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Durbin asks CFPB for new checking disclosures

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WASHINGTON (11/4/11)--Sens. Richard Durbin (D-Ill.) and Jack Reed (D-R.I.) in a Thursday release asked the Consumer Financial Protection Bureau (CFPB) to require financial institutions to post on their websites a standardized disclosure form that lists the fees and key terms associated with checking accounts.

Durbin in a release said the one-page model disclosure listing the fees and key terms of checking accounts is intended to give consumers "clear, upfront and accurate information about the fees that they will be charged will allow consumers to shop around and make sound financial decisions."

The legislators suggested that the CFPB form could be based on a form developed by The Pew Charitable Trusts' Safe Checking in the Electronic Age Project. That sample form provides spaces for disclosures on account opening fees, monthly account fees, ATM fees, overdraft and check processing policies, and other items.

Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said there is no reason for credit unions to be under any new disclosure requirements for share or checking accounts. Credit unions offer products that are member friendly, and already provide adequate disclosures, she added.

CUNA President/CEO Bill Cheney in a Bloomberg Radio interview aired earlier this week encouraged those fed up with bank fees to find a credit union they can join, and look at the options. "You will get a better deal," Cheney said. Bank customers that are interested in moving to a credit union can see which credit unions they are eligible to join on CUNA's, Cheney added.

The CUNA CEO in a separate Huffington Post piece advised consumers that those who join a credit union can expect to save at least $70 through lower rates, higher returns on savings and lower or no fees over a year--just as current credit union members did in the 12 months between June '10 and June '11.

CUNA CUs must have access to secondary mortgage market

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WASHINGTON (11/4/11)--Rep. Scott Garrett's (R-N.J.) Private Mortgage Market Investment Act, which was the subject of a Thursday hearing, could create a secondary mortgage market made up exclusively of the largest banks in the country, and could result in credit unions being excluded from that market, the Credit Union National Association (CUNA) has warned.

Thursday's hearing took place before the House Financial Services subcommittee on capital markets and government sponsored enterprises. Garrett's bill would require the Federal Housing Finance Agency (FHFA) to develop underwriting standards and securitization agreements and abolish the risk retention standards set forth by the Dodd-Frank Act. The legislation would also provide new disclosures for mortgage investors and securities purchasers.

FHFA Acting Director Edward DeMarco testified during the hearing, saying that "private capital markets can and should reclaim a prominent portion in providing housing finance." Garrett's proposal "broadens the discussion of how we might do that," he said.

DeMarco said "there seems to be relatively broad agreement that the government sponsored enterprise model of the past, where private sector companies were provided certain benefits and charged with achieving certain public policy goals, did not work." However, he added, there will likely "always be some portion of the housing or mortgage market that will be assisted by government programs, either through direct funding or through guarantees."

He added that any mortgage market must be able to preserve credit availability in times of stress and preserve liquidity in the market and the financial system. DeMarco suggested that governmental bodies could serve as backstops to guard against credit availability or liquidity issues. "These are just some of the issues that will have to be thought through as the process moves forward on building out this framework," he added.

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

CUNA Senior Vice President of Legislative Affairs Ryan Donovan said it is possible that Garrett's bill may be marked up before the end of this year, but its prospects are unclear after that.  While a number of hearings have been held in the Senate Banking Committee, it is not clear that the Senate will take up comprehensive housing finance reform legislation before the end of the Congress.

CDFI Fund to offer 123M in funds in 2012

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WASHINGTON (11/4/11)—The U.S. Treasury Department Thursday announced the availability of $123 million in funds through its Community Development Financial Institutions (CDFI) Fund.

A total of $25 million of the CDFI Fund awards will be distributed under the Obama administrations new Healthy Food Financing Initiative (HFFI), according to the release.

CDFI Fund Director Donna J. Gambrell in a release said that the CDFI program "will greatly support CDFIs serving distressed communities across the country." These institutions "play a critically important role in these communities by promoting economic opportunities and the CDFI Program is a vital tool for expanding the capacity of these CDFIs to increase their lending activities," she added.

Applications for the CDFI funds must be received by Jan. 11.

