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Inside Washington (10/29/2010)

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* WASHINGTON (11/1/10)- -Foreclosures have historically been a state issue, but several industry observers call for a national standard to govern the process, said American Banker (Oct. 29). While banks can use federal standards governing much of the lending process, they are still subject to local laws governing foreclosures, which range from California; unless a lender there has offered a modification, it must delay a foreclosure proceeding by a least six months, to Massachusetts; where the attorney general can review any foreclosure where the property is the primary residence of the borrow. “There are huge disparities in the time lines themselves, whether judicial or nonjudicial.…From that standpoint it’s a disparity in borrower treatment across the board,” said Cliff Rossi, a former banker who is an executive-in-residence at the University of Maryland’s Center for Financial Policy… * WASHINGTON (11/1/10)--The Internal Revenue Service last week released IR-2010-108 to announce cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2011. The IRS release notes that, In general, the limits will either remain unchanged, or the inflation adjustments for 2011 will be small. For instance, the elective deferral, or contribution, limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government’s Thrift Savings Plan remains unchanged at $16,500. The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500… * WASHINGTON (11/1/10)- -The Federal Deposit Insurance Corp. (FDIC), has released an updated version of its instructor-led Money Smart financial education curriculum for adults. This latest version incorporates changes in the law and industry practices that have occurred since 2006. For example, the curriculum reflects recent amendments to the rules pertaining to credit cards and the new overdraft opt-in rule. A new module, Financial Recovery, provides steps consumers can take to rebuild their finances after a financial setback. To obtain free copies of the curriculum visit the Money Smart page on FDIC’s web site… *WASHINGTON (11/1/10) -- The National Commission on Fiscal Responsibility and Reform has rescheduled this month’s meeting to Nov. 30. The commission, which serves as the president’s bipartisan deficit panel, is required to present recommendations to the U.S. Congress by Dec. 1 aimed at balancing the budget, excluding interest payments on existing debt, by 2015 and achieve long-term fiscal sustainability…

Game Change authors to offer insights at 2011 GAC

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WASHINGTON (11/01/10)--Political pundits and co-authors of the New York Times No. 1 best-seller “Game Change: Obama and the Clintons, Palin and McCain, and the Race of a Lifetime,” Mark Halperin and John Heilemann, have been added to the list of speakers at the 2011 edition of the Credit Union National Association’s Governmental Affairs Conference (GAC).
Halperin and Heilemann will discuss their book, the historic 2008 and nascent 2012 presidential campaigns, and other pressing political topics. The pair of speakers will also hold an audience Q&A session. Halperin currently covers politics and government as editor-at-large and senior political analyst for TIME. He has also appeared on several MSNBC programs and covered politics for 20 years with ABC News. Yesterday he was a guest on NBC's "Meet the Press." John Heilemann is currently a feature writer, political correspondent and columnist for New York magazine, and has also written for The Economist, Wired and The New Yorker. The GAC will open with a performance by classic rockers Three Dog Night, and will also feature a keynote speech by "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III and political point-counterpoint between conservative commentator Mary Matalin and liberal web leader Arianna Huffington. To register for this year’s GAC, use the resource link.

CUSOs may finance cab medallion purchases NCUA

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ALEXANDRIA, Va. (11/01/10)--Credit union service organizations (CUSOs) may originate business loans that are then used to purchase taxi medallions, the National Credit Union Administration (NCUA) said in a recently released legal opinion. This corrects a previous NCUA determination which incorrectly stated that credit union service organizations (CUSOs) could not originate or fund loans used for the purchase of taxicab medallions. In the legal opinion, NCUA Associate General Counsel Hattie Ulan said that brokering taxi medallion loans is “a permissible CUSO activity within the category of loan support services.” However, Ulan added, “this activity may involve compliance with other federal law or state or local requirements and, as with all permissible CUSO activities, a CUSO must comply with those requirements.” In the case cited in the letter, the CUSO would mainly be responsible for submitting loan applications from credit union members to credit union lenders. This type of loan broker activity is “permissible under the pre-approved category of ‘loan support services’ in the CUSO rule,” Ulan said. Taxi medallions are symbols that are usually attached to the hood of New York City cabs. The medallions are licenses that are regulated by the city and allow drivers to pick up curb-side passengers. The city limits the number of medallions that are released, so these medallions are often sold between drivers, and can sell for over $700,000, the NCUA said.

Gift-card date change gets Fed final approval

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WASHINGTON (11/01/10)--The Federal Reserve (Fed) on Friday officially published in the Federal Register an amendment that would provide a January 31 effective date for rules that will require new disclosures on gift certificates, store gift cards, and general-use prepaid cards that were issued before April 1. These new disclosures are mandated by the Credit Card Accountability, Responsibility and Disclosure Act of 2009. The previous effective date was Aug. 22. The disclosures must be provided via toll-free telephone numbers, websites, in-store signage, and other methods of general advertising. The disclosures must specifically inform consumers that there will be no dormancy, inactivity, or service fees and that these cards, specifically the underlying funds, will not expire, regardless of what is printed on the card. This information must be made available until Jan. 31, 2013. However, the in-store signs and general advertising will not be required on or after Jan. 31, 2011. CUNA in a comment letter sent last month commended the Fed for providing "the additional flexibility in the interim final rule that will facilitate compliance with these extended effective date provisions." For the rule, as published in the Federal Register, use the resource link.

Interchange rule work continues CUNA

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WASHINGTON (11/01/10)—The Credit Union National Association (CUNA) “continues to work to achieve a favorable interchange rule” while also watching the progression of a recent anti-interchange lawsuit against the U.S. government, CUNA President/CEO Bill Cheney said. Interchange provisions, which were passed as part of a comprehensive financial regulatory reform bill this fall, direct the Federal Reserve Board to write rules on interchange fees for debit card purchases. The interchange provisions exempt small credit unions and other financial institutions with under $10 billion in assets from any interchange changes. CUNA continues to discuss interchange issue with federal official and has also reached out to Treasury officials to discuss how their government programs that provide benefits through debit cards which are also exempt from the Fed's interchange rulemaking will be affected. Another meeting of CUNA’s interchange working group is also in the works. CUNA is also closely monitoring developments in TCF National Bank’s recent legal actions against the Federal Reserve. According to the TCF complaint, the interchange law is unconstitutional because it only applies to banks of a certain size and does not allow recovery of cost and profit for affected financial institutions. TCF also cited a lack of legislative history for the interchange amendment in its lawsuit. Cheney said that “while there is merit to some of the claims, the bank’s emphasis on problems created by favorable treatment for smaller institutions, including credit unions, raises concerns.” “A precedent must not be set that would, in effect, limit Congress’s ability to treat credit unions differently from banks under other laws,” Cheney added.

NCUA settles initial NGN offering

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ALEXANDRIA, Va. (10/29/10)--The National Credit Union Administration (NCUA) on Thursday reported that the initial offering of its NCUA Guaranteed Notes (NGN) have been settled. The NCUA’s Senior Series I-A notes are comprised of $3.28 billion of assets and are mainly backed by senior floating rate securities. The notes will pay a floating-rate coupon of one-month London Interbank Offered Rate (LIBOR) plus .45% per annum, subject to a maximum note interest rate cap equal to 7.00% annually, the NCUA said. The NCUA’s Senior Series II-A notes are comprised of $566.5 million in assets and are mainly backed by fixed-rate pass-through securities. Those notes will pay a fixed-rate coupon of 1.84% annually, the NCUA said. The notes, which are fully backed by the U.S> Government, “will receive monthly payments of principal and interest from cash flows of the related underlying securities,” according to the NCUA. “The transaction was met with strong investor demand and was oversubscribed,” with over 35 investors participating in the transaction, the NCUA said. Those investors included credit unions, banks, broker-dealers, insurance companies, money management funds, pension funds, and government agencies, the NCUA added. Credit unions received nearly 10% of the total allocation for both the I-A and II-A notes, according to the NCUA. For the full NCUA release, use the resource link.

CUNA warns against piecemeal Reg Z changes

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WASHINGTON (10/29/10)--Bill Cheney, President/CEO of the Credit Union National Association (CUNA) said that CUNA “remains very concerned” with the Federal Reserve Board’s (Fed’s) “piecemeal process” for amending Regulation Z, a process that “has imposed staggering costs and burdens on credit unions and has in many respects caused confusion for credit union members.” The letter was sent to Treasury Secretary Tim Geithner, CFPB Administrator Elizabeth Warren, and Fed Chairman Ben Bernanke. Cheney reiterated CUNA's longstanding support for reasonable consumer financial protection. However, he said confusion “will be compounded” if the Fed continues to issue new rules at the same time that the U.S. Treasury and the newly created Consumer Financial Protection Bureau (CFPB) do their own work to integrate various Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures. Overall, Cheney said, the Fed’s recent Reg Z rulemaking process has been "counterproductive and threatens the success of the current efforts to combine the TILA and RESPA disclosures.“ He added that the Fed’s current rulemaking efforts could be "inconsistent" with these and future rule changes to implement the consumer protection provisions of the Dodd-Frank Act and could prove to be “duplicative, counterproductive, and confusing for consumers.” Cheney noted that similar regulatory changes that were made in recent years have had similar impacts on credit unions, which often are forced to cope with these changes while also dealing with limited budgets and personnel issues. While CUNA supports the overall implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CUNA letter urged the agencies to support a temporary suspension of home mortgage disclosure-related rulemaking under Reg Z to better coordinate those efforts with the work on consolidation of TILA and RESPA disclosures. For the CUNA letter, use the resource link.

Housing anxiety high despite low mortgage rates

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WASHINGTON (10/29/10)—The national average interest rate for 30-year fixed rate mortgages rose slightly for the second week straight, lifting to 4.23%, for the week ended Oct. 28, Freddie Mac reported on Thursday. The 15-year fixed rate mortgage rate increased to 3.66% during the same week. Both the 30- and 15-year average interest rates were .02% higher than the rates reported during the previous week. While mortgage interest rates remain at or near all-time lows, the Washington Post this week reported that 53% of respondents to a recent survey said that they were either “somewhat concerned” or “very concerned” over their ability to meet their monthly mortgage or rent obligations. A similar percentage of poll respondents also said that the federal government should step in and impose a “national moratorium on foreclosures to sort out whether banks are improperly seizing the homes of struggling borrowers,” the Post said. The economic anxiety is twice as prevalent among individuals with annual household incomes below $30,000 when compared to individuals earning over $75,000 per year. “Those who are concerned about being able to make their payments are more likely to back the idea of a moratorium. Overall, 52 percent of all those surveyed back the moratorium and 34 percent oppose it,” the Post added. A total of 45% of survey respondents blamed mortgage lenders for the foreclosure mess, with 26% blaming irresponsible homeowners. The results of the Post poll were drawn from 1006 respondents contacted between Oct. 21 and 24. For Freddie Mac’s monthly numbers and the Post story, use the resource links.

Inside Washington (10/28/2010)

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* WASHINGTON (10/29/10)- -Senator Mark Warner (D-Va.) called on President Obama to set up a task force to examine the foreclosure paperwork issue that has stalled thousands of foreclosures and raised questions about their legality, said American Banker (Oct. 28). In a letter to Obama, Warner, a member of the Senate Banking Committee wrote, “I am writing to urge you to establish an independent and nonpartisan task force to make recommendations for addressing the recent and ongoing problems with the mortgage foreclosure process.”… * ALEXANDRIA Va. (10/29/10)—National Credit Union Administration
Click to view larger image Pictured from the left are Members Advantage President Frank Beachnau, NCUA board member Michael Fryzel, Members Advantage Business Development Representative Jace Smith, Members Advantage Senior Office Manager Jamie Barnett, and Members Advantage IT Manager Scott Neitzel. (Photo provided by NCUA)
board member Michael Fryzel took note of the financial education initiatives of Members Advantage CU when he recently visited the Michigan City, Ind. credit union. Credit unions overall, Fryzel noted, have responded in creative ways to continue to serve their members in current tough economic times. He went on to note specifically that Members Advantage “enacts proactive and responsive programs to meet the needs of its members,” such as its financial education promotion. The credit union provides financial counseling, credit report review, and debt management services. “They do for their members what all credit unions should,” Fryzel said in a recent release, and added that such programs can help credit unions be successful in the midst of the recession…

Compliance CUNA covers risk-based pricing Qs

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WASHINGTON (10/29/10)--The Credit Union National Association has advised credit unions that the Fair and Accurate Credit Transactions Act’s risk-based pricing regulations, which will become effective on Jan. 1, will require credit unions to provide risk-based pricing notices to each consumer in situations where two or more consumers are granted, extended, or otherwise provided credit. While the credit union may satisfy the requirements by providing a single notice addressed to all individuals if they live in the same residence, credit unions must provide individual alternative credit score disclosures to all individuals, whether they share an address or not, CUNA added. The same disclosure rules do not apply to individuals that act as co-signers/guarantors for another individual’s credit application. The co-signer/guarantor only supports and assumes liability for the credit granted or extended, but does not receive the credit, CUNA explains. Additionally, CUNA said that while credit unions are not specifically required to provide the risk-based pricing notices to consumers that do not accept the credit extended to them, the consumer may still ultimately receive a notice if they do not reject the credit offer within a given time period. Members will likely receive the notice when the credit union communicates the credit approval and may decline the offer at that time, CUNA added. For the full Compliance Challenge, use the resource link.

NCUA offers widget for share insurance awareness toolkit

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ALEXANDRIA, Va. (10/29/10)—The National Credit Union Administration (NCUA) on Thursday officially released its “Keep Your Money NCUA-safe” campaign online widget. The widget is a web-based advertisement that features clickable pictures and rotating messages about the NCUA’s share insurance. The widget may be added to websites, blogs, and social media pages. The widget, which can be installed by clicking on a “Get Widget” button on the NCUA’s homepage and following the resulting instructions, directs users to the NCUA’s “Keep your money NCUA-safe” campaign homepage. Users can then view resources related to the NCUA’s insurance fund public awareness campaign. Materials available on the site include an insurance coverage calculator and video PSAs that feature financial guru Suze Orman touting the benefits of the NCUA’s $250,000 credit union share insurance coverage. NCUA Chairman Debbie Matz said that the NCUA Share Insurance Campaign widget “is a simple yet very important way in which credit unions can get the message out about the safety of federally insured credit union deposits.” Matz also encouraged those that are “interested in consumer protection and financial education to take full advantage of this practical, easy-to-use tool.” For access to the NCUA’s online widget, click the image above.

Top among bipartisan PACs CUNA

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WASHINGTON (10/28/10)--With Tuesday’s midterm elections looming, the Credit Union National Association (CUNA) leads the top 50 political interest groups as the single most bipartisan spender on independent expenditures (IEs), the Washington Post reported. Independent expenditures are campaign spending -- such as television or radio ads or direct mail -- that are spent by outside groups, independent of a given candidate or campaign. A total of 56% of CUNA’s independent expenditures (IE) went to Democratic candidates, with the remainder going to Republicans. The majority of the top 50 interest groups spent more than 89% of their total expenditures on candidates from one party. The Post report, which is based on Oct. 24 Federal Election Commission (FEC) filings, ranked CUNA 49th out of 212 organizations that made independent expenditures (IE) during this campaign cycle. CUNA ranked 5th among trade associations, trailing only the US Chamber of Commerce, the National Association of Realtors, the American Hospital Association, and the National Association of Manufacturers in total spending. CUNA had spent a total of $837,000 in funds as of Oct. 24. CUNA’s Credit Union Legislative Action Committee (CULAC) has backed Rep. Roy Blunt (R-Mo.), Sen. Harry Reid (D-Nev.), Cory Gardner (R-Colo.), Rep. Kurt Schrader (D-Ore.), and Rep. Stephanie Herseth Sandlin (D-Ala.) during this general election. CUNA also backed New Hampshire Senate candiate Ovide Lamontagne (R) in his unsuccessful bid for the Republican nomination. CUNA Vice President of Political Affairs Trey Hawkins said that “CUNA’s IE campaigns, like all of our political activities, aren't focused on helping candidates of one party of the other. First and foremost we look to help candidates that understand and support credit unions."

NCUA reminds CUs Workshop reg. still open

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ALEXANDRIA, Va. (10/28/10)--Credit unions can still register for the National Credit Union Administration’s (NCUA) free Nov. 19 credit union workshop in Jackson, Miss. Credit unions of all sizes may take part in the workshop, and the NCUA is offering $250 registration fee stipends for credit unions with assets of $10 million or less. The workshop, which will start at 7:45 A.M. ET, will feature discussion of the many issues facing credit unions and regulatory hot topics. The positive impact that enhanced due diligence, balance sheet processes and strategic management processes can have on a credit union’s bottom line will also be covered, as will ways that credit unions can offer alternatives to harmful payday loans. There will also be a presentation on how to know when credit unions should recognize allowances for loan lease losses. The NCUA is also covering these and other credit union issues at upcoming workshops in Jacksonville, Fla., Los Angeles, and Silver Spring, Md. To register for the Jackson, Miss. Event, or the other NCUA workshops, use the resource links.

Mortgage disclosure comments due to CUNA Nov. 11

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WASHINGTON (10/28/10)--The Federal Reserve Board’s (Fed) proposal that would require lenders to disclose how borrowers’ mortgage payments will change over time so that they may be alerted to the risks of payment increases before they consummate the loan remains open for public comment, and the Credit Union National Association has encouraged credit unions to speak their minds. The Fed’s proposal requires lenders to provide a payment summary table that details the initial interest rate, along with the monthly payment amount, and the maximum interest rate and payment that can occur during the first five years and the maximum rate and payment that is possible over the life of variable rate loans. Certain loan features, such as balloon payments or options to make only minimum payments that cause the loan balance to increase, must also be disclosed. Information on loan refinancing, along with a statement that the consumer may not be able to refinance the loan to obtain a lower rate and payment, must also be included. Credit unions may forward their comments to the Credit Union National Association by Nov. 11. CUNA had previously stated that it would accept comments until Nov. 1. Credit unions and other interested parties will have until Nov. 23 to comment directly to the Fed. The interim rule will become effective on Jan. 30. 2011. For CUNA's comment call, use the resource link.

