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Senate Privacy Bill Vote Urged By CUNA, Coalition

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WASHINGTON (10/30/13)--The Credit Union National Association is urging U.S. Senate leaders to bring up the Privacy Notice Modernization Act of 2013 (S.635) for consideration in that chamber. CUNA joined a coalition of financial services and business trade groups in a letter to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.).

In the letter, CUNA and partners said the "common sense measure would reduce the significant costs institutions incur providing unnecessary disclosures and more importantly give (consumers) a break from redundant notices."

CUNA has previously said that while credit unions make every effort to provide the most effective and efficient services to their members, which includes ensuring their members are aware of their privacy rights, repetitive notices are often ignored by consumers.

The privacy notice bill, which was introduced by Senate Banking subcommittee on financial institutions Chairman Sherrod Brown (D-Ohio) and committee member Sen. Jerry Moran (R-Kan.) in March, would eliminate a requirement that privacy notices be sent on an annual basis. It would instead allow the notices to be sent only when the privacy policy of a financial institution has changed.

S. 635 is similar to legislation (H.R. 749) that passed the House early this year by voice vote and with broad bipartisan co-sponsorship. However, the Senate bill has some key differences: For instance, the Senate bill would require credit unions and other financial institutions to make their privacy policy always accessible in some form in order to qualify for the bill's exemption from sending annual privacy notices.

The Senate bill currently has 35 bipartisan cosponsors, and Consumer Financial Protection Bureau Director Richard Cordray has expressed support for the measure.

The letter to Reid and McConnell was cosigned by the American Bankers Association, American Financial Services Association, Consumer Bankers Association, Financial Services Roundtable, Independent Community Bankers Association, National Association of Federal Credit Unions and the U.S. Chamber of Commerce.

NCUA Sets Nov. 14 Employee Fraud Prevention Webinar

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ALEXANDRIA, Va. (10/30/13)--The impact of credit union employee fraud, and warning signs credit unions can look for to prevent that fraud, will be the topics of a free Nov. 14 National Credit Union Administration webinar.

The webinar, entitled "Deterring Employee Fraud," is scheduled to begin at 2 p.m. (ET). The NCUA's Office of Small Credit Union Initiatives will host the webinar. Joni Lovingood, a senior consultant with CUNA Mutual Group, and Scott Butterfield of Your Credit Union Partner will be among the speakers during the webinar.

The webinar participants will also discuss why credit union employees commit fraud, and how proper supervision and strong internal controls can help fight fraud.

The NCUA said webinar participants may submit questions in advance by sending an e-mail to WebinarQuestions@ncua.gov. The subject line of the e-mail should read "Deterring Employee Fraud."

To register for the NCUA webinar, use the resource link.

CUNA: QRM Definition Improves, But Concerns Remain

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WASHINGTON (10/30/13)--The Qualified Residential Mortgage (QRM) definition and requirements proposed in August in a joint regulators' rule addressing credit risk retention is a "marked improvement" over the agencies' original proposal issued in April 2011, according to the Credit Union National Association.
 
Under the current proposal, the definition of QRM would be aligned with the Consumer Financial Protection Bureau's definition of a qualified mortgage (QM). This was a development that CUNA had strongly urged.

In a comment letter submitted Tuesday, CUNA Senior Vice President and Deputy General Counsel Mary Dunn wrote, "The 2011 proposal was far too restrictive, including a 20% down payment requirement and front-end and back-end debt-to-income (DTI) ratio requirements."
 
She said that CUNA has an overarching concern that the QM/QRM should never become the only type of mortgage that regulators will permit or that the secondary market will accommodate.
 
"However, absent some flexibility for creditors under this rule, that is precisely what we believe will happen," Dunn warned.
 
She added that while CUNA supports a QRM standard that is aligned with the CFPB's QM, CUNA continues to have serious concerns about the rule's requirement for borrowers' 43% DTI cap.
 
"We urge the agencies to work with mortgage lenders to help ensure non-QM and non-QRM loans will be available to borrowers and acceptable to regulators and the secondary market," Dunn wrote.
 
She added that CUNA would welcome an opportunity to talk with the agencies further about the credit union views expressed in the CUNA letter.
 
The joint rule was proposed by the Federal Reserve Board, Federal Deposit Insurance Corp., U.S. Department of Housing and Urban Development, Federal Housing Finance Agency, Office of the Comptroller of the Currency, and the Securities and Exchange Commission.
 
To read CUNA's complete comments on the 500-plus page proposal, use the resource link below.

CUNA To Testify On Housing Finance Reform Tuesday

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WASHINGTON (10/30/13)--Credit Union National Association Senior Vice President and Chief Economist Bill Hampel will testify next week on how to protect credit unions' access to the secondary mortgage market.
 
Hampel will be testifying before the Senate Banking Committee during its hearing on "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market." It is scheduled for Nov. 5, 10 a.m. (ET).
 
In July, Hampel was the CUNA witness at the Senate's first hearing of the year on housing finance reform. He told members of the Senate Banking subcommittee on securities, insurance and investment that credit unions appreciate the need to reform the current housing finance system, but any reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way.
 
Hampel also said the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.
 
And at a meeting with Federal Housing Finance Agency officials this month, CUNA staff suggested these actions to help preserve credit union access to the secondary markets:
  • The pricing policies of government-sponsored enterprises (GSEs) and their replacements should factor in credit unions' low delinquency and default rates;
  • The GSEs and their replacements should purchase one loan as readily as pools of loans;
  • The GSEs and their replacements should not require small issuers to use large aggregators to service their loans; and
  • The GSEs and their replacements should purchase non-qualified mortgage loans.
Also scheduled to testify at the Tuesday hearing: Richard Swanson, president/CEO, Federal Home Loan Bank of Des Moines on behalf of the Council of Federal Home Loan Banks; William A. Loving, Jr., president/CEO Pendleton Community Bank, Franklin, W.Va., and chairman of Independent Community Bankers of America; Bill Cosgrove, president/CEO, Union Home Mortgage Company and chairman-elect of Mortgage Bankers Association; and, John Harwell, associate vice president of Risk Management, Apple FCU, Fairfax, Va., on behalf of the National Association of Federal Credit Unions.

Sen. Tester: Small FIs Need Secondary Mortgage Market Access

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WASHINGTON (10/30/13)--The ability of small community-based institutions to provide consumers with competitive pricing and product offerings depends significantly on their ability to access the secondary mortgage market, Senate Banking Committee member Jon Tester (D-Mont.) said in a Tuesday hearing.

The Credit Union National Association has repeatedly noted that credit unions need equal and fair access to a secondary market for lenders of all sizes that will ensure affordable mortgage products for their members. CUNA has also said any mortgage market reforms that are made must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way.

The Tuesday hearing, "Housing Finance Reform: Essentials of a Functioning Housing Finance System for Consumers," featured testimony from Center for Responsible Lending Senior Vice President Eric Stein, Genworth Financial President Rohit Gupta, National Association of Realtors President Gary Thomas, K & L Gates LLP Partner Laurence Platt, National Consumer Law Center Staff Attorney Alys Cohen and National Council of La Raza Vice President of Housing and Community Development Lautaro Diaz.

Stein agreed fully that having small lenders with direct access to the secondary market is very important. "If there are lenders willing to make those loans in [underserved areas], it's important that the secondary market be designed so that they have an outlet," he said. Gupta also noted it is very important for credit unions and other small lenders to have access to credit "across the board."

Responding to a question from Tester, Thomas noted rural communities depend on community based financial institutions. "The problem that we're getting to with such a tight credit box…is that you're only going to be left with large major lenders," he said. Such a situation would mean these large lenders could dictate what consumers pay, how they pay, and would make the loan market overly restrictive.

"We're getting into a position where only the best can get loans, and that's a big problem for all of us in sustaining a mortgage process that promotes home ownership throughout the country," Thomas added.

Tester during the hearing noted that the committee plans to hold weekly hearings on housing issues up until the Thanksgiving holiday, and could mark up housing reform legislation before the end of the year.

For more from the hearing, use the resource link.

CFPB Adds Senior Money Management Resources

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WASHINGTON (10/30/13)--Tips to prevent elderly financial abuse and help newfound financial caregivers manage a loved one's funds were released Tuesday by the Consumer Financial Protection Bureau.

The guides will walk financial caregivers through their new duties, provide resources that will help them in times of need, and tell them how to prevent and address scams and cases of financial exploitation, the CFPB said.

The bureau crafted four separate guides for newfound financial managers that have been:
  • Named in a power of attorney to make decisions about money and property for a loved one;
  • Appointed by a court as guardians or conservators of property to manage money and property for someone who cannot manage it alone;
  • Named as trustees under revocable living trusts; or
  • Appointed by a government agency to manage someone else's income benefits, such as Social Security or veterans benefits.
The CFPB prepared the guides with the help of the American Bar Association Commission on Law and Aging.

"The Greatest Generation deserves our commitment to their economic security, and these guides will help us all to defend and protect them more effectively," CFPB Director Richard Cordray said.

Credit unions and others can order free copies of the manuals in bulk from the bureau.

The CFPB also added new information to its AskCFPB site, Cordray noted. Some of the information in the new fund management documents was drawn from AskCFPB submissions, he said.

For more, use the resource link.

Yellen Fed Nomination Could See Nov. 14 Senate Banking Hearing

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WASHINGTON (10/30/13)--A Senate Banking Committee hearing on Janet Yellen's nomination to lead the Federal Reserve could be held on Nov. 14, according to Reuters (Oct. 28).

The committee plans to hold preliminary meetings with Yellen this week, Reuters added.

Yellen was nominated earlier this month by President Barack Obama. If confirmed, she would replace outgoing Fed Chairman Ben Bernanke when his term ends on Jan. 31.  She would become the first woman to  head the Fed, or any other central bank.

Yellen has served as vice chair of the Board of Governors of the Federal Reserve System since Oct. 4, 2010. Her term ends on Jan. 31, 2024. She also has served as president/CEO of the Twelfth District Federal Reserve Bank, at San Francisco.

NFIP Rate Delay Introduced With 57 Co-sponsors

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WASHINGTON (10/30/13)--As expected, a bill was introduced in the U.S. House yesterday that would delay planned National Flood Insurance Plan rate increases for up to four years and implement other reforms.
 
On the one year anniversary of Superstorm Sandy, a bipartisan coalition of 57 House members signed on in support of the bill whose lead sponsors are identified in a release as Reps. Maxine Waters (D-Calif.), Michael Grimm (R-N.Y.) and Cedric Richmond (D-La.).
 
The bill calls for a four-year delay to the program and requires the Federal Emergency Management Agency (FEMA) to complete an insurance affordability study and propose a framework that addresses affordability issues. A companion measure has been introduced in the Senate by Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.).
 
Specifically, the legislation will accomplish the following:
  • Imposes a delay likely to total four years for the most vulnerable properties, by delaying implementation of rate increases until two years after FEMA completes an affordability study, which was mandated in Biggert-Waters but not undertaken;
  • Requires FEMA to propose an affordability framework that addresses the identified affordability issues within 18 months after the completion of the study and provides six months for congressional review.
  • Allows FEMA to utilize National Flood Insurance Funds to reimburse policyholders who successfully appeal a map determination;
  • Eliminates the 50% cap on state and local contributions to levee construction and reconstruction;
  • Protects the so-called "basement exception," which allows the lowest flood-proofed opening in a home to be used for determining flood insurance rates;
  • Establishes a Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process; and
  • Requires FEMA to certify that the agency has fully adopted a modernized risk-based approach to analyzing flood risk.

CUNA's Gentile Talks CU Unsecured Loans In Reuters

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WASHINGTON (10/30/13)--Credit unions again received high profile press coverage this week when Paul Gentile, Credit Union National Association executive vice president of strategic communications and engagement, talked credit union unsecured loan terms in a Reuters piece that focused mainly on banks.

In the story, Gentile noted that credit union unsecured loans average $2,600, with a four-year interest rate of around 10%. The Reuters story, which also ran on Moneynews.com, noted that larger banks such as Citibank and TD Bank offer personal loans at higher rates.

One such example cited in the story is Citibank's personal loan, which offers up to $50,000 at a rate between 6.74% and 19.49%.

A 2013-2014 Fees Report generated by CUNA's Market Research Department details just how much credit union members save when compared to fees and charges levied on bank customers.

For instance, more than 80% of credit unions with checking services still offer free checking, compared to 39% of banks. Only 18% of credit unions overall charge maintenance fees on non-interest bearing checking accounts. Half of those credit unions (9%) levy a general maintenance fee. The other 9% of credit unions charged fees only when a minimum balance fell below a certain threshold.

Another example provided in the CUNA report is median overdraft protection fees, which average $25 at credit unions, compared to median fees of $30 at banks and $35 at larger banks.

As for ATMs: The average nonmember credit union ATM fee, for those that charge them, is $2.10. Banks on average charge non-customer fees of $2.50 per transaction.

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

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

CFPB Offers Resources To Increase QM, Remittance Reg Awareness

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

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

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

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

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

For more, use the resource links.

Bill That Would Delay NFIP Rate Hike Is On The Way

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

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

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

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

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

CUNA: CU Expert Must Be Part Of Expanded CFPB Leadership

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

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

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

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

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

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

CUNA, Trades Back Goodlatte Patent Improvement Bill

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

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

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

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

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

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

Mel Watt FHFA Nomination Could See Vote Soon

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

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

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

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

Cybersecurity Update Featured in This Week's Regulatory Advocacy Report

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

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

The NIST plans to finalize the framework by February.

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

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

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

NCUA Letters Detail Liquidity, E-Filing Regs For CUs

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ALEXANDRIA, Va. (10/28/13)--In a pair of Friday letters to credit unions, the National Credit Union Administration provided details on two final rules approved at the October open board meeting: emergency liquidity and contingency plans and e-filing regulations.

"Guidance on How to Comply with NCUA Regulation §741.12 Liquidity and Contingency Funding Plans" (13-CU-10) is the first of the two letters. That rule, which is scheduled to become effective on March 31, will set up three-tiered emergency liquidity requirements for credit unions with less than $50 million in assets, between $50 million and $250 million in assets, and more than $250 million in assets.

Topics addressed in the letter include:
  • What credit unions need to do to comply with the rule, and when;
  • What steps credit unions should take before and after the effective date of the rule;
  • Why the NCUA developed and released the rule;
  • The key sources of liquidity the NCUA looks for in credit union plans;
  • What written liquidity policies should address; and
  • What a credit union's contingency funding plan should address.
In the e-filing letter, "​Electronic Filing of Call Reports and Extended Filing Dates for 2014" (13-CU-11), the agency covers the why and when of that new rule. The final e-filing rule approved by the agency will require all federally insured credit unions to file financial, statistical, and other reports and credit union profiles electronically using the NCUA's information management system or other electronic means specified by the agency.

To help credit unions cope with these changes, the NCUA has adjusted its call report and profile submission due dates to the fourth Friday of each month following the end of a quarter. The specific due dates for 2014 are now Jan. 24, April 25, July 25 and Oct. 24.

If a credit union does not file electronically by the due date, it is a regulatory violation subject to applicable administrative remedies, including civil money penalties, the NCUA letter reminds.

For both NCUA letters to credit unions, use the resource link.

Cheney Report Launches Weekly Showcase For CU Stories

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WASHINGTON (10/28/13)--In this week's edition of The Cheney Report, Credit Union National Association President/CEO Bill Cheney highlights how credit unions in Kansas and Montana have united for good and come together to benefit their communities.

In one example, Cheney tells how Trico Community FCU, Helena, Montana, worked with a local engineering firm. The two organizations donated $6 to the Montana's Children Miracle Network Hospital for every run scored in the 2013 season by a local baseball team.

Another story comes courtesy of the Kansas Credit Union Association: That group hosted their third 'Make a Difference' event this year, in which 17 local credit unions came together and surprised 900 community members at 11 different locations by giving away $23,000 worth in cash, gift cards and free gas.

CUNA is collecting these stories to showcase how credit unions are joining forces to Unite for Good, and similar stories will be featured each week in The Cheney Report. Cheney encouraged credit unions to visit UniteforGood.org and share how they are helping reach CUNA's shared, strategic vision in which Americans choose credit unions as their best financial partner.

This week's Cheney Report also includes:
  • Details on legislation that would make it more affordable for credit unions and other smaller financial institutions to combat patent trolls;
  • CUNA's concerns about the impact of "qualified mortgages" on credit union fair lending standards;
  • News from CUNA's recent credit union tax status talks with Obama administration representatives; and
  • The results of last week's National Credit Union Administration open board meeting.
Use the resource link to read the latest in The Cheney Report.

California Reps. Unite For CU Tax Status

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WASHINGTON (10/28/13)--A bipartisan group of 11 freshman U.S. House members from California joined the lengthening list of credit union tax status supporters in Congress late last week.

In a joint letter to House Ways and Means Committee Chairman Dave Camp (R-Mich.) and ranking member Sander Levin (D-Mich.), the legislators encouraged committee leadership to maintain the credit union tax status as they discuss potential tax reforms this year.

Camp and Senate Finance Committee Chair Max Baucus (D-Mont.) remain committed to tax reform, and tax code changes will likely be one of the items discussed as budget tweaks are debated. The budget agreement that reopened the government requires congressional leaders to name conferees to a budget conference committee that would issue recommendations by Dec. 13.

"Ensuring the credit union tax exemption guarantees the choice in financial services for our consumers, our constituents, and our communities," the legislators wrote. "Credit unions are inherently different from other financial institutions because of their mission and their focus on members," and have played a vital role in the California economy, "where the economic conditions of the last five years have been challenging," they added.

The letter was cosigned by longtime credit union supporters Reps. Jared Huffman (D) and Col. Paul Cook (R), Ami Bera (D), Julia Brownley (D), Tony Cardenas (D), Doug LaMalfa (R), Alan Lowenthal (D), Scott Peters (D), Eric Swalwell (D), and Mark Takano (D). These legislators are also supporters of legislation that would increase the credit union member business lending cap.

Rep. Raul Ruiz (D) also signed on to the letter. This is the first time he has publicly supported credit unions since becoming a member of the House.

"This is another example of how the California Congressional delegation continues to show their strong support for credit unions," said Jeremy Empol, vice president of federal government affairs for the California and Nevada Credit Union Leagues.

In recent days, Credit Union National Association President/CEO Bill Cheney, General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Chief Economist Bill Hampel and Senior Vice President for Legislative Affairs Ryan Donovan have met with White House and Treasury officials to advocate for the continuation of the credit union tax exemption.

CUNA has provided a host of Take Action tools on www.DontTaxMyCreditUnion.org to help credit union supporters back the tax status. Supporters have spoken up by sending tweets, pictures, vine videos, and e-mails to their members of Congress, all with the #DontTaxMyCU hashtag.

Rep. Michaud To NCUA: Limit CU Burdens

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WASHINGTON (10/28/13)--Rep. Michael Michaud (D-Maine) has urged federal regulators to "consider the unintended consequences of a 'one size fits-all' regulatory approach, and to the extent practicable, exempt or alleviate unnecessary burdens on credit unions."

Michaud made his case against regulatory burden on credit unions in letters sent last week to Consumer Financial Protection Bureau Director Richard Cordray and National Credit Union Administration Chairman Debbie Matz.

"Credit unions did not engage in the abuses and risky practices that led to the financial crisis. I am concerned that the implementation of financial reforms is becoming disproportionately burdensome on credit unions, particularly the smaller community-based institutions, and leading to the consolidation of institutions," Michaud wrote.

Regulatory costs are particularly burdensome for smaller institutions, and every dollar a credit union spends on compliance reduces the amount available to serve their members, he said.

The federal lawmaker noted that "credit unions play an important role in states, towns and municipalities across the nation," and said many have deep ties in the communities they serve. "Credit union's local ties have long prevented excessive risk taking, and their structure has allowed them to remain a well-capitalized source of financial stability both during and following the financial crisis," he added.

Michaud encouraged Cordray and Matz to take these factors into account as they regulate, oversee and examine credit unions.

"Examination practices should be consistent from one to the next and should give credit unions the reasonable flexibility to serve their members' needs. Standards and rules developed for the largest and most complex financial institutions do not always make sense for credit unions," he added.

Maine Credit Union League President John Murphy in a release said Michaud "understands the important and significant role of credit unions, and that the burden of over regulation is impacting a credit union's ability to serve their members." The league appreciates "his initiative and advocacy on behalf of credit unions on this important issue," Murphy added.

For the full letter, use the resource link.

NCUA Could Subject Largest CUs To Stress Tests

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ALEXANDRIA, Va. (10/25/13)--Federally insured credit unions with assets exceeding $10 billion would be required to develop and maintain capital plans, and undergo annual stress tests under a rule proposed by the National Credit Union Administration Thursday.

