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NCUA CU growth accelerated in Q3

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WASHINGTON (11/30/12)--America's federally insured credit unions took in 742,847 new members in the third quarter of 2012, representing a quarterly growth rate of 0.8%, and these National Credit Union Administration-reported numbers show that "something remarkable is clearly happening," Credit Union National Association (CUNA) President/CEO Bill Cheney said.

The third-quarter membership increases brought the total number of federally insured credit union members nationwide to 93.9 million, the NCUA reported. The 742,847 gain is up from 643,322 net new members in the second quarter.

"Turned off by excessive fees and impersonal service--too often found at today's banks--consumers are turning to credit unions as a better, local and lower-cost alternative. It's great to see a year after Bank Transfer Day occurred, in November of 2011, that the number of new people joining credit unions continues to grow at such a sustained and increasingly strong pace," Cheney added.

"By CUNA estimates, U.S. consumers save $6.3 billion a year in better rates and lower fees by using member-owned, not-for-profit credit unions rather than banks for their financial services.  The third quarter data show that people are responding in droves," he said.

The NCUA's third quarter data also showed:

  • the overall number of federally insured credit unions declined to 6,888;
  • net worth grew 2% to total $104.5 billion;
  • credit union assets increased 0.5% to $1,012.9 billion;
  • savings rose 0.1% to $869.7 billion; and
  • credit union investments, cash on deposit, and cash equivalents declined by 2% to $378.7 billion.
Credit union loans outstanding also increased for the sixth-straight quarter. The total amount of increase was $9.4 billion, bringing the total number of loans held by credit unions to $591.1 billion as of the end of the quarter. New auto loans increased by 3.3%, used auto loans increased by 2.7%, and first-mortgage loans increased by 1.3% over the totals reported as of the second quarter. Non-federally insured student loans and leases receivable reported double-digit gains, the agency added.

Member business loans also increased by 1.5% during the third quarter, totaling $40.8 billion as of Sept. 30. The amount of payday alternative loan products provided by credit unions grew by 5.2%, totaling $17.3 million at the end of the quarter.

Credit union net income stood at $6.4 billion at the end of the third quarter, and this total exceeds credit union net income reported for all of 2011, according to the NCUA. Increases in fee income and other operating income coupled with declines in interest expenses and provisions for loan and lease losses resulted in $2.1 billion in third-quarter net income, the NCUA release added. The agency also reported that the credit union industry's return on average assets ratio stayed constant at 86 basis points for the quarter.

For the full NCUA release, use the resource link.

Fed FinCEN seek BSA definition comments

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WASHINGTON (11/30/12)--The Federal Reserve and the Financial Crimes Enforcement Network (FinCEN) on Thursday released an advanced notice of proposed rulemaking (ANPRM) seeking comment on potential amendments to the definitions of "funds transfer" and "transmittal of funds" under regulations implementing the Bank Secrecy Act (BSA).

The agencies said the proposed changes are intended to maintain the current scope of the definitions and are necessary in light of changes to the Electronic Fund Transfer Act that will result in certain currently covered transactions being excluded from Bank Secrecy Act requirements.

Comments on the ANPRM will be accepted until Jan. 25.

Credit Union National Association (CUNA) Director of Compliance Information Valerie Moss said FinCEN has to amend its definitions of "funds transfer" and "transmittal of funds" because its BSA regulations exclude any funds transfers that are governed by the Electronic Fund Transfer Act (EFTA). The Consumer Financial Protection Bureau's Regulation E remittance transfer regulation covers transactions that have traditionally been outside the scope of EFTA and Reg E, including consumer-initiated international wire transfers that were covered by BSA regulations.

"So, the BSA regulations had to be amended to maintain coverage of these types of transactions," she added.

For more on the ANPRM, use the resource link.

Credit ratings changes fidelity bond insurance on NCUA agenda

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ALEXANDRIA, Va. (11/30/12)--Final rules addressing credit rating use alternatives and fidelity bond and insurance coverage for federally insured credit unions are among the items on the National Credit Union Administration's (NCUA) December open board meeting agenda.

Community charter conversion requests from Focus FCU, Toledo, Ohio, and The Atlantic FCU, Kenilworth, N.J., will be discussed during the meeting. The agency's Temporary Corporate Credit Union Stabilization Fund budget will also be addressed during the final open board meeting of 2012.

