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Washington Archive

Washington

CUs dont have to act now on corporate decisions Matz

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DALLAS (10/12/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz urged credit union boards to wait for more information about corporate credit union options before looking outside the system for services. Matz told Corporate System Resolution Town Hall Meeting participants that bridge corporate credit unions will operate for 24 months to provide time for the credit union system to develop multiple options for corporate services. Southwest Corporate, which is now in conservatorship, is expected to evolve into a bridge corporate structure in November (LoneStar Leaguer Oct. 11). Southwest is currently forming an Advisory Council of credit union executives to help develop future corporate services. If a credit union’s contracts for corporate services expire during the 24-month bridge period, Matz noted that bridge corporates may honor current pricing on a month-to-month basis. Scott Hunt, NCUA Office of Corporate Credit Unions, advised credit unions to maintain current deposits in the system until the securitization process is complete in roughly six months. Maintaining deposits will prevent strains on liquidity that could create additional losses and impact all credit unions. The NCUA offers a three-part DVD about the corporate system resolution plan and timetable. A fourth installment is now available on the NCUA website.

FDIC proposal would broaden overdraft rules reach

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WASHINGTON (10/12/10)--The Federal Deposit Insurance Corp. (FDIC) recently proposed rules that would make state-chartered banks under its jurisdiction go farther in incorporating consumer protections in their overdraft programs than the Federal Reserve’s rules dictate. The Credit Union National Association (CUNA) notes that credit unions may well want to monitor what the FDIC is proposing as new overdraft rules, even though those rules would not apply to them. The FDIC actions possibly could foreshadow decisions about overdraft plans made by the new Consumer Financial Protection Bureau (CFPB), and bureau rules would apply to credit unions. Regarding the current situation, this is where things stand. In July, Fed rules went into effect that require accountholders to provide “opt in” consent before a bank or credit union can charge fees for covering overdrafts triggered by ATM withdrawals or one-time debit transactions. The Fed rule does not cover check or ACH payments. The FDIC’s expectations, as outlined in a Financial Institutions Letter (FIL-47-2010) dated Aug. 11, are that institutions monitor their overdraft programs closely and oversee any overdraft payment programs they offer to consumers. (See resource link below.) “Such oversight should include appropriate measures to mitigate risks, incorporating the best practices outlined (in a 2005 Joint Guidance on Overdraft Protection Programs) and effective management of third-party arrangementsm" according to the FDIC. Bank examiners would use this guidance to evaluate the adequacy of a bank’s overdraft program. The FDIC plan proposes that banks that rely on automated overdraft payment programs must establish procedures to address overdrafts triggered by checks and ACH transfers. The FDIC would require banks using automated systems to specifically provide an “opt out” program for checks and ACH payments and monitor accounts to limit overdraft usage by a customer, including giving customers who overdraw their accounts on more than six occasions during a 12-month period less costly alternatives or eliminate overdraft protection on the account, and cap the amount of transactions subject to an overdraft fee or putting a dollar daily limit on overdraft fees. A number of the FDIC's proposed restrictions are drawn from bills in Congress to restrict overdraft programs. Community bankers are “up in arms” about the FDIC plan, according to the Oct. 5 American Banker. The bankers argue that it would be burdensome, restrictive, and would put smaller institutions at a competitive disadvantage to larger ones. The FDIC position is that a bank's "oversight should include appropriate measures to mitigate risks, incorporating the best practices outlined (in a 2005 Joint Guidance on Overdraft Protection Programs) and effective management of third-party arrangements." Management should be especially vigilant with respect to product over-use that may harm consumers, rather than providing them the protection against occasional errors or funds shortfalls for which the programs were intended, according to the agency. A recent event that helps to drive home these points is framed in an announcement issued Friday by the Office of the Comptroller of the Currency (OCC). Under a settlement with that federal regulator, Woodforest National Bank, The Woodlands, Texas, must pay approximately $32 million to consumers in reimbursements from the bank’s overdraft program. The settlement also requires the bank to pay a civil money penalty of $1 million to the U.S. Treasury Department. The OCC determined that Woodforest engaged in “unfair or deceptive practices,” such as charging excessive fees, improperly assessing recurring fees, and assessing “continuous overdraft fees” against certain bank customers. In addition to the customer reimbursement and penalty payment, the bank also agreed to change its overdraft program in order to correct any violations of law.

