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Inside Washington (10/10/2011)

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* WASHINGTON (10/11/11)--Saying she does not believe that big banks will be held accountable in multi-state negotiations, Massachusetts Attorney General Martha Coakley said her office is preparing to file lawsuits against the nation’s largest mortgage servicers for illegal foreclosure practices. “I have lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures,” Coakley said. “Because our office for some time has anticipated that result, we have begun preparing for litigation. Our office is aggressively proceeding with efforts to file lawsuits regarding creditor misconduct in connection with unlawful foreclosures.” Coakley is not withdrawing from the multi-state negotiations (American Banker Oct. 7.) California Attorney General Kamala D. Harris withdrew from the negotiations last week. New York Attorney General Eric Schneiderman was removed from the talks after being accused of attempting to undermine the negotiations … * WASHINGTON (10/11/11)--Early indications are that the Volcker Rule will be difficult for regulators to implement and make it nearly impossible for banks to comply. The Volcker Rule, made law by the Dodd-Frank Act, prohibits banks from risking their capital through trading, and limits their involvement with hedge funds and private-equity entities. But it does allow exemptions, such as trading on behalf of customers. Wayne Abernathy, the director of regulatory affairs and financial institutions policy at the American Bankers Association, said he was “dismayed” that the preamble alone is more than 200 pages, an indication that the details of the regulation itself will be several times longer (American Banker Oct. 7.). Some observers suggested the plan is an opening statement in what may be a long battle over the final rule, according to the Banker … * WASHINGTON (10/11/11)--The Federal Emergency Management Agency (FEMA) website notes that President Obama on Oct. 5 signed the continuing resolution that includes a provision reauthorizing the National Flood Insurance Program (NFIP) through Nov. 18. FEMA, the overseer of the program, promised, “We will continue to update you on the NFIP reauthorization status” … * WASHINGTON (10/11/11)--In a comment letter sent to the National Credit Union Administration (NCUA) last week, the Credit Union National Association (CUNA) generally supported proposed technical amendments and clarifications to the agency’s corporate credit union rule. The letter said, CUNA overall supports a “more consistent” regulation and encourages “further efforts to reduce regulatory burdens on corporate credit unions.” CUNA backed a proposed revision that weighted average life (WAL) violations would no longer be subject to capital category reclassification for purposes of Prompt Correction Action under Section 704.8, calling it appropriate and citing that it would reduce regulatory burden. CUNA also agreed a proposed revised definition of “net assets” that would exclude Central Liquidity Facility (CLF) stock subscriptions is appropriate because the credit risk of carrying CLF stock subscriptions is “minimal and should encourage the use of the CLF as a liquidity provider, which will benefit corporate and natural person credit unions” … * WASHINGTON (10/11/11)--The Pennsylvania Credit Union Association (PCUA) Governmental Affairs Committee (GAC) launched its 2011 Hike the Hill event on Wednesday in Washington, D.C. Wednesday’s activities included a brief business meeting and discussions with the Consumer Financial Protection Bureau (CFPB), the National Credit Union Administration (NCUA) and the Credit Union National Administration (CUNA). Elizabeth Vale, CFPB assistant director for community banks and credit unions for CFPB, described the new agency’s mission. Consumer protection and financial literacy are top priorities for CFPB. “Credit unions wrote the book on financial literacy,” said Vale. “You are the model and your practices are outstanding.” Buddy Gill, senior strategic communications advisor for NCUA, discussed regulatory initiatives. Staff from the association and CUNA talked about pending legislation, policy issues, and campaign finance. Committee members also met with U.S. Reps. Jason Altmire (D) and Glenn Thompson (R). On Thursday committee members met with U.S. Rep. Mike Fitzpatrick (R), a member of the House Financial Services Committee and Dina Ellis Rochkind, senior financial services counsel for Sen. Pat Toomey (R), a member of the Senate Banking Committee. CUNA and credit unions are urging Congress to increase credit unions’ member business lending cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity for credit unions to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said …

Congress this week MBLs as centerpiece

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WASHINIGTON (10/11/11/)—The U.S. House and Senate are back in Washington this week to consider such things as foreign trade agreements, in the House, and judicial nominations in the Senate. However, the centerpiece of the week as far as credit unions are concerned is the Wednesday hearing on member business lending, at which the Credit union National Association (CUNA) will testify. At 2 p.m. (ET) the House Financial Services Committee subcommittee on financial institutions and consumer credit is scheduled to conduct the MBL hearing, focusing on H.R. 1418, the Small Business Lending Enhancement Act. Jeff York, President/CEO of Coasthills FCU in Lompoc, Calif. will testify on behalf of CUNA and his testimony will be available on the CUNA our website after it has been transmitted to the committee. Earlier in the day Wednesday, the same subcommittee will conduct a hearing entitled “Regulatory Impediments to Job Growth.” And another financial services subcommittee will study oversight of the Federal Home Loan Banks. On Thursday, the subcommittee on international monetary policy and trade has scheduled a hearing on "The U.S. Housing Finance System in the Global Context: Structure, Capital Sources, and Housing Dynamics." When the House completes its business for the week, it will stand in recess until the week of Oct. 24. The Senate will be in session next week and then out of session the week of Oct. 24.

