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For CUs: Agencies' Status During Gov't Shut Down

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WASHINGTON (10/2/13)--"While the gridlock in Washington has put many people in an unfortunate situation, it's important for the nation's 98 million credit union members to know that credit unions are still operating safe and sound," Credit Union National Association President/CEO Bill Cheney said following Tuesday's news of the federal government shutdown.
"Because we are member-owned and member-directed, our services will continue uninterrupted. During these financially uncertain times, credit unions can offer a variety of services, including short-term, specialty loans for those whose finances have been directly impacted by the shutdown," Cheney said. CUNA has readied its own resources to help credit unions inform their members of available help during the shutdown. (Use the resource link.)
CUNA has also noted the shutdown will not impact ACH processing.
"The National Credit Union Administration will remain functional through the shutdown and all accounts will be insured as usual," Cheney added. "Although NCUA is an arm of the federal government, its operations are completely funded by credit unions, ensuring the security of all member accounts," he said.

In fact, CUNA notes that most federal financial regulators are funded independently of the congressional appropriations process, and do not need to rely on Congress to pay their staff. Here's a brief update on the shutdown status of various federal agencies that are important to credit unions:
  • Consumer Financial Protection Bureau: open;
  • Federal Reserve: open;
  • Federal Deposit Insurance Corp.: open. However, the FDIC's Office of the Inspector General is closed with 113 out of 121 employees furloughed;
  • Office of the Comptroller of the Currency: open;
  • Federal Housing Administration (FHA): Partially open, and able to endorse new loans. The FHA in a recent release said it will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market. Because the agency is able to endorse loans, it said it does not expect the shutdown to significantly impact the housing market, as long as the shutdown is brief. "If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market.  We could also see a decline in home sales during an extended shutdown period, reversing the trend toward a strengthening market that we've been experiencing," FHA said;
  • Federal Trade Commission: closed;
  • Small Business Administration: generally closed; and
  • U.S. Internal Revenue Service: generally closed.

Also,  Fannie Mae and Freddie Mac are open and able to process new loans.

(See related story: CUs Offering Help To Furloughed Fed Employees.)

Online Don't Tax My CU Rally Is Today

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WASHINGTON (10/2/13)--Portions of the national mall remain barricaded as a result of the federal government shutdown, but those barriers won't matter when tens of thousands of credit union supporters take their "Don't Tax My Credit Union" message to members of the U.S. Congress during today's national virtual "Don't Tax My Credit Union" rally.

"Rather than rallying supporters at the National Mall--like so many campaigns do--this movement will rally tens of thousands of credit union members nationwide online," said Bill Cheney, president and CEO of the Credit Union National Association. "Our digital engagement has been a tremendous success this year, and we hope that support will culminate with our virtual rally."

During the national virtual rally, participants will be encouraged to use the various Take Action tools at to show their support via tweets, pictures, vine videos, and e-mails to their members of Congress, all with the #DontTaxMyCU hashtag. Advocates will also be asked to use the "Tweet Congress" tool on the site to tweet their lawmakers--and ask that lawmakers tweet back with a response showing their support of credit unions.

The online rally will also be supported by an accompanying physical rally at Credit Union House in Washington, D.C., between 2 p.m. and 3 p.m. (ET). The credit union house event will be live streamed at

The event will be moderated by Paul Berry, and will feature remarks by Cheney, Paul Gentile, Bill Hampel, John Magill, and Ryan Donovan of CUNA. Other participants, speakers and interviews from all over the country will join in remotely using video conferencing.

League and credit union representatives from Illinois, Iowa, Kansas, Maine, Michigan, Missouri, Minnesota, Montana, Nebraska and Ohio are also joining in the fight by hiking Capitol Hill this week. (See Sept. 27 News Now story: State Leagues Add 'Boots' Presence To Virtual CU Tax Rally.)

FHFA Reminded CUs Need Secondary Market Access

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WASHINGTON (10/2/13)--Credit union access to the secondary market must be maintained in any future housing finance market reforms, Credit Union National Association staff emphasized during a call this week with Federal Housing Finance Agency officials.

"The discussion between CUNA, credit unions and the agency was productive, and we will be following up on many of the issues covered during the call in future talks with the FHFA," CUNA Deputy General Counsel Mary Dunn said. The FHFA staff asked to meet with CUNA again very shortly to continue the discussions.

