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Washington Archive

Washington

CUs call for less reg burden in field hearing

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Wausau, WIS. (11/1/11)--The increasing number of regulations imposed on credit unions is costly, confusing to members, and creates "an unnecessary burden without any measure of the effectiveness of these changes," Central City CU CEO and Credit Union National Association (CUNA) board member Pat Wesenberg said in testimony delivered before a Monday House Financial Services financial institutions and consumer credit subcommittee field hearing.

She reiterated CUNA's recent call for the National Credit Union Administration to impose a moratorium on new regulations for at least the next six months and reinstate the RegFlex program. "There are no new, material systemic problems with the credit union system, and current safety and soundness concerns within natural person and corporate credit unions are being well managed, Wesenberg said.

Credit union executives Pat Wesenberg and Mark Willer are among those that testified during a Monday House Financial Services financial institutions and consumer credit subcommittee field hearing on regulatory burden. (Wisconsin CU League photo)
Wesenberg added that she is concerned by potential new regulations from the Consumer Financial Protection Bureau.

"In the wake of the financial crisis, credit unions face what might be best described as a crisis of creeping complexity related to regulatory burden.  It is not necessarily any one single regulation that is overly burdensome but rather the totality of regulations, the frequency with which the regulations change, and the sometimes varying application of the regulation by field examiners which sometimes conflicts with or expands upon the original intent of the regulation," Wesenberg added.

Mark Willer, COO of Eau Claire, Wis.-based Royal CU, also testified on behalf of his credit union. Willer said the current regulatory environment harms his credit union's central goal of "providing services designed to improve the economic and social well-being of all Members from all socio-economic backgrounds and to return financial value to all those who participate in our Member-owned financial cooperative."

Recent financial regulatory legislation, "while well intentioned," has resulted in "significant unintended consequences that confuse and financially harm the very consumers they intended to protect," Willer added.

Wesenberg said this regulatory creep has forced her $178 million in asset, 22,000-member credit union to hire a full time compliance officer and has redirected her lending staff's priorities to training for the constant changes. "This is valuable time that could be spent trying to develop products that would help serve our membership better during these extremely difficult economic times," she said.

Both credit union representatives said their credit unions also deal with increased software costs and other compliance costs as a result of new regulations. "If regulations continue to come from so many directions, I don't see how we will be able to keep up," Wessenberg said.

Mosinee, Wisconsin Mayor Al Erickson, Metropolitan Milwaukee Fair Housing Council representative Bethany Sanchez, and bank and business representatives also testified during the field hearing.

For more on the hearing, and a recent story on CUNA's discussion of regulatory priorities with the NCUA, use the resource links.

Inside Washington (10/31/2011)

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  • WASHINGTON (11/1/11)--The Consumer Financial Protection Bureau (CFPB) must navigate a disagreement between banks and consumer groups to finalize a rule that would require lenders to verify a borrower's ability to repay a mortgage loan. The Dodd-Frank Act amended the Truth in Lending Act and required regulators to establish "qualified mortgages" that would be exempt from the ability-to-repay standard. Raj Date, the bureau's de facto chief, said CFPB plans to issue a final rule by early next year. Banks and consumer groups are at odds over whether lenders should receive safe harbor protection from liability if they make a so-called qualified mortgage that meets certain criteria rather than verifying the ability of the borrower to repay. Two alternative definitions for a qualified mortgage have been proposed. One would create safe-harbor protection, which is promoted by banks, and would require the loan to meet four specific criteria. The other plan would establish a rebuttal presumption of compliance with a weaker safe harbor. The second plan would require a creditor to meet up to nine criteria. The Credit Union National Association (CUNA) supports the safe harbor  proposal because it will make compliance less resource intensive for credit unions. CUNA will monitor the progress of the rule and work with the CFPB to ease the compliance burden for credit unions …


  • WASHINGTON (11/1/11)—The U.S. Treasury on Monday reminded credit unions and other stakeholders that they have until Nov. 14 to comment on how the Treasury's Office of Financial Education and Financial Access (OFEFA) can design, implement and administer certain financial access activities to aid the underbanked and unbanked. The Treasury is developing a multi-year program of grants, cooperative agreements, financial agency agreements, and similar undertakings to promote initiatives aimed at enabling low- and moderate-income individuals to establish accounts in a federally insured depository institution, including federally insured credit unions. The Credit Union National Association (CUNA) in a comment call asked credit unions to comment on how the Treasury could best help low- and moderate-income individuals to establish accounts in federally insured depository institutions and how the treasury could evaluate which types of accounts would best meet the financial needs of low- and moderate-income individuals. CUNA is also seeking comment on how the Treasury can enable, enhance and assist local, regional, and state start-up collaborations that work with the underbanked. Credit unions must forward their comments to CUNA by the end of today…

CUNA NCUA board nominee could be confirmed in 2011

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WASHINGTON (11/1/11)--The Senate Banking Committee has not announced a date for National Credit Union Administration (NCUA) board nominee Carla León-Decker's confirmation hearing, but that hearing could take place before Thanksgiving, Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said.

Forecasting what happens after a confirmation hearing is not easy; however, Donovan said it is possible that the nomination could clear the Senate by end of the year, if everything goes smoothly.

"The Senate is scheduled to be here well into December and assuming there are no hiccups, a Senate vote on the confirmation before the end of this year isn't out of the question.  Having said that, there are a number of steps before the final vote, and small issues sometimes turn into long delays," he added.

Donovan said León-Decker's nomination is likely to be paired with other recent nominees, including Thomas Hoenig, who was picked to be vice chairman of the board of directors of the Federal Deposit Insurance Corporation last month. Hoenig and León-Decker were nominated by President Barack Obama in mid-October.

León-Decker is the current president/CEO of D.C. Government Employees FCU and has also served as operations manager and president/CEO of PAHO/WHO FCU and branch manager of Transportation FCU. She is also a credit union development educator and director of the Network of Latino Credit Unions & Professionals. León-Decker will take the NCUA board spot vacated by the pending departure of Gigi Hyland, whose six-year term on the NCUA board ended in August. Hyland is still serving as an NCUA board member.

CUNA President/CEO Bill Cheney said CUNA appreciates the White House nominating to the NCUA board an individual with credit union experience, and added that the nomination of León-Decker "is important when appropriate safety and soundness policy is under consideration."

CFPB hearings in House Senate this week

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WASHINGTON (11/1/11)—The U.S. House and Senate are back in House in Washington this week after a week-long in-state work period, and credit unions will want to keep an eye on upcoming hearings.

One such hearing will take place when the Joint Select Committee on Deficit Reduction discusses previous debt reduction proposals today. Former Sens. Alan Simpson (R-Wyo.) and  Pete Dominici (R-N.M.), former White House Chief of Staff Erskine Bowles, and former Federal Reserve Vice Chairman Alice Rivlin, are scheduled to testify during that hearing.

The first 100 days of the Consumer Financial Protection Bureau's (CFPB) work will be the topic of a Wednesday House Financial Services financial institutions subcommittee hearing. De facto CFPB leader Raj Date is the sole scheduled witness for that hearing.

The CFPB will also be in the spotlight on Thursday morning when CFPB Office of Servicemember Affairs leader Holly Petraeus appears before a Senate Banking Committee hearing on "Empowering and Protecting Servicemembers, Veterans, and their Families in the Consumer Financial Marketplace." Bonnie Spain of the Rushmore Consumer Credit Resource Center and retired Admiral Charles Abbott, president/CEO of Navy-Marine Corps Relief, are also scheduled to testify, and more witnesses could be added.

A House Financial Services subcommittee on capital markets hearing on the Private Mortgage Market Investment Act is scheduled for Thursday morning. That legislation, which was introduced by Rep. Scott Garrett (R-N.J.), would require the Federal Housing Finance Agency to develop underwriting standards and securitization agreements and abolish the risk retention standards set forth by the Dodd-Frank Act. The legislation would also provide new disclosures for mortgage investors and securities purchasers. (See related story in resource links.)

30- 15-year mortgage rates hold steady for second week

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WASHINGTON (10/31/11)--Average rates on 30- and 15-year fixed rate mortgages again held steady for the second week straight, Freddie Mac reported.

Thirty-year mortgages averaged 4.1% during the week ended Oct. 27, and 4.11% during the week ended Oct. 20, and 4.23% this time last year. Fifteen-year mortgages remained at 3.38% for the second straight week. Those types of mortgages averaged 3.66% this time last year.

Thirty- and fifteen-year mortgages reached record lows of 3.94 % and 3.26%, respectively, in the first week of this month, and rates have not increased significantly at any point during the month.

Freddie Mac Chief Economist Frank Nothaft said the fixed mortgage rates followed other long-term interest rates that also remained stable. Housing market indicators were mixed, with consumer confidence soft, house prices largely flat, and new home sales up from very low levels, he added.

Five-year Treasury indexed hybrid adjustable-rate mortgages (ARMs) rose last week, averaging 3.08%. The prior week's average was 3.01%. However, one-year Treasury-indexed ARMs decreased slightly last week, averaging 2.9%. Those ARMs averaged 2.94% during the previous week.

For the full release, use the resource link.

Inside Washington (10/28/2011)

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  • WASHINGTON (10/31/11)--Eighteen members of the House and Senate sent letters Thursday to Treasury Secretary Timothy Geithner and to federal regulators on the Financial Stability Oversight Council (FSOC) expressing concern that Bank of America has moved trillions of dollars in derivatives from its subsidiary Merrill Lynch into a subsidiary insured by the Federal Deposit Insurance Corp (FDIC). The lawmakers are concerned with a reported increase in so-called 23A exemptions, referring to the section of the Federal Reserve Act that separates insured banking from investment activities. In the letter, lawmakers questioned the transfer of an undisclosed amount of derivatives from Merrill Lynch, a securities trading subsidiary, to Bank of America, a retail bank subsidiary. The transfer reportedly happened following threats of further credit downgrades that would have forced Merrill Lynch to post an additional $3.3 billion in collateral. "Regulators must stop treating transactions like this as a private matter," said Rep. Brad Miller (D-N.C.) said. "This kind of transaction raises many issues of obvious public concern. If the bank subsidiary failed, innocent taxpayers could end up paying off 'exotic' derivatives." The questions Miller and Brown and other members seek answers to include whether investigators determined if the transfer occurred to avoid the requirement to post additional collateral in light of the credit downgrade for the company. The lawmakers also want to know if the risk of the derivatives was determined and whether the newly-insured derivatives pose a risk to the financial system …
  • WASHINGTON (10/31/11)--U.S. Rep. Elijah Cummings (D-Md.) issued a letter Thursday urging U.S. Rep. Darrel Issa (R-Calif.), chairman of the House Oversight and Government Committee, to force regulators to provide "engagement letters" between mortgage servicing companies and independent firms hired to review past foreclosure abuse (American Banker Oct. 28) The engagement letters from the 14 largest mortgage-servicing companies governed the contracts they had with consultants hired to review foreclosure actions. Federal regulators began investigating mortgage servicers last year after widespread problems were found with foreclosure practices. Cummings requested copies of the letters from regulators in May but did not receive a response. Cummings, the leading Democrat on the committee, said he was concerned the consultants performing foreclosure reviews had set their own terms, could have resulted in conflicts of interest …

CUNA seeks CU cost impact of NACHA processing plan

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WASHINGTON (10/31/11)--The Credit Union National Association (CUNA) has asked credit unions for information on the costs and impact of the Electronic Payments Association (NACHA) plan to create a new network-wide premium same-day automated clearing house (ACH) expedited processing and settlement (EPS) service.

NACHA has proposed amending its operating rules to enable EPS ACH entries to be processed and settled on the same day they are originated, while preserving existing ACH processing and settlement features for non-EPS entries. Under the proposal, credit unions and all other Receiving Depository Financial Institutions (RDFIs) would be required to both receive and settle EPS transactions.

The proposal sets specific timelines for payment file transmissions and fund availability, and also proposes new per-entry EPS dollar limits of $25,000 or $100,000.

NACHA has said the proposal would aid financial institutions by easing the flow of funds, increasing customer use of direct deposit, reducing counter-party settlement risks on received ACH credits, and mitigating risks.

CUNA in its comment call said credit unions would incur increased costs, including implementation costs, if the proposal is approved. Credit unions that only perform one ACH pickup per day will also incur new costs for the additional pickup, CUNA adds.

CUNA has specifically asked credit unions whether the EPS service should be made network-wide, or if credit unions and other institutions should be allowed to opt-in to the service.

Credit unions may also comment on the drawbacks, and advantages, that a move to this new structure would create.

For the full comment call, use the resource link.

Legislators from both sides urge mortgage housing action

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WASHINGTON (10/31/11)--The future of the U.S. mortgage market, and how to deal with the glut of foreclosures currently choking the housing market, were both taken on by members of Congress late last week.

Rep. Scott Garrett (R-N.J.) on Thursday introduced the Private Mortgage Market Investment Act. Garrett's legislation would require the Federal Housing Finance Agency (FHFA) to develop underwriting standards and securitization agreements and abolish the risk retention standards set forth by the Dodd-Frank Act. The legislation would also provide new disclosures for mortgage investors and securities purchasers.

The Obama administration is still considering a range of options for mortgage market reform, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Administration officials have said that each of these proposals would shrink the government's role in the mortgage market.

A hearing on Garrett's bill has been scheduled for Nov. 3 in the House Financial Services subcommittee on capital markets and government sponsored enterprises.

Homes that have gone into foreclosure were also addressed last week, as 33 senators, including Jack Reed (D-R.I.) and Tim Johnson (D-S.D.), encouraged the Obama administration to speed up its research into how best to deal with real estate owned (REO) properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).

The FHFA in recent weeks has sought outside opinion on how best to maximize value to taxpayers and increase private investment in the housing market while disposing of these properties. The U.S. Department of the Treasury and Department of Housing and Urban Development (HUD) are also participating in the initiative. 

Among the approaches being considered are converting government-held homes into rental units or affordable housing. The senators in a joint letter called on administration officials to consider the most effective ways to stabilize neighborhoods and housing values as they develop ways to better deal with the government-owned vacant homes. The letter also seeks specific details on what suggested strategies seem the most promising, and what the next step will be for the FHFA and other agencies.

For more on Garrett's bill and the letter to the administration, use the resource links.

CU pro-MBL efforts must continue CUNA

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WASHINGTON (10/28/11)--Support for increasing the credit union member business lending (MBL) cap continues to grow following this month's House Financial Services subcommittee hearing, and the Credit Union National Association (CUNA) continues to call on credit unions to keep up their advocacy efforts as MBL legislation moves forward.

National Credit Union Administration Chairman Debbie Matz and Jeff York, president/CEO of CoastHills FCU, Lompoc, Calif., testifying on CUNA's behalf, gave both a broad and narrow view of the promise that an MBL cap lift holds for small businesses, and the difficulties that credit unions facing the 12.25% of assets MBL cap face, during the Oct. 12 hearing. CUNA also refuted many banker claims that were made during that hearing in a recent letter to Rep. Shelley Moore Capito (R-W.Va.). (See related Oct. 27 story)

CUNA has estimated that lifting the MBL cap would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer.

H.R. 1418, the Small Business Lending Enhancement Act of 2011, had 101 cosponsors as of late Thursday, with Reps.  Sander Levin (D-Mich.) and Donald Payne (D-N.J.) serving as the most recent supporters. Sen. Mark Udall (D-Colo.) also continues to support his own MBL cap lift legislation, S. 509.

That bill has 20 cosponsors.

The fight to increase these numbers, and move MBL legislation on to President Barack Obama's desk, continues, and these credit union advocacy efforts are aided by CUNA's Grassroots Action Center. Nearly 20,000 separate contacts have been made since late spring, with credit union advocates reaching out to members of the House and Senate, as well as the Obama administration, to seek their support for an MBL cap lift.

MBL advocacy is also being achieved through direct contact with legislators and their staff on Capitol Hill. The majority of this year's Hike the Hills are complete, as the New Jersey Credit Union League and the Credit Union Association of the Dakotas visited this week and the New Hampshire, Massachusetts, and Rhode Island leagues are scheduled to come to D.C. at the beginning of November.

To contact your congressional representatives, use the resource link.

CUNA suggests series of steps to cut regulatory burden

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WASHINGTON (10/28/11)--The Credit Union National Association (CUNA) suggested adopting a temporary moratorium on new regulations as one of many ways the National Credit Union Administration (NCUA) could ease the regulatory burden on credit unions, and is also working on the legislative front to address these same issues.

CUNA in a 14-page letter sent Tuesday to NCUA Chairman Debbie Matz said "there is considerable merit in this idea, especially as there are no new, material systemic problems within the credit union system" and "current safety and soundness concerns within natural person and corporate credit unions seem to be manageable." Any significant threats or technical matters could still be addressed by the agency, CUNA added. CUNA suggested the moratorium could last as long as six months.

When the agency does create new regulations, those regulations should be limited to addressing material safety and soundness problems, and any rules that are developed should apply only to those credit unions that engage in activities that directly cause the problems in question, unless otherwise directed by Congress, CUNA urged.

CUNA also called upon NCUA to solicit input from credit unions and credit union associations on whether a regulation is needed before proceeding with the development of a particular rule, as opposed to issuing a rule and then seeking comments. This is the approach that the Consumer Financial Protection Bureau is using, and it seems to be working well, CUNA noted. The agency should also support any rulemaking with supporting data detailing why the regulatory action is needed, and what the costs and paperwork burden of the regulatory action would ultimately be. While NCUA does include some of this information in proposals and final rules, it does not so consistently, the letter said.

Enforcement actions should also be limited. CUNA advocated, for example, that NCUA examiners make every effort to resolve disagreements with credit union officials before issuing a Document of Resolution (DOR) or Letter of Understanding and Agreement. While a recent NCUA Office of Inspector General Material Loss Review Report found that the agency has not been adequately following through with credit unions on whether DORs were resolved, this report should not be viewed as evidence that the NCUA needs to be more aggressive in issuing its DORs. Rather, CUNA said, credit unions should be permitted to pursue their own solutions, working with their examiner.

Healthy credit unions should also be permitted to manage their own risks by being able to decide for themselves whether they need to make additions to their net worth when it is at 7% or higher. CUNA also supported expanding the Regulatory Flexibility Program.

CUNA commended NCUA Chairman Matz for steps she has initiated recently to address regulatory burdens but urged the agency to consider many more ways to help relieve credit unions.

CUNA's Examination and Supervision Subcommittee, the American Association of Credit Union Leagues Regulatory Advocacy Advisory Committee, credit union officials, state league staff, and other leadership groups, including CUNA council members, worked to develop these recommendations.

CUNA has also addressed the credit union regulatory burden with other regulators as well as legislators on Capitol Hill. The most recent interaction with the legislative branch came Thursday, when CUNA commended Rep. Shelley Moore Capito (R-W. Va.) for holding a House hearing on an Internal Revenue Service (IRS) deposit income reporting requirement. That proposal, which was discussed during a House Financial Services financial institutions subcommittee hearing, would require credit unions and other financial institutions to report on their Form 1042-S interest of $10 or more earned annually on deposit accounts held by nonresident aliens who are residents of any foreign country.

CUNA in a letter to Moore Capito said this rule would "only contribute to the tremendous regulatory burdens credit unions face that make it increasingly harder for them to serve their members" and would also increase compliance costs for credit unions. The costs to financial institutions and consumers will far outweigh any benefit to the IRS, and CUNA added that that agency has not proven that the new regulation is needed.

For more on CUNA's regulatory relief efforts, use the resource links.

NCUA adopts CDRLF changes

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NCUA Board Member Michael Fryzel, left, Chairman Debbie Matz, and Board Member Gigi Hyland listen to a staff presentation on CDRLF changes during Thursday's open board meeting. President Barack Obama last week announced his intention to nominate Carla León-Decker to join the board.  León-Decker, if confirmed, would take the spot of Hyland, whose term officially ended in August. (CUNA Photo)
ALEXANDRIA, Va. (10/28/11)--The process by which the National Credit Union Administration (NCUA) solicits, receives, evaluates, and acts on credit union applications for loans and technical assistance grants from the Community Development Revolving Loan Fund (CDRLF) will be changed under a final rule that was approved by the agency yesterday.

The agency will no longer require community needs plans to be filed with CDRLF applications and will increase the maximum amount of a single loan to more than $300,000 in some circumstances. The NCUA will also offer flexible repayment options for CDRLF loans and may offer lower interest rates in some cases.

The NCUA rule will also change the CDRLF rule's low-income credit union (LICU) designation criteria.

The final rule is similar to a proposed rule that was issued earlier this year. However, a proposed requirement regarding financial projections was not included in the final rule. The Credit Union National Association did not support this financial projection requirement, and encouraged the NCUA to remove the requirement from the final rule in a summer comment letter.

