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CUNA exam survey sees strong CU response

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WASHINGTON (1/28/13)--Well over 1,000 credit unions sent in their federal and state examination stories to the Credit Union National Association in response to CUNA's recent survey request.

In fact, 1,300 respondents took the time to detail their experiences--good, bad and in-between--on this key topic for credit unions.

The CUNA survey asked credit unions to detail their experiences with on-site National Credit Union Administration and state regulatory examinations, and to describe their satisfaction level with both the federal and state examinations process. Credit unions also described the strengths and weaknesses of the examination system.

The information gleaned from the survey responses will help CUNA and the leagues hone their exam issue advocacy efforts.

Results of the survey will be released in time for this year's CUNA Governmental Affairs Conference. The conference is scheduled for Feb. 24-28 in Washington, D.C.

OCC sets $10M penalty for BSA violations

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WASHINGTON (1/28/13)--For Bank Secrecy Act (BSA) violations the Office of the Comptroller of the Currency said ranged from late filing of suspicious activity reports (SARs) to instances where SARs failed to adequately explain or identify potential terrorist financing, the agency assessed a $10 million civil money penalty against TCF National Bank, Sioux Falls, S.D.

The OCC announced Friday that its examination of the bank's account and transaction activity covered the time period  between November 2008 and July 2010.

The suspicious activities involved, the OCC said,  primarily consisted of cash transactions" which indicated structuring and wire transfers where the source and purpose of the funds were unknown."

The agency said the penalty follows a cease-and-desist order issued in July 2010 when the bank was directed to correct deficiencies in its BSA and anti-money laundering programs.

The Bank Secrecy Act of 1970 requires financial institutions, including credit unions, to assist the government and law enforcement officials in detecting and preventing money laundering and terrorist financing.

Senate student loan bill would allow private debt writeoffs

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WASHINGTON (1/28/13)--Legislation that would treat privately issued student loans in bankruptcy the same as other types of private debt was introduced by a group of senators last week.

The bankruptcy bill, known as the "Fairness for Struggling Students Act of 2013" (S. 114), is sponsored by Sen. Richard Durbin (D-Ill.) and is cosponsored by Sens. Sheldon Whitehouse (D-R.I.), Jack Reed (D-R.l.), Tom Harkin (D-Iowa), Elizabeth Warren (D-Mass.) and Al Franken (D-Minn.). Durbin in a release said the bill would restore the bankruptcy law, as it pertains to private student loans, to the language that was in place before 2005 so that privately issued student loans will once again be dischargeable in bankruptcy like nearly all other forms of private debt.

Government issued or guaranteed student loans have been treated as nondischargeable debt during bankruptcy proceedings since 1978. Legislation that extended these same protections to private student loans was approved in 2005.

A second bill, the "Know Before You Owe Act of 2013" (S. 113), would require schools to counsel students before they take out private student loans and to inform students of any unused federal student aid eligibility. Schools would also need to confirm a student's enrollment status, cost of attendance and estimated federal financial aid assistance before their private student loan can be approved. S. 113 is cosponsored by Durbin, Harkin and Franken.

The Consumer Financial Protection Bureau has noted that student loan debt, which surpassed $1 trillion in 2012, has exceeded credit card debt as the largest source of consumer debt in the U.S. More than $150 billion of this $1 trillion total is comprised of private student loans, and at least $8 billion of these private student loans are in default, the CFPB said.

CUNA estimates that around 300 credit unions currently offer student loans to their members. Credit unions also provide financial education and seminars relating to student lending generally, and encourage students to attend. The CUStudentLoans.org website also provides extensive financial education regarding student lending, through both written information and webinars. The site is powered by Fynanz, a CUNA Strategic Services provider.

CDFI Fund posts archived training webinars, FAQ

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WASHINGTON (1/28/13)--Interested in applying for financial assistance through U.S. Treasury Community Development Financial Institutions (CDFI) Fund programs? The CDFI Fund has posted archived versions of two training webinars and an updated list of frequently asked questions (FAQ) for those in need of more information..

The webinars and FAQ address the CDFI Program and the Native American CDFI Assistance (NACA) Program.

The Treasury's CDFI Fund helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community.

The NACA Program is designed to encourage the creation and strengthening of certified CDFIs that primarily serve Native American, Alaskan Native and Native Hawaiian communities. NACA funds may be used to finance capital or may be provided to financial institutions in the form of technical assistance grants.

The CDFI Fund expects to provide up to $165 million to eligible financial institutions in 2013.

The $165 million will be divided into:

  • $130 million for CDFI Program awards;
  • $12 million for Native American CDFI Assistance (NACA) Program awards; and
  • $23 million for Healthy Food Financing Initiative.
Congress has not yet appropriated funds for the 2013 program rounds. The Obama administration requested $221 million for the CDFI Fund in its suggested 2013 fiscal year budget.