Inside Washington (10/27/2010)

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* WASHINGTON (10/28/10)--The next generation of homebuyers could be scared away from home ownership unless the mortgage industry proves it is willing to be held accountable for past wrongdoing, according to David Stevens, commissioner of the Federal Housing Administration (FHA). Speaking to industry participants at the Mortgage Bankers Association’s annual convention in Atlanta, Stevens said future homebuyers could be resistant to entering the market after watching the housing market meltdown and learning about dubious foreclosure practices (American Banker Oct. 27). To rebuild trust, the industry must persuade homebuyers that abuses will not be tolerated. When the current refinancing boom passes, the industry will also need to reassure potential homebuyers that homeownership is still meaningful … * WASHINGTON (10/28/10)--State attorneys general will probably play a key role in addressing questionable foreclosure proceedings, according to Elizabeth Warren, the assistant to the president charged with launching the Consumer Financial Protection Bureau. During a recent interview, Warren said information gathered by state attorneys general and the bureau will be combined to identify the parameters of the foreclosure problem (Dow Jones Oct. 27). She said the bureau’s role at this time is limited to collecting information and gauging the scope of the issue … * WASHINGTON (10/28/10)--The Federal Home Loan Bank of Seattle will be allowed to repurchase member stock and could potentially pay dividends in mid-2011 if it hits financial targets and satisfies regulators’ concerns. A consent order signed this week by the Federal Housing Finance Agency sets the terms for future operations (American Banker Oct. 27). The bank’s operations have been limited by regulatory restrictions since November 2009 due to the agency’s concerns that the bank was undercapitalized. The agency accepted the bank’s plan to restore capital in the consent order, but the bank will still be treated as undercapitalized until its metrics improve. Other regulatory issues deal with oversight, management, asset improvement program, compensation practices and retained earnings. The bank’s regulatory difficulties date to 2004, when the bank began purchasing mortgages from members in a program that later incurred significant losses …

HUD Treas. mark increased housing mkt. stability

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WASHINGTON (10/27/10)--Home prices are beginning to stabilize, and reduced interest rates are making homebuying more affordable, the U.S. Department of Housing and Urban Development and the U.S. Treasury reported in the Obama Administration’s most recent housing scorecard. The monthly housing scorecard serves as a catalog of several key housing market indicators. The report noted that “record low interest rates have helped more than 7.1 million homeowners to refinance, resulting in more stable home prices and $12.7 billion in total borrower savings” since April 2009. Total home sales remained below early 2010 levels, but home prices levelled off during the past year, with homeowners adding $95 billion of home equity in 2010 second quarter. Home prices had declined for the previous 33 months, according to the report. However, the number of completed foreclosures continues to increase, the agencies noted. Over 1.3 million trial Home Affordable Modification Program (HAMP) modifications have been serviced since April 2009, and nearly 90% of homeowners that took part in the HAMP Program have remained in their homes. “Early data indicate that HAMP permanent modifications are performing well over time, with lower delinquency rates than those reported by the industry at large. At nine months, less than 16 percent of permanent modifications are 60+ days delinquent,” the agencies added. For the full report, use the resource link.

Inside Washington (10/26/2010)

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* WASHINGTON (10/27/10)--Deputy Treasury Secretary Neal Wolin said the Obama Administration has made major strides toward enacting the regulatory reform law (American Banker Oct. 26). Noteworthy developments include the work done to set up a consumer protection bureau and a data collection agency as well as the creation of the Financial Stability Oversight Council and the Office of Financial Research (OFR). The OFR will aid regulators by standardizing financial reporting and reference data for better data collection and analysis. In a speech presented at Georgetown University's McDonough School of Business, Wolin countered concerns that the OFR would increase financial institutions’ reporting requirements by stating that the OFR will not duplicate existing data collection or create unnecessary burdens … * WASHINGTON (10/27/10)--There are more canceled mortgage loan modifications than active modifications in the foreclosure prevention program created by the Obama administration. A U.S. Treasury Department report stated that almost 700,000 loan modifications started under the program were canceled through Sept. 30, while 466,708 permanent modifications remain active (American Banker Oct. 26). A permanent modification is canceled when a mortgage holder falls behind on three or more consecutive monthly payments. Redefaults remain a problem for the program, with a permanent modification canceled if a borrower misses three or more consecutive monthly payments. In the first quarter of 2010, 9.8% of modifications that became permanent were delinquent by 60 days or more after six months. Delinquencies continue to increase, with 3 million loans delinquent as of Aug. 31 … * WASHINGTON (10/27/10)--Regulators should have recognized the warnings signs of eroding standards at foreclosure servicers, according to Sheila Bair, chairman of the Federal Deposit Insurance Corp. Bair said regulators failed to follow up on clues that some servicers were overloaded with foreclosures (American Banker Oct. 26). For example, regulators should have looked at major decreases in servicing fees in recent years and then asked how servicers could achieve those efficiencies without impacting quality. Bair said the temporary mortgage freeze enacted at several large institutions, including Bank of America Corp., indicates that securitization practices need to be revamped at every stage, from origination, to securities underwriting, to servicing. She called on the industry to ponder offering foreclosure “triage,” which might include providing safe harbor relief if a property is vacant or if the servicer offered a minimum payment reduction of at least 25% and the borrower still could not make the payments. Bair was addressing a regulatory symposium on the future of housing and finance…

Fed issues annual reserve calculation adjustments

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WASHINGTON (10/27/10)—The Federal Reserve has announced the annual adjustments to its Regulation D, which sets the reserve and reporting requirements of depository institutions, effective Nov. 26. Regulation D sets the amount depository institutions must maintain as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank, or as a deposit in a pass-through account at a correspondent institution. The reserve requirements are based on a depository institution’s net transaction accounts, which consist of demand deposits, automatic transfer services accounts, NOW accounts, share draft accounts, telephone or preauthorized transfer accounts, and obligations issued by affiliates maturing in seven days or less. Regulation D also includes periodic reporting requirements that are based on an institution’s level of deposits. Under the Fed adjustments, for net transaction accounts in 2011, the first $10.7 million, unchanged from its level in 2010, will be exempt from reserve requirements. A 3% reserve ratio will be assessed on net transaction accounts over $10.7 million up to and including $58.8 million, up from $55.2 million in 2010. A 10% reserve ratio will be assessed on net transaction accounts in excess of $58.8 million. These annual adjustments, known as the low-reserve tranche adjustment and the reserve requirement exemption amount adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2009 and June 30, 2010, according to a Fed release. Use the resource link for more on the Fed changes.

Indirect lending is NCUA webinar focus

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ALEXANDRIA, Va. (10/27/10)—Balancing the risks and rewards of indirect lending is the subject of an upcoming webinar to be sponsored by the National Credit Union Administration (NCUA) Nov. 9. National Credit Union Administration (NCUA) board member Gigi Hyland will host the session, which the announcement said will draw from the diverse expertise at the NCUA Central Office and NCUA Regional Offices. "Indirect Lending: Balancing the Risks and Rewards" will provide guidance, best practices and insight into examination of indirect lending, and will highlight the recently issued Letter to Credit Unions 10-CU-15, “Indirect Lending and Appropriate Due Diligence.” Those making presentations include:
* Board member Gigi Hyland; * Timothy Segerson, director of supervision, NCUA Office of Examination & Insurance; * Marcus Vander Wall, program officer, NCUA Office of Examination & Insurance; and * Victoria Bennett, regional lending specialist, NCUA Region V.
The panelists will provide an examiner’s perspective as well as that of experts in the agency’s central office.Office of Examination & Insurance in the Central Office. The webinar is designed to be interactive, with questions and answers an integral part of the presentation.

Tough Pa. race brings CU support

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WASHINGTON (10/27/10)—Rep. Paul Kanjorski, a long-time advocate on Capitol Hill for credit union issues, is facing a strong challenge for his 11th district House seat in next Tuesday’s elections, and credit unions are working in support of his campaign efforts. Kanjorski, a Democrat from Pennsylvania, is running against Republican Lou Barietta, who currently is mayor of Hazleton, Pa. Over the past month, credit union folks have been involved in a number of events, including a rally
Click to view larger image Rep. Paul Kanjorski (D-Pa.), shown here addressing credit union representatives at a recent CUNA Governmental Affairs Conference in Washington, D.C., has been a member of the U.S. Congress since 1985. (CUNA photo)
Tuesday evening featuring a supportive appearance from former President Bill Clinton. Pennsylvania Credit Union Association (PCUA) CEO Jim McCormack and REAL Solutions Program Manager/retired CEO John Kebles and other credit union representatives from the district planned to attend. Other events attended by credit unions have included a Sunday Oktoberfest celebration, in Dunmore, with Kanjorski, who “tapped the keg.” Also, on Monday, credit unions gathered at a “Rally at the VFW,” in Duryea. The Credit Union National Association (CUNA) has also been involved in supporting Kanjorski, who has sponsored and promoted numerous pieces of legislation that would improve the regulatory structure of credit unions and modernize their powers. Most recently, Kanjorski designed a bill H.R. 3380), which carried broad bi-partisan support, that would increase the credit union member business lending cap. That bill is still pending a House vote. CUNA and the PCUA collaborated on a breakfast Oct. 5 to focus on a number of goals, including engaging credit unions, recruiting volunteers, and energizing credit unions that are doing mailings for Kanjorski. With the candidate in attendance at the 90-minute breakfast, CUNA and the league finalized plans for a direct-mail program, which resulted in five rounds of mailings being sent out. The mailings are being sent from PCUA to members of four credit unions in Kanjorski's district, with CUNA assisting with strategy, financing, and design. Also at the breakfast, additional volunteers were recruited.

Fed investigating mortgage malfeasance says Bernanke

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WASHINGTON (10/26/10)--“Federal banking agencies are working together to complete an in-depth review of practices at the largest mortgage servicing operations,” and are “looking intensively at the firms' policies, procedures, and internal controls related to foreclosures” to help “determine whether systematic weaknesses are leading to improper foreclosures,” Federal Reserve Chairman Ben Bernanke said on Monday. The Fed will likely make the preliminary results of the review available next month, and the Fed will “take violations of proper procedures seriously,” Bernanke added. Various federal agencies will evaluate the impact that the foreclosure-related problems could have on the real estate market and financial institutions, Bernanke said. Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair in a separate speech backed up Bernanke’s comments, saying that the FDIC is working “to get to the bottom” of “concerns and claims that legal documents required for foreclosure have in some cases been improperly exercised – or ‘robo-signed’ – by mortgage servicers. The litigation generated by this issue could ultimately be very damaging to our housing markets if it ends up unduly prolonging those foreclosures that are necessary and justified,” Bair added. The House subcommittee on housing and community opportunity will also investigate potentially improper and illegal foreclosures on Nov. 18, Chairwoman Maxine Waters (D-Calif.) said this month. Waters has also promoted H.R. 3451, the Foreclosure Prevention and Sound Mortgage Servicing Act, a bill that would prohibit banks from initiating foreclosure proceedings without offering loss mitigation options to homeowners. A number of larger mortgage lenders have curtailed foreclosures or evictions in several states, and state officials nationwide are investigating claims of false mortgage documentation and verification that may have been used to justify hundreds of thousands of foreclosures. However, GMAC and Bank of America have recently signaled their intent to renew foreclosure processing. Credit Union National Association Chief Economist Bill Hampel has said that this temporary stall in foreclosure processing may aid credit unions by allowing them to get their own foreclosures off of their books quicker. Credit unions have seen limited increases in foreclosure-related activity due to the overall decline in the economy. However, the majority of credit unions were much more careful in their lending activities, and did not originate toxic mortgages nor engage in the subprime mortgage market. Bernanke made his remarks about the foreclosures at a joint Fed/FDIC conference highlighting policy-oriented research on U.S. housing and mortgage markets. Bernanke also touted the Mortgage Outreach and Research Effort (MORE), a program that combines the resources of 12 Fed banks and the Board of Governors to “promote fair and equal access to banking services and improve communities.” The Fed is also “conducting empirical research on mortgage and foreclosure related topics, and are reaching out to industry experts,” Bernanke added. For additional information on the MORE program, use the resource link.

Hyland NCUA intends comprehensive solution to corp. issues

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ALEXANDRIA, Va. (10/26/10)--The National Credit Union Administration’s (NCUA) corporate credit union resolution plan “represent(s) a comprehensive solution to the problems afflicting corporates” that puts consumers first and ensures that taxpayers will not have to pick up the tab, NCUA board member Gigi Hyland said on Monday. Speaking at the American Institute of Certified Public Accountants “Conference on Credit Unions,” Hyland said that “credit unions are paying the bill” as they work to resolve the credit union system’s “most significant financial and structural challenge.” The recent corporate troubles, started by a “perfect storm of over-concentration in private-label, mortgage-backed securities held by several large corporate credit unions,” will be partly resolved by the NCUA’s recent conservation of failed and troubled corporate credit unions, Hyland said. The NCUA “had to eliminate the threat of a liquidity event and provide a stable future for the system. Now credit unions can make a strategic business decision about how to get the services they need and what works for their credit union,” Hyland added. While credit unions do not have to make these business decisions immediately, Hyland said that credit unions “need to be engaged to begin thinking about the future and working on a transition strategy.” “Credit unions have options,” Hyland added. For the full NCUA release, use the resource link.

CUNA seeks extended escrow compliance deadline

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WASHINGTON (10/26/10)--The Credit Union National Association (CUNA) has requested that the Federal Reserve (Fed) give lenders an additional six to twelve months to comply with a proposed rule that would revise the escrow account requirements for “higher-priced,” first-lien “jumbo” mortgage loans. The compliance deadline extension, which would be effective after the Fed releases the final version of its rule in the Federal Register, would be “especially important for credit unions and others that rely on third parties, such as software vendors,” CUNA said. The extended implementation time “will be especially important at this time since lenders and their vendors are preparing for other changes, such as the disclosures changes required under the Mortgage Disclosure Improvement Act that will be effective as of Jan. 30, 2011,” CUNA added. “These third parties will need time to incorporate the necessary updates, complete the necessary testing, and then include this change into their regularly scheduled releases,” the comment letter said. Overall, CUNA added, the escrow provision would be helpful, as it would “relieve credit unions and other lenders from complying with the escrow account requirements for first-lien jumbo loans that are between 1.5 and 2.5 percentage points above the applicable average prime offer rate. The Fed rule would increase the annual percentage rate (APR) threshold used to determine whether an escrow account is required for property taxes and insurance for first-lien jumbo mortgages, which are defined as those exceeding the Freddie Mac and Fannie Mae conforming loan size thresholds. The escrow account requirement would apply to first-lien jumbo loans only if the loan APR is 2.5 percentage points or more above the applicable APOR, instead of the 1.5 percentage points as originally required by the current rules. For the full release, use the resource link.

Inside Washington (10/25/2010)

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* WASHINGTON (10/26/10)--Lawmakers, as well as bankers, are debating the limits on Elizabeth Warren’s authority as the administration official selected to launch the Consumer Financial Protection Bureau. President Obama appointed Warren as assistant to the president and special advisor to U.S. Treasury Secretary Timothy Geithner as a way to avoid the Senate confirmation battle likely to occur if she were named agency director (American Banker Oct. 25). Bankers and some lawmakers claim that since Warren is not a director, she only has the power to hire and is denied the ability to draft rules or proposals. But consumer advocates say bankers are "splitting hairs" and that Warren's influence is likely to be widely felt, even if the rules she helps draft cannot be issued until a permanent director is appointed. The Dodd-Frank law empowered the Treasury Department to create the agency, but only specifically mentioned hiring staff… * WASHINGTON (10/21/10)--Elizabeth Warren told reporters she expects to spend much of her time traveling outside Washington, D.C. to meet with representatives from financial institutions of all types to gather input on the role of the Consumer Financial Protection Bureau. The bureau recently established a 30,000-square-foot office in Washington, but Warren told reporters the agency is likely to outgrow that location as it hires 1,000 employees in its first year (American Banker Oct. 25). To date, Warren has met with large-bank executives, community bankers, private-equity investors with a major stake in financial services and technology firms… * ALEXANDRIA, Va. (10/26/10)—The NCUA on Monday amended its calendar for the month of November, moving the closed portion of their November monthly meeting to Wednesday, Nov. 17 at 10:00 AM E.T. The open portion of the meeting will take place on the following day at 9:00 AM E.T…

Small CUS may benefit from health care tax credit

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WASHINGTON (10/25/10)—Small credit unions may want to look into a new small business health care provision to determine if they may qualify for a tax credit. The credit, authorized under the 2010 Patient Protection and Affordable Care Act ,is intended to encourage small employers to offer health insurance coverage for the first time or to maintain current coverage for their employees. It is generally available to small employers that contribute at least half the cost of single health insurance for their employees. The credit is designed to assist small businesses and tax exempt organizations that primarily employ moderate- and lower-income workers. Small credit unions may be eligible for the tax credit if:
* The credit union has fewer than 25 full-time equivalent employees for the taxable year; * The average annual wage of employees for the year is less than $50,000; and * The credit union makes a "nonelective contribution," which is a contribution that is not made in accordance with a salary reduction agreement and that covers at least 50% of the employees' health care premiums--as long as the credit union provides the same percentage of premium contributions to all employees.
During tax years 2010 to 2013, eligible tax-exempt employers could receive a maximum tax credit of 25% of the employer's premium payments--(nonelective contributions to employee healthcare) notes Nichole Seabron, Credit Union National Association federal compliance counsel. Starting in 2014, the maximum tax credit for eligible tax-exempt employers would increase to 35 of the employer's premium payments for two years. However, the amount of the tax credit a credit union may claim may be less than the permitted amount. For example, a credit union's tax credit could be reduced by "phaseouts" if it has more than 10 employees or if the average compensation of those employees exceeds $25,000. It is unlikely, though, that the tax credit would be reduced by zero unless the credit union has 25 or more employees or if the average annual wages of the employees is $50,000 or more. Additionally, employee wages would be indexed after 2013 for cost of living. Credit unions may be able to use this tax credit to offset the Medicare "hospital tax" and other payroll taxes. Ultimately, credit unions will have to consult their tax advisors to determine eligibility for this credit. The IRS posted a draft version of Form 8941, which will be used by tax-exempt organizations to calculate the credit. The final version of Form 8941 should be available later this year. Tax exempt organizations will claim the small business health care tax credit on Form 990-T. Form 990-T is currently used by state-chartered credit unions to report unrelated business income. Federal credit unions aren't currently required to complete Form 990-T. However, it appears that in order to claim the tax credit, federal credit unions will be required to complete the IRS form. Form 990-T will be revised for the 2011 filing season to enable eligible tax exempt organizations--even those that normally don't report or owe unrelated business income--to claim the small business health care tax credit. A press release with this health care tax credit information can be accessed through the link below.