Click to view larger image CUNA Deputy General Counsel Mary Dunn (left) Executive Vice President for Strategic Communications Paul Gentile (center) and General Counsel Eric Richard (far right) meet with NCUA Chairman Debbie Matz following Thursday's open board meeting. (CUNA Photo)
The stress test requirements, drafted by the agency's Office of National Examinations and Supervision, would require impacted credit unions to conduct specific capital analyses to evaluate how changes in variables, parameters and inputs used by credit unions in their capital plans could impact capital. Credit unions would also need to test how interest rate shocks of at least 300 basis points would impact their net economic value.

"This proposed rule will further our efforts to dedicate more resources to the largest credit unions, which by their sheer size pose the greatest risks to the share insurance fund," NCUA Chairman Debbie Matz said.

Ensuring the liquidity of the credit union system is the NCUA's responsibility, board member Richard Metsger added.

The four credit unions with more than $10 billion in assets already conduct their own stress tests, agency staff said during their presentation. The agency would meet with representatives from those credit unions if the separate stress tests garner different results, NCUA staff said. However, the agency has not said what actions it would take to address any differences.

The NCUA has not decided whether the results of stress tests would be released publicly. Credit unions can comment on the benefits and drawbacks of publicly releasing stress test results, Matz said. Metsger said he was already disposed toward public disclosure, but he also welcomed credit union comments on the issue.

The agency hopes to have the rule finalized next year.

Setting up stress testing for credit unions could cost the agency as much as $4 million in the first year, according to unofficial agency estimates. The costs should decline after the first year, NCUA staff added. The costs would be charged to the National Credit Union Share Insurance Fund, not the NCUA operating budget. Any costs in excess of $4 million would need board approval. The agency plans to outsource the stress testing to a vendor.

The proposal will be open to public comment for 60 days.

"We share NCUA's basic safety and soundness objectives reflected by the proposal," Credit Union National Association Deputy General Counsel Mary Dunn said. "The extent to which a new costly program is needed to accomplish those objectives is one of the key issues we will be discussing with our members. We also have concerns about public disclosure of stress testing results, an issue the agency is seeking comments on," she added.

CLF, Fed Discount Window Are Only Sources For Emergency Liquidity In NCUA Rule

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ALEXANDRIA, Va. (10/25/13)--A new rule addressing emergency liquidity and contingency funding plans for credit unions contains some important changes that improve the final rule compared to the proposal and the Credit Union National Association said it appreciates these revisions. However, CUNA does not agree the rule is needed at this time.


Click to view larger image CUNA Senior Vice President for Compliance Kathy Thompson (right), talks credit union shop with board member Richard Metsger (left) following Thursday's meeting. Also pictured is NCUA Deputy Director of Examinations and Insurance Dave Shetler. (CUNA Photo)
Under the final rule, which was approved at Thursday's National Credit Union Administration open board meeting, credit unions with less than $50 million in assets would need to maintain a basic written emergency liquidity policy, but would not be required to take further action. This threshold was raised from $10 million in the proposal. All federally insured credit unions (FICUs) with assets of $50 million or more--also up from the proposal--would be required to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations.

FICUs with assets of $250 million or more would be required to have access to a backup federal liquidity source for emergency situations. That is a change from the original proposal of $100 million, and as a result, a number of credit unions that would have been required to obtain a federal source of emergency liquidity will avoid this requirement under the final rule. CUNA said this was a positive development that will benefit these credit unions.  
 
The rule "is part of a global regulatory effort to promote sound liquidity risk management," NCUA Chairman Debbie Matz said. "Financial institutions need to maintain ample liquidity to withstand unexpected contingency events. This rule will strengthen individual credit unions and, as a result, the entire system," she added.
 
The final rule does not include the Federal Home Loan Banks (FHLB) as an acceptable source of emergency liquidity, although eligible credit unions required to meet the federal source provisions would be free to borrow from a FHLBank for nonemergency purposes.

The 12 Federal Home Loan Bank presidents, in their own comment letter, urged the NCUA to add their banks to the agency's list of approved emergency liquidity providers for credit unions.

CUNA also strongly supported the use of the home loan banks for liquidity. Without the FHLB, credit unions have two options to ensure a federal liquidity source for emergency situations: Becoming a member of the NCUA's Central Liquidity Facility (CLF) by subscribing to CLF stock or access to the Federal Reserve's discount window.

CUNA applauds the NCUA's decision to raise the thresholds for different compliance responsibilities, but does not agree the rule is needed, CUNA Deputy General Counsel Mary Dunn said.
 
The rule becomes effective on March 31, and approximately 374 credit unions will be required to establish a new federal source of emergency liquidity.

CUNA Seeks Contact By CUs Ceasing Remittance Services

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WASHINGTON (10/25/13)--The Credit Union National Association encourages credit unions to contact the trade group immediately if they plan to stop offering international remittance services because of  compliance burdens imposed by a new Consumer Financial Protection Bureau rule that goes into effect Monday.
 
"If your credit union has stopped offering international remittance services because of concerns with the rule, CUNA would like to hear from you," encouraged CUNA Senior Vice President and Deputy General Counsel Mary Dunn Thursday.
 
She recommended such credit unions contact CUNA immediately at RegAdvocacy@cuna.coop.
 
Under CFPB rule, remittance transfer providers are required to give prepayment and receipt disclosures to the consumer-sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors.

NCUA: No NCUSIF Assessment In 2013

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ALEXANDRIA, Va. (10/25/13)--Thursday's National Credit Union Administration open board meeting featured good news for credit unions: There will be no National Credit Union Share Insurance Fund premium assessment in 2013, agency Chief Financial Officer Mary Ann Woodson reported.

Woodson on Thursday noted that the NCUSIF remains strong, with $110.3 million in net income, $11.7 billion in total assets and an equity ratio of 1.31% as of Sept. 2013.

The NCUA quarterly financial report also showed:
  • The number of CAMEL code 4 and 5 credit unions declined to 317 from 330 in the second quarter, with more than half of the CAMEL 4 and 5 credit unions holding less than $10 million in assets; and
  • The number of CAMEL code 3 credit unions declined to 1,483 from 1,508 in the second quarter, with 47% of those credit unions holding less than $10 million in assets.
CAMEL Code 4 and 5 credit unions held 1.58% of insured shares, or approximately $13.7 billion. CAMEL 3 credit unions held 11.13% of insured shares, or $96.7 billion. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 12.7% of total insured shares.

For a CUNA summary of the board meeting, use the resource link.

Anti-Money Laundering Bills Intro'd In House

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WASHINGTON (10/25/13)--Bills that would close loopholes, tighten anti-money laundering laws, encourage greater transparency and give financial regulators greater authority to punish violations of the Bank Secrecy Act were introduced by two high ranking U.S. House members on Thursday.

House Financial Services Committee Ranking Democrat Maxine Waters (D-Calif.) in a release noted that "a number of recent, high-profile cases show how several multinational banks actively turned off anti-money laundering controls to accommodate terrorist financing and drug cartels." The U.S. Department of Justice has levied high fines against these banks, "but not a single individual has been held accountable," Waters added. Her bill, the Holding Individuals Accountable and Deterring Money Laundering Act (H.R. 3317), would seek to "correct that injustice by making it easier to go after unscrupulous bankers and mandating punishments as strict as those the imposed on the drug dealers themselves."

The bill would achieve this, in part, by allowing regulators to remove or ban bankers that violate the law.

Financial Services capital markets subcommittee ranking member Carolyn Maloney's (D-N.Y.) Incorporation Transparency and Law Enforcement Assistance Act would back up these efforts by helping to "identify the true ownership of legal corporations and deter the use of shell companies for illegal purposes," according to the release.

For more on both bills, use the resource link.

E-Filing Reg Approved By NCUA

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WASHINGTON (10/25/13)--In a packed Thursday open board meeting that addressed emergency liquidity and stress tests, National Credit Union Administration board members also approved a final rule addressing e-filing. They were briefed on proposed joint federal agency diversity standards for regulated financial institutions and a proposed interagency rule on loans in areas having special flood hazards.

The final e-filing rule approved by the agency will require all federally insured credit unions to file financial, statistical, and other reports and credit union profiles electronically using the NCUA's information management system or other electronic means specified by the agency. 

The Credit Union National Association following the meeting urged the agency to provide assistance to those remaining credit unions if necessary in order to comply with the transition to all electronic filing of financial reports.

"All but a few dozen credit unions already file their financial reports electronically, and for those that do not have the capacity, our Office of Small Credit Union Initiatives is ready to assist. The change will save time and money, remove unnecessary paperwork and enable NCUA to report industry-wide data more quickly," NCUA Chair Debbie Matz said. OSCUI will offer up to $7,500 in funding available to credit unions that do not have a computer through its urgent needs grants program, and agency staff will also provide technical support to credit unions that need it.

The NCUA will also adjust its call report filing deadlines for 2014 to give credit unions more time to adjust to the new requirement.

A letter to credit unions detailing the regulation and providing guidance for credit unions will be released soon, the agency added. CUNA is also developing a final rule analysis for credit unions.

The rule will become effective on Jan. 1.

The agency on Thursday was also briefed on a joint agency proposed rule that would implement provisions of the Biggert-Waters Flood Insurance Reform Act of 2012. Specifically, the proposal would establish requirements with respect to the escrow of flood insurance payments, the acceptance of private flood insurance coverage, and the force-placement of flood insurance. The proposal also would clarify the agencies' flood insurance regulations with respect to other amendments made by the act and make technical corrections. The NCUA is accepting comment on the release until Dec. 10, and CUNA will develop a comment call on the proposal.

Joint standards for assessing diversity policies and practices were also discussed. The standards were detailed in a Wednesday joint agency release. (See Oct. 24 News Now story: Federal Regulators Propose Diversity Policies For FIs.) This joint agency proposal will be open for public comment for 60 days after it is published in the Federal Register.

NEW: Largest CUs Could Be Subject To Agency Stress Tests

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ALEXANDRIA, Va. (10/24/13 12:14 p.m. ET)--Federally insured credit unions with assets exceeding $10 billion would be required to develop and maintain capital plans, and undergo annual stress tests, under a proposed rule approved by the National Credit Union Administration.

The stress test requirements, drafted by the agency's Office of National Examinations and Supervision, would require impacted credit unions to conduct specific capital analyses to evaluate how changes in variables, parameters and inputs used by credit unions in their capital plans could impact capital. Credit unions would also need to test how interest rate shocks of at least 300 basis points would impact their net economy value.

The four credit unions with more than $10 billion in assets already conduct their own stress tests, agency staff noted.
The agency would meet with representatives from those credit unions if the separate stress tests garner different results, NCUA staff said. However, the agency has not said what actions it would take to address any differences.

The NCUA has not decided whether the results of stress tests would be released publicly. Credit unions can comment on the benefits and drawbacks of publicly releasing stress test results, Matz said. The agency hopes to have the rule finalized next year.

Setting up stress testing for credit unions could cost the agency as much as $4 million in the first year, according to unofficial agency estimates. The costs should decline after the first year, NCUA staff added.

The proposal will be open to public comment for 60 days.

"We share NCUA's basic safety and soundness objectives reflected by the proposal," Credit Union National Association Deputy General Counsel Mary Dunn said. "The extent to which a new costly program is needed to accomplish those objectives is one of the key issues we will be discussing with our members. We also have concerns about public disclosure of stress testing results, an issue the agency is seeking comments on," she added.

CAMEL Rating For Corporates Coming In January

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ALEXANDRIA, Va. (10/24/13)--As reported in the Sept. 16 edition of the Credit Union National Association's Regulatory Advocacy Report, the National Credit Union Administration this fall approved using the CAMEL rating system to judge the safety and soundness of corporate credit unions starting in January.

The CAMEL system will replace the Corporate Risk Information System, which the agency has used since 1999. The NCUA said the change will have no impact on the corporate exam process.

"With the addition of a risk-evaluation component to the CAMEL system, there is no substantive difference between the two ratings systems, so it made sense to return to one system for all credit unions. Corporate board members, CEOs of member credit unions, are already familiar with the CAMEL system. This change makes things simpler and more efficient, because it's the same scorecard," an NCUA official said.

CDFI Fund Receives 310 NMTC Program Applications

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WASHINGTON (10/24/13)--The New Markets Tax Credit program has received 310 applications, requesting a total of $25.8 billion in tax credit allocation authority, from entities in 43 states, the District of Columbia and Puerto Rico.

The application total was announced by the U.S. Treasury's Community Development Financial Institutions Fund, which oversees the tax credit program, on Wednesday.

Credit unions are among those eligible to participate in the NMTC, which seeks to spur the investment of new private sector capital into low-income communities. To do so, it permits individual or corporate taxpayers to receive a credit against federal income taxes for making Qualified Equity Investments. Those investments must be made in designated Community Development Entities. The CDFI Fund allocates the tax credits annually through a competitive application process.

The CDFI Fund said 749 awards totaling $36.5 billion in tax credit allocation authority have been made through the first ten yearly cycles of the NMTC.

For the CDFI Fund release, use the resource link.

CUNA Hails Waiver Provision In New Patent Reform Bill

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WASHINGTON (10/14/13)--A House bill intended to fight predatory "patent trolls," introduced Wednesday by House Judiciary Committee Chair Bob Goodlatte (R-Va.), includes a waiver provision strongly advocated by the Credit Union National Association.

"We appreciate that Rep. Goodlatte recognized the importance of including a discretionary fee waiver for covered business method patent review proceedings in his bill to help entities wishing to defeat patent trolls. CUNA strongly advocated for the inclusion of this provision. This bill is a first step in the direction of defeating patent trolls, and CUNA is working to ensure that credit unions have a voice at the table as the legislation moves forward," said CUNA President/CEO Bill Cheney.

The bill is intended to increase the transparency of patent ownership and, by doing so, help combat a growing practice by some patent holders that are misusing patents by suing unsuspecting consumers alleging infringements and extorting settlements.

Specifically, an organization will become the target of a demand letter claiming it has infringed a patent. The patent-holder "troll" will offer an opportunity to settle the matter but threatens litigation if the party does not agree to pay a settlement.

The problem revolves holders of questionable patents who purchased the patents solely for the purpose of collecting settlements from entities that do not want a legal fight. Under current law, financial institutions receiving such a threatening letter can seek a review from the U.S. Patent Office that could invalidate the questionable patent.

However, that process carries a hefty price tag starting at around $35,000--too steep for many small financial institutions, like credit unions, to bear. The Goodlatte bill includes a fee-waiver provision that was strongly supported by CUNA. If the bill is passed, that provision would give the Patent Office power to waive the fee on a discretionary basis--broadening the opportunity for smaller entities to protest.

CUNA has expressed deep concerns about the "patent troll" issue because credit unions increasingly have become a target of the abusive practices.

In a joint letter with 42 other trade associations to the U.S. Congress earlier this year (see resource link below), CUNA noted disturbing statistics:
  • Since 2005, the number of defendants sued by patent trolls has quadrupled;
  • Last year, patent trolls sued more than 7,000 defendants and sent thousands more threat letters;
  • The activity cost the U.S. economy $80 billion in 2011, and productive companies made $29 billion in direct payouts; and
  • Trolls no longer sue only large tech corporations. Small and medium-sized businesses of all types, including start-ups, are now the most frequent targets.
Goodlatte's bill joins a number of other patent reform bills in both the House and Senate.

IRS Announces Two-Week Tax Season Delay

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WASHINGTON (10/24/13)--The U.S. Internal Revenue Service on Wednesday announced the opening of the 2014 tax filing season could be delayed by as much as two weeks to allow adequate time to program and test tax processing systems following the 16-day federal government closure.

The delay could push the original start date of Jan. 21 back as far as Feb. 4. A final starting date for the tax season will be announced in December, and the IRS said it is exploring ways to shorten the potential delay. However, this delay does not necessarily equal good news for late filers: The April 15 tax filing deadline will not be impacted by the delay, the IRS noted.

The IRS explained it is nearly three weeks behind schedule due to the government shutdown.

Many important behind-the-scenes processes, like the programming, testing and deployment of the more than 50 IRS systems needed to process nearly 150 million tax returns begin in the fall, the agency said.

"Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right," IRS Commissioner Danny Werfel said. "The adjustment to the start of the filing season provides us the necessary time to program, test and validate our systems so that we can provide a smooth filing and refund process for the nation's taxpayers.

"We want the public and tax professionals to know about the delay well in advance so they can prepare for a later start of the filing season."

For the full IRS release, use the resource link.

Federal Regulators Propose Diversity Policies For FIs

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WASHINGTON (10/24/13)--Diversity standard guidelines, and guidance on how credit unions and others can assess their own diversity policies, are addressed in a proposal released Wednesday by the National Credit Union Administration and five other federal financial regulators.

The NCUA board will receive a staff briefing on the proposal at today's open board meeting, which starts at 10 a.m. (ET).

The standards, if approved, would encourage regulated entities to include diversity and inclusion considerations in both employment and contracting as an important part of their strategic plan. The standards, required by the Dodd-Frank Act, would also encourage those entities that collect workforce data to use that data to evaluate and assess workforce diversity and inclusion efforts.

Regulated entities would also need to demonstrate supplier diversity policies that provide "for a fair opportunity for minority-owned and women-owned businesses to compete in procurements of business goods and services."

An institution's commitment to these standards will also need to be demonstrated in a transparent fashion, the standards said. The proposed standards are tailored to account for an institution's:
  • Asset size;
  • Number of employees;
  • Governance structure;
  • Income;
  • Number of members or customers;
  • Contract volume;
  • Location; and
  • Community characteristics.
The agencies in their joint release said they "recognize standards may need to change and evolve over time." The proposed standards were developed following joint agency roundtable discussions with credit unions, representatives from other depository institutions, holding companies and industry trade groups.

Financial professionals, consumer advocates, and community representatives were also consulted during the process. The agencies said they seek comments specifically on how they might better take into account individual entities' circumstances, especially for small regulated entities.

The proposal will be open for public comment for 60 days after it is published in the Federal Register.

The Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Securities and Exchange Commission joined the NCUA in releasing the standards.

For the full release, use the resource link.

House Postpones CFPB, Reg Burden Hearings, Adds FHA Discussion

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WASHINGTON (10/24/13)--Hearings on small entity regulatory burden and legislative proposals to reform the makeup of the Consumer Financial Protection Bureau have been postponed. Both were originally scheduled for today.

The House Financial Services financial institutions and consumer credit subcommittee has rescheduled the CFPB hearing for 10 a.m. (ET) on Oct. 29.

The House Small Business Committee, which scheduled the regulatory burden hearing, has not announced a makeup date.

The Financial Services Committee has also set a hearing on the recent taxpayer-funded bailout of the Federal Housing Administration for 10 a.m. (ET)52666 on Oct. 29.

A House Financial Services capital markets and government sponsored enterprises subcommittee hearing entitled "Legislation to Further Reduce Impediments to Capital Formation" will still be held today at 2 p.m. ( ET).

Votes in the House will reportedly be suspended today so lawmakers can attend a funeral for Rep. C. W. "Bill" Young (R-Fla.). Young died this week at age 82. The funeral will be held Thursday in Largo, Fla.

NEW: CLF And Fed Discount Window Are Only Sources For Emergency Liquidity In New NCUA Rule

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ALEXANDRIA, Va. (10/24/13, UPDATED: 11:05 A.M. ET)--A final rule addressing emergency liquidity and contingency funding plans for credit unions has just been approved at today's National Credit Union Administration open board meeting.

Under the final rule, credit unions with less than $50 million in assets would need to maintain a basic written emergency liquidity policy, but would not be required to take further action. All federally insured credit unions with assets of $50 million or more would be required to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations.

FICUs with assets of $250 million or more would be required to have access to a backup federal liquidity source for emergency situations. That is up from the original proposal of $100 million.

The final rule does not include the Federal Home Loan Banks (FHLB) as an acceptable source of liquidity.

The 12 Federal Home Loan Bank presidents, in their own comment letter, urged the NCUA to add their banks to the agency's list of approved emergency liquidity providers for credit unions.

The Credit Union National Association also strongly supported the use of the home loan banks for liquidity. Without the FHLB, credit unions have two options to ensure a federal liquidity source for emergency situations: Becoming a member of the NCUA's Central Liquidity Facility (CLF) by subscribing to CLF stock or access to the Federal Reserve's discount window.

CUNA did not support the NCUA's proposed emergency liquidity regulations for federally insured credit unions and does not agree that a new rule on liquidity is needed.

Watch News Now for details on another board meeting item, a proposed rule addressing credit union capital planning and stress testing.

Other items on today's open meeting agenda include:
  • A board briefing on an interagency rule on loans in areas with special flood hazards;
  • A board briefing on joint agency diversity standards; and
  • The quarterly National Credit Union Share Insurance Fund report.
Two requests made under the Federal Credit Union Act are on the closed board meeting agenda.

