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Rep. Peters adds voice to interchange debate

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WASHINGTON (2/1/11)—Rep. Gary Peters (D-Mich.) joined the growing congressional chorus urging interchange caution. In a recent letter, Peters told the Federal Reserve that its planned interchange regulations, “if not properly implemented,” could increase costs for consumers, limit consumer choice, and make it harder for credit unions to offer many services to their members. Peters in his letter to Fed Chairman Ben Bernanke noted that credit unions and other financial institutions are concerned that the Fed has not met with them to discuss the issues that interchange regulations could create. House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and Rep. Jeb Hensarling (R-Texas) in their own joint letter to the Fed questioned the speed with which the interchange legislation was moved through Congress. Rep. Barney Frank (D-Mass.) has also written to warn the Fed of unintended and potentially harmful consequences of the interchange provisions, and, according to a recent Bloomberg News story, is willing to work with House Republicans to alter the Fed's interchange fee proposal. The House Financial Services Committee is set to take up the topic of interchange regulation implementation at a Feb. 17 hearing. The Fed’s interchange plan, which seeks to implement provisions enacted by the Dodd-Frank financial regulatory reform package, offers a dual framework for determining what the law calls "reasonable" interchange fees. One plan would provide issuers with a safe harbor of seven cents per transaction, and set a maximum interchange fee cap of 12 cents per transaction. An alternative framework would simply cap the maximum interchange fee at 12 cents per transaction. These safe harbors and/or caps would be reevaluated by the Fed every two years. The Credit Union National Association (CUNA) has expressed concern over the potential for higher fees or diminished debit card services for credit union members. While merchants have claimed that the savings created by the interchange changes would be passed on to consumers, CUNA President/CEO Bill Cheney in a recent Huffington Post editorial called those claims “spurious at best.” CUNA has also noted that the Fed’s planned $10 billion interchange regulation threshold would not work in practice, and has estimated that up to 67% of credit unions would lose money on their debit card programs if the interchange regulations reduced interchange-related revenues by 40%. No financial institution -- and more importantly, none of the millions of Americans who use their services -- is a winner here," Cheney added.

Inside Washington (01/31/2011)

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* WASHINGTON (2/1/11)--The White House’s withdrawal of Federal Housing Finance Agency (FHFA) director nominee Joseph Smith’s name is an indication of difficulties for an administration with numerous regulatory posts to fill, according to observers(American Banker) Jan. 31). Opposition to Smith’s nomination came as a surprise to some. But Senate Democrats did not schedule a confirmation vote after Senate Banking Committee Republicans, including ranking member Richard Shelby (R-Ala.), voiced opposition to the North Carolina bank commissioner. Republicans have since gained seats in both chambers of Congress, raising questions about future administration nominees for the FHFA post and other agencies. Also at stake is the future of government sponsored enterprises (GSEs). Some sources indicated Smith would side too closely with the Obama administration on the future of the GSEs. Republicans have taken issue with the taxpayer costs associated with the government takeover of Fannie Mae and Freddie Mac. Joseph Engelhard, a senior vice president with Capital Alpha Partners, disputed the notion that Republicans would reject any nominee the Obama administration would choose … WASHINGTON (2/1/11)--The Federal Reserve Board of Governors’ January Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply and demand for bank loans to businesses and households the past three months. Overall, the survey indicated that a modest number of banks continued to ease standards and terms for commercial and industrial (C&I) loans during the fourth quarter, while banks reported small mixed changes in their lending policies for other types of loans to businesses and households. Similarly, the respondents reported a moderate increase in demand for C&I loans but little change in demand for other types of loans. Survey respondents, particularly large banks, reported easing standards and most terms on C&I loans, especially to large and middle-market firms. Banks pointed to a more favorable or less uncertain economic outlook and increased competition from other banks or nonbank lenders as reasons for easing. Changes in standards and terms on loans to households were small and mixed. Banks again reported more willingness to make consumer installment loans, and a small fraction of respondents reported easing standards for approving consumer credit card applications. However, a few banks reported tightening terms on, or reducing the sizes of credit lines on existing consumer credit card accounts. Some banks reported having tightened standards on nontraditional residential mortgage loans, while others reported little change in standards on prime residential mortgage loans or home equity lines of credit … * WASHINGTON (2/1/11)--The Federal Housing Finance Agency (FHFA) announced Monday it is consolidating its three offices here into a single location at Constitution Center, 400 Seventh St., SW. The FHFA was created in 2008 by merging the Office of Federal Housing Enterprise Oversight, the Federal Housing Finance Board, and staff from the U.S. Department of Housing and Urban Development The new, single location is intended to improve efficiency, and allow for expansion in, and greater integration of, FHFA’s examination and supervisory personnel and programs … WASHINGTON (2/1/11)--Republication lawmakers announced legislation last Friday to repeal the Home Affordable Modification Program (HAMP) (American Banker) Jan. 31). Rep. Darrell Issa (R-Calif.), the chairman of the Oversight and Government Reform Committee, and his colleagues said the Treasury Department’s program to help troubled borrowers avoid foreclosure has been “a colossal failure.” HAMP is intended to offer homeowners facing foreclosure help by reducing monthly payments to sustainable levels, according to the Treasury Department. Despite record levels of new foreclosures--2.9 million in 2010 and a projected 3 million in 2011--as of Dec. 21 only 522,000 homes were still in the program undergoing permanent modification. More than 792,000 trial modifications have been cancelled, and 152,000 trial modifications have yet to be upgraded to permanent status …

National MLO registry is up and running

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WASHINGTON (2/1/11)--The Conference of State Bank Supervisors' (CSBS) Nationwide Mortgage Licensing System & Registry (NMLS) has been upgraded to allow banks and credit unions to register their mortgage loan originators (MLOs), and became fully active on Monday. The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires credit union mortgage loan originators and their employing institutions to register with the NMLS. MLOs will have 180 days to complete the initial round of NMLS registrations. Initial registration will run until July 29, 2011. Credit unions will be required to ensure that their mortgage loan originators are properly registered and prohibit any employees who are not registered from performing any residential mortgage loan origination duties. Residential mortgage loans, including home equity loans, are covered by the SAFE registration rules. However, unregistered MLOs that have originated five or fewer mortgage loans during the previous year will not be required to complete the federal registration process, according to a Federal reserve release. The NMLS Resource Center has scheduled a series of NMLS workshops, which will begin today. The workshops, which will run until March 24, will address account initiation and user registration, as well as how to create mortgage loan originator accounts and records and to manage filing MU4R forms and related fees. MLO training and employee management will also be covered. The Credit Union National Association (CUNA) has also provided its own SAFE Act compliance guide. For that guide, which is available only to CUNA members, use the second resource link. For more on the NMLS changes and the NMLS Resource Center and CUNA NMLS resources, use the resource links.

House leader Boehner to address CUNAs GAC

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WASHINGTON (2/1/11)--Speaker of the House Rep. John Boehner (R-Ohio) will address the Credit Union National Association’s (CUNA) 2011 Governmental Affairs Conference (GAC) in Washington on March 2. “Given his very busy schedule and many responsibilities, we are truly honored to have the Speaker join us at our industry’s premier governmental event,” said CUNA President/CEO Bill Cheney. “We view his acceptance of our invitation as recognition of the work credit unions do to provide affordable financial services to millions of American consumers, and we look forward to hearing Mr. Boehner’s comments on the House priorities in the year ahead,” Cheney added.
Click to view larger image CUNA President/CEO Bill Cheney, right, meets with Rep. John Boehner (R-Ohio), who is now the new Speaker of the House, in August. Boehner was one of many members of the House that met with Cheney during his first weeks as CUNA leader.
House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), fellow committee member Rep. Ed Royce (R-Calif.) and Senate Banking Committee member Sen. Jon Tester (D-Mont.) will join Boehner on the lineup of GAC speakers. Congressional colleagues Rep. Shelley Moore Capito (R-W.Va.), Sen. Roy Blunt (R-Mo.), Sen. Mike Crapo (R-Idaho), and Reps. Barney Frank (D-Mass.), Debbie Wasserman Schultz (D-Fla.), Sen. Mark Udall (D-Colo.) and Steve Stivers (R-Ohio) are also set to speak. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to address GAC attendees. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The 2011 GAC will begin on Feb. 27 and end on March 3. To register for the GAC, use the resource link.

Fed announces start of NMLS

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WASHINGTON (UPDATED: 12:15 P.M. ET, 1/31/11)--The Conference of State Bank Supervisors' (CSBS) Nationwide Mortgage Licensing System & Registry (NMLS) has been upgraded to allow banks and credit unions to register their mortgage loan originators (MLOs), and became fully active earlier today. The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires credit union mortgage loan originators and their employing institutions to register with the NMLS. MLOs will have 180 days to complete the initial round of NMLS registrations. Initial registration will run until July 29, 2011. Credit unions will be required to ensure that their mortgage loan originators are properly registered and prohibit any employees who are not registered from performing any residential mortgage loan origination duties. Residential mortgage loans, including home equity loans, are covered by the SAFE registration rules. However, unregistered MLOs that have originated five or fewer mortgage loans during the previous year will not be required to complete the federal registration process, according to a Federal reserve release. The NMLS Resource Center has scheduled a series of NMLS workshops, which will begin on Feb. 1. The workshops, which will run until March 24, will address account initiation and user registration, as well as how to create mortgage loan originator accounts and records and to manage filing MU4R forms and related fees. MLO training and employee management will also be covered. The Credit Union National Association (CUNA) has also provided its own SAFE Act compliance guide. For that guide, which is available only to CUNA members, use the second resource link. For more on the NMLS changes and the NMLS Resource Center and CUNA NMLS resources, use the resource links.

NCUA answers query on correspondent services to other CUs

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ALEXANDRIA, Va. (1/31/11)--Federal credit unions that provide services such as share draft processing, check collection, automated clearinghouse (ACH) origination and receipt, and wire transfers to their members may also provide those services to other federal credit unions, National Credit Union Administration (NCUA) Associate General Counsel Hattie Ulan wrote in a legal opinion letter. Ulan was responding to a letter to the NCUA that asked if a given federal credit union could provide share draft processing, check collection, ACH origination and receipt, wire transfers, coin and currency, and lines of credit to other credit unions. Federal credit unions may offer lines of credit to other credit unions, according to the Federal Credit Union Act. They may also provide the additional aforementioned services to credit unions under their incidental powers authority, Ulan added. According to the letter, federal credit unions are also expressly authorized to extend lines of credit to other credit unions, subject to approval by the federal credit union’s board. For the full NCUA legal opinion, use the resource link.

Over 10 of 2011 CDFI Fund applicants are CUs

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WASHINGTON (1/31/11)--Credit unions currently represent 13% of the total applicant pool for the 2011 round of the U.S. Treasury’s Community Development Financial Institution (CDFI) Fund Program, according to a Friday Treasury release. Fifty credit unions requested a combined total of nearly $56 million in funding. Thirty-five of those requests were for $54.3 million in total financial assistance, while 15 of the requests were for $1.4 million in technical assistance grants. The CDFI Fund received 393 funding applications from credit unions, banks, loan funds, venture capital funds, thrifts, and holding companies. Under $465 million in funds has been requested by these entities, and $135 million in funding will be distributed during the 2011 round of the CDFI Fund. CDFI Fund Director Donna Gambrell said that while the overall economy is "showing clear signs of recovery,” economic recovery is somewhat slower in many low income communities. “The CDFI Fund is poised to ensure its resources are awarded and disbursed to the CDFIs serving these communities as expeditiously as possible,” she added. The Treasury's CDFI Fund helps locally based financial institutions 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. CDFI fund distributions are merit-based. Twenty-one credit unions were awarded a combined $12 million in funds during the 2010 round of the CDFI Fund, with nearly one-third of those credit unions receiving $750,000 in funding each, the highest amount awarded to any financial institution during that round. The 2010 round of grants totaled $104.9 million in funding for 180 CDFI Fund-eligible institutions, representing the largest combined amount to be awarded since the CDFI Fund program began in 1994. The National Federation of Community Development Credit Unions in November reported that community development credit unions account for 165, or 20%, of CDFI-certified financial institutions. For the CDFI Fund release, use the resource link.

Panel recommends changes to private co. GAAP

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WASHINGTON (1/31/11)--Standards related to U.S. Generally Accepted Accounting Principles (GAAP) for public companies, and the standard setting process itself, should be reformed to “best meet the needs of users of private company financial statements,” a blue-ribbon panel has recommended. The panel consists of 18 members that represent a cross-section of financial reporting constituencies, including lenders, investors, and owners, as well as preparers and auditors. Karen Kelbly, National Credit Union Administration's chief accountant, contributed to the work of the panel as a participating observer, representing the U.S. Federal Financial Institution Regulatory Agencies. The recommendations were provided in a report that was issued to the Financial Accounting Foundation’s (FAF) Board of Trustees last week. That report called for the establishment of a new board to focus on making exceptions and modifications to U.S. GAAP for private companies, which include credit unions, and recommends the creation of a new set of decision criteria to facilitate a standard setter’s ability to make appropriate, justifiable exceptions and modifications, the FAF said. The new board would be overseen by the FAF, which also oversees the Financial Accounting Standards Board (FASB). The FAF noted that the report “does not advocate a move toward a separate, self-contained GAAP for private companies or a comprehensive reorganization of GAAP.” According to the report, the panel believes that the current system has not done a sufficient job of understanding the information that users of private company financial statements consider decision-useful and how those information needs differ from those of users of public company financials. This and other issues "have caused a lack of relevance of a number of accounting standards for many users of private company financial statements and an overall level of complexity in U.S. GAAP that continues to concern preparers of private company financial statements and their certified public accountant (CPA) practitioners." FAF President/CEO Teresa Polley said that her group “applauds the efforts of the blue-ribbon panel and will thoughtfully and thoroughly consider the issues raised by the panel, as well as the recommended solutions. The FAF will soon gather additional input on the panel’s recommendations. For the full release, use the resource link.

30-year mortgages average 4.61 in Dec. 2010

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WASHINGTON (1/31/11)--Conventional 30-year mortgages averaged an interest rate of 4.61% during December, a 23-basis point increase over November’s average, the Federal Home Finance Agency (FHFA) reported last week. Overall, the combined average contract mortgage rate for fixed and adjustable mortgages was 4.52% during that same time period. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.63%, according to the FHFA. The FHFA reported that the average loan amount for loans that closed in December was $209,500, a drop from the previous month’s average of $214,800. Initial fees and charges represented 0.8% of the balance of those loans, and the average term of loans originated in December was 28.4 years. The average loan-to-price ratio was 75.6% in December, an increase from the 74.8% loan-to-price ratio recorded at the end of November. For the full FHFA release, use the resource link.

Inside Washington (01/28/2011)

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* WASHINGTON (1/31/11)--The Appraisal Subcommittee of the Federal Financial Institutions Examination Council (ASC) has initiated a project to study establishing a national appraisal complaint hotline as required by the Dodd-Frank Act. The determination was made during the ASC’s open meeting on Jan. 12. The hotline would receive complaints of noncompliance with appraisal independence standards and the Uniform Standards of Professional Appraisal Practice, and concerns about improper influencing of appraisers or the appraisal process … * WASHINGTON (1/31/11)--Observers are questioning the value of the Financial Crisis Inquiry Commission’s final report, citing a lack of consensus among commissioners, poor narrative of the crisis and bad timing (American Banker Jan. 28). After more than 18 months of research and investigation, the 662-page report is designed to provide bipartisan insight on the reasons behind the crisis and a description of the response following it. But the commission was divided along political lines. Democrats held the majority of the commission, which was established when the Democrats still held both houses of Congress. The majority view held that the crisis was caused primarily by human error related to overpriced housing, inadequate mortgage underwriting and risky securities. Also to blame were the investors, the mortgage giants Fannie Mae and Freddie Mac, and regulators for failing to identify the risk. The four Republican members of the commission all dissented from the majority view. William Longbrake, an executive-in-residence at the University of Maryland, said the report’s value is further diminished because the Dodd-Frank Act has been made into law and various agencies and committees are moving on with the details of the act … * WASHINGTON (1/31/11)--North Carolina Banking Commissioner Joseph A. Smith Jr. has withdrawn his name from consideration to oversee Fannie Mae and Freddie Mac, according to a White House statement (Bloomberg News Jan. 28). Smith was nominated by President Barack Obama in November to head the Federal Housing Finance Agency, which regulates Fannie, Freddie and the 12 Home Loan Banks. Smith failed to win U.S. Senate confirmation after objections from Republicans. Smith would have replaced FHFA Acting Director Edward J. DeMarco. The FHFA has overseen Fannie and Freddie since 2008, when they were taken into government conservatorship …

Inside Washington (01/27/2011)

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* WASHINGTON (1/28/11)--The U.S. will record a profit of $312.2 million from the sale of 465.1 million warrants to purchase common shares of Citigroup Inc., the Treasury Department announced Wednesday (American Banker Jan.27). The sale of the warrants is the government’s remaining stake in Citi, which it obtained through the Troubled Asset Relief Program (TARP). Treasury invested a total of $45 billion in Citigroup through TARP. It has recovered all of the $45 billion plus about $12.2 billion in profits, consisting of dividends, interest and gains on the sale of Citigroup common stock, warrants and other securities. Last year Treasury sold its 34% share common stock investment in Citigroup. With the expected closings of the warrant offerings, Treasury’s remaining interest in Citigroup will consist only of trust preferred securities with a principal value of $800 million held by the Federal Deposit Insurance Corp. … * WASHINGTON (1/28/11)--The House Financial Services Committee’s first hearing of the year was dominated by criticism of the Dodd-Frank Act, policies of the Federal Reserve Board and the role of the government-sponsored enterprises in the financial crisis, and indication that panel’s direction will be as partisan as its predecessor (American Banker Jan.27). The committee’s vice chairman, Rep. Jeb Hensarling, (R-Texas), citing President Barack Obama’s State of the Union pledge to target burdensome regulations, said the Dodd-Frank Act was one such example. But Democrats disagreed, saying Republican were over-politicizing the issues before the committee. For example, Rep. Al Green (D-Texas) said Republicans were overstating the impact of Fannie Mae and Freddie Mac in the crisis with the objective of abolishing the government-sponsored enterprises, which the GOP has never supported. Credit Union National Association (CUNA) President/CEO Bill Cheney sent a letter ahead of Wednesday's hearing advising that the cap on credit union member business lending should be a key part of the economic recovery and job creation plans touted by the committee and other members of Congress (News Now Jan. 27). … * WASHINGTON (1/28/11)--Lawmakers were disappointed that President Barack Obama failed to address key banking issues in his State of the Union address on Tuesday (American Banker Jan.27). Most notably absent from the speech were the continuing foreclosure crisis and the future of the government-sponsored enterprises. Obama’s shift away from financial issues differed from his approach in the previous two years. In 2009, the financial crisis still cast a dark cloud over the economy. Last year, the president was pushing for financial reform. This year, with banks beginning to regain profits and the Dodd-Frank Act made into law. Obama mainly mentioned legislative accomplishments related to financial services. Questions still remain in the financial services sector. The administration’s Home Affordable Modification Program, which uses federal money to help troubled borrowers avoid foreclosure, has largely failed. And the administration has yet to offer a proposal on the future of Fannie Mae and Freddie Mac, which are still being run by the government …

NCUA settles first NGN offering of 2011

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ALEXANDRIA, Va. (1/28/11)--The first National Credit Union Administration (NCUA) Guaranteed Note (NGN) offering of this year brought in $1.5 billion in proceeds, bringing the total revenue gained from NGN sales to over $19 billion. The first 2011 NGN sale began on Jan. 18 and ended yesterday. The offering was comprised of NGN Trust Senior Notes. The coupon on those Senior Notes will be 45 basis points over LIBOR, “indicating strong investor interest,” the NCUA said. Collateral for the transaction consisted of previously issued residential mortgage-backed securities. The NCUA said that, with this sale, it has completed 65% of the securitization designed to fund deposits assumed by the bridge corporate credit unions. The remainder of the NGNs will be sold in the coming months, the NCUA added. NCUA Chairman Debbie Matz said that the offering “demonstrates the value of the NCUA securitization program,” adding that credit unions should be encouraged by the positive results. The NCUA NGNs will receive monthly payments of principal and interest from cash flows of related underlying securities, which are passed on to investors. Timely payment of principal and interest due on the notes is guaranteed by NCUA, and that guaranty is backed by the full faith and credit of the United States.