CUNA CUNA Mutual join in Reg Z comment drive

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WASHINGTON (10/25/10)--The Credit Union National Association (CUNA) is working closely with CUNA Mutual to raise awareness of the negative aspects of the Federal Reserve’s proposed disclosures that would be required for credit insurance and debt cancellation and suspension products. CUNA and CUNA Mutual, through a grassroots operation called “Operation Comment,” are encouraging credit unions to report their concerns with the proposals to the Fed. Credit unions should also address how these proposed disclosures will discourage consumers from purchasing payment protection products. Jeff Bloch, CUNA senior assistant general counsel, said that activating CUNA's Operation Comment at this time “is one important part” of the Fed-centered response, which CUNA has successfully used in the past for other problematic regulatory proposals.” These new disclosures for credit insurance and debt cancellation and suspension products are misleading and would likely discourage consumers from purchasing those products. These disclosures are being proposed in addition to other consumer protections and mortgage loan disclosures. These will change the rescission provisions and will change the disclosures and other requirements for reverse mortgage loans. The proposal also seeks to ensure that borrowers are supplied with new disclosures when the key terms of a closed-end mortgage loan are modified. CUNA has said that the disclosures “go well beyond ensuring that consumers are informed about these products,” instead casting the products “in a strictly negative light” and strongly discouraging the purchase of the products. For CUNA’s comment call, use the resource link.

Compliance Must CUs charge STS loan processing fee

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WASHINGTON (10/25/10)—The National Credit Union Administration (NCUA) issued a new rule recently to allow credit unions to offer members small-amount, short-term (STS) loans, but there has been some confusion about fees, according the Credit Union National Association’s (CUNA's) October Compliance Challenge. ABC FCU, says the Challenge, would like to offer the STS loans to members as an alternative to predatory payday lending available in the area. The credit union lending officer has read CUNA’s final rule analysis and is aware that credit unions are allowed to charge a maximum application fee of $20 to be used for processing costs. However, the credit union doesn’t normally charge fees for unsecured loans and would prefer not to do so. Does it have that flexibility for this product? Yes, it does. Although CUNA had to contact the NCUA to get clarification on this particular issue because the rule, unfortunately, does not specifically address whether or not the application fee is voluntary. In fact, some of the language of the regulation seems to suggest that a credit union would be required to charge the application fee to all members granted an STS loan in order to charge the maximum rate (28%) for the loans. Bit the NCUA clarified that the application fee is voluntary. However, iif a credit union opts to charge the fee, the maximum fee permissible for an STS loan is $20.

NCUAs IG takes US Central examiners to task

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ALEXANDRIA, Va. (10/22/10)—National Credit Union Administration (NCUA) examiners should have recognized earlier than 2007 and 2008 the risk exposure that U.S. Central FCU’s “significant concentration” in mortgage-backed securities represented, according to a material loss review published by the agency’s Office of Inspector General. The reports was prepared by Crowe Horwath LLP. “Similar to U.S. Central management, prior to 2007, NCUA also placed significant emphasis on the high ratings assigned by the NRSRO on the purchased mortgage-backed securities, and failed to recognize U.S. Central’s exposure to significant concentration risk due to the lack of diversification in their investments,” the report said. The executive summary of the report identified its objectives were to: determine the cause(s) for U.S. Central’s conservatorship and the resulting loss to the National Credit Union Share Insurance Fund, assess supervision of the credit union, and make appropriate recommendations to prevent future losses. The report also discusses the actions of U.S. Central’s management and board of directors generally from 2007 to 2009. The entire OIG report can be found on the NCUA website.

NCUA 2011-2016 strategic plan adds goals

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ALEXANDRIA, Va. (10/22/10)—A commitment to diversity and greater recognition of the need for “clearly articulated and easily understood regulations” will be among the National Credit Union Administration’s (NCUA) strategic goals moving forward, the Agency said on Thursday. Those two goals will join the goals of effective, transparent regulation, promoting ensuring a safe credit union system, and ensuring credit union access for all as key tenets of the NCUA’s strategic plan for the years 2011 through 2016. The NCUA on Thursday said that the strategic plan will “help promote a stable recovery from the current recession” and will ensure that the credit union system “is thriving and self-sustaining for years to come.” The NCUA has also renewed its “commitment to public service, objectivity and independence” as part of the strategic plan. For more on the NCUA’s strategic plan, use the resource link.

Progress of NCUSIF education efforts noted

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ALEXANDRIA, Va. (10/22/10)—The National Credit Union Administration’s (NCUA) pro-credit union PR blitz is gaining traction in several markets, the NCUA noted during its Thursday monthly meeting. The NCUA has created video and radio ads that feature financial guru Suze Orman touting the similarities between the NCUA’s National Credit Union Share Insurance Fund (NCUSIF) and the account insurance provided by the Federal Deposit Insurance Corporation. The NCUA recently made the $250,000 account fund guarantee permanent. The video PSAs are expected to begin airing in on several broadcast and cable channels, including, potentially, NBC, CBS, and ION TV, in the coming weeks. The NCUA has also been been active in radio, print and online forums, including social media sites such as twitter and facebook. The NCUA noted steady gains in followers on both of those sites, and education-related materials have been seen by an estimated 12 million viewers online.

Merger database launch valuable for CUs CUNA

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ALEXANDRIA, Va. (10/22/10)—The Credit Union National Association (CUNA) on Thursday commended the National Credit Union Administration (NCUA)for launching its credit union merger partner registry, which was highlighted at the agency's Board meeting Thursday.
Click to view larger image The NCUA's merger registry site will allow credit unions to search for potential merger partners
The registry provides the names of potential credit union supervisory merger partners and allows interested credit unions to search for potential merger partners nationwide or limit the search to within certain states or counties. Searches may also be limited to within a certain radius of a given address. The registry was strongly recommended by the Credit Union National Association's Mergers Issues Working Group, chaired by Ohio Credit Union League President Paul Mercer. NCUA officials during the meeting said that the merger database would provide a “good starting point” for credit unions that wish to merge “but don’t know where to start.” NCUA Chairman Debbie Matz cautioned that not all merger database participants would be selected for mergers. The merger registry and the overall merger process will also be discussed in a pending NCUA letter to credit unions. The NCUA also reported on the status of troubled credit unions during its monthly insurance report. While many of the statistics were similar to those reported last month, the NCUA reported that the total number of CAMEL Code 4/5 credit unions increased by 14 and the number of CAMEL Code 3 credit unions increased by 16 since last month. However, NCUA Chief Financial Officer Mary Ann Woodson noted that one of the new CAMEL Code 3 credit unions was a former Code 4/5 credit union that improved its financial condition. Overall, just over 18% of total insured shares are held in CAMEL 3 credit unions, and 5% of those same shares are held in CAMEL 4/5 credit unions, Woodson added.

RegFlex takes a hit NGNs get a boost

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ALEXANDRIA, Va. (10/22/10)--The National Credit Union Administration (NCUA) on Thursday voted to assign a 0% risk weight to the NCUA Guaranteed Notes that securitize the cash flows on the legacy assets held by the conserved corporates and approved a final version of RegFlex provisions. The NGNs are being sold in a series of auctions on the open market. NCUA Chairman Debbie Matz said that the NCUA issued the low risk asset rule to help a greater number of credit unions participate in the NGN investment opportunity.
Click to view larger image NCUA board members disagree on whether to move ahead with a tightening of RegFlex rules, with Chairman Debbie Matz (center) gesturing to make a point that the agency must be "proactive" with the changes. The rule was approved with board member Michael Fryzel (left) also voting in favor, while board member Gigi Hyland (right) voted against it. (CUNA Photo).

3.7M-asset Texas CU becomes 16th 2010 liquidation

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ALEXANDRIA, Va.--Phil-Pet FCU, Pampa, Texas, became the 16th credit union liquidation of the year when the National Credit Union Administration (NCUA) liquidated the $37 million-asset credit union. The credit union was determined by the NCUA to be insolvent and the agency’s Asset Management Assistance Center will transfer share accounts to Pantex FCU of Borger, Texas. Pantex, a full-service credit union, also has branches in Pampa, as well as in Fritch. It has $216.8 million in assets and serves approximately 15,939 members in the Texas Panhandle. Phil-Pet, chartered in 1940, served 765 members. It is the 26th credit union failute of the year. There have been 132 bank failures in 2010.

Inside Washington (10/21/2010)

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* WASHINGTON (10/22/10)--The Federal Reserve Board released a study Oct. 19 outlining eight recommendations regulators should use as they jointly draft risk-retention regulations over the next six months. (American Banker Oct. 21). The new rules would require lenders to retain some risk before selling loans into the secondary market. The recommendations included: considering the potential effect of risk retention on smaller institutions, weighing the different asset classes and securitization structures, and considering the relevant accounting treatment and regulatory requirements as they apply to retention. The study noted that the Fed believes the risk-retention rules should be flexible and that regulators should not enact one-size-fits-all rules that cover all asset classes that fall under the new Dodd-Frank Act restrictions. The Federal Reserve Board and the Federal Deposit Insurance Corp. will hold a two-day symposium on Oct. 25 and Oct. 26 on mortgages and the future of housing finance... * WASHINGTON (10/22/10)--Housing and Urban Development Secretary Shaun Donovan announced that a four-month review by his department has found "significant differences" in the performance of servicers, but not enough for foreclosure errors to be considered a "systemic" issue, said American Banker (Oct. 21). “We will follow up vigilantly on the potential noncompliance that we have found, and I want to be clear that we will demand that servicers take actions as required by FHA to do everything they can to keep borrowers in their homes,” Donovan said… * WASHINGTON (10/22/10)--In light of the beating the Deposit Insurance Fund took during the financial crisis, the Federal Deposit Insurance Corp. (FDIC) plans to raise its target ratio of reserves to insured deposits to 2%, 65 basis points above the statutory minimum. ( American Banker Oct. 20.). The move was designed to ensure that the fund does not go broke again if another banking crisis arises. FDIC officials said the fund would not reach the 2% threshold until 2027, at the earliest, based on projected assessment rates… *WASHINGTON (10/22/10)--In the Federal Deposit Insurance Corp. (FDIC) assessment plan released on Oct. 19, the agency canceled a planned to raise premiums by three basis points in 2011, noting that the U.S. Congress had allowed it more time to rebuild the battered fund and projected losses from bank failures had dropped, said American Banker (Oct.20). FDIC officials said they will seek to reduce over time the 12 to 16 basis points most banks now pay and settle at a small, steady premium…

House panel to investigate foreclosure issues

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WASHINGTON (10/21/10)--Potentially “improper and illegal foreclosures” will be investigated by the House Subcommittee on Housing and Community Opportunity on Nov. 18, Chairwoman Maxine Waters (D-Calif.) said this week. In a release, Waters said that federal regulators should “initiate a full review of Bank of America, GMAC and other servicers because we cannot leave it to the banks to review and police themselves.” A witness list for the hearing had not been released at press time. “In America, every family at risk of losing its home deserves fair consideration of the facts as well as an opportunity for alternative action,” she added. Waters this week also spoke in favor H.R. 3451, the Foreclosure Prevention and Sound Mortgage Servicing Act, a bill that would prohibit banks from initiating foreclosure proceedings without offering loss mitigation options to homeowners. That bill was introduced by Waters in July of 2009. A number of larger mortgage lenders have curtailed foreclosures or evictions in several states, and state officials nationwide are investigating claims of false mortgage documentation and verification that may have been used to justify hundreds of thousands of foreclosures. Credit Union National Association Chief Economist Bill Hampel said that this temporary stall in foreclosure processing may aid credit unions by allowing them to get their own foreclosures off of their books quicker. Although credit unions have seen some increases in foreclosure-related activity due to the overall decline in the economy, the majority of credit unions were much more careful in their lending activities, and did not originate toxic mortgages nor engage in the subprime mortgage market.

RegFlex merger registry are focus of NCUA meeting

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ALEXANDRIA, Va. (10/21/10)—The National Credit Union Administration (NCUA) will follow up on its recent interim final rules on regulatory flexibility (RegFlex) and fixed assets during its monthly meeting, set for later today. The NCUA will also release its national merger registry, which would provide the names of potential credit union merger partners, during the meeting, and will discuss an interim final rule that addresses the low risk asset definition in Section 702 during the meeting. Briefings on the NCUA’s credit union insurance fund and the agency’s recent pro-credit union publicity blitz will also take place. The merger recommendations were developed by CUNA's Mergers Task Force and presented to NCUA in the Task Force's May report. CUNA has encouraged the NCUA to address due diligence and loss-sharing incentives as it develops its approach to the merger process and asked the agency to revise or to simply not adopt proposed changes to its RegFlex program.

NCUA releases 2011 meeting schedule

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ALEXANDRIA, Va. (10/21/10)--The National Credit Union Administration (NCUA) on Wednesday released the monthly board meeting schedule for 2011. The specific dates for the NCUA’s 2011 board meetings are:
* January 13; * February 17; * March 17; * April 21; * May 19; * June 16; * July 21; * September 15; * October 27; * November 17; and * December 15.
The NCUA does not hold a board meeting during August. The 2011 board meeting schedule is subject to change.

Inside Washington (10/20/2010)

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* WASHINGTON (10/21/10)--The Conference of State Bank Supervisors (CSBS) has issued a corrected address for submitting comments on its proposed fees for the National Mortgage Licensing System & Registry (NMLS). Comments should be submitted to comments@stateregulatoryregister.org by Nov. 12. The National Credit Union Administration (NCUA) and the federal banking agencies have contracted with the CSBS's State Regulatory Registry to modify the NMLS to accommodate registrations by credit unions and banks as required by the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) … * WASHINGTON (10/21/10)--The Federal Deposit Insurance Corp. (FDIC) has proposed a comprehensive, long-term plan for managing the Deposit Insurance Fund (DIF). The FDIC outlines the plan in a financial institution letter (http://www.fdic.gov/news/news/financial/2010/fil10068.html). Goals include maintaining a positive DIF balance even when large fund losses occur and keeping assessment rates steady during economic and credit cycles… * WASHINGTON (10/21/10)--Two-thirds of institutional investors are critical of proposals to expand the use of fair value accounting for banks, according to a study released by Keefe, Bruyette & Woods and Greenwich Associates. Just 20% of survey respondents favored the fair value accounting change recommended by the Financial Accounting Standards Board Yet many investors also reject current practices, with 70% supporting an alternative proposal requiring banks to include enhanced disclosures about fair value in quarterly and annual regulatory filings but not on the balance sheet. As many as 45% of investors would reduce the amount of their investments in U.S. banks if the proposal was enacted(American Banker Oct. 20). The Credit Union National Association (CUNA), earlier this month at a roundtable meeting again made the case that FASB’s proposed update to financial instrument accounting standards would provide no benefit to credit unions while substantially increasing their compliance costs. CUNA also continued to oppose the proposed application of fair value accounting rules to loans and other credit union products…

Payment protection disclosures cast bad light CUNA

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WASHINGTON (10/21/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney this week said that CUNA and CUNA Mutual will be working with credit unions to oppose proposed changes to the Federal Reserve’s Regulation Z that would require new disclosures for credit life, credit disability, debt cancellation and debt suspension. CUNA in a Wednesday letter to credit unions said that the Fed proposal goes “well beyond ensuring the consumer is informed and makes a reasoned decision – the proposed regulatory language casts the products in a strictly negative light and strongly discourages the purchase of these products.” “The proposed disclosures misrepresent the purpose and value of payment protection products to credit union members,” and will likely “have a significant negative impact on members who would benefit from these products and on credit unions’ non-interest income and loan portfolio risk profile,” the letter added. Comments on the Fed proposal are due by Dec. 23, and CUNA is working to compile credit union commentary ahead of that date. CUNA has also engaged the National Credit Union Administration (NCUA) to discuss concerns related to the NCUA’s methodology for setting the Overhead Transfer Rate (OTR), which is the proportion of NCUA’s insurance and supervisory costs that may be paid for the NCUSIF. Cheney said he is “encouraged that NCUA is using an outside party to review the OTR.” Cheney in his weekly CUNA regulatory advocacy report also noted that the National Credit Union Administration’s final rule on corporate credit unions, which was released last month, will come into effect on Jan. 18. However, many portions of the bill, including new capital requirements for the corporates, will phase-in at later dates.

