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Interchange issues impacting small issuers, Wash Post reports

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WASHINGTON (1/2/13)--In an article that extensively quotes Credit Union National Association (CUNA) Chief Economist Bill Hampel, the Washington Post reported that credit unions and other small issuers are reporting reduced debit card processing revenues as a result of recent interchange regulation changes.

The Federal Reserve Board's final rule implementing interchange changes caps debit interchange fees for issuers with more than $10 billion in assets at 21 cents. An additional five basis points per transaction may be charged to cover fraud losses, and an extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap, but CUNA has repeatedly warned that the exemption will not insulate credit unions and other small issues and they will be adversely impacted by the big-issuers' interchange cap.

The Washington Post item directly questions the recent claims of a December Federal Trade Commission (FTC) report (News Now, Dec. 31) that small issuers have been unharmed by the interchange regulations. The Post story noted that credit unions and community banks have called the FTC report premature, and have said the results of the FTC survey do not reflect the true impact that interchange regulations have had on smaller institutions. The story also noted that small financial institutions have had to consider, in some cases, charging new fees to cardholders to offset revenue losses created by the interchange changes.

CUNA's Hampel in the Post story pointed out that  the interchange provision "that could really start to lower interchange revenues for smaller institutions took effect in April, and in the only full quarter since then, the third quarter of 2012, we saw the first-ever decline in interchange revenue for credit unions.

"We are concerned about whether that was a one-time downward shift or the first of several quarters of decline," he added.

CUNA Deputy General Counsel Mary Dunn last week took issue with the FTC's interchange claims, and CUNA is planning to outline concerns regarding the FTC's report in an upcoming letter to the agency.

Dunn said all aspects of the interchange cap law must continue to be monitored and assured credit unions that CUNA's work on these issues will continue. (See Dec. 31 News Now story: Small issuer concerns remain despite FTC interchange report: CUNA)

2013 HMDA threshold set by CFPB

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WASHINGTON (1/2/13)--Credit unions and other financial institutions with total assets of less than $42 million as of Dec. 31, 2012 will not need to collect and report Home Mortgage Disclosure Act (HMDA) data in 2013, the Consumer Financial Protection Bureau (CFPB) said last week.

Under HMDA in 2013, financial institutions with total assets of more than $42 million that have home or branch offices in defined metropolitan statistical areas must collect certain mortgage loan data and report it to federal regulators. The HMDA reporting threshold stood at $41 million in 2012.

Credit Union National Association (CUNA) staff have emphasized that a credit union's exemption from collecting HMDA data in 2013 does not affect its responsibility to report the data it is required to collect during 2012.

The Federal Financial Institutions Examination Council (FFIEC) has also posted information on its 2013 HMDA and Community Reinvestment Act data entry software. For that information, use the resource link.

CFPB mortgage rules among early 2013 actions: CUNA

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WASHINGTON (1/2/13)--Many mortgage regulations that the Federal Reserve and the Consumer Financial Protection Bureau (CFPB) have proposed over the last two years are scheduled to be finalized in early 2013, setting up a busy year for both regulators and the regulated, the Credit Union National Association (CUNA) notes.

Among the biggest items on the CFPB's docket are ability-to-repay/qualified mortgage regulations, which will need to be finalized by Jan. 21. Under the Dodd-Frank Wall Street Reform Act, no creditor may make a residential mortgage loan unless the creditor makes a reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated, the consumer has a reasonable ability to repay the loan. If the loan is a qualified mortgage, the creditor may presume that the ability to repay test has been met.

This rule has the ability to reshape the mortgage industry in the years to come, and many have argued that this is the most important rule under consideration by the CFPB at present, CUNA has noted.

Other items that are scheduled to be finalized by Jan. 21 include:

  • Loan originator compensation regulations;
  • Home Owner's Equity Protection Act regulations;
  • Mortgage servicing rulemakings that impact Regulation Z and Regulation X; and
  • Higher-risk mortgage appraisal regulations.
New escrow disclosure and waiver requirements are also expected to be finalized by the CFPB early this year. A final version of integrated Truth in Lending Act/Real Estate Settlement and Procedures Act disclosures, and accompanying rules, should be finalized by mid-2013, CUNA adds.

CUNA continues to meet with the CFPB and urge improvements in all of these proposals and will keep credit unions posted as the new rules are issued, CUNA Deputy General Counsel Mary Dunn said.

For more on these CFPB changes, use the resource link. A more comprehensive look at what regulatory changes credit unions can look out for in 2013 will be released in the coming days.

Inside Washington (01/02/2013)

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  • WASHINGTON (1/2/13)--The Senate Sunday voted to confirm Carol Galante as assistant secretary of Housing and Urban Development. In her new position, Galante will head the Federal Housing Administration. The vote was 69-24. Galante previously held the assistant secretary position in an acting capacity. Prior to that, she served as the deputy assistant secretary for multifamily housing programs, a post to which she was appointed by President Barack Obama in March 2009 …

Convicted embezzler banned from FI work by NCUA

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ALEXANDRIA, Va. (1/2/13)--Giovanna Liranzo, a former employee of McCoy FCU in Orlando, Fla., has been banned by the National Credit Union Administration (NCUA) from any future work at a federally insured financial institution.

The NCUA said Liranzo was convicted of embezzlement and misapplication of credit union funds and was sentenced to 15 months in prison, three years supervised release and ordered to pay restitution in the amount of $161,125.03.

To view this and earlier NCUA enforcement orders, readers can use the resource link below or visit NCUA's Office of General Counsel between 9 a.m. and 4 p.m. (ET) Monday through Friday. Paper copies may be ordered by mail from NCUA, 1775 Duke St., Alexandria, VA 22314-3428.

The agency also makes available links to the enforcement actions of other federal regulators against other institutions or their affiliated parties, which can be accessed via the second link below.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.