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CUNA, Trades Back Goodlatte Patent Improvement Bill

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WASHINGTON (10/29/13)--"The Innovation Act of 2013" (H.R. 3309) would help address the patent troll issues that "threaten to pose additional, unwarranted costs on Main Street lenders and the communities they serve," the Credit Union National Association noted in a letter sent to the U.S. Congress today.

"Financial institutions of every size have been targeted by non-practicing entities (NPEs), often referred to as patent trolls, who in most cases assert low-quality business method patents through vaguely worded demand letters," the letter said. The letter thanked Rep. Bob Goodlatte (R-Va.) for his introduction of H.R. 3309. "Components of the Innovation Act could help alter the business model of NPEs by removing some of their financial incentive to assert low-quality patents in the hope of quick settlements," the letter added.

CUNA has strongly advocated for improvements to a program that allows financial institutions to pursue invalidity claims at the Patent and Trademark Office when confronted with a patent claim. The program provides financial institutions with powerful tools to defend themselves, but carries a hefty price tag--starting at $35,000 just for the filing fee. The letter noted the Goodlatte bill contains a provision to allow that fee to be waived on a discretionary basis, with an idea of benefiting credit unions and community banks.

"Smaller financial services providers who have fewer resources to deal with demand letters and engage in the lengthy process of fighting the merit-less litigation that patent trolls initiate, will particularly benefit from these provisions. It is imperative that financial service providers of all sizes have access to the [Transitional Program for the Review of Covered Business Method Patents] program," the letter said.

CUNA was one of several financial services trade associations that co-signed the letter.

However, the co-signers said, the bill must go further. "Financial firms of all sizes find themselves in litigation as end-users given that virtually all business method patents claim a method or process implemented through some type of technology. Because it is rare for our technology providers to voluntarily step into a suit and stand in the place of their customers, we believe that adding a 'right of contribution' or 'mandatory joinder' to the patent law would enable a more equitable distribution of liability between end-users and suppliers," they added.

CFPB Offers Resources To Increase QM, Remittance Reg Awareness

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WASHINGTON (10/29/13)--The Consumer Financial Protection Bureau is working to increase awareness of two major topics: Qualified Mortgage (QM) standards that have created many questions for credit unions and others, and new remittance regulations, which became effective on Monday.

Many credit unions may be asking "so what exactly is a 'qualified mortgage'" as the January implementation date for new mortgage regulations approaches. A new single-page bureau release details QM basics, mandatory product feature requirements for all QMs, and the three main categories of QMs.

The CFPB release also notes that even loans that are not QMs can still be appropriate loans. "You can originate any mortgage (whether or not it is a QM) as long as you make a reasonable, good-faith determination that the consumer is able to repay the loan based on common underwriting factors. You can continue to rely on your sound, tested underwriting guidelines that you have used in the past to make loans that have generally performed well, as long as you document the information you consider," the CFPB release said.

Click to view larger image Pictured above is one of the many resources the CFPB has developed to inform consumers on the new remittance rule. This flier is in Chinese.
On Monday, the CFPB also released new fact sheets, brochures, fliers and posters to remind consumers that they "have new rights" if they send money to family or others outside the United States. Most of the resources are available in English, Spanish, Chinese, French-Creole and Tagalog.

New remittance questions and answers are also being added to the Ask CFPB and Spanish-language CFPB sites. The bureau also plans to advertise the new remittance protections as the holiday season approaches.

For more, use the resource links.

CDFI Fund Opens FY 2014 Funding Round With Up To $191 Million

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WASHINGTON (10/29/13)--The U.S. Treasury Department has opened its application process for up to $191 million for Community Development Financial Institutions (CDFI) Fund financial assistance and technical assistance awards for Fiscal Year 2014.
The funds are for both the CDFI and Native American CDFI Assistance Program (NACA Program).  The amounts available to make awards under the CDFI Program and NACA Program are subject to final appropriations.
The 2014 awards breakdown is:
  • $144 million for CDFI program awards;
  • $35 million for Healthy Food Financing Initiative Financial Assistance awards; and
  • $12 million for NACA program awards. 
The awards will support CDFIs that are providing affordable financing and related services to low-income communities and populations lacking access to credit, capital and financial services.
In FY 2013, CDFI program applicants requested a total of $410.8 million, which was a $15 million jump over the previous year's requests of nearly $395.7 million. Credit unions made 73 requests for a total of around $77 million in funds. More than $21 million in CDFI Fund awards and grants was released to 35 low-income credit unions for the year.
The deadline for submission of the CDFI Program and NACA Program applications is Dec. 23 (ET).  The announcement noted that the CDFI Fund strongly encourages all applications be submitted at least three days before the deadline.
Use the resource link for more information.

Cybersecurity Update Featured in This Week's Regulatory Advocacy Report

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WASHINGTON (10/29/13)--The Credit Union National Association continues to coordinate on cybersecurity regulatory and legislative issues, and in this week's Regulatory Advocacy Report, CUNA updates readers on the latest happenings at the National Institute for Standards and Technology (NIST).

The NIST last week requested public comment on the preliminary version of its cybersecurity framework. The framework implements parts of President Barack Obama's executive order on "critical infrastructure" cybersecurity, and incorporates some changes suggested in earlier feedback from CUNA to the agency. CUNA in April submitted a comment letter on an earlier version of the NIST framework, and also met with the Financial Services Sector Coordinating Council for Critical Infrastructure (FSSCC) and NIST last summer.

The NIST plans to finalize the framework by February.

CUNA will provide a regulatory comment call shortly to summarize the framework and to seek feedback from credit unions.