Politico Highlights CU-Bank Tax Battle

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WASHINGTON (10/23/13)--The nation's banks have broken an unwritten rule in tax debates in their fight with credit unions over the credit union tax status, observed a Tuesday article in Politico. 

The article said most businesses that want to influence the current efforts to overhaul the country's tax code focus on preserving their own tax "perks," not on tearing down those of others.  

However, big banks want the exemption gone, and smaller banks have named the repeal of the credit union exemption from federal income tax as their current No. 1 priority, said Politico.  

Ryan Donovan, senior vice president for legislative affairs at the Credit Union National Association, explained in the article that credit unions have their current tax status because of a fundamental difference between banks and credit unions--their not-for-profit mission.  

"We're out there helping consumers get loans and helping consumers acquire and maintain savings, while banks exist to make money for their shareholders," said Donovan. "They are completely different organizations."  

Politico highlighted CUNA's nationwide "Don't Tax My Credit Union" campaign through which credit union members have sent more than 850,000 messages to Congress.  

CUNA's Donovan noted, "There isn't a member of Congress that has come out publicly and said 'hey let's tax credit unions.' The article even mentions that a key player in the congressional push for tax reform, House Ways and Means Chair Dave Camp (R-Mich.), has said publicly that "credit unions continue to play a very important role in communities across Michigan and our nation."  

However, the Michigan Republican has also made it clear that all tax provisions are in play during tax reform--that he has started with a "blank page" approach and stakeholders must work their exemptions  back into the tax code.  

The banks say that approach, Politico noted, helps them in their fight against credit unions because each tax break has to be defended.  

Use the resource link to see more on CUNA's "Don't Tax My Credit Union" campaign.

Goodlatte To Announce Patent Litigation Bill Today

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WASHINGTON (10/22/13)--The head of the House Judiciary Committee, Rep. Bob Goodlatte (R-Va.), announced that he will introduced a bill today to address the "ever-increasing problem" of abusive patent litigation.
 
Goodlatte said Tuesday that he would unveil the bill at a press availability session at 11 a.m. (ET) today on Capitol Hill.
 
Critics of the current patent system say the problem involves some patent holders who are abusing the system. Rather than incentivizing the creation of the next-generation of advancements, they say, the abusers are instead suing unsuspecting consumers and extorting settlements.

It is a concern shared by the Credit Union National Association, which signed onto a joint letter to Congress in July that was supported by 42 trade associations in Washington, D.C., and which urged statutory changes.
 
At that time CUNA expressed deep concerns about the "patent troll" issue because credit unions have become a target of the abusive practices.
 
On the Senate side, Sens. Patrick Leahy (D-Vt.) and Mike Lee (R-Utah) penned an opinion piece in Politico.com last month that stated in no uncertain terms their belief that abuse of the country's patent system must be addressed.

The senators announced they are working to craft bipartisan legislation in the Senate to address abusive practices and restore confidence in the American patent system.
 
They said their bill will "increase the transparency of patent ownership, protect the customer of a patented product when the manufacturer should really be the defendant and improve the process for reviewing patents at the U.S. Patent and Trademark Office."

Regulators Say QM Offerings Will Not Elevate Fair Lending Risk

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WASHINGTON (10/23/13)--Offering only Qualified Mortgages "would not, absent other factors, elevate a supervised institution's fair lending risk," the National Credit Union Administration and other federal financial regulators said in a Tuesday joint statement.

The statement came in response to creditor questions to the agencies. Creditors, the regulators said, have asked for clarity regarding whether the disparate impact doctrine of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, allows them to originate only QMs. Credit Union national Association representatives, including Deputy General Counsel Mary Dunn, raised this issue as recently as last week in meetings with the with the Consumer Financial Protection Bureau and NCUA.

The CFPB issued standards to define QMs under the agency's "ability to repay" rules, and mortgage servicing rules, in January.

In the joint release, the agencies noted that "the decisions creditors will make about product offerings in response to the Ability-to-Repay Rule are similar to decisions creditors have made with regard to other significant regulatory changes affecting particular types of loans."

Creditors, they said, "should continue to evaluate fair lending risk as they would for other types of product selections, including by carefully monitoring policies and practices and implementing effective compliance management systems." The same principles apply in determining compliance with the Federal Housing Agency and its implementing regulation, the release added.

The Federal Reserve Board, CFPB, Federal Deposit Insurance Corp., NCUA and the Office of the Comptroller of the Currency co-signed the joint statement.

For the full release, use the resource link.

CUNA Urges CU Tax Exemption Be Continued In Treasury Meeting

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WASHINGTON (10/23/13)--Credit Union National Association President/CEO Bill Cheney had yet another opportunity to advocate for the continuation of the credit union tax exemption when he and senior CUNA staff met with U.S. Treasury Department Assistant Secretary for Tax Policy Mark Mazur and other agency staff this week.

Click to view larger image Credit Union National Association President/CEO Bill Cheney (not shown), General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Chief Economist Bill Hampel and Senior Vice President for Legislative Affairs Ryan Donovan attended a Treasury meeting to discuss credit union tax issues. (CUNA Photo)
"As key members of Congress continue to consider tax reform, I felt it was essential that we meet again with tax policy advisors at Treasury to ensure they are continually reminded that taxing credit unions would be bad public policy that would hurt consumers and small business, as well as credit unions. We had the opportunity to discuss this issue and present our views thoroughly; it was a very productive session," Cheney said.

General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Senior Vice President for Legislative Affairs Ryan Donovan and Chief Economist Bill Hampel also attended the Treasury meeting.

Cheney and CUNA staff stressed the significance of the tax exemption to the credit union system but they also emphasized the benefits of the tax exemption to the consumers, small businesses and communities that credit unions serve. Such benefits include lower fees, lower rates on loans and a better return on shares and deposits than other financial institutions often provide, they said. The group discussed other benefits that credit unions offer, including loans and other services to low-income members.

The discussion also focused on the cooperative structure, one-member, one vote, and democratic control of credit unions. "These attributes are strengths and hallmarks of credit unions that make them unique among financial institutions in this country--these are key distinctions that the tax exemption ensures will remain," Cheney said. The group also emphasized that the value of the tax exemption to communities far exceeds the amount of revenue that would be collected if the tax exemption were eliminated.

CUNA has called on credit unions to redouble their tax advocacy efforts as members of the U.S. Congress return to normal business. (See Oct. 18 News Now story: CUNA: CUs Must Redouble Efforts As Normalcy Returns In D.C.)

Remittance Exam Procedures Released by CFPB

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WASHINGTON (10/23/13)--The policies and procedures Consumer Financial Protection Bureau examiners will use when examining remittance programs were previewed in a Tuesday agency release.

The bureau also released e-Regulations, a new online tool that will make CFPB regulations "easier to find, read, and understand." Regulation E is the first regulation highlighted by the new tool.

Under the final CFPB rule, remittance transfer providers are required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors. The rule has an Oct. 28 effective date.

The rule will not apply to credit unions and other entities that consistently provide 100 or fewer remittance transfers each year. Transactions of less than $15 will also not be covered under the rule.

The CFPB said it is working closely with its fellow regulators to ensure they all have a shared understanding of new rules. The remittance examination procedures were developed, in part, through the Federal Financial Institutions Examination Council. "This interagency effort will promote consistent supervision of remittance providers," the CFPB said.

According to the CFPB, examiners will focus on:
  • Assessing the quality of the regulated entity's compliance risk management systems in its remittance transfer business;
  • Identifying acts or practices that materially increase the risk of violations of federal consumer financial law and associated harm to consumers in connection with remittance transfers;
  • Gathering facts that help to determine whether a supervised entity engages in acts or practices that are likely to violate federal consumer financial law in connection with remittance transfers; and
  • Determining, in accordance with CFPB internal consultation requirements, whether a violation of a federal consumer financial law has occurred and whether further supervisory or enforcement actions are appropriate.
The examiners will also check for weaknesses or other risks in the organization's remittance business model, and whether the institution's audits address all applicable provisions of Regulation E and all key business processes and functions.

Organizational charts, process flowcharts, policies and procedures, account and transaction documentation, checklists and computer program documentation will be considered as examiners determine whether an entity's internal controls are adequate to ensure compliance with various sections of Regulation E, the CFPB added.

The Credit Union National Association has provided a host of resources to help credit unions prepare for remittance rule compliance. (See Oct. 17 News Now story: CUNA Preps CUs For Oct. 28 Remittance Rule Reckoning.)

CUNA said that it will continue to urge the CFPB to minimize the regulatory burden of its rulemakings, but added this initiative will make it easier to find revisions and read the final regulations in context with the commentary.  CUNA has asked the agency to follow suit with it its mortgage rules and commentaries as quickly as possible.

NCUA Adds Diversity Briefing To Agenda

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ALEXANDRIA, Va. (10/23/13)--The National Credit Union Administration has added a new item to the agenda of its Oct. 24 open board meeting: Agency staff will brief the board on a proposed interagency policy statement addressing joint diversity standards for regulated entities.

The NCUA early last year said it and other regulators would soon begin reviewing diversity policies and practices of the institutions they regulate. The Credit Union National Association and state leagues have stressed that NCUA must do all it can to minimize any new reporting or compliance requirements that new standards could impose on credit unions.

Other items on the NCUA open board meeting agenda include:
  • A plan to require yearly stress tests at credit unions with assets exceeding $10 billion;
  • A final rule on liquidity contingency plans;
  • A board briefing on an interagency rule on loans in areas with special flood hazards;
  • The quarterly National Credit Union Share Insurance Fund report; and
  • A final rule on electronic filing of financial reports.
The Thursday open meeting is scheduled to begin at 10 a.m. (ET). Two requests made under the Federal Credit Union Act are on the closed board meeting agenda, which will follow the open meeting.

For the full agenda, use the resource link.

N.Y. Officials Want Debt Collection Reg Improvements

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NEW YORK, N.Y. (10/23/13)--The New York State Department of Financial Services last week suggested a series of bold reforms to enhance consumer debt collection regulations.

The department suggestions follow the release of proposed rules that would require the use of standardized affidavits in consumer credit actions seeking default judgments. The proposed rules were released by the New York Office of Court Administration.

Reforms suggested by the department include:
  • Creating stronger affidavits to stop "robo-signing" and ensure debt collectors actually review a consumer's file;
  • Requiring debt collectors to include important information about these debts in the affidavit;
  • Requiring debt collectors to include documentation evidencing the debt with the complaint;
  • Requiring debt collectors to send consumers a pre-complaint notice before commencing a collection lawsuit;
  • Demanding demonstrable proof of service when a debt collector moves for a default judgment; and
  • Providing consumers an opportunity to vacate a default judgment if a debt collector violates the court's rules.
These reforms would help curb litigation abuse by debt collectors, the department suggested in a letter to Chief Administrative Judge of the Courts A. Gail Prudenti.

The Consumer Financial Protection bureau has also been active on the debt collection front. Noting that the Federal Trade Commission receives more complaints about the debt collection industry than any other specific industry, the bureau this spring has said it is considering debt collection actions and could develop a proposed rule to strengthen federal consumer protections for prepaid cards.

In July, the CFPB released a bulletin explaining that under the Dodd-Frank Act, debt collectors are statutorily prohibited from committing unfair, deceptive, or abusive acts or practices. A second bulletin containing guidance for creditors, debt buyers, and third-party collectors was also unveiled. Resources for consumers faced with debt-collection woes were also released: The CFPB provided a compilation of five letters that borrowers can use when replying to collectors. The letters may help consumers get valuable information about claims being made against them, or may help them protect themselves from "inappropriate or unwanted collection activities."

Reg Advocacy Report Updates NCUA, CFPB News

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WASHINGTON (10/22/13)--The latest information on this week's National Credit Union Administration open board meeting, that agency's recent charitable donation proposal, and Credit Union National Association comments made in a meeting with new agency board member Richard Metsger are all featured in this week's Regulatory Advocacy Report.

This week's edition of the Report also features:
  • Details on the Consumer Financial Protection Bureau's interim final mortgage servicing rule and bulletin;
  • The results of CUNA's survey on how CFPB mortgage rules could impact credit unions;
  • The CFPB's release of the annual report of the student loan ombudsman;
  • CUNA's call for credit union comments on credit risk retention and U.S. Department of Housing and Urban Development qualified mortgage rules; and
  • Recent Federal Deposit Insurance Corp. guidance on interest rate risk management and payments processing for higher-risk merchants.
A resource chart with information on current CUNA comment calls is also provided in the Report.

For this week's Regulatory Advocacy Report, CUNA members can use the resource link. Also, use the resource links for more on CUNA's recent conversation with new NCUA board member Metsger.

CUNA Brief: Fed Interchange Rule Bad, Court Ruling Worse

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WASHINGTON (10/22/13)--The Federal Reserve Board has made errors in implementing the Dodd-Frank-imposed debit interchange fee cap, the Credit Union National Association said Monday in a legal brief, but a July 31 court ruling overturning the rule would make things "significantly worse."
 
The ruling "compounds the (Fed's) legal error through a construction that would require deep cuts--amounting to many billions of dollars each year--into issuers' remaining interchange-fee revenues," CUNA, with its financial services coalition partners, warned in an amicus brief.
 
Already the Fed cap is too low and the court has further misinterpreted the law to set the fee cap equal to only a portion of the cost incurred by the debit card issuer with regard to the transaction, CUNA said.
 
"(T)he statute states clearly that the full 'cost' incurred by an issuer 'with respect to' an electronic debit transaction may be recovered through an interchange fee," CUNA noted.
 
Judge Richard Leon of the U.S. District Court for the District of Columbia issued the July decision to strike down the Fed's price caps on debit interchange fees. He ruled at that time that the Fed did not follow narrow congressional intent when it implemented the cap and other changes imposed by what is known as the Durbin amendment.
 
At the urging of both sides party to the lawsuit--the merchants' group plaintiffs and defendant Fed--as well as CUNA and its partners, Leon issued a stay in September to keep the Fed rules in place during the court proceedings.
 
The CUNA brief Monday made two additional points against the court's ruling. CUNA said the court ignored that the statute provides that the interchange fee "shall be reasonable and proportional to that transaction cost." 
 
"In choosing that language, Congress invoked the established constitutional principle that price regulation may not deprive one of the right to earn a reasonable return.  The district court's construction, which would call for deeply below-cost price caps, would flagrantly violate that principle," the CUNA brief stated.
 
The court and Fed also depart from congressional intent in their interpretations of the network non-exclusivity clause. CUNA wrote the while the Fed final rule departs from intent by requiring issuers to negotiate contracts with unaffiliated networks so as to "enable multiple networks on a debit card," the court's interpretation departs further. 
 
The court's interpretation that issuers must enable additional networks on their debit cards would force issuers to spend billions of dollars developing complex technology that did not, and does not yet, exist. CUNA argued that is "implausible" to believe it was the intent of Congress, especially where those expenditures are not recoverable under the district court's construction of the statute.
 
CUNA made a final point that the district court's ruling would cause grave harm to all debit system participants through reduced services, diminished investment in innovation by issuers, increased fees to consumers, and disruptive technological changes--all with no tangible offsetting economic benefit.
 
The Fed's brief in support of its appeal was also due Monday. (See related story.) Merchants have until Nov. 20 to respond and then the Fed has a Dec. 4 deadline to reply to that.
 
CUNA's partners in filing the brief are the American Bankers Association, Consumer Bankers Association, Electronic Payments Coalition, Financial Services Roundtable, Independent Community Bankers of America, Midsize Bank Coalition of America, National Association of Federal Credit Unions, and National Bankers Association. The case is known as NACS, et al. v. Board of Governors of the Federal Reserve System.

See the resource link to read CUNA's full brief.

Fed Brief Says Interchange Rule Faithful To Law's Intent

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WASHINGTON (10/22/13)--In a brief filed Monday, the Federal Reserve argued that it correctly followed congressional intent when it wrote regulations implementing the debit card interchange cap required by the Dodd-Frank Act, and should be entitled to deference as a result.

The brief was filed in the U.S. Court of Appeals for the District of Columbia Circuit. It follows Judge Richard Leon's July decision, in which he ruled that the Fed did not follow narrow congressional intent when it implemented the cap. The Credit Union National Association, in partnership with a group of trade associations representing all types of financial institutions, also filed a brief in this case on Monday. (See News Now story: CUNA Brief: Fed Interchange Rule Bad, Court Ruling Worse.)

In its brief, the Fed argued that it reasonably interpreted the network exclusivity provisions included in the Dodd-Frank Act, "which direct the Board to prohibit 'an issuer or payment card network' from restricting the number of networks on which a debit card transaction may be processed to a single network or to only affiliated networks."

The Fed also argued that when it set the new interchange fee, it correctly:
  • Used issuers' incremental costs related to authorizing, clearing, and settling debit card transactions as a baseline;
  • Excluded other costs which are not specific to a particular electronic debit transaction; and
  • Considered the functional similarity between electronic debit and checking transactions.
The Fed briefing also questioned merchants' insistence that multiple routing options for each method of authentication enabled on a card should have been required.

CUNA Will Represent CUs On Reg Burden, Capital, CFPB Issues

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WASHINGTON (10/22/13)--The Credit Union National Association will submit statements for the record for upcoming hearings on key credit union issues this week, topics including regulatory burden, impediments to capital formation, and changes to the structure of the Consumer Financial Protection Bureau.
 
Though the U.S. House has scheduled a brief work week and the Senate is out, there are three hearings on the agenda of interest to credit unions:
  • A House Financial Services capital markets and government sponsored enterprises subcommittee hearing entitled "Legislation to Further Reduce Impediments to Capital Formation." CUNA has noted that supplemental capital does not change the credit union structure, said has said that new sources of capital would be a tool that would help credit unions better serve their members;
  • A House Small Business investigations, oversight and regulations subcommittee hearing entitled "Regulatory Landscape: Burdens on Small Financial Institutions." Compliance can be the most important legal task faced by many credit unions. CUNA has noted that regulatory complexity continues to increase, creating more and more emerging issues for credit unions. CUNA continues to work with credit unions and leagues to ensure that new regulatory developments do not have unintended consequences for the credit union system or impose unnecessary regulatory burdens; and
  • A House Financial Services financial institutions and consumer credit subcommittee hearing entitled "Examining Legislative Proposals to Reform the Consumer Financial Protection Bureau." CUNA has encouraged the CFPB to consider the regulatory burdens faced by credit unions as it writes new rules, and to exempt credit unions from the terms of new regulations as much as possible.

Cordray Defends CFPB Mortgage Rule

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WASHINGTON (10/22/13)--In a speech delivered in New Orleans Monday, Consumer Financial Protection Bureau Director Richard Cordray, in effect, addressed critics of his agency's new mortgage rules saying they were needed, they are better than the alternative, and there are good reasons for the January 2014 effective date.
 
First, he said, two of the new rules will be "extremely important" in addressing some of the worst problems that undermined the mortgage market and served to push it towards collapse. They are the Ability-to-Repay rule, also known as the Qualified Mortgage--or QM--rule, and the CFPB's mortgage servicing rule.
 
The QM rule, he said, ensures borrowers get mortgages "they can actually afford to pay back," and the servicing rule cleans up "many sloppy and unsatisfactory practices," as well as provides a better process for troubled borrowers who could face the loss of their homes.
 
Cordray also noted that continuing with the mortgage market "status quo" was never an option under the Dodd-Frank Act, under which the CFPB mortgage rules have been written. "(T)he new law contained an entire chapter that largely would have taken effect in its own right in January 2013--nine months ago (Monday)."
 
"So you would have already been living under those provision for quite some time with no guidance to resolve ambiguities and subject to whatever interpretations the courts might eventually arrive at through litigation," he said in his prepared remarks to the American Bankers Association annual convention.  
 
Under that regime, Cordray said, lenders would not have been permitted to charge any points or fees on any loan for which a loan originator--employee or not--was compensated; there would not have been a clear safe harbor against litigation for all prime QM loans as the CFPB rule provides, and there were no special provisions for small creditors, like the CFPB rule that deems as QMs all loans by those making 500 or fewer mortgages per year and keeping them in their own portfolios.
 
Regarding the fast-approaching January 2014 effective date, Cordray spoke in its defense as well.
 
"(T)here are many moving parts that are dependent on (the rules), and the mortgage market cannot attain certainty going forward if these part continue to move."

White House, CUNA Meet On Tax Reform And More

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WASHINGTON (10/22/13)--Jason Miller, special assistant to the President in President Barack Obama's National Economic Council, and NEC Senior Advisor Brett Taxin met with Credit Union National Association President/CEO Bill Cheney and senior CUNA staff Monday to discuss credit union concerns on a range of issues, including tax reform.
 