Reg M Z comment deadlines near

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WASHINGTON (1/28/11)--The Credit Union National Association (CUNA) has issued a regulatory comment call on the Federal Reserve Board’s proposal that would increase the threshold for Regulation Z consumer credit disclosures to $50,000. Consumer credit transactions of up to $25,000 are currently subject to several disclosure requirements under the Truth in Lending Act (TILA) and Regulation Z. Private education loans and loans secured by real property, such as mortgages, are subject to TILA regardless of the amount of the loan. Regulation Z implements the Home Ownership and Equity Protection Act (HOEPA) by adjusting the thresholds used to determine which loans are covered under HOEPA. A separate but similar Fed proposal would increase the threshold for Regulation M consumer lease disclosures to $50,000. Regulation M generally applies to consumer leases for the use of personal property, such as automobiles, where the contractual obligation has a term of more than four months. All of the above regulatory changes will come into effect on July 21, and the amount of the applicable thresholds will be adjusted annually to reflect any increase in the Consumer Price Index. Comments are due to CUNA by Jan. 31. Comments solicited by the NCUA should be submitted by Feb. 1. To view the CUNA comment calls, use the links.

Sen. Republicans Democrats reveal committee assignments

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WASHINGTON (1/28/11)--Senate Republicans and Democrats on Thursday announced their respective committee assignments for the 112th Congress. Sen. Tim Johnson (D-S.D.) will take over as Senate Banking, Housing, and Urban Affairs Committeec chairman following the recent retirement of Chris Dodd. Sens. Jack Reed (D-R.I.), Charles Schumer (D-N.Y.), Robert Menendez (D-N.J.), Daniel Akaka (D-Hawaii), Sherrod Brown (D-Ohio), Jon Tester (D-Mont.), Herb Kohl (D-Wis.), Mark Warner (D-Va.), Jeff Merkley (D-Ore.), Michael Bennet (D-Colo.) and Kay Hagan (D-N.C.) will join Johnson on the committee. Sen. Richard Shelby (R-Ala.) will continue his role as minority leader of that committee, and will be joined by fellow Republicans Mike Crapo (R-Idaho), Bob Corker (R-Tenn.), Jim DeMint (R-S.C.), David Vitter (R-La.), Mike Johanns (R-Neb.), Pat Toomey (R-Pa.), Mark Kirk (R-Ill.), Jerry Moran (R-Kan.) and Roger Wicker (R-Miss.). The lineups for the Senate’s Finance, Veterans Affairs, Small Business, Rules and Administration, Intelligence, Indian Affairs and Budget committees were also announced. The makeup of the Senate Joint Economic Committee as well as the committees on Appropriations, Armed Services, Foreign Relations and Agriculture, Nutrition, and Forestry were also revealed on Thursday. The Senate Republicans and Democrats also disclosed the members of the Commerce, Science, and Transportation; Energy and Natural Resources; Environment and Public Works; Homeland Security and Governmental Affairs; Judiciary; Health, Education, Labor and Pensions; Aging; Budget; and Ethics committees.

Royce Tester added to GAC lineup

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WASHINGTON (1/28/11)--House Financial Services Committee member Rep. Ed Royce (R-Calif.) and Senate Banking Committee member Sen. Jon Tester (D-Mont.) are the latest Washington leaders set to speak at the Credit Union National Association’s (CUNA) Governmental Affairs Conference (GAC). Royce, a credit union champion who last year co-authored member business lending (MBL) legislation in the House, is currently scheduled to speak March 2. Tester is set to speak on that day as well. Sen. Mark Udall (D-Colo.), who was the top sponsor of a 2010 Senate credit union MBL bill, will also join members of Congress and leading political pundits, including Rep. Shelley Moore Capito (R-W. Va.), Sen. Roy Blunt (R-Mo.), and House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) as a GAC speaker. Sen. Mike Crapo (R-Idaho), and Reps. Barney Frank (D-Mass.), Debbie Wasserman Schultz (D-Fla.) and Steve Stivers (R-Ohio) are also currently slated to speak at the GAC. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to address GAC attendees. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The 2011 GAC will begin on Feb. 28 and end on March 3. To register for the GAC, use the resource link.

FinCEN asks for outside input on database changes

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WASHINGTON (1/27/11)--The Financial Crimes Enforcement Network (FinCEN) is seeking public comment on changes related to Designation of Exempt Person (DOEP) reports and unified Currency Transaction Report (CTR) filings. The changes are technical adjustments, and will not change any Bank Secrecy Act (BSA) regulatory requirements. Rather, FinCEN said, it is seeking "input on technical matters" as the agency transitions "from a system originally designed for collecting paper forms to a modernized IT environment for electronic reporting." The new database "will accept XML-based dynamic, state-of-the-art reports," and few changes to the existing batch and computer-to-computer filing processes will be made, FinCEN said. Under the BSA, financial institutions must file CTRs on any transaction in currency of more than $10,000. BSA rules, however, do allow exemptions for certain members, or customers. DOEPs may be filed by financial institutions that wish to exempt certain transactions from BSA reporting requirements. For the FinCEN releases, use the resource links.

CUNA to Congress Add MBL cap lift to job creation plans

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WASHINGTON (1/27/11)--Lifting the cap on credit union member business lending should be a key part of the economic recovery and job creation plans touted by the House Financial Services Committee and other members of Congress, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a letter sent ahead of Wednesday’s financial services hearing. The financial services committee yesterday held its first hearing of the 112th Congress, entitled “Promoting Economic Recovery and Job Creation: The Road Forward.” Academics and finance industry insiders testified during the hearing, which was led by committee chair Rep. Spencer Bachus (R-Ala.). Cheney in the CUNA letter said that “America’s credit unions and their 93 million members stand ready to be part of the solution to the economic problems our nation faces.” The letter also noted the Obama administration’s strong support for MBL-related legislation. A 2010 piece of legislation that was introduced by Sen. Mark Udall (D-Colo.) would have lifted the MBL cap to 27.5% of total assets. CUNA has estimated that doing so would allow credit unions to lend an additional $10 billion to small businesses in the first year after implementation, helping them to create over 100,000 new jobs. “Credit unions do not need taxpayer money to lend to small businesses: they need the authority from Congress to do so,” Cheney added. The committee has tentatively scheduled a Feb. 17 hearing to study the Fed's planned implementation of interchange provisions. Other issues of interest to credit unions, including housing finance, monetary policy, and portions of Dodd-Frank financial regulatory reform rules, will be discussed by the full committee and various related subcommittees in the coming weeks.

Inside Washington (01/26/2011)

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* WASHINGTON (1/27/11)--The Securities and Exchange Commission (SEC) adopted rules for shareholder approval of executive compensation and golden parachute compensation arrangements as required under the Dodd-Frank Act. The SEC's new rules specify that say-on-pay votes required under the Dodd-Frank Act must occur at least once every three years beginning with the first annual shareholders’ meeting taking place on or after Jan. 21. Companies also are required to hold a “frequency” vote at least once every six years to allow shareholders to decide how often they would like to be presented with the say-on-pay vote. Following the frequency vote, a company must disclose on SEC Form 8-K how often it will hold the say-on-pay vote. Under the SEC’s new rules, companies also are required to provide additional disclosure regarding golden parachute compensation arrangements with certain executive officers in connection with merger transactions … * WASHINGTON (1/27/11)--The 2008 financial crisis could have been avoided, and was created by a mix of government and corporate mismanagement and excessive risk on the part of Wall Street firms, according to a federal inquiry to be released today (The New York TimesJan. 26). The report, issued by the Financial Crisis Inquiry Commission, finds fault with two presidential administrations, the Federal Reserve and other regulators for overseeing a disaster created by excessive risk, predatory lending and lax regulation. The 575-page report cites financial institutions for poor mortgage lending standards, excessive packaging and sale of loans, and risky bets on securities. The commission included 10 members, but was divided along party lines. The six members appointed by Democrats endorsed the final report. Three Republican members have issued a dissent that cites a narrower set of causes for the crisis. The fourth Republican member, Peter J. Wallison, prepared a separate dissent, calling government policies that promoted home ownership as the major cause of the crisis. The commission, which held 19 days of hearing and interviews with 700 witnesses, said it will release transcripts and other material online … * WASHINGTON (1/27/11)--The Securities and Exchange Commission (SEC) has voted to adopt two sets of new rules designed to help revitalize the asset-backed securities (ABS) market by encouraging better disclosure for investors. The SEC approved one set of rules that requires issuers of asset-backed securities to disclose the history of the requests they received and repurchases they made related to their outstanding asset-backed securities. The commission also approved a second set of rules that would require issuers of asset-backed securities to conduct a review of the assets underlying those securities. “At one time, the securitization market provided trillions of dollars of liquidity to virtually every sector of the economy. However, during the financial crisis, ABS investors suffered significant losses, causing the market for securitization to rapidly decline,” said SEC Chairman Mary L. Schapiro. “These rational measures are designed to help revitalize the important asset-backed securities market by encouraging better disclosure for investors” …

Registration for Feb. 17 NCUA town hall begins

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ALEXANDRIA, Va. (1/27/11)--The National Credit Union Administration (NCUA) has opened registration for its upcoming "Virtual Town Hall," which will take place on Feb. 17. The town hall will address the agency's initiatives to reform the corporate credit union system, minimize costs to consumer credit unions, and promote financial literacy for credit union volunteers. NCUA Chairman Debbie Matz in a statement said that the meeting will provide “an ideal venue to listen, to learn and to engage NCUA as we work together to move the credit union industry forward.” The webinar, which will be free, will allow viewers to write in questions on any topic. The meeting will begin at 2 p.m. ET and will last for 90 minutes. An archived version will be available on the NCUA website for those that are unable to participate. To register for the webinar, use the resource link.

Comment sought by CUNA on NCUA ad proposal

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WASHINGTON (1/27/11)--The Credit Union National Association (CUNA) has issued a regulatory comment call on the National Credit Union Administration’s (NCUA) proposed amendments to portions of its official advertising statement rule, Part 740, as it applies to radio and television advertisements and certain credit union reports. The NCUA proposal would reinstate an earlier requirement, which held that radio and television ads of less than 30 seconds, as well as annual reports and other statements, include an official NCUA advertising statement. More specific changes to print advertising requirements have also been proposed. Comments are due to CUNA by Feb. 14. Comments solicited by the NCUA should be submitted by Feb. 28. To view the CUNA comment call, use the link.

Interchange rule hearing tentatively set for Feb. 17

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WASHINGTON (1/27/11)--With the Federal Reserve’s April 21 deadline to craft a final rule on government controls on interchange fees steadily approaching, the House Financial Services Committee has tentatively scheduled a Feb. 17 hearing to study the Fed’s planned implementation. The Credit Union National Association (CUNA) has urged outright repeal of proposed interchange fee regulations. However, in the absence of repeal, CUNA has argued that lawmakers and the Federal Reserve should take time to review the interchange rules, and has urged lawmakers to conduct hearings on the interchange fee proposal. The Fed's interchange provisions, which were released just before the end of the year, could cap debit card interchange fees that are paid by merchants to card issuers at as little as seven cents per transaction. Issuers with under $10 billion in assets would be exempt from the interchange changes. The Fed proposal will remain open for public comment until Feb. 22. Fed officials during their December meeting said that the interchange provisions, if ultimately approved, would likely not become effective until after April. Also on the committee’s agenda, based on a tentative two-month scheduled released Tuesday by its chairman, Rep. Spencer Bachus (R-Ala.), are hearings on:
* Monetary policy and jobs, Feb. 9 (10 a.m.); * GSE reform, Feb. 9 (2 p.m.); * Markup of committee oversight plan, Feb. 10 *Implementation of derivatives provisions of Dodd-Frank Act, Feb. 15 (10 a.m.); * Government-sponsored enterprises' (GSE) legal fees, Feb. 15 (2 p.m.); * Financial Crisis Inquiry Commission, Feb. 16 (10 a.m.); * Housing finance, Feb. 16 (2 p.m.); * The Fed’s interchange plan, as mentioned, Feb. 17; * GSE reform, March 1; * HUD FY 2012 budget, March 2; and * Humphrey-Hawkins semi-annual Federal Reserve report on monetary policy, March 3.

CUNA FHLB voluntary merger plan enhances safety

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WASHINGTON (1/26/11)--The Credit Union National Association (CUNA) in a Tuesday comment letter told the Federal Home Finance Agency (FHFA) that it supports much of a proposed Federal Home Loan Bank (FHLB) voluntary merger rule that “could help maintain a safe and sound FHLB system capable of meeting FHLB-members’ needs.” The merger rule would implement voluntary FHLB merger authority that was added to the FHLB Act by the Housing and Economic Recovery Act of 2008. Many credit unions are members of FHLBs, and FHLBs provide liquidity to credit unions and have frequently awarded affordable housing-related grants to eligible credit unions. While CUNA supported the proposed ratification of a FHLB merger through a membership vote and backed language that would limit the number of votes each member may cast, CUNA questioned whether a proposed state-by-state limitation on FHLB member votes would be appropriate in the FHLB merger context. CUNA emphasized that it is important not to push directorship reductions in a merger to the point where the number of credit union representatives on FHLB boards is reduced. It is already “exceedingly difficult for credit unions to secure election to FHLB boards in the current configuration; it is essential to avoid making this problem worse,” CUNA said. CUNA also noted, however, that FHLB consolidation may create circumstances where it would be appropriate to reduce the number of directorships. Directorships typically represent specific states, and directorships should be equitably apportioned among the states following any FHLB merger, CUNA said. Any related reductions should be phased in slowly, and affected through the agency’s annual designation of directorships or a similar process, CUNA suggested. For the full comment letter, use the resource link.

Plain vanilla could be exempt from FASB fair value rule

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WASHINGTON (1/26/11)—The Financial Accounting Standards Board (FASB) signaled its intent to exclude consumer and other loans that are held for collection of contractual payments from fair value accounting standards, during a FASB meeting Tuesday. FASB’s decision is not final and there will be more deliberation by FASB on this issue. “I think this is a very positive development for credit unions,” said CUNA President/CEO Bill Cheney Tuesday, “CUNA, along with our Accounting Subcommittee, has been working for changes to the FASB fair value rule since the board first indicated it planned to apply fair value accounting principles to loans and other assets.” The subcommittee is headed by Scott Waite, chief financial officer of Patelco CU, San Francisco. “However,” Cheney added, “we need to carefully track developments on debt securities and the potential impact on credit unions that invest in mortgage and other asset-backed securities.” As indicated by FASB, entities that provide certain financial products to customers or members with the intent to hold them for collection of contractual payments will be able to record such products at their amortized cost, just as they do now. Debt securities, such as those securitized by loans, and some other types of investments would be subject to fair value accounting standards. It is unclear at this point how the Allowance for Loan and Lease Loss (ALL) Accounts would be affected. FASB’s fair value accounting proposal, which was released in May of 2010, would have required most financial assets and liabilities to be reported under U.S. Generally Accepted Accounting Principles (GAAP) at fair value. The proposal would also require the funding of ALL Accounts to utilize the expected loss model. Credit unions with assets of $10 million or more are required to comply with GAAP. CUNA has met regularly with FASB officials to oppose the proposed application of fair value accounting rules to loans and other credit union products, and has said that the proposed accounting changes would provide no benefit to credit unions while substantially increasing their compliance costs. In several meetings with the FASB board, Waite reiterated CUNA's claim that reporting fair value under GAAP is simply not useful to the members, creditors, board members, and regulators of credit unions. Waite told FASB that credit unions "provide an economic value to consumers by leveraging their not-for-profit status in the higher rates on deposit and lower rates on loans." "For us to be unfairly fair-valued on this business model changes the purpose of accounting standards," he said. "Accounting standards should not be the driver of shaping acceptable business models," but should "provide comparability, transparency, and relevancy," Waite added. FASB expects the final rule to be issued later this year and take effect sometime in 2013 with a four-year deferral for non-public entities under $1 billion in assets, which includes credit unions under the asset limitation. However, FASB has warned that issue date could change.

More SAFE Act registry info sessions planned

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WASHINGTON (1/26/11)--The Nationwide Mortgage Licensing System & Registry (NMLS) Resource Center has scheduled a second series of web-based workshops to inform financial institutions and their mortgage loan originating employees of pending regulatory requirements under the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). The SAFE Act requires credit union mortgage loan originators and their employing institutions to register with the Conference of State Bank Supervisors’ (CSBS) National Mortgage Licensing System & Registry. The sessions specifically address portions of the SAFE Act that require mortgage loan originators (MLOs), including those at credit unions, to register on the new NMLS system, which is scheduled to begin on or around Jan. 31. Once the registry launches, MLOs have 180 days to complete the initial round of registrations. The NMLS Resource Center has been holding “Introduction to the NMLS Federal Registry” workshops throughout the month of January. Those workshops will end on Jan. 28. The new NMLS Resource Center series will feature four separate sessions. Session A, entitled “Institution Basics: Getting Started on NMLS,” will cover account initiation, user registration, form MU1R submission, and VeriSign “Two Factor Credentials” registration. Institutions will learn how to create mortgage loan originator accounts and records and to manage filing MU4R forms and related fees, among other things, during Session B. Session C will serve as a training session for MLOs, and the fourth session, Session D, will cover confirming a mortgage applicant’s employment and managing MLO records. The informational sessions are staggered, and are scheduled to run from Feb. 1 through March 24. For more on the sessions, and a full session schedule, use the resource link. The Credit Union National Association has also provided its own SAFE Act compliance guide. For that guide, which is available only to CUNA members, use the second resource link.

Inside Washington (01/25/2011)

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* WASHINGTON (1/26/11)--The Obama administration has for the third time delayed the release of its proposed reforms for government-sponsored enterprises, including Fannie Mae and Freddie Mac. The administration said it will not make its Jan. 31 deadline for presenting the proposal to Congress and is now aiming for a mid-February release (American Banker Jan. 25). William Longbrake, an executive-in-residence at the University of Maryland, said the delay in releasing the report may be an indication of debate within the administration about whether to propose a specific plan or to summarize options. Many Republicans are in favor of abolishing Fannie and Freddie rather than maintain any government guarantee …

Newest corp. CU plan needs significant changes CUNA

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WASHINGTON (1/25/11)--Significant changes to the National Credit Union Administration’s (NCUA) November proposed rule regarding corporate credit unions are needed before the Credit Union National Association (CUNA) could support the plan, the association said Monday. The November proposal was sent out for comment just two months after the NCUA approved its comprehensive overhaul of the regulatory structure of the corporate credit union system. This later proposed rulemaking is intended, in part, to limit credit union membership in corporates to one corporate at a time, with some exceptions, and to change some internal control and reporting requirements. In a comment letter to the NCUA released Monday, CUNA said it does not support the limit on membership and does not consider it good public policy. “We believe the better public policy would be to allow natural person credit unions to decide which corporates they want to join and to be able to support them without these membership limitations. This approach would benefit natural person credit unions as well as corporate credit unions and would not jeopardize the safety and soundness of either group of credit unions or the National Credit Union Share Insurance Fund,” CUNA Deputy General Counsel wrote in the CUNA letter. CUNA also expressed serious concerns about the agency’s intention to ask for “voluntary” contributions from non-federally insured credit unions (non-FICUs) to the agency’s corporate credit union stabilization fund. CUNA said the NCUA has no authority to assess non-FICUs and would not be able to defend that position legally. In fact, CUNA maintained, the statutory record “could not be clearer” that only federally insured credit unions may be assessed for corporate stabilization costs. In its extensive comments regarding the NCUA “technical corrections” to its initial corporate rule, CUNA also said that many of the issues addressed in the November rule--such as internal controls and reporting requirement--are already adequately addressed elsewhere in NCUA regulations.