This week's edition of the Report also features:
  • Details on CUNA discussions with key White House and Treasury personnel;
  • A request for comment from credit unions that plan to stop offering remittance transfers;
  • News on Consumers Financial Protection Bureau actions to curb illegal kickbacks that violate the Real Estate Settlement Procedures Act; and
  • Information on Federal Housing Administration loan limits.
A resource chart with information on current CUNA comment calls is also provided in the Report.

For this week's Regulatory Advocacy Report, CUNA members can use the resource link.

Bill That Would Delay NFIP Rate Hike Is On The Way

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WASHINGTON (10/29/13)--Legislation that would delay planned National Flood Insurance Plan rate increases for up to four years and implement other reforms will soon be introduced by House Financial Services Committee Ranking Member Maxine Waters (D-Calif.).

The bill, Waters noted last week, has strong bipartisan backing. She worked with nearly 20 House members, as well as Senate staff from both parties, to develop the legislation. "This bill is critical and much needed. I urge House and Senate leaders to take up this measure without delay," Waters said.

The bill would correct some issues contained in the Biggert-Waters Flood Insurance Reform Act of 2012, which extended the NFIP until Sept. 30, 2017. That bill also called for the phasing out of subsidies for many properties, raising the cap on annual premium increases, allowing multifamily properties to purchase NFIP policies, imposing minimum deductibles for flood claims, requiring the NFIP administrator to develop a plan for repaying the debt incurred from Hurricane Katrina, and establishing a technical mapping advisory council to deal with map modernization issues.

Waters' new bill would delay implementation of the planned rate increases until two years after the Federal Emergency Management Agency completes an NFIP affordability study. FEMA would also need to propose regulations that address any affordability issues identified in this study within 18 months of the study's completion.

The new NFIP legislation would also:
  • Allow FEMA to use NFIP funds to reimburse policyholders that successfully appeal a map determination;
  • Eliminate a 50% cap on state and local contributions to levee construction and reconstruction;
  • Protect the "basement exception," which allows the lowest proofed opening in a home to be used for determining flood insurance rates;
  • Establish a Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process; and
  • Require FEMA to certify that the agency has fully adopted a modernized risk-based approach to analyzing flood risk.
For more on the bill, use the resource link.

Mel Watt FHFA Nomination Could See Vote Soon

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WASHINGTON (10/29/13)--Rep. Mel Watt's (D-N.C.) nomination to lead the Federal Housing Finance Agency could soon see a Senate vote after Senate Majority Leader Harry Reid (D-Nev.) filed a cloture motion on Monday.

Watt was nominated by President Barack Obama in May. Credit Union National Association President/CEO Bill Cheney has commended Watt for his "strong understanding of financial services issues" and his willingness to listen to credit unions and consider credit union issues throughout the years.

Watt has served in the U.S. Congress since 1992, and is a veteran member of the House Financial Services Committee. If confirmed by the Senate, he would replace FHFA Acting Director Edward DeMarco, who has led that agency since Sept. 1, 2009.

Many in Congress have called for Obama to remove DeMarco and nominate a replacement. Obama in 2011 nominated former North Carolina bank commissioner Joseph Smith to serve as full-time director, but that nomination was not confirmed.

CUNA: CU Expert Must Be Part Of Expanded CFPB Leadership

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WASHINGTON (10/29/13)--Credit union expertise must be included if the U.S. Congress moves to replace the single director of the Consumer Financial Protection Bureau with a broader multi-member commission, the Credit Union National Association said in a Tuesday letter.

The letter was submitted as a statement for the record of today's House Financial Services financial institutions and consumer credit subcommittee hearing entitled "Examining Legislative Proposals to Reform the Consumer Financial Protection Bureau."

Legislation that would replace CFPB Director Richard Cordray with a five-member panel is one of the bills scheduled to be discussed during the hearing. CUNA has recommended committee members consider expanding the board even further and including a seat "specifically for a person with experience related to credit unions.

"Expanding the scope of experience in this manner would enhance the quality of regulations promulgated by the CFPB by ensuring both the consumer perspective as well as the industry perspective is represented in the decision-making process," CUNA President/CEO Bill Cheney wrote.

Cheney in the letter also spoke in support of additional bills that would:
  • Prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer unless it has clearly disclosed to the consumer what information will be requested, accessed, collected, used, retained or disclosed, and the consumer has indicated that the information may be requested, accessed, collected, used, retained or disclosed;
  • Eliminate the CFPB's exemption from the Right to Consumer Privacy Act of 1978; and
  • Require the CFPB to provide at a consumer's request one free annual report disclosing all of the information about the consumer held by the CFPB, the sources of that information and the identity of any person or agency to which the CFPB has disclosed such information.
For the full CUNA letter, use the resource link.

Other hearings scheduled for this week include:
  • Today's Senate Banking Committee hearing on housing finance reform;
  • Today's House Judiciary Committee hearing on "The Innovation Act" (H.R. 3309). CUNA submitted a letter for the record of this hearing (See News Now story: CUNA, Trades Back Goodlatte Patent Improvement Bill.);
  • Today's House Financial Services Committee hearing on Federal Housing Administration financial issues;
  • A Wednesday joint House Homeland Security subcommittee hearing entitled "Cyber Incident Response: Bridging the Gap Between Cybersecurity and Emergency Management";
  • A Wednesday Senate Banking securities subcommittee hearing on the JOBS Act;
  • A Wednesday House-Senate Conference Committee meeting on budget plans; and
  • A Thursday Senate Banking Committee hearing on government guarantees for mortgage-backed securities.