A total of $186,853,456 was awarded to 210 organizations in 2012, representing the highest amount awarded in the CDFI Fund's history.

Twenty-two credit unions received funding through the 2012 CDFI Fund, and four credit unions received NACA Program grants.

For more on the CDFI Fund webinars and FAQ, use the resource link.

ABA targets tax exemption for 2013, CUNA primed to protect

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WASHINGTON (1/28/13)--As if there were any doubts about what the banks are up to this year, an American Bankers Association lobbyist was quoted today by Bloomberg BNA saying that a "chief" goal for banks in 2013 is to push for legislation to change or eliminate the credit union federal tax status.

The article quotes ABA Executive Vice President James Ballentine as saying the group will be talking to federal lawmakers about statutory changes and, if that fails, pushing for congressional hearings, a Government Accountability Office study, or "a variety" of other means to go on the attack.

Protecting the credit union tax exemption tops the Credit Union National Association's list of 2013 priorities.

Under the Federal Credit Union Act of 1934, federal and state-chartered credit unions are exempt from federal income tax because they are cooperatives operated for and by their members, and because credit union shares are essentially members' deposits. The tax status has been re-affirmed periodically by the U.S. Congress and is supported by many lawmakers.

As recently as yesterday, on a call to state credit union league presidents, Credit Union National Association President/CEO Bill Cheney reiterated that preserving the tax status of credit unions is CUNA's top priority and will be the number one issue during CUNA's upcoming Governmental Affairs Conference (GAC) here from Feb. 24-28.

Capitol Hill visits on key credit union issues are at the core of CUNA's GAC, which draws thousands of credit union representatives from across the country to Washington, D.C. each year.

"The congressional agenda for the year is unclear at this point but some expect it will include comprehensive tax reform discussions. As part of that process, the credit union tax status is likely to be examined and could come under significant threat--particularly since we know the banks will continue their paid media and lobbying barrage urging credit union taxation.

"Protecting the credit union tax exemption tops CUNA's list of ten 2013 priorities for good reason," Cheney said.

New services helped AEA FCU improve financial standing in 2012

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ALEXANDRIA, Va. (1/28/13)--New services for members and increased operational efficiency helped AEA FCU post net income and net worth ratio improvements in 2012, the National Credit Union Administration reported Friday.

Total assets held by the Yuma, Ariz., credit union stood at $231 million at the end of 2012. AEA FCU also reported net income of $3.15 million and its net worth ratio improved by 137 basis points during 2012, ending the year at 4.02%.

NCUA Region V Director Elizabeth Whitehead said the NCUA and management "reduced expenses, streamlined operations, retooled infrastructure, introduced an array of new services and continued the process of returning AEA to the core credit union business model" in 2012. "We see significant progress in all of these areas, and we are very pleased with the credit union's positive performance in 2012," she added.

Services introduced in 2012 included:
  • A new home banking website and mobile platform;
  • A suite of checking accounts;
  • A direct auto lending platform; and
  • A fixed-rate Visa credit card program.
AEA also joined the Shared Branching and CO-OP ATM Networks in 2012. This move provided its 42,000 members with 36,800 additional service sites, the NCUA said.

The NCUA placed the credit union into conservatorship in December of 2011, saying that it was not adequately capitalized under standards set forth in the Federal Credit Union Act and had earnings "insufficient to enable it to continue under present management." The agency at that time said the credit union's difficulties sprang from problems in its loan portfolio.

Whitehead said the NCUA hopes to release the credit union from conservatorship in 2013.

Rep Meeks adds name to 2013 GAC lineup

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WASHINGTON (1/28/13)--House Financial Services Committee member Rep. Gregory Meeks (D-N.Y.) is the latest legislator to join the 2013 Credit Union National Association Governmental Affairs Conference (GAC) lineup.

Meeks is the ranking minority member on the committee's Financial Institutions and Consumer Credit Subcommittee. He was an original co-sponsor of the credit union supplemental capital bill, H.R. 3993, in the 112th Congress. Meeks also co-sponsored legislation that would increase the credit union member business lending cap last year.

He will speak during the morning general session on Feb. 26.

Speaker of the House Rep. John Boehner (R-Ohio), credit union champions Sen. Mark Udall (D-Colo.), Rep. Ed Royce (R-Calif.) and Rep. Brad Sherman (D-Calif.) are also slated to speak at the 2013 GAC. House Financial Services Committee Chairman Jeb Hensarling (R-Texas), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee senior member Spencer Bachus (R-Ala.), Sen. Elizabeth Warren (D-Mass.), Rep. Peter King (R-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.) are also on the GAC speaking schedule.

More congressional and regulatory speakers will be added to the 2013 GAC lineup in coming weeks.

CUNA's 2013 GAC will take place Feb. 24-28 at the Washington Convention Center in Washington, D.C. This year's GAC theme, "Powerful Cause, Positive Effect," reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC. Use the resource link to register for the GAC.