The changes are intended to increase transparency and improve the CDRLF's organization, structure, and ease of use by credit unions. The NCUA in a release said the rule changes "will result in increased loan demand due to reduced burdens on participating credit unions, thereby enhancing the provision of financial services for low-income households."

NCUA staff during the meeting said some forms, including loan applications and Notices of Funding Opportunity, would need to be amended to reflect the changes. These changes would be completed before the rule comes into effect.

The final rule is scheduled to become effective 30 days after it is published in the Federal Register.

During the customary report on the NCUA's financial status, Chief Financial Officer Mary Ann Woodson said the National Credit Union Share Insurance Fund's equity ratio remained at 1.31% in September. The same number was reported last month, and NCUA Chairman Debbie Matz last month requested that her staff provide the board with their "best possible estimate" of the year-end ratio of the NCUSIF at the upcoming November board meeting.

The NCUA CFO reported there are currently 384 CAMEL 4 and 5 credit unions, which represent 3.88% of insured shares, or approximately $30 billion.  Woodson also noted that there are 1,777 CAMEL 3 credit unions, which represent 16.59% of insured shares, or $130 billion. 

Insured shares in CAMEL 3, 4, and 5 credit unions represented around 20% of total insured shares in September, with the number of CAMEL 3 credit unions decreasing slightly and the number of CAMEL 4 and 5 credit unions increasing slightly during that month. A total of $160 billion in shares are held in CAMEL 3, 4 and 5 credit unions.

The NCUSIF held $1 billion in reserves and the Temporary Corporate Credit Union Stabilization Fund recorded $1.97 billion in total earned revenues for the month of September. These revenues were due to the NCUA's recent TCCUSF assessment, Woodson said.

For more on the board meeting, use the resource link.

Inside Washingtonbr

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  • WASHINGTON (10/28/11)--The Credit Union National Association (CUNA) thanked Sen. Dianne Feinstein (D-Calif.) for drawing attention to the important role credit unions play in the lives of their members and the good work they are doing worldwide.  Feinstein submitted a statement into the Congressional Record to recognize International Credit Union Day (News Now Oct. 21), and she noted the 186 million consumers in 97 counties that are served by more than 56,000 credit unions. "These member-owned financial cooperatives provide their members access to affordable financial services. Many credit union members otherwise would not have access to these services because of financial or geographic challenges. Across the globe, credit unions are working every day to fulfill the mission, 'People Helping People,' CUNA noted in its letter of thanks. "We believe that credit unions are the best way for consumers to conduct their financial services, and we look forward to continuing to work with you on initiatives that support that goal."… 
  • WASHINGTON (10/28/11)--The U.S. Treasury Department must develop a clear exit path for community banks still mired in the Troubled Asset Relief Program (TARP), according to according to a government watchdog report due out Thursday. A common misperception is that most of the 707 TARP banks have paid back TARP, when only the largest banks have exited TARP, according to the report from the Special Inspector General for TARP. Smaller and medium-size banks are not exiting TARP with the same speed as the larger banks, with roughly 400 still in TARP. Of these, nearly half are not paying their TARP dividend and in some cases, the banks are operating under an order by their regulator. Compared with larger banks, community banks may face an uphill battle to exit TARP, the report said. Community banks do not have the same access to capital as the larger banks. They are more exposed to distressed commercial real estate-related assets and non-performing loans ...
  • WASHINGTON (10/28/11)--The Federal Housing Finance Agency (FHFA) Thursday released updated projections of the financial performance of Fannie Mae and Freddie Mac, including potential draws under the Senior Preferred Stock Purchase Agreements with the U.S. Department of the Treasury. FHFA first released financial projections in October 2010, and these updated projections show similar results for two out of three scenarios, and a decrease in cumulative Treasury draws in one scenario. Through the FHFA Conservator's Report, FHFA tracks actual performance versus projections on a quarterly basis. Under the three scenarios used in the projections, cumulative Treasury draws (including dividends) at the end of 2014 range from $220 billion to $311 billion. In the initial projections released in October 2010, cumulative Treasury draws (including dividends) at the end of 2013 ranged from $221 billion to $363 billion …
  • WASHINGTON (10/28/11)--New Jersey credit union advocates yesterday joined New Jersey Credit Union League (NJCUL) President/CEO Paul Gentile and Director of Government Affairs Chris Abeel for a day-long series of meetings on Capitol Hill to bring the job creation message to targeted members of New Jersey's Congressional delegation. In the morning the group met with U.S. Sens. Robert Menendez and Frank Lautenberg, both Democrats. In the afternoon, the group met with U.S. Reps. Donald Payne (D) and Bill Pascrell (D). They also met with the legislative counsel to U.S. Rep. Frank LoBiondo (R), who was called away at the last minute for a floor vote, and U.S. Rep Albio Sires' (D) chief of staff. On Wednesday, Payne announced he had signed-on to the House version H.R. 1418 of the Small Business Lending Enhancement Act that would increase the current credit union member business lending cap. Pictured from left: Chris Abeel, NJCUL director of government affairs; Beth Degnan, assistant vice president of external affairs, Affinity FCU, Basking Ridge, N.J.; U.S. Rep. Bill Pascrell (D); Paul Gentile, NJCUL president/CEO; Gary Chizmadia, volunteer, Credit Union of N.J., Ewing, N.J, and Al Feigenbaum, CEO, Advanced Financial FCU, New Providence, N.J. (Photo provided by NJCUL) …

NCUA conserves 1.3M-asset Birmingham Financial FCU

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ALEXANDRIA, Va. (10/27/11)--The National Credit Union Administration (NCUA) today assumed control of the services and operations of Birmingham Financial FCU of Birmingham, Ala.  The agency will continue normal services to Birmingham Financial's 429 members, but in a new location, as it works to resolve issues affecting the institution.

Birmingham Financial is the eleventh federally insured credit union placed into conservatorship during 2011.

Members of the $1.3 million-asset credit union can continue to conduct normal financial transactions, such as making deposit and accessing funds, making loan payments, and using shares. Birmingham Financial FCU is a multiple-bond credit union serving the employees of Birmingham Housing Authority and Birmingham Health Care who work in Birmingham.

Deposits at Birmingham Financial FCU remain federally protected. The NCUA's National Credit Union Share Insurance Fund (NCUSIF) insures individual accounts up to $250,000. The NCUSIF, like the FDIC's Deposit Insurance Fund, has the backing of the full faith and credit of the U.S. government.

Under conservatorship, the credit union moved to a new location and members can access their at America's First FCU, 1200 4th Avenue North, Birmingham. The credit union's new phone number is: (205)731-3527.

The decision to conserve a credit union enables the institution to continue regular operations with expert management in place, correcting previous service and operational weaknesses. Members who have questions about the conservatorship may review the Birmingham Financial FCU Frequently Asked Questions document when it is posted later to the NCUA website at www.ncua.gov.

Student loan debt cap disclosures could see changes

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WASHINGTON (10/27/11)—Student lending was a hot topic on Wednesday, as President Barack Obama and de facto Consumer Financial Protection Bureau (CFPB) director Raj Date each announced plans that could significantly alter the student loan landscape.

The agencies have taken the first step by developing a sample form and releasing that form for public comment. Date said the CFPB/Department of Education prototype form "makes it easier for students to compare offers side-by-side by using the same format and standard terms" and "clearly distinguishes between loans and scholarships, and lays out options for federal aid."

The CFPB homepage provides an area for general comment on the sample form, and asks commenters to prioritize standard loan disclosure items, including:
  • The school's graduation rate;
  • How the expected amount of student debt compares to national averages;
  • How much the student loan compares to average loans at that school and other schools;
  • Estimated debt and estimated monthly payment following graduation; and
  • The student's likely ability to repay their loans.
The CFPB this week also unveiled a Student Debt Repayment Assistant, a web-based tool that the CFPB said would provide borrowers with access to information on income-based repayment, deferments, alternative payment programs, and more. The CFPB is also planning to collect public and industry comment on the private student loan market in the coming weeks, and "will use this information to prioritize consumer education and policy efforts."

The agency and the Department of Education are scheduled to issue a comprehensive report on the private student lending market to Congress by July 2012.

Student loans were also a topic of discussion in the White House on Wednesday, as President Barack Obama announced a proposal that would cap student loan payments at 10% of a borrower's discretionary income and relieve student debt entirely after payments have been made for a 20-year period, beginning in 2012.

Obama also proposed allowing student loan borrowers to reduce their current interest rate by as much as 0.5% and announced a student loan consolidation program that would allow borrowers to and make a single payment each month, with incentives to encourage on-time repayment. The Obama administration estimated these changes would aid 1.6 million borrowers, and said administration officials would reach out to eligible borrowers in early 2012 to introduce them to this program.

Under current law, students may limit their loan payments to 15% of their income. Student loan debts are also forgiven after 25 years.

Credit Union National Association (CUNA) General Counsel Eric Richard said Obama's student loan initiative seems to be focused primarily on colleges and universities. "To the extent that there are new disclosure best practices, guidelines, or requirements, those might have an indirect impact on the financial institutions that work with schools to create financial aid packages," Richard said, adding that CUNA will assess what, if any, impact the plan could have on credit unions.

For more on the CFPB and Obama administration student loan initiatives, use the resource links.

Small biz seeks hard-to-find credit CUNA tells lawmakers

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WASHINGTON (10/27/11)—There still is a "healthy demand" for small business loans despite current economic conditions, and credit unions could provide more of those loans if the 12.25% of assets member business lending (MBL) cap was increased, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a Wednesday letter to the chairman of the House Financial Services subcommittee on financial institutions and consumer credit.

The letter to Rep. Shelley Moore Capito (R-W. Va.) follows this month's subcommittee hearing on H.R. 1418, the Small Business Lending Enhancement Act, at which CUNA testified. H.R. 1418 would lift the MBL cap to 27.5% of a credit union's total assets. CUNA has estimated this cap lift would add $13 billion in new funds to the economy and create 140,000 new jobs in the first year following enactment.

During the MBL hearing, bankers attempted to stir doubts that any unmet demand exists for small business credit, and therefore increased MBL capacity is unneeded. Some committee members questioned how much demand exists.

Cheney refuted the bankers' points in the recent CUNA letter, saying "the demand for small business loans is present in the market and the data suggest that banks continue to constrict credit availability while credit unions are expanding their business loan portfolios."

The CUNA CEO cited a Pepperdine Capital Markets Project survey that indicated that 95% of owners of privately held businesses wanted to expand their business, but only 53% had the financial means to do such. The report also found that 38% of businesses surveyed were seeking new sources of financing, and 65% of banks that responded to the survey said they had seen an increased demand for small business loans.

The CUNA letter noted that total bank business loan portfolios have declined by almost 14% during the current economic downturn, while credit union business loan portfolios grew at a healthy rate of over 40%. Any reduced borrowing from small businesses, and a corresponding reduction in small business expansion and job creation, "can be traced in large part to ongoing reductions in lending activity among the nation's commercial banks," Cheney said.

The letter also challenged banker statements that allowing increased credit union business lending would effectively "crowd out" bank business lending and said bank representatives grossly misrepresent the impact of raising the credit union business lending cap on their own lending volumes. "The vast majority of that new lending could be accomplished without any reduction in bank loans," the letter noted.

"With the banks controlling 95% of the commercial lending market, even a doubling of credit union market share would not significantly alter their dominance of this market," the letter said.

For the full letter, use the resource link.

Deficit reduction panel holds third public hearingbr

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WASHINGTON (10/27/11)—The Joint Select Committee (JSC) on Deficit Reduction conducted its third public hearing Wednesday and, for the second time, heard from Congressional Budget Office Director Doug Elmendorf, as he was the sole witness of the panel's session.

Elmendorf reminded the committee that the CBO would need proposed deficit-reduction initiatives by the beginning of November in order to project the budget impact of the legislation in time for the JSC to vote on it by its Nov. 23 deadline. The CBO impact-assessment process is referred to as "scoring" the legislation.

Sen. Patty Murray (D-Wash.), who with Rep. Jeb Hensarling (R-Texas) is co-chair of the committee, noted the next JSC public hearing is set for Nov. 1. Hensarling seemed to address skeptics' fears that the committee is not making adequate progress toward its goal of identifying $1.5 trillion in budget cuts by saying, "(U)ntil the stroke of midnight on November 22, we still have plenty of time to do the committee's work."

The joint select committee, also called the Super Committee, was created by the Budget Control Act in August.  In addition to Murray and Henslaring, the panel members are: Democratic Sens. Max Baucus (Mont.) and John Kerry (Mass.), Republican Sens. John Kyl (Ariz.), Rob Portman (Ohio), and Pat Toomey (Penn.), House Democrats, Reps. Xavier Becerra (Calif.), Jim Clyburn (S.C.), and Chris Van Hollen (Md., and House Republicans, Reps. Fred Upton and Dave Camp, both of Michigan.

NCUA reschedules Nov. board meetings

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ALEXANDRIA, Va. (10/18/11)--The National Credit Union Administrations (NCUA) November open board meeting will start an hour earlier than previously scheduled: 9 a.m. (ET) on Nov. 17.

The agency on Monday also announced that its November monthly closed board meeting will be moved to 10 a.m. (ET) on Wednesday, Nov. 16.

That meeting was scheduled for 11:30 a.m. (ET) on Nov. 17. The next open board meeting will take place at 10 a.m. (ET) on Oct. 27, and a closed session will follow that open meeting.

The agencys December board meeting is scheduled for 10 a.m. (ET) on Dec. 15. The NCUA late last month released the monthly open board meeting schedule for 2012.

The dates for the NCUA's 2012 board meetings are:
  • Jan. 26;
  • Feb. 16;
  • March 15;
  • April 12;
  • May 24;
  • June 21;
  • Juy 19;
  • Sept. 20;
  • Oct. 18;
  • Nov. 15; and
  • Dec. 13.

Inside Washington br

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  • WASHINGTON (10/27/11)--H.R. 1263, a bill that would amend the Servicemembers Civil Relief Act (SCRA) to extend protections against sale, foreclosure, and seizure of property to the surviving spouses of deceased servicemembers, would also require institutions with annual assets greater than $10 billion to maintain a toll-free telephone number to provide assistance to members of the military. The asset level was incorrectly reported in an Oct. 17 News Now article. Click here to read the corrected article. ...
  • WASHINGTON (10/27/11)--West Coast Bank, Lake Oswego, Ore., has been ordered by the Federal Deposit Insurance Corp. (FDIC) to pay a $390,000 fine and repay customers at least $350,000 in fees for overdrafting their accounts. The order, announced Monday in a regulatory filing by the bank, settles allegations by the FDIC that $2.5 billion asset West Coast deceived customers with its "Courtesy Coverage" overdraft protection. West Coast Bank did not admit to or deny the charges in signing the order. West Coast has agreed to correct all violations and review its program to ensure it complies with FDIC guidelines within 60 days. Under the agreement, West Coast's board is required to "participate fully" in the oversight of the bank's compliance management system and undergo educational training that specifically address consumer protection laws …
  • WASHINGTON (10/27/11)--The Federal Housing Finance Agency (FHFA)  announced that  two Freddie Mac board members, having reached the company's mandatory retirement age, will be stepping down from the board at the end of the current term in February 2012.  They are  Chairman John Koskinen and Robert Glauber, who is chairman of the Governance and Nominating Committee. To promote a smooth transition, FHFA Acting Director Edward J. DeMarco said in a release, Christopher Lynch, currently chairman of the Freddie Mac board's audit committee, will assume the chairmanship of the Freddie Mac board, effective at the December 2011 board meeting. Separately, the FHFA release noted, Laurence E. Hirsch notified the Freddie Mac on Oct. 18 that he will not seek re-election to the company's board of directors when his current term expires. Current Freddie Mac CEO Charles Haldeman, Jr. recently informed the board of his intention to step down some time in the coming year. FHFA Acting Director DeMarco requested that the outgoing and incoming board chairs work with the board and FHFA on developing a succession plan for the position of CEO …

SCRA mortgage protection changes pass House

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WASHINGTON (10/17/11)--The House late last week approved H.R. 1263, a bill that would amend the Servicemembers Civil Relief Act (SCRA) to extend protections against sale, foreclosure, and seizure of property to the surviving spouses of deceased servicemembers.

Members of the military and their spouses who are in financial distress would be protected from sale, foreclosure, or seizure of their property for 12 months under the legislation.

These protections would be in effect until Dec. 31, 2017. Current law protects military staff from foreclosure for nine months. However, those protections are set to expire on Dec. 31, 2012, and servicemembers would be protected only for 90 days if further action is not taken.

The bill, if passed into law, would also require credit unions and other lenders to create a new position to ensure their institution is in compliance with the SCRA. That employee also would be tasked with distributing information to servicemembers whose obligations and liabilities are covered by the law.

In addition, the bill would require institutions with annual assets greater than $10 billion to maintain a toll-free telephone number to provide assistance to members of the military. That number would need to be posted on the institutions website.

The bill was referred to the Senate Committee on Veterans' Affairs late last week, and it would need Senate approval before it can be signed into law.

Reg accountability bill would protect CUs CUNA

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WASHINGTON (10/26/11)--In its efforts to reduce the unnecessary regulatory burden of credit unions, the Credit Union National Association (CUNA) backed the Regulatory Accountability Act of 2011 (H.R. 3010) by submitting a statement for the record of Tuesday's House Judiciary Committee hearing.

H.R. 3010 would revise the Administrative Procedure Act to require agencies to consider the costs and benefits of new rules and other regulatory actions, and would require federal regulators to conduct public hearings for most rules estimated to have an aggregate impact on industry of over $1 billion. The legislation also sets new data quality standards for agency fact finding in the rulemaking process.

CUNA in its statement said the legislation "would give credit unions and others new tools and procedures that would help protect against arbitrary regulatory burdens" and "would significantly enhance the interaction between industry and federal administrative agencies."

Portions of the bill that add cost benefit analysis and information reporting requirements "would be far more effective than the closest existing parts of the Administrative Procedure Act, the Regulatory Flexibility Act and the Paperwork Reduction Act," CUNA added.

Rep. Lamar Smith (R-Tex.), the chief sponsor of the bill, in a statement called his legislation "common-sense reforms that have bipartisan support in both the House and the Senate." Reps. Howard Coble (R-N.C.), Collin Peterson (D-Minn.) are cosponsors of the bill, and joined Smith in introducing the bill, alongside Senators Rob Portman (R-Ohio) and Mark Pryor (D-Ark.).

Reducing regulatory burden for credit unions is a top CUNA priority, and CUNA has frequently called on the National Credit Union Administration, the Consumer Financial Protection Bureau, and other federal agencies to ease the working environment for credit unions.

For the full CUNA letter, use the resource link.

Financial advisory council sets Nov. 8 meeting

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WASHINGTON (10/26/11)--The President's Advisory Council on Financial Capability, created by executive order in 2010 to work to increase the financial literacy of the American public, will meet  on Nov. 8 at 10:30 a.m. (ET), the Federal Register reported.

The meeting will take place at U.S. Treasury headquarters in Washington. It is the fourth meeting of the council, which was founded in January 2010. The council is set to disband in late January if it is not extended by another executive order.

The council during the meeting will receive reports on the progress of its subcommittees on financial access, research and evaluation, partnerships, and youth, and will review subcommittee membership. The council will also hear from outside experts about youth financial capability and the use of technology in improving financial capability during the meeting, according to the Federal Register.

The council during the meeting will also review public comment on its recently released principles for recommendations.

Those principles are:

  • To provide recommendations that can be practically and quickly implemented and judged for their effectiveness in changing behavior;
  • To align with, consolidate and boost, rather than supplant, existing efforts of the private, for-profit, non-profit, and governmental sectors;
  • To remain consistent with the latest findings in behavioral economics;
  • To address issues impacting both the general population and smaller groups, including women, minorities, low and moderate income consumers, and the elderly; and
  • To leverage the use of technology to engage, inform, and impact behavior.
 

The advisory council has been tasked with advising President Barack Obama on ways to promote and enhance overall financial literacy, financial education efforts, and the general understanding of how to effectively use financial products. Defense Credit Union Council (DCUC) President/CEO Roland "Arty" Arteaga is one of the twelve members of the advisory council.

For more on the upcoming meeting and the council, use the resource links.

Reg accountability online gambling hearings lead week

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WASHINGTON (10/25/11)--With senators returning to their home districts until Oct. 31 and no financial services-related legislation on the House docket, credit unions will want to watch a trio of House hearings for potential action.

Two of these hearings will take place on Tuesday. The first of these hearings is scheduled for 10:15 a.m.(ET) before the House Judiciary Committee. That hearing will focus on the Regulatory Accountability Act of 2011 (H.R. 3010), legislation that would reform the process by which federal agencies analyze and formulate new regulations and guidance documents. Business owners and academics will testify during the hearing. 

