cooperative institutions when the committee identifies "weak banks."

In its comment letter, World Council supports most aspects of the proposal but expresses concern that "some elements of the proposal could be used to discriminate against the cooperative depository institution model or impose excessive regulatory burdens on credit unions and other smaller financial institutions" such as risk-based capital.

The proposed guidance aims to provide resources for supervisors by offering "practical guidelines in the areas of problem identification, corrective action, resolution techniques and exit strategies" with respect to identifying, strengthening and, if necessary, resolving weak banks and similar financial institutions.

Comment highlights include:
  • Regarding the proposed corrective action of the supervisor requiring changes in the legal structure of weak banking groups, the World Council argued that, without clarification, some supervisors could use this requirement to discriminate against the cooperative financial institution model by requiring conversion of credit unions and similar mutual institutions to joint-stock companies;

  • World Council also objected to proposed language in the guidance that all financial institutions, regardless of size, should be subject to the same regulatory and supervisory framework including risk-based capital requirements;

  • The council also urged the committee to state expressly in the guidance that supervisory discretion by regulatory agencies and their examiners must be exercised consistently with rule-of-law principles. World Council noted that credit unions often report that their supervisors cite general, ambiguous legal powers, such as the power to prevent unsafe and unsound activities, to override more specific legal provisions addressing the same subject matter; and

  • Urging the committee to clarify that capital injections, including grants made to credit unions for stabilization purposes, should not be subject to corporate income tax.
Use the resource links below to access the Basel Committee's proposed guidance and World Council's letter.

Va. league breaks ground on new HQ

CU System
RICHMOND, Va. (9/23/14)--Virginia Credit Union League board members sank shovels into dirt last week to ceremonially begin construction on the league's new headquarters in downtown Richmond, Va.

Click to view larger imageVirginia Credit Union League board members celebrate the groundbreaking for the league's new headquarters in Richmond. Front row, from left: Chris Williams, treasurer, Henrico FCU, Richmond; Rose Gilliam, vice chair, Argent CU, Chester; Karen Orie, chair, Hampton (Va.) Roads Educators' CU; Catherine McDermott, RiverTrace FCU, Richmond; Suzanne Hodgins, University of Virginia Community CU, Charlottesville; Patsy Smith, secretary, Peoples Advantage FCU, Petersburg; and Rick Pillow, president/CEO. Back row, from left: Joe Thomas, Fairfax (Va.) County FCU; Cliff DeMars, Blue Eagle CU, Roanoke; Dan Morrisey, Queen of Peace Arlington (Va.) FCU; and Gaye DeCesare, Belvoir FCU, Woodbridge. (Virginia Credit Union League Photo)
Construction, which will cost $2.6 million, will include the renovation of four former row houses that sit two blocks from the state Capitol. Once complete, the headquarters will feature 9,000 square feet of office space and 1,000 square feet for the reception area.

"This project represents a milestone for our member credit unions and for our organization," said Karen Orie, league board chair and president/CEO of Hampton (Va.) Roads Educators' CU, with $32 million in assets. "Our primary mission during our 80-year history has been representing credit unions at the General Assembly and working with state agencies to ensure success of Virginia-based credit unions.

"We believe a permanent presence in the heart of Richmond only enhances that mission, allowing us to build on already-solid working relationships with our lawmakers and state agency officials."

Richmond Mayor Dwight C. Jones also attended the groundbreaking ceremony and said the new headquarters will be a "wonderful addition" to the city.

Richmond Mayor Dwight C. Jones salutes the start of construction on the Virginia Credit Union League's new headquarters, just two blocks from Capitol Square. (Virginia Credit Union League Photo)
The league and its member credit unions "are really adding to the vitality of this street and this area," Jones said. "To have the Virginia Credit Union League here in the city only adds another feather in our cap."

When the league proposed moving the headquarters from Lynchburg--where a number of the league's employees will remain--to the heart of Richmond, members were very supportive, according to Rick Pillow, league president/CEO.

"Our credit unions understand the importance of our mission in Richmond and what it means for their future," Pillow said. "After years of leasing space here in the city, we've very proud to see our credit unions' vision realized for a permanent, visible presence."