Addressing credit union tax status issues with the White House comes at a critical time, noted Cheney after the meeting. House Ways and Means Committee Chair Dave Camp (R-Mich.) and Senate Finance Committee Chair Max Baucus (D-Mont.) have underscored they remain committed to tax reforms. Tax reform could also be discussed as the budget conference committee convenes as part of the deal to reopen the government meets in the coming weeks.
 
"We are very aware that work continues on drafts in both chambers, which makes our continued grassroots efforts on this issue very important," Cheney underscored.
 
The NEC staff indicated the administration fully recognizes the important role that credit unions play in the U.S. economy and all of our communities. 
 
Cheney called the meeting "extremely cordial" and added, "I feel we had a very good opportunity to reinforce how imperative the tax exemption is for credit unions, as well as raise a range of other issues that are critical for the credit union system, such as the regulatory burdens that credit unions face on a daily basis," Cheney said.  CUNA Senior Vice President for Legislative Affairs Ryan Donovan, Deputy General Counsel Mary Dunn, General Counsel Eric Richard, and Chief Economist Bill Hampel also attended the meeting.
 
Topics covered by CUNA during the meeting also included:
  • The importance of ensuring fair access for credit unions to the secondary market as housing finance reform is addressed;
  • The growing and immediate need for regulatory relief;
  • The catalyst that removing the member business loan (MBL) cap would be to greater small business lending at credit unions; and
  • The impact that access to supplementary capital for all credit unions could have on the ability of credit unions to serve their members and communities.
Concerns that regulators and the secondary market may require mortgage loans to be "qualified mortgages" under the Consumer Financial Protection Bureau's Ability to Repay rule were also among the priority issues raised during the meeting.
 
"We were encouraged by the NEC staff to follow up with them on these and other issues and we look forward to continuing the dialogue on the significant issues facing the credit union system," Cheney added.

Charitable Donation Proposal Tweaks Could Improve Participation: CUNA

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ALEXANDRIA, Va. (10/22/13)--While the National Credit Union Administration's proposed creation of hybrid charitable and investment vehicles "will allow federal credit unions to do well by doing good," the Credit Union National Association Monday recommended a few changes that could improve the proposal. The changes would "facilitate credit union participation without raising safety and soundness concerns," CUNA said in a comment letter to the agency.
 
The NCUA plan, introduced at the agency's September open board meeting, would limit total investment in charitable donation accounts (CDAs) to 3% of the credit union's net worth for the duration of the accounts. A minimum of 51% of the total return from such an account would have to be distributed to one or more qualified charities. Distributions could be made to qualified charities no less frequently than every five years.
 
These CDAs will allow federal credit unions to make investments that are otherwise prohibited, provided that the proceeds are primarily for charitable purposes. This would facilitate a federal credit union's charitable activities by allowing investments that could generate a higher return, CUNA wrote.
 
Changes recommended in the CUNA comment letter include:
  • Making the limitations on a federal credit union's aggregate contributions to CDAs more flexible by specifying the net worth limitation be measured at the time of purchase or placement of the investment in the CDA and at the time of any subsequent additional investment and raising it from 3% to 5% of net worth;
  • Making CDA disbursements on an annual basis;
  • Allowing corporate credit union to take part in CDAs;
  • Eliminating U.S. Securities and Exchange Commission registration requirements for Office of the Comptroller of the Currency-supervised entities that manage CDAs for federal credit unions. Such a change would prevent redundant regulatory oversight; and
  • Allowing credit unions to recover their costs so that these do not impact the total investment return.
For the full CUNA comment letter, use the resource link.

Fed To File Interchange Brief Today; CUNA To File Also

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WASHINGTON (10/21/13)--Today the Federal Reserve Board's brief is due in support of its rule implementing the debit card interchange cap required by the Dodd-Frank Act. The brief must be submitted to the .S. Court of Appeals for the District of Columbia Circuit.
 
In July, Judge Richard Leon of the district court ruled to strike down the Fed's price caps on debit interchange fees. He said that the Fed did not follow narrow congressional intent when it implemented the cap. The Fed has appealed that decision.
 
The Credit Union National Association and its financial services partners will file an amicus brief today.
 
At the urging of both sides party to the lawsuit--the merchants' group plaintiffs and defendant Fed--as well as CUNA and its partners, Leon issued a stay in September to keep the Fed rules in place during the court proceedings.
 
CUNA's partners in filing the brief are the American Bankers Association, Consumer Bankers Association, Electronic Payments Coalition, Financial Services Roundtable, Independent Community Bankers of America, Midsize Bank Coalition of America, National Association of Federal Credit Unions, and National Bankers Association. The case is known as NACS, et al. v. Board of Governors of the Federal Reserve System.

Monthly Payments Webinars Previewed In Cheney Report

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WASHINGTON (10/21/13)--In the latest edition of The Cheney Report, Credit Union National Association President/CEO Bill Cheney previews a new series of monthly upcoming webinars that will help credit unions tackle the challenges brought on by the changing nature of payments systems and technologies.
 
The first webinar, which is scheduled for Oct. 21 at 2 p.m. (CT), is part of a series on the future of payments. The CUNA Technology Council will present the webinar, during which PSCU Executive Vice President Fredda McDonald will discuss:
  • Closed Loop versus using the current rails;
  • Credit versus Debit in the mobile payments space;
  • Cloud payments versus the mobile wallet;
  • What role loyalty plays for credit unions, and how they can leverage it; and
  • How payment system changes can offset the loss of interchange income.
 
Use the resource link to register for the webinar.
 
Cheney also discusses the results of a CUNA survey on upcoming Consumer Financial Protection Bureau mortgage rules. (For more, see today's story: CUs Wary Of New Mortgage Rules, CUNA Survey Shows.)
 
This week's edition of The Cheney Report also:
  • Thanks to credit unions that helped their members make it through the federal government shutdown;
  • Provides a preview of how tax reform discussions could progress as Congress returns to normal business;
  • Gives credit unions an example of why they must continue to advocate for their tax status; and
  • Details the items on the National Credit Union Administration's October open board meeting agenda.
 
Use the resource link to read the latest in The Cheney Report.

Survey Shows New Mortgage Regs Could Force CUs To Reduce Programs

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WASHINGTON (10/21/13)--Some credit unions may be forced to discontinue, delay, or reduce their mortgage loan product offerings due to Consumer Financial Protection Bureau mortgage regulation changes that are set to take effect in January, a Credit Union National Association survey has revealed.

Around 60% of credit unions that responded to the survey said they were considering scaling back their mortgage practices. And, while many have been diligently working throughout 2013 toward meeting the compliance deadline, they may not be fully prepared to comply when the regulations take effect.

"These survey results are troubling for consumers," CUNA President/CEO Bill Cheney said. "CUNA has urged the CFPB to allow more time for compliance, since seven rules will hit within a two-week period, which poses a monumental compliance challenge. This is a particularly daunting task for smaller credit unions, given their small staffing resources," he added.

Half of the credit unions that responded said they have not decided whether or not they would offer non-qualified mortgage (QM) loans, write only QM loans, or reduce the number of non-QM loans that they make for their members. "This indicates that some credit worthy borrowers who would otherwise have qualified for a mortgage may not receive loans from their credit union," Cheney said.

The survey showed the pending regulations will also impact third party vendors: Ten percent said they would not be able to develop programming until after January 2014, and 41% of credit unions indicated their vendor has not yet promised a delivery date.
 
The lack of programming updates could mean that credit unions may miss their Internal Revenue Service deadlines and/or CFPB compliance dates. Overall, the survey showed that 86% of responding credit unions are using third party vendors to assist in implementing the rules, while 69% of this 86% are using multiple vendors.
 
"CUNA will continue to do all we can to help minimize the impact of these rules," Cheney added. "We are aware that the CFPB has talked with prudential regulators such as [the National Credit Union Administration] and that examiners should allow several months after the effective date before instructions that are seeking to comply are cited for violations. We are also concerned about protecting credit unions from litigation, and we will continue to pursue that issue as well."

CUNA Brings CU Issues To Newest NCUA Board Member

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ALEXANDRIA, Va. (10/21/13)--Potential risk-based net worth requirements, containing corporate stabilization fund assessments and general agency budget issues were on the agenda when the Credit Union National Association met with new National Credit Union Administration board member Richard Metsger on Friday.

CUNA President/CEO Bill Cheney said the discussions were candid and productive. "We are confident that board member Metsger will ensure that credit unions' concerns will be fully considered, as well as reasonable agency safety and soundness needs when the board makes policy decisions," he added.

CUNA staff at the meeting included Cheney, General Counsel Eric Richard, Deputy General Counsel Mary Dunn, and Executive Vice President for Strategic Communications Paul Gentile. Also in the meeting was NCUA Deputy Director of Examinations and Insurance Dave Shetler, who is acting as Metsger's advisor on a temporary basis until a candidate is selected to fill the position permanently.

Other meeting topics included:
  • Minimizing oversight of credit union service organizations;
  • Emergency liquidity resources;
  • Examination and appeals process issues;
  • The agency's proposal on derivatives; and
  • NCUA's proposal on charitable donation accounts.
CUNA is pursuing all of these issues and others with the agency to point out concerns and seek improvements to benefit credit unions without undermining safety and soundness. CUNA will continue to advance recommendations to the agency on all of these issues, CUNA's Dunn said after the Friday meeting.

NCUA Names New Office Of Examination And Insurance Supervision Director

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ALEXANDRIA, Va. (10/21/13)--D. Scott Neat, a 26-year National Credit Union Administration veteran, will serve as the agency's director of supervision in the office of examination and insurance starting on Nov. 3.

The Division of Supervision oversees NCUA's examination and supervision program. Neat will replace Matthew Biliouris, who the NCUA named deputy director of the office of consumer protection in July.

Neat joined the NCUA as an examiner in 1987, and has served as supervision analyst, problem case officer and supervisory examiner in his time with NCUA. He holds an accounting degree from the University of Kentucky.

NEW: CUNA Brief: Fed Interchange Rule Bad, Court Ruling Worse

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WASHINGTON (10/21/13, UPDATED 3:44 p.m. ET)--The Federal Reserve Board has made errors in implementing the Dodd-Frank-imposed debit interchange fee cap, the Credit Union National Association said today in a legal brief, but a July 31 U.S. appeals court ruling  overturning the rule would make things "significantly worse."
 
The ruling "compounds the (Fed's) legal error through a construction that would require deep cuts--amounting to many billions of dollars each year--into issuers' remaining interchange-fee revenues," CUNA, with its financial services coalition partners, warned in an amicus brief.
 
Already the Fed cap is too low and the court has further misinterpreted the law to set the fee cap equal to only a portion of the cost incurred by the debit card issuer with regard to the transaction, CUNA said.
 
"(T)he statute states clearly that the full 'cost' incurred by an issuer 'with respect to' an electronic debit transaction may be recovered through an interchange fee," CUNA noted.
 
Judge Richard Leon of the U.S. District Court for the District of Columbia issued the July decision to strike down the Fed's price caps on debit interchange fees. He ruled at that time that the Fed did not follow narrow congressional intent when it implemented the cap and other changes imposed by what is known as the Durbin amendment.
 
At the urging of both sides party to the lawsuit--the merchants' group plaintiffs and defendant Fed--as well as CUNA and its partners, Leon issued a stay in September to keep the Fed rules in place during the court proceedings.
 
The CUNA brief today made two additional points against the court's ruling. CUNA said the court ignored that the statute provides that the interchange fee "shall be reasonable and proportional to that transaction cost." 
 
"In choosing that language, Congress invoked the established constitutional principle that price regulation may not deprive one of the right to earn a reasonable return.  The district court's construction, which would call for deeply below-cost price caps, would flagrantly violate that principle," the CUNA brief stated.
 
The court and Fed also depart from congressional intent in their interpretations of the network non-exclusivity clause. CUNA wrote the while the Fed final rule departs from intent by requiring issuers to negotiate contracts with unaffiliated networks so as to "enable multiple networks on a debit card," the court's interpretation departs further. 
 
The court's interpretation that issuers must enable additional networks on their debit cards would force issuers to spend billions of dollars developing complex technology that did not, and does not yet, exist. CUNA argued that is "implausible" to believe it was the intent of Congress, especially where those expenditures are not recoverable under the district court's construction of the statute.
 
CUNA made a final point that the district court's ruling would cause grave harm to all debit system participants through reduced services, diminished investment in innovation by issuers, increased fees to consumers, and disruptive technological changes--all with no tangible offsetting economic benefit.
 
The CUNA brief was filed today in support of the Fed's brief due today on its appeal (more in tomorrow's News Now). Merchants have until Nov. 20 to respond and then the Fed has a Dec. 4 deadline to reply to that.
 
CUNA's partners in filing the brief are the American Bankers Association, Consumer Bankers Association, Electronic Payments Coalition, Financial Services Roundtable, Independent Community Bankers of America, Midsize Bank Coalition of America, National Association of Federal Credit Unions, and National Bankers Association. The case is known as NACS, et al. v. Board of Governors of the Federal Reserve System.

Stress Tests, Contingency Plans On Heavy NCUA Agenda

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ALEXANDRIA, Va. (10/18/13)--A plan to require yearly stress tests at credit unions with assets exceeding $10 billion, and a final rule on liquidity contingency plans, are two of the higher profile items on the National Credit Union Administration's October open board meeting agenda.

NCUA Debbie Matz last month said the agency's Office of National Examinations and Supervision was drafting a stress test requirement. Stress testing of federally insured credit unions with state charters would be conducted in consultation with the state regulator, she said. The shocks used in the stress tests, she added, would be based on scenarios issued annually by the Federal Reserve, with adjustments for differences between banks and credit unions.

Matz said the stress test results may be made public--but the jury was still out on that.  She noted that public disclosure would enhance transparency to members.  However, she acknowledged that results could also be misinterpreted and lead to inaccurate conclusions about a credit union's current stability.

Credit Union National Association President/CEO Bill Cheney last month said CUNA doesn't take issue with the NCUA taking appropriate steps to protect the federal share insurance fund in the interests of all credit unions that it insures. But CUNA is pondering, he added, whether "whether this sort of approach is necessary for credit unions, with their relatively low-risk profile, even for very large credit unions." Any stress test proposal will receive "very careful scrutiny."

The final version of the NCUA's liquidity rule follows a proposed version that was introduced last fall. Under that proposed rule, credit unions with less than $10 million in assets would need to maintain a basic written emergency liquidity policy, but would not be required to take further action. All federally insured credit unions with assets of $10 million or more would be required to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations.

FICUs with assets of $100 million or more would be required to have access to a backup federal liquidity source for emergency situations.

The Thursday open meeting is scheduled to begin at 10 a.m. (ET). Other items on the NCUA open meeting agenda include:
  • A board briefing on an interagency rule on loans in areas with special flood hazards;
  • The quarterly National Credit Union Share Insurance Fund report; and
  • A final rule on electronic filing of financial reports.
Two requests made under the Federal Credit Union Act are on the closed board meeting agenda.

For the full agenda, use the resource link.

CULAC-Backed Booker Wins N.J. Senate Seat

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WASHINGTON (10/18/13)--Credit Union National Association Vice President of Political Affairs Trey Hawkins said CUNA is looking forward to working with credit union-backed New Jersey Senate candidate Cory Booker (D), who won his special election contest Wednesday by an 11-point margin.

"Booker has been a great credit union supporter and we look forward to working with him in the Senate. We are confident that he will be as effective a leader here in Washington as he was in Newark," Hawkins added.

The New Jersey Credit Union League (NJCUL) and CULAC, CUNA's federal political action committee, supported Booker in his campaign efforts, making the legal maximum donation of $5,000.

Booker, the outgoing mayor of Newark, N.J., beat his Republican opponent, Steve Lonegan, by winning 54% of the total vote. New Jersey has not elected a Republican to the U.S. Senate since 1972.

Booker will take the seat vacated when Frank Lautenberg died on June 3 once the vote is certified. That could occur as soon as the first week of November. State Attorney General Jeff Chiesa (R) was appointed by Gov. Chris Christie to fill Lautenberg's seat on an interim basis since June.

NJCUL Director of Government Affairs Chris Abeel said the league has been building relations with Mayor Booker for several years, and noted Booker has expressed his support for credit unions several times.

"We are excited to work with him in his new role as a U.S. senator," Abeel added. Booker has spoken at New Jersey state credit union chapter meetings, and has taken part in a Garden Savings FCU event that benefitted the Newark Y.E.S. (Youth Education, Employment and Success) Center.

CUNA: CUs Must Redouble Efforts As Normalcy Returns In D.C

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WASHINGTON (10/18/13)--With a budget catastrophe averted, at least for now, credit unions must redouble their tax advocacy efforts as members of the U.S. Congress dust off and get back to work, Credit Union National Association Executive Vice President of Government Affairs John Magill said Thursday.

The budget agreement reached this week requires congressional leaders to name conferees to a budget conference committee that would issue recommendations by Dec. 13. Tax reform will likely be one of the items discussed as budget changes are debated, Magill noted.

"We absolutely cannot let our guard down," Magill emphasized.

The government shutdown and the debate that surrounded it created a short delay, but Magill said Senate Finance Committee Chair Max Baucus (D-Mont.) and House Ways & Means Committee Chair Dave Camp (R-Mich.) are still committed to tax reform, and are looking at an emptying hourglass as elections approach next year.

"They want to move sooner rather than later," Magill said.

In addition, members of Congress are also well aware of the criticism levelled against them in recent days, and they will be eager to show the American public that they can, in fact, do positive work. Immigration reform and the farm bill--with controversial food stamp provisions and  federally subsidized crop insurance--are two of the other topics at the top of their list.

Magill said he is glad that CUNA began this latest round of tax status advocacy in May of this year. Credit unions "have not stopped" since that time, and they must keep up the good work to remind members of Congress that a tax on credit unions is a tax on 97 million Americans, he added.

CUNA has provided a host of Take Action tools on www.DontTaxMyCreditUnion.org to help credit union supporters back the tax status. Supporters have spoken up by sending tweets, pictures, vine videos, and e-mails to their members of Congress, all with the #DontTaxMyCU hashtag.

NCUA Employees Robust In Food Bank Giving

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ALEXANDRIA, Va. (10/17/13)--National Credit Union Administration employees increased their donations to an area food bank by 961% this year. They gave more than 22,000 pounds of food to the Capital Area Food Bank through the Feds Feed Families program; it is expected to help more than 18,000 residents of the Washington metropolitan area.
 
NCUA employees of all levels participated in the food drive and to achieve the record-breaking results, several NCUA office directors offered to match staff contributions by as much as four to one.

"The staff at NCUA really stepped up, and this year's charity drive was nothing short of amazing," NCUA Chair Debbie Matz said in a release. "In a time when food banks are reporting historically high levels of requests for help, NCUA staff responded to the need energetically and creatively. "
 
Since the Feds Feed Families annual food drive began in 2009, federal workers have donated and collected 15.2 million pounds of food and other non-perishable items to support families across the United States. More than 85% of federal workers live and work outside the Washington D.C. area.

Cheney Hails CU Support For Federal Workers

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WASHINGTON (10/17/13)--Federal workers were expected back to work today after the U.S. House and Senate Wednesday moved toward a solution to the weeks-old spending standoff that led to a government shutdown--and the suspension of many federal workers' job responsibilities, as well as their paychecks.

Credit Union National Association President/CEO Bill Cheney took the opportunity to commend credit unions for their extensive work to help their members in need. "Over the last few weeks, we have heard so many fantastic reports of credit unions stepping up to help their members affected by the government shut down. 

"Always in hard times such as these recent weeks, credit unions show how the credit union philosophy of 'People Helping People' deeply benefits their communities."

The budget bill, which was approved by the Senate late Wednesday and was adopted 285-144 by the House, will fund the government through Jan. 15 and increase the debt ceiling through Feb. 7, allowing the U.S. Treasury to continue to borrow funds to pay the nation's outstanding bills. It requires additional income verification measures under the Affordable Care and Patient Protection Act to ensure that those receiving financial assistance to purchase health insurance are qualified.

The budget agreement also requires congressional leaders to name conferees to a budget conference committee that would issue recommendations by Dec. 13.

Federal workers are expected to receive back pay under the terms of the deal. President Obama signed the bill shortly after midnight.

During the shutdown, credit unions supported affected members by offering zero-percent loans, penalty-free term share withdrawals, one- to three-month deferment of loan payments, and fee waivers on early withdrawals on share certificates.

CUNA this week detailed some of these efforts in a letter to U.S. Rep. Maxine Waters (D-Calif.). Waters, the ranking member on the House Financial Services Committee, requested details from CUNA. CUNA's Cheney in the letter noted that "the credit union mission is to promote thrift and provide access to credit for provident purposes to members...As member-owned, not-for-profit cooperatives, credit unions embody a 'people helping people' philosophy. As a result, when credit union members face hardship, they have confidence that their credit union will stand with them and provide assistance. It is simply what we do," he added.