The fund earlier this year awarded $142,302,667 to 155 institutions, including 25 credit unions, in the largest single round of monetary awards since the CDFI Fund program began in 1994. Overall, the CDFI Fund eclipsed $1 billion in total awards in 2011.

For the CDFI Fund release, use the resource link.

FinCEN proposes SAR AML reporting change GSEs

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VIENNA, Va. (11/4/11)--Government-sponsored enterprises (GSEs) Fannie Mae, Freddie Mac and the Federal Home Loan Banks would be required to develop anti-money laundering (AML) programs and file suspicious activity reports (SARs) with the Financial Crimes Enforcement Network (FinCEN) under a plan proposed Thursday.

The GSEs currently file fraud reports with their regulator, the Federal Housing Finance Agency (FHFA), which then files SARs with FinCEN when the facts in a particular fraud report warrant a SAR under FinCEN's reporting standards


The new reporting regime, FinCEN said, would streamline the reporting process, provide law enforcement with quicker access to data about potential fraud, and result in the reporting of a wider range of suspected financial crimes.

"This action is another step to help restore the integrity of the mortgage market," said FinCEN Director James H. Freis, Jr. in a release.  "Providing law enforcement with quicker access to data about potential financial crimes will help them better hold illicit actors accountable for mortgage fraud and other scams."

FinCEN said another important benefit to the GSEs of developing an AML program and filing SARs directly with FinCEN is that the GSEs, including their directors, officers, and employees, will become subject to the Bank Secrecy Act's (BSA) "safe harbor" provisions, which are intended to encourage financial institutions to report suspicious activities without fear of liability from lawsuits by SAR subjects.

The comment period is open for 60 days from the date of publication in the Federal Register.

Inside Washington (11/03/2011)

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  • WASHINGTON (11/4/11)--Members of a House Financial Services Committee subcommittee questioned the governance structure and regulatory efforts of the Consumer Financial Protection Bureau (CFPB) during a hearing on Wednesday (American Banker Nov. 3). Grilling Raj Date, the special advisor to the Treasury secretary on the CFPB, Republicans called for a board or commission to lead the bureau in place of a single director.  Democrats, led by U.S. Rep. Barney Frank (D-Mass) disputed the notion that the bureau is not subject to congressional oversight, pointing out that the hearing was the second held by the Financial Services oversight subcommittee. Some Republicans also expressed concern that the agency place increased an regulatory burden on community banks in their districts, though they had nothing to do with subprime lending and other practices that led to the financial crisis …
  • WASHINGTON (11/4/11)--The Federal Deposit Insurance Corp.'s (FDIC) role in the bank failures is larger than the agency would like to admit, according to observers (American Banker Nov. 3). The FDIC's role in bank closings was brought into the spotlight by the Federal Reserve's historic decision to close the $1.38 billion asset Community Banks of Colorado last month. It was the first time the Federal Reserve ever closed a bank, and the FDIC was closely tied to the decision-making process. Though banks are nearly always shut down by the state regulator or the Office of the Comptroller of the Currency, depending on their charters, the FDIC has a "material influence" on the decision, according to John Bley, formerly Washington state's chief bank regulator and now chair of the financial institutions group Foster Pepper. In the case of Community Banks of Colorado, the state's banking regulator sought to give the bank more time to sell branches to raise cash. However, the Federal Reserve Board, the bank's primary federal regulator, and the FDIC agreed that the deal would only delay the failure and make it more costly in the long run. The Fed overruled the state, closing a bank for the first time ever. When a deal is in the works to raise capital, investors typically first turn to regulators to determine if the arrangement is acceptable, according to Jeffrey Taft, a partner with Mayer Brown LLP.  If the regulators aren't satisfied, the financial institutions do not attempt to go forward, Brown said …
  • WASHINGTON (11/7/11)--The U.S. Department of Housing and Urban Development (HUD) and the U.S. Treasury Department released the October edition of their "Housing Scorecard." The latest housing data reflected the turmoil that continues in housing markets. The scorecard reported mixed signals: new home sales rose compared to August, but were still slightly down from the prior year; and mortgage defaults and foreclosure sales continued a downward trend, but foreclosure completions ticked slightly upward in September after months of decline …