The first floor of the new facility will be designated the Credit Union House of Virginia and will feature reception space, a kitchen and a history room that celebrates credit union service.

Credit unions from throughout the state are also submitting names of individuals to be included on the Credit Union House Wall of Fame.

The wall will recognize men and women who have played extraordinary roles in building up their credit unions, or who have served the state or national credit union systems.

Other Resources

CFPB CU Advisory Council meeting set for Oct. 1 in D.C.

WASHINGTON (9/23/14)--A meeting of the Consumer Financial Protection Bureau's (CFPB) Credit Union Advisory Council will be held Oct. 1 in Washington, D.C.

The agenda features a discussion on overdrafts with Gary Stein, program manager of deposits markets, and Jesse Leary, section chief of consumer and household research and policy. Assistant Director for Consumer Response Scott Pluta will also lead a discussion of consumer complaints.

The council's function is to advise the bureau on regulating consumer financial products or services and specifically to share the unique perspectives of credit unions.

The upcoming meeting will be the first for the council in 2014. It previously met four times in 2013 and once in 2012.

The meeting will be from 3:30 to 5:30 p.m. (ET). Registration is required.

Use the resource link below for more information.

Northwest FCU Foundation celebrates Night of Magic

CU System
HERNDON, Va. (9/23/14)--More than 100 patients receiving care at Inova Children's Hospital in Falls Church, Va., attended the Night of Magic Ball--an event sponsored by the Northwest FCU Foundation that giving chronically ill patients and their families an evening away from the stresses of being in the hospital.

Click to view larger image Children dance the night away during Northwest FCU Foundation's Night of Magic Ball. (Northwest FCU Foundation Photo)
The foundation is the charitable arm of Northwest FCU, Herndon, Va., with $2.6 billion in assets.

Night of Magic is a time of laughter, dancing, crafts, games, food, prizes and fun for those in attendance. The guests often miss out on childhood events such as father-daughter dances, after-school parties and even their high school proms. The Night of Magic Ball is a way of creating an evening where they can forget about their medical concerns for a few hours.

This year's event--a carnival theme--was coordinated with the help of 55 volunteers and donors from the surrounding communities. It started with patients selecting party attire from an assortment of new dresses and suits that were theirs to keep. Hair and makeup was completed by a team of volunteer professionals. Attendees met with the ringmaster for entry into the carnival ball, where a magician opened the evening with a performance. 

The night included music with a DJ, and dance professionals teaching the latest moves and line dances. Volunteers also provided a craft table and game area. There was plenty of food and beverages, and photo booths provided both "posed" prom photos and dress-up photos. As the evening ended, patients were able to select a special keepsake from a gift table, and all attendees received goodie bags.

One of the night's highlights was a check presentation from the foundation. Linda Rogus, the foundation's executive director, joined Northwest Federal President/CEO Chris McDonald to present $3,000 to Child Life Services at Inova Children's Hospital to purchase electronic games to be used by hospital patients.

Other Resources

Service CU leadership sees results of member biz loan

CU System
PORTSMOUTH, N.H. (9/23/14)--The leadership team at Service CU saw first-hand the results of one of its member business loans when it toured the 30,000-square-foot NCS Global building located in the Granite State Business Park, Rochester, N.H.
NCS Global received funding for its building from the $2.4 billion-asset credit union based in Portsmouth, N.H.
"It was important for us to find the right financial partner," Shiva Nanda, CEO of NCS Global, told Foster's Daily Democrat (Sept. 22). "Service CU is local, understands the market and was very responsive."
The new building was constructed to silver LEED-certified standards and set a benchmark for design, construction and operation of high-performance green buildings in the Lilac City area.
"We pride ourselves on giving the member and business members what they want and need," said Gordon Simmons, Service CU president/CEO.
Service CU employees who toured NCS Global included Simmons; William Newman, executive vice president; Andrew McGeorge, chief financial officer; Daniel Clarke, vice president of member services; Fawn Terwilliger, vice president of lending; and David Weed, assistant vice president of business services.
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