Inside Washington (10/19/2010)

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* WASHINGTON (10/20/10)--The Federal Deposit Insurance Corp. (FDIC) is proposing a rule to govern implementation of specific provisions of its resolution authority for financial companies under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposed rule describes how key elements of the FDIC’s authority will take effect to ensure the liquidation process for failing companies with the potential to cause “systemic” damage reflects the act’s mandate for transparency. Written comments and questions must be submitted to the FDIC no later than Nov. 18 … * WASHINGTON (10/20/10)--The Dodd-Frank Act has enabled the Federal Deposit Insurance Corp. (FDIC) to discard plans to impose an across-the-board premium increase in 2011. While Dodd-Frank aims for a stronger Deposit Insurance Fund (DIF), it also provides additional time for the FDIC to replenish reserves (American Banker Oct. 19). The FDIC had scheduled an increase of three cents per $100 of domestic deposits on top of the current rate of 12 cents to 16 cents paid by most banks. Dodd-Frank requires the FDIC to increase the DIF to 1.35% of deposits in 10 years. The FDIC’s proposed hike was designed to return the DIF to a ratio of 1.15% by 2016. The agency’s decision is part of a comprehensive plan for long-term DIF management that includes creating a reserve ratio of 2% by 2027 to enable the FDIC to survive the next crisis …

CUNA WOCCU meet with Fed on Dodd-Frank burdens

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WASHINGTON (10/20/10)--Representatives from the Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU) recently met with the Federal Reserve to address credit union-specific issues regarding the remittance transfer provisions in the recently passed Dodd-Frank financial regulatory reform, such as WOCCU's IRnet remittances program, credit union international wire transfer and ACH operations, consumer protection, and credit union regulatory burden concerns. Portions of the Dodd-Frank legislation would require money transfer companies, banks, and credit unions that conduct what the law calls "remittance transfers" -- which are broadly defined by the law to include most consumer cross-border electronic fund transfers not involving plastic cards -- to provide consumers with certain disclosures regarding exchange rates and fees. The law also requires the Fed to establish regulations concerning error resolutions and similar consumer protections. Congress intended to exempt transactions that are initiated from deposit accounts at federally-insured credit unions from many aspects of these rules regarding disclosure of exact exchange rates, fees, and so forth for at least five years. International transfers in which recipient nations do not legally allow, or the method by which transfers are made in the recipient country do not allow, the amount of currency that will be received -- presumably including most, if not all, international wire transfers and ACH transactions -- would also likely be exempted to some degree. “How these exemptions operate in practice, however, will largely depend to the details of the proposed rule issued by the Fed,” CUNA Counsel for Special Projects Michael Edwards said. The Fed “is likely to issue these proposed regulations in mid- to late-spring of 2011,” Edwards added.

Fed issues CARD Act clarifications dates

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WASHINGTON (10/20/10)--Credit unions will want to note a proposal just issued by the Federal Reserve Board, one which is intended to help card issuers more fully understand their compliance obligations under changes to Regulation Z. The Credit Card Accountability Responsibility and Disclosure (CARD) Act, enacted in May 2009, made a series of changes to credit card rules, which were implemented under Reg Z Truth in Lending rules. This new Fed proposal is intended to clarify the Fed’s CARD Act rules. Specifically, the proposed clarifications state:
* Promotional programs that waive interest charges for a specified period of time are subject to the same protections as promotional programs that apply a reduced rate for a specified period. For example, a card issuer that offers to waive interest charges for six months would be prohibited from revoking the waiver and charging interest during the six-month period unless the account becomes more than 60 days delinquent. * Application and similar fees that a consumer is required to pay before a credit card account is opened are covered by the same limitations as fees charged during the first year after the account is opened. Because the total amount of these fees cannot exceed 25% of the account's initial credit limit, a card issuer that, for example, charges a $75 fee to apply for a credit card with a $400 credit limit generally would not be permitted to charge more than $25 in additional fees during the first year after account opening. * When evaluating a consumer's ability to make the required payments before opening a new credit card account or increasing the credit limit on an existing account, card issuers must consider information regarding the consumer's independent income, rather than his or her household income.
The Fed will be publishing its proposal (see resource link) in the Federal Register, likely within the next week. Comments on the proposal must be submitted within 60 days after its publication. The Fed on Tuesday also made official an interim final rule that pushed back the compliance date for gift card-related disclosure rules until Jan. 31, 2011. Those rules were previously slated to come into effect on Aug. 22. For that Fed release, use the resource link.

NCUA adds low risk asset discussion to agenda

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ALEXANDRIA, Va. (10/19/10)--The National Credit Union Administration (NCUA) on Monday added discussion of an interim final rule that addresses the low risk asset definition in Section 702 to the list of items up for consideration during Thursday’s monthly board meeting. The NCUA last week officially announced that its NCUA Guaranteed Notes (NGNs) will carry a 0% risk weight and will be backed by the Federal government. The NCUA said that the NGNs, which will be offered on the open market this week, will be permissible investments for credit unions. The Agency will also release its national merger registry, which would provide the names of potential credit union merger partners, and discuss final rules on fixed assets and the regulatory flexibility (RegFlex) program during the meeting.

Guidance for CUs on STS loan rules NCUA

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ALEXANDRIA, Va. (10/19/10)--Via a regulatory alert released last week, the National Credit Union Administration (NCUA) issued a series of questions and answers to assist federal credit unions in setting up a short-term, small amount (STS) lending programs. The NCUA last month made final an interim rule that allows federal credit unions to offer STS loans to their members as an alternative to predatory payday loans that are offered by other financial service providers. The final rule allows federal credit unions to charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. A $20 application fee may also be charged. The loans may total as high as $1,000 and may last for as long as six months, the NCUA added in the release. The loans will not be permitted to rollover. The new rule will go into effect on Oct. 25. Credit unions “are required to establish underwriting standards in their written lending policies for short-term small loans,” the NCUA said. However, the best practices portion of the NCUA’s STS rule “is guidance, not a regulatory requirement,” the NCUA added. NCUA examiners will review STS loan policies, procedures and processes for evidence of proper underwriting. The examiners also will work to ensure that the STS loans “are being made in a way that provides the member with the best chance to successfully repay a loan made under this rule,” and that the application fees collected “are being used to recoup costs associated with processing an application and not to account for the riskier nature of this type of lending.” The examiners will also monitor credit unions to make sure they are complying with the NCUA’s 20%-of-net-worth limit for these types of loans. The NCUA will collect this and other information over the course of the next 12 to 18 months, and may make additional revisions to the rule as needed. For the NCUA release, use the resource link.

Fed rule to prohibit real estate appraiser coercion

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WASHINGTON (10/19/10)—Real estate appraisers will be “free to use their independent professional judgment in assigning home values without influence or pressure from those with interests in the transactions” and will “receive customary and reasonable payments for their services” following a Federal Reserve interim final rule release. The Federal Reserve interim rule, released on Monday, would prohibit appraiser coercion by outside parties and would prevent “appraisers and appraisal management companies hired by lenders from having financial or other interests in the properties or the credit transactions.” The Fed will also require creditors or settlement service providers to report any appraiser misconduct to state licensing authorities. The interim final rule is required under the Dodd-Frank Act and is intended to replace the earlier Home Valuation Code of Conduct. The rule will become effective on April 1, 2011. Public comments on the rule will be accepted for 60 days after it is published in the Federal Register. The Credit Union National Administration (CUNA) will have additional information and a comment call in the coming days, and will submit its own comments to the Fed. For the Fed release, use the resource link.

CU bank employees aid fin. fraud fight FinCEN finds

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WASHINGTON (10/19/10)--“While suspected cases of identity theft are on the rise, vigilant financial institution employees are reportedly rejecting over half of fraudulent vehicle or student loans facilitated by identity theft prior to funding,” a Financial Crimes Enforcement Network (FinCEN) survey has found. "FinCEN's study of identity theft Suspicious Activity Reports (SARs) reveals how important suspicious activity reports can be to deterring illicit activity," FinCEN Director James Freis Jr., said. “The vigilance of employees of financial institutions is apparently deterring greater losses when the employees suspect loans are tied to false identities," Freis added. The FinCEN study found that identity theft “was the sixth most frequently reported characterization of suspicious activity,” behind structuring/money laundering, check fraud, mortgage loan fraud, credit card fraud, and counterfeit check fraud. The number of identity theft-related SARs filed increased by 123% over the number reported in 2004. The total number of SAR filings increased by 89% during that same time period. FinCEN found that credit card fraud “was the most frequently co-reported suspicious activity characterization with identity theft, appearing in over 45.5% of sample filings,” and that just over one-quarter of total reported identity thefts were committed by a perpetrator that knew the victim. SAR report filers “credited routine financial institution account monitoring” with revealing identity theft in over 20% of the filings covered by the survey, FinCEN said. While 28% of identity theft victims uncovered the thefts during a review of their own accounts, “credit reports, law enforcement investigations, collection agencies, and credit monitoring services were responsible for revealing identity theft in a decreasing percentage of sample filings,” FinCEN added. For the FinCEN release and study, use the resource link.

Inside Washington (10/18/2010)

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* WASHINGTON (10/19/10)--The Credit Union National Association (CUNA) is part of a coalition that will help consumers prevent identity theft by supporting Protect Your Identity Week (PYIW), Oct. 17-23. Identity theft remains the top complaint reported to the Federal Trade Commission, occurring more than 10 million times annually. Created by the National Foundation for Credit Counseling and the Council of Better Business Bureaus, PYIW is linked to educational events nationwide and a website, www.ProtectYourIDNow.org, that provides information about local events, resources and a consumer quiz. Advice in Spanish is also available …

FinCEN BSA rule reorganization out early next year

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WASHINGTON (10/19/10)--The Financial Crimes Enforcement Network (FinCEN) announced that its streamlined reorganization of its Bank Secrecy Act (BSA) rules will be implemented on March 1, 2011. FinCEN will move the BSA regulations into a new Chapter X of Title 31 of the Code of Federal Regulations (CFR). The reorganization splits the regulations “into general and industry-specific parts, ensuring that a financial institution can identify its obligations under the BSA in a more organized and understandable manner.” However, FinCEN said that it “has not made any substantive changes to the BSA rules.” The BSA reorganization moves definitions and regulatory obligations that are applicable to all or a number of regulated persons/financial institutions under the header of "General Provisions". The “General Provisions” section will be divided into the following subparts:
* Subpart A: General definitions; * Subpart B: Programs; * Subpart C: Reports required to be made by financial institutions; * Subpart D: Records required to be maintained by financial institutions; * Subpart E: Special information sharing procedures (money laundering and terrorist financing); * Subpart F: Special standards of diligence; prohibitions; and special measures; * Subpart G: Administrative rulings; * Subpart H: Enforcement; penalties; and forfeiture; * Subpart I: Summons; and * Subpart J: Miscellaneous.
Regulatory obligations that are applicable to particular industries are divided into industry-specific sections. Among these sections are sections covering credit unions/banks, casinos, and other money services businesses. FinCEN has also created an online citation translator to “provide an automated way for financial institutions to translate a regulatory citation from 31 CFR Part 103 to 31 CFR Chapter X and vice versa.” For the full FinCEN release, use the resource link.

Political prowess of CUNA noted by media

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WASHINGTON (10/18/10)--With midterm campaign season in full swing and candidates from both sides of the aisle reporting record fundraising tallies, the Credit Union National Association (CUNA) has been receiving attention of its own for its political activity. As reported by The Hill and later noted in the pages of The Politico, CUNA has come out in support of South Dakota House incumbent Stephanie Herseth Sandlin (D) by financing a 30-second television ad. The ad hails Herseth Sandlin as an "independent leader" who opposed the Wall St. bailout, supports small businesses, and is not afraid to stand up to her own party. The most recent Rasmussen poll shows Republican opponent Kristi Noem with a slight 3 point lead over the incumbent Herseth Sandlin. CUNA has also backed Sen. Harry Reid (D-Nev.) in his reelection attempt against Sharon Angle. Former House Republican Whip and current Missouri Senate candidate, Rep. Roy Blunt (R), and Colorado-based Republican House candidate Cory Gardner have also received support. CUNA's backing of these candidates was noted in opensecrets.org's Oct. 8 listing of top independent expenditures. Oregon-based Democratic House incumbent Kurt Schrader has also received CUNA backing during his reelection attempt. “These are just some of the record 13 races this election cycle in which CUNA has undertaken direct voter communications on behalf of credit union candidates," CUNA Vice President of Political Affairs Trey Hawkins said. The Herseth Sandlin, Reid, Blunt, Gardner and Schrader efforts are independent expenditures financed by CULAC, CUNA's federal political action committee, and by law cannot be coordinated with the candidates or their campaigns. CUNA, leagues and credit unions are also engaged in five partisan communications campaigns, in which leagues and credit unions can coordinate with the candidates and send political mailings to credit union members. Partisan communications campaigns for the general election include efforts for incubment Reps. Paul Kanjorski (D-Penn.), Ed Perlmutter (D-Colo.), and Larry Kissell (D-N.C.); open seat candidate Kevin Yoder (R-Kan.), and Steve Stivers (R-Ohio), who is challenging incumbent Rep. Mary Jo Kilroy (D). A total of 16 credit unions in five states are participating in these efforts. CUNA, leagues and credit unions also engaged in three primary campaigns earlier this year, including the successful nomination of Rob Woodall (R-Ga.) in his Republican primary. These CUNA-backed candidates "have a long history of supporting credit unions," CUNA Senior Vice President of Political Affairs Richard Gose said. "While we can't be a player in every race, we will support the candidates that have supported credit unions in the past. The races we do take part in are ones where we have had clear support from the candidates," he added.

Inside Washington (10/15/2010)

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* WASHINGTON (10/18/10)--The Federal Deposit Insurance Corp. has issued updated procedures for how troubled banks can get approval to making "golden-parachute" payments, said American Banker (Oct.15). Existing rules do not allow a bank with a 4 or 5 CAMEL rating to make such payments to parties terminating their affiliation. But the bank can apply for an exemption under three scenarios: when regulators concur a payment is allowed, the employee was brought in late to try and save the institution, or an employee is terminated following an open-bank merger. As an increasing number of troubled institutions have sought approval, the new FDIC issued guidance aims to better outline the application process … * WASHINGTON (10/18/10)--The new Consumer Financial Protection Bureau (CFPB) is facing obstacles as it figures out how it will supervise the estimated 71,000 money transmitters, prepaid card issuers, check cashers, payday lenders, financial companies and other nondepositories that could fall under the CFPB’s jurisdiction, said American Banker (Oct. 15). CFPB’s top priority has been hiring relevant staff and beginning coordination with state officials. While the Dodd-Frank law mentions mortgage lenders and a few institutions the bureau should cover, the agency may expand that authority when it outlines the extent of its authority in a rule due by July 21, 2012. “To a large extent it is going to come down to who they define as covered persons,” said Bill Himpler, executive vice president for federal affairs at the American Financial Services Association. “They’re going to probably look at terms of their first bite at the apple where they can show the most progress, so I would venture to guess they would start with the biggest players” … * WASHINGTON (10/18/10)--S. Denise Hendricks has been appointed director of Equal Opportunity Programs at the National Credit Union Administration (NCUA). Hendricks will oversee three programs designed to enhance affirmative employment plans in such areas as recruitment, employment, training, retention and awareness, and foster a multi-cultural diverse workforce. Hendricks joins NCUA after a 15-year stint with the Department of Defense, most recently as the deputy assistant director of Equal Employment Opportunity Programs Division at Washington Headquarters Services …

DCUC CEO Arteaga named to Presidents fin lit council

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WASHINGTON (10/18/10)--Defense Credit Union Council (DCUC) President/CEO Roland "Arty" Arteaga last week was named as one of twelve members of President Barack Obama’s Advisory Council on Financial Capability. The advisory council will advise the President on ways to promote and enhance overall financial literacy, financial education efforts, and the general understanding of how to effectively use financial products. In a release, Obama said that the council would “greatly serve the American people as they work to improve financial literacy and promote services that will benefit consumers.” “I look forward to their sound advice on these issues as we work together in the months and years ahead,” Obama added. Arteaga, who has led the DCUC since early 2000, serves as the primary liaison between the Pentagon and military post-based credit unions. Arteaga also served with the U.S. Army from 1971 until 1999.

FinCEN seeks comment on SAR database changes

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WASHINGTON (10/18/10)--The Financial Crimes Enforcement Network (FinCEN) on Friday said it is accepting public comment on its pending Bank Secrecy Act (BSA) database redesign. Specifically, FinCEN is seeking comment on its proposed list of data fields within the Database that will support Suspicious Activity Report (SAR) filings by financial institutions required to file such reports under the BSA. FinCEN said that it is not proposing “any new regulatory requirements nor changes to the requirements related to suspicious activity reporting, ” but 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. For the FinCEN release, use the resource link.

Fannie Mae to provide cost benefits to CUNA members

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WASHINGTON (10/18/10)--Credit Union National Association (CUNA) member credit unions that are active in the secondary mortgage market will now be eligible for “significant cost benefits and price breaks” via Fannie Mae, CUNA announced on Thursday. CUNA, CUNA Strategic Services (CSS) and Fannie Mae this week completed work on an affinity program that will give CUNA member credit unions that service or sell their mortgage loans access to innovative mortgage loan products and features and special member pricing in the secondary market for whole loan sales to Fannie Mae. Member credit unions will also be offered discounted licensing and loan submission fees for Fannie Mae’s Desktop Underwriter® software, discounts on training through Fannie Mae’s Housing Finance Institute™, and access to newsletters, announcements and webinars. The agreement, which Cheney said would provide a “terrific, cost-saving opportunity” to CUNA member credit unions that use the secondary market. For credit unions that are not approved Fannie Mae seller/servicers, the “Path to Approval Toolkit” is available to help determine if you qualify to sell loans directly to Fannie Mae.

CSBS seeks comments on federal registry fees

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WASHINGTON (10/18/10)--The Conference of State Bank Supervisors (CSBS) is seeking comments on its proposed fees for the National Mortgage Licensing System & Registry (NMLS). The deadline for submitting comments is November 12. The National Credit Union Administration (NCUA) and the federal banking agencies have contracted with the CSBS’s State Regulatory Registry to modify the NMLS to accommodate registrations by credit unions and banks as required by the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). The SAFE Act will require credit union “mortgage loan originators” (MLO) and their employing institutions to register with the NMLS. The registry is expected to be available in January 2011. “The NMLS website adds additional information every week, so we hope to see the actual registration procedures loaded some time in November,” said Valerie Moss, Credit Union National Association (CUNA) director of compliance information. CUNA encourages credit unions to comment of the following proposed fees: Registered MLO fees:
* Initial federal registration:
* $30 if completed between January 1 and June 30; * $60 if completed between July 1 and December 1
* Annual renewal fee: $30 * Change in employment processing fee: $30 * Criminal background check:
* Electronic fingerprints: $39 * Paper fingerprints: $49
Employing Institution Fees:
* Initial institution filing: $100 * Annual institution renewal: $100 * Two-factor authentication annual subscription: $70
Please send your comments to CUNA via e-mail at cucomply@cuna.com or to the CSBS at comments@stateregulatoryregistry.org by Nov. 12. Letters may also be submitted by postal mail to the CSBS address listed at the end of the proposal. For more information on the SAFE Act, visit CUNA’s compliance Web page at www.cuna.com and stay tuned for CUNA’s Dec. 9 SAFE Act Webinar with guest speakers from CSBS and NCUA. Details will be available on the CUNA training Web page by the end of the week.