Rep. Lamar Smith (R-Tex.), the chief sponsor of the bill, in a release said the bill would reform the current rulemaking process to lower the costs and improve the quality of new regulations and require federal agencies to hold formal hearings to test the assumptions and evidence on which the costliest new rules are based. A separate regulatory reduction bill has also been introduced in the Senate.

Reducing regulatory burden for credit unions is a top Credit Union National Association (CUNA) priority, and CUNA has frequently called on the National Credit Union Administration, the Consumer Financial Protection Bureau, and other federal agencies to ease the working environment for credit unions.

CUNA is also keeping an eye on Tuesday's House Energy and Commerce subcommittee hearing entitled:  "Internet Gaming:  Is there a Safe Bet?" Legislation that would allow the U.S. Treasury to license internet gambling operators and would permit approved operators to accept bets from U.S. citizens was offered in the House earlier this year by Rep. John Campbell (R-Calif.), with Rep. Barney Frank (D-Mass.) serving as its main co-sponsor.

The House bill would ease the compliance burdens imposed by the Unlawful Internet Gaming Enforcement Act (UIGEA) by supplying a list of approved Internet gambling providers that financial institutions could use to help determine what transactions to validate. While many transactions that are made with illegal gambling operators are blocked, the UIGEA regulations do result in a large number of false positives, creating issues for both credit union members and credit unions. Frank introduced identical legislation last year, and that bill gained House Financial Services Committee approval in July, but did not come up for further vote in the full House.

The House Financial Services financial institutions subcommittee has also scheduled a Thursday hearing on a U.S. Internal Revenue Service proposal that would require credit unions and other financial institutions to report on their Form 1042-S interest of $10 or more earned annually on deposit accounts held by nonresident aliens who are residents of any foreign country.

CUNA strongly opposes this regulation, and earlier this year asked the Internal Revenue Service to withdraw a proposed rule that would expand reporting requirements for interest paid to nonresident aliens, saying that the proposals costs to financial institutions and consumers will far outweigh any benefit to the IRS.

NCUA union employees will see pay freeze

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ALEXANDRIA, Va. (10/26/11)--The National Credit Union Administration's (NCUA) Wednesday announcement that it will institute a pay freeze for all NCUA employees in 2012, and will index future pay raises to the Office of Personnel Management's general schedule raise level, is "a step in the right direction," the Credit Union National Association (CUNA) said.

The agency will also freeze locality rates, and will provide yearly three percent contributions to an agency-established 401(k) plan and contribute to health, dental and vision premiums paid on federal plans. The terms were agreed to under a new three-year collective bargaining agreement, and the NCUA said its unionized employees agreed to the pay freeze as an offset to the increased employee benefits.

The agreement will bring the 950 unionized employees of the NCUA in line with a government-wide pay freeze that was put in place by an executive order earlier this year. The NCUA earlier this year applied the pay freeze to agency employees whose salary increases were not negotiated under existing union contracts.

The agreement is scheduled to be signed by NCUA Chairman Debbie Matz and National Treasury Employees Union (NTEU) President Colleen Kelley on Nov. 1.

CUNA will study this agreement to assess its impact.

The NCUA in July reduced its 2011 operating budget by $2 million after adjustments to the employee pay and benefit budget, administrative and contracting costs, travel, and other standard business expenses were made.

CUNA at that time supported the decision, but also noted that even with the reduction, the NCUAs 2011 budget of $223 million was still $23 million more than the agency spent in 2010.

Bill Cheney, CUNA president/CEO, encouraged the agency to "continue a close review of its operations and look for other potential areas where expenses can be cut without detracting from its mission of safety and soundness as it develops its 2012 budget."

Inside Washington (10/25/2011)

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  • WASHINGTON (10/26/11)--Colorado's state banking commissioner Fred Joseph said he disagreed with federal regulators' decision to shut down $1.38 billion-asset Community Banks of Colorado. The Federal Reserve Board Friday for the first time used special powers in shutting down the Colorado bank. The central bank appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for the state-chartered bank. The Fed had never before used its authority to close a state-chartered bank, a role normally reserved for state-regulators. Joseph said he would have allowed the bank to sell branches and provided it with more time to solve its capitalization problems. Community Banks had agreed to sell 16 of its 40 branches to Boston-based NBH Holdings Corp. The FDIC opposed the sale. Joseph said. V. Gerard Comizio, a partner at Paul, Hastings, Janofsky & Walker, LLP, described the situation as an instance in which a state regulator sought to prevent a bank under his jurisdiction from failing …

Administration enhances foreclosure-help program

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WASHINGTON (10/25/11)--The Federal Housing Finance Agency (FHFA), the federal regulator with oversight responsibility for Fannie Mae and Freddie Mac, announced changes Monday to the Home Affordable Refinance Program (HARP) to attract more underwater borrowers who could benefit from refinancing their home mortgages.

News reports, such as one from ABC News blog, reported that President Obama announced the proposal from a Las Vegas home's front porch. Nevada has one the highest foreclosure rates in the country.

HARP was launched in 2009 to let troubled homeowners bypass a requirement that they have at least 20% equity in their home to be able to refinance their mortgages at lower rates.  However, the program has been, some say, severely under utilized because many cannot qualify for help.

The program enhancements announced yesterday were developed at FHFA's direction with input from lenders, mortgage insurers and other industry participants. Program changes include:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
 

  •  Removing the 125% loan-to-value ceiling for fixed-rate mortgages backed by Fannie and Freddie;
 

  • Waiving certain representations and warranties made by lenders on loans owned or guaranteed by Fannie Mae and Freddie Mac;
 

  • Eliminating the need for a new property appraisal where there is a reliable automated valuation model estimate provided; and
 

  • Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to Fannie and Freddie on or before May 31, 2009.
 

The FHFA, in a release, said one important element of the changes to HARP is the elimination of certain risk-based fees, which should encourage borrowers to utilize HARP to refinance into shorter-term mortgages.

"Borrowers who owe more on their house than the house is worth will be able to reduce the balance owed much faster if they take advantage of today's low interest rates by shortening the term of their mortgage," explained the agency.

Fannie Mae and Freddie Mac plan to issue guidance with operational details about the HARP changes to mortgage lenders and servicers by Nov.  15.

ABC iWorld Newsi reports growing consumer interest in CUs

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WASHINGTON (10/25/11) -- The move to credit unions by consumers upset with bank fees received more national media attention in a segment last night on ABC's World News.

The ABC segment noted the new wave of consumer dissatisfaction with big banks builds on sentiment that goes back to the Huffington Post's Move Your Money campaign several years ago, but now is fueled by anger sparked by Bank of America's decision in late September to charge a new $5 a month debit card fee.  B of A's move has many grumbling about banks. 

One viewer angry over new banks card fees emailed to ABC news, "We bail them out and they raise rates—priceless."  However, correspondent David Muir noted,  "Many of you took it a step further…."

Another viewer wrote, "My secret's very simple—a credit card from a credit union.  It turns out thousands of Americans are doing the same thing—trading their banks on Wall Street for ones on Main Street."

The segment explained how many of the more than 7,000 credit unions around the country are seeing "an explosion in new members" since Bank of American's debit fee announcement, and new Facebook pages have sprung up urging consumers to switch.   ABC interviewed disgruntled bank customers, such as Karen Jackson of Miami, who closed her Chase account and transferred her money to Miami-Dade Credit Union.

"We couldn't take it anymore," she told ABC.  And, the segment added, "there are thousands more like her."

The ABC World News segment referred viewers to its web site where it posted "9 Tips Before You Switch to a Credit Union" using information provided by the Credit Union National Association (CUNA).  Those suggestions included using the CUNA's new consumer web site, www.aSmarterChoice.org, to learn more about credit unions and find a credit union you are eligible to join. 

Citing CUNA data, the tips also noted consumers save more than $6 billion annually in lower fees and better rates by using credit unions rather than banks.

Cheney touts CUs in Credit Line interview

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WASHINGTON (10/25/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney in a Los Angeles radio interview this past weekend underscored the value and service credit unions provide today's consumers, encouraged potential credit union members to examine their own financial options, and suggested they search for local credit union options on aSmarterchoice.org, CUNA's site that helps consumers find a credit union they are eligible to join.

The CUNA CEO appeared on The Credit Line, which airs on Los Angeles' KFWB 980 AM. The Credit Line is a weekly call-in show hosted by Credit.com chairman Adam Levin and L.A.-based radio personality Jeff Levy.

Asked about the approach of Bank Transfer Day (Nov. 5), Cheney urged listeners not to wait until then, and to start making the move to a credit union now. New members will find credit union pricing is better, and they will be treated differently than they have been at banks, Cheney said. Bank Transfer Day, started by a 27-year-old artist in California, is urging consumers to switch from big banks to credit unions on Nov. 5. So far more than 400,000 people have been made aware of Bank Transfer Day through Facebook, and Bank Transfer Day has also received widespread media coverage.

Cheney also covered many of the basics of credit union structure, services and products, saying that credit unions can focus purely on their members, "and members have a say in how the credit union is managed." Loan rates and fees are often lower at credit unions, with credit union credit card rates averaging 2 percentage points below the rates charged by banks, Cheney added.

Listen to The Credit Line:



Although there aren't any credit unions that are the size of Bank of America, the shared credit union ATM network means credit union members can access their accounts, free of charge, from a greater number of ATMs, Cheney said.  The CO-OP Network, he noted, has more than 28,000 surcharge-free ATMs.

NCUA advises examiners ahead of Bank Transfer Day

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ALEXANDRIA, Va. (10/25/11)—Credit unions will be interested to know that the National Credit Union Administration (NCUA) has advised its examiners on alternative ways to view how the sudden inflow of deposits and members caused by the planned Nov. 5 Bank Transfer Day could impact credit union finances.

Saying that the new funds and member "may temporarily depress a credit union's net worth ratio," the agency also noted that credit union call reports allow credit unions "to calculate their net worth ratio in different ways, using 'point-in-time' assets or using a rolling average of assets." The NCUA added that the rolling average of assets accounting approach "was put into place to be more equitable to credit unions who may experience a large payroll deposit on the last day of a quarter or have seasonal fluctuations such as teachers credit unions."

The NCUA said credit unions may only get temporary relief from the net worth effects of these new transfers. "Since this is a rolling average, the longer the deposits stay, the less relief these alternative calculations will provide," the NCUA said.

However, the NCUA added, many of these new members may stay with their new credit unions. If the new members, and their money, remains in the credit union several months from now, "capital retention plans should be updated to include this new factor," the NCUA said.

The guidance was released to NCUA examiners ahead of the coming Bank Transfer Day (Nov. 5). However, many are not waiting for Nov. 5 to make their transfers, as many credit unions have seen sharp increases in membership applications following Bank of America's announcement that they would charge a $5 per month fee for debit card accounts.

A poll commissioned by Creditcards.com found that 78% of debit card holders surveyed said they will switch banks to avoid monthly fees charged when they use their debit cards to make purchases, and credit unions are receiving plenty of positive press ahead of Bank Transfer Day. For more coverage, use the resource link.

Inside Washington (10/24/2011)

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  • WASHINGTON (10/25/11)--The Federal Reserve Board Friday for the first-time used special powers in shutting down a Colorado bank on Friday. The central bank appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for Community Banks of Colorado, of Greenwood Village, Colo., a state-chartered bank and member of the Federal Reserve System. The Fed had never before used its authority to close a state-chartered bank, a role normally reserved for state-regulators. As of June 30, the bank had approximately $1.4 billion in assets. The appointment was made after the Federal Reserve Board determined that the bank had been "critically undercapitalized" since July 29, and appointment of the FDIC as receiver was necessary to carry out the purpose of the prompt corrective action (PCA) statute to reduce long-term loss to the FDIC's deposit insurance fund. The PCA statute required the Federal Reserve, as the bank's federal supervisor, to appoint the FDIC as receiver not later than 90 days after the bank became critically undercapitalized, or to take other supervisory action, with the FDIC's concurrence, that would cause the least possible long-term loss to the deposit insurance fund. Pursuant to statute, the Federal Reserve also consulted with the Colorado State Banking Commissioner …
  • WASHINGTON (10/25/11)--With his advocacy for tough examinations and community banks, and criticism of "too big to fail," Thomas Hoenig, President Barack Obama's nominee for vice chairman of the Federal Deposit Insurance Corp., is a good fit for the position, according to observers (American Banker Oct. 24). Hoenig stepped down as head of the Federal Reserve Bank of Kansas City on Oct. 1. In that role he was critical of big bank bailouts and recent steps by the Fed to prop up the economy. He cast dissenting votes on the central bank's Federal Open Market Committee and has questioned the ability of the Dodd-Frank Wall Street Reform and Consumer Protection Act to address how systemically important financial institutions will wind down in the event of a financial crisis. Observers said Hoenig's track record indicates he would at times disagree with his new colleagues at the FDIC, including acting FDIC Chairman Martin Gruenberg.  As vice chairman, Gruenberg was usually aligned with former FDIC chief Sheila Bair …
  • WASHINGTON (10/25/11)—The Community Development Financial Institutions (CDFI) Fund Monday announced the appointment of Dennis Nolan to serve as its deputy director, effective immediately.  Nolan is now responsible for heading up policy development, operating procedures, internal controls, and short- and long-range strategic planning at the CDFI Fund, as well as coordinating, evaluating and enhancing the fund's programs. Prior to joining the CDFI Fund, Nolan was deputy chief financial officer at the Millennium Challenge Corporation (MCC), an independent U.S. foreign-aid agency focused on the fight against global poverty.  Nolan has also held financial management positions at the Environmental Protection Agency, where he was responsible for all aspects of EPA's financial management program, and the Federal Deposit Insurance Corporation, in such positions special assistant to the CFO and special assistant to the director of the Division of Finance …

CUNA welcomes NCUA board candidates experience

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WASHINGTON (10/24/11)--President Barack Obama announced late last week that he intends to nominate Carla León-Decker to become a member of the National Credit Union Administration (NCUA) board, and Credit Union National Association (CUNA) President/CEO Bill Cheney said CUNA appreciates the White House nominating to the NCUA board an individual with credit union experience.

Cheney added that the nomination of León-Decker, who is the current president/CEO of D.C. Government Employee's FCU, "is important when appropriate safety and soundness policy is under consideration."

Gigi Hyland, whose six-year term on the NCUA board ended in August, congratulated León-Decker, saying the credit union executive "has extensive knowledge of the credit union system" and will "bring her acumen to the regulatory realm."

León-Decker served as Operations Manager and, later, as president/CEO of PAHO/WHO FCU from 1994 to 2000, and also served as branch manager of Transportation FCU between 1988 and 1994. She is also a credit union development educator and director of the Network of Latino Credit Unions & Professionals.

NCUA Chairman Debbie Matz said León-Decker "will bring valuable perspectives to the NCUA Board---particularly her inspiring commitment to providing affordable financial services for recent immigrants, low-income families, and many people of modest means."

Her nomination is subject to congressional approval, and CUNA will work with the Senate as the nomination moves forward. A vote on the nomination could possibly come before the end of the year.

NCUA outlines OCP structure consumer complaint process

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ALEXANDRIA, Va. (10/24/11)--The National Credit Union Administration (NCUA) provided additional detail on the two divisions of its Office of Consumer Protection (OCP), and covered the agency's member complaint resolution process, in a letter to credit unions (11-CU-17) released late last week.

In its letter, NCUA stated that it "designed OCP to segregate consumer protection and consumer compliance responsibilities from those involving safety and soundness."

The NCUA said its Division of Consumer Access will cover:
  • New federal credit union charters;
  • Charter conversions;
  • Field-of-membership expansions;
  • Bylaw amendments; and
  • Low-income designations.
The Division of Consumer Compliance and Outreach (CCO) will:
  • Address consumer compliance policies, program and rulemaking;
  • Act as an interagency liaison on consumer protection and compliance issues;
  • Conduct fair lending examinations;
  • Manage its own consumer call center and financial literacy and outreach programs; and
  • Serve as the agency's ombudsman. 
The agency also outlined how the CCO would handle consumer complaints, saying that complaints and any related documents that are submitted by credit union members to the CCO would first be forwarded on to the chairman of the given credit union's supervisory committee. The CCO will request a response within 21 days, and will "review the response to ensure it adequately addresses the member's complaint and that the action(s) taken, if any, are consistent with consumer protection laws and regulations."

The CCO will request additional information if needed, and will update the credit union and the credit union member once the case has been fully examined or resolved, the NCUA said. Member complaints may be addressed by the credit union. However, the complaints may also result in legal or regulatory action, and the CCO will inform the credit union and the credit union member of any further actions that could be taken, the agency added.

The Credit Union National Association has urged the NCUA to provide more information about the operations of the OCP and will continue to push for assurances that the OCP will not interfere with credit unions' operations or seek to add to the regulatory burdens placed on credit unions nationwide.

Loan limit language tied to Senate spending bill

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WASHINGTON (10/24/11)--Legislation that would return the Federal Housing Administration's (FHA) insurance limit for single-family home loans to $729,750 was approved by the Senate in a 60-38 vote, and attached to a minibus spending bill, late last week.

The minibus spending bill was passed by the House earlier this year. A Senate vote on the spending bill is expected in the coming weeks.

The mortgage-related legislation, known as the Homeownership Affordability Act of 2011, was introduced earlier this year by Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.), and co-sponsored by Sen. Dianne Feinstein (D-Calif.). The legislation would allow the FHA, Fannie Mae, Freddie Mac, and the Veterans Administration (VA) to guarantee mortgages up to $729,750, or 125% of local median prices for single family homes, through Dec. 31, 2013.

The maximum conforming loan limit was previously set at $729,750, but fell to $625,500 on Oct. 1 when a loan limit extension could not be agreed to by Congress. The Housing and Economic Recovery Act (HERA) of 2008 requires that Congress set maximum conforming loan limits each year.

Menendez earlier this year said that allowing the loan limits to expire "would be bad medicine for our economy at a time when we need a booster shot," and Isakson added that he is "concerned that failing to extend these limits would make it even more difficult for the average homebuyer get a mortgage and buy a home when credit is already tight."

Inside Washington (10/21/2011)

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  • WASHINGTON (10/24/11)--Lawmakers on Thursday raised concerns about whether U.S. regulators possess the insight to predict the impact a financial crisis in Europe would have on the U.S. financial system. During a Senate Banking Committee's security and international trade and finance subcommittee hearing, Sen. Mark Warner (D-Va.) asked Lael Brainard, undersecretary for international affairs for the Treasury Department, whether his agency had the "real-time knowledge" to monitor depository exposure in Europe (American Banker Oct. 21). Direct exposure is relatively modest, and the most detailed information available is on money market funds, Brainard said. But even with moderate direct exposure to depository institutions, the financial crisis in Europe is a grave threat to the global financial recovery, and the fragile U.S. economy is vulnerable to offshore disruption, he added …
  • WASHINGTON (10/24/11)--Republicans--many of whom favor a more limited government role in the housing market--may be abandoning support for subsidizing the benchmark 30-year fixed-rate mortgage. Sen. Richard Shelby (R-Ala.) questioned the unintended consequences of subsidizing the 30-year fixed-rate mortgage during a Senate Banking Committee hearing Thursday (American Banker Oct. 21). Lawmakers need to reconsider if the preferential pricing of the 30-year fixed mortgage is in the public's best interest, Shelby said. But not all Republicans agree. Rep. John Campbell (R-Calif.) is among the co-sponsors of a bipartisan bill that would preserve the 30-year fixed-rate loan …
  • WASHINGTON (10/24/11)--Thomas Hoenig, who recently retired as head of the Federal Reserve Bank of Kansas City, has been nominated as vice chairman of the Federal Deposit Insurance Corp., the White House said Thursday night (American Banker Oct. 21). Hoenig has criticized "too big to fail" financial firms, and in interviews stated that the Dodd-Frank Act may intensify rather than minimize the impact of large financial institutions. The FDIC is currently implementing a new resolution system for winding down large firms in danger of failing--a key component of Dodd-Frank. Hoenig was the president/CEO of the Federal Reserve Bank of Kansas City from 1991 to 2011 …

NEW D.C. FCU PresidentCEO nominated to NCUA board

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WASHINGTON (UPDATED: 10:15 A.M. ET)--President Barack Obama has announced his intent to nominate D.C. Federal Credit Union President/CEO Carla León-Decker to become a member of the National Credit Union Administration (NCUA) board. Gigi Hyland, whose six-year term on the NCUA board technically ended in August, congratulated León-Decker, saying the credit union executive “has extensive knowledge of the credit union system” and will “bring her acumen to the regulatory realm.” NCUA Chairman Debbie Matz said León-Decker “will bring valuable perspectives to the NCUA Board—particularly her inspiring commitment to providing affordable financial services for recent immigrants, low-income families, and many people of modest means.” León-Decker served as Operations Manager and, later, as president/CEO PAHO/WHO FCU between 1994 to 2000, and also served as branch manager of Transportation FCU between 1988 and 1994. She is also a credit union development educator and director of the Network of Latino Credit Unions & Professionals. Her nomination is subject to congressional approval.