See resource links for extensive stories of credit unions' efforts.

CUNA Preps CUs For Oct. 28 Remittance Rule Reckoning

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WASHINGTON (10/17/13)--As the Oct. 28 effective date for new remittance transfer regulations approaches, the Credit Union National Association is reminding credit unions of how the coming regulatory changes could impact their daily business, and how they can prepare for the changes.

Under the final Consumer Financial Protection Bureau rule, remittance transfer providers are required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors.

In a recent CUNA CompBlog post, Valerie Moss, senior director of compliance analysis, noted that two types of credit unions have reached out to CUNA with questions regarding the rule: Credit unions that provide remittance transfers "in the normal course of business" and are working on implementation issues, and credit unions that only provide international money transfers occasionally as an accommodation to members.

Both groups, Moss wrote, have one thing in common: They need to determine what is and is not a remittance transfer under subpart B of Regulation E--the electronic funds transfer rule.

Credit unions that provide remittance transfers in the "normal course of business" will be considered "remittance transfer providers," and will need to comply with the remittance rule requirements.

Credit unions will not be considered remittance transfer providers under the rule if:
  • They provided 100 or fewer remittance transfers in the previous calendar year; and
  • If they provide 100 or fewer remittance transfers in the current calendar year.
Credit unions that qualify for this safe harbor are exempt from the rule, Moss wrote.

When tallying the 100, credit unions must count all the various types of remittance transfers covered by the rule together. However, transactions that do not count toward this 100 transfer total include:
  • Domestic wire/ACH transactions;
  • Transfers where the credit union is the recipient institution of the wire/ACH;
  • Debit card purchases from a merchant located in another country;
  • International transfers sent by businesses;
  • Prepaid cards purchased in the U.S. that are not delivered to a recipient abroad; and
  • Online bill payments to recipients located in another country where the agreement states that payments will be made solely by check, draft or similar instrument.
CompBlog is planning more posts on the remittance regulation as the Oct. 28 effective date approaches.

Earlier this year, CUNA released a survey identifying credit unions' top concerns with the CFPB remittance rule.

CUNA's Center for Professional Development has also extended availability for its archived webinars on remittances until Jan. 31.

For more of this CUNA CompBlog post, the CUNA survey and the archived CPD webinars, use the resource links.

CFPB: Loan Mods, Payments Challenge Private Student Loan Holders

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WASHINGTON (10/17/13)--Payment processing and loan modification issues continue to be the most widely reported problems with private student loans, the Consumer Financial Protection Bureau's Student Loan Ombudsman noted in its annual report released Wednesday.

The report examines more than 3,800 private student loan complaints received by the CFPB between Oct. 1, 2012 and Sept. 30 of this year. Complaints from consumers seeking a loan modification comprised just under half of the student loan complaints received during the reporting period, the CFPB said.

The CFPB report said student loan refinancing options can be hard to find. It said that while many student loan borrowers attempt to pay off their loans early to reduce the total amount of interest owed, such attempts can leave consumers confused. According to the CFPB, sometimes payments in excess of normal monthly amounts are applied to all loans held by the borrower, not just the highest-interest loan under their name.

The ombudsman also reported complaints that lenders, in some cases, took partial payments intended for a single loan and distributed it equally to all a multiple loan holder's loans. That practice can result in additional late fees for the borrower, "and it can exacerbate the negative credit impact of a single late payment," the CFPB wrote.

Lost paperwork, processing errors and other issues have also cropped up when loans are transferred between multiple servicers, the report said. The CFPB released a consumer advisory to help borrowers deal with these and other issues. The advisory includes sample instructions that will help consumers ensure that any extra payments made on their student loans are applied toward the highest-rate loan they have taken out. For the CFPB report and the consumer advisory, use the resource link.

The Credit Union National Association has met with CFPB officials to underscore that credit unions could do even more to help debt-saddled grads if the maximum credit union student loan maturity of 15 years was increased. Also, this summer CUNA formed a student loan working group to explore current issues related to credit unions' offering private student loans to members. The group is focused on developing best practices for credit union student loans and monitoring related regulatory activity at the CFPB and the National Credit Union Administration.

Metsger: CUs, NCUA Can Work Toward 'Bigger, Faster, Stronger' System

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ALEXANDRIA, Va. (10/16/13)--While he is working to get up to pace on issues his National Credit Union Administration colleagues have been discussing for months, if not years, new agency board member Richard Metsger gave News Now a window into how he plans to address credit union issues going forward: Regulation, he said, can be a collaborative process between credit unions and the NCUA.

Click to view larger image National Credit Union Administration Board Member Richard Metsger told News Now that being a "Monday morning quarterback" never changes the outcome of the game, but can be a good tool for avoiding future mistakes. A focus of the NCUA continues to be evaluating what went wrong leading up to the financial crisis of 2008, and learning how to avoid a similar situation going forward, he said. (CUNA Photo)
Metsger does not see the regulatory process as "adversarial," he said. Rather he sees it "as cooperative, but [with] distinctively different perspectives in some cases."

He invited credit unions to reach out to the NCUA board and engage in a thoughtful manner. "Standing on one end of the room and yelling at someone else seldom produces any results," he said, noting his past work as an Oregon state senator has shown that a collaborative approach can benefit all parties. The NCUA needs "the experience and the expertise of the regulated community, but we don't need sound bites. What we do need is information and facts so we can make informed decisions," he said.

Metsger emphasized that his experience with credit unions, which has come over many years from a number of different angles, will be a boon to the NCUA and credit unions alike. One such angle is his work as a member of the board of directors at Portland Teachers CU from 1993 to 2001. He dealt directly with compliance and budget issues during that time.

"The backbone of the credit union system has been small credit unions," Metsger said.  That's where it all started, and Metsger touted his understanding of how they differentiate from the larger credit unions in the system.

For now, Metsger said the agency is concerned with making sure credit unions are adequately capitalized, prepared for potential interest rate shocks, avoid concentration of risk on balance sheets, and look to see how the increasing threat of cyberattacks on credit unions and other financial institutions can be mitigated. "We don't want to be the vulnerable party," he emphasized.

In the long-term, he hopes to focus on the safety and soundness of the system. Overall, a strong, safe, sound credit union system is the mutual goal of the regulator and the regulated, and while both sides have different opinions, credit unions and the NCUA can listen to each other and work carefully to address shared concerns, he said. And, in the end, a "bigger, faster, stronger" credit union system is the goal.

CUNA Highlights CUs' Furlough Efforts For Federal Lawmakers

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WASHINGTON (10/16/13)--At the request of U.S. Rep. Maxine Waters (D-Calif.), ranking member on the House Committee on Financial Services, the Credit Union National Association Tuesday provided a letter describing the efforts that credit unions are taking to help those affected by the federal government shutdown.
 
"The credit union mission is to promote thrift and provide access to credit for provident purposes to members," wrote Bill Cheney, CUNA president/CEO, in the letter to Waters. "As member-owned, not-for-profit cooperatives, credit unions embody a 'people helping people' philosophy.  As a result, when credit union members face hardship, they have confidence that their credit union will stand with them and provide assistance.  It is simply what we do."
 
The letter outlines specifics of programs at 19 credit unions, including Congressional FCU, which initiated a relief program offering members a 0% 90-day loan that converts to a 4% 36-month loan after the 90 days are up.
 
Waters had sent a letter to CUNA late Friday asking for examples of specific programs at credit unions.

"Credit unions are not simply waiting for their members to ask for assistance.  In many cases, they are actively reaching out to their membership through e-mail, mail, local media and social media to notify members of the availability of assistance programs," Cheney wrote.

"While CUNA has not conducted a comprehensive survey of credit unions to assess all that is being done to assist government workers, government contractors and other small businesses affected by the shutdown, the anecdotal evidence suggests that credit unions are stepping up in support of their members, as anyone who understands the mission of credit unions would expect them to do."

In addition to the program at Congressional FCU, the letter lists the specifics of furlough assistance programs at 18 credit unions from 14 states.

"While this is far from a comprehensive list of how credit unions have stepped up to help their members over the last two weeks, it is representative of what credit unions are doing as their members endure a government shutdown that has gone on longer than any could have reasonably expected and continues without any meaningful promise of ending soon," said Cheney's letter.

"So far, we have not heard of push back from the National Credit Union Administration or state regulators regarding these programs; however, if the shutdown is prolonged, it is possible that examiners may start to question the continuation of these services.  In the meantime, credit unions will continue to do what they can to assist their members; however, we also encourage Congress to work together to end the shutdown as soon as possible," the letter said.

For yet more examples of programs from credit unions, see related story, "CU Branches Closed By Shutdown Still Helping Members, from today's News Now as well as past articles on the topic. Use the links.

NCUA Video Highlights Small CU, LICU Resources

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ALEXANDRIA, Va. (10/16/13)--The many boot camps, on-demand webinars and workshops offered by the National Credit Union Administration's Office of Small Credit Union Initiatives (OSCUI) are highlighted in a new agency YouTube video, "March in Double Time with OSCUI."

"While the credit union industry as a whole is doing well, many small credit unions need assistance," NCUA Board Chairman Debbie Matz said. The NCUA's comprehensive training, she noted, is "to build capacity and strengthen small and low-income credit unions so they can remain viable and meet the financial needs of their members, some of whom live in our most underserved communities, for many years to come."




OSCUI workshops and boot camps have been attended by more than 1,500 credit union professionals this year, 6,900 credit union representatives have used the agency's training videos, and 4,500 have taken part in OSCUI-led webinars, the NCUA said.

For more on the video, use the resource link.

CUNA Reg Advocacy Report Features CU Comment Collection

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WASHINGTON (10/16/13)--The Credit Union National Association continues to work to address the regulatory issues faced by credit unions, and in this week's edition of the Regulatory Advocacy Report, CUNA regulatory staff highlight three areas in which regulators are seeking comments from credit unions and others.

The first area outlined is a Federal Reserve paper on potential payments system changes and improvements. The Fed is working to address potential gaps and opportunities in the payments system, including payment speed, closed payment communities, and international, mobile, and traditional payment channels. The Fed is also exploring where it fits in the payment system going forward, and is seeking extensive public comment as part of this research process.

CUNA is reviewing the paper with its payments subcommittee, CUNA Councils, and others, and has met with the Fed to discuss payments issues and how credit unions can provide feedback.

Another item of interest is Bank Secrecy Act burdens, and CUNA is reaching out to credit unions on this issue as well. In a CUNA-produced survey, credit unions can detail their own regulatory burdens and suggest areas in which BSA regulations can be improved.

Also, CUNA continues to accept comment on an interagency credit risk retention proposal that includes a new definition of "qualified residential mortgage" (QRM). The proposed QRM definition would be identical to the definition adopted by the CFPB for a "qualified mortgage" (QM). Comments on this proposal are due by Oct. 30.

This week's Regulatory Advocacy Report also includes:
  • Details on the Consumer Financial Protection Bureau's recent release of Home Mortgage Disclosure Act guidance;
  • National Credit Union Administration exam modernization efforts; and;
  • The results of an NCUA material loss review of Chetco FCU.
A resource chart with information on current CUNA comment calls is also provided in the Report.

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

World Council Seeks Basel III Carveout For CUs

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WASHINGTON (10/16/13)--The World Council of Credit Unions in a new letter has asked that bank term deposits made by credit unions and similar  institutions be classified as "retail" or "small business" deposits rather than as "wholesale funding" for Net Stable Funding Ratio (NSFR) purposes under Basel III liquidity regulations.

Such a carveout could apply to federal credit unions and other institutions that are subject to very limited investment power regulations, or institutions that are less than $1 billion in assets, World Council Vice President and Chief Counsel Michael Edwards wrote in a letter to Basel Committee on Banking Supervision Bank for International Settlements Secretary General Wayne Byers.

Basel III currently defines credit union deposits at banks or other Basel III-compliant institutions as "wholesale funding," and the increased cost of capital for "wholesale" deposits has caused Irish banks to reduce the yield on terms deposits made by credit unions by 150 basis points, on average, Edwards explained. This situation has likely caused some banks in Great Britain and the U.S. to cease doing business with credit unions altogether, he noted.

"We expect significant problems for credit unions in developed countries, including possible failures and consolidation, unless the committee clarifies the NSFR so that bank term deposits made by these credit unions are considered "retail" or "small business" rather than "wholesale," Edwards wrote. And, the growing adoption of Basel III regulations could create larger issues for credit unions in developing countries, he added.

"Without clarification from the committee concerning the definition of credit union deposits under the NSFR, we believe that the trends of lower yields on credit unions' term bank deposits or closures of their bank accounts will harm potentially tens of thousands of credit unions and up to 200 million credit union members in both the developed world and the developing world. That outcome would be especially tragic for the world's 2.5 billion unbanked people as well as for the low-income and rural areas where credit unions are often the only financial institution serving the community," Edwards said.

Similar sentiments were echoed in a European Network of Credit Unions letter. For both letters, use the resource links.

CFPB Unveils Additional Mortgage Guidance

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WASHINGTON (10/16/13)--Communications with family members after a borrower dies, contact with delinquent borrowers, and treatment of consumers who have filed for bankruptcy or invoked certain protections under the Fair Debt Collection Practices Act are addressed in a new bulletin and interim final rule released by the Consumer Financial Protection Bureau (CFPB) on Tuesday.

The releases are meant to clarify portions of pending CFPB mortgage servicing regulations that have not yet been addressed. "As servicing implementation enters its final phases, we heard from many sources that it was important to address these remaining issues to ensure a smooth transition and provide certainty to the market," CFPB Director Richard Cordray said.

The CFPB release provides examples of mortgage servicer policies and procedures that will ensure that family members, heirs, or other parties who have a legal interest in the home are identified and contacted if a mortgageholder dies. Mortgage assumption and loss mitigation measures are also addressed, and the bureau also attempted to answer questions regarding the interplay of the servicing rules, bankruptcy code, and the Fair Debt Collection Practices Act (FDCPA). The bureau has also clarified aspects of regulations that require consumers to receive housing counseling before taking out a high-cost mortgage.

The CFPB interim final rule also addresses:
  • The steps that mortgage servicers must take to reach out to delinquent borrowers, and what they must communicate and provide to those borrowers;
  • Some exemptions from regulations that require mortgage servicers to provide periodic account statements and certain early intervention contacts to borrowers in bankruptcy proceedings.
For the full CFPB release, use the resource link.

Cheney Report: NCUA Exam Improvements a Good Sign

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WASHINGTON (10/15/13)--The National Credit Union Administration's recent announcement that its examination processes will be streamlined and improved starting in 2014 "indicates an effort toward a better process for addressing problem examination issues," Credit Union National Association President/CEO Bill Cheney wrote in this week's Cheney Report.

The NCUA's planned improvements, which include setting clear expectations for credit unions and examiners regarding the use of Documents of Resolution (DoRs) and other areas, "reflect a number of recommendations that CUNA has been making for some time," Cheney noted.

Of course, the CUNA leader made it clear, "there is still a lot of room for improvement." CUNA has long advocated changes to some exam practices. For example, in the 2011 "Credit Union Exam Bill of Rights," CUNA said if a credit union disagrees with a DoR from its examiner, the credit union should be able to contact the regional director to discuss concerns. 

Overall, Cheney stressed, the success of these exam changes "will be in actions taken, including whether or not examiners correctly interpret information provided by credit unions."

He added that CUNA will follow up with the NCUA on these and other exam issues.

CUNA and state credit union leagues later this year will conduct an annual National Examination Survey. Credit unions will be asked to describe the strengths and weaknesses of their state and federal regulatory examination experiences. The results of the survey will be used as CUNA and the leagues hone their exam issue advocacy efforts, Cheney wrote.

This week's edition of The Cheney Report also details:
  • CUNA media outreach on debt ceiling issues;
  • A tax reform update;
  • A preview of the 'Rock Stars' issue of Credit Union Magazine; and
  • A call for credit unions to tap the power of their members to rebuff bank attacks.
Use the resource link to read the latest in The Cheney Report.

CFPB Removes Enforcement Attorneys From On-Site Exams

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WASHINGTON (10/15/13)--The Consumer Financial Protection Bureau's decision to remove enforcement attorneys from on-site examinations "is a wise move on CFPB's part," Credit Union National Association General Counsel Eric Richard said Monday.

"Having enforcement attorneys take part in exams can imply some kind of punitive intent that can chill open communications between examiners and financial institutions.  Plus, taking part in exams can transform enforcement attorneys into witnesses, which often creates a conflict of interest," Richard added.

The CFPB said enforcement attorneys will continue to coordinate with examiners offsite, and will work closely with supervision examiners to ensure that the financial institutions the CFPB oversees are following the rules, the CFPB said. "We think this approach will result in better overall oversight," a CFPB representative told News Now.

The CFPB, she said, found that it was not efficient to have both examiners and enforcement attorneys physically present on exams. American Banker last week reported that banking representatives had complained about the enforcement attorney role in examinations. The attorneys, some said, were hampering communication between institutions and examiners.

Credit unions with less than $10 billion in assets are exempt from supervision and enforcement by the CFPB. CUNA continues to press the CFPB to minimize the impact of CFPB rules on credit unions where possible and appropriate.

CompBlog Wrap-Up Provides Mortgage Reg Resources

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WASHINGTON (10/15/13)--New and pending mortgage regulations remain a chief concern for credit unions across the country. The latest edition of the Credit Union National Association's CompBlog Wrap-Up provides an outline of recent Consumer Financial Protection Bureau revisions to mortgage regulations, a question and answer document on mortgage originator regulations, and much more.

The Wrap-Up section on the CFPB's mortgage rules highlights how the revisions will impact small creditors, credit insurance premiums, loss mitigation applications, mortgage loan originators and ability-to-repay standards.

The Wrap-Up also features details on CUNA's new mortgage rules resource page, which compiles compliance information addressing the new CFPB mortgage rules. CUNA e-Guides, compliance articles from Credit Union Magazine, frequently asked questions, summaries, explanatory charts, CompBlog posts, and training opportunities are among the resources posted on this page.

One key question regarding the new Regulation Z mortgage originator rules is also addressed:  Does responding to a member's request for real estate lending department contact information make a given credit union employee a mortgage loan officer? The answer, CUNA says, is no.

While referrals are considered to be loan originator activities under the rule, Reg Z's definition of loan originator does not include persons who:
  • Provide general explanations, information, or descriptions in response to consumer queries;
  • Provide loan originator or creditor contact information in response to a consumer request;
  • Describe other product-related services; or
  • Explain or describe the steps that a consumer would need to take to obtain an offer of credit, including providing general guidance on qualifications.
The Wrap-Up also provides quick answers to several remittance transfer compliance questions.

And, as it does every month, the CompBlog Wrap-Up lists the upcoming effective dates of new regulations, important compliance articles and reports to read, as well as CUNA training programs.

For more of the CUNA CompBlog Wrap-Up, and other compliance gems, use the resource link.

NCUA, Fed Regulators Seek Comment On Flood Insurance Enhancements

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WASHINGTON (10/15/13)--The National Credit Union Administration and other federal regulators are seeking comment on potential changes to regulations pertaining to loans secured by property located in special flood hazard areas.

The joint agency proposal would require that regulated lending institutions accept private flood insurance, as defined in the Biggert-Waters Flood Insurance Reform Act of 2012, and satisfy mandatory purchase requirements outlined in that bill.

The flood insurance reform act, which became law in July 2012, extended the National Flood Insurance Program (NFIP) until Sept. 30, 2017. The bill also called for flood insurance reforms, including the phasing out of subsidies for many properties, raising the cap on annual premium increases, allowing multifamily properties to purchase NFIP policies, imposing minimum deductibles for flood claims, requiring the NFIP administrator to develop a plan for repaying the debt incurred from Hurricane Katrina, and establishing a technical mapping advisory council to deal with map modernization issues.

The new joint agency release asks whether federal financial regulatory agencies should adopt additional regulations on the acceptance of flood insurance policies issued by private insurers.

The joint agency proposal would:
  • Require regulated lending institutions to escrow payments and fees for flood insurance for any new or outstanding loans secured by residential improved real estate or a mobile home, not including business, agricultural and commercial loans, unless the institutions qualify for a statutory exception;
  • Result in new and revised sample notice forms and clauses concerning the availability of private flood insurance coverage and the escrow requirement;
  • Clarify that regulated lending institutions have the authority to charge a borrower for the cost of force-placed flood insurance coverage after a homeowner's private insurance lapses or becomes insufficient; and
  • Outline the circumstances under which a lender must terminate force-placed flood insurance coverage and refund payments to a borrower.
The joint agency proposal is co-signed by the NCUA, the Federal Reserve, the Farm Credit Administration, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

Comments on the release will be accepted until Dec. 10.