Inside Washington (10/14/2010)

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* WASHINGTON (10/14/10)--Mark Pearce, the chief deputy commissioner of banks in North Carolina since 2009, has been appointed as director of a new division devoted to consumer compliance at the Federal Deposit Insurance Corp. (FDIC), said American Banker (Oct.14). The creation of the division of depositor and consumer protection, announced in August by FDIC, will focus on consumer rules in the wake of the sweeping Dodd-Frank legislation. Although the law created the new Consumer Financial Protection Bureau to write new rules, the FDIC will still enforce compliance for the banks it supervises. In addition, the new division is responsible for promoting the public’s knowledge about deposit insurance. Pearce previously spent over 10 years at the Center for Responsible Lending... * WASHINGTON (10/14/10)--Richard Nelman, superintendent of New York State banks, Wednesday called on state and federal regulators to work together to implement the Dodd-Frank financial reform legislation, particularly for non-depository supervision. (American Banker, Oct. 14). Speaking before the Exchequer Club here, Nelman said Dodd-Frank reaffirmed the need for state and federal regulators to partner, particularly on consumer protection issues for banks and nondepository supervision and enforcement. Nelam said the U.S. Congress confirmed that the state role is critical--providing checks and balances, calling it "more cops on the beat in enforcement," and serving as a proving ground for new laws. He also encouraged the Consumer Financial Protection Bureau to coordinate with existing state efforts as it designs a system to regulate nonbank institutions. Nelman suggested expanding the licensing system to include other nondepository lenders such as money transmitters and payday lenders.

First-round CMF awards provides 80 M for affordable housing

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WASHINGTON (10/15/10)--Twenty-three community development financial institutions (CDFIs) and other nonprofits were awarded $80 million to attract private funds for affordable housing under the U.S. Treasury Department’s new Capital Magnet Fund (CMF). The CMF is a competitive grant program for CDFIs and other nonprofits to attract private capital for development, preservation, rehabilitation, and purchase of affordable housing for low-income families. It is also meant to stir economic development activities or community service, which in conjunction with affordable housing activities may implement a concerted strategy to stabilize or revitalize a low-income area or underserved rural area. The awards were announced Thursday at St. Joseph’s Senior and Family Housing in Oakland, Calif., a site chosen because it is currently having a transformation to affordable housing units due to CDFI financing. “I am thrilled to be announcing these awards under the first-ever round of the Capital Magnet Fund…where CDFIs continue to have a tremendous positive impact on the development of affordable housing,” said the director of Treasury’s CDFI Fund, Donna Gambrell. "The Capital Magnet Fund awards will enable our partners to leverage up to $1.6 billion for the financing of affordable housing within underserved communities and help put under-served neighborhoods on the path to recovery and revitalization.” The CMF awards went to organization in 38 states. There were 230 applications from organizations serving 49 states, the District of Columbia, and Puerto Rico requesting over $1 billion in grants under the FY 2010 round of the CMF. On average, according to the announcement, applicants proposed leveraging their awards by a factor of over 20 times their award request, exceeding the target set by the U.S. Congress of leveraging by a factor of 10.

Compliance CUNA lays out timeline for ADA-ATM compliance

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WASHINGTON (10/15/10)--By now, most credit unions have heard about the Department of Justice’s (DOJ) update to the accessibility standards governing the construction and alteration of facilities covered by the American with Disabilities Act (ADA). The new ADA regulations were issued in late July. The DOJ’s 2010 Standards for Accessible Design consist of the DOJ’s revised regulations and the U.S. Access Board’s accessibility guidelines that were issued in 2004. New standards for ATMs are the most relevant changes for credit unions. The 2010 ADA standards address both physical access and communication-related elements to make ATMs usable by individuals who are visually impaired as well as those who have mobility challenges. “There has been a great deal of confusion regarding the effective date versus the compliance date for the 2010 accessibility standards,” said Credit Union National Association director of compliance information Valerie Moss. According to the DOJ, compliance with most of the regulation’s provisions is required on March 15, 2011. However, the mandatory compliance date for the 2010 accessibility standards is March 15, 2012. Any ATMs that are newly installed or altered on or after March 15, 2012 will be required to comply with the 2010 accessibility standards. However, there is a safe harbor for ATMs that are in compliance with the original 1991 ADA accessibility standards. These ATMs will not need to be modified unless they are altered on or after March 15, 2012. ATMs that do not comply with the 1991 standards must be modified to comply with either the 1991 or 2010 standards before March 15, 2012. The 1991 standards required that instructions and all information for use be made “accessible to and independently usable by persons with vision impairments.” So, practically speaking, most ATMs will still need to be speech enabled in order to meet either the 1991 or 2010 standard for independent usage, added Moss. Credit unions should review Section 707 of the Access Board’s Accessibility Guidelines and consult with their ATM service providers to determine what changes will need to be made to their ATMs.

NCUA approves big Addison Ave. First Tech CU merger

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ALEXANDRIA, Va. (10/15/10)--The National Credit Union Administration (NCUA) has approved the merger of Addison Avenue FCU, Palo Alto, Calif., and First Tech CU, Beaverton, Ore. The NCUA on Thursday told news Now that it officially approved the merger on Oct. 4. Both credit unions served members from high-tech companies such as Hewlett Packard, Microsoft, Agilent, Intel, and CH2M HILL. The newly merged credit union, which will operate as First Tech FCU with corporate offices in Palo Alto, Beaverton and Rocklin, Calif., will hold $4.6 billion in assets from 320,000 members. The credit union will have 38 branches total. Addison Avenue President/CEO Benson Porter earlier this year said that the partnership is a tremendous opportunity for the credit unions to create more value for their combined membership and sponsor companies.

Merger registry RegFlex on NCUA agenda

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ALEXANDRIA, Va. (10/15/10)—The National Credit Union Administration (NCUA) will release its national merger registry, which would provide the names of potential credit union merger partners, at next Thursday’s open board meeting. The registry was initially recommended by the Credit Union National Association (CUNA). CUNA has also urged the NCUA to address due diligence and loss-sharing incentives as it further refines its approach to the merger process, and has asked the NCUA to provide greater detail on its criteria for selecting which credit unions on the merger partner registry should serve as acquirers. The merger recommendations were developed by CUNA's Mergers Task Force and presented to NCUA in the Task Force's May report. Final rules on fixed assets and the NCUA’s regulatory flexibility (RegFlex) program will also be discussed during the meeting. CUNA earlier this year urged the NCUA to revise or to simply not adopt proposed changes to its RegFlex program. Those changes, which were announced in March, would eliminate RegFlex authority for credit unions in regard to the 5% limit on fixed asset investments, the requirement for the personal guarantees of borrowers for member business loans (MBLs), stress testing of certain investments, and discretionary control of investments. The NCUA will also release its plan for the years 2011 through 2016, and will cover the status of its insurance fund during the open portion of the meeting. Insurance appeals and supervisory activities will be discussed during the closed portion of the meeting. For the full NCUA agenda, use the resource link.

FHFA recommends 4-point foreclosure framework

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WASHINGTON (10/15/10)--Fannie Mae and Freddie Mac should inform authorities of potentially fraudulent activities and avoid unneeded delays when working to resolve foreclosure proceedings, Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco said this week. DeMarco also said that Fannie and Freddie should verify that all foreclosure-related documents are compliant and remediate foreclosure process deficiencies in a “timely” manner. DeMarco made these suggestions as part of a “four-point policy framework” released by the FHFA. The framework “envisions an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, lenders, investors, and communities alike,” DeMarco said in a release. “The country’s housing finance system remains fragile and I intend to maintain our focus on addressing this issue in a manner that is fair to delinquent households, but also fair to servicers, mortgage investors, neighborhoods and most of all, is in the best interest of taxpayers and housing markets,” DeMarco added. The FHFA specifically recommended that mortgage servicers review foreclosure documents to ensure that any documentation of pre-judgment foreclosure actions, post-judgment foreclosure actions, post-foreclosure sales, or eviction actions is correct and was “completed in compliance with applicable law.” The FHFA earlier this month said that both Fannie and Freddie would work with mortgage servicers to identify and address issues in the foreclosure process. DeMarco last month said that Fannie and Freddie should "maintain their focus on mitigating credit losses and remediating internal operational weaknesses while employing prudent underwriting standards and guaranteeing proven mortgage products." Developing and offering new products should be tabled for the time being, he added. For the full FHFA release, use the resource link.

NGNs will carry 0 risk weight NCUA says

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ALEXANDRIA, Va. (10/15/10)--The National Credit Union Administration (NCUA) on Thursday officially announced that its NCUA Guaranteed Notes (NGNs) will carry a 0% risk weight. The NGNs are comprised of $50 billion of legacy assets held by the NCUA. Those legacy assets are primarily of private label, residential mortgage-backed securities that were significantly devalued during the turmoil in the overall mortgage market. A total of $35 billion of those assets will then be reissued as NCUA Guaranteed Notes (NGN), which will then be sold on the open market. The NCUA said that additional information about the securitization process will be made available as the process moves forward. The NCUA worked with the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision to gain clarification on the appropriate risk weight required under regulatory capital risk weighting regulations. The NGNs will be offered on the open market this week, under the ticker symbol NGN. The initial offering is one of a series of similar transactions that NCUA intends to conduct in order to affect the corporate resolution plan. "Since the NCUA Guaranteed Notes are backed by the federal government, similar to U.S. Treasury securities, these investments carry a zero risk weight and are permissible for credit unions," NCUA Chairman Debbie Matz said this week. For the full NCUA release, use the resource link.

Treasury gets 10B in NCUA corporate loan repayment

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Alexandria, Va. (10/14/10)—Late yesterday, the National Credit Union Administration (NCUA) announced it has repaid $10 billion, plus interest, to the U.S. Department of Treasury. They repayment was made using proceeds from selling performing assets of two formerly conserved corporate credit unions. The NCUA said the repayment came, in part, from $9.5 billion raised by selling select assets from U.S. Central FC, of Lenexa, Kan., and Western Corporate (WesCorp.) FCU, of San Dimas, Calif. The sales included securities backed by performing residential and commercial mortgages, credit card receivables, student loans and auto loans. The proceeds from those sales allowed the NCUA to repay a $10 billion loan from the Treasury to the agency’s Central Liquidity Facility (CLF). In 2009, the CLF transferred the $10 billion to the National Credit Union Share Insurance Fund (NCUSIF) so the insurance fund could stabilize U.S. Central and WesCorp with a $5 billion loan to each. Future borrowings from the Treasury for corporate stabilization will be assigned to the Corporate Stabilization Fund. “Paying off the $10 billion in loans clears the balance sheets of both the CLF and the Share Insurance Fund,” said NCUA Chairman Debbie Matz. “This is a significant first step in NCUA’s orderly corporate resolution process.” The next step in the resolution, according to the NCUA, is to begin securitizing cash flows from “legacy assets,” which are mostly impaired mortgage-backed securities from five corporates that currently are either in conservatorship or have been converted to asset management estates. “While the legacy assets will be transferred to securitization trusts, new securities matched to their cash flows will be sold in financial markets with an unconditional guarantee backed by the full faith and credit of the United States,” the NCUA release said. Starting this week, these NCUA Guaranteed Notes will be offered under the ticker symbol NGN. The initial offering is one of a series of similar transactions that NCUA intends to conduct in order to affect the corporate resolution plan. “Since the NCUA Guaranteed Notes are backed by the federal government, similar to U.S. Treasury securities, these investments carry a zero risk weight and are permissible for credit unions,” said Chairman Matz.

Three Dog Night concert to kick off 2011 CUNA GAC

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WASHINGTON (10/14/10)--Bringing its extensive catalogue of hits like “Joy to the World,” “Eli’s Coming” and “One,” the legendary super group Three Dog Night will headline the kickoff concert Feb.27 at the Credit Union National Association’s (CUNA) Governmental Affairs Conference (GAC) in Washington, D.C.
Click to view larger image Popular seventies group Three Dog Night will headline the kickoff concert Feb. 27 at the Credit Union National Association's 2011 Governmental Affairs Conference (GAC) in Washington, D.C. (Photo provided by CUNA)
The Sunday evening kickoff concert, sponsored by the CUNA Councils, has become a GAC tradition. The evening begins with a reception in the conference Grand Exhibit Hall in the Washington Convention Center at 7 p.m., followed by the Three Dog Night concert at 8:30 p.m. The concert is open to all GAC attendees and registered guests. From 1969 through 1974, no other group achieved more top 10 hits than Three Dog Night. Since 1986, it has performed more than 2,000 shows, including two Super Bowls. Today, as it marks 40 years on the road, the band continues to top the list of artists with the best “Billboard Top 100 Chart” average. CUNA’s 2011 GAC will be Feb. 27 through March 3 at the Washington Convention Center. Registration and housing lines are open. The 2011 GAC will also feature keynote remarks on leadership from Chesley B. “Sully” Sullenberger III, the heroic pilot who landed US Airways flight 1549 on the Hudson River and saved the lives of 155 people. It also will feature a political debate between Republican strategist Mary Matalin and Arianna Huffington, co-founder of the Huffington Post. Additional GAC speakers, including those from Capitol Hill, the administration and the federal regulatory agencies, will be announced in coming weeks. For more information on the 2011 GAC, call CUNA at 800-356-9655, ext. 5700, e-mail gacinfo@cuna.coop or use the link. For program information, call 800-356-9655, ext. 6759. All GAC 2011 information will be updated on the GAC website.

Inside Washington (10/13/2010)

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* WASHINGTON (10/14/10)—Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and U.S. Treasury Secretary Timothy Geithner have joined the White House in opposing a national moratorium on home foreclosures (Politico and American Banker Oct.13). Allegations of flawed paperwork have caused Bank of America Corp. to suspend foreclosures nationwide, while several other lenders temporarily halted foreclosures in 23 states. Dodd said a nationwide foreclosure moratorium could damage the economy and hinder the housing recovery. Geithner said a moratorium might hurt homeowners in neighborhoods that already have high numbers of empty houses by putting more downward pressure on housing prices... * WASHINGTON (10/14/10)--The Federal Deposit Insurance Corp. pledged to use severe restraint when tapping its new resolution powers to deal with the failure of giant firms. The Dodd-Frank regulatory reform law enables the agency to treat similar firms differently when handling the resolution of a large firm that could pose a systemic risk if allowed to go into bankruptcy (American Banker Oct. 13). The law allows the FDIC to pay more to creditors who provide essential services for the failing firm. The FDIC has proposed a limited rule that would bar some creditors from favorable treatment, including shareholders, subordinated-debt holders and long-term holders of senior debt. There is a 30-day comment period on the limited rule... * WASHINGTON (10/14/10)--House Financial Services Committee Chairman Barney Frank (D-Mass.) this week said that his committee would hold a hearing on the Financial Crimes Enforcement Network’s (FinCEN) recent wire-transfer proposal. As reported in American Banker, Frank said that the FinCEN proposal would “further increase bank costs” and liabilities. "The need to better identify and track flows of terrorist funds is clear. I am not persuaded that such a broad-scale policy change is the best way to achieve that goal," Frank added. The FinCEN proposal, which would require some depository institutions and money services businesses to provide FinCEN with records of certain cross-border electronic transmittals of funds, will likely not impact credit union practices…

St. Paul Croatian FCU fraud may cost NCUSIF 170M

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ALEXANDRIA, Va. (10/14/10)--The National Credit Union Administration (NCUA) Office of Inspector General (OIG) revealed today that St. Paul Croatian FCU was catapulted into a liquidation by fraudulent loans, some allegedly masked by the credit union’s CEO. The IG’s material loss review of the Eastlake, Ohio. credit union noted that the NCUA projected an estimated loss of $170 million to the National Credit Union Share Insurance Fund directly attributable to the liquidation. The IG review noted that as of Dec. 31, 2009, the credit union had approximately $238.8 million in total assets and that St. Paul had a “substantial majority of its assets in loans that were supposedly secured by members’ shares.” However, an examination at that time found the majority of the loans were not actually share-secured and a that number of them were “allegedly fraudulent.” “The NCUA also found that St. Paul’s chief executive officer manipulated loan records and masked the suspected loan fraud by constantly refinancing certain loans or making advance payment on those loans,” the report said. The review also said that the IG determined a number of failures regarding the credit union management’s obligations to implement proper internal controls. The review said, specifically, management did not:
*Ensure adequate internal controls were in place; * Ensure adequate policies were in place and adhered to; and * Resolve prior examiner findings in a timely fashion.
In fact, the review indicated, the state of management was so abysmal at the time of the liquidation that once the credit union was placed in conservatorship and the CEO was removed, the remaining nine-person staff wasn't familiar enough with operations to run the credit union. It was quickly liquidated soon after. The IG review also took NCUA examiners to task noting, in part, that the examiners “did not adequately evaluate the risks to St. Paul operations.” According to the IG, the examiners did not thoroughly evaluate the credit union’s internal controls when assessing transaction risk, ensure credit union management took corrective actions when failures were documented, nor did they expand examination procedures when “red flags” indicated higher risks St. Paul Croatian was chartered in 1943 and had almost 5,400 members at the time of its liquidation.