30- 15-year mortgage rates hold steady Freddie Mac

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WASHINGTON (10/7/11)--Average rates on 30- and 15-year fixed rate mortgages held steady this week and remained near recent all-time lows, Freddie Mac reported. Thirty-year mortgages averaged 4.11% this week, 4.12% last week, and 4.21% this time last year. Fifteen-year mortgages averaged 3.38% this week, 3.37% last week, and 3.64% this time last year. Thirty- and fifteen-year mortgages reached record lows of 3.94 % and 3.26%, respectively, in the first week of October. Freddie Mac Chief Economist Frank Nothaft said the mortgage rate stability was tied to mixed economic reports that were released this week. Five-year Treasury indexed hybrid adjustable-rate mortgages (ARMs) fell during the week, averaging 3.01%. Last week's total was 3.06%. However, one-year Treasury-indexed ARMs increased slightly this week, averaging 2.94%. Those ARMs averaged 2.9% last week. For the full release, use the resource link.

CDRLF final changes on NCUA agenda

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ALEXANDRIA, Va. (10/21/11)—A final rule on Community Development Revolving Loan Fund (CDRLF) access for credit unions is one of two items on the agenda of next week’s October National Credit Union Administration (NCUA) board meeting. The NCUA earlier this year released a proposed rule that would change the CDRLF rule's low-income credit union (LICU) designation criteria to use "median family income" in the standard for LICU determination instead of "median household income." The NCUA at that time said that the CDRLF changes would likely increase loan demand "due, in part, to reduced program burdens on participating credit unions, thereby enhancing the provision of basic financial services for low-income households." Overall, the CDRLF changes are meant to improve transparency and ease credit union use of the fund and improve the process through which credit unions may apply for loans and technical assistance grants from the CDRLF. The proposed changes also clarify the application process, and add reporting and monitoring requirements. CUNA in a July comment letter urged the agency to minimize reporting and monitoring burdens on "low-income" credit unions seeking CDRLF assistance by using existing reports whenever possible, and suggested that the NCUA also develop a list of permissible CDRLF loan uses and increase the CDRLF’s maximum loan limit beyond the current limit of $300,000. The monthly insurance fund report will also be presented during the open portion of the board meeting. The closed portion of the NCUA's meeting will feature a merger request and consideration of supervisory activities. For the full NCUA agenda, use the resource link.

FASB should tailor communications with firms conference attendees say

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WASHINGTON (10/21/11)--Attendees of the Financial Accounting Standards Board's (FASB) recent private-company accounting roundtable urged FASB to focus and streamline how it communicates when it issues or amends rules that specifically impact certain types of private businesses. The FASB meeting was held earlier this week in San Francisco, Calif. Patelco CU Chief Financial Officer and Credit Union National Association (CUNA) Accounting Subcommittee Chairman Scott Waite attended the meeting on behalf of CUNA and his credit union. He is also a long-time advisory member of the FASB. Waite said he was “very happy to represent credit unions” at the FASB meeting. He will also attend a November meeting at FASB’s home office in Norwalk, Connecticut. Several participants said that the amount of disclosures provided by FASB can be overwhelming while still others would prefer more use of disclosures rather than apply the accounting treatment. Waite noted that this make setting appropriate standards very challenging to please everyone. During the meeting while discussing ways to filter applicable changes, Waite said one of the reasons that CUNA formed its accounting subcommittee is to filter through FASB proposal and standards and pick out the relevant information for credit unions. The meeting attendees also generally encouraged FASB to improve its communication with the small accounting firms that work with private companies and to give greater consideration to the needs of these small firms. Accounting and disclosure requirements relating to variable interest entities, interest-rate swaps, and Level 3 fair value measurements were also among the items covered during the meeting. The Financial Accounting Foundation earlier this month proposed establishing a new Private Company Standards Improvement Council. FASB in an earlier release said this new group, if approved, would review U.S. GAAP and determine how those standards could be improved to better serve the needs of private companies. The group could then issue modifications, if needed.

Feinstein statement in iCongressional Recordi marks ICU Day

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WASHINGTON (10/21/11)— Sen. Diane Feinstein (D-Calif.) Wednesday inserted a statement into the Congressional Record to mark “the importance and many achievements of credit unions worldwide in celebration of the 63rd annual International Credit Union Credit Day (ICU Day).” Feinstein said to her Senate colleagues, “I rise today to recognize the importance and many achievements of credit unions worldwide in celebration of the 63rd annual International Credit Union Credit Day.” The Feinstein statement marked the beneficial impact credit unions make both in the United States and on an international scale. She said in this country, that credit unions provide “affordable and safe financial services to many Americans of moderate means has been significant and widely recognized. “The difference credit unions make in the United States by providing affordable and safe financial services to many Americans of moderate means has been significant and widely recognized,” the senator noted in her Senate statement, adding, “However, the contributions credit unions have made on an international scale are equally notable.” She went on to note: Since the mid-1800s, credit unions have established themselves in communities around the world struggling with social dislocation, political unrest and economic depression as a means to promote economic growth and democratic practices at the local level. Today, more than 54,000 credit unions provide financial services to more than 186 million members in 97 nations. Nationally, credit unions provide financial services to more 93 million Americans. Feinstein’s statement also called attention to credit unions are working with the World Council of Credit Unions to “introduce a variety of innovative technology solutions to bank the unbanked in rural areas.” Bob Arnould, senior vice president of government affairs for the California and Nevada Credit Union Leagues, took the occasion to thank Feinstein for her support of credit unions and for entering her “comprehensive statement” into the congressional record. Jeremy Empol, director of the leagues’ federal government affairs, added, “As chairman of the Senate Select Committee on Intelligence, Sen. Feinstein is well aware of the role cooperative financial institutions play in countries around the world. Credit unions are grateful for her acknowledgements.” The senator is one of 21 backers of S. 509, the Small Business Lending Enhancement Act introduced in March by Sen. Mark Udall (D-Colo.) to increase the credit union members business lending cap to 27.5% of assets, up from 12.25%. For more on ICU Day celebrations, see related story: A whole lotta CU celebrations going on. Also, use the resource link to read Feinstein's complete statement.

Kutchey to become NCUA deputy executive director

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ALEXANDRIA, Va. (10/21/11)--National Credit Union Administration (NCUA) Chairman Debbie Matz today announced the appointment of John Kutchey to become deputy executive director and COO, to succeed Melinda Love when she retires in December. Matz said Kutchey will bring “tremendous understanding of the agency at the headquarters, regional, and field levels.” She also said that his “distinct role” as our chief negotiator with the National Treasury Employees Union makes him the “perfect fit” for the deputy executive director’s job. As deputy executive director, Kutchey will assist the executive director with the day-to-day operation of NCUA to include oversight of its 10 central offices, five regions and the Asset Management and Assistance Center, according to an NCUA release. Kutchey most recently served as the deputy director of the Office of Examination and Insurance (E&I). He has also held positions as E&I’s director of risk management and Region II’s director of supervision, as well as served as a supervisory examiner, a problem case officer and a principal examiner. He also has experience in credit union work.

Inside Washington (10/20/2011)

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* WASHINGTON (10/21/11)--The Federal Reserve Board must step up efforts to avoid possible conflicts of interest that result from how board members at the Fed’s 12 regional banks are selected, the Government Accountability Office (GAO) said in a report issued Wednesday. The Dodd-Frank Wall Street Reform and Consumer Protection Act required GAO to review the governance of the Federal Reserve following the 2008 financial crisis. While the report found no evidence of wrongdoing, it did find situations that create the appearance of conflicts of interest. “Although directors’ affiliations with financial firms do not necessarily create conflicts of interest, they may complicate the directors’ relationships with the Reserve Banks and increase public scrutiny of them,” the report said. For example the study found 18 former and current directors from nine Reserve Banks who were affiliated with institutions that used at least one federal emergency program … * WASHINGTON (10/21/11)--The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged …

FinCEN urges consumers to take action on ID theft

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WASHINGTON (10/20/11)--The 4th annual National Protect Your Identity Week, which began on Oct. 16 and continues until Oct. 21, provides consumers with an excellent opportunity to understand the steps needed to guard their financial account and personal information against identity theft, the Financial Crimes Enforcement Network (FinCEN) said. FinCEN Director James Freis said “identity theft is one of the top 10 suspicious activities reported to FinCEN by financial institutions,” and FinCEN in a release said a recent study found that identity thieves prefer to use stolen account identifiers to take over existing legitimate investment accounts, rather than to set up new unauthorized users. FinCEN also noted that vigilant financial institution employees in 2010 rejected over half of fraudulent vehicle or student loans facilitated by identity theft prior to funding. More than eight million consumers were impacted last year by the crime of identity theft, resulting in the loss of $37 billion, according to Javelin Strategy and Research. The agency encouraged consumers to visit http://www.protectyouridnow.org/ to find new ways to help prevent identity theft. The Credit Union National Association (CUNA) joined a number of government agencies and organizations earlier this week to launch this year’s National Protect Your Identity Week. Child identity theft protection and education are the focus of this year’s observation. More than 100 related events have been planned for this week. Credit unions and other organizations are offering ID theft protection handouts, workshops, speakers, cell phone collection, credit report reviews and shredding, and some credit unions are using the events as part of Thursday’s International Credit Union Day. For prior NewsNow coverage of National Identity Theft Prevention week, use the resource link.

NMLS renewal period starts Nov. 1

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WASHINGTON (10/20/11)--The Credit Union National Association (CUNA) in a recent CompBlog post reminded credit unions to confirm that previously submitted Nationwide Mortgage Licensing System & Registry (NMLS) information remains accurate and complete, and to update any information that needs to be changed, during the upcoming NMLS Annual Renewal Period. The 2011 renewal period begins on Nov. 1 and ends Dec. 31. The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires credit union mortgage loan originators (MLOs) and their employing institutions to register with the NMLS. The NMLS became active earlier this year. Registered MLOs are given a "unique identifier," which is the identification number associated with the MLO within the NMLS. The unique identifier remains the same, even when the MLO changes employment, moves, or changes his or her name, and the identifier tracks the MLO and facilitates public access to the employment history and any disciplinary or enforcement actions that have been initiated against the individual. All NMLS accounts for financial institutions must be renewed on an annual basis, and CUNA said that credit unions must renew their NMLS accounts before the institution’s MLOs can renew their individual registrations. Credit unions will be required to pay a $100 renewal processing fee. However, there is no MLO renewal fee for this first renewal period. CUNA added that individual MLOs that registered before July 1 of this year will need to renew their NMLS registration by the end of the year to remain active in the system for 2012. However, individual MLOs that registered for on the NMLS after July 1 will not need to renew their registration this year, CUNA said. MLOs that do not renew their registration will be deemed inactive and will need to reactivate their NMLS registration. MLOs that are not registered on the NMLS are prohibited from originating residential mortgage loans. Further, institutions that fail to renew will be listed on NMLS as ineligible to originate mortgages. For more on NMLS renewals, see CUNA’s CompBlog.

Humphrey to head CFPB Office of Older Americans

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WASHINGTON (10/20/11)--The Consumer Financial Protection Bureau (CFPB) on Wednesday announced former Minnesota Attorney General and Minnesota State Senator Hubert “Skip” Humphrey as the leader of the agency’s Office of Older Americans. The CFPB’s Office of Older Americans has been tasked with helping seniors avoid fraud related to financial counseling, as well as with educating seniors about their choices for long-term savings, retirement planning, and long-term care programs. The CFPB division will also work with senior groups, law enforcement, financial institutions, and other federal and state agencies to identify and prevent scams targeting seniors. Humphrey said he is “honored and excited to bring [his] experience in consumer protection and [his] work with seniors to the CFPB to help educate seniors about fair practices and how to make financial decisions that are right for them.” “A well-informed consumer is the best protection against fraud and deceptive practices – especially if that knowledge is backed up by tough regulatory enforcement,” he added. Humphrey, a graduate of American University and the University of Minnesota Law School, has also served as former State President and national board member of the AARP. Humphrey is the son of former Vice President Hubert Humphrey and former U.S. Senator Muriel Humphrey. Rep. Barney Frank (D-Mass.) said he was “especially pleased to note the addition of another former attorney general to the top ranks of the agency because attorneys general have been at the forefront of consumer protection.” The Financial Crimes Enforcement Network (FinCEN) earlier this year noted a sharp increase in the number of financial institutions that filed Suspicious Activity Reports (SARs) on elder financial abuse. FinCEN has warned that erratic or unusual banking transactions, such as frequent large withdrawals, sudden Non-Sufficient Fund activity, uncharacteristic nonpayment for services, inconsistent debit transactions, and the closing of certificate or other accounts without regard to penalties can all be warning signs of elder financial abuse. Financial institutions should also look out for instances in which an elderly member or customer lacks knowledge about his or her financial status, or shows a sudden reluctance to discuss financial matters. Elderly victims of financial abuse may also fear eviction or nursing home placement if money is not given to a caretaker, FinCEN warned. Credit unions and other financial institutions often can play a key role in uncovering instances of financial exploitation of the elderly, and the Maine Credit Union League and the Northwest Credit Union Association are examples of leagues that have supported elderly financial abuse prevention legislation in their respective states. The U.S. Treasury has also promoted its GoDirect federal benefit direct deposit program as one way that older Americans can avoid financial fraud. The Credit Union National Association is a GoDirect partner.

Postal service raises rates

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WASHINGTON (10/20/11)--The U.S. Postal Service (USPS) early this week announced that postage prices for standard letters and other mailings would be increased on Jan. 22, 2012. Specifically, the USPS said the price of "forever stamps," which can be used to mail a single one-ounce letter, would increase by one cent to total 45 cents. However, the price for additional ounces will hold steady at 20 cents, the USPS said. Mailing a letter to nearby neighbors Canada or Mexico will cost 85 cents, and postage for letters sent to other international addresses will increase by seven cents, to total $1.05. Postcard postage will increase by three cents to total 32 cents, the USPS added. The USPS said prices for standard mail, periodicals, package services, and other services will also be changed. Express mail and priority mail prices will not be changed, the USPS said. For more on the price changes, use the resource link.

Inside Washington (10/19/2011)

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* WASHINGTON (10/20/11)—U.S. senators on Tuesday criticized the Small Business Lending Fund for not providing enough capital to community banks. The fund, which was created a year ago, encourages banks to lend to small businesses (American Banker Oct. 19). Senators also complained that SBLF funding was used by some banks to repay their Troubled Asset Relief Program funds rather than to lend to small businesses. When SBLF-participating banks meet certain thresholds for small-business lending, they pay lower dividend rates on the government capital. Treasury Secretary Timothy Geithner said demand from banks was lower than expected and half of all applicants were financially healthy enough to qualify for the program. Banks applied for only one-third of the capital in the program, he said. … * WASHINGTON (10/20/11)--Financial stability and monetary policy are “co-equal responsibilities” and “highly complementary” functions of central banks, Federal Reserve Board Ben Bernanke said Tuesday. “In the decades prior to the [financial] crisis, monetary policy had come to be viewed as the principal function of central banks; their role in preserving financial stability was not ignored, but it was downplayed to some extent,” said Bernanke, speaking at the Federal Reserve Bank of Boston 56th Economic Conference. “The financial crisis has changed all that.” Efforts to draw distinctions between those two objectives can be blurred by the strong ties between financial and economic conditions, Bernanke said. For example, monetary policy actions that improve the economic outlook also tend to improve the conditions of financial firms. Similarly, actions to support financial institutions and markets can help achieve the central bank’s monetary policy objectives by improving credit flows and enhancing monetary policy transmission, he added … * WASHINGTON (10/20/11)--President Barack Obama continued his assault on big banks Tuesday, comparing them with polluters and offshore drillers. “You can’t pretend that creating dirtier air and water for our kids and fewer people on health care and less accountability on Wall Street is a jobs plan,” Obama said. “I think more teachers in the classroom is a jobs plan; more construction workers rebuilding our schools is a jobs plan; tax cuts for small business owners and working families is a jobs plan.” Obama has singled out Wall Street in other instances in recent weeks (American Banker Oct. 19). During a press conference earlier this month, he used Wall Street as an example of an institution that does not follow rules. He also singled out Bank of America Corp., after the company announced it will charge a $5 monthly fee for debit card use, as an example of why the U.S. needs stronger consumer protection … * WASHINGTON (10/20/11)--The Federal Financial Institutions Examination Council (FFIEC) on Wednesday announced that it will incorporate the U.S. Census Bureau’s American Community Survey (ACS) information into its 2012 annual Median Family Income (MFI) data. MFI data is used by Federal financial agencies to compile Home Mortgage Disclosure Act (HMDA) data and Community Reinvestment Act (CRA) examinations analyses, the FFIEC said. That group also announced it would incorporate 2010 American Community Survey data into the FFIEC-published census data file…

Inside Washington (10/18/2011)

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* WASHINGTON (10/19/11)--The U.S. Supreme Court is expected to decide whether the Real Estate Settlement and Procedures Act (RESPA), in addition to its clear prohibition on lenders receiving kickbacks in exchange for “unearned” fees charged to borrowers, also prohibits lenders from charging borrowers fees that are defined as unearned in the first place (American Banker Oct. 18). The high court announced last week it will hear Freeman v. Quicken Loans Inc. That Fifth Circuit, U.S. Court of Appeals case alleges that Quicken Loans charged borrowers thousands of dollars in “loan discount fees” that were unearned because it failed to give borrowers loan discounts. The article notes that the case has major implications for other lenders and could affect everything from what lenders charge borrowers for credit reports, to fees charged for appraisals and other services … * WASHINGTON (10/19/11)--The Community Development Financial Institution (CDFI) Fund has made new enhancements to its monthly reports--Certified CDFIs; Certified Native CDFIs; Newly Certified CDFIs; and Newly Certified Native CDFIs. The monthly Certified CDFIs and Certified Native CDFIs reports have been combined into one report that will include all of the relevant certification data for CDFIs. The Newly Certified CDFIs and Newly Certified Native CDFIs will also now be one report, with the Native CDFIs highlighted for easy identification. The reports will be sent out in one monthly e-mail. A link to separate, static PDFs for certified CDFIs and Native CDFIs sorted by name, state, and type of organization will no longer be sent each month. Rather, starting with this month, the fund will send one link to a comprehensive Excel spreadsheet containing the previously released information and additional information requested by readers. This new report format will allow readers to sort the information in several different ways, said the fund’s announcement … * WASHINGTON (10/19/11)--The Consumer Financial Protection Bureau (CFPB) supervision and examination manual will employ some of the same methods that regulators have previously used to conduct exams, but examiners will look at the information they gather in new ways, Steve Antonakes, the bureau’s associate director for large bank supervision, said in an interview Monday (American Banker Oct. 18). Exams will reflect the primary focus of the bureau: risk to consumers and transparency of information, Antonakes said. The bureau is a member of Federal Financial Institutions Examination Council, follows many of its procedures and enforces many of the same laws, including the Truth in Lending Act, Real Estate Settlement Procedures Act and Fair Credit Reporting Act … * WASHINGTON (10/19/11)--The Federal Housing Finance Agency (FHFA) announced Tuesday that it has directed Fannie Mae and Freddie Mac to transition away from current foreclosure attorney network programs and move to a system where mortgage servicers select qualified law firms that meet certain minimum, uniform criteria. The FHFA announcement noted that under current practices in certain states, Fannie and Freddie individually designate law firms eligible under each entity’s own criteria to undertake foreclosure work and mortgage servicers, then select and work with these firms. The new approach, which the FHFA believes will lead to greater transparency and benefit delinquent borrowers who become subject to the foreclosure process, supplants Freddie and Fannie’s individual criteria with the agency’s uniform criteria. The change will be implemented after a transition period, during which FHFA will seek comment from servicers, regulators, lawyers and other market participants …

Fair lending is topic of free Fed webinar

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WASHINGTON (10/19/11)—Credit unions and other interested parties can register for the Federal Reserve System’s upcoming Outlook Live webinar on Fair Lending Issues and Hot Topics, scheduled for Nov. 2 at 2-3:30 p.m. (ET). The Fed is conducting the free webinar in conjunction with the Non-Discrimination Working Group of the Financial Fraud Enforcement Task Force. The task force, created by the president in November 2009, is charged with confronting financial fraud relating to the financial crisis, such as discrimination in the lending and financial markets. During the upcoming session, representatives from the Non-Discrimination Working Group will discuss a variety of emerging fair lending issues and hot topics. Introductory remarks will be provided by Thomas Perez, assistant attorney general for civil rights, for the U.S. Department of Justice; and Sandra Braunstein, director of the division of consumer and community affairs, of the Federal Reserve Board. A representative of the National Credit Union Administration also will address the webinar. Other speakers of this event will represent a variety of agencies, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the U.S. Department of Housing and Urban Development. This webinar is part of an ongoing series of events focused specifically on consumer compliance issues. For more information and to register, use the resource link below.