Spanish Language Consumer Sites Unveiled By NCUA

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ALEXANDRIA, Va. (10/11/13)--Updated Spanish versions of the National Credit Union Administration's consumer website MyCreditUnion.gov and financial literacy microsite Pocket Cents were unveiled on Thursday in observance of National Hispanic Heritage Month.

"During the last two decades, the number of Spanish speakers in America has more than doubled. Today, more than 36 million Americans speak Spanish at home," NCUA Board Chair Debbie Matz said in an agency release. "It is critical that these Spanish speakers have access to reliable resources for financial information," she added.

The agency's Pocket Cents and MyCreditUnion.gov sites cover credit union basics and provide financial tips for consumers of all ages, including details on the cost of education and homeownership, and information to help retirement planning, debt management, online financial security and emergency planning. The NCUA has recently added new content that could help older consumers avoid scams and protect their finances. "I encourage everyone to take full advantage of all the tools we have made available to them free of charge," Matz wrote.

The new sites can be found at http://espanol.mycreditunion.gov/.

FASB Releases Disclosure Framework Q-and-A

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WASHINGTON (10/11/13)--Questions, answers and clarifications regarding the Financial Accounting Standards Board's (FASB) Disclosure Framework project are provided in a new document released by that agency.
 
FASB's ongoing disclosure project is a bid to create disclosures that clearly communicate vital information to users of financial statements released by public firms, private companies and not-for-profit organizations. As the project moves forward, FASB is focused on two items: Its own decision-making process, and the decision-making processes of firms producing financial statements.
 
In one response, FASB said the objective of the disclosure framework project is to improve the effectiveness of disclosures in notes to financial statements, not necessarily to reduce the volume of notes. "By clearly communicating the information that is most important to users of reporting organizations' financial statements, the disclosure framework project aims to make disclosure requirements more effective and useful," the board said.
 
Other questions answered in the FASB document include:
  • Will FASB's decision process require preparers to disclose predictions and forecasts of future cash flows?;
  • Will disclosure overlap between U.S. Generally Accepted Accounting Principles, Securities and exchange Commission rules, and other regulatory requirements be eliminated?;
  • Will FASB's decision process address interim reporting?;
  • How are investor concerns being taking into account in the project?; and
  • How does the disclosure framework project relate to private companies?
For the full disclosure document, use the resource link.

The Credit Union National Association has repeatedly urged FASB to understand the unique nature of credit unions, which are member-owned, not-for-profit financial cooperatives, as it develops the framework and works on other accounting changes.

CUNA, Coopera Team Up For Oct. 30 Webinar

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WASHINGTON (10/11/13)--Engaging Spanish-speaking members to help protect the credit union tax status will be the central topic of a Wednesday, Oct. 30 webinar hosted by the Credit Union National Association and Coopera, a Hispanic market solutions company with a focus on credit unions nationwide.

The webinar, which is scheduled to begin at 3 p.m. ET, will be presented by Coopera CEO Miriam De Dios and Coopera's Anna Pena.

CUNA and Coopera have partnered to introduce new Spanish resources available as a part of the national "Don't Tax My Credit Union" campaign ("No Le Cobren Impuestos a Mi Credit Union," in Spanish).

The credit union tax advocacy initiative urges lawmakers as part of any final tax reform plan to preserve the federal tax exemption credit unions receive as not-for-profit, member-owned cooperatives. Credit unions and their members are using CUNA and the state credit union leagues' resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

This pro-credit union message is also being shared through Twitter feeds, CUNA's Twitter handle @CUNAadvocacy and the hashtag, #DontTaxMyCU.

To date, the campaign has generated more than one million messages to members of Congress.

Webinar attendees will have the opportunity to learn about the key "Don't Tax" Spanish message points for Spanish-speakers, the new tools that are available, and how to use them.

The webinar will address:
  • A video and website, www.NoImpuestosAMiCU.org;
  • Form letters that members can send to Congress;
  • A Spanish option on the toll-free number, 877-642-4223;
  • Instructions for social media engagement; and
  • Graphics, posters, statement stuffers and flyers that are being made available to credit unions.
The webinar is free, but registration is required, and only CUNA-affiliated credit unions may register. Affiliation with CUNA/league is required for attendance. Use the resource link for more on the webinar.

Northern Eagle FCU First New CU Charter Of 2013

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ALEXANDRIA, Va. (10/11/13)--Northern Eagle FCU, Minnesota, a multiple common-bond credit union that will serve the 4,900 members and employees of the Bois Forte Band of Chippewa, is now the first new federal credit union of 2013. Approval of the credit union's charter was announced by the National Credit Union Administration Thursday.

"It's always a great day when a new credit union is formed, particularly in an underserved community," said Bill Cheney, President/CEO of the Credit Union National Association. "We hope this is the first of many new credit unions created in 2013."

Every American deserves access to affordable financial services, but many Native Americans unfortunately lack access to federally insured financial services providers or only have access to predatory lenders," NCUA Chairman Debbie Matz said in an agency statement. "The chartering of Northern Eagle FCU addresses a real need," and the credit union "has the potential to play an important role in improving the lives and financial well-being of Northern Minnesota's Chippewa communities," she added.

The low-income designated credit union (LICU), which is sponsored by the Bois Forte Band of Chippewa Reservation Tribal Council, is scheduled to open in December.

Members will be able to access regular share accounts, unsecured loans, other secured loans, share drafts, credit repair loans, prepaid debit cards, share certificates, anti-predatory loans, money orders, club accounts, share secured loans, cashier checks, non-member deposits, auto loans and direct deposit within the first year of the credit union's operation. The credit union also plans to offer online banking services, and financial literacy education will also be an area of emphasis.

The LICU designation brings benefits that include the ability to accept supplemental capital and an exemption from the 12.25%-of-assets MBL cap under certain circumstances.

For more on the new credit union, use the resource link.

Federal Regulators To Financial Institutions: Work With Furloughed Employees

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WASHINGTON (10/10/13)--The National Credit Union Administration on Wednesday joined its fellow financial regulators to urge credit unions and other financial institutions to work with customers affected by the federal government shutdown.

"Prudent workout arrangements that are consistent with safe-and-sound lending practices are generally in the long-term best interest of the financial institution, the borrower, and the economy," the agencies said in a release. The release also encouraged consumers impacted by the shutdown to reach out to their lenders immediately if financial hardship occurs.

The release was co-signed by NCUA, the Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

The regulators noted that borrowers affected by the shutdown "may face a temporary hardship in making payments on debts such as mortgages, student loans, car loans, credit cards, and other debt."

Credit unions and other financial institutions should "consider prudent workout arrangements that increase the potential for creditworthy borrowers to meet their obligations."

Many credit unions have already heeded this call, and are helping their members work through this government impasse.

Dozens have reported to News Now on their efforts, and others have been spotlighted in local news coverage. A few examples of the measures credit unions have taken include:
  • Cabrillo CU, San Diego, Calif.'s decision to roll out a 0% loan, with a line of credit equal to an employee's last full paycheck, up to $2,500;
  • Offering advice through the media to the general public about the best way to manage finances during the furloughs;
  • Hawaii State FCU, Honolulu's, offering of penalty-free term share withdrawals and one- to three-month deferment of loan payments;
  • Community CU, Rockledge, Fla.'s, offering of 0% loans and fee waivers on early withdrawals on share certificates; and
  • Coloramo FCU, Grand Junction, Colo.'s, waiving of a $30 Skip-a-Payment fee and offer of up to three months of personal loans in the amount of a member's paycheck.
Use the resource link for more coverage of credit union efforts to support furloughed members.

Obama Nominates Janet Yellen For Top Fed Post

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WASHINGTON (10/10/13)--Janet Yellen has been nominated by President Barack Obama to serve as the next Federal Reserve chair. She would replace outgoing Chairman Ben Bernanke when his term ends on Jan. 31.

Her nomination would need U.S. Senate approval. If approved, she would become the first female head of the Fed, or any other central bank.

Obama urged the Senate to confirm Yellen without delay. "I'm absolutely confident that she will be an exceptional chair for the Federal Reserve," he said.

Yellen has served as vice chair of the Board of Governors of the Federal Reserve System since Oct. 4, 2010. She is also in the midst of a Federal Reserve Board membership that will end on Jan. 31, 2024. She has served as president/CEO of the Twelfth District Federal Reserve Bank, at San Francisco.

The potential Fed leader graduated summa cum laude from Brown University in 1967, and received her Ph.D. in economics from Yale University in 1971. She has worked as an assistant professor at Harvard University, a Fed economist, and on the London School of Economics and Political Science faculty.

She also chaired President Bill Clinton's Council of Economic Advisers.

According to a Fed profile, Yellen has written on a wide variety of macroeconomic issues, while specializing in the causes, mechanisms, and implications of unemployment.

CFPB Acts On HMDA Violations

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WASHINGTON (10/10/13)--Mortgage Master Inc. and Washington Federal, a Seattle-based bank,  have been ordered by the Consumer Financial Protection Bureau to pay a combined $459,000 in civil penalties for alleged violations of the Home Mortgage Disclosure Act (HMDA).

The consent order follows a CFPB examination that found that Walpole, Mass., nonbank Mortgage Master "had significant data errors" in 21,015 mortgage loan applications the firm reported in 2011. Further investigation by the CFPB and the Commonwealth of Massachusetts Division of Banks found significant error rates in other HMDA filings, the agency said. A $425,000 civil penalty has been assessed against Mortgage Master.

An examination of Seattle bank Washington Federal found HMDA errors in 5,785 mortgage loan applications that were reported in 2011. The CFPB reported a $34,000 civil penalty has been assessed against Washington Federal.

The CFPB has ordered both firms to correct and resubmit their 2011 HMDA data, and develop and implement an effective HMDA compliance management system to prevent future violations.

Both entities have been taking steps to improve their HMDA compliance management systems and the accuracy of their HMDA mortgage loan information since the HMDA errors were revealed, the CFPB said.

"When financial institutions report inaccurate information, it obstructs the purpose of the Home Mortgage Disclosure Act and makes it more difficult for the CFPB to discover and stop discriminatory lending," said CFPB Director Richard Cordray. The CFPB consent orders will send "a strong signal that no mortgage lending institution--whether bank or nonbank--should be able to mislead the public with erroneous data," Cordray added.

The CFPB on Wednesday also released a new HMDA resubmission schedule and guidelines, and outlined the factors it may consider when evaluating whether to pursue a public enforcement action for HMDA violations. (See News Now story: HMDA Resubmission Schedule, Guidelines Released By CFPB.)

NEW: NCUA Approves Northern Eagle FCU Charter

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ALEXANDRIA, Va. (UPDATED: 1:40 P.M. ET, 10/10/13)--Northern Eagle FCU, Minnesota, a multiple common-bond credit union that will serve the 4,900 members and employees of the Bois Forte Band of Chippewa, is now the first new federal credit union of 2013. Approval of the credit union's charter was announced by the National Credit Union Administration today.

Every American deserves access to affordable financial services, but many Native Americans unfortunately lack access to federally insured financial services providers or only have access to predatory lenders," NCUA Chairman Debbie Matz said. "The chartering of Northern Eagle Federal Credit Union addresses a real need," and the credit union "has the potential to play an important role in improving the lives and financial well-being of Northern Minnesota's Chippewa communities," she added.

The low-income designated credit union (LICU), which is sponsored by the Bois Forte Band of Chippewa Reservation Tribal Council, is scheduled to open in December. Members will be able to access regular share accounts, unsecured loans, other secured loans, share drafts, credit repair loans, prepaid debit cards, share certificates, anti-predatory loans, money orders, club accounts, share secured loans, cashier checks, non-member deposits, auto loans and direct deposit within the first year of the credit union's operation. The credit union also plans to offer online banking services, and financial literacy education will also be an area of emphasis.

The LICU designation brings benefits that include the ability to accept supplemental capital and an exemption from the 12.25%-of-assets MBL cap under certain circumstances.

For more on the new credit union, use the resource link.

CUNA: Reducing Mortgage Limits Would Disrupt Housing Recovery

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WASHINGTON (10/10/13)--Reducing the size of mortgages that Fannie Mae and Freddie Mac can finance "would have a very disruptive impact on the availability of affordable housing credit," the ongoing housing recovery and the economy as a whole, the Credit Union National Association said in a joint letter sent to Federal Housing Finance Agency Acting Director Ed DeMarco Wednesday.

The letter follows a recent FHFA announcement that it is considering reducing Fannie Mae and Freddie Mac loan limits. Any change would be implemented on Jan. 1, 2014.

"Not only is lowering loan limits bad for housing, we question to what extent FHFA's authority would allow for such a change considering congressional intent when passing [the Housing and Economic Recovery Act (HERA) of 2008] was certainly opposed to a reduction," the letter said. HERA clearly indicates that the maximum loan limits for loans taken on by Fannie and Freddie shall not drop below the current limit of $417,000, the letter added.

"Lowering the loan limits further restricts liquidity and makes mortgages more expensive for households nationwide. Without affordable financing, families are unable to purchase or refinance homes, and those who wish to sell find it more difficult, all of which will continue to prolong our housing crisis," the cosigners wrote.

The letter was co-signed by the American Escrow Association, American Financial Services Association, American Land Title Association, Asian Real Estate Association of America, Coalition of US Mortgage Insurers, Community Home Lenders Association, Community Mortgage Lenders of America, Leading Builders of America, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of REALTORS® and The Realty Alliance.

HMDA Re-submission Schedule, Guidelines Released By CFPB

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WASHINGTON (10/10/13)--New Home Mortgage Disclosure Act (HMDA) Resubmission Schedules and Guidelines, and factors the Consumer Financial Protection Bureau may consider when evaluating whether to pursue a public enforcement action for HMDA violations, are outlined in a new bureau release. There are also tips on how best to run an effective HMDA compliance system.

The resubmission guidelines detail the error thresholds that CFPB examination teams will use to determine when institutions should correct and resubmit their HMDA data.

"CFPB examination teams will use different guidelines when they conduct HMDA reviews at banks and nonbanks that have 100,000 or more mortgage loans to report," the bureau wrote. It noted that low error rates at larger institutions can reflect a larger number of HMDA data errors than similar errors at smaller institutions.

The new resubmission guidelines will apply to HMDA reviews that begin on or after Jan. 18, 2014, the CFPB said.

Employee training, internal audits and data reporting procedures are essential to effective HMDA compliance, the CFPB added.

Factors the CFPB may consider when determining whether or not to take enforcement actions include:
  • The size of the financial institution or nonbank's mortgage lending activity;
  • The institution's HMDA error rate;
  • The history of previous HMDA supervisory activity, including the history of any violations; and
  • Whether the institution self-identified or self-corrected any errors.
These factors may also be considered as the CFPB determines the size of a potential civil penalty, the bureau noted.

A pair of civil penalties for HMDA violations were announced on Wednesday. (See News Now story: CFPB Acts On HMDA Violations.)

NCUA Unveils Upcoming CU Exam Changes

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ALEXANDRIA, Va. (10/9/13)--Changes that will streamline credit union examination reports and improve the overall exam process by setting clearer expectations for credit unions and examiners will be introduced on Jan. 1,  the National Credit Union Administration said in a letter to credit unions (13-CU-09) released Tuesday. The Credit Union National Association has long sought the kind of changes provided in this NCUA letter, Deputy General Counsel Mary Dunn noted.

The NCUA noted it considered feedback from credit union industry officials as it developed these changes. The agency also incorporated recommendations from the U.S. Government Accountability Office and the NCUA's own Office of Inspector General.

One specific change outlined by the agency is separating the Document of Resolution (DOR) and Examiner's Findings sections of the examination reports into stand-alone documents.

"Separating the DOR and Examiner's Findings documents--and providing descriptive definitions of each document's purpose--will help credit union officials clearly differentiate between major and minor problems in order to prioritize corrective actions," the agency wrote.

Examiner concerns and documented support for material problems listed in the examinations will be included in the DOR, along with corrective action plans, the agency added. "This will help credit unions and NCUA implement timely problem resolution of the most critical and material concerns" and "enhance consistency in the exam process," the letter said.

These and other changes will better clarify the priority exam action items to be resolved, reduce redundancy, and ensure consistency, the agency wrote.

A new status update template has also been developed as part of the exam document changes. The update will provide details on credit union outstanding administrative actions, including Letters of Understanding and Preliminary Warning Letters, the agency said. The informal discussion document will be eliminated.

Examiners will need to follow up with credit union officials on any outstanding DOR items within 120 days after the timeframe for completion has passed. Credit unions that have received DORs instructing them to cease unsafe or unsound practices will need to notify their respective NCUA Regional Office in writing once they have implemented corrective actions, the letter adds.

Reasonable solutions provided by a given credit union will become the corrective action plan included in the DOR, the NCUA said.

Risk-Based Lending Webinar Scheduled By NCUA For Oct. 22

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ALEXANDRIA, Va. (10/9/13)--An overview of risk-based lending, and details on how that practice has become an important part of consumer lending, will be provided in an Oct. 22 National Credit Union Administration webinar.

The free webinar, entitled "Risk-Based Lending--More than a Loan Pricing Tool," is scheduled to begin at 2 p.m. (ET).

Tom Penna, NCUA Office of Small Credit Union Initiatives Economic Development Specialist, Susan George, CEO of Lake Shore FCU, Angola, N.Y., and Kelly Haaksma, CEO of Greater Chautauqua FCU, Falconer, N.Y., will co-host the webinar.

George and Haaksma will discuss how their credit unions have used risk-based loans to serve their members, increase loan volume, and create new sources of income while mitigating unnecessary risks.

The webinar will also feature useful reporting tools that a board of directors and management can use to get a better understanding of the risks present in a credit union's loan portfolio.

The CUNA Lending Council has noted that risk-based lending helps credit unions reach out to higher-risk borrowers, keeping them from predatory lenders, and allows credit unions offer lower rates to the most creditworthy members, rewarding their excellent credit habits and keeping them from the competition.

However, the Council has advised that risk-based lending can be complex. It is important for credit unions to do their homework before implementing it, the Council wrote. Sound planning, specialized expertise, reliable monitoring and control systems, and proper pricing are key components of any risk-based lending plan, the Council stressed.

Webinar participants may submit questions to the NCUA in advance by sending an e-mail to WebinarQuestions@ncua.gov. The subject line of the e-mail should read, "Risk-Based Lending Webinar."

To register for the NCUA webinars, use the resource link.

Franken: Shutdown Hurts CUs' Ability To Verify Loan Info

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WASHINGTON (10/9/13)--If credit unions want further proof of the impact that Hike the Hill events have on Capitol Hill, they need look no further than a speech by U.S. Sen. Al Franken (D-Minn.) about the impact of the government shutdown on Minnesotans, including small businesses and credit unions. The speech, made on the Senate floor, referred to a meeting he had with a group of Minnesota credit unions.
 
The government shutdown is hurting people in Minnesota and around the country, he said, noting that Minnesota's businesses are feeling the impact. Small businesses there received an average of $1.8 million loans every day under the Small Business Administration's loan guarantee programs in 2012. "With the government shut down, these programs will no longer take applications, and our businesses have had to put their plans on hold," he said.
 
"And it's not just businesses that are facing problems getting access to loans," he added.
 
"Minnesota is home to a lot of great, smaller financial institutions--community banks and credit unions--and I talk with them regularly," Franken said. "Earlier this week, I met with folks from some Minnesota credit unions, and they explained to me that as a result of the shutdown, they are having problems approving mortgages because the Social Security Administration can't verify Social Security numbers. That is not just terrible for those Minnesotans who are trying to buy or sell a home, it's also terrible for our economy."
 
Franken pointed out a number of other areas the shutdown has hit and urged the passage of the Senate passed bill to fund the government.

"We appreciate Sen. Franken speaking up for Minnesotans and their credit unions on this important issue," said Mara Humphrey, Minnesota Credit Union Network vice president--governmental affairs. "We'll also continue to advocate for easing the challenges resulting from the shutdown for those seeking home loans."
 
Credit unions from 10 states hiked Capitol Hill in Washington last week to highlight the value of their corporate income tax exemption and defend their tax status. They also urged passage of a bill to lift credit unions' member business lending cap to open up more business lending opportunities. Credit unions from Illinois, Iowa, Kansas, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska and Ohio participated.

CompBlog: CUs Should Plan For Credit Insurance Premium Changes

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WASHINGTON (10/9/13)--Credit unions should begin planning a way to account for credit insurance premiums and debt protection fees that is consistent with pending Consumer Financial Protection Bureau regulatory changes, CUNA Mutual Group Lead Attorney David Tomar wrote in a recent Credit Union National Association CompBlog post.

The CFPB's loan originator compensation rule adopted the Dodd-Frank Act's prohibition on creditors financing credit insurance premiums in connection with certain mortgage transactions. The final rule makes clear that credit insurance premiums are "financed" by a creditor when the creditor allows the consumer to defer payment of the premium past the month in which it is due. The rule explains how it applies to "level" premiums, when the monthly premium is the same each month rather than decreasing along with the loan balance.

