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CUNA says CU difference must show in CFPB rulemaking

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WASHINGTON (1/9/13)--The Consumer Financial Protection Bureau (CFPB) should bring its awareness of the credit union difference into play as it develops any new rules, the Credit Union National Association (CUNA) urged in a Tuesday letter to agency director Richard Cordray.

CUNA President/CEO Bill Cheney wrote that credit unions do not always expect to be exempt from new regulations. However, he added, "There are a number of factors unique to credit unions that support liberal use of the CFPB's exemption authorities for our members, and we urge the agency to be as proactive as possible in considering how those authorities should be applied."

"We urge the agency to help direct its appreciation of the way credit unions operate into meaningful regulatory relief for credit unions so that they can do even more to serve their communities," he added.

CUNA also urged the bureau to focus more attention in 2013 on regulating entities in the financial marketplace that engage in abusive practices, such as payday lenders, that have been unregulated or under-regulated to date.

The call for a honed approach to regulation comes just before the CFPB is expected to release final versions of several mortgage regulations required under the Dodd-Frank Wall Street Reform Act.

The CUNA CEO said credit unions are most concerned about:

  • The CFPB's pending definition of "qualified mortgage" under the Ability to Repay proposal;
  • Whether the agency is going to expand the definition of "finance charge" under Regulation Z;
  • Key requirements in the mortgage servicing proposal; and
  • Provisions in the mortgage loan originator compensation proposal.
Cheney highlighted CUNA's advocacy efforts, which include supporting a delayed compliance date of up to 18 months, or 24 months in some cases, for new mortgage regulations. CUNA also has urged the CFPB to provide coordinated and achievable compliance dates with as much time as possible for institutions to reprogram systems and deal with the operational challenges the new mortgage rules will present, he noted.

For the full CUNA letter, use the resource link.

Inside Washington (01/09/2013)

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  • WASHINGTON (1/9/13)--The Office of the Comptroller of the Currency (OCC) gave high priority to cash compensation for abused borrowers in discussing the $8.5 billion settlement with 10 mortgage servicers, American Banker reported Tuesday (Jan 8.). Borrowers will receive $3.3 billion in direct cash payments through the settlement. The OCC must still work out the details about how the money will be divided among borrowers. The settlement calls for banks to contribute to a central settlement fund, with the OCC to divide the money based on rough profiles of bank customers. Among the categories for distribution are borrowers in bankruptcy at the time of foreclosure and those were denied loan modifications …

NCUA flags new CU reg tools, exam improvements

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WASHINGTON (1/9/13)--National Credit Union Administration (NCUA) efforts to provide meaningful improvements to examinations and reduce regulatory burdens on credit unions are welcome, Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said Tuesday.

In the January edition of The NCUA Report, Chairman Debbie Matz said, "The agency continues to study the examination program carefully, looking for ways to…ultimately reduce burdens on credit unions wherever we can, consistent with safety and soundness."

Dunn noted that efforts to relieve burdens and improve exams are consistent with CUNA's 2013 Regulatory Advocacy strategy. CUNA knows that a number of credit unions have continuing concerns about examinations, she added. "That's why we developed our national exam survey, and will also work throughout the year with our Examination and Supervision Subcommittee to gauge credit unions' reactions to NCUA improvements."

Chairman Matz said the NCUA board in 2013 will also explore the creation of additional regulatory tools to give credit unions more capacity to manage risk, like the use of derivatives to hedge interest rate risk, a move that CUNA strongly supports.

The NCUA Report article also said the agency is developing better training and guidance in several areas. Pre-exam letters will communicate additional information about the exam process, and exam report cover letters will outline exam appeal options that are available to credit unions.

The NCUA chairman also previewed areas that agency examiners will emphasize in 2013, including:

  • How well credit unions put risk management controls in place when expanding the use of technology like online banking and social media;
  • Whether credit unions are appropriately managing earnings and capital without adding undue levels of interest rate, liquidity and credit risk;
  • How well credit unions control operational risk and maintain sound internal controls; and
  • Whether credit unions are actively managing the unique risks associated with unconventional products, such as investments in credit union-funded benefit plans or private student loan programs.
More detail on these areas of exam emphasis will be provided in a January Letter to Credit Unions, Matz noted.

For the full January NCUA Report use the resource link.

Also, CUNA member credit unions can participate in the CUNA examination survey until Jan. 15. More than 1,100 credit union representatives already have responded to CUNA's survey to share the strengths and weaknesses of their state and federal examination experiences. CUNA will use the confidential survey information to inform its advocacy efforts on behalf of credit unions to improve the examination process.

CUNA members may use the resource link to take the survey.

CFPB releases semiannual agenda

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WASHINGTON (1/9/13)--Mortgage rulemakings are among the top items featured on the Consumer Financial Protection Bureau's (CFPB) semiannual regulatory agenda, which was published in the Federal Register on Tuesday.

Items on the agenda that are in the final rule stage include regulatory changes that address:
  • Loan originator compensation (Regulation Z);
  • Mortgage servicing (Regulation Z);
  • Requirements for escrow accounts (Regulation Z);
  • Truth in Lending Act (TILA) ability to repay rules (Regulation Z);
  • TILA/Real Estate Settlement Procedures Act (RESPA) mortgage disclosure integration (Regulation X and Regulation Z); and
  • The Expedited Funds Availability Act (Regulation CC).
A regulation addressing small, women and minority-owned business lending data is also on the longer-term CFPB agenda, but may not be proposed this year, CUNA Senior Assistant General Counsel Jared Ihrig noted.