Hill staffers hear CU perspective in CUNA briefing

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WASHINGTON (1/25/11)--New members of the House Financial Services Committee team, as well as other congressional staffers, were the focus Monday of the Credit Union National Association’s (CUNA) briefing on credit union issues on Capitol Hill. About 50 congressional staff members, from offices of House members across the nation, attended CUNA’s briefing “Understanding Credit Unions” on Capitol Hill Monday. The briefing, which featured updates by CUNA staff, focused on how credit unions are different from other financials; the challenges credit unions face and how they address them); and, what Congress can do to help credit unions better serve their members. CUNA President/CEO Bill Cheney kicked off the discussion by
Click to view larger image CUNA President/CEO Bill Cheney (seated at table second from left) and senior CUNA staff brief 50 Capitol Hill staffers on the credit union difference and how the 112th Congress can help credit unions better serve their members. (CUNA Photo)
detailing the credit union difference, and outlining the key issues facing credit unions. CUNA’s economic team of Bill Hampel and Mike Schenk described the operating environment and outlook for credit unions. Mary Dunn, CUNA senior vice president of regulatory advocacy, gave an overview of the regulatory burden facing credit unions, including the impact of the new Interchange law. And Ryan Donovan, CUNA vice president of legislative affairs, gave details of the credit union legislative agenda for the next year. According the CUNA Senior Vice President of Legislative Affairs, John Magill, the room was packed with congressional staff to hear the credit union message. “We had staffers up and down the seniority list,” Magill noted, “from chiefs of staff to legislative correspondents, from both sides of the aisle and representing offices from all across the country. Many of those attending were from offices of newly elected representatives--precisely who we hoped to reach.”

This week in Congress House considers Senate organizes

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WASHINGTON (1/25/11)--In the U.S. Congress this week, action of interest to credit unions will be concentrated in the House, while the Senate continues to pursue organizational tasks. The House Monday began consideration of a 2011 budget resolution (H.Res. 38), which is aimed at reducing federal spending to fiscal year 2008 levels, and work on that resolution is expected to continue today. That body is also scheduled to take up two bills under suspension of the rules today, one of which would extend funding authorization for U.S. Small Business Administration (SBA) lending programs until May 31. The funding would cover such SBA programs as its 504 guaranteed lending, which is set to expire on Jan. 31. Also of note in the House:
* The House Financial Services Committee meets today to organize for the 112th Congress. The committee is expected to consider resolutions establishing its rules and electing members to subcommittees. Nominations were made public last week; and * On Wednesday, House Financial Services, as reported earlier, has scheduled a hearing on "Promoting Economic Recovery and Job Creation: The Road Forward."
When the House adjourns on Wednesday, it is next expected to meet on Feb. 8. The Senate returns to session today and will resume debate on amendments to the Standing Rules of the Senate. Several changes to the Senate rules related to the filibuster, secret holds and nominations have been proposed. The Senate is expected to be in session next week.

DOJ should narrow Web-access rule says CUNA

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WASHINGTON (1/25/11)--While supporting the U.S. Department of Justice’s (DOJ) overall effort to ensure equal access by individuals with disabilities to the products and services of public accommodations, including credit unions, the Credit Union National Association (CUNA) recommends that the scope of a web-access proposal be pared down. A recent DOJ advance notice of proposed rulemaking (ANPR) addresses whether to require that the websites of public accommodations—that provide products or services to the public through such websites—be accessible to and usable by individuals with disabilities under the legal framework established by the Americans with Disabilities Act (ADA). In a comment letter to the agency, CUNA Assistant General Counsel Luke Martone wrote, “We believe that if a public accommodation (including credit unions) is offering a full range of online services to its customers/members through its website, it should be ADA-compliant for access to those services. “However, we believe that smaller accommodations that are simply offering a single online service, or a very limited number of services, should be afforded greater flexibility under web accessibility standards.” The CUNA letter encouraged DOJ to consider narrowing the scope of the web accessibility regulations to (non-credit union) online-only financial institutions. If DOJ applies the rule more broadly, CUNA asked the department to adopt flexible performance standards that would allow public accommodations to develop solutions capable of working effectively with their existing web frameworks. The trade group also asked that DOJ acknowledge the limited resources available to many credit unions, and allow at least 18 months from publication of the final rule for full-site compliance. The complete CUNA comment letter is available through the resource link below.

Inside Washington (01/24/2011)

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* WASHINGTON (1/25/11)--The Credit Union National Association (CUNA) backs a recent technical change by the National Credit Union Administration (NCUA) that formalizes a shift of responsibility of some chartering decisions to its new Office of Consumer Protection (OCP). However, CUNA seeks a one-year review of the change. At its December 2010 open board meeting, the NCUA adopted an interim final rule, effective Dec. 23, meant to incorporate into its rules the transfer of responsibility for the review and approval of certain types of credit union conversions from the Regional Directors to the director of the OCP. The OCP authority includes credit union conversions to mutual savings banks or mutual savings associations and the conversion from National Credit Union Share Insurance Fund insurance to non-federal share insurance. The NCUA action amended the definition of “regional director,” as it applies to the aforementioned types of credit union conversions, to include the OCP. CUNA, in a comment letter submitted Monday to the NCUA, wrote that the new definition is “consistent with the defined role of the director of the OCP.” However, the association asked that the NCUA to execute a one-time annual review of its action defining the role of the director of the OCP in the context of conversions to study if there were any unanticipated ramifications… * WASHINGTON (1/25/11)--The Credit Union National Association has promoted Michael Edwards to senior assistant general counsel. He previously was counsel for special projects. Luke Martone has been promoted to assistant general counsel from regulatory counsel … * WASHINGTON (1/25/11)--Rep. Randy Neugebauer (R-Texas), the chairman of the House Financial Services Oversight Subcommittee, said the Treasury Department’s Home Affordable Modification Program and other government-supported modification efforts have failed to help consumers and should be shut down. Neugebauer said the housing market must bottom out before a recovery can begin and government programs are preventing that process. He acknowledged his opinion may not be popular because some consumers would lose their homes, but he added that government programs just delay the inevitable: people who can’t afford homes in the long-term won’t be able to keep them anyway … * WASHINGTON (1/25/11)--Federal agencies are expected to formally discuss their various proposals for mortgage servicing reforms this week, but it remains unclear how they will resolve their differences. The Federal Deposit Insurance Corp.’s proposal includes servicing standards that would be included in the risk-retention rule agencies are writing. The latest proposal from the Office of the Comptroller of the Currency challenges that plan, calling for a stand-alone rule. The Federal Reserve Board is open to either option, and has sent a draft of servicing principles to Capitol Hill. State attorneys general and the Federal Housing Finance Agency are also contributing ideas to the process. All of the plans call for restrictions on servicing, but any proposal that includes a stand-alone rule servicing rule is at odds with the FDIC proposal. The FDIC plan would also create a special class of highly safe loans--known as "qualified residential mortgages"--that would be exempt from retention. Observers believe that the OCC’s proposal for a stand-alone rule could gain approval more quickly and cover more of the industry. The Fed’s principles include measures to address shortcomings in servicer operations and internal controls …

MBL-sponsor Udall to speak at GAC

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WASHINGTON (1/21/11)--Sen. Mark Udall (D-Colo.), who was the top sponsor of a 2010 Senate credit union member business lending bill, will join members of Congress and leading political pundits at the Credit Union National Association’s (CUNA) Governmental Affairs Conference (GAC), which begins on Feb. 27. In remarks delivered before the GAC last year, Udall said that the U.S. Congress must look for "job creation policies that are deficit neutral" and find "simple cost effective ways" to create employment. Udall’s S. 2919, which would have allowed credit unions to increase the number and amount of loans given to members with small businesses by lifting the MBL cap to 27.5% of assets. The bill would have also raised the "de minimis" threshold for a loan to be considered a member business loan to $250,000. These two steps would create over 100,000 new jobs and increase small business lending by $10 billion within the first year following enactment, at no cost to taxpayers. Rep. Shelley Moore Capito (R-W.Va.), Sen. Roy Blunt (R-Mo.), House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), Sen. Mike Crapo (R-Idaho), and Reps. Barney Frank (D-Mass.), Debbie Wasserman Schultz (D-Fla.) and Steve Stivers (R-Ohio) are also currently slated to speak at the GAC. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to address GAC attendees. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. To register for the GAC, use the resource link.

Cheney backs CUs consumers in recent media coverage

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WASHINGTON (1/24/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney advocated for both credit unions and consumers in a story on where to find low-cost checking carried by The Chicago Tribune and separately in a column on debit interchange published in the online news source Huffington Post. In his Huffington Post editorial, Cheney called the Federal Reserve’s proposed interchange changes “a huge new regulatory burden, whose true costs end up falling on the shoulders of millions of consumers.” The Fed’s interchange proposal, which would implement provisions enacted by the Dodd-Frank financial regulatory reform package, offers a dual framework for determining what the law calls "reasonable" interchange fees. One plan would provide issuers with a safe harbor of seven cents per transaction, and set a maximum interchange fee cap of 12 cents per transaction. An alternative framework would simply cap the maximum interchange fee at 12 cents per transaction. These safe harbors and/or caps would be reevaluated by the Fed every two years. While financial institutions holding under $10 billion in assets would be exempted from the interchange rules, CUNA has expressed concern to policy makers that exemption will not work in practice and has estimated that up to 67% of credit unions could lose money on their debit card programs if related revenues decrease by 40%. Cheney in his Huffington Post editorial noted that some recent media reports have mischaracterized credit unions and community banks as “big winners” in a recent regulatory battle over how much revenue financial institutions should derive from interchange. Emphasized Cheney: “No financial institution -- and more importantly, none of the millions of Americans who use their services -- is a winner here.” “The coming changes to the debit card interchange rules, esoteric though they may be, are going to have real and negative consequences that will unfortunately hit consumers directly in the pocketbook,” Cheney added. “Consumers can expect higher fees or diminished debit card services” as credit unions and other financial institutions attempt to adapt to the interchange rules. While retailers have claimed that the interchange changes would permit them to lower costs for consumers, Cheney said that those claims “are spurious at best.” One way that consumers can get ahead, as detailed in the Tribune story, is by joining a credit union. Cheney in that story emphasized that “We like to say, ‘anybody can join a credit union, just not the same one.’" The Tribune article points consumers to findacreditunion.com and credtiunion.coop to find a credit union they can join. While many banks are threatening new charges for customers with checking accounts, Cheney noted that 80% of credit unions currently offer free checking, with no minimum balances. The level of service and accessibility for both large and smaller credit unions is on par with the rest of the modern banking system, Cheney adds. For both articles, use the resource links.

NCUA opens new Office of Minority and Woman Inclusion

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ALEXANDRIA, Va. (1/24/11)--The National Credit Union Administration’s (NCUA) Office of Minority and Women Inclusion (OMWI) was officially opened by NCUA Chairman Debbie Matz and OMWI Director Tawana James Friday. The office, announced last year and developed in response to
Click to view larger image
requirements in the Dodd-Frank financial reform regulations, will address issues related to diversity in management, employment, and business activities. It’s goal is to ensure equal employment opportunity and the racial, ethnic, and gender diversity of the work force and senior management of the agency. The OWMI will also promote increased participation of minority-owned and women-owned businesses in the programs and contracts of the agency, including standards for coordinating technical assistance to such businesses. Assessing the diversity policies and practices of entities regulated by the NCUA and preserving credit unions that are either run by or primarily serve minorities will also be priorities of the OWMI. James (left in photo) will obtain input from both external and internal stakeholders as the OWMI ramps up. Matz (right in photo) in a Friday statement said that the OWMI will “provide crucial focus and direction to NCUA and credit union efforts to reach all segments of the population.” Ensuring diversity of our employees and contractors will open the door to new opportunities for the agency, credit unions as well as minorities and women,” she added. For the full NCUA release, use the resource link.

Foreclosure management for CUs covered in NCUA letter

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ALEXANDRIA, Va. (1/24/11)--Pending National Credit Union Administration (NCUA) examination standards will address the need for appropriate due diligence when dealing with outside vendors, quality control reviews on foreclosure processes, and stress event analysis and reporting, the NCUA said in a recent letter to credit unions. The NCUA in that letter also urged federal credit union directors to perform their own in-depth reviews of their mortgage documentation and foreclosure management processes. Specifically, credit unions should be aware of issues related to the Mortgage Electronic Registration System (MERS), missing or defective loan documents, and documentation deficiencies related to so-called “robo-signing.” Credit unions should also monitor for contractual buy-back risks associated with serviced mortgages, the NCUA said. To properly deal with these and other mortgage-related issues, credit unions should ensure that their credit union has established appropriate policies and procedures for all aspects of the foreclosure process. A credit union’s staff should be qualified to properly handle foreclosures, and its internal controls should be able to adequately deal with the foreclosure process. Credit unions should also ensure that their oversight, due diligence, and controls related to third-party servicers that perform foreclosures on behalf of the credit union are adequate. Any foreclosure action should be accompanied by the required legal documentation, and information on the number and volume of foreclosure actions, as well as the financial impact of those foreclosure actions, should be disclosed to a credit union’s board of directors, the NCUA added. For the full NCUA letter, use the resource link.

Inside Washington (01/21/2011)

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* WASHINGTON (1/24/11)--The Internal Revenue Service (IRS) last week increased the gross receipts threshold under Form 990, Return of Organization Exempt From Income Tax, to $50,000. The previous threshold was $25,000. State-chartered credit unions are required to file Form 990 with the IRS annually, although a few states still permit group 990 filings. Federal credit unions are not required to file, since they are not subject to unrelated business income taxes. Small tax-exempt organizations with annual receipts of $50,000 or less can file an electronic notice Form 990-N (e-Postcard). Tax-exempts with annual receipts above $25,000 must file a Form 990 or 990-EZ, depending on their annual receipts.Any tax-exempt organization that has not filed the required form in three consecutive years automatically loses its tax-exempt status, effective as of the due date of the annual filing... * WASHINGTON (1/24/11)--Braced for a tough battle, the banking industry remains intent on weakening, delaying or repealing interchange fees proposed by Sen. Richard Durbin (D.-Ill.) as part of the Dodd-Frank Act before the changes go into effect in July. The latest proposal by the Federal Reserve board would cap the fees merchants pay at 12 cents per transaction. In a speech on the Senate floor last month, Durbin pledged to stand by his proposal. Since then, Visa has announced it would offer a two-tiered interchange rate schedule for large and small financial institutions. Under the law, financial institutions under $10 billion are exempted from the Fed’s regulation. Durbin said Visa’s announcement counters the banking industry’s argument that small financial institutions will have to be held to same standards as large larger banks. But both Republican and Democrat lawmakers have voiced objections to Durbin’s proposal. Among them are House Financial Services Committee Chairman Spencer Bachus (R-Ala.); former committee chair Rep. Barney Frank (D-Mass.); and more than a dozen senators. For the Credit Union National Association’s view, see the related News Now story “Cheney backs CUs, consumers in recent media coverage” …

Four banned from future FCU work

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ALEXANDRIA, Va. (1/21/11)--Four former credit union employees have been banned from future work at any federally insured financial institution under prohibition orders issued by the National Credit Union Administration (NCUA). In a Thursday announcement, the NCUA noted the following details of the enforcement orders:
* Christopher Allen, a former employee of First Service CU in Houston, Texas, was convicted of bank fraud and sentenced to 32 months imprisonment, three years of probation, and ordered to pay $31,303 in restitution; * Keona Blagburn, a former employee of Newport News Neighborhood FCU in Newport News, Va., pleaded guilty to embezzlement and obtaining money under false pretenses; * Arden Marie Rohrer, a former employee of Henrico FCU in Richmond, Va., was convicted of grand larceny. While Rohrer will pay $1,500 in restitution, a potential five-year sentence was suspended on the condition that she keep the peace and be on good behavior; and * Kelly White, a former employee of Sussex County FCU in Seaford, Del., was convicted of theft and sentenced to two years of supervised release. White will also pay $33,062 in restitution.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

CUNA to Obama CU regulators should heed reg review

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WASHINGTON (1/21/11)--The Credit Union National Association (CUNA) expressed its strongest support for a proposed review of financial and other regulations in a Thursday letter to President Barack Obama. CUNA urged the National Credit Union Administration (NCUA) and other independent agencies to consider the "principles and basic approach to regulation" reflected in that executive order when reviewing current regulations. The Obama administration in a Tuesday executive order called on federal agencies to design cost-effective, evidence-based regulations that are compatible with economic growth, job creation, and competitiveness. Specifically, the administration instructed regulators to consider approaches that maintain freedom of choice and flexibility, including disclosure of relevant information to the public, and to work to coordinate, simplify, and harmonize regulations where possible to reduce costs and promote certainty for businesses and the public. The order also instructed regulators to reduce burdens on small businesses whenever possible and called for greater transparency and accountability in regulatory compliance. The resulting regulations must also be subject to periodic review, the order said. Regulatory reform is critical for financial institutions, particularly in light of many new requirements under the Dodd-Frank Act and continual regulations from federal financial authorities, the CUNA letter adds. “At the very time when a number of credit unions are operating with reduced resources due to the economic crisis that they did not create, they are being subjected to an ever-increasing regulatory load,” CUNA President/CEO Bill Cheney wrote. “Because credit unions are financial cooperatives, their members are also burdened, since the costs of meeting regulatory demands are ultimately borne by a credit union's membership.” Cheney urged a review of the collective impact of regulation on credit unions and others which must operate under rules, directives, guidelines, and orders issued by a number of agencies, and suggested that the Consumer Financial Protection Bureau, which is currently under development, would be ideal for this role. CUNA added that working with members of Congress to reduce regulatory burdens in a meaningful way, without jeopardizing key consumer protections or important safeguards, will benefit both the economy and the nation.

CU concerns re interchange rule get press airing

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WASHINGTON (1/21/11)--During a national press call Thursday, Jim Blake, president/CEO of HarborOne CU, reiterated the credit union call to scrap the Federal Reserve Board’s plan to implement government restrictions on interchange fees. The Massachusetts credit union CEO underscored that the practical ramifications for consumers of the plan to limit interchange fees could be numerous and dire. The press teleconference was organized by the Electronic Payments Coalition (EPC). The Credit Union National Association is an EPC member, and tapped Blake to give the credit union perspective. Blake said that already, even before any implementation rule has been finalized, there is broad talk about the possibility that interchange fee limits could drive up consumers’ check costs, eliminate some card rewards programs, force limits on the number of card swipes allowed per month--or a lower limit on what size charges can be applied to debit cards. The Fed plan, which seeks to implement provisions enacted by the Dodd-Frank financial regulatory reform package, offers a dual framework for determining what the law calls "reasonable" interchange fees. One plan would provide issuers with a safe harbor of seven cents per transaction, and set a maximum interchange fee cap of 12 cents per transaction. An alternative framework would simply cap the maximum interchange fee at 12 cents per transaction. These safe harbors and/or caps would be reevaluated by the Fed every two years. CUNA has estimated that up to 67% of credit unions would lose money on their debit card programs if the interchange regulations reduced interchange-related revenues by 40%. Under the Dodd-Frank Act, card issuers with under $10 billion in assets would be exempt from the proposed rule changes. The exemption covers most, but not all, credit unions. However, CUNA remains concerned that a two-tiered pricing system could lead merchants to set incentives for consumers to use only big-issuers’ cards, which would have a lower per transaction cost for the merchant. In a related story, Bloomberg News reported Thursday that Rep. Barney Frank (D-Mass.) said he was ready to work with House Republicans, now in the majority, to force changes in the Fed’s interchange fee proposal. Frank, along with former Sen. Christopher Dodd (D-Conn.), were, of course the key architects of the Dodd-Frank Wall Street reform bill requiring the Fed to set the fee limits. The Fed is accepting public comment on its proposal until Feb. 22, and the agency has said that it is unlikely that a final plan would be ready by April. CUNA is asking credit unions to send their comments to the association by Feb. 1. Use the resource link to view CUNA’s Comment Call.

