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CU Reg Relief Bill Set For Markup

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WASHINGTON (11/12/13)--The House Financial Services Committee announced that it will mark up a bill Thursday on a credit union regulatory relief measure supported by the Credit Union National Association, one that would extend share insurance coverage to trust accounts held in the name of nonmembers.

The bill, expected to be introduced by Reps. Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo.), would rectify the disparate treatment given such accounts at credit unions. In 2008, the National Credit Union Administration issued an opinion letter on insurance coverage on Interest on Lawyers' Trust Accounts (IOLTA). The accounts are those set up by lawyers at a credit union or bank to hold funds for their clients. Often, the interest accrued is paid to the state or the state bar association to fund legal services.

CUNA has noted that the situation puts credit unions at a disadvantage to attract this type of account if all the clients must be members, rather than just the attorney establishing the account. CUNA has discussed the issue both on the regulatory and legislative fronts.

Also to be considered at the Thursday markup is H.R. 3329, a bill introduced by Rep. Blaine Luetkemeyer (R-Mo.) to increase from $500 million to $1 billion the cap on the application of the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors.

"We hope that the legislation considered on Thursday will be the first of several regulatory relief bills to move through the committee, and we are very appreciative of Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) for their leadership in this process," noted CUNA Senior Vice President of Legislative Affairs Ryan Donovan Friday.

Other hearings on the schedule this week include:
  • A Tuesday Senate Banking Committee hearing on the Consumer Financial Protection Bureau's semi-annual report to congress. CFPB Director Richard Cordray will testify (See News Now story: Senate Panel Hears CFPB Six-month Report Today.);
  • A Wednesday House-Senate conference committee meeting on S.Con.Res.8, which would revise fiscal 2013 budget levels, set the congressional budget for fiscal 2014, and set budgetary levels for the 2015-2023 fiscal years;
  • A Wednesday Joint Economic Committee hearing on the current economic outlook;
  • A Wednesday House Financial Services monetary policy subcommittee hearing on international central bank models; and
  • A Thursday Senate Banking Committee hearing on Janet Yellen's nomination to serve as Federal Reserve Board chair.

Cheney Report Details CU Fin Ed Efforts

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WASHINGTON (11/12/13)--The financial education efforts of TopLine FCU, Maple Grove, Minn., received top billing in this week's edition of The Cheney Report.

The $340-million-in-assets credit union held personal money management educational sessions at last month's Minnesota Student Leadership Summit. TopLine's session, "The Real World of Personal Money Management," was attended by more than 300 students and built on the themes of the event by helping students better understand how to manage finances.

TopLine FCU's story is one of several that CUNA has featured in recent editions of The Cheney Report. CUNA is collecting these stories to showcase how credit unions are joining forces to Unite for Good. Cheney has encouraged credit unions to visit and share how they are helping reach CUNA's shared, strategic vision in which Americans choose credit unions as their best financial partner.

Back in Washington, Cheney noted, "signs and hints that tax reform is gearing up continue to accumulate." A tax reform discussion draft outlining the thinking of the committee's leadership on a particular issue could be released in the coming weeks. CUNA is focused on keeping the credit union tax exemption intact in discussion drafts, and needs credit union supporters nationwide to stay engaged in the Don't Tax My Credit Union campaign to achieve that goal, Cheney emphasized.

This week's Cheney Report also includes:
  • Details on CUNA Chief Economist Bill Hampel's testimony before the Senate Banking Committee;
  • Highlights from the second part of a two-part Inside Exchange interview with National Credit Union Administration Chairman Debbie Matz; and
  • An update on Senate privacy legislation.
Use the resource link to read the latest in The Cheney Report.

CUNA Contacts FFIEC To Urge Delay Of Mortgage Reg Legal Liability, Sanctions

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WASHINGTON (11/12/13)--Federal financial regulators should work with the Consumer Financial Protection Bureau to provide a short-term reprieve, until September, from examiner sanctions for noncompliance that might be imposed on regulated financial institutions that are in making good faith efforts to comply with upcoming mortgage regulations, the Credit Union National Association's CEO Bill Cheney urged in a letter to the Federal Financial Institutions Examination Council (FFIEC).

CUNA has called for a delay in possible sanctions and legal liability under the mortgage rules in several forums in recent days: For instance, Chief Economist Bill Hampel sought short-term reprieves or an outright delay of the mortgage regulations in Senate Banking Committee testimony delivered last week. CUNA's Bill Cheney also argued for a delay in an American Banker op-ed piece published Thursday.

In a letter to the leaders of the FFIEC, CUNA urged the regulators to work with Congress to delay legal liability under the new rules, again until September. The FFIEC was formed in 1978 to promote uniformity in financial institution regulation. It includes the heads of the Federal Reserve Board, the National Credit Union Administration, and the Federal Deposit Insurance Corp., as well as the Comptroller of the Currency and the director of the  Consumer Financial Protection Bureau.

