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Robust lame duck brings CU opportunities CUNA predicts

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WASHINGTON (11/8/12)—Remarking on the results of the Nov. 6 federal elections, Credit Union National Association Executive (CUNA) Vice President John Magill said Wednesday that CUNA anticipates a  lively post-election congressional session with many opportunities to shine the light on credit union legislation.

"We anticipate a robust lame duck session.  We are launching a massive, grassroots Hike the Hill event just as lawmakers return for the post-election session.  And, with the number of lingering, must-pass legislative items pending there will be many vehicles to serve as an engine for credit union legislation," Magill said, describing the post-election environment.

The grassroots event noted by Magill is the National Hike the Hill that will take place on Nov. 27 and 28. Advocacy for credit union member business lending (MBL) cap increase bills in the U.S. Senate and House will be the main focus of these visits.

"In some senses this has been a 'status quo' election, with the majority parties in the House and Senate, and leadership in the White House, remaining the same once a new session of Congress begins in January," Magill explains. He adds that this fact also favors action on credit unions issues.

"It means there is no rationale for holding off action for the next year on pending priority legislative items hoping for different outcomes.  And, MBL legislation, as recently as this week, was identified by Senate leader Harry Reid (D-Nev.)  as one of his 26  'unfinished business' items for the year," Magill notes.

Magill has noted that CUNA is eyeing "a number of good vehicles that MBLs could hitch a ride on." (News Now Nov. 6)

For instance, both parties will have to work to address the so-called "fiscal cliff" via a combination of tax increases and public spending cuts is one of the largest political priorities on the horizon. If legislators fail to compromise on these spending and tax issues by year end, $1.2 trillion in deficit reduction moves will be initiated on Jan. 2.

There are also appropriations bills, various tax extenders, and the Farm Bill, which expired on Sept. 30,  that need to be addressed by Congress.

"The fact of the matter is, instead of having a one-week (lame duck) session, it's likely that they'll be in for several weeks," Magill says and adds that the longer Congress is in session, the more issues can be addressed.

Another important thing, Magill notes is that there will be changes next year. "While the dominant parties remain in the House and Senate come January, some of the faces will change and that could bring a new dynamic to credit union issues."

Inside Washington (11/07/2012)

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  • WASHINGTON ((11/8/12)--In the aftermath of Hurricane Sandy, the Internal Revenue Service (IRS) has announced additional tax relief to affected individuals and businesses. Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency (FEMA), the IRS announced Wednesday that affected taxpayers in Connecticut, New Jersey and New York will receive tax relief. Other locations may be added in coming days based on additional damage assessments by FEMA. The tax relief comes in the form of postponed tax filing and payment deadlines that occurred starting in late October. As a result, affected individuals and businesses will have until Feb. 1, 2013 to file certain returns and pay any taxes due …
  • WASHINGTON (11/8/12)--The Federal Deposit Insurance Corp. (FDIC) will brief its community bank advisory committee Thursday on initiatives it is considering after regional meetings this year revealed top community bank concerns. The FDIC noted that banks around the country said they expect better pre-examination work from the agency, a change banks said would increase exam efficiency. Banks also want timely post-exam reports and consistency in those reports with what was said on-site by examiners. Another top area of concern named by banks: operational challenges in their sector, including succession planning for bank management and attracting qualified personnel. (American Banker Nov. 7) …
  • WASHINGTON (11/8/12)--It appears as if U.S. regulators will miss the yearend deadline to complete Basel III capital and liquidity requirements. Regulators have received more than a thousand comment letters on the proposal (American Banker Nov. 7). The letters are substantive and agencies must summarize them and consider how outstanding questions will be answered, said Karen Shaw Petrou, a managing partner at Federal Financial Analytics Inc. Community bankers have also called on assistance from Congress. Lawmakers from both parties sent letters to regulators arguing that the Basel III requirements were too complex for community banks. Eight of the 27 countries that are part of the Basel Committee on Banking Supervision have completed their rule-writing process. Regulators have also been strained by derivatives reform and the so-called Volcker rule, which places limits on proprietary trading, said Gregg Rozansky, a counsel in the financial institutions advisory and financial regulatory group of Shearman & Sterling …

CUNA urges CFPB to rethink finance charge action

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WASHINGTON (11/8/12)--The Credit Union National Association (CUNA) has urged the Consumer Financial Protection Bureau (CFPB) to eliminate from the pending combined mortgage loan forms proposal an expanded definition of "finance charge" in a major comment letter filed with the agency Nov. 6.

The CFPB mortgage proposal combines elements of the Truth in Lending Act and Real Estate Settlement Procedure Act into a single disclosure, and creates regulations to implement those changes.