House Democrats named to Financial Services spots

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WASHINGTON (1/21/11)--Rep. Barney Frank (D-Mass.) revealed the new and continuing Democratic financial services subcommittee ranking members, as well as the panels' general membership in a Thursday release. The announcement comes just a day after new House Financial Services Chairman Spencer Bachus (R-Ala.) released his Republican subcommittee lineup for the 112th Congress on Wednesday. (See related Jan. 20 story: Bachus names Republican members of finance subcommittees.) Rep. Maxine Waters (Calif.) will serve as ranking minority member for the House Financial Services subcommittee on capital markets and government-sponsored enterprises. Reps. Gary Ackerman (N.Y.), Brad Sherman (Calif.), Ruben Hinojosa (Texas), Stephen Lynch (Mass.), Brad Miller (N.C.), Carolyn Maloney (N.Y.), Gwen Moore (Wis.), Ed Perlmutter (Colo.), Joe Donnelly (Ind.), Andre Carson (Ind.), Jim Himes (Conn.), Gary Peters (Mich.), Al Green (Texas) and Keith Ellison (Minn.) were also named by Frank to serve on that subcommittee. The ranking Democrat on the domestic monetary policy and technology subcommittee will be Rep. William Lacy Clay (Mo.). Rep. Carolyn Maloney is the leading Democrat on the financial institutions and consumer credit subcommittee, and Rep. Luis Gutierrez (Ill.) will be the senior minority member of the insurance, housing and community opportunity subcommittee. Rep. Carolyn McCarthy of New York will be ranking minority member of subcommittee on international monetary policy and trade. She will be joined on that panel by fellow Democrats Perlmutter, Donnelly, Moore, Carson, and Rep. David Scott (Ga.). Rep. Michael Capuano (Mass.) will serve as the ranking Democratic member of the subcommittee on oversight and investigations.

Inside Washington (01/20/2011)

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* ALEXANDRIA, Va. (1/21/11)--“It's that time again!” says a National Credit Union Administration announcement of a free Credit Union Workshop scheduled for March 26 in Los Angeles. The agenda includes discussion of a wide range of topics, including such things as examination issues, what the agency’s new office of consumer protection means to credit unions, federal credit union directors’ fiduciary duties, and basic financial literacy requirements. The Los Angeles session follows three other scheduled workshops: one in Phoenix, Ariz., on March 5, one in Richmond, Va. on March 10, and another in Philadelphia on March 17 … * WASHINGTON (1/21/11)--Bank regulators are at odds over how best to launch national standards for servicing mortgage loans, although they appeared to be in accord that such standards should be established. The Federal Deposit Insurance Corp. (FDIC) backs the idea of tucking the standards into an existing Dodd-Frank Act risk-retention proposal, but the Office of the Comptroller of the Currency (OCC) does not (American Banker Jan. 20). FDIC Chairman Sheila Bair said in a speech this week that it is “imperative” that the risk-retention rule include provisions that improve loan servicing because of the effect it would have on preserving value for investors and preventing systemic instability. However, John Walsh, acting head of the OCC, countered that it would be “inappropriate” to include servicing standards in the Dodd-Frank qualified-residential-mortgages rule, and may not even fit legally. Also, Walsh said the OCC would rather see a broader set of standards, ones that could be applied across the system and enforced by federal regulators …

Powerful tax committee starts reform discussions

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WASHINGTON (1/20/11)—The House Ways and Means Committee later today will discuss federal tax reform during its first hearing of 2011. The hearing, according to a committee statement, will examine the economic and administrative burdens imposed by the current structure of the federal income tax and will explore costs associated with individual and corporate income tax regimes. Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs John Magill said that this is the first of many hearings examining the current tax system, and CUNA will monitor this and other developments for any discussion of the credit union tax exemption. CUNA is a staunch advocate for the current credit union tax status, maintaining that the strong public-policy reasons that first inspired that tax status remain valid today. CUNA President/CEO Bill Cheney has said, "It may be the case that not all tax preferences have lived up to expectations, but the credit union tax exemption is one of the highest-yielding investments the federal government has made." CUNA figures show that America's 92 million credit union members receive substantial benefits in the form of better pricing on services, saving them about $7.5 billion a year. The $7.5 billion savings to consumers is especially significant when measured against the $1.5 billion in lost federal revenue a year that the government says is represented by the credit union tax exemption. "Further, the tax exemption helps to ensure consumers have choices beyond commercial banks in the financial marketplace. It is appropriate to view these results as evidence of sound public policy," Cheney has remarked.

Bachus names Republican members of finance subcommittees

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WASHINGTON (1/20/11)--The names of the Republican members of House Financial Services subcommittees were released on Wednesday by the new full committee chairman, Rep. Spencer Bachus (R-Ala.). The financial institutions and consumer credit subcommittee, a key group for credit unions, will be chaired by Rep. Shelley Moore Capito (W. Va.), and Rep. Kenny Marchant (Texas) has been named to serve as vice chair. Capito is a featured speaker at the Credit Union National Association’s Governmental Affairs Conference, which kicks off in Washington, D.C. on Feb. 27. Also named to the committee are Reps. Ed Royce (Calif.), Don Manzullo (Ill.), Walter Jones (N.C.), Patrick McHenry (N.C.), Thaddeus McCotter (Mich.), Kevin McCarthy (Calif.), Stevan Pearce (N.M.), Lynn Westmoreland (Ga.), Blaine Luetkemeyer (Mo.), Bill Huizenga (Mich.), Sean Duffy (Wis.), Jim Renacci (Ohio), Robert Dold (Ill.), Francisco Canseco (Texas) and Jeb Hensarling (Texas). Hensarling will serve as Bachus’s vice chair on the full House Financial Services Committee, according to the Bachus announcement. The Texan also has been named a member of the capital markets and government-sponsored enterprises subcommittee, which will be headed by Rep. Scott Garrett (N.J.). Rep. Ron Paul (Texas) will chair the domestic monetary policy subcommittee, with Jones, of North Carolina, joining him as vice chair. Illinois’ Rep. Dold will work with Rep. Gary Miller (Calif.) as Miller chairs the international monetary policy subcommittee. Randy Neugebauer (Texas) will chair the oversight and investigations subcommittee, with Michael Fitzpatrick (Pa.) serving as vice chair. Bachus’s financial services committee has also added two more members for the 112th congress, bringing the total number of members on that committee to 61. For the full subcommittee lineups, use the resource link.

State regulators back NCUA supplemental cap. push

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WASHINGTON (1/20/11)--The National Association of State Credit Unions (NASCUS) this week backed the National Credit Union Administration’s (NCUA) support for potential additional sources of capital for credit unions by noting that credit unions can manage the complexities of supplemental capital, and that NCUA and state regulators are fully capable of managing its regulation. NCUA Chairman Debbie Matz, in a letter to the top members of the Senate Banking Committee and the House Financial Services Committee, recently urged statutory changes that would correct the disincentive that she said is impacting even strong, well-capitalized credit unions. She recommended allowing qualifying credit unions to issue supplemental capital and excluding assets that carry zero risk, such as short-term U.S. Treasury securities, from the definition of total assets. In the group’s letter to the NCUA, NASCUS President/CEO Mary Martha Fortney said that achieving capital reform has long been a matter of safety and soundness, and added that increased capital and investor discipline can provide credit unions with critical buffers during economic downturns. Earlier this week, Credit Union National Association (CUNA) President/CEO Bill Cheney commended the NCUA’s public support for capital reform. He said the regulator’s letter could be helpful as CUNA works to “educate members of Congress about the importance of establishing risk-based and supplemental capital avenues for credit unions."

NACUSO team will ID issues facing CUSOs CUs

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NEWPORT BEACH, Calif. (1/20/11)--The National Association of Credit Union Service Organizations (NACUSO) has launched a new advocacy committee charged with identifying and addressing the legislative and regulatory issues facing credit union service organizations (CUSOs). The committee, which was founded last December, will be chaired by CU Holding Company CEO Lisa Renner and will feature input from NACUSO CEO Jack Antonini and former National Credit Union Administration Chairman Dennis Dollar. The committee will focus on issues related to collaboration, innovation, industry growth and entrepreneurship--called the “four pillars” by the group--and will oppose anything that undermines those pillars, while “enthusiastically and strongly” supporting anything that promotes those ideals. Renner told News Now that the credit union industry as a whole must find ways to increase member service, thus increasing revenue while lowering operating expenses. “CUSOs are a business model that has proven successful in creating an efficient and effective platform for collaboration and innovation to achieve these two goals,” she added. The group will identify legislative and regulatory issues that impact CUSOs and their credit unions; determine what role NACUSO, as an organization, can play in those issues; and bring a recommendation before the board for actions to be taken, according to Renner. The committee is developing a focused, three- to five-point legislative and regulatory advocacy agenda, and that agenda will likely be released later this year. “There are many great advocacy groups in the industry, and we look forward to working with each of these groups to turn up the volume on the credit union industry voice as a whole--particularly on the important issues impacting how CUSOs can play a key role in the industry’s future,” Renner said. NACUSO was formed in 1985 to help credit unions explore the use of credit union service organizations and the delivery of non-traditional products and services.

Inside Washington (01/19/2011)

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* WASHINGTON (1/20/11)--The Federal Deposit Insurance Corp.’s board of directors on Tuesday said regulators would soon release a proposal to bar risky compensation agreements, a plan required by the Dodd-Frank Act (American Banker Jan. 19). Dodd-Frank requires banking agencies, the Securities and Exchange Commission and the Federal Housing Finance Agency to author a rule by April that mandates financial companies to disclose incentive executive compensation agreements and prohibit excessive pay packages. Such compensation issues drove up risk during the banking crisis, according to observers. Also, on Tuesday, the FDIC board approved an interim final rule clarifying how the agency will treat certain creditor claims under the new orderly liquidation authority established under Dodd-Frank. The law gives the FDIC the authority to provide some creditors in similar classes more relief than others. The agency indicated it would grant that relief only to cover general services crucial to operating a receivership …

Rep. Capito joins GAC Lineup

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WASHINGTON (1/19/11)--Rep. Shelley Moore Capito (R-W.Va.) is the latest member of Congress who will speak at the Credit Union National Association’s (CUNA) 2011 Governmental Affairs Conference (GAC) this February. Capito late last year was named chair of the House financial institutions and consumer credit subcommittee, which will cover financial institutions, federal deposit insurance, and safety and soundness. Capito, who has served in Congress since 2001, has backed regulatory relief for credit unions and has pledged to support the credit union tax exemption. She was backed by the Credit Union Legislative Action Council (CULAC) during her successful 2010 reelection campaign. Sen. Roy Blunt (R-Mo.), House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), Sen. Mike Crapo (R-Idaho), and Reps. Barney Frank (D-Mass.), Debbie Wasserman Schultz (D-Fla.) and Steve Stivers (R-Ohio) are currently slated to speak at the GAC. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to address GAC attendees. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. To register for the GAC, use the resource link.

CUNA plans property valuation audio conference

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WASHINGTON (1/19/11)—Changes to Truth in Lending Act (TILA) requirements addressing valuations of properties that are secured by a borrower’s principal dwelling will be covered during a Feb.15 Credit Union National Association (CUNA) audio conference. The TILA changes, which were proposed as part of the Dodd-Frank financial regulatory reform package of 2010, will seek to ensure that appraisers receive customary and reasonable payments for their services, and will prohibit appraiser coercion. The rule will also prevent appraisers that were hired by lenders from having financial or other interests in the properties or credit transactions, and will prohibit appraisers from materially misrepresenting the value of a consumer's home. The new TILA requirements will come into effect on April 1 and will replace the current Home Valuation Code of Conduct (HVCC). The HVCC, which became law in May of 2009, allows lenders, not real estate agents and brokers, to order home appraisals, a move that aims to reduce conflicts of interest in home appraisals while also protecting the independence of the people who conduct them. During the conference, Fannie Mae’s requirements for loans saleable on the secondary market will be discussed. The conference will also answer whether credit unions should hire an independent appraisal management company. Potentially differing regulatory requirements and possible exemptions from the TILA changes will also be discussed during the conference. CUNA Certified Credit Union Compliance Expert (CUCE) and president of Compliance Plus Inc. Mary-Lou Heighes will lead the discussion. To register for the conference, use the resource link.

Inside Washington (01/18/2011)

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* WASHINGTON (1/19/11)--Observers believe the Obama administration will offer guiding principles rather than a concrete restructuring plan for the future of Fannie Mae and Freddie Mac (American Banker Jan. 18). That belief is based on the Treasury Department’s continued silence on any proposal and the fact that the administration has twice postponed delivery of a plan for the government-sponsored enterprises. The deadline for release of the proposal is Jan. 31. Industry observers are split on whether a guiding-principle approach makes sense. Some say because Fannie and Freddie have been in conservatorship for two years, a concrete plan is needed. Also, any further delay would give Republication critics of the administration more ammunition. On the other hand, Republicans would rather see Fannie and Freddie abolished altogether than endorse any plan that preserves a government guarantee. For that reason, a plan that offers alternatives for preserving Freddie and Frannie would be a wise approach, some observers said … * WASHINGTON (1/19/11)--The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to work on a joint initiative, in coordination with FHFA and the Department of Housing and Urban Development (HUD), to consider alternatives for future mortgage servicing structures and servicing compensation for their single-family mortgage loans. Currently, a servicer’s compensation is generally based on a minimum servicing fee that is part of the mortgage rate, which decreases the flexibility necessary for optimal servicing of non-performing loans from both the borrowers’ and guarantors’ perspectives. The joint initiative will consider alternatives to the traditional servicing compensation structure. The goals are to improve service for borrowers, reduce financial risk to servicers, and provide flexibility for guarantors to better manage non-performing loans, while promoting continued liquidity in the to be announced mortgage securities market. Alternatives for consideration may include a fee for service compensation structure for non-performing loans and reducing or eliminating the minimum mortgage servicing fee for performing loans, or other structures … * WASHINGTON (1/19/11)--Terry Jorde, recently retired president/CEO of CountryBank USA, Cando, N.D., has been named the chief of staff for the Independent Community Bankers of America (ICBA), effective April 1 (American Banker Jan. 18). She was chair of the ICBA in 2006, and has been on its executive committee for the past seven years … * WASHINGTON (1/19/11)--Amy Friend, chief counsel to the Senate Banking Committee for the past three years under its former chairman, Chris Dodd (D-Conn.), has joined Promontory Financial Group (American Banker Jan. 18). Friend helped write the Dodd-Frank Financial Reform Act. Prior to serving on the Banking Committee, Friend worked for the Office of the Comptroller of the Currency, where she was assistant chief counsel … * WASHINGTON (1/19/11)--The law firm Arent Fox LLC, Washington, D.C., has hired former senators Bob Bennett (R-Utah) and Byron Dorgan (D-N.C.). Bennett, who formerly served on the Banking Committee, was a Senate member since 1992. He lost in the 2010 election. Dorgan, who retired after the Senate’s last term, served 12 years in the House of Representatives and 18 years in the Senate … * WASHINGTON (1/19/11)--A 2010 annual report has been released by the Financial Crimes Enforcement Network (FinCEN). Within its pages, FinCEN noted a broadened and enhanced effort to partner with U.S. government agencies to combat home loan modification and foreclosure scams, and home equity conversion mortgage (reverse mortgage) scams that generally target the elderly. Also notable, FinCEN reported that fiscal year 2010 witnessed the largest ever civil money penalty that FinCEN has imposed: $110 million against Wachovia Bank, “which previously was one of the largest and most sophisticated banks in the world.” The annual report said, “A coordinated effort by the U.S. Attorney’s Office for the Southern District of Florida, the Office of the Comptroller of the Currency, the Drug Enforcement Agency, the Internal Revenue Service-Criminal Investigation Division , and FinCEN determined, among other things, that Wachovia failed to effectively monitor for potential money laundering activity more than $420 billion in foreign financial transactions.”…

Inside Washington (01/17/2011)

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* WASHINGTON (1/18/11)--The Credit Union National Association (CUNA) has issued an analysis of a final National Credit Union Administration (NCUA) rule that amends the federal regulator’s low-income rule, located in Section 701.34 of its regulations. The CUNA final rule analysis notes that the new rule clarifies the definition of “low-income members” to say that, when determining a credit union’s low-income designation, the comparison of credit union data (whether individual or family data) must use statistical data for the same category. More specifically, individual member data should be compared to individual median income data and not compared to median family income data. Another clarification in the new rule makes the regulatory text consistent with the geo-coding software the NCUA uses to determine whether to designate a credit union as low-income. The final rule is identical to an interim final rule adopted by the agency Aug. 5, and its provisions are effective as of that date … * WASHINGTON (1/18/11)--Whether government should take a role in jump-starting small-business lending—or if regulators have gotten in the way--was the focus of a Federal Deposit Insurance Corp. forum last Thursday. Regulatory officials maintained small-business credit could flow more freely with increased supervision and still-declining real estate values. They urged lenders to do more holistic underwriting, without relying on borrowers’ collateral values to make loan approvals. Federal Reserve Chairman Ben Bernanke stressed that the underwriting cannot rely on collateral for repayment until the real estate market improves, which may not happen for some time. In addition to Bernanke, the panel, which aired on CNBC, also included FDIC Chairman Sheila Bair, Sen. Mark Warner, D-Va., and Thomas Bell Jr., the chairman of the U.S. Chamber of Commerce. Panelists disagreed if a stricter regulatory environment, including the Dodd-Frank Act, was restricting small-business lending. Warner said regulators are sending mixed messages by asking lenders to be more cautious with their balance sheets while asking them to do more lending. Bair said the credit crisis was the result of excessive risk and a more cautious approach is a benefit to banks. The Credit Union National Association (CUNA) advocates an increase in the credit union member business lending cap as an important way to address the small business lending crunch. A cap increase to 27.5% of assets, up from the current 12.25%-of-assets limit, could infuse $10 billion of new credit into the nation's small businesses and add more than 100,000 jobs to a struggling jobs market. Both economic improvements would occur at no cost to the taxpayer … * WASHINGTON (1/18/11)--Saying the “pendulum had swung too far” in favor of regulatory micro-management Rep. Spencer Bachus (R-Ala.) Thursday said bank examiners should allow community bankers to lend more freely and spur small business job growth. Bachus made his remarks at an Federal Deposit Insurance Corp. conference on small business lending in his first official speech as chairman of the House Financial Services Committee. “During my conversation with employers, I am constantly told that one of the biggest obstacles they face right now is obtaining financing from banks,” Bachus said. “The search for sufficient capital is a struggle, even for companies with good credit histories and long-established relationships with local banks.” Credit unions also face challenges with examinations. The Credit Union National Association (CUNA) has just released extensive guidance on examination and supervision issues, as well as a Credit Union Bill of Rights. CUNA staunchly endorses strong, reasonable safety and soundness supervision, but also maintains that credit union officials must have the latitude they need to exercise business judgments and operate in the best interests of their members. (See related story:”CUNA unveils extensive guidance on CU exam issues”) … * WASHINGTON (1/18/11)--The Basel Committee today issued minimum requirements to ensure that all classes of capital instruments fully absorb losses at the point of non-viability before taxpayers are exposed to loss. The requirements were endorsed by the committee’s oversight body, the Group of Governors and Heads of Supervision, at its Jan. 10 meeting. During the financial crisis, a number of distressed banks were rescued by the public sector injecting funds in the form of common equity and other forms of Tier 1 capital. While this had the effect of supporting depositors, it also meant that Tier 2 capital instruments (mainly subordinated debt), and in some cases Tier 1 instruments, did not absorb losses incurred by certain large internationally active banks that would have failed had the public sector not provided support. Under the new rules an instrument must meet or exceed minimum requirements to be included as Tier 1 or Tier 2 capital. Instruments issued on or after Jan. 1, 2013, would be required to meet those requirements. Instruments issued before that date, but conforming to the criteria under Basel III, would be phased out starting Jan. 1, 2013 …

Matz urges changes to credit union capital statutes

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WASHINGTON (1/18/11)--To the detriment of consumers, current credit union prompt corrective action (PCA) rules discourage some credit unions from marketing their “desirable products and services” out of concern that attracting increased share deposits could deflate net worth positions, National Credit Union Administration (NCUA) Chairman Debbie Matz warned key lawmakers Friday. Matz recommended Congress address by permitting a combination of supplemental and risk-related capital for credit unions. In letters to the top members of the Senate Banking Committee and the House Financial Services Committee, Matz urged statutory changes that would correct the disincentive that she said is impacting even strong, well-capitalized credit unions. Credit Union National Association (CUNA) President/CEO Bill Cheney said the NCUA’s message on risk-based and supplemental capital to leaders of the Senate and House committees is a “much-welcomed development, which we hope leads to action very soon in the Congress on these important issues.” “Supplemental capital is CUNA’s top legislative priority in the year ahead. Chairman Matz’s letter will be helpful as we work to educate members of Congress about importance of establishing risk-based and supplemental capital avenues for credit unions,” Cheney said. He added, “A number of details remain to be worked out, and we want to work closely both with NCUA and congressional leaders in addressing all of them. We commend the agency and the chairman for taking this initiative for the future of the credit union movement.” In her letter, Matz specifically proposed two reforms that would enable the NCUA to reverse the disincentive for credit unions to accept deposits from their members, They are to:
* Allow qualifying credit unions to exclude assets that carry zero risk, such as short-term U.S. Treasury securities, from the definition of “total assets.” NCUA would set a minimum net worth requirement, and would also determine that share growth is the cause of declining net-worth, not poor management or unsafe practices, before a credit union would be allowed to exercise this exclusion; and * Authorize qualifying credit unions to issue supplemental capital. The form of supplemental capital would be subject to strict regulatory prescriptions that address safety and soundness criteria, protect investors, and preserve the cooperative credit union governance model.
“Congress already permits low-income designated credit unions to offer uninsured supplemental capital accounts to non-members,” noted Matz in a release about the NCUA letters. “Modifying the Federal Credit Union Act to permit qualifying credit unions to offer uninsured alternative capital instruments subject to regulatory restrictions, and expanding the Act’s definition of ‘net worth’ to include those instruments, would allow well-managed credit unions to better manage net worth levels under varying economic conditions. “It is clear that controlling accelerated, unmanageable growth of credit union assets was a principal purpose of PCA, and NCUA’s implementing regulations respect that goal. It is for that reason that in the course of implementing PCA over the last nine years, NCUA did not propose statutory remedies in response to occasional periods of reluctance by credit unions to grow assets. That reluctance in the present period of national economic distress has become acute, however, warranting a statutory remedy.” Use the resource link to access the NCUA letter.