Tomar said the rule is effective for loans whose applications are taken on or after Jan. 10, 2014. The scope of the rule still applies only to closed-end loans secured by any dwelling or open-end loans secured by a principal dwelling, he added.

As noted in Tomar's blog post, advocacy by CUNA, credit unions and CUNA Mutual resulted in the CFPB determining that adding a premium to the outstanding loan is not "financing" if the premium is posted and paid in the same monthly period, even if some interest accrues. "That's the most common scenario and a huge relief for credit unions because credit unions do not need to make changes by Jan. 10, 2014," Tomar said.

The bureau may also revisit rules regarding underlying credit insurance or debt cancellation product agreements, and charging interest on credit insurance premiums. Credit unions may need to revise their practices in the near future to comply with CFPB changes to these rules and regulations, Tomar warned.

For the full CompBlog post, use the resource link.

NEW: CUNA, Cosigners: Reducing Mortgage Limits Would Disrupt Housing Recovery

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WASHINGTON (UPDATED: 1:20 P.M. ET, 10/9/13)--Reducing the size of the mortgages that Fannie Mae and Freddie Mac can finance "would have a very disruptive impact on the availability of affordable housing credit," the ongoing housing recovery and the economy as a whole, the Credit Union National Association said in a joint letter sent to Federal Housing Finance Agency Acting Director Ed DeMarco today.

The letter follows the recent FHFA announcement that it is considering reducing Fannie Mae and Freddie Mac loan limits. Any change would be implemented on Jan. 1, 2014.

CUNA cosigned the letter alongside several financial services and housing groups.

"Not only is lowering loan limits bad for housing, we question to what extent FHFA's authority would allow for such a change considering Congressional intent when passing [the Housing and Economic Recovery Act of 2008] was certainly opposed to a reduction," the letter said. HERA clearly indicates that the maximum loan limits for loans taken on by Fannie and Freddie shall not decline below the current limit of $417,000, the letter added.

"Lowering the loan limits further restricts liquidity and makes mortgages more expensive for households nationwide. Without affordable financing, families are unable to purchase or refinance homes, and those who wish to sell find it more difficult, all of which will continue to prolong our housing crisis," the cosigners wrote.

The letter was cosigned by the American Escrow Association, American Financial Services Association, American Land Title Association, Asian Real Estate Association of America, Coalition of US Mortgage Insurers, Community Home Lenders Association, Community Mortgage Lenders of America, Leading Builders of America, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of REALTORS® and The Realty Alliance.

FDIC Objects To BofA Mortgage Settlement

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WASHINGTON (10/9/13)--The Federal Deposit Insurance Corp. this week objected to a $500 million April settlement between Bank of America and several class action plaintiffs.

The objection was filed in California state court.

The suit involves Bank of America subsidiary Countrywide Mortgage's sale of mortgage-backed securities in the days before the financial crisis. A number of pension funds were among those that brought or later joined in the lawsuit against the bank.

According to Bloomberg News, the FDIC said the proposed settlement was not enough. The $500 million total only represents about 0.11% of the face value of the securities it covers, the FDIC said. In similar cases, plaintiffs have received 1.1% of the value of the securities in question, Bloomberg noted. In its objection, the FDIC also said the plaintiffs that accepted the settlement had a conflict of interest: Lawyers and main plaintiffs in the settlement would receive substantially more than other minor plaintiffs in the class action suit.

Bank of America did not comment on the FDIC objection.

A hearing on the settlement has been scheduled for Oct. 28. The settlement could be approved at that time.

BoA Autodial Settlement Is TCP Act Lesson: Reg Advocacy Report Cautions

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WASHINGTON (10/8/13)--Bank of America recently reached a preliminary $32 million settlement with consumers that alleged violations of the Telephone Consumer Protection Act (TCPA). In the aftermath of this settlement, the Credit Union National Association has encouraged credit unions to be mindful of any autodialed calls placed to members' cel lphones, which under certain circumstances can violate the TCPA and open the credit union up to liability.

The settlement, as noted in this week's CUNA Regulatory Advocacy Report, is believed to be the largest settlement in TCPA history. Plaintiffs in the case claimed that Bank of America autodialed their cell phones resulting in calls or texts without their prior consent.

The Report noted that courts in many cases have determined that debt collection calls made to cell phones using an automatic telephone dialing system or a pre-recorded voice violate the TCPA if the called party has not provided their "prior express consent" to receiving such calls. The Federal Communications Commission, which issues TCPA rules, has also considered debt collection calls within the scope of the TCPA, the Report said.

This week's Regulatory Advocacy Report also includes:
  • Details on a Consumer Financial Protection Bureau field hearing on the CARD Act, which was attended by CUNA;
  • The U.S. Department of Housing and Urban Development's proposed qualified mortgage rule;
  • The Federal Reserve's new consumer compliance supervision program for community banks; and
  • Information on CUNA's attendance of the annual NACHA Councils payments meeting.
A resource chart with information on current CUNA comment calls is also provided in the Report.

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

CUNA Watching Budget Talks For Tax Impact

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WASHINGTON (10/8/13)--While the pace of business in Washington, D.C. has slowed to a crawl as a result of the massive furloughs of federal workers, the U.S. Congress continues to work--by and large on budget issues. In fact, National Public Radio this morning noted that few, if any, members of the House and Senate have furloughed staff.

The Credit Union National Association is closely monitoring the situation, in part to assess what impact the budget impasse might have on tax reform legislation.

The issue of tax reform is not over for this session of Congress, CUNA Executive Vice President of Government Affairs John Magill reminded on Monday.

"The original October deadline for a tax reform proposal may not be met, but that does not mean that tax reform is dead. It just means the mid-October deadline may be pushed back to a mid-November deadline," Magill said.

"Senate Finance Committee Chair Max Baucus (D-Mont.) and House Ways & Means Committee Chair Dave Camp (R-Mich.) have said they will release a bill--and nothing has changed that," Magill added.

Debt ceiling discussions and other issues could indeed put a vote on tax reform legislation off until next year. However, CUNA Senior Vice President of Legislative Affairs Ryan Donovan said the debt ceiling debates and legislation could be used to set up a framework for how tax reform could proceed through Congress. "That could expedite things," he added.

In fact, Donovan said the current 90% disapproval rating that Congress now faces "is unsustainable." And, with all of the U.S. House and one-third of the Senate facing reelection in the 2014 mid-terms, many in Congress may want to demonstrate that they can craft and pass legislation once this current impasse has ended.

As tax reform legislation continues to loom, it is still vital for credit unions to advocate for their tax status, Magill and Donovan said. During CUNA's and the state credit union leagues' "Don't Tax My Credit Union" online rally last week (see resource link), Donovan said tax status advocacy is "a long game," but urged credit unions to get their message out now, while policy is being crafted.

CUNA continues to encourage credit union supporters to use the various "Take Action" tools at www.DontTaxMyCreditUnion.org to show their support via tweets, pictures, vine videos, and emails to their members of Congress, all with the #DontTaxMyCU hashtag.

FFIEC Advises Institutions On Windows XP Support Changes

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WASHINGTON (10/8/13)--Financial institutions and their technology service providers should identify, assess, and manage the potential operational risks associated with Microsoft's upcoming discontinuation of support for its Windows XP operating system, the National Credit Union Administration and its fellow financial institution regulators urged Monday.

The software giant is scheduled to cease Windows XP support on April 8, 2014. The operating system was first released to consumers in 2001.

Financial institutions must "ensure that safety and soundness and the ability to deliver products and services are not compromised" by this change, an NCUA
release said. The release was cosigned by Federal Financial Institutions Examination Council (FFIEC) members.

The FFIEC was formed in 1978 to promote uniformity in financial institution regulation. It is comprised of the heads of the NCUA, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau, Council's State Liaison Committee, and a member of the Federal Reserve Board.

NEW: NCUA Unveils Upcoming CU Exam Changes

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ALEXANDRIA, Va. (10/8/13, UPDATED: 4 P.M. ET)--Changes that will streamline credit union examination reports and improve the overall exam process by setting clearer expectations for credit unions and examiners will be introduced on Jan. 1, the National Credit union Administration said in a letter to credit unions (13-CU-09) released this afternoon.

One specific change outlined by the agency is separating the Document of Resolution (DOR) and Examiner's Findings sections of the examination reports into stand-alone documents.

"Separating the DOR and Examiner's Findings documents--and providing descriptive definitions of each document's purpose--will help credit union officials clearly differentiate between major and minor problems in order to prioritize corrective actions," the agency wrote. Examiner concerns and documented support for material problems listed in the examinations will be included in the DOR, along with corrective action plans, the agency added. "This will help credit unions and NCUA implement timely problem resolution of the most critical and material concerns" and "enhance consistency in the exam process," the letter said.

These and other changes will better clarify the priority exam action items to be resolved, reduce redundancy, and ensure consistency, the agency wrote.

For more on the examination changes, watch Wednesday News Now.

Senate Hearings Set As Congress Works Amid Shutdown

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WASHINGTON (10/8/13)--Small, targeted appropriations bills to fund various agencies and government programs are the likely agenda this week for the U.S. House, as the ongoing government shutdown enters its second week. The Senate has not indicated how they will act on these bills, and while additional pieces of legislation could emerge this week, they have not been added to the schedule just yet.

The legislative schedule is light, but credit unions will want to watch out for the following hearings:
  • A Wednesday Senate Banking Committee hearing on housing finance reform and the multifamily housing finance system; and
  • A Thursday Senate Banking Committee hearing entitled "Impact of a Default on Financial Stability and Economic Growth."
The House Financial Services Committee had scheduled hearings on the status of the National Flood Insurance Program, legislation to further reduce impediments to capital formation, international central banking models and un-banked and under-banked areas. However, these hearings have been postponed due to the government shutdown.

Cheney Report: Reasons To Stay Tough On CU Tax Status

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WASHINGTON (10/7/13)--The federal government's current shutdown may mislead some into thinking nothing will happen on tax issues this year, but Credit Union National Association President/CEO Bill Cheney in this week's Cheney Report urges credit unions to keep up tax status advocacy effort.

Banks continue to carp, trying to overturn the credit union tax status.  Also, Cheney notes, there is talk in Washington that with a federal debt ceiling deadline looming, "grand fiscal bargain" legislation could be developed by congressional leaders, which that could include tax reform, although, so far, nothing has emerged.

CUNA has urged credit unions to remember that "advocacy is a long game" and they need to remain engaged.

One way credit unions can show their value right now, Cheney said, is by promoting the good work they are doing on behalf of members impacted by the shutdown. "From across the nation, credit unions have launched innovative programs and products to be sure that their members employed by the federal government, or relying on government contracts, would have the financial resources the needed as they faced the reality of furloughs and delayed payments due to the shutdown," Cheney wrote.

He cited bridge loans at little or no interest, no-charge financial counseling, 0% lines of credit equal to one month's net payroll, loan restructurings, signature loans, skip-a-pay and zero-interest payroll advance loans as examples of the many products and services credit unions are offering their members.

CUNA has shared these examples with the press, and Cheney encouraged credit unions to shout loud the services they are extending to their members and share their stories on CUNA's uniteforgood.org. "Let everyone see how credit unions are serving their members," Cheney said.

The Cheney Report also features:
  • Details on CUNA testimony during a Consumer Financial Protection Bureau hearing on the CARD Act; and
  • A briefing on CUNA's mid-week Don't Tax My Credit Union online rally.
Use the resource link to read the latest in The Cheney Report.

CUNA Seeks CU Comment On HUD QM Definition

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WASHINGTON (10/5/13)--What factors should the U.S. Department of Housing and Urban Development (HUD) take into consideration as it sets points and fees limits for its pending qualified mortgage (QM) definition? Credit unions can take on this and other questions in a new Credit Union National Association comment call.

HUD is required under the Dodd-Frank Act to issue its own qualified mortgage rule, separate from the one issued earlier this year by the Consumer Financial Protection Bureau (CFPB). Once finalized, HUD's WM rule will replace the CFPB's QM definition for Federal Housing Administration (FHA) loans or certain other HUD insured loans. HUD expects to finalize and have its QM rule become effective on Jan. 10, at the same time as the CFPB's QM rule takes effect.

The HUD definition would be similar to the CFPB definition, with some distinct differences. For instance, HUD's proposed rule does not have a debt-to-income ratio requirement.

HUD's proposed rule would:
  • Require FHA streamlined refinances to comply with the rule;
  • Modify the CFPB's rebuttable presumption standard to clarify that a presumption is rebutted if the lender does not meet the underwriting requirements applicable to the transaction;
  • Maintain the existing regulatory structure for FHA-insured single-family mortgage programs for purposes of defining qualified mortgages, but augment these programs with certain features;
  • Define all FHA-insured single-family mortgages to be qualified mortgages, except reverse mortgages insured under HUD's Home Equity Conversion Mortgage (HECM) program; and
  • Incorporate safe harbor and rebuttable presumption standards into its own definition of qualified mortgage.
HUD is seeking comment from lenders participating in its programs on any issues specific to HUD's mortgage insurance and loan guarantee programs. Many of these issues are addressed in the CUNA comment call.

Other topics addressed in the comment call include:
  • Whether lenders participating in HUD's mortgage insurance and loan guarantee programs would lower the annual percentage rate relative to the average prime offer rate; and
  • Whether lenders would always opt for the safe harbor QM rule, and never make a rebuttable presumption QM, and what views credit unions have on the effect that this incentive may have on lenders, borrowers and the broader economy.
CUNA is accepting comments until Oct. 15. Comments are due to HUD by Oct. 30.
For the full comment call, use the resource link.

Mark Your 2014 Calendar: NCUA Releases Meeting Schedule

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ALEXANDRIA, Va. (10/7/13)--The National Credit Union Administration Friday released its 2014 board meeting schedule.

The first meeting of 2014 is set to be held on Jan. 23.

Monthly meetings are scheduled to follow on:
  • Feb. 20;
  • March 20;
  • April 24;
  • May 22;
  • June 19;
  • July 31;
  • Sept. 18;
  • Oct. 23;
  • Nov. 20; and
  • Dec. 18.
All meetings are scheduled to begin at 10 a.m. (ET).

As usual, there will be no August board meeting.

The agency said the 2014 schedule could be subject to change.

The NCUA in 2012 cancelled three of its monthly open board meetings, and the Credit Union National Association at that time supported the decision. "Any time a regulator avoids issuing new rules, it is a positive development," CUNA Deputy General Counsel Mary Dunn said.

CUNA Backs 'Timely' Reg D Study

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WASHINGTON (10/7/13)--The Credit Union National Association has thrown its support behind a new bill introduced by Reps. Robert Pittenger (R-N.C.) and Carolyn Maloney (D-N.Y.). The legislation would order the U.S. Government Accountability Office (GAO) to study the impact of the Federal Reserve Board's monetary reserve requirements on depository institutions, consumers and monetary policy.

The reserve requirements are implemented by the Fed's Regulation D, and the new bill (H.R. 3240) is entitled, the "Regulation D Study Act." Credit unions became subject to monetary reserves in 1980.

CUNA supports improvements to Regulation D, such as increasing the number of automatic transfers allowed from a member's savings to share accounts and has testified before the U.S. Congress in support of such changes.

In a letter Friday, CUNA President/CEO Bill Cheney wrote, "Regulation D impacts credit union members by limiting by regulation (rather than as a business decision of the credit union) the number of withdrawals from a member's savings account to six transactions per month."

Calling the introduction of H.R.  3240 "timely," Cheney wrote, "A GAO study will allow an objective assessment of whether the rarely changed monetary reserves imposed on depository institutions and consumers are necessary in order for the Fed to implement monetary policy in the 21st century."

The bill instructs the GAO to consult with credit unions and community banks as it examines, and reports within one year of enactment, on the following:
  • An historic overview of how the Fed has used reserve requirements to conduct monetary policy;
  • The impact of the maintenance of reserves on depository institutions, including the operations requirements and associated costs;
  • The impact on consumers in managing their accounts, including the costs and benefits of the reserving system; and
  • Alternatives to required reserves the Fed may have to effect monetary policy.

Newest 'Don't Tax' Rally Draws 9,000 CU Advocates To Website

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WASHINGTON (10/4/13)--The response to Wednesday's online Don't Tax my Credit Union rally was outstanding, "and we urge credit unions to keep up this up-tempo advocacy activity going forward," Credit Union National Association Senior Vice President of Political Affairs Richard Gose said Thursday.

Overall, 9,000 unique visitors logged on to the Credit Union National Association's www.DontTaxMyCreditUnion.org site. Seventy percent of these hits came from first-time visitors. Many more viewed the rally on TheHill.com's online event stream, and the stream received public play in office conference rooms across the country.

The online rally again stoked credit union advocates into action, with more than 2,300 emails and nearly 2,200 tweets being sent on to members of the U.S. Congress. In total, the campaign has sent well over 1 million messages to congress.

Rally participants were encouraged to use Facebook, Twitter and other forms of online media to demonstrate their support of credit unions and send a unified message to members of Congress: Don't Tax my Credit Union!

"All told it's hard to say exactly how many eye balls were on the rally but we had a lot of participation and are very pleased," Gose added. But, CUNA has emphasized that this increased level of credit union tax status advocacy will need to continue going forward.

During the Wednesday webinar, CUNA Senior Vice President of Legislative Affairs Ryan Donovan underlined that "advocacy is a long game" and "we need to make sure we stay engaged." (For News Now coverage of credit union league Capitol Hill meetings this week, see: CUs' Hill Visits Fruitful Despite Shutdown.)

CFPB Takes Debt Settlement Action

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WASHINGTON (10/4/13)--The Consumer Financial Protection Bureau Thursday took action against debt settlement payment processor Meracord LLC, alleging that the firm helped debt-settlement companies collect illegal fees from consumers.

Meracord, according to CFPB Deputy Director Steve Antonakes, helped debt settlement companies "collect money that should have gone to pay down a consumer's debt but instead went to the debt-settlement companies in the form of illegal advance fees."

Antonakes in a release noted the Telemarketing Sales Rule specifies that companies that engage in debt-settlement services cannot charge or collect a fee unless they first reduce or alter a debt. "This law protects consumers from paying upfront for services that may not materialize and that may leave them even deeper in debt. We believe that Meracord knew or should have known that it was processing illegal upfront fees charged to consumers in violation of this rule," he wrote.

The CFPB alleges that Meracord processed more than 11,000 payments.

Under the terms of a CFPB order, Meracord and company owner Linda Remsberg would pay a $1.376 million civil penalty. The company would also be required to halt all illegal activities, and Meracord and Remsberg would be banned from processing payments of any kind for debt relief or mortgage assistance relief providers.

The CFPB would monitor the company going forward to ensure compliance with the order.

The order was filed in federal district court in the Western District of Washington on Thursday, according to the CFPB.

CUNA Backs Rep. Huizenga's Amended CFPB Bill

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WASHINGTON (10/4/13)--Rep. Bill Huizenga (R-Mich.) last week introduced a pared-down version of the Consumer Mortgage Choice Act (H.R. 3211),  a bill which would address some credit union concerns regarding point and fee definitions in the Consumer Financial Protection Bureau's amended final "Ability to Repay" rule.

H.R. 3211 is a revised version of H.R. 1077, which Huzienga introduced earlier this year. The legislator simplified his earlier bill to increase its chances of final passage, CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

The CFPB's "Ability to Repay" rule, which will require lenders to determine a borrower's ability to repay before writing a mortgage loan, is slated to take effect on Jan. 10, 2014. CUNA remains concerned about the definition of points and fees in the rule, CUNA President/CEO Bill Cheney wrote. "Specifically, we are concerned that the inclusion of affiliated title charges remains as part of the points and fees definition," he said.

Huizenga's new bill, which was referred to the House Financial Services Committee late last week, would exclude from the definition compensation which is retained by a creditor or its affiliate as a result of its participation in an affiliated business arrangement as defined under the Real Estate Settlement Procedures Act.

"Defining points and fees in this way will maintain a competitive marketplace, prevent over-pricing or limiting choice in low-moderate income areas and allow consumers to enjoy the existing benefit of working through one entity for their new mortgage or refinance," Cheney wrote.

Cheney thanked Huizenga for introducing the bill, and said CUNA looks forward to helping him move the bill through Congress.

CUs' Hill Visits Fruitful Despite Shutdown

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WASHINGTON (10/4/13)--While the government shutdown continued to make news from coast to coast, credit union advocates from 10 states were undeterred in their advocacy efforts, taking to Capitol Hill to again spread the good news about credit unions and urge the continuation of their tax status.

State credit union league and credit union representatives from Illinois, Iowa, Kansas, Maine, Michigan, Missouri, Minnesota, Montana, Nebraska and Ohio joined the Don't Tax My Credit Union fight by hiking Capitol Hill this week, backing the Credit union National Association's own Wednesday online efforts. (See related story: Newest 'Don't Tax' Rally Draws 9,000 CU advocates to Websites.)