NCUA alt. capital plan gets joint CUNA-NAFCU support

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WASHINGTON (10/14/10)--Joining together on an issue of “utmost significance” to credit unions, the Credit Union National Association (CUNA) and National Association of Federal Credit Unions (NAFCU) jointly backed the National Credit Union Administration’s (NCUA’s) proposal on alternative sources of capital for credit unions. In a joint letter, CUNA and NAFCU thanked NCUA Chairman Debbie Matz for her leadership on the important issue and asked for further meetings with agency staff on pursuing supplemental capital legislation. Last December, the NCUA contacted House Financial Services Committee Chairman Barney Frank (D-Mass.) to propose the following:
* The law should be changed to allow qualifying credit unions, as determined by the NCUA board, to issue alternative forms of capital to supplement their retained earnings. To ensure the proper authority, alternative forms of capital would be subject to necessary regulations addressing safety and soundness criteria, investor protections, and any impact on the cooperative credit union governance model; and * Using the model of low-income designated credit unions, which are authorized to offer uninsured secondary capital accounts to non-members, the Federal Credit Union Act should be modified to permit qualifying credit unions to offer uninsured alternative capital instruments subject to regulatory restrictions and to expand its definition of net worth to include those instruments. These changes would allow well-managed credit unions to better manage net worth levels under varying economic conditions.
The CUNA-NAFCU letter notes that the executive committees of CUNA and NAFCU recently met to discuss a number of issues of relevance to the credit union industry. “We were very pleased to note that your proposal, while adding a risk-based capital regime, was in keeping with the set of principles, joint statement, and draft legislative language that we developed (at NCUA’s request),” said the letter signed by CUNA President/CEO Bill Cheney and NAFCU President Fred Becker. It added, “Recognizing that alternative capital is an issue of ever-increasing importance, we endorse your proposal and ask for your leadership and assistance in moving capital reform expeditiously forward through the legislative process in the first session of the 112th Congress.”

Monthly SAR report zeros in on debt relief fraud

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Vienna, Va. (10/14/10)--Among a scattershot of articles featured in its 18th monthly review of suspicious activity, the Financial Crimes Enforcement Network (FinCEN) offered analysis of Suspicious Activity Reports (SARs) by depository institutions that addressed “debt relief” and “debt settlement.” FinCEN credited depository institutions with becoming more aware of such fraudulent practices and noted that, while only two SAR reports on debt settlement activities were filed in 2006, 42 were filed in just the first half of 2010. In all, from January 2006 through June 2010, financial institutions filed 115 SARs totaling $135 million related to fraudulent debt. Use the resource link below to read more on the types of fraud uncovered and what tipped it off. Also of interest to some credit unions, Section IV of the monthly report features an article geared toward compliance officers, and called “Helping Your Board of Directors to Understand the Value of BSA Information.”

CUNA offers summit for CU response to corporate plan

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WASHINGTON (10/14/10)--The Credit Union National Association (CUNA) is coordinating and hosting a summit meeting in the next few weeks, one which will give credit union stakeholders the opportunity to come together as a system to develop a plan for the future of corporate credit unions. In announcing the summit, CUNA President/CEO Bill Cheney noted, “CUNA has been asked by a large number of credit unions and others to help the industry chart a path to the future on these issues.” He pledged that CUNA, working with the credit union system, will do everything within its power to help address questions that have arisen since the National Credit Union Administration (NCUA) approved new corporate credit union and legacy asset rules on Sept. 23. Common questions posed to CUNA include those concerning the future role of corporate credit unions in providing key payments, settlement, liquidity, and investment advisory services to natural person credit unions. The CUNA leader commended other system efforts to work on “various approaches” to these issues. “Even so,” he emphasized, “I think that it will be highly beneficial and productive for the credit union system if such efforts are coordinated, to the extent possible, and are consistent with an overall vision to ensure that all credit unions have access to the operational support services they need.” “There are no more important issues now than how we, together, address corporate credit union services. This is why CUNA will be hosting the summit and continuing our work to pursue solutions not only for the transition period under the new rule but for the future,” Cheney said. News Now will provide summit details as they become available.

Comment on NCUA Corp. CU charter guidance sought

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WASHINGTON (10/12/10)--The Credit Union National Association (CUNA) has asked credit unions to comment on the National Credit Union Administration’s (NCUA) proposed guidance on the requirements and process for chartering federal corporate credit unions. The NCUA currently does not provide guidance in this area. Under the NCUA corporate credit union guidance, a group of at least seven representatives from natural person credit unions would need to provide detailed business planning information and several types of supplemental information. To approve the corporate, the NCUA and its Office of Corporate Credit Unions (OCCU) will judge whether the proposed corporate credit union would uphold the provisions of the Federal Credit Union Act, promote safety and soundness within the credit union industry, and provide quality services to members. The NCUA and its OCCU will also assess the economic and long-term viability of the proposed corporate. The NCUA has estimated that creating a corporate charter that complies with its guidance would take 330 hours, total. In the comment call, CUNA asks if there is a need for corporate credit union chartering guidance, and, if so, whether or not the proposed collection of information is necessary for the NCUA to properly perform its functions as the regulator of corporate credit unions. Comments should be sent to CUNA by Oct. 26. The NCUA will accept comments on the proposal until Nov. 1.

Interchange rules unconstitutional lawsuit charges

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WASHINGTON (10/12/10)—Decrying Sen. Richard Durbin’s (D-Ill.) interchange fee legislation as “unconstitutional,” TCF National Bank on Tuesday brought legal action against the Federal Reserve, the agency charged with implementing the law. According to the TCF complaint, the law is unconstitutional because it only applies to banks of a certain size and does not allow recovery of cost and profit for affected financial institutions. TCF also cited a lack of legislative history for the amendment. A single, brief hearing was held in the weeks leading up to the financial reform legislation vote, and the interchange legislation also saw little debate in Congress prior to its passage. The complaint also noted that while Durbin claimed his amendment would reduce fees charged by credit card issuers and debit network operators, the legislation only addresses the fees charged by debit card issuers. “There is no obligation under the amendment to pass cost savings on to consumers,” the complaint adds. The interchange legislation, which was passed as part of comprehensive financial regulatory legislation earlier this year, directs the Federal Reserve Board to write rules on interchange fees for debit card purchases. While the interchange provision exempts small credit unions and other financial institutions with under $10 billion in assets from any interchange changes, these institutions would still be impacted directly by whatever rates are established. TCF in the complaint called this $10 billion threshold “arbitrary.” The Credit Union National Association’s (CUNA) Senior Vice President/Deputy General Counsel Mary Dunn said that the lawsuit aims to delay the Fed from writing regulations until a full hearing on the interchange provisions can occur. The federal government has 60 days to respond to the complaint. TCF will file a motion for a preliminary injunction within a few weeks, and will ask the court for an expedited judgment.

FASB listens to fair-value concerns at first roundtable

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NORWALK, Conn. (10/12/10)—The Credit Union National Association (CUNA) during a Tuesday roundtable again made the case that the Financial Accounting Standards Board's (FASB) proposed update to financial instrument accounting standards would provide no benefit to credit unions while substantially increasing their compliance costs. CUNA also continued to oppose the proposed application of fair value accounting rules to loans and other credit union products. The FASB proposal would require most financial assets and liabilities to be reported under Generally Accepted Accounting Principles (GAAP) at fair value. The proposal would also require the funding of the Allowance for Loan and Lease Loss Accounts to be under the expected loss model. Credit unions over $10 million in assets are required to comply with GAAP. CUNA Accounting Subcommittee Chairman and Patelco CU Chief Financial Officer Scott Waite also 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 the FASB panel 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 held the Tuesday roundtable, which is the first of several, in an effort to collect commentary from industry insiders. Representatives from the National Credit Union Administration (NCUA) and the American Institute of Certified Professional Accountants, as well as several community bankers, were also in attendance, though the regulators did not take part in the forum. The roundtable discussion follows a number of comment letters on the fair value proposal. FASB released the fair value proposal in May. Though FASB expects the final rule to take effect sometime in 2013, that date is not concrete, and CUNA Senior Vice President/Deputy General Counsel Mary Dunn said CUNA will “continue pursuing a positive result for credit unions on this issue.”

NCUA to combine LA and Phoenix Town Hall meetings

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ALEXANDRIA, Va. (10/13/10)--To “consolidate efforts and minimize expenditures and resources,” the National Credit Union Administration announced it is combining the Phoenix, Ariz. and Los Angeles, Calif. town hall-style meetings into the single location of Los Angeles. The combined meeting will take place on Oct. 29 at the Hilton Los Angles Airport from 9:30 a.m. (PDT) to 12:30 p.m. (PDT). The session is one of 10 being hosted by the NCUA across the country during October in an effort to reach stakeholders to discuss the comprehensive new rules relating to corporate credit union operations and corporate legacy assets resolution that the NCUA board adopted at its open meeting on Sept. 23. Free NCUA Town Hall meetings also are being held in Atlanta, Boston, Dallas, Chicago, Columbus, Detroit, Los Angeles, Orlando, Portland, and Alexandria, Va. (Use the resource link to access the schedule and registration.)

FinCEN webinar Nov. 4 offers e-filing info

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WASHINGTON (10/12/10)--The Financial Crimes Enforcement Network (FinCEN) will “provide an overview” of its free Bank Secrecy Act (BSA) E-Filing system during a Nov. 4 webinar. FinCEN in a release said that the webinar “will highlight the benefits” of the BSA E-Filing system “and instruct financial institutions on the simple process of signing up and using E-Filing.” FinCEN will also cover how to complete both single and multiple report filings during the webinar. BSA E-Filing, which was developed in 2002, is a free, web-based system that is user-ID and password protected. Financial institutions subject to BSA reporting requirements use the system to electronically file a variety of BSA forms, either individually or in batches, through a FinCEN secure network. Currency Transaction Reports (CTRs), Designations of Exempt Persons (DEPs), and Suspicious Activity Reports (SARs) may currently be filed online. To sign up for the webinar, use the resource link.

Inside Washington (10/12/2010)

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* WASHINGTON (10/13/10)—WhiteHouse.gov kicked off its new Tuesday Talks live video chat by featuring Elizabeth Warren. The Tuesday Talks chats will be held every Tuesday at 1 p.m. EDT, according to a White House press release. Warren joined President Barack Obama’s administration in late September as assistant to the president and special adviser to U.S. Treasury Secretary Tim Geithner. She is charged with launching the Consumer Financial Protection Bureau, which is a core element of Wall Street reform efforts. The bureau is designed to serve as a watchdog for American consumers by streamlining and enforcing financial protection rules. The National Credit Union Administration and other financial regulators are required to transfer functions and authorities regarding consumer financial laws to the CFPB by July 21, 2011… * WASHINGTON (10/13/10)--The Small Business Administration (SBA) and the U.S. Treasury Department are implementing core provisions of the Small Business Jobs Act to increase small business lending (American Banker Oct. 12). The SBA raised the maximum for small business loans from $2 million to $5 million for several programs, including general small business loans and fixed asset loans, as was reported earlier by News Now. The Treasury Department allocated $1.5 billion to states as part of the State Small Business Credit Initiative that encourages states to work with local lenders to help entrepreneurs expand. States must demonstrate that they gain $10 in private lending for every $1 of federal funding received … * WASHINGTON (10/13/10)--The Federal Deposit Insurance Corp. (FDIC) plans to pursue more than 50 lawsuits to attempt to recapture more than $1 billion in losses from banks that failed due to the credit crisis. The lawsuits, which were authorized by the FDIC board in closed session, are aimed at officers and directors of failed banks (American Banker via Bloomberg.com Oct. 12). The FDIC typically takes about 18 months to investigate bank failures and determine whether litigation can be used to recover losses to its insurance fund. To date, the FDIC’s only lawsuit related to the credit crisis is a July filing that asks for $300 million in damages from four executives at IndyMac Bankcorp Inc. … * WASHINGTON (10/13/10)--The Federal Deposit Insurance Corp., Federal Reserve Board, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision have published revisions to Community Reinvestment Act (CRA) rules. The new rules, effective Nov. 3, implement two statutory changes. One requires the agencies named above, when assessing a bank’s or thrift’s record of meeting community credit needs, to consider low-cost education loans to low-income borrowers. The other change permits the agencies to consider various activities undertaken with minority- and women-owned financial institutions and low-income credit unions… * WASHINGTON (10/13/10)--The Federal Deposit Insurance Corp. (FDIC) last week proposed a rule to clarify how the agency would treat certain creditor claims under a new “orderly liquidation authority “established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Title II of the Dodd-Frank Act allows the appointment of the FDIC as receiver for a financial company if its failure and liquidation--under the Bankruptcy Code or other insolvency procedures-- would pose a significant risk to the financial stability of the United States. The Notice of Proposed Rulemaking approved Friday includes a request for comment on a proposed regulation on specific issues related to creditor claims and a request for comment on broader questions to inform a future rulemaking addressing other orderly liquidation issues under the Dodd-Frank Act. The proposed rule is open for comment for 30 days and the broader set of questions for the future rulemaking will be open for public comment for 90 days…

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 ...

Inside Washington (10/08/2010)

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* WASHINGTON (10/11/10)--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 (10/11/10)--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 (10/11/10)--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 ...

HUD plans guidance on Lender Insurance process

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WASHINGTON (10/11/10)--The U.S. Department of Housing and Urban Development (HUD) keeps working on improvements to the risk management activities of its Federal Housing Administration (FHA) and recently proposed changes to update the Lender Insurance process. Most FHA-insured mortgages are endorsed for the insurance process and the proposed rule, most significantly, would provide new guidance on requirements for mortgagee indemnification to HUD of insurance claims in the case of fraud, misrepresentation, or noncompliance with applicable loan origination requirements. The plan also clarifies that, in order to retain Lender Insurance authority, mortgagees must continually maintain the acceptable claim and default rate required for the initial delegation of eligibility. Comments are due Dec. 7. For more use the resource link.

Foreclosures still a topic for Fed consumer advisers

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WASHINGTON (10/11/10)-The Federal Reserve Board announced Thursday that its Consumer Advisory Council (CAC) intends to take up foreclosure issues again at its next meeting, on Oct. 21. Not surprisingly, the front-page grabbing topic was on the last CAC agenda as well, when the advisory panel discussed loss-mitigation efforts, including the Administration's Making Home Affordable program, neighborhood stabilization initiatives and challenges, and other issues related to foreclosures. Also on the October agenda:
* Proposed Rules Regarding Home Mortgage Transactions: CAC members will discuss the Fed board’s proposal to enhance Regulation Z (Truth in Lending Act) rules that address consumer protections and to improve disclosures for reverse mortgage transactions and other home mortgage loans; * Home Mortgage Disclosure Act (HMDA): Also on the discussion agenda, CAC members will debate the advantages of suggested changes to Regulation C, addressing the importance or utility of particular information in light of the purposes of HMDA and the burdens and possible privacy risks associated with collecting and reporting that information; and * Community Reinvestment Act (CRA): CAC will focus on key insights from recent hearings on modernizing regulations that implement CRA, and consider issues such as how to update the regulations to reflect changes in the financial services industry, changes in how banking services are delivered to consumers today, and current housing and community development needs.
The CAC 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. Alan Cameron, president/CEO of the Idaho Credit Union League, is a representative on the council. His term runs through 2010.

CDFI initiative enlists federation

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WASHINGTON (10/11/10)--The National Federation of Community Development Credit Unions is among those selected to aid the Community Development Financial Institutions (CDFI) Fund as it works to “expand technical assistance and training opportunities for CDFIs nationwide,” the CDFI Fund announced on Friday. The CDFI Fund’s capacity-building initiative aims to “provide specialized training and technical assistance designed to significantly increase the ability of CDFIs to deliver financial products and services to underserved communities.” The training will cover “affordable housing and business lending, portfolio management, risk assessment, foreclosure prevention, training in CDFI business processes, and assistance with liquidity and capitalization challenges,” according to the CDFI Fund. Federation President/CEO Cliff Rosenthal in a release said his group was “pleased to be selected” for participation in the CDFI Fund’s capacity-building initiative. NeighborWorks America, Deloitte, The Opportunity Finance Network and Reznick Group P.C. will also aid the CDFI Fund. In a Friday release, CDFI Fund Director Donna Gambrell said that her group will work with the providers “to offer high quality training resources, on-site technical assistance and individualized capacity-building assistance to help CDFIs extend and expand their coverage.” The CDFI Fund last week announced the beginning of the 2011 round of funding, through which $135 million will be made available to eligible credit unions. Applications for the CDFI funds must be received by Nov. 19. (See related story: CDFI to provide up to $135 mil in 2011 round, Oct. 6) For the full CDFI Fund release, use the resource link.

NCUA continues nationwide town halls

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ALEXANDRIA, Va. (10/11/10)--The National Credit Union Administration (NCUA) this week will continue its series of corporate credit union resolution town halls with meetings set to take place in Atlanta, Detroit, and Columbus, Ohio. The meetings, which give the NCUA an opportunity to explain and gather input on its recently passed corporate credit union and legacy asset plans, were held in Portland, Ore., Boston, and Dallas last week. The NCUA has scheduled five other meetings through Oct. 29. NCUA Chairman Debbie Matz recently said that the NCUA scheduled at least two meetings in each region "to make sure that credit union officials have an opportunity to be personally briefed and ask questions." Matz in a release said that “the Town Hall format has proven to be valuable for all participants.” “From NCUA’s perspective, we always garner significant insights and information from the credit union stakeholders in attendance… I hope that the credit union industry takes full advantage of these opportunities to hear and be heard,” Matz added.

SBA officially increases 504 7a loan limits

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WASHINGTON (10/11/10)--The U.S. Small Business Administration (SBA) on Friday announced higher maximum 7(a) and 504 program loan limits. The increased loan sizes, which were authorized by the Small Business Jobs Act, are effective as of Friday. Under the legislation, SBA 7(a) loan limits will be increased to $5 million from $2 million, 504 loan limits will increase to $5.5 million from $1.5 million, and 7(a) "Express Loans" will increase to $1 million from $300,000. The bill also ups the definition of microloans from $35,000 to $50,000. Credit unions may participate in 7(a) and 504 SBA loans. “Across the country, there are small businesses owners who are in a position to take that next step to grow and create jobs, and these larger loan sizes provide another tool to help them do just that,” SBA Administrator Karen Mills said in a release.