Free NCUA town-hall webinar slated for Feb. 17

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ALEXANDRIA, Va. (1/18/11)--On February 17, National Credit Union Administration Chairman Debbie Matz will host her next “Virtual Town Hall” to address the agency’s initiatives to reform the corporate credit union system, minimize costs to consumer credit unions, and promote financial literacy for credit union volunteers. In an announcement delivered while addressing the Virginia Credit
Click to view larger image NCUA Chairman Debbie Matz is shown here (center standing) in October as she answers questions at the final 2010 town hall meeting on the agency’s Corporate Credit Union Resolution Plan. She will conduct here next virtual town hall meeting on corporate credit union and other issues on Feb. 17. (NCUA Photo)
Union League’s Northern Virginia Chapter, Matz said, “NCUA is moving forward on several initiatives this year to strengthen the safety and soundness of credit unions, which will keep assessments and premiums as low as possible.” She said the agency believes the free webinar will be “an efficient way to clearly communicate our initiatives and open a new dialog with stakeholders.” Live webinar viewers will be able to write in questions on any topic. An archived version will be available on the NCUA website for those who can’t participate. A webinar registration link will be posted at www.ncua.gov by early February.

CUNA names 24 CU exam rights

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WASHINGTON (1/18/11)--As part of its comprehensive guidance to member credit unions regarding supervisory and examination trouble spots, the Credit Union National Association (CUNA), in conjunction with state league and credit union leaders, developed a Credit Union Bill of Examination Rights. The document, though not legal advice, informs credit unions that in the examination process, they have the right to:
* Manage risk without being directed by examiners to eliminate it. * Respectful conduct from their examiner. * Be examined by well-trained, competent examiners who understand the unique characteristics of credit unions. * Meet and discuss examiner findings, conclusions, directives and administrative actions with the examiner. * Question, and seek corrections to, examiner findings, conclusions, and directives. * Provide alternative and/or additional data, conclusions, and solutions to address problems identified by the examiner. * Know the specific authority or legal basis for an examiner’s directive. * Receive clearly written examination reports, notices, etc., on a timely basis. * Receive exam reports, findings, directives, and administrative actions that are based on all relevant facts. * Be evaluated on their own strengths and weaknesses and not solely on the basis of regulator concerns about trends. * Be evaluated for progress toward objectives that are realistic and achievable, proportionate to the risk presented. * Examination findings and directives that are risk prioritized. * Appeal examiner findings, conclusions, or directives without retaliation from their regulator. * Have instructions on how to appeal, detailed on every exam report form provided to credit unions. * Record meetings with examiners and other agency personnel. * Have a representative, such as an attorney, present during meetings with the examiner and other regulatory personnel. * Have any published orders—such as consent orders—address only facts and not conjecture or speculation by the examiner. * Have confidential, non-discoverable communications with their legal counsel regarding examination issues. * Develop and use “high-level” policies, which should be separate and distinct from detailed procedures. * Have a lead examiner that is state or federal, consistent with the credit union’s charter type. * Know the timing of when NCUA will publish a Letter of Understanding and Agreement. * Defer to their CPA if there is a disagreement between the officials and their regulator regarding issues related to U.S. generally accepted accounting principles. * Have communication (i.e., discussion of draft findings) with their examiner prior to final issuance of the examination report. * Have directives from examiners (including verbal and written comments) be consistent with regulatory requirements, policies, and Letters to Credit Unions. For example, there were inconsistencies noted between how examiners treated the assessment’s effect on credit union earnings and an NCUA letter to credit unions on the subject.
The list of rights was developed in conjunction with CUNA’s extensive study of credit union frustrations with the examination process that resulted in a 64-page document providing guidance for CUNA member credit unions on examination and supervisory issues. (See related story: CUNA unveils extensive guidance on CU exam issues.)

Sen. Blunt to address GAC attendees

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WASHINGTON (1/18/11)--Sen. Roy Blunt (R-Mo.), a public supporter of the federal credit union tax status and other credit union-friendly issues, will address the Credit Union National Association’s (CUNA) 2011 Governmental Affairs Conference (GAC), which is being held here from Feb. 27 through March 3. Blunt, a seven-term member of the House before successfully running for his Senate seat in 2010, served as Majority Whip and Republican Whip three times while in the House. He was a co-sponsor of the historic CU Membership Access Act in 1997, and has backed credit union positions in many other areas, such as bankruptcy, retirement savings and regulatory reform. On bankruptcy reform, Blunt became personally involved in inserting CUNA-supported language protecting credit union members' right to reaffirm their debts. On retirement savings, he helped ensure that CUNA-supported provisions to expand Individual Retirement Accounts, pensions, and Education Savings Accounts were included in a final 2001 tax bill. Blunt will address GAC attendees on Wednesday morning, March 2--following the new House Financial Services Committee chairman, Rep. Spencer Bachus (R-Ala.). The powerhouse lineup for this year’s GAC also features Sen. Mike Crapo (R-Idaho), and Reps. Barney Frank (D-Mass.), and Debbie Wasserman Schultz (D-Fla.), and Steve Stivers (R-Ohio). Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to address GAC attendees. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. To register for this year's GAC, use the resource link.

SAFE Act Webinar coming straight from the source

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WASHINGTON (1/18/11)--The Nationwide Mortgage Licensing System & Registry (NMLS) is sponsoring web-based workshops called “Introduction to the NMLS Federal Registry” throughout the month of January. The sessions will be offered Jan. 19, 21, 26 and 28. They address rules under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) that require mortgage loan originators (MLOs), including those at credit unions, to register on the new NMLS system, which is scheduled to begin on or around Jan. 31. Once the registry launches, MLOs have 180 days to complete the initial round of registrations. According to the NMLS, the workshop will provide an overview of the new registration process and will cover steps that credit unions can take to prepare for registration, which include building a batch upload file and choosing a workflow that may work for the organization. Workflows may vary depending on whether a credit union has individual MLOs register themselves or has the institution handle the entire registration process for all MLOs. The workshop is expected to be geared toward institution staff who will be handling any part of the registration process, not intended for individual MLOs. The NMLS also provides a series of resources on its website that can help credit unions and their mortgage loan originators. The resources include an NMLS “Getting Started Guide” for financial institutions which guides institutions through the registration process, and a similar guide for MLOs will be coming soon. There is also a guide that describes the process for submitting fingerprints to the NMLS. The NMLS also finalized the fee schedule that will apply to institutions and their MLOs. See the resource links below for more information.

CUNA unveils extensive guidance on CU exam issues

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WASHINGTON (1/18/11)--After an exhaustive look at credit unions’ increasing frustrations, the Credit Union National Association (CUNA) has developed a bill of “examination rights,” which is detailed and cross-referenced to the National Credit Union Administration’s (NCUA) own examiner guide. Within a 64-page guidance document titled “Supervisory Issues and Examinations: Guidance For Credit Unions During The Current Economic Times And Beyond,” CUNA lists 24 “examination rights,” which include such things as the right of credit unions to “manage risk without being directed by examiners to eliminate it,” and “appeal examiner findings, conclusions, or directives without retaliation from their regulator,” among others. (See related story: CUNA names 24 CU exam rights.) "A prime objective of this Guidance is to assure credit unions they have options in responding to most supervisory issues and when they feel an examiner has overstepped his or her authority,” said CUNA President/CEO Bill Cheney, in releasing the booklet to credit unions Friday. “Credit union officials are entitled to question an examiner’s findings and directives, suggest alternatives in most situations, and appeal decisions they feel are unwarranted, arbitrary, inconsistent with laws and regulations, or may jeopardize their ability to serve their members.” The publication also includes sections dealing with general duties of examiners, credit union examination concerns, which are based on survey responses directly from credit unions, handling disagreements with examiners and recommendations--for both credit unions and NCUA alike--for improving the examination process. “This Guidance is the culmination of many months of work by credit union and league leaders,” said Paul Mercer, president/CEO of the Ohio Credit Union League, and chairman of the CUNA Supervisory Issues Working Group, which led the work on the volume. Mercer added, “It is designed to be an accessible, easy-to-use reference concerning a number of supervisory issues that have surfaced recently among credit unions. Its aim is to provide resources about the supervisory process so that credit unions will have a better understanding of their responsibilities and rights as well as a greater awareness of the proper role of the examiner.” The free booklet is available to all CUNA-member credit unions. Use the resource link below.

Inside Washington (01/13/2011)

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* WASHINGTON (1/14/11)--The January 2011 NCUA Report newsletter features the new financial literacy provisions for federal credit union directors, National Credit Union Administration Board actions taken at the December meeting. It also includes articles on contingency fund planning, managing mobile banking risk, and how credit unions fare in mortgage delinquency trends. NCUA Board member articles address understanding the regulators role, restricting vendor information, and the recent "Game Change." The complete document is available online here … * WASHINGTON (1/14/11)--The first indication of how regulators will interpret the Dodd-Frank Act comes next week when the Financial Stability Oversight Council outlines enforcement of the Volcker Rule, which bans proprietary trading and puts limits on risky investments (American Banker Jan. 13). Along with mandating the Volcker Rule, the act created the council, and gave it six months to define how proprietary trading should be reined in. Among the challenges are the different perspectives of its 15 members, who represent every area of financial services from banking to securities to insurance. If the council makes a relaxed interpretation of Volcker Rule, observers also expect it will take the same approach on its other primary mandate: deciding which nonbanks are systemically important. Companies determined to be systemically important will be held to the same oversight and rules as the largest banks, including when to inform the government and how they should be restored if they face financial challenges … * WASHINGTON (1/14/11)--Timed for tax season, the U.S. Department of the Treasury has launched a pilot to offer taxpayers a safe, convenient and low-cost financial account for the electronic delivery of their federal tax refunds. The new account card option provides everyday money-saving conveniences and consumer protection features for Americans with limited or no access to traditional banking services. As the next step in this pilot, Treasury will mail letters next week to 600,000 low- and moderate-income individuals nationwide. The letters will invite these taxpayers to consider activating a MyAccountCard Visa Prepaid Debit Card in time to have their 2010 federal tax refund direct deposited to the card. Compared with paper checks, direct deposit provides a safer, faster and more convenient way to receive a federal tax refund and other regular income, said the Treasury. Melissa Koide, policy director for the Chicago-based Center for Financial Services Innovation, lauded the move by the Treasury. “It bolsters the credibility of a quickly maturing market already well versed in serving low-income consumers. The pilot is an excellent start to bringing low cost transaction and savings products to millions of tax filers” …

Truth-in-Savings changes finalized by NCUA

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ALEXANDRIA, Va. (1/14/11)--The National Credit Union Administration (NCUA) on Thursday finalized a rule that requires credit unions to disclose overdraft and returned item (NSF) fees on their members' periodic statements. Under the rule, fees for both the statement period and for the year-to-date must be included on the disclosures. These and other changes to Regulation DD, the Truth in Savings Act, took effect on Jan. 1. NCUA staff during discussion of the rule noted that a trio of entities, one of which was the Credit Union National Association, 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." In an August 2010 comment letter, CUNA said that doing so would further distinguish paid overdraft items from items that are returned unpaid and that are also required to be disclosed. However, the final rule was unchanged from the NCUA’s earlier proposal. NCUA staff cited a desire to remain consistent with the Federal Reserve’s standards. The interim final rule also addressed disclosures for balance information and sweep accounts that are established to facilitate compliance with monthly limitations on savings accounts under Regulation D. The agency also approved interpretive ruling and policy statement (IRPS) 11-1, an interim policy statement that would add denials of technical assistance grant reimbursements to the set of issues that may be appealed during a credit union’s challenge of material supervisory determinations that are made by NCUA staff. These material supervisory determinations are currently limited to CAMEL ratings of 3, 4 or 5, adequacy of loan loss reserve provisions, loan classifications, and revocations of RegFlex authority for federal credit unions.

NCUA approves 2011 annual performance budget

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ALEXANDRIA, Va. (1/14/11)--Reducing losses to the National Credit Union Share Insurance Fund (NCUSIF) and improving the capital levels of corporate credit unions are among the National Credit Union Administration’s (NCUA) high priority goals for 2011, the agency said on Thursday. The NCUA on Thursday released its 2011 Annual Performance Budget, a document that addresses the NCUA’s objectives for the upcoming year. While the agency uses the budget to determine whether or not it has met its performance goals, it does not track the financial status of these objectives in the document. Annual performance budgets are released on a yearly basis and the goals set in the budgets are tracked on a quarterly basis. The NCUA may also be required to occasionally report to the Office of Management and Budget, NCUA staff added. Other goals outlined in the budget include fully staffing the NCUA’s Office of the Chief Economist and Office of Consumer Protection, helping low-income and other credit unions to access services, developing a transparent and effective regulatory environment with easily understood regulations, and increasing its own examination staff. The NCUA in its budget also said that it would establish its Office of Minority and Women Inclusion during 2011. The agency last year said that this office would be operational by Jan. 21. Responding to the release of the budget, the Credit Union National Association said that it would do all that it can to hold the NCUA to the performance goals regarding improving the regulatory environment and will continue to raise serious concerns about recently approved staff increases. The NCUA late last year voted to increase its 2011 budget by $25 million, and said that $750,000 of that increase would be dedicated to bolster examination and supervisory programs.

Sen. Mike Crapo joins 2011 GAC lineup

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WASHINGTON (1/14/11)--Sen. Mike Crapo (R-Idaho) will join congressional colleagues Reps.Spencer Bachus (R-Ala.), Barney Frank (D-Mass.), and Debbie Wasserman Schultz (D-Fla.),a nd Steve Stivers (R-Ohio), as a speaker at the Credit Union National Association's (CUNA) 2011 Governmental Affairs Conference (GAC). Crapo is a member of the Senate Banking Committee and has commended the Idaho Credit Union League and credit unions for their efforts to advance financial literacy in Idaho. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to speak during the GAC. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The GAC will open on Sunday Feb. 27 with a performance by classic rockers Three Dog Night. Additional speakers from Capitol Hill and the regulatory agencies will be announced in coming weeks. To register for this year's GAC, use the resource link.

NCUSIF reserve balance surpasses 1.26B

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ALEXANDRIA, Va. (1/14/11)--The National Credit Union Share Insurance Fund’s (NCUSIF) reserve balance currently stands at over $1.26 billion after the National Credit Union Administration (NCUA) last month transferred $54.8 million from the NCUSIF to its reserves as an insurance loss expense. Charges to the NCUSIF’s reserves related to natural person credit union failures totaled $7.8 million during the same month. The NCUA recognized a total of $317.2 million in those charges during 2010. The NCUSIF’s equity ratio declined from 1.29% in November to 1.28% as of the end of December, and NCUA staff noted that the 1.28% ratio’s calculation includes funds related to the NCUSIF capitalization deposit that have not yet been collected by the agency. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represented 23.18% of insured shares during December, NCUA staff reported. The NCUA’s staff reported that there are currently 368 CAMEL 4 and 5 credit unions, representing just over 5% of the amount of total insured shares in the credit union system. The percentage of shares held in CAMEL 4 and 5 credit unions peaked at 6.2% in May. There are currently 1,827 CAMEL 3 credit unions, representing 18.1% of total insured shares, NCUA staff said. The agency reported 1,668 CAMEL 3 credit unions in December of 2009 and 1,792 in November of 2010.

Ruling allows bond insurers reorganization

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NEW YORK (1/13/11)--The appellate division of the New York Supreme Court Tuesday upheld the dismissal of banks' lawsuit against bond insurer MBIA Insurance Corp.'s over its reorganization, which split its business into a mortgage-backed securities (MBS) company and a municipal bond insurance company. It is not known yet what the impact, if any, would be to the National Credit Union Administration's temporary corporate stabilization fund or how it would affect losses of corporate credit unions. Corporates aren't part of the lawsuit filed in May 2009 by about 20 banks, including JPMorgan Chase, Bank of America, Morgan Stanley, Canadian Imperial Bank of Commerce, Barclays PLC, and UBS AG. The lawsuit, ABN AMRO Bank, N.V. v. MBIA Inc., challenged the restructuring plan approved in February 2009 by the Superintendent of New York State Insurance Department. It alleged that the bond insurer's decision to split its businesses amounted to a "fraudulent conveyance that left MBIA Insurance undercapitalized and potentially unable to pay out" on future claims on their policies. The suit claimed the split was "an unlawful attempt to escape" its contractual obligations to cover losses from bad mortgage securities. Corporate credit unions were among the institutions that suffered other-than-temporary-impairment losses from MBS investments insured by bond insurers such as New York-based MBIA and Wisconsin-based Ambac. Both insurers had promised some payment on the securities. However, as losses mounted during the financial crisis, both companies took steps to reorganize. "The impact of the ruling on credit unions is unclear at this time," said Credit Union National Association spokesman Pat Keefe. It was not known whether NCUA considered possible decisions when it put together its corporate stabilization plan. "Had it ruled differently, or if a higher court reverses the ruling, it would be a big recovery in MBIA mortgage backed securities and result in fewer losses for corporates," said Michael Edwards, CUNA counsel on special projects. He added the current decision means "MBIA would pay less in theory" to investors who have experienced the MBS losses. Very few natural person credit unions have private label MBSs. Federal credit unions are allowed up to one-fourth of their investments. How much would be picked up by the NCUA guarantee notes in the corporate stabilization fund is unknown, Edwards told News Now. NCUA did not respond to News Now's requests for comments as of press time.