The NCUA open board meeting is scheduled to begin at 10:00 a.m. ET on Dec. 6.

The NCUA last spring released a proposal that would prohibit credit unions from relying on credit ratings to assess credit risk. Under that proposal, securities would not be assigned a specific grade, such as AA, A, or BB, to be a permissible investment. The securities would instead need to satisfy a narrative standard on credit quality. This credit rating replacement was required by the Dodd-Frank Wall Street Reform Act.

The Credit Union National Association (CUNA) in a comment letter said it was concerned with the potential unintended effects of the NCUA's credit rating alternative proposal. "Credit ratings can be useful to credit unions as part of a comprehensive approach to assessing credit risk," CUNA wrote. The CUNA comment letter urged the NCUA to consider permitting credit unions to rely on credit ratings as long as the credit union also conducts further reasonable and appropriate due diligence.

The closed portion of the December meeting will feature a creditor claim appeal. Termination of investment pilot programs and personnel matters will also be discussed.

For the full NCUA agenda, use the resource link.

Fannie Freddie conforming loan limits unchanged for 2013

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WASHINGTON (11/30/12)--The Federal Housing Finance Agency (FHFA)  Thursday announced that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2013 will remain at existing levels.

What that means, the agency said, is that in most of the country the loan limit will be $417,000 for one-unit properties. The loan limits are established under the terms of the Housing and Economic Recovery Act of 2008 (HERA) and are calculated annually.

HERA requires the loan limits to be set as a function of median home values in local areas: While some counties saw increases in home prices in 2012, no loan limit increases were evident after other HERA terms such as the statutory ceiling and floor were taken into account.

The maximum conforming loan limits for one-unit properties, which generally have applied to loans originated since Oct. 1, 2011, are $417,000 in most locations, but are as high as $625,500 in certain high-cost areas in the contiguous United States.

For loans originated prior to October 2011, the maximum loan limit was as high as $729,750 in the contiguous United States. That higher "ceiling" limit was permitted under legislation that is not applicable to loans originated in 2013, FHFA noted in a release.

Use the link for a list of the 2013 maximum conforming loan limits for all counties and county-equivalent areas in the country.

Inside Washington (11/29/2012)

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  • WASHINGTON (11/30/12)--Credit Union National Association President/CEO Bill Cheney introduced Thursday's keynote speaker, Pulitzer prize-winning Washington Post business columnist Steven Perlstein, at the Consumer Federation of America's annual conference on consumers in the financial services marketplace in Washington, D.C.  "Bill is going to like my speech, even though he hasn't seen it yet," Perlstein said before beginning his remarks.  Perlstein went on to praise mutual institutions like credit unions as appealing alternatives for consumers who are fed up with the excesses of Wall Street and big business.  "It is, after all, (our) money," he said.  "We have it within our power to take it back and put it somewhere else--cooperative enterprises."  Perlstein said he would like to see CFA help power a grassroots movement to "take back the financial system--not by occupying it, but by defunding it" in favor of enterprises where the profits go back to the consumers ...
  • WASHINGTON (11/30/12)--Former Dominion Resources Senior Vice President and Chief Information Officer Margaret E.  "Lyn" McDermid has been named the next chief information officer of the Federal Reserve System, according to an announcement from the Federal Reserve Bank of Richmond. "Lyn is an outstanding IT leader in a dynamic, highly regulated industry that is focused on service reliability, innovation and security. Her experience is great preparation for leading national IT services for our nation's central bank, where world-class information technology is essential to all aspects of our mission," Jeff Lacker, president of the Federal Reserve Bank of Richmond, said in a news release. McDermid will begin her new job on Feb. 1 and will succeed Lon Zanetta who is retiring. She has been chairman of the board of directors of the Federal Reserve Bank of Richmond …
  • WASHINGTON (11/30/12)--Sen. Bob Corker (R-Tenn.) said he would oppose any extension of the Transaction Account Guarantee Program because it is "time to move beyond this period of unprecedented support of the banking industry.''  Corker, a member of the Senate Banking Committee, said in a news release that he reached his conclusion after he received responses from the Federal Deposit Insurance Corp. (FDIC) indicating that with "banks now holding sufficient deposits to support their outstanding loans and data showing that large institutions are by far the largest holders of TAG deposits, the program's benefit to the community banking system is, at best, unclear.''  Senate Majority Leader Harry Reid (D-Nev.) has introduced legislation to extend program, which the FDIC launched during the financial crisis in 2008, to 2014. The program provides unlimited insurance for some non-interest bearing accounts …
  • WASHINGTON (11/30/12)--Foreign banks that operate in the U.S. would be subject to annual stress testing, risk management regulations and single counterparty credit limits under proposed regulations to be issued in the next few weeks, Federal Reserve Board Gov. Daniel Tarullo said in a speech on Wednesday. (American Banker Nov. 29)  Imposing more standardized regulations on the U.S. operations of foreign banks can ensure that enhanced prudential standards are applied consistently across foreign banks and in comparable ways between U.S. banking organizations and foreign banking organizations," Tarullo said in a speech at Yale University's Law School.  Tarullo supports having foreign banks that operate in the U.S. establish first-tier intermediate companies encompassing all of their American operations. He said the U.S. needs to adjust the regulatory requirements for foreign banks in response to changes in the nature of their activities here, the risks attendant to those changes, and instructions from Congress in new statutory provisions …