"We believe these requests are reasonable and if implemented, would be enormously useful to smaller creditors as they work to meet their responsibilities under these rules," CUNA wrote in the letter. "This approach, to delay examiner sanctions and legal liability only for a short but reasonable time, will ultimately support full compliance--in the best interests of consumers, creditors, servicers, and regulators," CUNA added.

Delaying compliance with upcoming mortgage rules would also "provide welcome, although temporary, relief particularly for smaller creditors and servicers, such as credit unions," CUNA wrote. However, CUNA in the letter recognized that the CFPB has said a full delay is not be possible because of the implementation directive in the Dodd-Frank Act.

The letter also calls on the regulators to do more to address concerns about the risk of disparate impact discrimination that could result because of the focus on "qualified mortgages." The concern is that examiners and the secondary market could favor QMs, which require the borrower to have no more than a 43% debt to income ratio.

Other borrowers that have higher ratios that still could be good mortgage credit risks might not be able to obtain a mortgage or have to pay more for one.

Senate Subcommittee Investigates Patent Abuses(1)

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WASHINGTON, D.C. (11/12/13)--The Senate Commerce consumer protection subcommittee conducted a hearing on the impact of demand letters--sent by patent assertion entities (PAEs) or "patent trolls"--on small businesses, consumers, and innovators. The hearing considered whether legislation is needed to provide increased protections from patent abuses.

The volume of lawsuits against credit unions related to patents is steadily increasing, and the Credit Union National Association has called on Congress to act to address this abusive litigation. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones, among other examples.

These suits, which involve so-called "patent trolls" using low-quality patents in an effort to extract settlements from credit unions, are an abuse of the patent system, CUNA has said. 

Credit unions and others have settled out of court to avoid the cost of litigation.

Other examples of alleged patent infringement that were touched on in the Thursday hearing include credit, debit, and gift card magnetic stripe technology, as well as image scanning to email technology.

In the Thursday hearing, Nebraska Attorney General John Bruning called the practices of patent trolls silent extortion. "Attorney general after attorney general is realizing that we have to band together to combat patent trolls," he added. Bruning urged the U.S. Congress to "use its subpoena powers to bring patent trolls forward to answer for their abusive practices."

Bruning explained that larger entities having earlier experience with demand letters know that once they meet the patent troll's financial demands, the trolls will "come back again and again." He argued this is why smaller companies and organizations have seen an uptick in the number of the demand letters. Patent trolls, he said, have "reached the end of their rope" and they "know the big guys have the resources to and most likely will fight, but the small guys lack the resources to fight, so they often settle."

Another witness, BrandsMartUSA Executive Vice President Larry Sinewitz, said his business has troubled demonstrating how many demand letters that it receives. "We have trouble bringing you demand letters we've settled on, because they usually include non-disclosure agreements. So if I showed you all of them it would literally open me right back up to the risk of litigation," he said.

The Innovation Act of 2013 (H.R. 3309), which was introduced by Rep. Bob Goodlatte (R-Va.) late last month, would remove some of the financial incentives sought by firms that assert low-quality patents in the hope of quick settlements. CUNA supports this bill. (See Oct. 29 News Now story: CUNA, Trades Back Goodlatte Patent Improvement Bill.)

Dakotas, New York CU Reps Finish Off Fall Hike Schedule

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WASHINGTON (11/12/13)--A strong fall season of Hike the Hill credit union advocacy was wrapped up last week as a twelve-member delegation from North and South Dakota brought the credit union message to Capitol Hill. This fall's Hike the Hill schedule included visits from credit union representatives from 32 states.

The North and South Dakota credit union delegation poses in front of CPB headquarters in Washington. The group, in no particular order, included Robbie Thompson, Credit Union Association of the Dakotas (CUAD); Roger Heacock, Black Hills FCU; Floyd Rummel III, Northern Hills FCU; Amy Klienshcmit, CUAD; Steve Schmitz, First Community CU; Janet Mount, Vermillion FCU; Marty Willms, Minute Man Community FCU; Mary Connick, Minute Man Community FCU; Tyler Neether, Town & Country CU; Julie Thompson, Ft. Randall FCU; Melanie Stillwell, Western Cooperative CU, and Jeff Olson, CUAD.           (CUAD Photo)
The Credit Union Association of the Dakotas met with Sens. John Hoeven (R-N.D.), Heidi Heitkamp (D-N.D.) and John Thune (R-S.D.) and the credit union advocates focused on three vital issues: Preserving the credit union tax status, reforming privacy notification regulations, and maintaining credit union access to the secondary mortgage markets as policymakers work for housing finance system reforms.

CUAD reported that credit unions' 'Don't Tax My Credit Union" efforts have had an impact, according to those lawmakers they met with: Many referenced the volume of credit union contacts their district offices continue to receive from Dakota credit union members.