Currently, under Regulation Z, a number of types of costs associated with the extension of credit are excluded from the definition of "finance charge" and the "annual percentage rate," which is calculated using the finance charge. Under the CFPB's new finance charge proposal, lenders would be required to include most up-front costs associated with a mortgage in the finance charge disclosed to borrowers. Loan charges or fees would need to be included in the finance charge, but late fees, delinquency or default charges, seller's points, some escrow payments and most insurance premiums would not need to be included.

The proposed finance charge definition, if adopted, would impact credit union mortgage loans in a variety of ways, including subjecting more loans to additional limits and requirements under the Home Ownership Equity Protection Act and excluding some mortgage loans from being considered "qualified mortgages" under the CFPB's Ability-to-Repay proposal.

In a comment letter, CUNA Deputy General Counsel Mary Dunn said CUNA agrees that the current approach to finance charge and APR disclosures under Regulation Z is imperfect and very likely limits the ability of consumers to understand the full costs associated with any loan, open- or closed-end, that they shop for or obtain. However, CUNA does not support expanding the definition of the "finance charge," as proposed.

While the CFPB's proposal would make the "finance charge" more inclusive, there is great potential for the proposed approach to be even more confusing than the current system, Dunn wrote. The expanded definition would be applied to closed-end transactions secured by real property or dwellings. However, the existing definition would still apply to all other types of loans. This may be difficult for consumers who question how different APRs are calculated, and it will likely create problems for creditors as well, the CUNA letter noted.

CUNA also said that the CFPB has not provided sufficient evidence that consumers will benefit from the expanded finance charge definition, and noted that the CFPB itself has said that expansion of the definition would result in more mortgage loans being subject to a range of additional limitations.

The timing of this finance charge action "could not be worse," Dunn wrote. "The issue of how the finance charge is defined is simply too central to mortgage lending and disclosures to be included with other rulemakings such as the complicated mortgage-related proposals that the agency is pursuing to meet its obligations under the Dodd-Frank Act," Dunn wrote.

The regulatory environment for credit unions and other financial institutions is becoming progressively more complex, and CUNA and credit unions are constantly working to analyze, prepare for and respond to a number of proposals from the CFPB and others, the letter adds. Dunn noted that there is no set deadline for the CFPB to address finance charge issues. Rulemaking related to the issue, therefore, could be delayed.

Before proceeding with major changes to the definition of "finance charge," the agency should conduct its own, robust study of the specific issues relating to this term and APR disclosures, CUNA suggested. The study should consider a range of factors and perspectives, including those of consumers, their advocates, and financial institutions.

CUNA also suggested the agency conduct a Small Business Regulatory Enforcement Fairness Act panel to solicit specific input from small financial institutions.

If the CFPB does choose to move forward with the expanded finance charge definition, the CFPB should delay implementation by at least 18 to 24 months, CUNA concluded.

For the full comment letter, use the resource link.

CUNA- CU-backed candidates have a strong outcome

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WASHINGTON (11/8/12)--Sen. Jon Tester's victory in Montana, called shortly before noon (ET) yesterday, embodies the success of many credit union-friendly candidates in the Nov. 6 federal elections, even for those in very tough fights.

Overall, the Credit Union National Association (CUNA) supported 388 candidates for the House and Senate in Tuesday's election, and in 96% of those races the credit union-friendly candidates won.

Tester, with whom CUNA, Montana Credit Union Network and Montana credit unions worked with closely on interchange issues and concerns, defeated Republican Rep. Denny Rehberg to win a second term in the Senate. Tester received CUNA and credit union backing in the form of mailers, volunteerism, phone banking, fundraisers and neighborhood canvassing.

In comments made during a call Wednesday reviewing the election outcome for state credit union league representatives and CUNA board members, CUNA President/CEO Bill Cheney noted "there are a lot of people in Washington that said it was impossible for Tester to be reelected in one of the reddest of red states." However, he said, credit union efforts helped push Tester over the top.

Tester's success story is indicative of a large majority of races that had credit union backing.

Similarly strong efforts were made in support of successful Senate candidates Rep. Jeff Flake (R-Ariz.), Sen. Sherrod Brown (D-Ohio) and Sen. Bill Nelson (D-Fla.).

Overall, CUNA and the Credit Union Legislative Action Council (CULAC) supported candidates in 361 House races and 33 Senate races. As of Wednesday, CULAC-supported candidates had won 336 of their House contests, with 12 races remaining uncalled. CUNA, CULAC and credit unions supported candidates in 27 of 33 Tuesday Senate races, with their candidates winning 26 of those contests.

Tuesday "was a great day for credit unions overall and the races in which we were focused," Cheney said. "All in all, it was not a bad night," CUNA Senior Vice President of Political Affairs Richard Gose added.