NCUA considers new allegations in WesCorp case

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WASHINGTON (1/13/11)--The National Credit Union Administration (NCUA) has asked the U.S. District Court for the Central District of California for permission to modify its complaint against directors and officers of the conserved Western Corporate FCU (WesCorp). The court had previously stated that it planned to dismiss the complaint against the directors, but gave NCUA one final opportunity to state its case. The NCUA request for permission to amend its allegations follows a recent tentative ruling by the court that the agency could not do so. The former directors named in the agency’s suit will file a rebuttal to the NCUA’s request on Jan. 24. There is a hearing set for Jan. 31.

Three NCUA small CU workshops coming in March

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ALEXANDRIA, Va. (1/13/11)--The National Credit Union Administration is offering three Office of Small Credit Union Initiatives workshops in March, one in Richmond, Va., another in Philadelphia, Pa., and the third in Phoenix, Ariz. The topics scheduled for discussion include:
* Issues facing credit unions; * NCUA--Consumer Protection Office--What It Means To You; * Duties of federal credit union boards of directors (NCUA Regulations 701.4). Attendees will receive an attendance certificate after completing this two-hour session; * Basic financial literacy requirements; * Due diligence and evaluating payment system service providers; and * Examination issues.
The free training program in Phoenix is March 5, the Richmond session is scheduled for March 10, and the one in Philadelphia is March 17. Use the resource links for registration information.

Fed unveils risk-pricing consumer handbook

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WASHINGTON (1/13/11)--The Federal Reserve Board has unveiled an online consumer handbook to help borrowers better understand new notices they may receive from lenders when credit reports or credit scores affect a credit decision. The new publication is called “What You Need to Know: New Rules about Credit Decisions and Notices.” It describes the types of notices a potential borrower might receive, as well as provides illustrations of what those notices might look like. It also gives advice on what a consumer should do upon receiving a notice and includes instructions on how to dispute credit report errors. The notices described in the new handbook are required by new rules issued by the Fed and the Federal Trade Commission on a practice known as “risk-based pricing,” where, based on a consumer's credit report, a lender provides credit to a borrower on terms less favorable than those provided to other consumers. The rule took effect Jan. 11. In announcing the new online consumer resource, the Fed reminded that as an alternative to providing risk-based pricing notices, creditors can choose to provide consumers who apply for credit with a free credit score and information about their score.

Compliance How many background checks are enough

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WASHINGTON (1/13/11)--As credit unions and other mortgage loan originators (MLOs) await final notice from federal regulators that the SAFE Act national mortgage registry is open for registration, they may be pondering many variables, some of which are visited by this month’s Credit Union National Association Compliance Challenge. For instance, credit union compliance folks--always alert to find ways to comply with rules in the most cost- and time-efficient manner possible--may be wondering whether a little recycling may be in order. Can a credit union that already has obtained fingerprints and background checks on prospective employees simply upload this information into the Nationwide Mortgage Licensing System & Registry (NMLS), or do employees have to be re-fingerprinted and go through another background check? Compliance Challenge advises that there is no chance for recycling here: A credit union’s employees who are identified as MLOs will have to be fingerprinted again and go through another background check. The SAFE Act requires MLOs to submit fingerprints to the NMLS for the purpose of conducting a criminal background check. Fingerprints will be submitted to the FBI, which will return any information resulting from the background check to the credit union through the NMLS. So, the NMLS will manage the entire process, from fingerprint capture to the return of the criminal background check to the credit union through the new system once it’s up and running. Fingerprints will be taken at an NMLS-authorized fingerprint vendor. Information will be forthcoming, but to see how this process works on the state licensing side, see the resource link. Note that the initial period for federal registration of residential mortgage loan originators is expected to begin on or around Jan. 31, and end on or around July 29. The National Credit Union Administration and the federal banking regulators will publish an announcement on their respective websites confirming the start date of the registration period shortly before the period begins. Then credit unions and their MLOs will have 180 days from the date indicated in the notice to register on the new system. To see more on the SAFE Act and to take the CUNA Compliance Challenge, use the resource link below.

Inside Washington (01/12/2011)

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* WASHINGTON (1/13/11)--The National Council on Aging (NCOA) is conducting a pilot project with U.S. Department of Housing and Urban Development (HUD) and the National Reverse Mortgage Lenders Association (NRMLA) to help reverse mortgage borrowers struggling to pay property taxes and homeowners insurance. “While reverse mortgages can help seniors to stay at home, these funds may be depleted over time,” said Barbara Stucki, vice president for home equity initiatives at NCOA. “With economic conditions putting pressure on many of these borrowers, we want to assess the services and supports to help them remedy their delinquencies and stay at home.” By partnering with senior service agencies in Miami, Houston, Detroit and Los Angeles, NCOA, HUD, and NRMLA will identify ways to assist seniors with reverse mortgages who are most at-risk for foreclosure by not keeping up with their borrower obligations. Case managers from the community partner agencies will work with reverse mortgage borrowers to pursue local tax relief options and identify other financial, legal, and housing solutions to resolve delinquencies. If appropriate, case managers will also help borrowers who need to move to other housing options, such as affordable housing or supportive-housing developments … * WASHINGTON (1/13/11)--Four U.S. House Democrats are raising questions about bad loans sold to Fannie Mae and Freddie Mac (American Banker Jan. 12). The two government-controlled mortgage companies have recovered $3.3 billion for taxpayers by reaching settlements in recent weeks with Bank of America Corp. and Ally Financial Inc. Rep. Maxine Waters (D-Calif.) questioned in a letter whether the settlements “represent the real liability [Fannie and Freddie] bear as a result of the misrepresentations and breaches of warranty” made by Bank of America and Ally Financial. The letter was addressed to Edward DeMarco, the acting director of the Federal Housing Finance Agency, which oversees Fannie and Freddie. The letter was also signed by three other members of the House Financial Services Committee--Reps. Brad Miller (D-N.C.), Keith Ellison, (D-Minn.) and Stephen Lynch, (D-Mass.) … * WASHINGTON (1/13/11)--The U.S. Small Business Administration announced the appointment of Patricia Brown-Dixon to be regional administrator for Region VII, which encompasses Iowa, Kansas, Missouri, and Nebraska. Brown-Dixon has worked for the U.S. General Services Administration (GSA) for more than 25 years. Currently, she serves as director of the Heartland Office of Small Business Utilization, where she is responsible for managing the agency’s efforts to support small businesses in the region. As Region VII administrator, Brown-Dixon will oversee SBA operations throughout its district offices in Des Moines, Iowa; St. Louis and Kansas City, Mo.; Omaha, Neb.; and Wichita, Kan…

CUNA to FDIC Increased MBLs can address bank credit gap

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WASHINGTON (1/13/11)--The Federal Deposit Insurance Corp. (FDIC) is conducting a forum today to explore ways in which credit can be made more accessible to the small business sector. The session will bring together policymakers, regulators, small business owners, lenders and other stakeholders to identify key issues and focus on solutions, according to an agency announcement. The Credit Union National Association (CUNA), in its advocacy efforts in favor of increasing the credit union member business lending (MBL) cap to 27.5%, up from the current 12.25%, has noted to policymakers that such a change could infuse $10 billion of new credit into the nation’s small businesses. The benefits to the economy of the cap increase go even further than that infusion, CUNA underscores, and could add more than 100,000 jobs to a struggling jobs market. Both economic improvements would occur at no cost to the taxpayer. “Credit unions were not asked to be on the forum’s panels, but we will be reiterating to FDIC that given the lack of bank credit to small businesses, solutions should include the administration-supported MBL increase,” said John Magill, CUNA senior vice president of legislative affairs. The FDIC forum, which is open to the public and will be webcast live (see resource link), will kick off with remarks from Rep. Spencer Bachus (R-Ala.), who became chairman of the House Financial Services Committee in the new Congress. It will also feature a panel discussion lead by FDIC Chairman Sheila C. Bair, Federal Reserve Chairman Ben S. Bernanke, Sen. Mark Warner (D-Va.), and Thomas D. Bell, Jr., chairman of the U.S. Chamber of Commerce. A second panel will present additional government and private sector leaders whose focus will be to identify issues that are constraining the availability of credit to small businesses and “articulate ideas for overcoming these obstacles.” Administrator Karen Mills, of the Small Business Administration, is scheduled to provide remarks at the conclusion of the forum.

Inside Washington (01/11/2011)

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* WASHINGTON (1/12/11)--The Federal Deposit Insurance Corp. is considering a proposal to require big banks that own both servicers and home equity loans to disclose to potential investors—prior to the packaging and sale of the loans--what would happen to the second-lien if the first mortgage comes under distress (Marketwatch Jan 11). Holders of the home equity loans often fail to disclose to investors what their arrangement is on the home equity loans with the corresponding owner of the primary loans. Critics say this lack of transparency is among the reasons why large servicers block modifications to mortgages even when bondholders agree to lower payments for borrowers. Most home equity loans are held by large banks, which also own the large servicers. Observers argue this creates a conflict of interest within the marketplace because banks veto the proposed modifications to primary loans to preserve the home equity loans. Regulators are considering addressing this issue by requiring banks issuing primary mortgages for securitization to disclose what would happen to the second lien if the first mortgage becomes distressed …

New House member Stivers added to GAC lineup

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WASHINGTON (1/12/11)--Rep. Steve Stivers (R-OH) will join fellow House members Rep. Spencer Bachus (R-Ala.), Barney Frank (D-Mass.), and Rep. Debbie Wasserman Schultz (D-Fla.) as a speaker at the Credit Union National Association’s (CUNA) 2011 Governmental Affairs Conference (GAC). Stivers has previously served in the Ohio state senate, and became a first time member of the U.S. Congress when he was sworn in last week. Stivers, who was backed by CUNA, the Ohio Credit Union League, and individual Ohio-based credit unions during his campaign, defeated then-incumbent Mary Jo Kilroy (D) last November. Stivers has extensive finance industry experience, and has, in recent years, told Ohio credit union representatives that he would support legislation that gives credit unions more capacity to serve members. Stivers has also noted the important economic role that credit unions play in the communities they serve. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to speak during the GAC. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The GAC will open on Sunday Feb. 27 with a performance by classic rockers Three Dog Night. Additional speakers from Capitol Hill and the regulatory agencies will be announced in coming weeks. To register for this year's GAC, use the resource link.

NCBA to testify on co-op model this week

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WASHINGTON (1/12/11)—National Cooperative Business Association (NCBA) CEO Paul Hazen will on Thursday give testimony on the cooperative business model during a U.S. Department of Health and Human Services (HHS)-led hearing. HHS is working to implement health care legislation signed into law in 2010. The NCBA is expected to testify regarding its concern that the new law’s language blurs the definition of co-ops. Specifically, the health care bill provides funding for so-called “Consumer Owned and Oriented Plans”—or “CO-OPs.” The provision allows but does not mandate the creation of cooperatives, despite the name of the plan. An NCBA release said the group “welcomes this opportunity to protect the cooperative brand and ensure that entities organized under CO-OP operate as cooperatives.” The NCBA has frequently worked with the Credit Union National Administration (CUNA) to educate cooperative businesspeople. That association has also advocated on behalf of credit unions by producing an informational video on how credit unions work and why they are different from banks. The video, which was released in 2009, was one of several videos that touted the benefits of cooperatives to consumers. The NCBA has frequently worked with CUNA to educate cooperative businesspeople. That association has also advocated on behalf of credit unions on such issues as member business lending, the CU tax exemption, and the Credit Union Membership Access Act. The NCBA also has produced an informational video on how credit unions work and why they are different from banks. The video, which was released in 2009, was one of several videos that touted the benefits of cooperatives to consumers. CUNA is a member of the NCBA board.

3Q financial crimes at CUs down from 2009 FBI

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WASHINGTON (1/12/11)—A total of 91 financial crimes, or 6.9% of the total of 1325 robberies and incidental crimes reported at financial institutions during the third quarter of 2009, took place at credit unions, the Federal Bureau of Investigation (FBI) has reported. This percentage is slightly below the 7% total reported during the previous quarter, when a total of 85 financial crimes were committed at credit unions. Credit unions were victimized 490 times in 2009, representing 8% of the total number of financial institution robberies. Credit Union National Association (CUNA) figures show that at the end of 2009 credit unions operated a total of 21,336 “outlets,” that is main offices and branch offices, while banks and thrift institutions operated 121,574 outlets; credit unions therefore operated 17.5% of total depository institution outlets. CUNA’s Mike Schenk said that the relatively low crime numbers, as compared to the higher outlet percentage number, makes sense. “We have no hard data on branch accessibility. But we do know that credit union branches are less likely than bank branches to be accessible to the general public because many credit union branches are located inside sponsor organizations. “Because we don’t have data on the specific characteristics of branches it is difficult to say if the 7% “share” of crimes is consistent with the share of accessible outlets but it is certainly not surprising that credit unions account for nearly 18% of outlets but only 7% of crimes,” Schenk said. More details from the FBI report showed commercial banks were hit by 1,195 instances of crimes. Credit unions were second highest with 91 instances, followed by savings and loan associations with 25 robberies, then mutual savings banks, with 13. Just over $9 million in funds were taken during these robberies, and nearly $1.4 million of those funds were eventually recovered. Loot was taken in 90% of the incidents, the FBI said. The majority of the robberies were committed by men, and the largest number of robberies, 482, took place in the southern United States. The most popular day for crimes was Friday, and the most popular time period for them was 9 a.m. to 11 a.m. Nearly all of the financial institutions involved had alarm systems and security cameras, but a mere 72 of them had on-site guards. Some of the top methods used in the crimes were:
* Demand note used--726; * Firearm used--333; * Weapon threatened--568; and * Explosive device used or threatened--30.
Violent acts were committed during 54 of the robberies, resulting in 21 injuries. One perpetrator was injured and three perpetrators died during the robberies. Of the 9 incidents in which hostages were taken, 7 of the hostages were employees and 2 were members/customers. The FBI reported no instances of bank extortion violations at credit unions. However, there were six of these violations at banks. For the full FBI release, use the resource link.

Interchange rule even with two tiers harms CUs CUNA

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WASHINGTON (1/11/11)—Pending interchange fee rule changes will create issues for both credit unions and their members, as well as consumers in general, whether a two-tier fee system is followed or not, the Credit Union National Association (CUNA) has again warned. It has been widely reported in recent days that Visa plans to follow a two-tiered interchange fee structure when and if the interchange fee regulations take effect later this year. Visa representatives, when contacted by News Now, said they did not wish to comment on the reports. Under the two-tiered fee system, credit unions and other financial institutions with over $10 billion in assets would be required to limit the interchange fee charged on individual purchases. This fee could be as low as seven cents per transaction under one plan released by the Federal Reserve. Credit unions and other institutions with under $10 billion in assets would not be subject to this fee limit. However, nothing in the Fed’s proposal, which was released late last year, provides an enforcement mechanism to ensure that the two-tier fee schedule is followed. CUNA Chief Economist Bill Hampel has said that market forces would likely erode the gap between the two tiers over time. Overall, smaller institutions such as credit unions could lose revenue due to the interchange changes, a circumstance that may force credit unions to increase member fees or reduce the amount of services they offer to those members, CUNA has said. CUNA and several congressional representatives have called on the Fed to hold hearings to review the interchange fee proposal.

Rep. Barney Frank added to 2011 GAC lineup

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WASHINGTON (1/11/11)—Democratic firebrand, House Financial Services Committee stalwart and co-sponsor of the most sweeping financial reform package in decades Barney Frank (Mass.) will again join credit union boosters as a speaker at the Credit Union National Association’s Governmental Affairs Conference (GAC).
Click to view larger image Rep. Barney Frank (D-Mass.), who becomes the ranking minority member of the House Financial Services Committee as the U.S. Congress reconvenes, is shown here at Credit Union House with Dan Egan, president of the Massachusetts, Rhode Island and New Hampshire Credit Union Leagues. Throughout 2010, Frank and his staff met with the Credit Union National Association, state leagues, and credit unions regarding their concerns with evolving financial regulatory reform measures. (CUNA Photo)
Frank is a frequent GAC speaker. While Frank was one of the architects of the Dodd-Frank Financial Regulatory Reform bill which was recently enacted, he has said that interchange regulations that were added to the financial reform package at the last minute could, if not properly crafted, "have unintended consequences" for credit unions and consumers. In a December letter to the Federal Reserve, Frank added that limitations on network restrictions should not unduly increase costs for credit unions, community banks or government card programs. Other well-known policymakers House Financial Services Committee chairman Rep. Spencer Bachus (R-Ala.) and Rep. Debbie Wasserman Schultz (D-Fla.) will also speak during the GAC, as will Consumer Financial Protection Bureau architect Elizabeth Warren. Actor and Children's Miracle Network Hospitals co-founder John Schneider, political pundits and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann, and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III will also speak during the GAC, which will open on Sunday evening, Feb. 27 with a performance by classic rockers Three Dog Night. Additional speakers from Capitol Hill and the regulatory agencies will be announced in coming weeks. To register for this year's GAC, use the resource link.

UW CUs Mike Long to serve on Fed CAC

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WASHINGTON (1/11/11)—Credit Union National Association (CUNA) nominee and UW CU Chief Credit Officer Mike Long will, starting in 2011, serve on the Federal Reserve’s Consumer Advisory Council (CAC). Long is one of 10 new CAC appointees. Long told News Now that he is honored to be a part of the CAC, adding that he looks forward to representing the interests of credit unions and their members during his time with the committee. CUNA nominated Long and Idaho Credit Union League President/CEO Alan Cameron to serve on the CAC last September. Cameron served on the CAC through the end of 2010. The CAC, which is composed of 30 members that serve three-year terms, advises the Fed on its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. The group meets three times a year in Washington, D.C. and meetings are open to the public. The group discussed loss-mitigation efforts, the Obama Administration's Making Home Affordable program, neighborhood stabilization initiatives and challenges, and other issues related to foreclosures during its last meeting, which took place on June 17, 2010. The CAC has not scheduled its first meeting of 2011. The Fed said that the CAC will continue to hold meetings until a number of consumer protection functions, in accordance with the Dodd-Frank financial regulatory reform act, are moved from the Fed to the new Consumer Financial Protection Bureau (CFPB). The CAC will be dissolved at that time, but the CFPB is authorized to establish its own consumer advisory body.

Rep. Emerson to lead appropriations finance subcommittee

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WASHINGTON (1/11/11)—Rep. Jo Ann Emerson (R-Mo.) has been appointed Chairman of the House Appropriations Committee’s financial services subcommittee. The National Credit Union Administration’s Central Liquidity Facility (CLF) and Community Development Revolving Loan Fund (CDRLF) fall under the jurisdiction of Emerson’s subcommittee. The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund and the Small Business Administration are also overseen by this subcommittee. Congress in 2010 appropriated $1.25 million in funds to the NCUA's CDRLF, which provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions. The CDFI Fund has made $135 million in funds available to eligible community development financial institutions, including credit unions. Emerson has met frequently with representatives of the Missouri Credit Union Association, discussing small business lending and interchange fees, among other items, during those meetings.