More than two dozen credit union advocates traveled as part of a Michigan Credit Union League (MCUL) and Affiliates group, meeting with someone from nearly every legislator's office. "All of the congressional staff and lawmakers we talked to understood our issues and were engaged in the conversation," league President Dave Adams said, noting that both staff and lawmakers were engaged in the discussion of credit union issues, despite the turmoil over the government shutdown that is dominating most conversations in Washington right now. "It's obvious they have heard the credit union message loud and clear," he added.
 
All 16 members of the Michigan congressional delegation have said they support credit unions, with some specifically saying they would not vote for a bill that changed the credit union tax status.

Click to view larger image Ohio Credit Union League Director of Public Affairs Patrick Harris poses with his group's leave-behind lunchbox, packed with credit union fact sheets and Buckeyes candy, in front of that state's official flower, the Scarlet Carnation.  The flower is part of a series of state flowers displayed in Credit Union House on Capitol Hill. (CUNA photo)
The Ohio Credit Union League and credit unions from that state took a unique approach to their visits, bringing along steel lunch boxes as leave-behinds for members of Congress. The lunch boxes, which are packed with credit union fact sheets and Buckeyes candy from that state, are meant to give legislators food for thought and respond to banks that claim credit unions are "eating their lunch." An accompanying tag notes that "credit unions aren't eating anyone's lunch. They're simply a banking alternative for 2.7 million Ohioans who choose a not-for-profit financial co-op to serve their families' needs."

The Missouri credit union group has also reported positive results from their meetings. Shannon Payne, a Poplar Bluff FCU board member, said she is sending a simple message to her legislative representatives. "We don't want to be taxed...we're for the community."

CFPB's Cordray Reports CARD Act Progress For Consumers

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CHICAGO (10/3/13)--"The [Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act)] brought better consumer protections and fairness to the marketplace, but we found there is more work to be done," Consumer Financial Protection Bureau Director Richard Cordray said during a Wednesday agency field hearing.

The field hearing followed the release of a CFPB report on the CARD Act's impact on credit markets. (See related story: CUNA's Dunn Outlines CARD Act Challenges For CUs at CFPB Event.)

The CARD Act was enacted in 2009 to prohibit and restrict a number of credit card practices.

While the bureau highlighted some improvements that have been made as a result of the CARD Act, the CFPB said it still has areas of concern, such as optional services that are sold by credit card companies to cardholders, application fees or other fees that are charged before an account is opened and deferred interest products.

Online disclosures, disclosures concerning rewards products, and grace period disclosures are also of interest. The CFPB said it will study some of these areas, and could take future action to address these issues.

According to the CFPB report:
  • The total cost of credit, including all fees, interest, and finance charges paid to card issuers, declined by two percentage points between 2008 and 2012;
  • Overlimit fees have been effectively eliminated, as consumers have paid about $2.5 billion less in overlimit fees than they paid in 2008; and
  • The average late fee declined by $6 since 2008, resulting in a $1.5 billion decrease in late fees paid by consumers in 2012.
The CFPB also reported that the percentage of young adults ages 18-20 that have at least one credit card account has dropped by half. However, overall availability is not an issue: There is still $2 trillion of unused credit for consumers with credit cards in the marketplace, the agency noted.

Social Media All A-Twitter: CUs Act Via 'Don't Tax' Virtual Rally

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WASHINGTON (10/3/13)--The call of "Don't Tax My Credit Union!" was amplified Wednesday, as the Credit Union National Association launched the newest apex of its advocacy efforts in support of the credit union tax status--featuring use of social media platforms--in a virtual rally.

Click to view larger image Credit Union National Association President/CEO Bill Cheney (left) is prepped by CUNA staff before the online "Don't Tax My Credit Union" rally begins. (CUNA Photo)

Facebook and Twitter users across the country joined other credit union supporters gathered in Washington to speak up and send a united message to the U.S. Congress during CUNA's online tax status rally.

CUNA President/CEO Bill Cheney kicked off the rally at Credit Union House on Capitol Hill by encouraging online viewers to tweet their members of Congress. He noted that "credit unions are tax exempt because we are member-owned, return earnings to our members and exist only to provide financial services to our members. None of that has changed in more than 100 years," he said.

Reaching out to members of Congress and educating them on the credit union tax status issue was the main goal of Wednesday's online rally, and credit union members across the country responded to the call, posting messages, like the following, on Twitter:

  • @i_am_mr_davis told several Missouri members of Congress "placing a tax on my #creditunion would be like punishing my child for doing nothing wrong, that's wrong.";
  • @EntrustGary told House Majority Leader Eric Cantor (R-Va.) "credit unions are rooted in communities with a mission to serve our members. #DontTaxMyCU;"
  • @AngelaMGervais said there are "no crazy fees" at her credit union, "just people helping people!"; and
  • "Funny that after taking bailouts, bankers want to punish Credit Unions. Please #dontTaxMyCU," @JMouzoukos wrote.
Click to view larger image A time-lapse video of a "Dont Tax" jack-o-lantern was one of many ways credit unions across the country found innovative ways to spread their message on Wednesday. 

In Oregon, Oklahoma, and Ohio, the #DontTaxMyCU hashtag became a trending topic on Twitter. In Washington, credit unions got double the result, as both #DontTaxMyCU and #CURally trended in that state.

Elsewhere, credit unions leagues held rally viewing parties, and  others set up laptops in their lobbies to help their members share their love for their credit union with members of Congress.

The rally also highlighted the great things credit unions are doing across the country, including a video that demonstrated how North Carolina credit unions are putting people above profit.

Click to view larger image A graphic posted by Vacaville, Calif.-based Travis CU shows that even while the government is closed, credit unions are still there to help.


More than 10,000 people visited www.DontTaxMyCreditUnion.org in the hours leading up to and following the rally, and more than 1,800 email messages were sent to legislators on Wednesday.

CUNA is also working to tally the total number of tweets and impressions that were made during the rally. CUNA's tax advocacy Twitter feeds and Facebook page also gained followers during the rally. (See Friday News Now for a full report.)

CUNA's Dunn Outlines CARD Act Challenges For CUs

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CHICAGO (10/3/13)--Credit unions' cooperative structure sets them apart in the credit card industry, Credit Union National Association Deputy General Counsel Mary Dunn said Wednesday at the Consumer Financial Protection Bureau's field hearing here.

"Credit unions don't view themselves as part of the credit card industry, we
Click to view larger image Credit Union National Association Deputy General Counsel Mary Dunn addresses the Consumer Financial Protection Bureau's field hearing on credit cards Wednesday.  What sets credit unions apart from other credit card issuers is that they operate for the purpose of promoting thrift, providing credit, and providing other financial services at competitive rates, she noted in prepared remarks.
view ourselves as cooperatively owned financial institutions that provide cards and services because our members want them," Dunn told the crowd of CFPB staff, including Director Richard Cordray, consumer activists, other card issuers and more. What sets credit unions apart is that they operate for the purpose of promoting thrift, providing credit, and providing other financial services at competitive rates, she noted in prepared remarks. (For more on the hearing, see related story: CFPB's Cordray Reports CARD Act Progress For Consumers.)

Therefore, Dunn told the field hearing, credit unions do not see themselves as competing with banks in the credit card space. Rather, they look for ways to offer products their members will benefit from, and do so by offering lower fees and better rates to their members, Dunn said. As one example, Dunn said on a non-rewards credit card program, a credit union member will save $100 per year when compared with what they would pay for a similar card from a bank.

Dunn made her remarks during a Wednesday field hearing on credit cards and the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). She spoke on a panel that included Legal Assistance Foundation of Chicago Supervisory Attorney David Yen, U.S. PIRG Consumer Program Director Ed Mierzwinski, Sanjay Sakhrani, equity researcher with Keefe, Bruyette & Woods, and Citi Retail Services CEO Bill Johnson.

The CARD Act was enacted in 2009 to prohibit and restrict a number of credit card practices.

Remaining nimble enough to provide services members want when there are so many options out there is one of many challenges the CARD Act poses for credit unions, Dunn said. And, she added, the CFPB must work to make sure that consumers are adequately protected while at the same time allowing financial institutions to do their jobs and provide financial services.

Credit unions want to ensure that consumers continue to receive reasonable protections, and support the stated intent of the CARD Act, Dunn noted. However, she added, credit unions are adamant that regulatory requirements must not become any more cumbersome for credit unions than they are now.

Dunn in prepared remarks said the CARD act has resulted in some benefits: Borrowers are better informed on the interest rates and fees they will pay, there are adequate interest rate restrictions, and penalty fees are more "reasonable and proportional."

However, increased compliance costs have made it more expensive for credit unions and others to operate card programs, she said. The CARD Act has also had a disparate impact on the cost of credit for those with marginal credit, and there is concern that some issuers are approving fewer credit card applications as a result of the Act, Dunn noted in her prepared remarks.

CUNA Supports Minority CU Program

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

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

Bagumbayan CU Subject Of NCUA Cease And Desist Order

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

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

FHFA Reminded CUs Need Secondary Market Access

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

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

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

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

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

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

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


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

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

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

Online Don't Tax My CU Rally Is Today

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

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

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

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

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

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

NCUA Bans Two From Future CU Work

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ALEXANDRIA, Va. (10/1/13)--The National Credit Union Administration has banned two former credit union employees from participating in the affairs of any federally insured financial institution following their alleged involvement in embezzlement.

The NCUA said the orders involve the following individuals:
  • Former Monterey County Employees CU, Salinas, Calif., employee Mary Jane Arroyo, who was sentenced to 90 days in prison and three years of probation, and ordered to pay restitution and court costs after pleading no contest to embezzlement charges; and
  • Former Hamlet  (N.C.) FCU  employee Cynthia Mercer, who was sentenced to one year in prison and five years supervised release, and ordered to pay restitution in the amount of $169,261.79 after pleading guilty to embezzlement charges.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link to access all NCUA enforcement orders.

CUNA To Warn Of Reg Burden At Chicago CFPB Hearing

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WASHINGTON (10/1/13)--Credit Union National Association Deputy General Counsel Mary Dunn will again voice the concerns of credit unions impacted by regulatory burdens at a Wednesday Consumer Financial Protection Bureau hearing on credit cards in Chicago.

Dunn plans to meet with CFPB officials following the hearing, and she said she will urge the agency not to contribute further to credit unions' heavy regulatory burdens and instead, to help minimize them.

She will also encourage the agency to exempt credit unions from future regulatory requirements to the greatest extent possible.

"Credit unions simply do not need, and will have increasing difficulties assimilating, additional regulatory burdens if they are to fulfill their purpose of responding to their members' financial needs," she said Monday.

The field hearing is scheduled to begin at 11 a.m. (CDT) on Oct. 2 in the Winter Garden of the Harold Washington Library.  CFPB Director Richard Cordray, consumer groups, industry representatives, and members of the public will also be in attendance. (News Now Sept. 20)

For more on the event, use the resource link.

Welcome Cybersecurity Month With Policy Reviews, NCUA Says

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ALEXANDRIA, Va. (10/1/13)--Cybersecurity Awareness Month, which begins today, "is an ideal time for credit unions to review their information systems policies, practices and procedures," National Credit Union Administration Chairman Debbie Matz said Monday.

"We live in a world where individuals increasingly buy their groceries, book their trips and manage their credit union accounts online. As a result, the threat of identity theft and cybercrime continues to grow," Matz added. She urged credit unions to proactively put in place effective controls to protect against these cyber threats, and to "make cybersecurity an important part of their financial literacy efforts in October and all year long."

Cybersecurity Awareness Month is a national initiative sponsored by Department of Homeland Security, in cooperation with the National Cyber Security Alliance and the Multi-State Information Sharing and Analysis Center that raises awareness and educates Americans about cybersecurity, and increases the resiliency of the nation and its cyber infrastructure.

The agency in a release highlighted its consumer website MyCreditUnion.gov and financial literacy microsite Pocket Cents as two resources for credit unions looking to increase cybersecurity awareness among their members. Other methods will be highlighted on the agency's Facebook and Twitter feeds, as well as the October edition of the NCUA Report.

For more on Cybersecurity Awareness Month, use the resource link.

The Federal Bureau of Investigations' Internet Crime Complaint Center received 289,874 consumer complaints of internet fraud and other cybercrimes in 2012, and these crimes resulted in $525 million in losses, according to the agency.

The Credit Union National Association continues to be engaged on cybersecurity issues, by working with the credit union system, FSSCC, regulators, BITS, and other entities. CUNA is also monitoring developments with the National Institute of Standards and Technology (NIST) framework.

On July 1, NIST released a discussion draft outline on a "Framework to Reduce Cyber Risks to Critical Infrastructure." NIST plans to issue a proposed cyber framework this October for notice and comment, and to finalize the framework by February. (See Aug. 6 News Now story: CUNA Takes CU Cybersecurity Concerns To Treasury.)

CUNA has repeatedly emphasized that credit unions are already subject to robust data security requirements and standards, and should not be subject to additional regulations.

Additional coordination on cybersecurity would be helpful, CUNA has said.

NCUA, CUNA, CUs Prepared For Government Interruption

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WASHINGTON (10/1/13)--Federal workers walked away from their desks last night not knowing whether the U.S. government would be open for business this morning or not. But either way, the National Credit Union Administration on Monday said it would be open for business, and it encouraged credit unions to "maintain a state of readiness to help their members who may be affected by a potential government shutdown."

There was a midnight Sept. 30 deadline for the U.S. Congress to approve continued funding for the government and its programs. After long debate, Congress was unable to agree on bill, which means some agencies will be closed until action is taken.

The NCUA in a release Monday said it would remain open and unaffected in the event of a shutdown, and reminded credit union members that their member shares would still be insured to $250,000 per account, no matter what.

"Credit unions that serve federal workers and the military have responded before to members' financial needs resulting from furloughs, reimbursement delays, suspension of government programs or the closing of federal buildings housing branches. They need to prepare to do that once again," NCUA Chairman Debbie Matz said.

The Credit Union National Association also readied its own resources to help credit unions inform their members of available help in the event of a government shutdown. (Use the resource link.) CUNA President/CEO Bill Cheney said protecting and informing credit union members is CUNA's top concern when these events occur.

And credit unions, as they have done in the past, readied themselves to help members and consumers who could be impacted by a potential shutdown. (Use resource link for Sept. 27 News Now article: CUs In Place To Assist Federal Employees.) In these situations, many credit unions are prepared to offer short-term loans, work with members to restructure loans, and offer free financial counseling, among other services.

The NCUA has also cited its 2011 letter,which recommended credit unions:
  • Ensure policies provide flexibility to respond to members' financial needs;
  • Prepare for service interruptions if a shutdown affects access to credit union offices located in federal buildings;
  • Prudently work with affected members, including providing advances to individuals receiving direct deposits from the federal government;
  • Develop contingency plans with respect to participation in government programs that may be affected by a federal government shutdown;
  • Communicate response plans to members, staff and volunteers in a timely manner; and
  • Consider offering special programs to assist members who need short-term loans, create loans with special terms and rates, or offer payment flexibility.
As Congress debates spending measures, there are also some hearings of interest on the agenda this week that are expected to go on. Those hearings include:
  • A Tuesday House Financial Services Committee financial institutions and consumer credit subcommittee hearing entitled "Examining Legislative Proposals to Reform the Consumer Financial Protection Bureau." CUNA will submit a statement for the record of this hearing;
  • A Tuesday Senate Banking Committee hearing entitled "Housing Finance Reform: Fundamentals of a Functioning Private Label Mortgage Backed Securities Market.";
  • A Wednesday Joint Economic Committee hearing entitled "The Economic Outlook.";
  • A House Judiciary regulatory reform, commercial and antitrust law subcommittee hearing on the Dodd-Frank Act's impact on financial industry competition; and
  • A Senate Banking Committee hearing entitled "Rebuilding American Manufacturing."

CUNA Reminds Important Comment Deadlines Approaching

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WASHINGTON (10/1/13)--Credit unions are faced with a short, but very important, list of looming comment deadlines, and the Credit Union National Association's Regulatory Advocacy Report this week urges credit unions to weigh in on each. The topics range from a new charitable accounts rule, to needed bylaw updates, to a proposed definition for "qualified residential mortgage" for purposes of creating an exemption from the risk retention requirements under the Dodd-Frank Act.
 
Comments are due to CUNA by Oct. 15 and to the National Credit Union Administration no later than Oct. 21 on the agency's plan to allow federal credit unions to invest in charitable donation accounts (CDA), while creating safeguards to ensure the donations are used for their intended charitable purposes.
 
CUNA generally supports the NCUA proposal and commended the agency for going outside the box to create a novel structure to facilitate the proposed rule. However, CUNA has concerns about a potentially burdensome registration requirement and seeks credit union comment. (Use the first resource link to read a related News Now story.)
 
The Sept. 30 Regulatory Advocacy Report also reminds credit unions that CUNA is reviewing federal credit union bylaws and welcomes input from credit unions, leagues and others who assist credit unions with these operational rules. The federal credit union bylaws were last updated in 2007 and CUNA anticipates that the NCUA will be updating the "dated" rules soon. (See second resource link for a related News Now story.)
 
CUNA also urges credit union comment on a proposed credit risk retention regulation, which includes the new QRM definition with modifications that had been urged by CUNA.

Comments on this proposal are due to the Consumer Financial Protection Bureau by Oct. 30 and to CUNA tomorrow.
 
Under the Dodd-Frank Act, most credit unions would not be directly covered by the QRM proposal. However, CUNA has been weighing in with the various regulators on the QRM issues because there is a concern that the secondary market will conform to QRM standards and that examiners will expect federally insured institutions to meet QRM requirements. (Use the third resource link to read a related News Now story.)
 
For more on these and other key credit union regulatory topics, CUNA members can use the final resource link below to access the RAR.

House Lawmakers Urge Senate Action On Flood Insurance Rate Hikes

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WASHINGTON (10/1/13)--Seventy-three members of the U.S. House--representing at least 23 states and both sides of the aisle--urged the Senate to follow in House footsteps and approve legislation that would give relief to National Flood Insurance Program policyholders who face steep increases in rates today.
 
The House lawmakers urged Senate leadership to add a provision to any appropriate legislative vehicle--"including legislation used to complete the appropriations process for the 2014 fiscal year"--to address an unintended consequence of a 2012 bill that could bring sharp payment increases to more than 20% of policyholders.
 
The House letter noted that in July that chamber adopted an amendment to the FY14 Homeland Security Appropriations Act to shield certain flood insurance policyholders from excessive rate increases triggered by Federal Emergency Management Agency flood insurance rate map changes.
 
"The amendment received broad bipartisan support with over 280 House members voting in favor of the provision. This is a positive step toward providing a comprehensive solution to the affordability challenges plaguing the National Flood Insurance Program," the House letter noted.

Use the resouce link to access the lawmakers' letter.

Former Fin. Services Chair Bachus Won't Seek Re-election

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WASHINGTON (10/1/13)--Rep. Spencer Bachus (R-Ala.), a former chairman of the House Financial Services Committee, announced Monday morning that he will not seek another term in office.
 
Bachus, 65, has 16 months left to his current term and noted in a public statement that he will "devote his full energies to his legislative duties and serving his constituents during the remainder of his current term."
 
Bachus has been considered by some to be a lawmaker strongly guided by a conservative political philosophy but willing to consider individual issues on their own merits.
 
For credit unions, this has meant an interesting journey in a relationship with the prominent lawmaker, according to Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan.
 
Donovan noted Monday, "Here you have someone who voted against H.R. 1151...and through the tireless effort of the Alabama credit unions and CUNA, he developed into a strong credit union supporter as chairman of the House Financial Services Committee, ultimately co-sponsoring our supplemental capital legislation."  H.R. 1151, of course, is the landmark 1998 legislation that authorized credit unions to have multiple common bonds among their memberships.
 
"Bachus' development as a credit union supporter has been remarkable and it shows what can happen when credit union advocacy is viewed as a long game," Donovan remarked.
 
In his statement announcing his decision not to seek re-election, Bachus said, "There is much important work that remains to be done and what I would like to see above anything else before I leave is a spending reduction plan that will put the federal government on a sensible and sustainable financial path going forward."
 
He added, "It has been the greatest privilege imaginable to serve as the representative of the people of Alabama in the United States House of Representatives. It is an honor that I never dreamed could have been possible for me and the words 'thank you' are far from adequate."
 
He said his planned exit was a family decision and added that now is the time to "allow others to have the opportunity to serve."
 
Bachus was first elected to the U.S. House in 1992.  He currently serves on the Financial Services Committee as chairman emeritus and chairs the House Judiciary Committee subcommittee on regulatory reform, commercial and antitrust law.