The Dakotas group also were present when Credit Union National Association Chief Economist Bill Hampel testified before the Senate Banking Committee hearing on housing finance reform, and also later visited that committee's chairman, Sen. Tim Johnson (D-S.D.).

Click to view larger image The Credit Union Association of New York (CUANY) poses with Rep. Chris Collins (R-N.Y.) (second from right) in front of his office on Capitol Hill. The New York group included Allison Barna, Michael Lanotte, and RJ Tamburri, all of CUANY; Stephanie Carl, Corning FCU; Cara Carlevatti, Great Erie FCU; Kate Czarnecki, FocalPoint FCU; Angela Hitchcock, Sidney FCU; Aimee Johnson, Oswego County FCU; Meghan McGee-Pelkey, UFirst FCU; Cristina Morrissiey, AmeriCU Credit Union; David Roy, Buffalo Metropolitan FCU; and Christin Vincent, The Summit FCU.
The Credit Union Association of New York (CUANY) also came to Washington for one of CUNA's and the state leagues' final Hike the Hill events of the year. That group took a novel approach to their advocacy efforts: CUANY representatives were accompanied by ten young credit union professionals, many of whom were attending their first meetings on Capitol Hill.

The young credit union employees, who are members of CUANY's Young Professional Commission (YPC), helped deliver more than 13,000 Don't Tax My Credit Union postcards to the offices of Sens. Charles Schumer (D-N.Y.) and Kirsten Gillibrand (D-N.Y.).

"I think the senators' staff members were really surprised with our proactive approach," Angela Hitchcock, loan officer at Sidney FCU, Bainbridge, N.Y., told CUANY's The Point. "They weren't expecting all those postcards, and they seemed pleased with how we were bringing awareness to our members," she added.

Member business lending and supplemental capital were also addressed during meetings with legislators and their staff. YPC Chair Aimee Johnson, who is vice president of lending at Oswego County FCU, Oswego, N.Y., said the credit union group "explained it in clear terms and gave real examples of how not having additional capital has hindered our credit unions."

The New York advocates met with representatives or staff from one-third of their congressional delegation, and the CUANY said many lawmakers expressed support for the credit union tax status.

"These visits created new personal relationships between our young credit union professionals and our federal legislators," Mike Lanotte, CUANY senior vice president/general counsel, said. "It also gave us the opportunity to discuss our legislative priorities and thank our cosponsors while strengthening our case with those yet to take that step."

The key credit union issues were also brought to lawmakers attention by credit union advocates from Arizona, Colorado, Indiana, Massachusetts, New Hampshire, Rhode Island, and Wyoming in the final weeks of this year's Hike the Hill schedule.

Final TILA/RESPA Rule Could Be Revealed Nov. 20

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WASHINGTON (11/12/13)--A final rule on the integration of Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures may be released at the Consumer Financial Protection Bureau's Nov. 20 mortgage field hearing.

The field hearing, entitled "Know Before You Owe: Mortgages," will be held in Boston, Mass., and is scheduled to begin at 11 a.m. (ET). Bernie Winne, CEO at Boston Firefighters CU, will take part in a roundtable discussion at the hearing. Winne is a member of the Credit Union National Association's Government Affairs Committee.  Also, Cordray is scheduled to meet with Massachusetts Credit Union League representatives after the hearing.

The CFPB has also set a Nov. 14 auto finance forum event. The event will be held in Washington and is scheduled to begin at 8:45 a.m. (ET) at bureau headquarters.

Both events will be streamed live on the CFPB homepage.

For more on the events, use the resource links.

CFPB Releases Housing Counselor Tool For Consumers

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WASHINGTON (11/12/13)--The Consumer Financial Protection Bureau on Friday released a new tool to help consumers access advice on buying a home, renting, defaults, foreclosures, and credit issues through local housing counselors.

"Consumers need and deserve the best guidance when making the decision to purchase a home," CFPB Director Richard Cordray said. "Buying a home may easily be the largest investment a consumer makes, and we want to make it easier for them to find a housing counselor that is a good fit for them," he added.

The housing counselor locator:
  • Shows consumers the 10 closest U.S. Department of Housing and Urban Development-approved counselors near their zip code;
  • Tells consumers which services a give counselor provides, such as rental housing counseling, pre-purchase counseling, or default resolution counseling; and
  • Lists the languages offered by each counselor.
Pending mortgage regulations require lenders to provide borrowers with a list of homeownership counseling organizations. The CFPB on Friday said lenders that have not developed their own lists by Jan. 10 can provide borrowers with a link to the agency's new mortgage counselor tool.

"If lenders take these steps in good faith while building their systems or are working with vendors to build systems, the CFPB would not raise supervisory or enforcement concerns," the bureau said in a release.

The CFPB also provided an interpretive rule to guide lenders that are building their own mortgage counselor list.

For the CFPB release, use the resource link.