CUNA and CULAC supported five challengers in their races against sitting incumbents, and three of those challenges were successful. In New York, Dan Maffei (D) and Chris Collins (R) defeated sitting House incumbents, with assistance from CULAC financed independent expenditures.

Another challenger was soon-to-be-former East Moline, Ill. Alderwoman Cheri Bustos' (D), who defeated Republican incumbent Bobby Schilling. Bustos "will prove to be a strong credit union champion for credit unions from Illinois," CUNA Vice President of Political Affairs Trey Hawkins said.

Credit union champions Rep. Brad Sherman (R-Calif.) and Rep. Tom Latham (R-Iowa) also won their respective incumbent-versus-incumbent contests with the help of credit unions, including radio ads for Latham that were financed by CULAC. Both Sherman and Latham were pitted against fellow legislators due to redistricting in their states.

CUNA was involved in 50 of 59 races for open and newly created legislative seats, and credit union supported candidates won in 44 of those contests. "When there is no incumbent, CUNA and credit unions take the opportunity to speak with both legislators in the race to assess which will best support credit unions," Hawkins said.

Cheney congratulated all the leagues and credit unions in every state on their political advocacy efforts surrounding the federal elections.

While there were a few losses, CUNA, CULAC and credit unions continued to support pro-credit union candidates in what were in some cases uphill battles. While the losses are disappointing, Gose emphasized that CUNA will work with incoming legislators, even if they have defeated credit union friends.

HUD expands hurricane housing relief

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WASHINGTON (11/8/12)--In the wake of Superstorm Sandy, the U.S. Department of Housing and Urban Development (HUD) is speeding federal disaster assistance to Rhode Island and providing support to homeowners and low-income renters that have been forced from their homes due to the storm.

President Barack Obama on Saturday added Rhode Island's Bristol, Newport and Washington counties to the official list of federal disaster areas. The declaration allows HUD to offer foreclosure relief and other assistance to certain families living in these counties, the agency said.

"Families who may have been forced from their homes need to know that help is available to begin the rebuilding process," HUD Secretary Shaun Donovan said. "Whether it's foreclosure relief for families with FHA-insured loans or helping these counties to recover, HUD stands ready to help in any way we can," he added.

HUD said it is:

  • give the State and communities the flexibility to redirect millions of dollars to address critical needs, including housing and services for disaster victims. HUD is currently
  • contacting State and local officials to explore streamlining the Department's Community Development Block Grant (CDBG) and HOME programs to speed the repair and replacement of damaged housing;
  • Granting a 90-day moratorium on foreclosures and forbearance on foreclosures of Federal Housing Administration (FHA)-insured home mortgages;
  • Providing FHA insurance to many that have lost their homes;
  • Allowing individuals that have destroyed or damaged homes to finance the purchase, refinance or repair of a house through a single mortgage; and
  • Offering federally guaranteed loans to state and local governments for housing rehabilitation, economic development and repair of public infrastructure.
HUD is also sharing information with state and local authorities and the Federal Emergency Management Administration.

For the full HUD release, use the resource link.

Matz says reg modernization remains post-election priority

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ALEXANDRIA, Va. (11/8/12)--With President Barack Obama winning a second term on Tuesday, one member of his administration--National Credit Union Administration (NCUA) Chairman Debbie Matz--told credit unions that the agency will continue efforts to modernize credit union regulations.

Obama in 2011 issued Presidential Executive Order 13579, which requested review by independent federal regulatory agencies of 'rules that may be outmoded, ineffective, insufficient, or excessively burdensome' in order to 'modify, streamline, expand, or repeal them in accordance with what has been learned.'

Matz in a release said the NCUA will continue to act in the spirit of this order, and will "continue to minimize burdens while implementing robust rules for safety and soundness that are in sync with today's evolving marketplace realities.

"Many of NCUA's regulatory improvements to date came from constructive dialogues with credit union officials. I assure credit union officials and other stakeholders that I will continue to listen carefully to you and to take action wherever prudent and practical to do so," she said.

Matz added that the election will not change the course of the NCUA Board, and said the agency will move forward on final rules to implement the regulatory relief initiatives that were proposed this year.

Recent relief proposals include regulatory changes that would triple the asset test that defines a "small" credit union to $30 million in assets, give credit unions greater investment authority, and expand the agency's definition of "rural district" for fields of membership. The agency in September also released an advanced notice of proposed rulemaking seeking comment on how the agency could improve its Payday-Alternative Loan rule.

All four of these agenda items address issues raised by credit unions during the agency's recent listening sessions. "As we begin the second year of our regulatory modernization initiative, we will continue to listen to credit unions and other stakeholders to identify further opportunities to provide regulatory relief while protecting safety and soundness," she said in September.