CUNA urges reforms to GSEs rules

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WASHINGTON (1/11/11)--The challenge of reforming the government-sponsored housing enterprises is huge, but the costs to the economy and housing market of failing to make necessary changes is far greater, the Credit Union National Association (CUNA) told the U.S. Treasury Department in a letter urging a series of reforms. CUNA President/CEO Bill Cheney wrote in a Jan. 10 letter that CUNA and credit unions agree with a range of policy makers that “meaningful, comprehensive efforts” to address the numerous problems leading to the federal government’s conservatorships of Fannie Mae and Freddie Mac in September 2008 deserve to be addressed in the 112th Congress. In its letter, CUNA sent to Treasury Secretary Timothy Geithner specific recommendations the group has developed that reflect the needs and concerns of credit unions and their members regarding reform of the government-sponsored enterprises (GSEs). The recommendations include:
* Continuing the role of the GSEs to ensure that the housing finance system remains efficient, even if the current entities themselves must be replaced; * Equal access to the secondary market must be preserved going forward; it must be open to lenders of all sizes on an equitable basis; * A strong system of supervision must be developed and maintained, and entities providing secondary market services must be subject to appropriate regulatory and examination oversight to ensure safety and soundness, as well as strong capital requirements; * A reformed secondary mortgage market should distinguish between the goals of public policy, such as affordable housing, and a secondary market for mortgages; and * Legislation and regulations implementing the new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans.
Cheney told Geithner that mortgage lending is “a significant activity for many credit unions and is a vital financial service for their members.” He emphasized that throughout the housing crisis and recession, as other lenders pulled back credit, credit union first mortgage originations increased from $53 billion in 2006 to $59 billion in 2007, $70 billion in 2008 and a record $94 billion in 2009. Through September of 2010, credit unions originated first mortgages at an annual rate of $74 billion, with a delinquency rate in 2010 that has been about half that of commercial banks. Cheney further noted that from 2006 to 2008, credit unions sold about one-quarter of first mortgage originations. In 2009 and 2010, sales accounted for a little more than half of originations. “Obviously, a healthy, efficient and accessible secondary market is vital to credit unions and the millions of consumers they serve,” Cheney wrote. CUNA also circulated the letter to Senate Banking Committee Chairman-Designate Tim Johnson (R-S.D.), Senate Banking Committee ranking member Richard Shelby (R-Ala.), House Financial Services Chairman-Designate Spencer Bachus (R-Ala.), House Financial Services ranking member-designate Barney Frank (D-Mass.), and Special Advisor to the President Elizabeth Warren. To read CUNA’s extensive comments on GSE reform, use the resource link below.

Inside Washington (01/10/2011)

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* WASHINGTON (1/11/11)--Having projected that bank failures resulting from the 2008 crisis peaked in 2010, the Federal Deposit Insurance Corp. last month said it was cutting its budget slightly in 2011--but the agency will continue to add staff (American BankerJan 10). The agency’s budget remains at about $4 billion, and it adds 2.5% in staffing. The new positions are temporary, as are 40% of the total 9,252 authorized positions for 2011. With bank failures expected to remain high through at least 2011, the agency is not expected to downsize significantly for at least two years, experts say. The 2010 total of 157 bank failures surpassed the 2009 total of 140, but the cost of the 2010 failures was about $22 billion, compared with $37 billion in 2009. As the failures slow, the agency will increasingly turn its attention to litigation, observers said. Also, FDIC’s list of “problem” institutions still numbers 860 … * WASHINGTON (1/11/11)--The National Credit Union Administration (NCUA) Board has revised the closed Board meeting agenda scheduled for Thursday. The Board unanimously approved deleting item No.1, Insurance Appeals, from the previously announced closed meeting agenda. The revised agenda for the Thursday's open and closed Board meeting sessions is available online here

Holly Petraeus to join CFPB

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WASHINGTON (1/10/11)--Holly Petraeus, named by the U.S. Treasury last week to head an office of the Consumer Financial Protection Bureau that would work to bolster the financial literacy of military servicemembers and their families and to protect those families from questionable lending practices, has been a guest on the Credit Union National Association’s (CUNA) weekly Home & Family Finance Radio show, discussing just such topics. Petraeus is the wife of General David Petraeus and the daughter of a former West Point superintendent. Warren in a blog post on www.whitehouse.gov said that the office will partner with the Department of Defense (DoD) to respond to financial issues raised by military families and will help . The agency will also help federal and state agencies work together to improve consumer protection measures for those same families. “Military families have unique challenges, and now they have a unique advocate to ensure that their special concerns get the attention they deserve,” Warren added. Petraeus previously served as the Director of the Better Business Bureau (BBB) Military Line, a joint BBB/DoD project that provides consumer education and advocacy for military families. Petraeus and Warren will hold a town hall-style meeting at San Antonio, Texas’s Lackland Air Force base later this month, Warren said. For audio of Petraeus's segment, use the resource link.

Miracle Network founder John Schneider to speak at GAC

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WASHINGTON (1/10/11)—John Schneider, who first gained notoriety as Bo Duke on TV’s The Dukes of Hazzard and now works extensively on behalf of his charity, Children's Miracle Network Hospitals, will join a growing list of high profile speakers at this year’s Credit Union National Association (CUNA) Governmental Affairs Conference (GAC). Schneider co-founded Children's Miracle Network Hospitals, which
Click to view larger image John Schneider, co-founder of Children's Miracle Network Hospitals along with Marie Osmond, is shown here with children who have benefitted from the charitable organization’s efforts. To Schneider’s left is Eileen Garrido, daughter of Carlos Garrido, EVP/COO at Schools Federal CU in Southern California. Eileen was a recipient of care at Children’s Hospital LA. (CMNHospitals Photo)
raises funds for 170 childrens hospitals in the U.S., with singer and actress Marie Osmond. Credit unions are top contributors to the network and also work with the network via programs such as Credit Unions for Kids and the annual CU Cherry Blossom 10-mile run. Consumer Financial Protection Bureau architect Elizabeth Warren, House Financial Services Committee chairman Rep. Spencer Bachus (R-Ala.) and Rep. Debbie Wasserman Schultz (D-Fla.) are also among those policy makers that are set to speak. The GAC will also feature political pundits and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann. The GAC will open Sunday evening, Feb. 27 with a performance by classic rockers Three Dog Night, and will also feature a keynote speech Feb. 28 by "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The GAC also will feature a political point-counterpoint between conservative commentator Mary Matalin and liberal Web commentator Arianna Huffington of the Huffington Post. Additional speakers from Capitol Hill and the regulatory agencies will be announced in coming weeks. To register for this year's GAC, use the resource link.

Dodd-Frank repeal bill mainly symbolic CUNA

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WASHINGTON (1/10/11)—Rep. Michele Bachmann (R-Minn.) last week introduced H.R. 87, legislation that would repeal the Dodd-Frank financial reform bill that was passed into law last year. Reps. Darrell Issa (R-Calif.), Todd Akin (R-Mo.), Tom McClintock (R-Calif.) and Bill Posey (R-Fla.) signed on as cosponsors of the legislation, which is widely viewed as being a mainly symbolic shot at the Obama administration reforms. Rep. Barney Frank (D-Mass.), a key sponsor of the reform bill, as the name implies, spoke up to defend his legislation last week. Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan said that CUNA does not expect there to be a concerted effort to repeal Dodd-Frank in its entirety. “Having said that, as the various regulatory agencies take the steps to implement the law, we will continue to encourage Congress to exercise oversight over that process,” Donovan added. Also, CUNA is working to address the impact of sections of Dodd-Frank act, for instance the interchange provisions require the Federal Reserve Board to set interchange fees. CUNA recently asked new House Financial Services Committee Chairman Spencer Bachus (R-Ala.) to fully review the interchange proposal before the Fed moves forward with implementation.

Inside Washington (01/07/2011)

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* WASHINGTON (1/10/11)--Some lenders have taken issue with the recently released terms of the Small Business Lending Fund (SBLF), saying that restrictions will limit participation in the program (American Banker Jan. 7). The SBLF is a $30 billion fund that encourages lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion. Among the concerns expressed are that the program will not consider Small Business Administration (SBA) loans as small-business lending; that the fund will have volatile interest rates; and that financial institutions will be forced to find matching funds for money they receive through the program. That National Association of Government Guaranteed Lenders supported the creation of the fund when President Barack Obama first suggested it last year, but the group pulled its support after learning that SBA 7(a) loans and other government-guaranteed loans would not count as small business loans under the SBLF. Under the terms issued by the Treasury, banks can apply for funds at an initial 5% dividend rate that decreases as they conduct more small-business lending. But if the guaranteed portion of SBA loans does not count, SBA lenders are less likely to take part in the program, according to Tony Wilkinson, president of the association. Wilkinson said this policy discriminates against SBA lenders … * WASHINGTON (1/10/11)--Organizational issues are preventing the House Financial Services Committee and the Senate Banking Committee from holding hearings and carrying out their agendas at the start of the new congressional term (American Banker Jan 7). Rep. Spencer Bachus (R-Ala.) has been unable to move into the House committee office because it is still occupied by outgoing chairman Rep. Barney Frank (D-Mass.). Bachus also cannot schedule hearings or conduct other committee business because Democrats have yet to organize their subcommittee membership. A House Democrat indicated the caucus might organize within the next week. In the Senate, the Banking Committee cannot convene hearings because Sen. Tim Johnson (R-S.D.) is not expected to be officially named committee chairman until later this month or early February. Also, the panel’s budget has not been determined, hampering Johnson’s ability to hire staff … * WASHINGTON (1/10/11)--In his first testimony before the new Congress, Federal Reserve Chairman Ben S. Bernanke said there is “increased evidence” that a self-sustaining economic recovery is taking hold. Bernanke said real consumer spending rose at an annual rate of 2.5 % in the third quarter, and available indicators suggest it likely expanded at a somewhat faster pace in the fourth quarter. Businesses also have begun replacing aging equipment after delaying such investments during the downturn. Overall, the pace of economic recovery seems likely to be moderately stronger in 2011 than it was in 2010, according the Fed chairman. He also defended the Federal Reserve’s recent policy of buying government bonds to support the economy, including its intention to purchase an additional $600 billion in Treasury securities by the end of the second quarter. Bernanke also advised Congress of the increased danger of failing to reign in the federal budget deficit. “Diminishing confidence on the part of investors that deficits will be brought under control would likely lead to sharply rising interest rates on government debt and, potentially, to broader financial turmoil,” Bernanke said … * WASHINGTON (1/10/11)--The Small Business Administration (SBA) has unveiled a newly designed website. The new site features the launch of SBA Direct, a new web tool that allows small business visitors to personalize their browsing experience according to their business type, geography and needs. SBA Direct offers information on running a business, including the steps involved in getting started, business growth strategies, and how to stay compliant with current laws and regulations. Visit www.sba.gov … * WASHINGTON (1/10/11)—The National Economic Council will be chaired by Gene Sperling, who was appointed to the position by President Barack Obama late last week. Sperling led the NEC during the late Clinton administration and has worked with the Obama administration as it developed small business and tax policies during the past two years. Obama on Friday called Sperling “a public servant who has devoted his life to making this economy work -– and making it work specifically for middle-class families.” National Credit Union Administration (NCUA) Chairman Debbie Matz in 2009 suggested lifting the credit union member business lending cap to Sperling after he requested input on how to spur small business growth…

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.

Inside Washington (01/05/2011)

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* WASHINGTON (1/6/11)--The Obama administration is expected this month to unveil a reform package for Fannie Mae and Freddie Mac (American Banker Jan. 5). The White House has offered few clues about its plan for the housing finance system, and has twice delayed the release of a proposal for the government-sponsored enterprises. The consensus among observers is that the plan would include some form of government safety net in the event of a catastrophic loss. Most variations of the plan include Freddie or Fannie continuing operations along with the creation of several federally chartered, privately owned mortgage conduits that would buy loans from the primary market and create federal guaranteed mortgage-backed securities. To back those guarantees, the conduits would pay fees into an insurance fund, similar that of the Federal Deposit Insurance Corp. or the National Credit Union Share Insurance Fund … * WASHINGTON (1/6/11)--The Federal Deposit Insurance Corp. (FDIC) is suing at least 109 former directors and officers of failed banks in an effort to recover more than $2.5 billion losses to its insurance fund. The agency has already filed two director and officer lawsuits naming 15 individuals from the failed IndyMac Bank, Pasadena, Calif., and Heritage Community Bank, Glenwood, Ill. The FDIC guarantees individual deposits up to $250,000, but when an institution fails, the agency’s insurance fund is diminished. One way the agency recovers those funds is through lawsuits against negligent directors and officers of the failed banks. From 1986 through 2009, the FDIC and Resolution Trust Corp. collected $6.2 billion from such claims … * WASHINGTON (1/6/11)--The Consumer Financial Protection Bureau (CFPB) implementation team, currently housed within the Treasury Department, and the Conference of State Bank Supervisors (CSBS) will establish a foundation of state and federal coordination and cooperation for supervision of providers of consumer financial products and services. Under a memorandum of understanding (MOU) signed between the CFPB and the CSBS, state regulators and the bureau will work to promote consistent examination procedures and effective enforcement of state and federal consumer laws. The MOU also calls for state regulators and the CFPB to minimize regulatory burdens and deploy supervisory resources. State regulators and the bureau will work with each other regarding the standards, procedures, and practices used by state regulators and the CFPB to conduct compliance examinations of providers of consumer financial products and services, including non-depository mortgage lenders, mortgage servicers, private student lenders, and payday lenders …

CUNA provides roadmap for reduced regulatory burden

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WASHINGTON (1/6/11)--The 112th Congress, which began on Wednesday, can help lessen the regulatory burden faced by credit unions by allowing credit unions to raise supplemental capital, reviewing and potentially amending the Federal Reserve’s recent interchange fee proposal, and lifting the cap on credit union member business lending, the Credit Union National Association (CUNA) said in a Wednesday letter to Rep. Darrell Issa (R-Calif.) Issa will chair the House Government Reform and Oversight Committee during the 112th Congress. CUNA pinpointed a number of additional ways that Congress could help reduce the regulatory burden on credit unions. Congress could encourage the National Credit Union Administration (NCUA) and other regulators to reward well-run credit unions by lengthening their examination cycles to 18 months, streamlining their 5300 call reports, and providing them with automatic waivers from regulatory limitations that are not required by statute, CUNA said. Further, the budgets and resource allocations of the agency and other federal financial regulators should also be subject to periodic congressional review, CUNA suggested. The Government Accountability Office could also monitor these agencies to review their compliance with the Paperwork Reduction and Regulatory Flexibility Acts, and could force regulators to report on whatever yearly steps they have taken to reduce the regulatory burden on their respective institutions, CUNA added. “The only owners of a credit union are its members, who receive the benefit of ownership through reduced fees, lower interest rates on lending products and higher dividends on savings products,” CUNA President/CEO Bill Cheney wrote. “Because of this structure, the cost of a credit union’s compliance with unnecessary and unduly burdensome regulation impacts its members more directly than bank customers. Every dollar that a credit union spends complying with regulation is a dollar that is not used to the benefit of the credit union’s membership,” Cheney added. CUNA was responding to a specific request made by Issa in a Dec. 10 letter, in which he asked for about 150 companies, think tanks and trade groups to provide their input on various regulations. For the full letter, use the resource link.

CFPB architect Elizabeth Warren to speak at GAC

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WASHINGTON (1/6/11)--Consumer Financial Protection Bureau architect Elizabeth Warren will join a host of other high profile regulators and legislators when she speaks at the Credit Union National Association's (CUNA) upcoming Governmental Affairs Conference.
CUNA President/CEO Bill Cheney (left), CUNA General Counsel Eric Richard and Deputy General Councel Mary Dunn (right) posed with Elizabeth Warren (center) in the U.S. Treasury's offices following their September meeting. (CUNA photo)
Warren is Assistant to the President and Special Advisor to the Secretary of the Treasury on the consumer Financial Protection Bureau. She is currently working with the Obama administration to create the CFPB, an organization created under the Dodd-Frank financial reform legislation that will develop rules governing consumer financial products like credit cards and mortgages. CUNA President/CEO Bill Cheney and other CUNA representatives in September met with Warren to discuss a number of credit union issues. During that meeting, CUNA staff emphasized that their key objective in working with the new agency will be to minimize credit unions' regulatory burdens, costs and requirements. Warren welcomed CUNA's commentary on how both regulations and disclosures can be improved, and noted that improving the transparency and consumer-friendliness of many financial products would benefit credit unions. The GAC will be held at the Washington Convention Center, and will run from Feb. 27 until March 3. House Financial Services Committee chairman Rep. Spencer Bachus (R-Ala.), Rep. Debbie Wasserman Schultz (D-Fla.), are among those policy makers also scheduled to speak. The program will also feature political pundits and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann. The GAC will open Sunday evening, Feb. 27 with a performance by classic rockers Three Dog Night, and will also feature a keynote speech Feb. 28 by "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The GAC also will feature a political point-counterpoint between conservative commentator Mary Matalin and liberal Web commentator Arianna Huffington of the Huffington Post. Additional speakers from Capitol Hill and the regulatory agencies will be announced in coming weeks. To register for this year's GAC, use the resource link.

Obama signs NCUA technical amendments into law

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WASHINGTON (1/6/11)—President Barack Obama this week signed into law a technical corrections bill that would provide the National Credit Union Administration (NCUA) with new tools to address both troubled individual credit unions and the larger corporate credit union crisis. The legislation, which will alter the Federal Credit Union Act by permitting the NCUA to make payments to the Temporary Corporate Credit Union Stabilization Fund without borrowing from the U.S. Treasury, was approved on the final day of the 111th Congress. The legislation also clarifies that the equity ratio of the National Credit Union Share Insurance Fund (NCUSIF) is based solely on the unconsolidated financial statements of the NCUSIF and grants credit unions the ability to count Section 208 assistance as net worth for the purposes of prompt corrective action (PCA). The Government Accountability Office will also soon investigate the NCUA’s handling of recent corporate credit union failures, and that resulting report will be delivered to relevant congressional committees within six months. The Credit Union National Association plans to closely monitor its implementation going forward.

CU reps swarm D.C. as 112th Congress begins

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WASHINGTON (1/6/11)--As the 112th Congress officially kicked off on Wednesday, representatives from a dozen state credit union leagues, credit unions, and the Credit Union National Association (CUNA) swarmed the House and Senate to take the credit union message to over 100 new members of America’s top legislative body. Credit union representatives from as far away as California and as near as Maryland were greeted by CUNA President/CEO Bill Cheney at credit union house before moving on to their congressional visits.
Click for slide show At CUNA’s swearing-in day open house at Credit Union House on Jan. 5, CUNA President/CEO Bill Cheney greets Greg Connor, executive vice president of Associated CU, Norcross, Ga. Looking on are CUNA Vice President of League Relations Patricia Sowick, CUNA Senior Vice President of Legislative Affairs John Magill, and Georgia Credit Union Affiliates CEO Mike Mercer, who is also vice chairman of the CUNA board.
Representatives from Delaware, Florida, Georgia, Kentucky, Illinois, Missouri, North Carolina, New York, Ohio and Texas were also active at the Credit Union House, on Capitol Hill, and at various congressional receptions held throughout the day. In one congressional meeting, Illinois credit union representatives discussed interchange, supplemental capital and taxation with Sen. Mark Kirk’s (R-Ill.) staffers, noting that the proposed interchange fee carveout for credit unions under $10 billion in assets would likely be difficult to enforce. Leagues are also reaching out to the new congressional representatives via their own district and state-based activities, and will continue to do so in the coming weeks. As the new Congress heats up, the credit union tax exemption, supplemental capital, and the proposed member business lending cap lift will remain high priorities for CUNA. CUNA has also asked members of Congress to hold hearings on the Federal Reserve's recently proposed interchange fee regulations, and urged the Fed to delay implementation of the new rules until the Congress can complete a full discussion of the rules with all parties involved.