American Idol winner Hicks to open 2012 GAC with concert

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WASHINGTON (10/19/11)--The Credit Union National Association (CUNA) announced today that American Idol star Taylor Hicks will perform at the 2012 Governmental Affairs Conference (GAC) opening concert. The event is sponsored by the CUNA Councils.

Hicks, the fifth-season winner of American Idol in 2006, is known for his gritty, soulful, southern vocals and engaging live performances.

The platinum-selling singer/songwriter released his latest album, The Distance in 2009. Hicks has seen his debut album certified platinum, performed with such music greats as Earth, Wind & Fire, The Allman Brothers, and Willie Nelson, has toured through Asia, penned a brisk-selling Random House memoir, and made his Broadway debut in Grease. He is currently working on a new studio album while continuing performing with his eight-piece band for select dates.

"Taylor Hicks is a great opening act for the 2012 GAC," said Erin Mendez, chair of the CUNA Council Forum and executive vice president/COO of SchoolsFirst FCU in Santa Ana, Calif. CUNA Councils is pleased to again sponsor the GAC concert, bringing attendees together to launch an exciting credit union week in Washington D.C. Late last month, CUNA annnounced as GAC headliners former U.S. Secretary of State Condoleezza Rice and America's iconic journalistic duo, Bob Woodward and Carl Bernstein.

The GAC will be held March 18-22 at the Washington Convention Center. Both Rice and Woodward and Bernstein are scheduled for March 19. CUNA's GAC is the credit union movement's premier political event and its largest national conference, each year providing more than 4,000 credit union executives and board members an opportunity to hear influential leaders from the U.S. Congress, the administration and federal regulatory agencies.

Additional speakers and session topics will be announced in the weeks to come. For more information and to register use the resource link below or go to gac.cuna.org.

CUNA seeks comment on plan to help underbanked

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WASHINGTON (10/19/11)--The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) authorized the U.S. Treasury Department to establish a multi-year program of grants, cooperative agreements, financial agency agreements, and similar undertakings to promote initiatives aimed at enabling low- and moderate-income individuals to establish accounts in a federally insured depository institution, including federally insured credit unions. The Credit Union National Association (CUNA) is asking credit unions to comment on what types of program initiatives Treasury should promote. The relevant section of Dodd Frank also authorizes recipients of the grants to provide low- and moderate-income individuals with small-dollar amount loans and financial education and counseling related to the use and management of such accounts. Treasury is currently developing implementation rules and is seeking comment until Nov. 14. CUNA asks credit unions to send comment its way by Nov. 1, on such issues as:
* What types of program initiatives should Treasury promote to enable low- and moderate-income individuals to establish accounts in federally insured depository institutions? * How should Treasury evaluate whether an account in a federally insured depository institution is “appropriate” to meet the financial needs of low- and moderate-income individuals? What account features and terms are “reasonable” to meet the financial needs of such individuals in an appropriate manner? * What level of financial access should be the desired outcome of such initiatives? What other measures of success of the initiatives should be considered? * How can Treasury enable, enhance and assist local, regional, and state start-up collaborations that incorporate low- and moderate-income individuals into the financial mainstream? How can existing collaborations be supported to expand or improve their financial access efforts? How could meaningful innovations be fostered by these collaborations?
Use the resource link below to read CUNA’s complete Comment Call.

Inside Washington (10/17/2011)

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* WASHINGTON (10/18/11)--The Federal Reserve Board on Monday released the final rule to implement the resolution plan requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rule requires bank holding companies with assets of $50 billion or more and nonbank financial firms designated by the Financial Stability Oversight Council for supervision to annually submit resolution plans. Each plan will describe the company’s strategy for resolution in bankruptcy in case of financial distress. A resolution plan must include a strategic analysis of the plan’s components, specific actions the company proposes to take in resolution, and a description of the company’s organizational structure, material entities, interconnections and interdependencies, and management information systems. Under the final rule, companies will submit their initial resolution plans on a staggered basis. The first group of companies, those with $250 billion or more in non-bank assets, must submit their initial plans on or before July 1, 2012; the second group, those with $100 billion or more but less than $250 billion in total non-bank assets, must submit their initial plans on or before July 1, 2013; and the remaining companies, those with less than $100 billion in total non-bank assets, must submit their plans on or before Dec. 31, 2013 …

Corporates 2012 budget topics at Nov. 9 NCUA webinar

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ALEXANDRIA, Va. (10/18/11)--The continuing corporate credit union system resolution, the status of the National Credit Union Share Insurance Fund, and the agency’s 2012 budget will be up for discussion during a Nov. 9 National Credit Union Administration (NCUA) online town hall. The hearing, which is scheduled to begin at 3 p.m. (ET) on Nov. 9, will be open to “the entire credit union industry” and members of the media, the NCUA reported. NCUA Chairman Debbie Matz and other NCUA staff will take questions from attendees, and questions may be submitted ahead of time, the NCUA said. Matz said she remains committed “to providing transparency about NCUA initiatives and continuing an open dialog with credit union stakeholder,” and encouraged “credit union professionals and volunteers to participate in these important discussions.” The webinar will also cover the NCUA’s Regulatory Modernization Initiative. The town hall webinar is the third to be scheduled this year. The NCUA earlier this year held webinars on its voluntary Corporate Stabilization Fund assessment prepayment plan, troubled debt restructured (TDR) loans, and allowance for loan and lease loss-related exam issues and interagency supervisory policies. The webinar will be archived on the NCUA website about two weeks after the event for those who cannot participate in the live session.

CFPB continues to test mortgage disclosure form revisions

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WASHINGTON (10/18/11)--The Consumer Financial Protection Bureau (CFPB) has released another version of its simplified mortgage disclosure form as part of its ongoing Know Before You Owe project. The CFPB’s Know Before You Owe project, which began in May, asked for comment on several drafts of a sample mortgage form that combines certain consumer disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into one document. The revisions are meant to make the disclosures concerning the costs and risks of mortgage loans clearer and to help consumers comparison shop for the best mortgage loan offer. The combined form is required under the Dodd-Frank Act, and the CFPB is required to publish rules and model disclosures for the new mortgage form by July 2012. The CFPB said it has received more than 24,000 comments during the previous stages of the form revision project. Commenters have recommended adding information on total payments and closing costs to the form, and have also proposed design changes, the CFPB said. The latest version of the form is not being released online for public comment, but is being tested by lenders and potential homebuyers in the Albuquerque, N.M., area. The CFPB is still working on the final version of the mortgage disclosure form and said Monday that a prototype closing disclosure would be released for public comment soon. The agency late last month said it would begin developing new mortgage regulations once the ongoing mortgage disclosure form revision project is completed. Credit Union National Association (CUNA) staff have met with the CFPB to discuss the mortgage disclosure revision project, and CUNA continues to be actively involved in roundtable discussions and other forums with CFPB personnel and others as the drafting and testing phases of the revision process moves forward. For the CFPB release, use the resource link.

Cheney on CNBC Bank backlash leads to growing CU membership

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WASHINGTON (10/18/11)--Credit unions, and their new members, are poised to benefit as more and more Americans become fed up with their banks, Credit Union National Association (CUNA) President/CEO Bill Cheney said during a Monday interview on CNBC’s Squawk Box. A proposed nationwide Bank Transfer Day, scheduled for Nov. 5, appears to be gaining some momentum as around 50,000 people had pledged on Facebook, as of Monday night, to remove their funds from banks and transfer them into credit unions. Asked by CNBC’s hosts if such a mass movement could trigger bank runs, Cheney emphasized that is unlikely. Overall, Cheney said, the message from CUNA and credit unions is that big bank customers would certainly “find a better value” at their local credit union branch. Cheney also noted that many current bank customers aren’t waiting for Nov. 5 to make their move. Some credit unions have already seen new membership applications increase fivefold, and traffic at CUNA’s aSmarterchoice.org has doubled over the past several weeks, Cheney explained. Much of this new attention is related to Bank of America's plans to raise its debit card fees to $5 a month. Many other large banks have also announced changes to deal with the burdens caused by the new debit interchange fee cap. Cheney noted that credit unions are “holding the line on fees,” and a large majority of credit unions have free checking accounts. He said credit unions offer most of the same services that can be found at larger banks, and have become more convenient through participation in shared branches and surcharge-free ATM networks like the 28,000 ATM CO-OP Network. Asked about a New York Times story over the weekend that suggested banks’ automatic bill pay and other new technologies are intended to make it harder and more complicated for customers to switch institutions, Cheney said he believes the real motivation is responding to consumers’ desire for convenient service. Many credit unions offer online bill pay, direct deposit, other online banking services for that reason, Cheney said. He also emphasized that many credit unions have account switch kits on-site to help move their new members through the account transfer process.

CUs see slow week in Washington

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WASHINGTON (10/18/11)--Washington, D.C., should be quiet for credit unions this week as the Senate focuses on appropriations bills and the House is in recess. However, credit unions will still want to look out for a Thursday Senate Banking Committee hearing entitled “Housing Finance Reform: Continuation of the 30-year Fixed-rate Mortgage.” No credit union witnesses are set to appear at this point, but a series of academic witnesses are scheduled to speak during the hearing. Another noteworthy hearing scheduled for Tuesday is the Senate Small Business Committee, which will hear U.S. Treasury Secretary Tim Geithner address the first year of the Small Business Jobs Act. Tuesday also will feature a Senate Finance Committee hearing entitled Tax Reform Options: Incentives for Charitable Giving. Congressional Budget Office deputy assistant director for tax analysis Frank Sammartino, charity representatives, and academics are scheduled to testify. The Joint Select Committee on Deficit Reduction is expected to continue to meet in private this week. The committee, which was created as part of an agreement to lift the debt ceiling while making some budget cuts, has been charged with creating more than $1 trillion in deficit reductions. The Credit Union National Association (CUNA) continues to emphasize the positive impact that the credit unions have on the members and communities that they serve as the committee identifies areas for deficit reductions.

Inside Washington (10/14/2011)

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* WASHINGTON (10/17/11)--U.S. Rep. Peter Welch (D-Vt.) and House colleagues on Thursday called on Attorney General Eric Holder to investigate whether big banks are coordinating their fee strategies in violation of federal anti-trust laws. In a letter to Holder, Welch and his colleagues highlighted public statements by banks and banking associations that point to possible efforts to coordinate fee increases. “It appears that banks are seeking to justify fee increases after Congress and the Federal Reserve Board recently limited banks’ ability to collude with networks to set debit interchange fees,” the lawmakers wrote. “Statements made by individual banks and their trade associations raise questions about whether some price increases that have occurred this year have actually been coordinated.” Three of the nation’s four largest banks--Bank of America, J.P. Morgan Chase and Wells Fargo--recently announced they will begin charging new debit card fees … * WASHINGTON (10/17/11)--The federal agencies that supervise credit unions, banks, thrifts and the Farm Credit System on Friday published guidance that updates the interagency questions and answers regarding flood insurance published in July. The guidance finalizes questions related insurable value and force placement of flood insurance. The agencies withdrew another question regarding insurable value. They requested comment on three additional proposed updates to questions and answers relating to force placement of flood insurance. Two answers have significantly changed. The third change, regarding force placement of flood insurance, revises a previously finalized question and answer for consistency with the proposed changes … * WASHINGTON (10/17/11)--Charlotte, N.C., the likely site of the 2012 Democratic National Convention, may prove to be an uncomfortable location after President Barack Obama’s comment last week that the government may be able to stop banks from charging some fees (American Banker Oct. 14). Charlotte is a banking city, and the home of both Bank of America (BofA) and the 73,000-seat Bank of America Stadium, where the convention would likely be held. One industry source said he could not recall a similar instance of a president citing a specific company in comments. BofA has not responded publicly to the president’s comments …

CUNA stresses compliance issues to CFPB BSA groups

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WASHINGTON (10/17/11)--The Credit Union National Association (CUNA) continued to emphasize the high compliance burdens and increased costs that the Federal Reserve’s proposed remittance changes would impose on credit unions during a meeting with the Consumer Financial Protection Bureau (CFPB) last week. The Fed proposal, which will be finalized by the CFPB, would implement a provision of the Dodd-Frank Act to require credit unions and other remittance providers to provide estimates of fees and exchange rates. The proposal also includes new error resolutions procedures. CUNA specifically noted that the compliance burden would increase for credit unions and others that rely on “open networks,” adding that disproportionately high costs borne by smaller credit unions and other unintended consequences could effectively force many, if not most, credit unions to cease or limit their international wire and international automated clearinghouse (ACH) products. Bill Cheney, CUNA president/CEO, said CUNA “continues to seek a positive outcome on this proposal during the rulemaking process and will follow up with the CFPB to emphasize credit union concerns and to provide additional information.” CUNA last week also met with U.S. Treasury representatives at a Bank Secrecy Act (BSA) Advisory Group meeting. Suspicious activity report (SAR) activity review statistics and law enforcement cases, potential changes to BSA filing procedures, and the Financial Crimes Enforcement Network’s information technology modernization efforts were among the topics covered during the meeting. CUNA Deputy General Counsel Mary Dunn said CUNA’s regulatory advocacy staff will continue to work with the BSA group and their subcommittees, as well as CUNA’s Payments Policy Subcommittee and credit unions, to address further BSA developments and to minimize compliance burdens associated with reporting forms and regulatory proposals.

FASB accounting meeting to hear CUNA CU comment

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WASHINGTON (10/17/11)--The concerns of credit unions and the Credit Union National Association (CUNA) will be represented at today’s Financial Accounting Standards Board’s (FASB) private-company accounting roundtable by Patelco CU Chief Financial Officer and CUNA Accounting Subcommittee Chairman Scott Waite. The meeting, which is scheduled for 9 a.m. (PT) in San Francisco, Calif., will allow representatives from private companies, CPAs, and users of private-company financial statements to engage FASB “in a constructive dialogue about private-company accounting and reporting issues” related to U.S. generally accepted accounting principles (GAAP), FASB said in a release. The FASB release said accounting and disclosure requirements relating to variable interest entities, interest-rate swaps, and Level 3 fair value measurements will be among the items covered during the meeting. Waite noted that public and private companies currently abide by the same accounting standards, and many have suggested that changes are needed. Although public companies produce their financial statements mainly to inform their investors, credit union financial statements are mainly produced to inform the National Credit Union Administration and other regulators of their financial status. “The needs of the different types of users are different and so perhaps the standards should be as well,” Waite added. Waite told News Now that his comments will center on the relevancy of these standards, the cost and benefit of the standards and related disclosure requirements, and the rapid change in standards in recent years. The Financial Accounting Foundation earlier this month proposed establishing a new Private Company Standards Improvement Council. FASB in an earlier release said this new group, if approved, would review U.S. GAAP and determine how those standards could be improved to better serve the needs of private companies. The group could then issue modifications, if needed. For more on FASB’s meeting and the potential standards improvement council, use the resource links.

CFPB releases supervision examination guidance

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WASHINGTON (10/14/11)--The Consumer Financial Protection Bureau (CFPB) on Thursday released a CFPB Supervision and Examination Manual to aid the agency’s examiners as they oversee financial services firms. The CFPB in a release said the manual will help its examiners “determine if providers of consumer financial products and services are complying with consumer protection laws” and whether or not those providers “have adequate policies and procedures in place to comply with those laws.” The manual incorporates the existing examination procedures of many other financial agencies, covers aspects of the supervision and examination process, and includes general and specific examination procedures, the agency said. The CFPB has also added examination report templates to the manual. The Credit Union National Association (CUNA) noted the CFPB has supervision, examination and enforcement authority over federally-insured credit unions with total assets over $10 billion. Although the National Credit Union Administration (NCUA) and various state regulators will retain examination and enforcement authority over federal credit unions with $10 billion or less in assets, the CFPB has the right to accompany NCUA examiners on some examinations, to request examination reports, and to refer suspected credit union issues to the agency, CUNA added. The CFPB manual also contains guidelines to help examiners assess mortgage servicers’ policies and procedures and their compliance with applicable laws. The CFPB said it would begin its examinations later this year. For a CFPB blog post on the examination manual, use the resource link.

MBL hearing one important step toward cap lift CUNA

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WASHINGTON (10/14/11)Wednesdays House Financial Services subcommittee on financial institutions and consumer credit hearing on credit union member business lending was an important step in the push for legislation to increase the cap, Credit Union National Association (CUNA) Executive Vice President for Government Affairs John Magill said. Wednesdays hearing focused on H.R. 1418, the Small Business Lending Enhancement Act, which would increase the MBL cap to 27.5% of assets. The cap currently stands at 12.25% of assets. National Credit Union Administration (NCUA) Chairman Debbie Matz and Jeff York, president/CEO of CoastHills FCU, Lompoc, Calif., testifying on behalf of the Credit Union National Association, were among Wednesdays witnesses. (See related Oct. 13 story: CUNA testifies as House lawmakers study MBL benefits) In the pursuit of a statutory correction of the current cap on MBLs, there are certain boxes that must be checked for a bill to move ahead, Magill said, adding that the House hearing on H.R. 1418 was a big box to check. However, he adds, rather than taking any pressure off of credit union advocates, the hearing increases the need for credit union advocacy for the MBL cap lift measure. Republicans and Democrats continue to struggle to find common legislative ground, and this overall lack of congressional consensus means congressional outreach is more important than ever, Magill said, adding that CUNA continues to search for the right legislative vehicle to take the MBL bill through both houses of Congress. Rep. Brad Sherman (D-Calif.), a longtime credit union supporter and co-sponsor of H.R. 1418, said during the hearing that the MBL cap legislation may be the only thing [the] committee passes into law that actually creates jobs, and noted that it is the only pro-jobs bill that has substantial numbers of both Republicans and Democrats supporting it. He added he has not met a single small business owner in his district that has told him not to allow credit unions to make more business loans. H.R. 1418 has 88 cosponsors. A similar Senate bill, S. 509, was introduced earlier this year by Sen. Mark Udall (D-Colo.) and has 20 cosponsors. CUNA has estimated that lifting the MBL cap would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer. To encourage your House members and senators to support H.R. 1418 and S. 509, use the resource link.

CUNAs Cheney named by iThe Hilli as top lobbyist

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WASHINGTON (10/14/11)--D.C.-based political publication The Hill has named Credit Union National Association (CUNA) President/CEO Bill Cheney as a top nonprofit lobbyist for his positive work for credit unions during the past year. Cheney said the recognition “is a reflection of the significant efforts that CUNA, the leagues and credit unions put forth on behalf of the entire movement over the past year.” Fights over the new debit card interchange fee cap, increased member business lending for credit unions, and other legislative issues have also kept Cheney and CUNA staff busy throughout 2011. The CUNA CEO was one of 64 named to The Hill’s 2011 list. Cheney was also named as one of the Top Association CEOs of 2011 when CEO Update's list of influential executives was released earlier this year. That publication noted that Cheney has been credited by allies and adversaries alike "for nearly scoring a major upset in the debit-card swipe fee battle." CEO Update also recognized CUNA Senior Vice President of Legislative Affairs Ryan Donovan’s work on behalf of credit unions, naming him as one of 2011's top lobbyists. For the full story from The Hill, use the resource link.

NCUA report CU system stability improved in 2010

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ALEXANDRIA, Va. (10/14/11)—Credit unions “continued to respond to many economic hurdles, but moved significantly further along the road to improved financial stability” in 2010, the National Credit Union Administration (NCUA) said in its 2010 annual report. The report, entitled Resilience and the Road Ahead, serves as the NCUA's official report to the President and Congress, and covers the NCUA and credit union operations. The report also tabulates 10 years of financial trends for credit unions and the National Credit Union Share Insurance Fund, the NCUA said in a release. The NCUA added that the report also carries forward the complete audited financial statements of all funds managed by the agency. Overall, the agency said the credit union industry “demonstrated its resilience” during 2010, and “had achieved higher net income, greater return(s) on assets, more efficient operations,” and reduced loan delinquencies and charge-offs by the end of that year. Total assets held in credit unions increased to $914.5 billion and total shares and deposits increased to $786.5 billion during 2010, the NCUA said. The total number of federal credit unions decreased to 4,589 in 2010, down from 2009’s total of 4,714. However, the number of federal credit union members increased by nearly 500,000 in 2010, with membership totaling 50,081,400 at the end of the year. Membership at state-chartered, federally insured credit unions also showed a modest increase during 2010, the agency said. The total number of credit union members stood at 90.5 million at the end of the year, according to the NCUA. The agency noted that it further strengthened the credit union system in 2010 by working toward the resolution of the corporate credit union crisis, overseeing the implementation of the Temporary Corporate Credit Union Stabilization Fund, extending the Temporary Corporate Credit Union Share Guarantee Program, establishing bridge corporate credit unions, and approving new safety and soundness standards for corporates. For the full release, use the resource link.