E-advocacys dynamic growth reflected in CUNA efforts

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WASHINGTON (10/11/11)--Members of the U.S. Congress are increasingly using email and social media tools such as Facebook and Twitter to gauge public opinion and communicate with their constituents, and the total volume of electronic communications going into congressional offices has increased by as much as 1,000% over the last decade, the Congressional Management Foundation said in a recent report. The report, entitled How Citizen Advocacy is Changing Mail Operations on Capitol Hill, found that “the bulk of these communications sent to Capitol Hill are through advocacy campaigns.” The Credit Union National Association (CUNA) is among those leading this charge, and has long been on the cutting edge of this communications shift. “Social media and email advocacy is still a relatively new medium, but in many ways it’s ready-made for credit unions to use in delivering our message to Congress. It fits perfectly with the grassroots and cooperative nature of credit unions... but it only works if we are willing to engage our credit union employees and members on key issues,” CUNA Vice President of Political Affairs Trey Hawkins said. CUNA’s Grassroots Action Center, which is hosted on, alerts these credit union supporters of the most pressing issues for credit unions, and gives them the tools to contact their own elected officials on these issues. The site helps constituents search for contact info from their local legislators and provides them with background information and sample statements covering the issues in question. Contacting a member of Congress on a credit union issue is as easy as a few quick clicks. In a recent Action Alert campaign on the debit card interchange fee issue, CUNA sparked more than 500,000 credit union contacts to federal lawmakers before a vote that would have delayed the fee cap. The Action Center over two years, circulated more than a million grassroots contacts on the interchange issue and the impact of those contacts was seen directly. While the delay bill ultimately was defeated, support for it grew significantly as contacts increased and some original supporters of the interchange fee cap were swayed to support the legislation that would have required a second and slower look at the cap. The main target of CUNA’s current online advocacy efforts are House and Senate bills that would increase the credit union member business lending (MBL) cap to 27.5%, up from 12.25%. CUNA’s MBL push also incorporates use of Twitter and Facebook, and geographically targeted, web-based ads to drive traffic to CUNA’s own MBL direct advocacy page. Legislative Action Alerts can often be teamed up with CUNA’s Operation Comment Alerts, which—excluding the avalanche of interchange letters--has generated more than 15,000 comments to agencies such as the National Credit Union Administration, the Federal Reserve Board, the U.S. Treasury Department. Hawkins said Facebook and Twitter are also key parts of CUNA’s grassroots communication strategy. He added that he thinks the Action Center experience on interchange has opened a lot of credit union eyes to the benefits of the electronic systems and he believes it will translate to a good response for MBLs as well. (See the resource link below.)

Compliance Junior goes on a spree with Moms debit card

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WASHINGTON (10/11/11)--Kids these days. You hand them your three-and-a-quarter inch debit card and they take a mile. But can a credit union be liable for Junior’s spending binge if it is piled on top of authorized use of the card? A recent post in the Credit Union National Association’s ComplBlog tells credit unions to consider this common and familiar scenario: Mom Member gives her son, Sonny, her debit card and a list of items to pick up at the grocery store. He purchases everything on the list, but then takes a sharp turn off the path of being a good son and decides also to get some cash at the ATM, fill up his gas tank, buy pizza and beer for 20 of his closest friends, and purchase a new gaming system. Sonny dutifully returns the card to Mom. Mom checks her account online a few days later and discovers Sonny’s little shopping spree. She calls her credit union to report the “unauthorized” transactions. Is Mom entitled to get her money back? Under Regulation E, the answer is probably not. The Federal Reserve Board's Official Staff Commentary to Regulation E [Comment 205.2(m)] states the following: “If the consumer grants authority to make transfers to a person (such as a family member or co-worker) who exceeds the authority given, the consumer is fully liable for the transfers unless the consumer has notified the financial institution that transfers by that person are no longer authorized.” If Mom Member notified the credit union that transactions were no longer authorized while Sonny was still using the card, she wouldn't be liable for any additional debit card transactions after providing the notice. And, the credit union could have canceled or suspended the card to prevent any further usage. However, if Mom Member discovers Sonny’s usage after the fact, it's too late. Follow CUNA’s CompBlog for continuous compliance gems. Use the resource link below.