Inside Washington (01/04/2011)

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* WASHINGTON (1/5/11)--As the next Congress focuses on modifying the Dodd-Frank Act, both regulators and lawmakers have pointed to the need for national mortgage servicing and foreclosure standards (American Banker Jan.3). Rep. Barney Frank (D-Mass.), outgoing chairman of the Financial Services Committee, has said conflicting incentives to foreclose or seek other loss-mitigation options have created a need for new servicing standards in the wake of recent problems with loan modifications. Both Sen. Chris Dodd (D-Conn.), outgoing chairman of the Banking Committee, and Sen. Tim Johnson (R-S.D.), who is in line to succeed Dodd, have invited regulators to submit a proposal for national mortgage servicing standards. One area of conflict of particular concern for regulators and lawmakers is when one company services a first mortgage for an investor pool and a second one for a different party. Rep. Brad Miller (D-N.C.) has proposed legislation that would prevent such conflict … * WASHINGTON (1/5/11)--A group of Senate Democrats is expected to call for new limits on filibusters when the new Congress convenes today The New York Times Jan.3). Sen. Tom Udall, (D-N.M.) said proposed legislation would require senators to be on the floor if they seek to derail legislation In the previous Congress, Republicans successfully blocked several Obama Administration bills using procedural tactics. Udall said the Constitution and previous Senate rulings empower senators to change the chamber’s rules by a majority vote on the first day of the new Congress. Senate leaders hope to gain more time for bipartisan talks and avoid a showdown on the Senate floor by putting the Senate in recess at the conclusion of today’s opening session. When members return on Jan. 24, the Senate would technically be in the same legislative day. In the interim, a rules compromise could be worked out among senate leaders, said the Times

NCUA applies salary freeze to part of work force

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ALEXANDRIA, Va. (1/5/11)--The National Credit Union Administration (NCUA) said yesterday it will apply President Barach Obama's recent executive-ordered federal pay freeze to those agency employees whose salary increases were not negotiated under existing union contracts. These employees' salaries will be frozen, NCUA Chairman Debbie Matz said, "and we will reduce our budget accordingly." The NCUA said that the cost savings from the pay freeze will be disclosed when the NCUA Board conducts its mid-year budget review in July. The pay freeze would not apply to any increases that are based on collective bargaining agreements between employee unions and their management that were executed before the Presidential order. The NCUA pay increase is one of these agreements. The NCUA on Tuesday told News Now that 217 of its employees will be subject to the pay freeze. A total of 894 union employees will not be subject to the terms of the pay freeze, according to the agency. The freeze, which was approved by the Congress in late December, is aimed at all civilian federal employees that are not military personnel. After reviewing the President's mandate, however, NCUA concluded that as a matter of law it could not apply the pay freeze to any increase required by a collective bargaining agreement that had already been executed and in effect at the time of the President's announcement, as was the case with its employees' bargaining agreement. “NCUA’s decision to apply the freeze to those employees not under the collective bargaining agreement will somewhat ease the cost impact on credit unions that are responsible for funding the agency’s budget, and we view that as a helpful step,” noted Credit Union National Association President and CEO Bill Cheney. “But we continue to share credit unions’ deep concerns over the level of agency expenditures at a time when so many in our industry are under extreme pressure to reduce their own expenses to bring their budgets into line. We can understand the legal constraints that limit the agency’s action with respect to freezing its unionized employees’ salaries, but we also believe the Board should have taken action early on to strike a more reasonable agreement to begin with,” Cheney said.

CUs CUNA prep for 112th Congress

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WASHINGTON (1/5/11)--With the 112th Congress set to start later today, credit unions, state credit union league representatives, and the Credit Union National Association (CUNA) are moving to meet with incoming and returning members of Congress. After the Congress convenes at noon, the House of Representatives will elect the Speaker of the House, swear in Representatives and approve officers and a rules package. The House will also begin the process of electing Members to standing committees, including the House Financial Services Committee, on Wednesday, and will likely remain in session on Thursday and Friday. CUNA Vice President of Legislative Affairs Ryan Donovan said that the House should be in session sporadically through the end of the month, but will likely avoid discussion of any large scale legislation until after President Barack Obama has completed his state of the union address later this month. The Senate will also be sworn in today, and may take up a new rules package that could include proposals related to the filibuster and secret holds later today. Member business lending will be one focus during the upcoming Congress, following up on many recent attempts to move the legislation both as an amendment and a standalone bill. The MBL cap legislation, which is sponsored by Sen. Mark Udall (D-Colo.) and has several Senate cosponsors from both major parties, would lift the cap to 27.5% of a credit union’s total assets, and could create up to $10 billion in new funding for small businesses. This untapped source of funding would create over 100,000 new jobs at no cost to taxpayers. CUNA this week also asked members of Congress to hold hearings on the Federal Reserve’s recently proposed interchange fee regulations, and urged the Fed to delay implementation of the new rules until the Congress can complete a full discussion of the rules with all parties involved. (See related 1/4/11 story: CUNA: Hearings on Fed interchange proposal needed)

CUNA concerned by CARD Act creditworthiness standard

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WASHINGTON (1/5/11)--The Credit Union National Association (CUNA) in a recent comment letter said it is concerned by a Federal Reserve proposal that would require creditors to consider only an individual credit applicant’s ability to make payments, and not other household income, when determining an individual’s creditworthiness. CUNA noted that this proposed change could have a negative effect on individuals’ access to credit, with a particular impact on women who “are members of households and are either not working themselves or underemployed.” “These individuals should be allowed to rely on household income when applying for credit and nothing in the CARD Act or other provisions of the Truth-in-Lending Act require a different result,” CUNA added, referring to the Credit Card Accountability Responsibility and Disclosure (CARD) Act. CUNA also questioned the Fed’s decision to include application and processing fees under a proposed 25% cap. The proposed cap would require financial institutions to ensure that all account fees charged during the first year of an account do not exceed 25% of the account’s total credit limit. CUNA said that Congress did not intend for this cap to apply to account opening fees. However, CUNA agreed that the Fed’s restrictions on charging multiple fees for single transactions and proposed prohibition on account inactivity fees were consistent with the intent of the CARD Act. CUNA also supported proposed clarifications related to the definition of a credit card and requirements that aim to ensure that accountholders receive their statements in a timely manner. CUNA also backed proposed limitations that would hold penalty fees to $25 for initial violations and $35 for additional violations of the same type during the next six billing cycles. The CARD Act also prohibits card issuers from imposing more than one over-the-limit fee per billing cycle, imposing more than one penalty fee based on a single event or transaction, or imposing multiple returned payment fees by submitting the same check for payment multiple times, CUNA noted. For the full comment letter, use the resource link.

NCUA announces agenda for Thursdays webinar

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ALEXANDRIA, Va. (1/5/11)--The definition of troubled debt restructured (TDR) loans, as well as what constitutes financial difficulty and how impairment measurement works when dealing with these loans, will be among the items on the agenda during a Jan. 6 National Credit Union Administration (NCUA) webinar. The webinar, which will take place at 2 p.m. ET, will be moderated by Board Member Gigi Hyland and will feature input from auditing firm Crowe Horwath LLP. The webinar, which is interactive and will feature a question and answer session, will facilitate credit union understanding of U.S. generally accepted accounting principles in relation to troubled debt restructurings, the NCUA said. TDR loans, which have very specific accounting and reporting requirements, sometimes occur as a result of loan modifications. The financial statement notes and call report data associated with TDRs are also unique. To register for the NCUA webinar, use the resource link.

Inside Washington (01/03/2011)

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* WASHINGTON (1/4/11)--As of Dec. 31, the Small Business Administration (SBA) had approved more than $10.3 billion in loan guarantees since President Obama signed the Small Business Jobs Act of 2010 on Sept. 27. The Jobs Act included an extension of reduced fees and higher guarantee loan enhancements in the agency’s two largest loan programs. SBA Administrator Karen Mills noted that in three months all of the $505 million in subsidies provided in the Jobs Act to support loan enhancements has been used by the agency’s national network of lending partners. As a result, the SBA has activated its loan queue to redirect any remaining funds that result from loan cancellations to Jobs Act loans. During the fourth quarter, SBA approved nearly 22,000 small business loans for $10.47 billion, supporting $12.16 billion in lending. The amounts are greater than the volume for Jobs Act loans over the same period because they exclude some loans that were not eligible for Jobs Act enhancements …

Agency to provide CU systems transition tracking in 2011

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ALEXANDRIA, Va. (1/4/11)--Natural person credit unions that are temporarily receiving payment services from so-called “bridge” corporate credit unions will, beginning with the June 30, 2011 call report cycle, be able to track their payment system service transition via an online credit union profile, the National Credit Union Administration (NCUA) said in a recent release. The NCUA has also provided both guidance and a payment systems checklist to give credit unions the resources needed to successfully analyze payment system services and make prudent decisions regarding potential service provider changes. Corporate credit unions are often used to aid natural person credit unions in the operation of their clearing, settlement and payment systems, and can also offer other behind the scenes business assistance to credit unions. Credit unions that plan to transfer some of their existing services to another corporate credit union “must work diligently to ensure a safe and sound transition” and work to minimize disruption to any member payment services, the NCUA said. The agency will later this year hold a “Payment Systems Checklist” webcast and will also provide credit unions with under $50 million in assets with their own public forum during a series of workshops. The NCUA also encouraged credit unions to perform a due diligence review on their service providers and to fully understand each payment service provided by their corporate credit union to make informed decisions before any changes are made to those services. For the full NCUA release, use the resource link.

NCUA tech corrections bill could become law this week

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WASHINGTON (1/4/11)--A technical corrections bill that would provide the National Credit Union Administration (NCUA) with new tools to address both troubled individual credit unions and the larger corporate credit union crisis could be signed into law this week, and the Credit Union National Association (CUNA) plans to closely monitor its implementation going forward. The legislation, S. 4036, was approved on the final day of the 111th Congress. The legislation will alter the Federal Credit Union Act by permitting the NCUA to make payments to the Temporary Corporate Credit Union Stabilization Fund without borrowing from the U.S. Treasury. The legislation also clarifies that the equity ratio of the National Credit Union Share Insurance Fund (NCUSIF) is based solely on the unconsolidated financial statements of the NCUSIF. The legislation will also give credit unions the ability to count Section 208 assistance as net worth for the purposes of prompt corrective action (PCA). Under the terms of the legislation, the Government Accountability Office will investigate the NCUA in an attempt to uncover the reasons for recent corporate credit union failures and evaluate the adequacy of the NCUA's response to the failures of the corporates. The resulting report, which will be delivered to the Senate Banking Committee and House Financial Services Committee within six months after the legislation is enacted, will also evaluate the effectiveness of the NCUA's PCA implementation and examine whether the agency has been effective in implementing recommendations made by its Inspector General and contained in Material Loss Review Reports.

CUNA Hearings on Fed interchange proposal needed

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WASHINGTON (1/4/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney on Monday urged the House Financial Services Committee to hold hearings on the Federal Reserve’s debit interchange proposal as soon as possible, with an eye toward encouraging the Fed to delay full implementation of the interchange rule until after these hearings are held and a comprehensive congressional review has been completed. The Fed’s interchange provisions, which were released just before the end of the year, could cap debit card interchange fees that are paid by merchants to card issuers at 12 cents per transaction. Issuers with under $10 billion in assets would be exempt from the interchange changes. The Fed proposal will remain open for public comment until Feb. 22. Fed officials during their December meeting said that the interchange provisions, if ultimately approved, would likely not become effective until after April. Cheney in the letter to House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) and ranking member Rep. Barney Frank (D-Mass.) noted that no congressional hearings were held on the interchange provision prior to its enactment, and that there is virtually no legislative history regarding the amendment. “This is troubling given the fact that the legislation to which it was attached received considerable consideration by both chambers and was subject to an exhaustive conference committee process,” Cheney added. Hearings on the interchange issue would be timely and critical, and would help determine how best to ensure that credit unions and other small issuers are not subjected to the artificially low debit interchange fee structure the Fed is proposing for large issuers, Cheney added. In a letter to the lawmakers, Cheney argued that the interchange provisions could have tragic consequences for credit unions, and would impact all users of debit cards. Cheney noted that the interchange amendment lacks an enforcement mechanism for the small issuers’ exemption, and said that there is no guarantee the payment card networks will operate a two-tiered system the exemption necessitates for small issuers. Bachus and Rep. Jeb Hensarling (R-Texas) in a recent letter to the Fed questioned the speed with which the interchange legislation was moved through Congress. Frank last month also contacted the Fed, noting that the implementation of still-pending interchange regulations, if not properly crafted, "may have unintended consequences" for credit unions and consumers. (See related story 12/23/10: Bachus, Hensarling: Could $10B exemption harm CUs?) For the full comment letter, use the resource link.

Inside Washington (01/02/2011)

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* WASHINGTON (1/3/11)--The creation of the Financial Stability Oversight Council was seen as a key element of the Dodd-Frank Act, but after the council’s first five months of existence observers are wondering if it has the political will to carry out its statutory mandate of identifying and eliminating systemic risk (American Banker Dec. 30). For example, the council’s 15 members disagree on how to implement the Volcker Rule, which bans proprietary trading and puts limits on risky investments. Part of the problem is the different perspectives of regulators, such as the Federal Reserve Board and the Federal Deposit Insurance Corp. (FDIC). Some believe the council is too large to carry out its mandate. Josh Rosner, managing director at the research firm of Graham Fisher & Co., said there are too many voices on the council to create coherent policy. Others said that the diverse views on the committee will be an asset. For example, FDIC Chairman Sheila Bair said it’s important to have the views of the Securities and Exchange Commission and the Federal Housing and Finance Agency in addition to bank regulators on servicing issues … * WASHINGTON (1/3/11)--White House adviser Elizabeth Warren is quietly seeking candidates to head the new Consumer and Financial Protection Bureau (The Wall Street Journal Dec. 30). The search indicated that Warren would not be selected to lead the bureau. The Obama administration considered nominating Warren for the position earlier this year, but delayed that decision because of concerns Republicans considered her anti-business and would block the nomination. Observers say Warren and her senior adviser, Raj Date, have sought input from the Independent Community Bankers of America, the Financial Services Roundtable and the Center for Responsible Lending. Among the names mentioned as possible nominees include Iowa attorney general Tom Miller; New York state bank regulator Richard Neiman; and former Office of Thrift Supervision director Ellen Seidman …

CU ATM takes residence on Hill

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WASHINGTON (1/3/11)—The incoming 112th U.S. Congress, to be sworn in Wednesday, must gird to face some significant challenges in the coming year. However, the credit union movement would agree that there is at least a little bit a good news to greet them as they come to Washington, D.C. The National Democratic Club (NDC) on Capitol Hill has installed a credit union-affiliated ATM for the convenience of its members. The ATM is administered by Congressional FCU. With its multiple-group field of membership, with focus primarily on those affiliated with federal, state and local government, all NDC members are eligible for membership at Congressional. The NDC announcement about its new ATM offering notes that “other bank and credit cards may be used” at the ATM, but also says applications for membership at Congressional are available at the NDC office.

CUNA backs appraiser independence rule with tweaks

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WASHINGTON (1/3/11)—The Federal Reserve Board’s approach to its interim final rule on appraisal independence, overall, will help prevent actions designed to coerce or manipulate appraisers, the Credit Union National Association (CUNA) agreed in a recent comment letter. However, the Fed must do more to protect small financial institutions from an unmanageable burden, the group added. CUNA supported many aspects of the new rule, but encouraged the Fed to increase the asset threshold for the small institution safe harbor from the currently proposed $250 million in assets to a more reasonable $1 billion in assets. The CUNA letter said that the reasons cited by the Fed rule’s preamble for differentiating between small and large institutions apply equally to institutions with up to $1 billion in assets. As an example, CUNA cited the Fed’s example that institutions below $250 million in assets “may decrease their consumer lending operations due to an inability to comply with the rules, such as the firewalls requirement, because of limited staff resources and similar factors.” “This is also true for many institutions with up to $1 billion in assets,” CUNA told the Fed. “Many credit unions and other community financial institutions with more than $250 million but fewer than $1 billion in assets have small staffs and relatively limited resources compared to larger institutions with national or regional presences.” Beyond the asset threshold, CUNA had a series of recommendations to improve the rule. For instance, CUNA recommended some changes in the way appraiser fees are to be assessed. Since 2008, many creditors have used appraisal management companies to avoid the appearance of undue influence on an appraiser’s conclusions under the Home Valuation Code of Conduct, and appraisal management companies have generally depressed the average compensation of appraisers, CUNA noted. “We believe that credit unions that prefer to use appraisal management companies should be free to continue to use them, as the rule contemplates. However, credit unions should be able to consider appraiser fees that existed prior to the Home Valuation Code of Conduct in order to be able to retain the most experienced appraisers who produce the most accurate appraisals,” said the CUNA letter. Use the resource link below for CUNA’s complete remarks.

CUs were in the legislative thick of things CUNA says

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WASHINGTON (1/3/11)--Credit unions were in the thick of things from the beginning to end of the 111th Congress, reminded Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs John Magill last week, and lawmakers in the 112th Congress--to be sworn in Wednesday--should expect no less. “When Congress turned its attention to repairing the regulatory framework that caused the greatest financial crisis since the Great Depression, CUNA, the leagues and credit unions were there to work with Congress to minimize the adverse impact on credit unions,” Magill reminded. He said that effort was typical of the level of involvement and impact that credit unions had throughout the year. As a result of those efforts:
* All but three credit unions will be exempt from examination and enforcement by the Bureau of Consumer Financial Protection (BCFP); * Credit unions will not have to pay for the new agency; * The chairman of the National Credit Union Administration will serve on the oversight council reviewing the BCFP’s rules; * Credit unions will not be required to offer plain vanilla products to their members before offering products that may better meet their needs; * Credit unions will not have to collect deposit account data and report it to the consumer bureau; * Credit unions will not be subject to the Community Reinvestment Act, and the CFPB will not have authority over the CRA; * The legislation included language that CUNA inspired which directs the bureau to review and address outdated, unnecessary and unduly burdensome regulations with the intent of reducing regulatory burden; and, finally * The new law directs the bureau to take into consideration the impact of its regulations on credit unions.
“Congress saw credit union involvement in perhaps unprecedented force,” Magill said. “It set a high bar, but credit unions can be encouraged to see the effect their efforts can have.”

NCUA reports a sound industry with continuing challenges

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ALEXANDRIA, Va. (1/3/11)--For the first three quarters of 2010, the aggregate net worth of the credit union industry was up slightly to just less than 10% of total assets, and more than 94% of federally insured credit unions met the standard for the definition of being “well capitalized with net worth ratios of 7% or greater, according to figures released by the National Credit Union Administration (NCUA). The agency underscored that the overall financial condition of the credit union industry remained sound; even the return on average assets improved--reaching 0.45%. However, in its Letter to Credit Unions (10-CU-25), the agency stated clearly that financial stresses on credit unions remain, and it identified key trends and risks that the federal regulator will continue to supervise closely. For instance, in addition to credit and interest rate risk, the NCUA noted the affect the weak economy continues to have on many credit union members. “As their debts become overwhelming, members who experienced job losses and foreclosures are more likely to file for bankruptcy. The number of members filing for bankruptcy increased by one-third in the third quarter of 2010 and is on pace to exceed the total for 2009. During the first nine months of 2010, the percentage of loans charged off due to bankruptcy increased from 20.8% to 23.7%,” the letter noted. Use the resource link to view the complete letter.

Regulators set supervisory expectations for Internet authentication

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WASHINGTON (1/3/11)--The National Credit Union Administration (NCUA), along with federal bank and thrift regulators, issued a supplemental guidance on Internet banking authentication late last week to update supervisory expectations. The guidance, also meant to reinforce the practices of risk management specified in a 2005 authentication guidance, updates supervisory expectations for the effectiveness of member authentication, layered security and other controls used to secure member accounts and fight fraud. Convenience and cost savings have driven up the use of online transaction services since the 2005 Authentication in an Internet Banking Environment was unveiled, the NCUA noted in its Letter to Credit Unions (10-CU-24), and the “Internet threat landscape has changed significantly.” “Sophisticated hacking techniques and growing organized cybercriminal groups with expertise, skills, and resources are increasingly targeting financial institutions, compromising authentication mechanisms, security controls and engaging in online fraudulent activities,” the agency noted. The NCUA letter, signed by Chairman Debbie Matz, encourages federal credit unions to implement the supplemental guidance to help secure members’ online accounts and sensitive member information. Use the resource link to access the authentication guidance.