Compliance audio conference tackles six major issues

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WASHINGTON (10/12/10)--The Credit Union National Association (CUNA) will offer up-to-date information on six hot compliance topics in a wide-ranging audio conference this Thursday. The live information session will feature the following topics for discussion:
* Secure and Fair Enforcement (SAFE) Act registration process update; * Upcoming changes in mortgage lending rules; * Requirements of the National Credit Union Administration’s new payday-loan-alternative; * New Americans with Disability Act rules impacting ATMs; * U.S. Department of Labor's affirmative action authority; and * The Fair and Accurate Credit Transaction Act’s (FACTA's) upcoming risk-based pricing notice requirements.
Scheduled speakers include: Kathy Thompson, CUNA senior vice president for compliance, Mike McLain, CUNA assistant general counsel, Valerie Moss, CUNA director of compliance information, and Nichole Seabron, CUNA federal compliance counsel. Participants will have an opportunity to ask questions of audio conference panelists. The Oct. 14 session is scheduled for 2:00-3:30 p.m. (ET). Use resource link below to register.

Foreclosure debate heightens

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WASHINGTON (10/12/10)--Attention to the topic of mortgage foreclosures has sparked in the past week, although it never fully cools off or falls completely to the background--not since the country’s housing crisis was first acknowledged. In a recent development, the Senate Banking Committee has scheduled a Nov. 16 hearing to investigate the charges that have been flying that there has been improper and fraudulent mortgage servicing and foreclosure processing. “American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud,” said the committee chairman, Sen. Christopher Dodd. The Connecticut Democrat said recent allegation that some of the nation’s largest lenders have engaged in shoddy, at best, practices in their foreclosure action has him “deeply troubled.” “I am deeply troubled by recent revelations and allegations of practices by some of the nation’s largest lenders. Regulators at the federal, state, and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law,” Dodd said in a release that announced the hearing. Last week, it was widely reported that four major mortgage servicers were suspending foreclosures while allegations of improper actions are investigated. And President Obama made it known that he would not sign a bill, passed by the U.S. House in April but pushed through the Senate just before recess, which would have required that foreclosure documents notarized in one state be recognized in other states.

Cheney emphasizes on CNBC There is no bailout

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Washington (10/12/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney appeared live Monday morning on CNBC's Squawk Box to talk about credit unions and again dispel any mistaken notion that recent regulatory action involving corporate credit unions constitutes any form of bailout. Co-anchor Joe Kernen in an introduction asked Cheney about the characterization of the National Credit Union Administration’s (NCUA’s) actions to stabilize the corporate credit union system as a “government bailout.” “That’s not quite right, is it,” Kernen asked.

Cheney emphasized that "this is not a bailout in any way, shape or form" and that NCUA's action "won't cost the taxpayers a dime." Asked about a "worst case" scenario regarding the government guarantee behind the credit union investments to bolster the corporate system--and whether that eventually could lead to taxpayer costs, Cheney underscored that credit unions are fully able to pay for the costs of the stabilization program over the allowable 11 years. Cheney said, “The government has set up a program that will enable credit unions to pay for this themselves. They aren’t asking for any bailout.” Cheney further explained the difference between corporates and natural person credit unions and stressed that "the credit unions consumers deal with will continue to do a great job, as they always have, serving their members."

Inside Washington (10/11/2010)

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* WASHINGTON (10/12/10)--Sen. Tim Johnson (R-S.D.), who is expected to be chairman of the Senate Banking Committee after Christopher Dodd (D-Conn.) retires, said that he plans to “cautiously” reform housing finance, said American Banker (Oct. 8). Johnson told the publication that he is planning hearings to look at different housing finance models in other countries. Any legislation, however, would need a wide consensus for approval, he said. Johnson is expected to take a more moderate approach to banking than Dodd. South Dakota is home to many community banks and Citigroup credit card operations. Johnson voted against credit card reform, which was approved last year. He supported federal preemption for national banks, which was an amendment by Sen. Tom Carper (D-Del.) in the regulatory reform bill ... * WASHINGTON (10/12/10)--Senate Majority Leader Harry Reid (D-Nev.) welcomed a decision by Bank of America to suspend foreclosures in all states. Reid wrote a letter to Nevada’s mortgage-servicing divisions of Bank of America, JP Morgan Chase, Wells Fargo and Ally, asking them to suspend foreclosures until reports regarding improper actions are resolved. “It is only fair to Nevada home owners to suspend foreclosures until a thorough review of foreclosure processes is completed and home owners can be assured that their documents are being analyzed properly,” Reid said on his website ... * WASHINGTON (10/12/10)--President Barack Obama will not sign a foreclosure notarization bill, according to White House Press Secretary Robert Gibbs (American Banker Oct. 8). Obama is not planning to sign because of foreclosure proceeding problems, Gibbs said. The president will exercise a pocket veto, sending the measure back to Congress to iron out some “unintended consequences” of the bill. The measure, the Interstate Recognition of Notarization Act, by Rep. Robert Aderholt (R-Ala.), was approved by the Senate in September and the House in April ...