Fee flexibility would help more avoid payday loans CUNA

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WASHINGTON (11/30/12)--Giving federal credit unions more flexibility on application fees and interest rates on payday-alternative loans (PALs) would allow more credit unions to offer those products, the Credit Union National Association (CUNA) wrote in a Nov. 26 comment letter to the National Credit Union Administration (NCUA).

Credit unions generally seek to be reasonable when charging fees for loan application processing, including loans under the PALs program, CUNA Senior Vice President and Deputy General Counsel Mary Mitchell Dunn wrote.

However, because of costs incurred, credit unions should be able to charge an application fee that is greater than the current maximum of $20, she recommended. Dunn also recommended that credit unions that offer PALs should continue to be able to charge at least 1,000 basis points above the maximum rate allowed on other loans.

The NCUA began allowing federal credit unions to issue PALs in 2010 and is seeking comments on the program.

The CUNA letter added that credit unions should be allowed to charge higher rates than the current annual percentage rate (APR) of 28%. They should be able to choose between the 28% APR that does not include the application fee, or an APR of 36% that incorporates fees.

Dunn also wrote that the range of PALs be expanded above and below the current range of $200 to $1,000 loans.

CUNA also recommended that the NCUA:

  • Allow loan maturities less than one month and longer than six months;
  • Allow credit unions to offer more than one PAL at a time; and,
  • Eliminate the requirement that someone be a member of the credit union for a month before they can take out such a loan.
"CUNA encourages all regulators that affect credit unions' operations to do all they can to help alleviate regulatory burdens and provide more leeway, consistent with legal requirements, for credit unions to make their own decisions about how best to serve their members. More flexibility regarding the PALs program will not only help credit unions in that regard but also will ensure more consumers have ready access to much needed credit on better terms than what abusive payday lenders not subject to NCUA requirements offer,'' CUNA  wrote.

As of June 2012, about 420 credit unions offered PALs with an aggregate balance of $16.7 million on over 41,000 outstanding loans.

CFPB reminds credit reporting agencies of legal role

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WASHINGTON (11/30/12)--Credit reporting agencies must make clear how consumers can obtain credit reports by phone and the Internet and have a system in place with "adequate capacity to accept requests from a reasonably anticipated volume of consumers.''

That's one of the guidelines spelled out in a new bulletin that the Consumer Financial Protection Bureau sent to credit reporting agencies on Thursday.

"Nationwide specialty consumer reporting agencies can have great influence over a consumer's tenancy, insurance premiums, or even employment," said CFPB Director Richard Cordray. "Today, the CFPB is reminding these companies that they must follow the law and provide consumers with easy access to their free annual report. If we have reason to believe that companies are not following the law, we will take action."

The bureau said the bulletin is the result of its findings that discovered problems such as companies that have toll-free numbers but make it hard for consumers to request reports. There are approximately 400 such companies.

The CFPB, which began receiving complaints about credit bureaus in October, has already sent warning letters to several bureaus.

The newest CFPB bulletin focuses on the provisions of the Fair Credit Reporting Act.

Use the resource link to read more.