Inside Washington (10/13/2011)

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* WASHINGTON (10/14/11)--The Obama administration will introduce a plan to revise the Home Affordable Refinance Program (HARP) within the next two weeks, Housing and Urban Development Secretary Shaun Donovan told mortgage bankers Wednesday at their annual convention in Chicago. HARP is part of the administration’s strategy to help homeowners avoid foreclosure, stabilize the country’s housing market, and improve the nation’s economy. But it has helped fewer than a million homeowners refinance. “We need to pick up the pace,” Donovan said. The Obama administration is engaged in “intensive discussions” with the Federal Housing Finance Agency, lenders, mortgage insurers, regulators and investors to lower barriers to refinancing and increase the program’s reach, Donovan said … * WASHINGTON (10/14/11)--Federal Home Loan Bank (FHLB) representatives and community bankers urged lawmakers Wednesday to omit FHLBs from any overhaul of the housing finance system (American Banker Oct. 13). The banks maintain they have survived the financial crisis and remain a critical source of liquidity for other financial institutions. The home loan bank system works and its structure does not need to be changed, said Lee Gibson, chairman of the Federal Home Loan Bank of Dallas. As much as 50% of short-term agricultural production loans are funded through the Federal Home Loan Banks, added Timothy Zimmerman, president of Standard Bank in Monroeville, Pa., who said the loss of such low-cost funding would present a challenge for community banks. The Obama administration has not offered a detailed proposal for the future of the housing government-sponsored enterprises, but it has suggested the Home Loan Banks should be part of any revision …

CUNA testifies as House lawmakers study MBL benefits

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WASHINGTON (10/13/11)--National Credit Union Administration (NCUA) Chairman Debbie Matz and Jeff York, president/CEO of CoastHills FCU, Lompoc, Calif., testifying on behalf of the Credit Union National Association, discussed the benefits a higher credit union member business lending cap would have on the nation's economy and small businesses during a Wednesday hearing before the House Financial Services subcommittee on financial institutions and consumer credit.
Click to view larger image In her testimony and in response to questions from lawmakers, National Credit Union Administration Chairman Debbie Matz (shown center) detailed for the House Financial Services subcommittee on financial institutions and consumer credit three tangible benefits of increased MBL authority: more reasonably priced loans for small businesses, enhanced safety and soundness through diversification for credit union portfolios, and job growth. Shown behind Matz from left: CUNA Senior Vice President of Legislation Affairs Ryan Donovan, Jeff York, President/CEO of Coasthills FCU in Lompoc, Calif., who testified on behalf of CUNA after Matzs testimony, CUNA President/CEO Bill Cheney, and CUNA Executive Vice President for Government Affairs John Magill. (CUNA Photo)
Click to view larger image At the center of things, CUNA witness Jeff York, of Coasthills FCU, prepares to take his spot at the witness table during Wednesday hearing on increasing the MBL cap. York testified that large numbers of small business owners are telling policymakers that they are being turned away for credit by their banks, and are coming to credit unions for help. His testimony notes that, in the year ending June 2011, community bank commercial loans outstanding declined by 2.6%--in sharp contrast to the 4.4% increase in credit union business loans over the same period (CUNA Photo).
The hearing centered on H.R. 1418, the Small Business Lending Enhancement Act, which would increase the MBL cap to 27.5% of assets. The cap currently stands at 12.25% of assets. Testifying first, Matz said more than one in five credit unions making member business loans that are subject to the cap have reached 50% or more of this [12.25% of assets] ceiling. Later, as part of a panel of five witnesses, York said his $617 million-asset credit unions business loan portfolio currently stands at around 7% of assets, and added that his credit union could reach the upper limit of the 12.25% lending cap within six months. However, he explained, credit unions cannot simply lend up to the cap and then halt lending, as doing so could harm their ability to lend to current business-owning members. York said credit unions that consider getting into the business lending marketplace are also forced to examine whether there would be a benefit in business lending if cap concerns would force them to slow down or end this practice within a few months. His remarks were in accord with an earlier statement by Matz. Testifying bank representatives said that the demand for small business loans was not high at the moment. However, York in his testimony countered those statements, saying that small business owners are coming to credit unions for help after they are turned away for loans at banks. York noted that credit union business lending increased by 4.4% in the 12-month period ended June 2011, adding that small business lending by commercial banks declined by 2.6% during that same time period. Matz in her testimony said providing more reasonably priced loans for small businesses, enhancing safety and soundness through diversification for credit union portfolios, and creating new jobs are the three main benefits of the MBL cap increase. She added that her agency would promptly revise credit union regulations to protect safety and soundness if MBL cap increase legislation is enacted. NCUA would also remain vigilant in carrying out our supervisory authorities, she added. The NCUA in a release noted the legislation would allow experienced, well-capitalized and well-managed credit unions to gradually increase member business lending portfolios, by no more than 30% annually. Matz also called on Congress to expand credit union access to supplemental capital during her appearance. Rep. Ed Royce (R-Calif.), who is an original sponsor of the legislation, said his goal in introducing the legislation is to expand access to credit for creditworthy borrowers. Rep. Brad Sherman (D-Calif.), a co-sponsor, noted that H.R. 1418 is one of the few job creation measures that has bipartisan support. H.R. 1418 has 88 cosponsors. A similar Senate bill, S. 509, was introduced earlier this year by Sen. Mark Udall (D-Colo.) and has 20 cosponsors. CUNA has estimated that lifting the MBL cap would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer. Other testifying witnesses included:
*Sal Marranca, president/CEO of Cattaraugus County Bank, on behalf of the Independent Community Bankers of America; *Albert Kelly, Jr., president/CEO of SpiritBank and chairman-elect of the American Bankers Association; *Gary Grinnell, president/CEO of Corning FCU, on behalf of the National Association of Federal Credit Unions; and *Mike Hanson, president/CEO of the Massachusetts Credit Union Share Insurance Corporation.

Remote capture issues cause higher CU SARS filing

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WASHINGTON (10/13/11)--Credit unions filed 15% of all suspicious activity report (SAR) inquiries between July 1, 2010 and June 31, 2011. The high percentage was attributed in large part to an increasing number of Remote Deposit Capture (RDC) transactions, which, while innovative, can create new types of risks, the Financial Crimes Enforcement Network (FinCEN) reported. RDC transactions allow credit union members and other bank customers to transmit scanned checks or share drafts to their financial institutions from remote locations. FinCEN in its release said “the adoption of new technologies or use of those technologies to provide innovative banking products and services, such as RDC services,” raise risk management issues. FinCEN added that smaller institutions such as credit unions “may require additional guidance to identify and appropriately mitigate these risks.” A total of 1,017 SAR reports were filed between July 1, 2010 and June 31, 2011, and 78% of these RDC-related SAR filings were tied to check fraud, FinCEN said. FinCEN added that “the vast majority of RDC-related SAR filers associated suspicious activities with the deposit of third-party or personal checks.” Money laundering, check kiting, and the use of counterfeit checks were among the specific instances of fraud. The agency recommended that “special precautions and commensurate due diligence efforts may be appropriate when processing items from non-U.S. correspondent accounts or foreign-located customers.” Credit unions and other institutions should also “ensure that their transaction monitoring systems adequately capture, monitor and report on suspicious activities occurring through RDC, especially as transactional levels increase,” FinCEN said. The agency also noted that SARs related to international prepaid cards accounted for 0.19% of all SARs filed between January 2008 and June 30, 2011. FinCEN on Wednesday proposed adding prepaid cards and other so-called "prepaid access devices" to the list of monetary items that must be reported when they are transported into or out of the United States. FinCEN Director James Freis in a release said "reporting tangible prepaid access devices puts another tool at the disposal of law enforcement to interrupt the transfer of monetary value anonymously across international borders when that value was obtained illegally." For FinCEN’s most recent SAR Activity Review and Wednesday's release, use the resource links.

House bill introduced to repeal debit interchange cap

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WASHINGTON (10/13/11)--Reps. Jason Chaffetz (R-Utah) and Bill Owens (D-N.Y.) Wednesday introduced H.R. 3156, a bill to “repeal the debit card interchange price control provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and restore balance to the electronic payments system.” In announcing the bill, Chaffetz in a release said the debit interchange cap rule “is a perfect example of the dangers of price controls and the inefficiency of government intervention in the free market.” He added that the “legislatively enacted price controls have compelled banks to charge consumers higher (and in some cases new) fees to make up for lost revenue.” The Federal Reserve's final debit interchange rule, which became effective earlier this month, caps debit interchange fees for issuers with assets of $10 billion or more at 21 cents. The regulation also allows card issuers to charge an additional five basis points of the value of the transaction to cover fraud losses. An extra penny may also be charged by financial institutions that are in compliance with the Fed's fraud-prevention standards. Credit Union National Association (CUNA) President/CEO Bill Cheney said Wednesday, “The recent action of large banks imposing fees on consumers for debit card usage and checking accounts confirms what we have feared: That regulation of interchange fees is poor public policy that has opened the door to unintended consequences for consumers and the financial institutions that serve them.” Cheney added, “While most credit unions are exempt from the cap on interchange fees, we continue to have concerns that market forces may render that exemption unworkable. “We are keeping a close eye on the card networks. Credit unions are doing whatever they can to hold the line on new fees – for them, raising fees is a last resort not a first resort.” “In the final analysis,” the CUNA leader said, “as this legislation acknowledges, all consumers would be better off if there were no debit interchange law.”

Inside Washington (10/12/2011)

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* WASHINGTON (10/13/11)--The Financial Stability Oversight Council voted yesterday to evaluate not only financial firms that have more than $50 billion in assets, but also other companies to determine which ones need extra supervision because they pose a potential threat to the economy American Banker Oct. 12). Financial institutions with more than $50 billion in assets are automatically considered systemically risky under the terms of the Dodd-Frank Act. Firms such as insurance companies that hold a 15-to-1 leverage ratio, $3.5 billion in derivatives liabilities or $20 billion of outstanding loans borrowed and bonds issued may be subject to additional scrutiny by regulators. Treasury Secretary Timothy F. Geithner, who chairs the council, did not identify what types of non-bank financial firms, such as hedge funds or asset management companies, would be considered systematically risky. Using a three-step process, the council will evaluate companies based on size, interconnectedness and liquidity risk to determine if they pose a risk. Firms considered financially susceptible would be required to to raise capital and minimize risky practices … * WASHINGTON (10/13/11)--Missouri credit unions added two new co-sponsors to the member business lending (MBL) bill during their Hike the Hill efforts earlier this month. U.S. Reps. Todd Akin (R) and William “Lacy” Clay (D) signed onto H.R.1418, the Small Business Lending Enhancement Act. Clay joined the bill Oct.3, and Akin announced he was joining the bill at a breakfast meeting at National Credit Union House with Missouri credit union leaders on Oct. 5. The credit unions met with the state’s entire congressional delegation. “Missouri’s credit union leaders went to Capitol Hill with a purpose, and they clearly made a difference,” said Missouri Credit Union Association President/CEO Mike Beall. “There are no better advocates for the credit unions than these motivated and informed activists, and our visits helped drive our message home leading up to (Wedesday’s) House hearing on MBLs,” Beall said. The Credit Union National Association (CUNA) and credit unions are urging Congress to increase the credit union MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity for credit unions to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said …

Letter to CUs reiterates first-half data

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ALEXANDRIA, Va. (10/12/11)--The National Credit Union Administration has re-released credit union system financial results for the first half of 2011 in a letter to credit unions (11-CU-16). The letter features the results of call reports from 7,239 federally insured credit unions. Those results, which were originally released in early September, generally showed “stabilization and continued improvement," the NCUA said. (See related Sept. 2 story: Slow growth for CUs in 2Q, NCUA reports.) For the full NCUA letter, use the resource link.

C-SPAN features CU benefits via CUNA interview

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WASHINGTON (10/12/11)--In a 40-minute segment on C-SPAN’s Washington Journal, Credit Union National Association (CUNA) Chief Economist Bill Hampel on Tuesday discussed the many benefits credit union membership brings consumers, among other issues currently facing credit unions.
Click to view larger imageCUNA Chief Economist Bill Hampel addressed several credit union issues in a Tuesday appearance on C-SPAN. For video of his appearance, use the resource link below.
Hampel told host John McArdle that while credit unions have received much attention following the recent announcements that Bank of America and other large banks would charge customers for debit cards or checking accounts, credit unions “have always offered a better deal,” including lower loan rates and higher deposit rates, and fewer and lower fees. McArdle noted a recent Baltimore Sun article as one of many venues where anti-bank, pro-credit union sentiments are being covered. (See related story: CUs' woo consumers with bank fee campaigns.) The article underscores the convenience and broad array of services available through credit union membership. Hampel warned that there are certain “myths” about credit union membership that sometimes keep consumers from pursuing that option. For instance, credit union fields of membership were once job-based, but now are often extended to residents in communities. Hampel estimated that every American could easily qualify as a member for two or three credit unions, and recommended that any potential members begin their search for their new credit union at CUNA’s consumer website, aSmarterchoice.org. There’s been a “huge increase in interest” in credit unions over the last few weeks due to stories on high bank fees, and while switching accounts can be a hassle, credit unions offer so-called “switch kits” to help potential members with the paperwork needed to leave their bank, Hampel said. He noted that most credit union members have access to 28,000 surcharge-free ATMs nationwide, and a caller to the show wanted to make sure listeners knew about the convenience that credit union shared branching networks provide. “The whole range of typical consumer financial services,” including ATM use, debit and credit cards, investments, and mortgages, are available to “virtually all credit union members,” Hampel said. In response to another caller, Hampel underscored that the credit union tax status is tied to their not-for—profit, cooperative structure and that all profits are returned to members in the form of better fees and rates or retained as capital. Credit unions, he said, don’t have stockholders to pay. Hampel also addressed caller questions on credit unions’ work with businesses, and noted the drive by CUNA, the leagues and credit unions to increase the current member business lending (MBL) cap to help the economy and create jobs. (See related story: Pre-hearing ad urges MBL action to add jobs: CUNA). The MBL cap will also be addressed during a House Financial Services subcommittee on financial institutions and consumer credit hearing today.

CUNA launches Action Alert to boost MBL contacts

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WASHINGTON (10/12/11)--The Credit Union National Association (CUNA) on Tuesday issued an action alert that urges credit union advocates to ask their U.S. House members to support legislation that would increase the credit union member business lending (MBL) cap. “The time is right to get the MBL cap raised for credit unions, and your advocacy efforts are needed more than ever,” the action alert says. The alert adds that “there are already 86 co-sponsors of this bipartisan legislation,” and says credit union advocates “need to assure members of the House of Representatives that there is broad support for this legislation.” CUNA estimates the MBL cap increase would inject $13 billion in new credit for small businesses into the ailing economy, adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer. H.R. 1418, which would raise the MBL cap to 27.5% of assets, will be the subject of a House Financial Services subcommittee on financial institutions and consumer credit hearing set for 2 p.m. (ET) today. Jeff York, pPresident/CEO of Coasthills FCU in Lompoc, Calif., will testify on behalf of CUNA. National Credit Union Administration (NCUA) Chairman Debbie Matz will also testify at the hearing. For the CUNA action alert, use the resource link.

Pre-hearing ad urges MBL action to add jobs CUNA

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WASHINGTON (10/12/11)--Seven new names have joined the list of small business and policy organizations that have joined the Credit Union National Association (CUNA) to support increasing the credit union member business lending (MBL) cap ahead of today’s House Financial Services subcommittee on financial institutions and consumer credit hearing on MBLs.
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Those new supporters are the Progressive Policy Institute, Small Business Majority, the CCIM Institute, the Institute of Real Estate Management, MultiFunding, the Realtors Land Institute, and the Society of Industrial and Office Realtors. The seven supporters are among the 27 groups that have co-signed an open letter that urges President Barack Obama and members of Congress to allow credit unions to expand lending to their business members. The letter, which will run in Washington, D.C. publications with Capitol Hill readerships today, notes that credit unions continue to lend to their members, even as banks have cut back. A similar MBL-push letter was published in D.C.-based publications in late 2009. The letter also addresses the vital role that credit unions play in providing capital to underserved communities and small businesses, and adds that credit unions understand the special needs of their business members and can make loans that banks will not. These and other similar details will be covered Wednesday afternoon when Jeff York, president/CEO of Coasthills FCU, Lompoc, Calif., testifies before Congress on MBLs. The credit union CEO will testify on CUNA’s behalf and is scheduled to cover the benefits a higher MBL cap would have on the nation's economy and its small businesses. York is testifying on CUNA’s behalf. York in a written statement will cover how H.R. 1418 “would permit credit unions with the most experience successfully offering business loans to their members the opportunity to continue to do so as they approach the cap, while at the same time ensuring that these credit unions engaged in additional business lending continue to do so safely and soundly.” National Credit Union Administration (NCUA) Chairman Debbie Matz is also scheduled to testify during today’s hearing, which is set for 2 p.m. (ET).

Inside Washington (10/11/2011)

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* WASHINGTON (10/12/11)--The Federal Reserve Board and the Office of Comptroller of Currency (OCC) Tuesday issued a proposal outlining a ban of proprietary trading and limitations on private equity investments. Part of the Dodd-Frank Act, the proposal, which will be issued jointly with the Fed, the OCC, Federal Deposit Insurance Corp., and the Securities and Exchange Commission, clarifies the scope of the act’s prohibitions and provides certain exemptions. The proposed rule would require banking entities to establish an internal compliance program, subject to supervisory oversight, that is designed to ensure and monitor compliance with the statute’s prohibitions and restrictions. Banks with significant trading operations would be required to report to the appropriate federal supervisory agency certain quantitative measurements designed to assist agencies and banking entities in identifying prohibited proprietary trading in the context of certain exempt activities and identifying high-risk trading assets and strategies. Transactions in certain instruments--including obligations of the U.S. government or a U.S. government agency, government-sponsored enterprises, and state and local governments--are exempt from the statute’s prohibitions. Activities exempted include market making, underwriting and risk-mitigating hedging. The statute also would allow banks to offer a hedge fund or private-equity fund subject to certain conditions. The proposal distinguishes permitted market making-related activities from prohibited proprietary trading activities and includes elements to reduce its effect on smaller, less-complex banks … * WASHINGTON (10/12/11)--Faced with hundreds of comment letters objecting to their risk-retention proposal, regulators may issue a new proposal rather than make an attempt to finalize the existing plan, according to industry observers (American Banker Oct. 11). The proposal seeks to implement a Dodd-Frank provision requiring banks to retain 5% of the credit risk when reselling mortgage loans. But industry feedback has been critical of the plan’s scope, including how risk retention would be calculated, what regulators di to prohibit securitizers from avoiding retention and proposed exemptions. If too many changes to the initial proposal are made, regulators must seek comment again or issue an interim final rule with a comment period. Agencies said they would meet about rule, but did not indicate if they had decided to issue a new proposal … * NEW ORLEANS (10/12/11)--National Credit Union Administration (NCUA) Board Member Michael E. Fryzel spoke to the National Coalition of Firefighter Credit Unions summit in New Orleans on Monday, drawing comparisons between the firefighter family and how credit unions support their members. “For firefighters, success or failure depends on cooperation,” said Fryzel. “This is why firefighters, first-responders and credit unions are such a natural fit together. Credit unions embrace and reinforce the family of their members. They are cooperatives.” Discussing the member business lending (MBL) needs of firefighter entrepreneurs, Fryzel said, “Making firefighter credit unions a greater source of credit to firefighter family businesses can be very helpful for members, and continue the bond that firefighters share.” The Credit Union National Association (CUNA) and credit unions are urging Congress to increase the credit union MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity for credit unions to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said …

Inside Washington (10/10/2011)

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

Congress this week MBLs as centerpiece

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

E-advocacys dynamic growth reflected in CUNA efforts

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

Compliance Junior goes on a spree with Moms debit card

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

York to testify for CUNA on MBLs Oct. 12

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WASHINGTON (10/7/11)--Jeff York, president/CEO of Coasthills FCU, Lompoc, Calif., will testify Oct. 12 on the benefits a higher cap on credit union member business lending (MBL) would have on the nation’s economy and its small businesses. York, a Credit Union National Association (CUNA) board member, will testify on behalf of the CUNA. National Credit Union Administration (NCUA) Chairman Debbie Matz is also among the scheduled witnesses. The hearing, announced last week by the House Financial Services subcommittee on financial institutions and consumer credit, will study pending legislation that would increase the MBL cap to 27.5% of a credit union’s assets, up from the current 12.25%. Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) introduced H.R. 1418, the Small Business Lending Enhancement Act, earlier this year in the House. The bill has 80 co-signers. On the Senate side, Sen. Mark Udall (D-Colo.) has introduced S. 509, the Small Business Lending Enhancement Act, which has 20 co-sponsors. CUNA emphasizes that lifting the MBL cap would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment—all at no cost to the American taxpayer. Also scheduled to testify, according to a subcommittee announcement, are:
* Sal Marranca, president/CEO of Cattaraugus County Bank, on behalf of the Independent Community Bankers of America; * Albert C. Kelly, Jr., president/CEO of SpiritBank and chairman-elect of the American Bankers Association; * Gary Grinnell, president/CEO of Corning CU, on behalf of the National Association of Federal Credit Unions; and * Mike Hanson, president/CEO of the Massachusetts Credit Union Share Insurance Corporation.
The hearing is scheduled for 2 p.m. (ET).