CUNA did expect the agency Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA) rulemakings to be released earlier in 2013. "We were thinking perhaps mid-year, but the agenda indicates September," Ihrig noted.

The Dodd-Frank Wall Street Reform Act also called on the CFPB to amend the Home Mortgage Disclosure Act (HMDA) data collection points, but that item does not appear on the agency's latest semiannual agenda, Ihrig said.

Since the bureau's inception, the agency has also collected data and information on everything from prepaid cards, credit cards, overdraft protection, checking account disclosures, elder abuse and student lending issues. However, Ihrig said, "It's still too early to tell which of these issues may rise to the forefront after the bureau completes the mortgage-related rulemakings required by the Dodd-Frank Act."

The next agenda will be published in spring 2013 and will update the bureau action agenda through October 1.

For the CFPB agenda, use the resource link.

EITC Day is opportunity for CU outreach

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WASHINGTON (1/9/13)--Earned Income Tax Credit (EITC) Awareness Day, which falls on Jan. 25, provides credit unions with a valuable community outreach opportunity, the Credit Union National Association (CUNA) notes.

The U.S. Internal Revenue Service (IRS) has encouraged charitable and social organizations, elected officials, state and local government agencies, employers, and others to join together and help generate extensive mainstream and social media coverage for the EITC on this day.

The EITC, which is a federal income tax credit that is intended to aid low-income working families, allows those that qualify and claim the credit to pay less federal tax, pay no tax, or get substantial tax refunds.

The agency said concerned parties need to work hard to reach community members that are eligible for the tax credit. Many that would be eligible for the EITC miss out on the benefits provided because they do not file federal tax returns, the IRS noted.

EITC eligible workers can receive up to $5,981 by claiming the credit on their 2013 federal tax returns, and can receive even more if they live in a state with a similar credit. "Four out of five people claim and get the EITC they earned but that leaves millions of people who miss boosting their income by claiming EITC," the IRS added.

Many credit unions also help low-to-moderate income and elderly taxpayers through the IRS's Volunteer Income Tax Assistance Program (VITA).

The National Credit Union Administration's (NCUA) Office of Small Credit Union Initiatives awarded more than $100,000 in technical assistance grants to low-income designated credit unions that operate or participate in VITA programs in 2011 tax year, the most recent year for which data was released. Credit unions that received the technical assistance grants helped more than 16,055 members prepare their tax returns, saving those members and their families $5.6 million in taxes, the NCUA said.

For more on the EITC, use the resource link.

FHA reporting changes a positive for some CUs: CUNA

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WASHINGTON (1/9/13)--A recent Federal Housing Administration (FHA) decision to ease financial reporting regulations for credit unions and other small financial institutions should be welcomed by credit unions involved in FHA lending, Credit Union National Association Senior Assistant General Counsel Jared Ihrig said.

"Small lenders," as determined by federal financial regulators, are now exempt from regulations that require internal control and compliance reports to be submitted to the FHA. Ihrig said these reports can be costly to obtain and maintain on an annual basis.

A regulatory relief measure that permits these same small financial institutions to submit unaudited regulatory reports to the FHA in place of audited financial statements is still in effect.

Small credit unions are defined as those with $30 million in assets or less by the National Credit Union Administration (NCUA). However, this threshold is scheduled to be addressed during this week's NCUA open board meeting, and could ultimately be changed.

FHA Loans are provided by many credit unions. The loans, which are insured by the FHA, offer low down payment and credit score requirements and reduced closing costs to eligible borrowers.

For an FHA letter on the financial reporting changes, use the resource link.

Former CU employee named to House Fin Services

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WASHINIGTON (1/9/13)--Former credit union employee and freshman congressman Denny Heck (D-Wash.) has been appointed to the House Financial Services Committee. Heck had Credit Union National Association (CUNA) and state credit union league backing during his election effort.

CUNA and the Northwest Credit Union Association (NWCUA) supported Heck with a $10,000 maximum contribution from the Credit Union Legislative Action Council and organized events on his behalf.

Click to view larger image From left to right: Marshall Ellison, TwinStar CU; Rep. Denny Heck (D-Wash.), when a candidate; Marilyn Ball-Brown, Generations CU; Phyllis Kaczmarski, TwinStar; Jeff Kennedy, TwinStar. (NWCUA photo)


CUNA's and the NWCUA's support was based not only on Heck's past employment at a credit union, but on his in-depth knowledge and stated support of credit unions and their issues, CUNA has said.

The House Financial Services Committee has jurisdiction over financial institutions' issues, federal housing policy, Wall Street reform and consumer protection, and commercial insurance.  Heck said in a release a seat on this panel was his top request for committee assignment.

"I'm thrilled to be named to the House Financial Services Committee. No sustainable economic recovery can occur in this country without a strong start in the housing sector…

"With major employers, credit unions, financial institutions, and a burgeoning tech-start up industry, Washington has a tremendous and growing stake in the work done under jurisdiction of the Committee," Heck said announcing his appointment.