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Inside Washington (01/06/2011)

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* WASHINGTON (1/7/11)--Consumer groups are raising their voices against the Federal Reserve Board’s Truth in Lending plan issued in September, which would, in part, change a borrowers’ “rights of rescission.” Current rules allow borrowers to rescind a loan within three years if that loan fails to comply with disclosure requirements. The Center for Responsible Lending, National Consumer Law Center and other groups have said the Fed proposal would, in effect, gut the rescission rule by requiring a borrower to fully repay the entire mortgage before a loan can be rescinded. The groups' complaints mirror those stated recently by six federal lawmakers who argued that the right of rescission has been a powerful tool to help protect consumers from predatory loans. The consumer groups add that it has been “the main tool” consumers have to defend against foreclosures in cases where their loans were not properly originated.(American Banker Jan. 6)… * WASHINGTON (1/7/11)--In a letter to Senate Democratic Leader Harry Reid, of Nevada, the U.S. Treasury Secretary Thursday said the country could reach the $14.3 trillion debt ceiling as early as the end of March, and likely by May 16. (Wall Street Journal “MarketWatch, Jan. 6) Secretary Timothy Geithner said the U.S. currently has room to borrow about $335 billion, and added that the situation makes it necessary for the U.S. Congress to address the issue of the debt ceiling “by the end of the first quarter."…

CFPB will consider CU concerns as agency develops

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WASHINGTON (1/7/11)--The Consumer Financial Protection Bureau (CFPB) is looking at ways to streamline truth in lending and Real Estate Settlement Procedures Act (RESPA) rules, and would welcome Credit Union National Association (CUNA) input on how the regulatory burden on credit unions could be reduced, CFPB official Steve Antonakes told CUNA President/CEO Bill Cheney in a recent meeting. Cheney, along with Massachusetts Credit Union League Senior Vice President/General Counsel Mary Ann Clancy, CUNA General Counsel Eric Richard, Associate General Counsel Mary Dunn, and Chief Economist Bill Hampel, met with Antonakes to ensure that credit union concerns about regulatory burdens are considered as the new CFPB is organized. The credit union representatives during the meeting told Antonakes that credit unions are very concerned by compliance costs and the possibility of further compliance burdens for credit unions. During the meeting, Antonakes noted that credit unions did not cause the financial crisis, and, in fact, “have served as a source of strength for their members” during the ongoing economic recovery. If the CFPB’s actions result in increased costs for credit unions and lead to unnecessary consolidation and reduced consumer choice, then the agency will have failed to achieve its strategic goals, Antonakes added. Antonakes currently serves as head of the CFPB’s Depository Institution Supervision Department. The CFPB, which was created by the Dodd-Frank financial reform legislation package, will develop rules governing consumer financial products like credit cards and mortgages and will seek to improve the transparency and consumer-friendliness of many financial products. Antonakes’ department will focus on supervision of financial institutions with assets over $10 billion. Credit unions with assets below that threshold will remain under the supervision of the National Credit Union Administration (NCUA) or their respective state regulators. The CFPB is still currently in development, and the agency is expected to be running by July 21, 2011. Cheney and other CUNA representatives have also met with CFPB architect Elizabeth Warren in recent months, and CUNA will continue following up with Antonakes and other key officials at the agency going forward.

Overdraft NSF fees on NCUA Jan. agenda

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ALEXANDRIA, Va. (1/7/11)—The first National Credit Union Administration (NCUA) meeting of 2011 will take place on Jan. 13, and part 707 of the NCUA's Rules and Regulations, Truth in Savings, will lead the day’s discussion. The Federal Reserve and the NCUA in 2009 amended their respective Truth in Savings regulations to require all financial institutions to disclose on the periodic statement the fees charged for overdraft services and the fees charged for returning items unpaid, both for the statement period and for the year-to-date. Responding to the proposed changes, the Credit Union National Association (CUNA) last August recommended that the NCUA allow credit unions to refer to overdraft fees on periodic statements as “Total Overdraft Fees for Paid Items” instead of “Total Overdraft Fees,” a difference that would further distinguish paid overdraft items from items that are returned unpaid and that are also required to be disclosed. The agency should also afford credit unions the flexibility to use either the NCUA’s revised sample overdraft and returned item fee form or the original form when producing the required disclosures. The agency’s yearly performance budget and guidelines for the NCUA’s supervisory review committee are also on the agenda, as is the customary review of the agency’s credit union share insurance fund. The NCUA has also released the schedule for its additional 2011 meetings, with the second and third meetings of the year taking place on February 17 and March 17, and the majority of the spring and early summer meetings will take place near the middle of the month. The agency will take its customary August break before returning for the fall and winter meetings. For the full NCUA agenda and the NCUA’s 2011 meeting schedule, use the resource links.

FinCEN 3Q SARs up by 2

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WASHINGTON (1/7/11)--The total number of suspicious activity reports (SARs), as well as the number of mortgage fraud-related SARs filed, increased by 2% during the third quarter of 2010, the Financial Crimes Enforcement Network (FinCEN) reported this week. Mortgage related SARs totaled 16,693 during the quarter, with overall SARs totaling 175,717 during the same time period. The number of SARs filed during the first six months of 2010 decreased by 9% when compared with numbers recorded during the same time period of 2009. Borrowers were responsible for over half of the reported instances of mortgage fraud, and more than 80% of the mortgage-related SARs involved less than $500,000 in funds. FinCEN Director James Freis said that the FinCEN report, which contains new information on SARs based on the locations of the scams and types of scams, “serves as another tool to fight scammers and mortgage fraud.” In addition to the mortgage fraud cases, the report also notes instances of check fraud, commercial loan fraud, consumer loan fraud, credit card fraud, debit card fraud, and wire transfer fraud. California and Florida had the highest number of SARs, according to the report. For the full FinCEN report, use the resource link.