30- 15-year mortgages remain at record lows

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WASHINGTON (10/7/11)--Average rates on 30- and 15-year fixed rate mortgages fell to all-time lows for the second straight week, totaling 3.94% and 3.26%, respectively, Freddie Mac reported. Thirty-year mortgages averaged 4.01% last week and 4.27% this time last year. Fifteen-year mortgages averaged 3.28% last week and 3.72% this time last year. Freddie Mac Chief Economist Frank Nothaft said these record low mortgage rates are due to a “sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew.” Five-year Treasury indexed hybrid adjustable-rate mortgages (ARMs) also fell during the week, averaging 2.96%. Last week’s total as 3.02%. However, one-year Treasury-indexed ARMs averaged 2.95% this week, up from the 2.83% total reported last week. Nothaft said the one-year ARM increase was tied to the Federal Reserve’s move to replace $400 billion in short-term Treasury securities. These securities serve as benchmarks for many ARMs, Nothaft said. For the full release, use the resource link.

Cordray CFPB nomination approved by Senate Banking Committee future bumpy

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WASHINGTON (10/7/11)--The nomination of Richard Cordray to be Consumer Financial Protection Bureau director will now move on to the full Senate after the nominee was approved by the Senate Banking Committee Thursday. The committee by a Thursday voice vote also approved Alan Krueger to join the Council of Economic Advisers, David Montoya to serve as U.S. Department of Housing and Urban Development Inspector General, Cyrus Amir-Mokri to serve as Assistant Secretary of the U.S. Treasury, and Patricia Loui and Larry Walther to join the Export-Import Bank Board of Directors. Cordray's nomination was approved by a party-line 12-10 vote. Committee Chairman Tim Johnson (D-S.D.) said the vote was “an important step forward for American consumers,” and called on his Senate colleagues to confirm Cordray as soon as possible. Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said Cordray's nomination "still faces several obstacles," adding that "over 40 senators have said they will not vote to confirm any CFPB nominee unless changes to the CFPB are enacted." Those changes include increasing CFPB leadership to a five-member commission and reforming some operational rules. Speaking before the committee following the nomination hearing, Treasury Secretary Tim Geithner encouraged members of the committee that did not support Cordray's nomination to meet with the CFPB nominee. Geithner said Cordray is "exceptionally qualified" for the job, and reminded the senators that a "vast array" of financial institutions will remain outside the scope of consumer protection regulations if the Senate fails to nominate a CFPB director. CUNA has encouraged Cordray to "consider ways in which the bureau can help minimize regulatory requirements for credit unions and other financial institutions" and has also encouraged the CFPB to establish an Office of Regulatory Burden Monitoring to help the agency "track, consider, and help mitigate the cumulative regulatory burden under which credit unions and others must operate."

Matz NCUA will review TDR standards

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WASHINGTON (10/7/11)--The Credit Union National Association (CUNA) strongly supports a plan announced by the National Credit Union Administration (NCUA) to review its Troubled Debt Restructuring (TDR) policy, and has been raising TDR-related issues in meetings with agency staff, CUNA Deputy General Counsel Mary Dunn noted Thursday. State leagues have also weighed with the agency on these issues. Early Thursday, NCUA Chairman Debbie Matz said the agency would review its TDR policy in the near future. A timeline for the board review has not been set, but the agency told News Now that NCUA staff members are reviewing the TDR policy to make recommendations for change. TDR loans, which have very specific accounting and reporting requirements, occur when a credit union or other lender grants a concession to the borrower and modifies the terms of the loan based on the borrower’s financial situation. The financial statement notes and call report data associated with TDRs are also unique. Matz said the agency “supports credit union efforts to find creative solutions for members who need loan modifications to stay in their homes,” and added that the NCUA “is seeking solutions that would better assist credit unions which are working diligently to provide members with alternatives to foreclosure.” However, CUNA and others have followed up on credit union complaints that NCUA examiners have sometimes discouraged TDRs. Credit unions are also burdened by regulatory requirements that force credit unions to segregate TDRs and report TDR payments as delinquent until the member has made timely and consecutive payments for six months after the modification. This generally requires credit unions to manually track such payments, Dunn said. NCUA board member Gigi Hyland in July said an Interpretive Ruling and Policy Statement (IRPS) on TDRs, if released, would recommend that credit unions adopt charge-off, loan grading and modification frequency standards that are similar to those currently used by banks. Credit unions would be advised to create and implement their own limits on the number and frequency of loan extensions, loan deferrals, loan renewals and loan rewrites, and would need to develop effective risk management, reporting and internal controls related to these types of loans, Hyland said.

Inside Washington (10/06/2011)

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* WASHINGTON (10/7/11)--Regulators will soon release one of the most contentious elements of the Dodd-Frank Act: a proposal to ban proprietary trading and limitations on private equity investments. The plan would define proprietary trading, describe the circumstances in which financial institutions can invest in hedge or private-equity funds, and require banks to put in place internal compliance controls for the so-called Volcker Rule (American Banker Oct. 6). The Federal Deposit Insurance Corp. is scheduled to issue its proposal Tuesday. Other regulators are expected to unveil their plans around the same time. Under the proposal, regulators would define proprietary trading as participating in the purchase or sale of one or more covered financial positions as principle for the trading account of the banking entity. It would not include acting as an agent, broker, or custodian for unaffiliated third parties. Under the original statute, banks can engage in underwriting and market making-related activities. In the new proposal, certain requirements must be met so the trading activities are within exempted categories. A separate section of the proposal outlines the types of relationships a bank is prohibited from having with hedge and private-equity funds. The proposal would also prohibit a bank from acting as a general partner or trustee, selecting directors and managers, or having a name similar to a covered fund. Any bank taking part in certain trading or fund activities would be also required to comply with the prohibitions and restrictions related to Volcker Rule. These would include internal written policies and procedures, internal controls, management framework, independent testing, training and record keeping … * WASHINGTON (10/7/11)--U.S. banks have made progress in reforming their compensation practices since the 2008 financial crisis, but more changes are needed, according to a Federal Reserve report released Wednesday. “Incentive compensation practices at banking organizations are continuing to evolve and develop,” the Fed said. “We expect this evolution to continue.” Before the crisis, big banks didn’t pay adequate attention to risk when creating their incentive compensation packages, according to the report. “Some employees were provided incentives to take imprudent risks,” the Fed added. But all firms reviewed in the report have made progress in identifying the employees, such as traders and loan originators, whose incentive compensation packages could threaten the safety and soundness of an organization, the Fed said … * WASHINGTON (10/7/11)--Although he did not publicly criticize Bank of America Corp.’s decision to charge a monthly fee for debit card use, Raj Date, the de facto head of the Consumer Financial Protection Bureau, implied that a uniform disclosure standard for checking-account terms may be in the best interests for consumers (American Banker Oct. 6). Checking accounts often come with unexpected costs that can add up for consumers, Date said. Consumers should ideally have a more simple way to evaluate checking account costs, he suggested. Consumer groups and financial institutions are developing simplified disclosures that allow consumers to compare the checking account options from credit unions, large banks and community banks, he said …

Geithner testifies on oversight committee issues

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WASHINGTON (10/7/11)--U.S. Treasury Secretary Timothy Geithner appeared before the Senate Banking Committee Thursday to review recommendations that were included in the Financial Stability and Oversight Council’s (FSOC’s) first annual report, which was released in July. The report included a comprehensive view of financial market developments and potential threats to the U.S. financial system and Geithner is the current chair of FSOC. The council is comprised of 10 voting members--nine federal financial regulators, including the National Credit Union Administration (NCUA), and one independent member--and five nonvoting members. Geithner used the opportunity of the hearing to express his support for The American Jobs Act, stating that, “according to estimates by outside economists, [the act] would raise economic growth by one to two percentage points and help create one to two million new jobs.” The Obama administration noted on its twitter feed, WHLIVE, Thursday that the U.S. Senate will begin consideration of the jobs bill Tuesday; it is expected that the early votes will be mainly on procedural matters. Secretary Geithner summarized the recommendations of FSOC’s report, which include:
* Taking further action to strengthen the financial position of the core of the U.S. financial system, particularly the largest institutions, which should be able to manage their businesses so that they have the ability to weather more challenging future environments without government assistance in crisis; * Reforming the housing finance system, including taking action to establish national standards for the mortgage servicing market, in order to better align incentives and help reestablish confidence in the integrity of the housing market.
The report emphasizes the importance of broader reforms to help return private capital to the housing market, strengthen mortgage underwriting, and reduce over time the role of the government in the housing markets. While saying he was optimistic about the future, Geithner acknowledged that much work remains to sufficiently strengthen the financial system, stating that the U.S. must continue to implement financial reform and move forward with the other recommendations in the report. “We will do this with a balanced approach, weighing the benefits of regulation against the costs of excessive restraint.” This is an approach that the Credit Union National Association (CUNA) strongly supports, and one that CUNA urges the NCUA to follow to avoid unnecessary regulatory burdens for credit unions. Geithner, in his prepared remarks to the committee, also said that in order to continue to repair our financial system, the country must have qualified people in place to run the financial agencies, which, he added, requires that Congress provide sufficient funding for enforcement agencies to do their jobs in a complicated and challenging financial environment. Geithner testified later in the day before the House Financial Services Committee.

Compliance Employee rights notice deadline is postponed

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WASHINGTON (10/7/11)--Private-sector employers got a reprieve Thursday from an approaching regulatory deadline that would require them to publicly post notices of employee rights, as detailed under the National Labor Relations Act (NLRA), in their offices beginning on Nov. 14. The National Labor Relations Board (NLRB) pushed the implementation date for its rule back to Jan. 31, 2012. The NLRB said it delayed the deadline following queries from businesses and trade organizations indicating uncertainty about what businesses fall under the board’s jurisdiction. The board finalized the rule to a back drop of significant opposition from the business community, saying that "many employees protected by the NLRA are unaware of their rights under the statute" and adding that the rule "will increase knowledge of the NLRA among employees, in order to better enable the exercise of rights under the statute." The new notice is similar to one required by the U.S. Department of Labor (DOL) for federal contractors. The NLRA notice must be posted "in conspicuous places” where they are readily seen by employees, including all places where notices to employees concerning personnel rules or policies are customarily posted. A similar notice must be posted online if personnel rules and policies are customarily posted there. Translated versions of the poster are required in workplaces where 20% or more of employees speak a language other than English. Credit Union National Association (CUNA) compliance staff noted that since credit unions that are not specifically excluded from the NLRA's definition of "employer," they will be subject to the rule. CUNA has noted that credit unions that already comply with DOL posting requirements will be in compliance with the new NLRB rule. For more on the NLRB rule, use the resource link below to see recent postings on CUNA’s CompBlog. NLRB Release http://www.nlrb.gov/news/posting-employee-rights-notice-now-required-jan-31-board-postpones-deadline-allow-further-educa

NEW Cordray CFPB nomination approved by Senate Banking Committee

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WASHINGTON (UPDATED: 10:40 a.m. ET, 10/6/11)--The Senate Banking Committee this morning approved the nomination of Richard Cordray to be Consumer Financial Protection Bureau director. Cordray’s nomination was approved by a 12-10 vote, and will now move on for a vote in the full Senate. Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said Cordray's nomination "still faces several obstacles," adding that "over 40 senators have said they will not vote to confirm any CFPB nominee unless changes to the CFPB are enacted." Those changes include increasing CFPB leadership to a five-member commission and reforming some operational rules. Speaking before the committee following the nomination hearing, Treasury Secretary Tim Geithner encouraged members of the committee that did not support Cordray’s nomination to meet with the CFPB nominee. Geithner said Cordray is “exceptionally qualified” for the job, and reminded the senators that a “vast array” of financial institutions will remain outside the scope of consumer protection regulations if the Senate fails to nominate a CFPB director. CUNA has encouraged Cordray to "consider ways in which the bureau can help minimize regulatory requirements for credit unions and other financial institutions" and has also encouraged the CFPB to establish an Office of Regulatory Burden Monitoring to help the agency "track, consider, and help mitigate the cumulative regulatory burden under which credit unions and others must operate."

IG recommends monitoring DOR improvements at NCUA

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ALEXANDRIA, Va. (10/6/11)--The National Credit Union Administration’s (NCUA) inability to properly monitor or follow up on unresolved Documents of Resolution (DOR) related to troubled credit unions resulted in “missed opportunities to mitigate losses to the National Credit Union Share Insurance Fund (NCUSIF),” the NCUA Office of the Inspector General (OIG) has concluded. The OIG report said 45% of the 74 credit unions that were closed and/or merged between 2008 and 2010 “historically received composite CAMEL 1 or 2 ratings,” and noted that 18 of these credit unions were so troubled that they closed or were merged within one year of their downgrade. A total of 55 unresolved DOR items were found in examinations of 14 of these failed credit unions, and the OIG overall noted that NCUA examiners considered CAMEL Code 1 or 2 credit unions “low risk and therefore did not aggressively pursue timely resolutions for the unresolved DOR items.” The 74 failed credit unions resulted in $649 million in NCUSIF losses, with the 33 failed credit unions that historically received composite CAMEL 1 or 2 ratings accounting for $559 million of these losses, the OIG reported. An OIG examination also identified 26,000 unresolved DOR items as of December 2010. These unresolved issues impacted 63% of all federally insured credit unions. Specifically, the OIG in its review of the NCUA’s DOR follow up process found that “neither NCUA’s Office of Examination and Insurance (E&I) nor the five regional offices effectively monitored or followed up on unresolved DOR items,” adding that “E&I performed limited DOR monitoring and that monitoring in each region varied based on their individual policy.” The OIG also noted that the “establishment of timeframes for DOR completion was left to the examiner's judgment” and was not set by the agency. The NCUA in its response to the OIG report said it did not “believe it is feasible to establish specific time limits for examiners to resolve and close DOR items given the innumerable circumstances examiners must consider when determining the appropriate needed action.” Although it deferred to NCUA management’s in this case, the OIG also urged the NCUA to “continue to look for ways to reduce the time to close DORs” as it revises its examination programs. The OIG also recommended the agency ensure that regional staff take stronger supervisory actions when a credit union fails to correct DOR items, and urged the NCUA to require credit union management to provide a written response for DOR items that are not resolved in a timely fashion. For the full NCUA OIG report, use the resource link.

SBA sets lending record in fiscal 2011

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WASHINGTON (10/6/11)--The Small Business Administration (SBA) backed $30.5 billion in loans to small businesses and start-ups in fiscal 2011, setting a yearly record, the agency reported on Wednesday. Nearly half of 2011’s SBA lending activity took place in the first quarter, when $12 billion in loans were provided, the SBA said in a release. The volume of loans provided in 2011 first quarter was more than four times the dollar volume of the same quarter in 2009 and more than double the volume of any quarter over the past four years, the SBA added. The agency said this unprecedented activity in the first quarter was due to SBA loan enhancements that allowed it to increase guarantees on 7(a) loans to 90% and to waive fees that were previously added to 7(a) and 504 loans. The agency noted that program-related lending returned to pre-recession levels after the first quarter. SBA Administrator Karen Mills said, “due to the Small Business Jobs Act and a return to pre-recession lending levels, over 61,000 small businesses had access to capital.” SBA-approved loans totaled $22.6 billion in 2010 and $17.9 billion in 2009. The previous high mark for approved loans was 2007’s total of $28.5 billion. Eligible credit unions may participate in the SBA’s Small Loan Advantage and Community Advantage programs. Those programs are aimed at increasing the number of lower-dollar SBA 7(a) loans going to small businesses and entrepreneurs in underserved communities. For the full SBA release, use the resource link.

Inside Washington (10/05/2011)

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* WASHINGTON (10/6/11)--Although U.S. banks have limited direct exposure to debt from troubled nations such as Greece, Portugal and Ireland, a default by any country in the Euro zone would damage the U.S. economy, Federal Reserve Board Chairman Ben Bernanke told the Joint Economic Committee. “It is difficult to judge how much these financial strains have affected U.S. economic activity thus far, but there seems little doubt that they have hurt household and business confidence, and that they pose ongoing risks to growth,” Bernanke said. European leaders need to address the sources of the fiscal problems that have slowed the process of finding solutions, Bernanke said. He is not only concerned about direct exposure, but about the broader resolution of sovereign debt issues and European banking issues that have created uncertainty and volatility in financial markets … * WASHINGTON (10/6/11)--Federal Reserve Board Governor Sarah Bloom Raskin called for changes in mortgage servicing agreements to allow for more loan modifications. The inadequacies of servicing contracts have contributed to the slow pace of mortgage workouts and repeated breakdowns in the foreclosure process, Raskin told a Maryland State Bar Association conference “The standard servicing contract provides disincentives for servicers to act in the best interests of investors and borrowers,” she said. “This misalignment of incentives has more profound consequences when defaults are high.” She suggested that compensation structure for servicers should include incentives to execute payment processing more efficiently on performing mortgages, and to carry out effective loss mitigation on delinquent loans. Pooling and serving agreements should be amended or renegotiated to facilitate more workouts and to clarify the situations in which loan modifications and other mitigation strategies should be pursued, she said …

Lawmakers boost MBL bills visibility with support

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WASHINGTON (10/6/11)--Noting that one of the few things Congress can agree on is the need to create new jobs, Rep. Rob Woodall (R-Ga.) took to the floor of the U.S. House Wednesday to call for greater support of legislation that would increase the credit union member business lending (MBL) cap.

With so many struggling to cope with layoffs and home foreclosures, helping small business owners should be a priority, Woodall said, adding that “anyone who has talked to small business knows they are having a hard time accessing credit.” H.R. 1418, which was introduced by Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) earlier this year, would increase the MBL cap to 27.5% of assets, up from the current 12.25%. The Credit Union National Association (CUNA) has estimated that lifting the cap to 27.5% of assets would inject $13 billion in new funds into the economy and create 140,000 new jobs, at no cost to taxpayers. A similar bill (S. 509) has been introduced in the Senate. If MBL cap increase legislation were approved, “every credit union in America would be able to take part in funding small businesses and helping them succeed,” Woodall said. The legislator noted that H.R. 1418 is co-sponsored by 53 Democrats and 31 Republicans, an increasingly rare situation in what is now a frequently divided D.C. Sen. Mark Udall (D-Colo.), who authored the Senate version of the bill, touted the benefits of increased credit union small business lending this week in a speech before the 2011 Latino Business Summit in Denver. "No matter how successful they are or how good their business plan is, small-business owners still find it difficult to access the capital they need to start or grow their business, and minority-owned businesses often face additional obstacles in accessing this important lifeline," Udall said. He noted that increasing the MBL cap to 27.5% of assets would result in $1 billion in new funding from credit unions in mainly Hispanic areas. CUNA is scheduled to testify on the MBL legislation before an Oct. 12 House Financial Services subcommittee on financial institutions and consumer credit hearing. For Woodall's complete floor statement, use the video link above.