NCUA letters address Corp. CU actions due diligence

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ALEXANDRIA, Va. (10/8/10)--The National Credit Union Administration (NCUA) this week followed up its recent corporate credit union actions by releasing a series of letters to credit unions. Letters 10-CU-17, 10-CU-19, 10-CU-20 and 10-CU-21 address the recently determined National Credit Union Share Insurance Fund Premium, the NCUA’s corporate credit union resolution, the new corporate credit union rule, and the general state of the credit union industry, respectively. The NCUA also makes more specific recommendations to credit unions in letter 10-CU-18. In that letter, the NCUA recommends the risk management processes needed to ensure that credit unions have taken appropriate due diligence. The agency recommends that credit unions risk management practices include examinations of exposure limits, “accurate risk measurement, an understanding of the investment’s structure, knowledge of the collateral performance, and a determination of investment suitability. “Knowing what questions to ask and which documents to review is the foundation of a solid due diligence process,” the NCUA adds. The NCUA said that credit unions should also note the nature of the investment, whether or not it is backed by any collateral, the interest rate structure of the investment, the amount of the investment. The maturity schedule of the investment and whether or not the given investment fits within the credit union’s investment policy and asset-liability management constraints should also be determined, the NCUA said. For the full NCUA letters, use the resource link.

Agency warns of false site phishing scam

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ALEXANDRIA, Va. (10/8/10)—Credit unions should be wary of e-mails that claim to be from the National Credit Union Administration (NCUA) and promise their recipients $50 for taking an NCUA-created survey, the NCUA said Thursday. According to the agency, the survey link directs members to a false version of the NCUA homepage. That site contains “an illicit survey that solicits credit card account numbers and confidential personal information” from survey respondents. In a release, the NCUA warned that the site is a phishing scam, adding that the agency “will never ask credit union members or the general public for personal account or personally identifiable information as part of a survey.” “Any e-mail that alleges to be from NCUA and asks for account information is fraudulent and should be treated as suspicious,” NCUA added. NCUA has advised that those who may have clicked on the link “consult with a computer security or anti-virus specialist to assess the need to re-install a clean image of the computer system.” Generally, credit unions should encourage their members to execute simple antivirus scans, install security patches as needed, and use caution in general when online. For the full NCUA release, use the resource link.

CUNA letter refutes ICBA tax call

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WASHINGTON (10/8/10)--Credit unions at large face no threat--and taxpayers will not pay the costs-–for resolving wholesale, “corporate” credit unions recently conserved by federal regulators, Credit Union National Association (CUNA) President/CEO Bill Cheney told key Treasury officials personally yesterday in response to misinformation spread by a community bank lobby group. Cheney made these points in a visit with Assistant Treasury Secretary Michael Barr and in a letter to Treasury Secretary Timothy Geithner, which he also hand-delivered to Barr. The letter was CUNA's response to a Thursday Independent Community Bankers of America (ICBA) letter that claimed that the “taxpayer bailout of the credit union system should cast doubt on the wisdom and the fairness of [credit unions’] tax exempt status.” Cheney refuted the ICBA’s claims, noting that “the ICBA is clearly trying to capitalize on the corporate credit union situation in order to advance their anti-credit union agenda.” The ICBA’s claims of a taxpayer-funded credit union bailout are “simply not true,” Cheney said. “While the bonds to be issued by National Credit Union Administration (NCUA) have the full faith and credit of the United States Government, credit unions--not taxpayers--will pay all of the costs,” he added. Cheney, citing an SNL Financial analysis of community bank recipients of Troubled Asset Relief Program (TARP) funds, noted that over 621 banks still owe a combined $50 billion in funds that were borrowed from American taxpayers. “More than 100 of these banks are behind on their payments to Treasury,” and “taxpayers will very likely be left on the hook for some of the bailout these community banks have received,” Cheney added. Cheney also noted that that the tax-exempt status afforded to credit unions “is one of the highest-yielding investments the federal government has made.” Consumers save more than $7 billion in better rates and lower fees by using credit unions rather than banks, he noted. “While the bankers may complain of an uneven playing field, if there was any truth to their complaint, the evidence would be in the conversion of banks to the credit union charter. That is simply not happening,” Cheney noted.

CUNA meets with Treasury on Corp. CU issues CFPB

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WASHINGTON (10/8/10)—Credit Union National Association (CUNA) President/CEO Bill Cheney on Thursday thanked the U.S. Treasury for aiding the National Credit Union Administration in its development of the corporate credit union resolution plan. Cheney also discussed the NCUA’s corporate credit union legacy asset plans during his meeting with Assistant Treasury Secretary Michael Barr, and thanked the Treasury official for his agency’s support of increasing the credit union member business lending (MBL) cap.
CUNA President/CEO Bill Cheney meets with Asst. Treas. Secretary Michael Barr (left).
The Treasury was a key supporter of the MBL legislation, as Treasury Secretary Tim Geithner earlier this year publicly backed lifting the MBL cap in a letter to Congress and encouraged the administration to include MBL language in future economics-oriented legislative packages. Cheney told Barr that CUNA is looking for opportunities to reintroduce MBL legislation, which would increase the current 12.25% cap to 27.5% of total assets, during the coming “lame duck” session of Congress. CUNA is also looking for opportunities to introduce legislation that would allow credit unions increased access to additional sources of capital, Cheney added. The CUNA CEO also among a number of industry insiders who met with Consumer Financial Protection Bureau architect Elizabeth Warren earlier in the day. CUNA is working with the developing CFPB to decrease the regulatory burden for credit unions, and Warren earlier this year said that the CFPB’s goal of improving the transparency and consumer-friendliness of many financial products would benefit credit unions, as they already lead their competitors in these core areas.

Inside Washington (10/07/2010)

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* WASHINGTON (10/8/10)--The Securities and Exchange Commission is seeking comment on a proposal it released Wednesday that would require issuers of asset-backed securities (ABS) and credit ratings that rate ABS to provide investors with new disclosures about representations, warranties and enforcement mechanisms. The SEC’s proposed rules would require disclosures of repurchase history and repurchase history in prospectuses and ongoing reports, and require Nationally Recognized Statistical Rating Organizations to provide disclosures in any report accompanying a credit rating ... * WASHINGTON (10/8/10)--Sen. Richard Shelby (R-Ala.), lead party member on the Senate Banking Committee, said Wednesday there should be an investigation regarding improper foreclosure practices at several banks. Regulators should immediately review mortgage servicing and foreclosure activities of Ally Financial, JPMorgan Chase and Bank of America, he said. Regulators have failed yet again to properly supervise those entities, so the committee should commence a separate investigation, he said. House Speaker Nancy Pelosi (D-Calif.) and other state legislators urged Attorney General Eric Holder to investigate violations of law or regulations by financial institutions also. JPMorgan, Bank of America and Ally halted their foreclosure activities in several states after questions arose over their mortgage processing (News Now Oct. 7) ...

CUNA to Treasury CUs have interest in GSE reform plans

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WASHINGTON (10/7/10)--The U.S. Treasury should continue to consider the needs of credit unions and other small mortgage lenders as it develops its plans for the future of the secondary home mortgage market, Credit Union National Association (CUNA) President/CEO Bill Cheney told Treasury officials on Wednesday. Cheney last month also met with Treasury representatives and attended a government forum addressing how mortgage disclosure forms can be simplified to give consumers the information needed to make prudent financial choices. The Treasury is expected to release a comprehensive plan for the future of the home mortgage market early next year. The Treasury earlier this year said that any plan that is developed should eliminate the conflict between Freddie Mac's and Fannie Mae's public policy role and the need to enhance shareholder returns. The government’s role in promoting market stability and financially supporting the home market should also be examined, the Treasury said. How any future secondary market enterprises should be regulated will also be reviewed. In a July comment letter, CUNA recommended that the Treasury's pending housing finance plan "ensure that all segments of the financial services industry can take full advantage of the opportunities to sell their loans into the secondary market and to receive services from the Federal Home Loan Banks or other entities." CUNA also urged the Treasury to "recognize that credit unions perform, and can continue to perform, a valuable role in the mortgage lending system" as it develops the new plan. CUNA is developing an advisory council on the GSE issue and will publish its own recommendations for the Treasury’s treatment of the mortgage market later this fall. CUNA General Counsel Eric Richard, Chief Economist Bill Hampel, and Deputy General Counsel Mary Dunn were also in attendance.

Pelosi urges action on possible mortgage malfeasance

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WASHINGTON (10/7/10)--House Speaker Nancy Pelosi (D-Calif.) and a host of other California-based legislators urged Attorney General Eric Holder to “investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications, and foreclosures.” JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc., halted their foreclosure activities in several states this week amid questions over their mortgage processing. As reported on Bloomberg.com, these three lenders “have curtailed foreclosures or evictions in 23 states where courts have jurisdiction over home seizures,” and many expect the number of investigations into these types of activities to grow in the coming weeks and months. Officials in “at least seven states” are investigating claims of false mortgage documentation and verification. These actions may have been used to “justify hundreds of thousands of foreclosures,” according to Bloomberg.com. Pelosi, in a letter to Holder, Federal Reserve Chairman Ben Bernanke, and Comptroller of the Currency John Walsh, said that thousands of Californians have reported that financial institutions have “failed to respond” to homeowners’ “good faith efforts” to “work out reasonable loan modifications or simply seek forebearance on a foreclosure.” Lenders have also “misplaced requested documents” and have sent “mixed signals about the requirements that need to be met to avoid foreclosures,” the letter added. While credit unions have seen some increases in foreclosure-related activity, the majority of credit unions did not engage in the subprime mortgage market, and their general asset quality remains relatively high. "Credit unions were much more careful in their lending activities and didn't originate toxic mortgages. However, their members do reside in declining markets," Credit Union National Association Senior Economist Mike Schenk said. For the full letter, use the resource link.

Final rule analysis covers mortgage sales transfers notification rule

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WASHINGTON (10/7/10)--The Credit Union National Association this month released a final rule analysis on a Federal Reserve rule that requires consumers to receive notice when their mortgage loan has been sold or transferred. Specifically, under the Fed rule, purchasers or assignees that acquire mortgage loans must provide the required disclosure in writing within 30 days after the loan has been sold, transferred, or assigned. The required disclosure must include the name, address, and telephone number of the new owner, the transfer date of the mortgage, the name, address, and telephone number of an agent or other party authorized to receive a rescission notice or resolve issues concerning the loan payments, if this differs from the owner, and the location where the transfer of ownership is recorded. This disclosure is not required if the transferee assigns its interest in the loan before the end of the 30-day period after the transferee acquires the loan. The purchaser or assignee would also avoid providing the disclosure if a partial interest in the loan is transferred and the party authorized to resolve issues regarding loan payments and to receive rescission notices does not change. The final rule will become effective on Jan. 1. For the full final rule analysis, use the resource link.

Inside Washington (10/06/2010)

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* WASHINGTON (10/7/10)--The Credit Union National Association recently released final rule analysis of a number of regulatory changes affecting credit unions, including one that addresses the reforms approved Sept. 23 by the National Credit Union Administration (NCUA) regarding the corporate credit union system. Others address joint regulatory guidance on reverse mortgages, the NCUA’s final rule for short-term, small amount loans, and the Federal Housing Administration’s risk reduction final rule ... * WASHINGTON (10/7/10)--Sen. Mark Udall (D-Colo.) sent a letter to Elizabeth Warren, President Barack Obama’s assistant who will oversee the Consumer Financial Protection Bureau, asking that consumers have free access to their credit reports. “It is my belief that making free access to consumer credit scores a priority point of emphasis for the bureau will help level the financial playing field for millions of Americans, improve financial literacy and ultimately provide greater stability for the nation’s economy as a whole,” he wrote. Udall authored a bipartisan provision in the Wall Street Reform and Consumer Protection Act that would require lenders to provide consumers with the credit scores used in making a determination to deny or offer credit on less than favorable terms ... * WASHINGTON (10/7/10)--The Small Business Administration (SBA) Wednesday published a package of revised size definitions for three broad commercial sectors affecting businesses in retail trades, accommodations and food service, and other services. The changes, proposed Oct. 21, 2009, aim to broaden small business eligibility and help them gain access to SBA’s financial assistance. Up to 17,000 additional firms will be eligible for SBA programs as a result of the revisions, SBA said. SBA changed size standards for the car dealer industry to 200 employees from a revenue-based standard of $29 million. Size standards also were increased for five food services industries and 18 other industries ...

GAO TARP study suggests lessons for SBLF

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WASHINGTON (10/7/10)--A new Government Accountability Office (GAO) study that takes a look at the U.S. Treasury Department’s execution of the Troubled Asset Relief Program (TARP), used to bailout banks, says there are lessons that the government can learn from the experience and apply to any similar, future programs. The GAO report noted that among the Treasury’s actions under its TARP authority was the establishment of the Capital Purchase Program (CPP) as “its primary initiative” to make capital investments in eligible banks. “If Treasury administers programs containing elements similar to those of CPP, such as the Small Business Lending Fund (SBLF), Treasury should apply lessons learned from the implementation of CPP and enhance procedural controls for addressing the risk of inconsistency in regulators' decisions on withdrawals,” the report noted specifically. The SBLF is the $30 billion fund authorized by the Small Business Jobs and Credit Act that provides low-cost capital to small and mid-sized banks as incentives to increase lending. One thing that the GAO recommends regulators take a look at as they build the framework for the SBLF is how to build in consistency with the way applicants are treated and how TARP repayment decisions were made. “Specifically, the Secretary of the Treasury should direct the program office responsible for implementing SBLF to establish a process for collecting information from bank regulators on all applicants that withdraw from consideration in response to a regulator's recommendation, including the reasons behind the recommendation. "The program office should also evaluate the information to identify trends or patterns that may indicate whether similar applicants were treated inconsistently across different regulators and take action, if necessary, to help ensure a more consistent treatment,” the report said.

FASB plan would spike costs with no benefits CUNA

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WASHINGTON (10/6/10)--The Credit Union National Association (CUNA) this week was critical of the Financial Accounting Standards Board’s (FASB) proposed financial instrument accounting standards update, saying that the update would force credit unions to incur substantial direct and indirect costs to comply, while providing no benefit to credit unions, their members or their regulators. The proposal would require most financial assets and liabilities to be reported under Generally Accepted Accounting Principles (GAAP) at fair value. The proposal would also require the funding of the Allowance for Loan and Lease Loss Accounts to be under the expected loss model. Credit unions over $10 million in assets are required to comply with GAAP. While forcing financial institutions to report fair value under GAAP is “of questionable value to investors of publicly traded companies,” the information is even less useful to the members, creditors, board members, and regulators of credit unions, CUNA said. The association added that “credit unions generally fund their operations by taking deposits and holding loans for the long term,” and, as a result, “most financial instruments that credit unions hold are not readily marketable.” CUNA raised general concerns with FASB before the proposal was released. CUNA is coordinating with the National Credit Union Administration and other regulators to “ensure” that “available avenues of opposition” are employed, CUNA President/CEO Bill Cheney said. CUNA Accounting Subcommittee Chairman and Patelco CU Chief Financial Officer Scott Waite will, along with CUNA staff, participate in an Oct. 12 roundtable discussion on the proposal at FASB headquarters in Norwalk, Conn. For the full comment letter, use the resource link.

CUNA seeks tweaks on overdraft disclosure rule

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WASHINGTON (10/6/10)--Credit unions should have the option to list overdraft fees on periodic statements as “total overdraft fees for paid items” instead of “total overdraft fees,” the Credit Union National Association (CUNA) said in a comment letter on the National Credit Union Administration’s (NCUA) interim Regulation DD (Truth in Savings) amendments. Doing so would further distinguish the paid overdraft items from items that are returned unpaid and that are also required to be disclosed, CUNA said. The NCUA, along with the Federal Reserve, last year amended Regulation DD to require all financial institutions to disclose on the periodic statement the fees charged for overdraft services and for returning items unpaid, both for the statement period and the year-to-date. The rule also provides a sample form that may be used to comply with these disclosure requirements, and clarifies some key definitions. CUNA also asked the NCUA to provide credit unions with the flexibility needed to continue using a sample overdraft and returned item fee form. Currently, credit unions would be forced to reformat their disclosures due to minor changes in the NCUA’s form, a situation that would result in additional, unneeded burdens for credit unions. For the full CUNA comment letter, use the resource link.

Bridge corporates ready for business

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ALEXANDRIA, Va. (10/6/10)--The National Credit Union Administration (NCUA) on Tuesday chartered the two bridge corporate credit unions to assume the operations of now conserved U.S. Central Corporate FCU (US Central) and Western Corporate FCU (WesCorp), completing another vital step in its corporate credit union resolution process. NCUA announced that the bridge corporates would be created at its special board meeting late last month. During that meeting, NCUA also placed three more corporate credit unions into conservatorship, finalized new rules governing the corporates and approved a plan to isolate and securitize the corporates so-called "legacy" assets. A total of $50 billion of these “legacy” assets will be isolated and funded, and $35 billion of those assets will be reissued as NCUA Guaranteed Notes (NGN), which will then be sold on the open market. The newly created institutions will be known as U.S. Central Bridge Corporate FCU and Western Bridge Corporate FCU, the NCUA said. NCUA Chairman Debbie Matz said that the creation of the bridge corporates “is an important interim step toward an orderly transition that will allow consumer credit unions to exercise real choice about the future of the corporate system.” The bridge corporates will purchase and assume assets and member share deposits from the conserved corporate credit unions. The bridge corporates will offer little in the way of new services, and new loans will only be provided for “settlement purposes,” the NCUA said. Existing loans “will continue to be serviced,” and the field of membership for the new corporates will be identical of that of the now-conserved corporates. New members will not be accepted, according to the NCUA. Overall, the bridge corporates will focus on payment and settlement activities, and will not operate indefinitely, NCUA said. The agency is also “committed to operating the bridge corporate for sufficient time so that members can find individual solutions,” a process that could take up to 24 months. For the full NCUA release, use the resource link.