CUNA and credit union staff during the call suggested:
  • The pricing policies of government-sponsored enterprises (GSEs) and their replacements should factor in credit unions' low delinquency and default rates;
  • The GSEs and their replacements should purchase one loan as readily as pools of loans;
  • The GSEs and their replacements should not require small issuers to use large aggregators to service their loans; and
  • The GSEs and their replacements should purchase non-qualified mortgage loans.
FHFA staff updated CUNA and credit unions on the status of housing finance reform legislation, and asked for information on the challenges and opportunities housing finance reforms could create for community lenders, specifically in rural or underserved areas. Ways to maintain and maximize credit union relationships with the GSEs, and ways that smaller community lenders can maintain equal footing with their bigger competitors were also discussed.

Representatives from CUNA member credit unions on the call, included Harvard Employees CU President/CEO Eugene Foley, Alaska USA FCU Chief Lending Officer Jerry Reed, and CEFCU Vice President of Mortgage Lending Stacy Davis and Operations Manager Sara Blackburn.

Senior Vice President of Legislative Affairs Ryan Donovan, Assistant General Counsel for Special Projects Robin Cook and Associate General Counsel Jared Ihrig were also on the call which featured FHFA Division of Housing Mission and Goals Deputy Director Sandra Thompson and other members of the FHFA staff.

Bagumbayan CU Subject Of NCUA Cease And Desist Order

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ALEXANDRIA, Va. (10/2/13)--The National Credit Union Administration has issued a cease and desist order to Bagumbayan CU, Chicago, requiring several changes to operations.

The agency said Bagumbayan officials have consented to the order, which requires the credit union to:
  • Cease and desist allowing unapproved officials to attend board meetings, serve on committees, or perform any and all managerial functions, operational functions, or both;
  • Refrain from implementing any aspects of a proposed business plan involving the establishment of new lines of business, including money remittance services;
  • Resolve all recordkeeping issues and Bank Secrecy Act violations detailed in exam reports;
  • Ensure secure storage and transmission of all member data consistent with NCUA's rules and regulations for safeguarding member information; and
  • Comply with all lawful directives of the state regulator, including all elements of the suspension order issued by that agency.
Bagumbayan CU was chartered in 1964, has assets of $75,253 and currently serves 43 members, according to the credit union's most recent Call Report.

CUNA Supports Minority CU Program

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WASHINGTON (10/2/13)--The Credit Union National Association is a strong supporter of minority credit unions and backs the National Credit Union Administration's work to implement a program that would help preserve those institutions. However, as with any agency initiative, an analysis should be completed of different elements of a program to assure benefits outweigh costs, CUNA said.
"We applaud the objectives of any program that encourages credit union membership, including initiatives that further the interests of minority credit unions and their members, which are an important facet of the credit union system," writes Mary Dunn, CUNA deputy general counsel and senior vice president, in a Sept. 30 comment letter to the agency.
The NCUA proposed an interpretive ruling and policy statement (IRPS 13-1) in July to establish a Minority Depository Institution (MDI) Program under requirements of the Dodd-Frank Act.
The program is reflective of ones established in 1989 under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) for the Federal Deposit Insurance Corp. and the now-defunct Office of Thrift Supervision, in response to the failure of the Federal Savings and Loan Insurance Corp.

Under the 2010 Dodd-Frank Act, FIRREA was applied to the NCUA, the Office of the Comptroller of the Currency and the Federal Reserve Board.
The Dodd-Frank provisions require the NCUA to consider how such goals as the preservation of the present number of minority credit unions and their minority character in cases involving mergers or acquisitions can be accomplished. They also direct the NCUA to: consider how to provide technical assistance to prevent insolvency of minority credit unions that are not currently insolvent; provide for the creation of new minority credit unions; and provide for training, technical assistance and educational programs.
Under the agency's proposal, 50% of the membership and 50% of the management of the credit union would have to meet the definition of "minority." (Credit unions that have 50% of their directors who meet the definition would also qualify.)
"While the 50% of membership requirement is statutory, the requirement to have 50% of the management be minority is not. We question whether this additional, non-statutory requirement is necessary and whether it will actually undermine the achievement of the statute's objectives in some cases," Dunn writes.
"We also think there should be some flexibility for minority institutions that fall below the 50% levels but have plans in place to reach those benchmarks again through marketing, employment recruitment, etc.," the CUNA letter added.
Use the resource link to read the CUNA comment letter.
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