Inside Washington (10/04/2011)

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* WASHINGTON (10/5/11)--The apparent end of mortgage malfeasance settlement talks between several state attorneys general (AG) and banks could benefit banks in the end, American Banker reported on Tuesday. The state attorneys were proposing a settlement of over $20 billion, but bankers balked, saying this was well above their liabilities. Many state representatives gradually backed away from this deal, and as their numbers decreased, so too did banks’ willingness to settle with the state AGs. Some have said that the end of state-based negotiations could lead to a glut of individual lawsuits, or action by the Consumer Financial Protection Bureau. A settlement reached with federal officials may amount to less of a hit on the banks bottom line …

Cheney invites upset bank customers to join a CU

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WASHINGTON (10/5/11)--Consumers upset by the recent spate of news about escalating bank fees on debit cards and checking accounts should take their business to a credit union where fees are lower and service is better, Credit Union National Association (CUNA) President/CEO Bill Cheney said this week. “Consumers do not have to sit still. They should give credit unions a close look and take advantage of credit unions’ emphasis on service over profits, typically with no or lower fees overall,” said Cheney. “When free checking at banks seems to be disappearing, our surveys show eight out of 10 credit unions still offer at least one free checking account with no minimum balance requirement and no maintenance or activity fees,” Cheney added. He noted that CUNA’s website, www.aSmarterChoice.org, can help consumers learn more about credit unions and find one they are eligible to join. “Everybody can join a credit union, just not the same credit union,” Cheney explained. “It’s just a matter of knowing the ones you’re eligible to join and making the move. This is the time. People need a financial institution that put their best interests above its own bottom line.” Cheney’s comments come amid recent news reports that Bank of America and other big banks will begin charging customers new fees on debit cards and checking accounts. The publicity is driving outraged consumers to seek out alternative banking solutions. Credit unions are financial cooperatives owned by their accountholders, rather than outside investors. Because they are member-owned and not-for-profit, credit unions return their excess earnings back to the members they serve, typically through higher rates on savings accounts, lower rates on loans, and by charging lower and fewer fees. Cheney noted that 92 million Americans already belong to the nation’s 7,500 credit unions. Those members, he added, save more than $6.7 billion a year in lower fees and better rates by using credit unions rather than banks, representing an average yearly savings of $75 per person or $142 per family, according to a CUNA survey. Cheney also noted that 80% of credit unions provide free checking, more than 70% of credit unions offer debit/ATM cards, and credit unions provide more than 28,000 surcharge-free ATMs nationwide via the CO OP Network. He also cited independent surveys by Forrester Research and others that have rated credit unions tops in consumer trust and satisfaction.

FHFA IG Foreclosure abuses reported as early as 2003

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WASHINGTON (10/5/11)--Government-sponsored mortgage giant Fannie Mae was informed of foreclosure abuses, including the filing of false pleadings and affidavits, as early as 2003, but Fannie Mae’s overseer, the Federal Housing Finance Agency (FHFA), did not officially act to address these types of actions until 2010, the FHFA’s Office of the Inspector General (OIG) reported on Tuesday. An outside law firm that was hired by Fannie Mae to follow up on reports of abuses that were made in 2003 found that “Fannie Mae did not take steps to ensure the quality of its foreclosure attorneys’ conduct, the legal positions taken in the attorneys’ pleadings, or the manner in which the attorneys processed foreclosures on [Fannie Mae and Freddie Mac’s] behalf,” the OIG said. The outside law firm advised Fannie Mae to stop the practice. While Fannie Mae claims to have addressed these issues in a later discussion with the Office of Federal Housing Enterprise Oversight (OFHEO), there is no record of this contact, the FHFA OIG said. (OFHEO was the regulatory body that was the precursor to FHFA.) The OIG found that Fannie Mae continued to fail to act as press reports and consumer complaints of foreclosure abuses mounted in 2008 and 2009. Further, the OIG report said, the FHFA did not conduct its own internal investigation of the foreclosure abuses, which also said included creating and filing incomplete and improper documents, fraudulent affidavits, improper notarizations and the use of robo-signing to process foreclosure documents, until heavy media reporting on these issues began in 2010. The OIG in its report said that the FHFA “had not considered risks associated with foreclosure processing to be significant, and, instead, had focused its limited examination resources on assessing high risk areas such as [Fannie Mae and Freddie Mac’s] management of credit risk.” Overall, the OIG report found there “were multiple indicators of foreclosure abuse risk prior to 2010 that could have led FHFA to identify and act earlier on the issue.” To correct these issues, the OIG suggested that the FHFA enhance “its capacity to identify new and emerging risks,” create and implement new guidance and supervisory plans for default-related legal services, and “develop and implement policies and procedures to address poor performance by default-related legal services vendors” that work on behalf of Fannie Mae and Freddie Mac. For the FHFA release, use the resource link.

CUNA welcomes first new CU of 2011

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ALEXANDRIA, Va. (10/5/11)--"It's a joyous event whenever a new credit union is born, and we wish Stepping Stones FCU every success," Credit Union National Association (CUNA) President/CEO Bill Cheney said on Tuesday. “CUNA and the Delaware Credit Union League stand by to provide any help the new credit union may ask for. We look forward to helping them succeed,” he added. Alice Smith, director of the league’s communications and governmental affair departments, noted that the league has been watching the development of this new credit union for about three years. “We are excited to have a new credit union chartered in Delaware. The last one was chartered in 1984,” Smith said. She also noted that recently Delaware witnessed its smallest credit union merge into its largest. Cheney’s and Smith's remarks followed the National Credit Union Administration’s (NCUA) Tuesday announcement that it had approved the first newly chartered credit union of 2011: Wilmington, Del.-based Stepping Stones FCU. The credit union, which is designated as a low-income credit union, will serve the 72,700 people that live, work, worship, volunteer, attend school or transact business in Wilmington. Stepping Stones is expected to open this month, and initially plans to offer multiple savings accounts, including regular shares, club accounts and share certificates. It also plans to offer a variety of personal loans, including signature, used auto, and share-secured loans, within the first 12 months of operation. Planned future services include share drafts and travelers checks. NCUA Chairman Debbie Matz in a release said she is “pleased to see the outstanding work of so many dedicated people result in a newly chartered credit union,” and added that the agency’s Office of Small Credit Union Initiatives “will offer assistance to help it prosper.” For the full NCUA release, use the resource link. The agency approved six new credit union charters last year. A total of four new corporate credit unions were also chartered in 2010. The NCUA last year approved changes to its rules for creating or expanding a community credit union charter, saying at that time that its new rule removed some burdensome elements of the previous charter application process and provided credit unions with the flexibility to serve consumers that would otherwise go unserved. The changes also were intended to shortened the amount of time needed to approve an application to "a couple of months" in most situations, with the more difficult situations needing slightly more time to be resolved, the NCUA said.

Small CUs may be regulated out of business CEO warns

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WASHINGTON (10/5/11)--Wright-Patt FCU President/CEO Doug Fecher on Tuesday said burdensome regulations are a central challenge to his credit union’s pro-consumer work, adding that it is “not an exaggeration to say our nation’s small, community-based financial institutions are exposed to a situation where they ultimately may be regulated out of business.” “This should concern us all,” he added. Fecher spoke before a Tuesday Senate Banking subcommittee on financial institutions hearing entitled "Consumer Protection and Middle Class Wealth Building in an Age of Growing Household Debt." Wright-Patt helps its members “achieve financial freedom for themselves and their families” by only making affordable loans that the members will be able to repay, by fully disclosing the terms of loans up front, and advising members on how they can increase their own savings, even while taking out a loan, Fecher said. “While credit unions would rather hire loan advisers and financial counselors to help consumers improve their financial situation, we’re instead hiring compliance offers to deal with the new rules,” he added. The Fairborn, Ohio-based credit union is the most regulated financial institution in its neighborhood, the CEO said. Fecher noted that it has been given “more than 160 new rules and regulations from some 27 different federal agencies” since 2008. Fecher said he hopes the Consumer Financial Protection Bureau “empowers credit unions to do their jobs of helping consumers make smart use of credit without creating even higher regulatory costs.” He also spoke in support of his fellow Ohioan and nominee for CFPB director, Richard Cordray, saying Cordray “has outstanding qualifications and understands the unique role credit unions play in the lives of consumers.” He noted that until a director is confirmed, unregulated entities like payday lenders and check cashers will go without regulation while credit unions and banks will be subject to regulation. Fecher also addressed the regulatory burden in early 2009 when he testified on the Credit Union National Association’s behalf before a House Financial Services subcommittee hearing.

Durbin letter calls CUs small banks superior

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WASHINGTON (10/5/11)--With the public backlash against the debit account actions of Bank of America and other large institutions continuing to grow, interchange rule author Sen. Richard Durbin (D-Ill.) said “now is the moment” for credit unions and other small institutions to make the superior benefits and customer service offered by their institutions “crystal clear” to these consumers. In a letter to the Illinois Credit Union League, the Illinois Bankers Association, and the Community Bankers Association of Illinois, Durbin noted that many consumers are looking to move their accounts away from “Wall Street giants” to smaller institutions, and he urged smaller institutions “to seize this competitive opportunity.” The senator made similar remarks in a floor statement earlier this week, and is planning to release legislation that would make it easier for bank customers to transfer their accounts between financial institutions. Durbin sought to reassure credit unions and community banks on such issues as the viability of the two-tiered interchange system and potential steering by merchants. For instance, he said he is alert to the possibility “that Visa and MasterCard might act in collusion with large banks to adjust rates over time in a way that diminishes the ability of smaller institutions to issue debit cards.” The Credit Union National Association (CUNA) is monitoring merchants for any signs that they are steering consumers away from using debit cards issued by institutions that are not subject to the cap, and has developed a website to help consumers and credit unions report any instances of steering. CUNA is also working with regulators to ensure the two-tiered interchange system is followed.

NEW Stepping Stones FCU is first newly chartered CU of 2011

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ALEXANDRIA, Va. (UPDATED: 9:30 a.m. ET, 10/4/11)--The National Credit Union Administration (NCUA) today announced the first newly chartered credit union of 2011: Wilmington, Delaware-based Stepping Stones FCU. The credit union, which is designated as a low-income credit union, will serve the 72,700 people that live, work, worship, volunteer, attend school or transact business in Wilmington. Stepping Stones is expected to open this month, and initially plans to offer multiple savings accounts, including regular shares, club accounts and share certificates. It also plans to offer a variety of personal loans, including signature, used auto, and share-secured loans, within the first 12 months of operation. Planned future services include share drafts and travelers checks. NCUA Chairman Debbie Matz in a release said she is “pleased to see the outstanding work of so many dedicated people result in a newly chartered credit union,” and added that the agency’s Office of Small Credit Union Initiatives “will offer assistance to help it prosper.” For the full NCUA release, use the resource link.

Heavy hearing schedule in House Senate

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WASHINGTON (10/4/11)--With the House and Senate both returning to Washington this week, a number of hearings are on the agenda. One hearing credit unions will want to watch is today’s Senate Banking Committee financial institutions subcommittee hearing entitled: “Consumer Protection and Middle Class Wealth Building in an Age of Growing Household Debt.” Doug Fecher, president/CEO of Fairborn, Ohio-based Wright-Patt FCU, will testify on his own behalf during that hearing. Federal Reserve Chairman Ben Bernanke will also be active on the Hill today, as Bernanke discusses the nation’s economic outlook before the Joint Economic Committee. Another pair of high profile hearings will take place on Thursday, as U.S. Treasury Secretary Tim Geithner delivers the Financial Stability Oversight Council’s yearly report to Congress in separate remarks before the House Financial Services Committee and the Senate Banking Committee. Other hearings of note include:
* A Tuesday House Judiciary Committee hearing on a potential balanced budget amendment to the U.S. Constitution; * A Wednesday Senate Banking Committee economic policy subcommittee hearing on the economic implications of federal budget deficits; * A Thursday Senate Finance Committee hearing entitled: “Tax Reform Options: Incentives for Homeownership,” and * A Thursday House Financial Services Committee insurance, housing and community opportunity subcommittee hearing on the Obama administration’s response to the housing finance crisis.
Markup sessions on a bill that would amend securities law to establish shareholder registration thresholds, the Private Company Flexibility and Growth Act (H.R. 2167), the Entrepreneur Access to Capital Act (H.R. 2930), the Access to Capital for Job Creators Act (H.R.2940), and the Small Company Job Growth and Regulatory Relief Act of 2011 are also on the House Financial Services Committee’s capital markets subcommittee Wednesday schedule. The Joint Select Committee on Deficit Reduction is expected to hold private meetings this week, and potential Consumer Financial Protection Bureau leader Richard Cordray is scheduled to face a Senate Banking Committee confirmation vote. (See related story: Cordray CFPB vote set for this week) Legislation that would continue to fund the government and extend the National Flood Insurance Program until Nov. 18 is set for a House vote today. The House is also scheduled to hold votes on H.R. 1343, a bill that would return unused or reclaimed funds made available for broadband improvements to the Treasury, H.R. 2681, the Cement Sector Regulatory Relief Act, and H.R. 2250, the Environmental Protection Agency (EPA) Regulatory Relief Act, this week.

Cordrays CFPB nomination may be voted this week

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WASHINGTON (10/4/11)--The Senate Banking Committee is expected to vote on the nomination of Consumer Financial Protection Bureau (CFPB) director Richard Cordray this Thursday. His nomination would move on to the full Senate following committee approval.

Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said CUNA expects Cordrays nomination to be approved by the committee, but we are unsure of his prospects after that. Donovan recently noted that Cordray's nomination "faces several obstacles," adding that "over 40 senators have said they will not vote to confirm any CFPB nominee unless changes to the CFPB are enacted."

Among the suggested changes are increasing CFPB leadership from a single director to a five-member commission, reforming some operational rules, and adjusting the voting threshold needed for the Financial Stability Oversight Council (FSOC) to set aside or stay a CFPB issued rule to a simple majority.

Expanding the FSOC's review authority of CFPB rules has also been proposed. These changes passed the House by a 241-173 vote in July, but the Senate prospects for these changes are in doubt.

CUNA has encouraged Cordray to "consider ways in which the bureau can help minimize regulatory requirements for credit unions and other financial institutions" and has also encouraged the CFPB to establish an Office of Regulatory Burden Monitoring to help the agency "track, consider, and help mitigate the cumulative regulatory burden under which credit unions and others must operate."

Consumers lose in CU-to-bank conversions Cheney says

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WASHINGTON (10/4/11)--Following Monday’s announcement that Technology CU, of San Jose, Calif., will seek members’ approval to convert to a mutual savings bank charter, Credit Union National Association (CUNA) President/CEO Bill Cheney said “CUNA continues to believe that the credit union charter remains the best option for serving the interests of consumers.” The value of the credit union charter, Cheney said, was demonstrated over the last several days when Bank of America’s announcement of a $5 monthly debit card fee ”was followed by a resounding and sharp outcry from across the nation, by consumers and the news media alike, that credit union membership is the natural haven from such high fees typically charged by banks.” “As in this instance it is difficult to imagine how converting from a credit union to a bank could really benefit consumers,” Cheney said. Studies have shown credit unions that converted to banks in the past soon begin pricing their services like banks. “Ultimately, of course, the decision to convert has to be made by members of the credit union who own the institution. They can only make that decision based on all of the facts, provided with complete transparency,” the CUNA CEO stated. He urged the credit union to make every effort to completely and transparently inform its members of the pros and cons of “this critical decision.” California Credit Union League President/CEO Diana Dykstra concurred, saying members must be educated on the benefits of being part of a credit union as opposed to a bank, so they are fully informed when their financial institution considers a change of charter. She noted that some of those benefits include:
* Credit union members are owners and elect their board on democratic principle: one member, one vote. In contrast, a stock-owned company like a bank will maximize gain for stockholders, not members; * According to various studies and reports, credit unions typically offer better loan rates than banks; and * Research indicates that consumers nationwide save $6.8 billion a year by using a credit union over a bank. In California, Dykstra noted, that savings amounts to about $930 million, or $183 per member household.
Technology CU was chartered in 1960, serves 73,000 members, and holds more than $1.5 billion in assets. It said in a notice to members that the charter conversion would allow the institution to “significantly expand its commercial lending business” and diversify its loan portfolio “by increasing secured commercial and industrial lending to small and mid-size businesses.” The credit union said member/customer access to the institution’s branches, ATMs, checking, direct deposits and withdrawals, and other standard services would also be unchanged. The credit union will accept comments from members until Oct. 29, and Technology CU’s board of directors said it would consider the charter change on Nov. 2.

Inside Washington (10/03/2011)

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* WASHINGTON (10/4/11)--Amendments to the Federal Credit Union Act's definitions regarding the National Credit Union Share Insurance Fund's (NCUSIF) equity ratio and credit union net worth will be effective on Oct. 31, according to a document published in the Federal Register Friday. The National Credit Union Administration (NCUA) approved the equity ratio and net worth changes in September. They clarify that the NCUSIF’s equity ratio must be based solely on the financial statements of the NCUSIF, without consolidation with other statements such as those of conserved credit unions. They also allow Section 208 assistance, which is provided to troubled credit unions, to qualify as regulatory net worth for natural-person credit unions under the NCUA’s Prompt Corrective Action authority. The Credit Union National Association (CUNA) strongly opposes a requirement that credit unions must deduct the amount of any bargain purchase gain from the net worth of a target credit union before a merger, saying it “could result in a lower post-merger net worth, potentially discouraging mergers”… * WASHINGTON (10/4/11)--The Housing and Urban Development (HUD) inspector general (IG) is recommending that the Federal Housing Administration (FHA) ban corporate officers who have left companies that have not met indemnified the government for delinquent loans. The recommendation was made in a HUD IG report issued Friday (American Banker Oct. 3). The report provides examples of seven companies that had $7.3 million in outstanding indemnification obligations when their FHA-approved lender status was revoked. Twelve corporate officers from those firms re-entered the FHA program through another company or by starting a new firm. FHA will need new legal authority to prevent corporate officers from reentering the FHA program, according to the IG. The FHA cannot block the re-entry of the executives unless it can prove the individuals are personally responsible for loan losses, FHA acting deputy assistant secretary Deborah Holston said … * WASHINGTON (10/4/11)--Wisconsin credit union activists met with the state’s congressional delegation as part of Wisconsin Credit Union League’s (WCUL) annual Hike the Hill event in Washington, D.C. This year’s trip was productive in gaining support for legislation that would raise the member business lending (MBL) cap. U.S. Rep. Tom Petri (R-Wis.) pledged to co-sponsor the bill. Activists also met with Elizabeth Vale, Consumer Financial Protection Bureau assistant director for community banks and credit unions. Vale urged credit unions to keep in direct contact with the bureau so regulatory problems can be averted before they need correction. The group also met with National Credit Union Administration Chairman Debbie Matz, who provided insights on topics such as credit union service organization rules, assessments and examinations, and multi-featured open-ended lending. The Credit Union National Association and credit unions are pressing Congress to increase credit unions’ MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said. From left, Brett Thompson, WCUL; Sarah Wainscott, WCUL; Pat Lowney, Lakeview CU, Neenah; Ken Beine, Shoreline CU, Two Rivers; Chip Coenen, Lakeview CU; Petri; Sharon Tome, Shoreline CU; and John Morrissey, Southern Lakes CU, Kenosha. (Photo provided by the Wisconsin Credit Union League) …

Cheney says fees highlight CU difference on iFox Biz Networki

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WASHINGTON (10/3/11)—As Fox Business Network's Gerri Willis interviewed Credit Union National Association (CUNA) President/CEO Bill Cheney and a banking consultant about debit card fees that large banks are starting to charge, Cheney explained how the credit union difference makes the financial cooperatives a better deal for consumers than profit-driven banks. Willis on Friday questioned her guests about whether the growing banks fees—such as a $5-montly charge announced by Bank of America last week, which became a media flashpoint--are an outcome of a debit interchange fee cap imposed by Congress, a limit that went into effect over the weekend. Cheney acknowledged the role that the limits have on the income bases of financial institutions that issue debit cards. He said that to make up for revenues lost because the government capped the fee merchants can be charged to use the popular debit card system, some debit card issuers are charging fees. The CUNA CEO noted that it is not just B of A charging new fees—other banks also are doing this and “that is what you would expect from a for-profit institution.” “When they see their revenues dropping, they have to go elsewhere to pump up those profits so they can make a return for their shareholders. “Credit unions are very different institutions and their focus is on their members—members own their credit unions and it is a very different approach to management,” Cheney noted. Bert Ely, CEO of Ely & Co. and a nationally known bank expert, was also interviewed. Later in the interview when Willis--who reminded her listeners that she has been recommending credit unions “for a long time”--questioned whether credit unions have the same convenience as banks, such as large ATM networks, Cheney assured that they do. He explained that credit unions, unlike banks, work together to best serve credit union members as a whole and many credit unions belong to ATM networks, like the CO OP Network, that help them provide as many as 28,000 ATMs nationwide--surcharge free. “Surcharge free. I like to hear that,” Willis declared. In addition to the comprehensive ATM networks, Cheney made an opportunity to explain that as a credit union member he enjoys the same convenient online banking—and even phone app banking—that banks offer customers. Use the resource link to see the Fox Business Network video clip.