Inside Washington (10/05/2010)

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* WASHINGTON (10/6/10)--Sen. Olympia Snowe (R-Maine), ranking member on the Senate Committee on Small Business and Entrepreneurship, has asked Elizabeth Warren--who is leading the new Consumer Financial Protection Bureau--for a detailed plan explaining how she will implement small business review panels at the agency. Snowe introduced an amendment in the regulatory reform bill that would create small business advocacy review panels within the agency to consider the impact of federal regulations on small business. A recent Small Business Administration report Snowe cited indicates that regulatory compliance costs small firms 36% more on average per employee than large firms. Firms with fewer than 20 employees spend $10,585 per employee, compared to $7,755 for firms with 500 or more employees ... * WASHINGTON (10/6/10)--Loans generated by the Small Business Administration (SBA) accounted for more than $22 billion in 2010--a 29% increase over 2009--as a result of successful loan enhancements put in place under the American Recovery and Reinvestment Act of 2009, according to the SBA. The SBA made 54,833 loans through its 7(a) and 504 loan programs in fiscal year 2010, compared with 47,897 loans amounting to $17 billion in fiscal year 2009. The highest loan volume in a single month in fiscal 2010 was in November 2009, with $2.18 billion in loans. November 2009 also was the highest single month loan volume SBA had seen since September 2002 when it was $2.34 billion. “The success of these loan enhancements has meant tens of thousands of small businesses have been able to get the capital they needed to not just survive the recession, but to grow and create much-needed jobs in communities all across the country,” said Karen Mills, SBA administrator ... * ALEXANDRIA, Va. (10/6/10)—The National Credit Union Administration’s campaign to raise awareness of its account insurance program began in earnest on Tuesday, as NCUA Chairman Debbie Matz spoke on radio stations in key markets nationwide. “In the past few years, millions of people moved their money from other investments to credit unions – and I want to be sure that consumers do everything they can to set up their accounts so that all of their money is protected,” Matz said. The NCUA-branded “radio tour” precedes the NCUA’s "keep your money NCUA-safe" campaign, which features television, radio and billboard ads with financial guru Suze Orman touting the benefits of NCUA account insurance. The ads aim to educate potential and current credit union members on the similarities between the NCUA and Federal Deposit Insurance Corporation's customer account guarantees. The NCUA made the $250,000 account fund guarantee permanent earlier this year…

CDFI to provide up to 135 mil in 2011 round

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WASHINGTON (10/6/10)--The U.S. Treasury Department Tuesday announced the availability of $135 million in funds through its Community Development Financial Institutions (CDFI) Fund. A total of $25 million of the CDFI Fund awards will be distributed under the Obama administration’s new Healthy Food Financing Initiative (HFFI), according to the release. CDFI Fund Director Donna J. Gambrell in a release said that the CDFI program “continues to be a critical tool for building the capacity of community-based financial institutions serving low-income communities, and the need for their services has never been greater." The CDFI Fund will hold an informational teleconference for interested credit unions. That call is scheduled to take place at 3 p.m. ET on Oct. 18. Applications for the CDFI funds must be received by Nov. 19. 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, 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. For the CDFI Fund release, use the resource link.

Inside Washington (10/04/2010)

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* WASHINGTON (10/5/10)--At the Financial Stability Oversight Council’s first meeting Friday, members moved forward to establish criteria to determine which nonbanks are systemically risky and to ban proprietary trading. During the meeting, Treasury Secretary Tim Geithner said that a study on how to enforce the Volcker Rule--which bans proprietary trading--would be due at the end of January. The Volcker Rule proposal, which the council approved Friday, asks financial institutions how to impose such a ban and restrict investment with private-equity and hedge funds. It also questions how to protect taxpayers and consumers by minimizing risks that firms take on (American Banker Oct. 4). Under the regulatory reform law, the council must make recommendations about how to implement the Volcker Rule by Jan. 22. Regulators will then have nine months to implement the rule. Debbie Matz, chairman of the National Credit Union Administration, was among meeting attendees ... * WASHINGTON (10/5/10)--The National Credit Union Administration (NCUA) is accepting comment on its Proposed Interpretive Ruling and Policy Statement, which sets forth the requirements and process for chartering corporate federal credit unions, as published in the Federal Register Friday. Comments must be received by Nov. 1. NCUA recently finalized its Corporate Credit Union Rule, changes which are likely to result in a fundamental restructuring of the corporate credit union system. As part of the restructuring, NCUA believes some groups may wish to form new corporate credit unions, according to the Federal Register ...

Pro-CU legislation still possible in post-recess action

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WASHINGTON (10/5/10)—While the Congress has officially left Washington for the pre-electoral recess, credit union related legislation could see action during a “lame duck” session. That session is scheduled to begin on Nov. 15, and while many legislative priorities were wrapped up in recent weeks, Congress still needs to approve legislation that would continue to fund the government itself and the nation’s defense. Additional legislation could be considered during this time period, and the Credit Union National Association’s Senior Vice President of Legislative Affairs John Magill said that CUNA continues to look for potential vehicles for member business lending cap legislation. That MBL legislation, if enacted, would increase the MBL cap to 27.5% of a credit union's total assets, up from the current 12.25% limit. Doing so would infuse $10 billion of new credit into small businesses and create more than 108,000 new jobs--at no cost to the American taxpayer. CUNA is also working to promote allowing credit unions to raise alternative capital. CUNA Vice President of Legislative Affairs Ryan Donovan said that CUNA has seen genuine interest in maintaining the capital level of credit unions and other financial institutions in Congress, and added that this type of awareness could be key to credit union’s legislative prospects going forward.

CUNA CUs must assess FinCEN cross-border rule impact

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WASHINGTON (10/5/10)—The Credit Union National Association recommends that credit unions analyze the Financial Crimes Enforcement Network’s (FinCEN) recent cross-border electronic fund transmittal proposal to determine how it applies to their business activities. FinCEN recently proposed rules to require some depository institutions and money services businesses (MSB) to "affirmatively provide records to FinCEN of certain cross-border electronic transmittals of funds (CBETF). FinCEN has acknowledged that a final rule on CBETFs cannot be issue until the systems needed to accept the required reports are in place. According to the proposal, such systems may not be in place before 2011, and a final rule may not be issued until January of 2012 . While CUNA cannot say how many credit unions would be subject to the rule, CUNA Federal Compliance Counsel Nichole Seabron said it is estimated that approximately 300 financial institutions would be impacted. The World Council of Credit Union's (WOCCU) recently said that neither the proposed rule nor the potential final rule would impact its remittance programs. (See related story: FinCEN plan won't affect CU remittances, WOCCU says, Sept. 30) The FinCEN CBETF reporting requirement does not apply to all financial institutions, only those that transmit the electronic funds transfer instructions directly to a foreign financial institution ("last-out financial institution") or that receive the electronic funds transfer instructions directly from a foreign financial institution ("first-in financial institution"). According to FinCEN, the proposal will likely impact larger institutions that utilize centralized message systems like SWIFT, Fedwire and CHIPS. Reporting credit unions would be required to file reports on all CBETF transactions and such reports would need to be filed with FinCEN no later than five business days after issuing or receiving the transmittal notice or advice. Under the FinCEN proposal, credit unions and other financial institutions may file the reports directly or have them filed by a third party. However, the financial institution will be ultimately responsible for compliance with the reporting obligation. The proposal exempts from reporting funds transfers that are conducted and messaged entirely through a bank/credit union's proprietary systems. Also, CBETF reporting requirements do not apply when there is no third party consumer to the transaction, i.e. where the transmitter and recipient of a funds transfer are both either credit unions or banks. There is also an annual taxpayer ID reporting requirement under the proposal that is designed to help flesh out instances of money laundering and tax evasion. This requirement would apply to all banks/credit unions that maintained a consumer account that was debited or credited in relation to a CBETF. Institutions are required to provide FiNCEN with the consumer's account number and tax ID for all accounts that originated or received CBETFs in the previous calendar year. Comments must be received by FinCEN no later than December 29. For the full FinCEN proposal, use the resource link.

Fed delays new 100 bill issue date

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WASHINGTON (10/5/10)--Production problems at the Bureau of Engraving and Printing have pushed back the issue date of the new $100 bill, the Federal Reserve (Fed) announced last week. The new bill was scheduled to be issued on Feb. 11. The Fed has not established a new issue date. According to the Fed, the Bureau of Engraving and Printing has identified “sporadic creasing of the paper” during the printing of the bill. “As a consequence, the Federal Reserve will not have sufficient inventories to begin distributing the new $100 notes as planned,” the Fed added. The bill design combines the usual portrait of Ben Franklin, and some previously added security enhancements, with a pair of brand new, advanced counterfeit-deterrent security features. The bill also features a blue three-dimensional security ribbon and an interpretation of the classic liberty bell image which, when tilted, changes colors from copper to green, making the bell appear to disappear and reappear in an inkwell. The new security features were researched and developed for more than a decade, according to U.S. Treasurer Rosie Rios. For the Fed release, use the resource link.

NCUA kicks off keep your money NCUA-safe campaign

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WASHINGTON (10/5/10)—The National Credit Union Administration (NCUA) on Monday officially began its "Keep your money NCUA-safe" campaign. The campaign will feature television, radio and billboard ads with financial guru Suze Orman touting the benefits of NCUA account insurance. The ads aim to educate potential and current credit union members on the similarities between the NCUA and Federal Deposit Insurance Corporation’s customer account guarantees. The NCUA recently made the $250,000 account fund guarantee permanent. The NCUA has also created a new website with links to the video ads and other information. The NCUA’s site also features an “e-calculator” which will help users find out how much of their money is “NCUA-safe.” The calculator will also tell members what they can do if their account is not 100% protected. NCUA Chairman Debbie Matz in a Monday release said that the campaign “will give consumers the tools to make sure their accounts are properly set up so that they can have the peace of mind they deserve.” An NCUA official told News Now that the agency has not yet established a channel lineup or an airing schedule for the PSAs. For the new NCUA site, use the resource link.

Inside Washington (10/01/2010)

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* WASHINGTON (10/4/10)--During a hearing Thursday, lawmakers said they were concerned that the Consumer Financial Protection Bureau would try and enforce new rules without a director confirmed by the Senate (American Banker Oct. 1). Such a move would be illegal, according to members of the Senate Banking Committee. The bureau’s temporary leader, Elizabeth Warren, will serve as a special adviser to President Barack Obama and Treasury Secretary Timothy Geithner, and help set up the new agency. Neal Wolin, deputy Treasury Secretary, said that the bureau can work on disclosure rules. The bureau has until July 21, 2012, to write new mortgage disclosure standards. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said he thinks the bureau is in danger because some will look to get rid of it after midterm elections. It will be easier to eliminate the bureau if it doesn’t get off to a strong start and demonstrated its value, he said ... * WASHINGTON (10/4/10)--The Financial Stability Oversight Council held its first meeting Friday, and lawmakers have expressed their doubts about what it can accomplish. The council aims to provide comprehensive oversight over the stability of the nation’s financial system. Some lawmakers’ concerns include interagency disagreements, and whether members could agree on the council’s top priorities. Sen. Mike Johanns (R-Neb.) asked regulators what areas of conflict have arisen so far and what areas of conflict regulators anticipate. Regulators told Congress the council is getting along fine. Neal Wolin, deputy Treasury Secretary, said he didn’t think there were disagreements among council members. Federal Reserve Board Chairman Ben Bernanke agreed, saying that he didn’t forsee any controversies. However, on Sept. 27, the Office of the Comptroller of the Currency protested the Federal Deposit Insurance Corp.’s move to complete its own securitization rule ahead of requirements mandated by the regulatory reform bill. Treasury Secretary Timothy Geithner also was concerned about the action, said The Wall Street Journal (American Banker Oct. 1). Debbie Matz, chairman of the National Credit Union Administration, participated in the council’s first meeting ... * WASHINGTON (10/4/10)--The Troubled Asset Relief Program (TARP) could cost less than estimated, according to The New York Times (Sept. 30). TARP, which was a $700 billion lifeline to banks, auto companies and insurers, is set to expire Sunday and could turn taxpayers a profit, the newspaper added. On Thursday, the government said it had started negotiating a plan with American International Group to repay taxpayers for its $70 billion rescue. The Treasury committed $470 billion and disbursed $387 billion for TARP. Projected TARP losses are less than $50 billion. In mid-2009, the program was projected to lose $341 billion. The Congressional Budget Office reduced its estimate for loss to $66 billion ... * WASHINGTON (10/4/10)--CORRECTION: A Sept. 17 story on the National Credit Union Administration’s action to allow approved federal credit unions to offer short-term, small amount (STS) loans to their members contained an error. A sentence regarding loan payments through payroll deduction should have read: Federal credit unions are required to set a cap of 20% of net worth on the aggregate dollar amount of loans outstanding, and will not be permitted to require loan payment via member payroll deduction ...

NCUAs Matz reiterates Corp. CU plan not a bailout

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WASHINGTON (10/4/10)--In a column published in Friday’s American Banker, National Credit Union Administration (NCUA) Chairman Debbie Matz again said that “not a dime of taxpayer money” would be used as part of the NCUA’s plan for dealing with corporate credit unions. “One laudable aspect of the credit union system is that it takes care of its own. And now the vast majority of well-run and financially stable credit unions will repay their guarantees through special assessments,” Matz added. The NCUA last month introduced comprehensive plans to address both the corporate credit union system and the legacy assets held by many of the corporate credit unions. The NCUA took Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU under agency control and is in the process of repackaging their legacy assets, along with the legacy assets of previously conserved Western Corporate FCU and U.S. Central FCU, into guaranteed notes. Those notes will then be sold on the open market. Credit union members “will see no changes at their local credit unions” as a result of the NCUA’s corporate actions, Matz said. Matz added that while the growth of credit union membership, assets, shares, investments, loans and net worth “(is) not record-setting,” these developments “are signs that the credit union industry is — overall — healthy, stable and poised for growth.” For the full Matz interview, use the resource link.

First Financial Stability Oversight Council meeting held

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WASHINGTON (10/4/10)—The newly created Financial Stability Oversight Council (FSOC), which provides a forum for discussion between various regulatory agencies, held its first meeting on Friday. The Council, which is comprised of National Credit Union Administration (NCUA) Chairman Debbie Matz, Treasury Secretary and FSOC Chairman Tim Geithner, Federal Reserve Chairman Ben Bernanke, Acting Comptroller of the Currency John Walsh, Securities and Exchange Commission Chairman Mary Schapiro, and Federal Deposit Insurance Corp. Chairman Sheila Bair, and representatives from the Commodity Futures Trading Commission and the Federal Housing Finance Agency, will also oversee the resolution of troubled financial institutions. Matz in a statement released on Friday said that the FSOC would also “strengthen the early warning systems of independent regulators of insured institutions.” “The sharing of information about the health and practices of uninsured financial service providers, in and of itself, will provide a vital tool in our ability to protect tens of millions of insured depositors,” she added. The FSOC during the meeting also approved its Bylaws, its Transparency Policy, an Advance Notice of Proposed Rulemaking on designating nonbank financial companies for heightened supervision, a request for information regarding the Council's "Volcker Rule" study and recommendations, and an Integrated Implementation Roadmap for both the FSOC and its independent member agencies, according to a release. For releases from the FSOC and the NCUA, use the resource links.

NFIP now extended into 2011

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WASHINGTON (10/4/10)—The National Flood Insurance Plan (NFIP) is now extended until Sept. 30, 2011 after President Barack Obama signed legislation into law on Friday. The NFIP lapsed for a period of time, beginning on June 1, but was restored in early July when H.R. 5569 was signed into law. Legislation that would reauthorize the NFIP program until Sept. 30, 2015, and improve the program by adding a Flood Insurance Advocate and raising the maximum coverage limits, passed the House in July. A Senate vote on that legislation has not been scheduled. The NFIP is important to credit unions because the mortgages they write for properties in a floodplain are required to have flood insurance.

Fed creates Community Depository Institutions Advisory Council

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WASHINGTON (10/4/10)--The establishment of the new Community Depository Institutions Advisory Council (CDIAC) was announced by the Federal Reserve on Friday. In a release, the Fed said that the council, which will include credit union, bank and thrift representatives, “will provide input to the (Fed) on the economy, lending conditions, and other issues.” The Fed will select one member from each of its 12 Fed local advisory councils to serve on the new council. The Fed and the CDIAC will meet twice a year in Washington. The CDIAC replaces the Thrift Institutions Advisory Council, which has been active since 1981. Michael Kloiber of Oklahoma’s Tinker FCU and Randy Smith of Texas’s Randolph-Brooks FCU are currently serving on the Thrift Institutions Advisory Council. The 12 local advisory councils should begin meeting in “early 2011,” with the CDIAC scheduled to hold its first meetings later in that year, the Fed said. For the full release, use the resource link.

NCUA Guaranteed Notes prospectus out Oct. 12

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SAN ANTONIO, Texas (10/4/10)--The prospectus for the National Credit Union Administration (NCUA) Guaranteed Notes (NGNs) will be released around Oct. 12, NCUA Chairman Debbie Matz said last week. The NGNs will be comprised of $50 billion of legacy assets gathered from the accounts of corporate credit unions that are currently under NCUA conservatorship. The NGNs will then be sold on the open market. The NGNs will be permissible investments for credit unions, and have received a zero risk weight from the Securities and Exchange Commission. Matz covered several other aspects of the recently released corporate credit union and legacy asset plans during her speech made during the National Association of State Credit Union Supervisors (NASCUS) yearly gathering. Credit Union National Association (CUNA) President/CEO Bill Cheney, also speaking before the NASCUS conference, said that CUNA’s work in 2011 would focus on secondary capital and member business lending. Congress is interested in more capital across the spectrum of financial institutions, Cheney said, adding that the NCUA has also backed increased capital, with the Agency calling alternative and supplemental capital for credit unions “a safety and soundness issue.” While the credit union industry remains “very well capitalized,” with a 9.9%, dollar-weighted average, Cheney said that CUNA economists have estimated that one in four credit unions would likely “feel a very strong need to rebuild their net worth ratios over the next few years.” Generally, credit unions “would be best served” by having as many alternative capital options as possible, Cheney added.