Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Senate panel to hold State of CU hearing next week

 Permanent link
WASHINGTON (12/1/10)--The Senate Banking Committee late Tuesday announced it will hold a “State of the Credit Union Industry” hearing Dec. 7 at which National Credit Union Administration (NCUA)Chairman Debbie Matz will be the sole witness. It has been years since the U.S. Congress has staged a credit union industry oversight hearing and this session is likely to probe the general health of natural-person credit unions, as well as the state of corporate credit unions and the NCUA’s actions to restore liquidity. In the NCUA's assessment, the chairman will give a broad overview of the financial condition of the industry and NCUA's regulatory and supervisory efforts to keep credit unions safe, sound and continuing to serve consumers. The hearing is scheduled for 2:30 p.m. (ET) and will be followed directly by a hearing on the nomination of Joseph A. Smith, Jr., of North Carolina, to be director of the Federal Housing Finance Agency.

NCUA underscores importance of CU tax status

 Permanent link
ALEXANDRIA, Va. (12/1/10)—The head of the National Credit Union Administration (NCUA) underscored the importance of the existing tax status of federal credit unions, saying its loss would have a “tangible and negative effect” on the safety and soundness of credit unions. NCUA Chairman Debbie Matz, in a Nov. 22 letter, was responding to a communication from Credit Union National Association (CUNA) President/CEO Bill Cheney regarding a recent report by the National Commission on Fiscal Responsibility regarding possible changes in the country’s tax code. The Commission’s draft report on deficit reduction options named tax expenditures as one way that the country's debt could be cut. While this could conceivably bring about debate on the credit union tax exemption, credit unions are not specifically cited in the report. In her letter, Matz said as chief regulator of federal credit unions her concerns about any repeal of the federal tax exemption extend also to the very existence of credit unions as they are known today. “Not only would there be a tangible and negative effect on the safety and soundness of credit unions, but I also believe such a change would necessitate a significant re-examination of the not-for-profit cooperative business model currently employed by credit unions,” Matz wrote. While deeply concerned about the commission’s tax report, CUNA has emphasized that the suggestions contained within its report are in the very earliest stages of recommendation and have a long road ahead before any are made policy. The commission released its recommendations today and is expected to vote on them on Friday.

NCUA NGN sales net 13.1M in funds

 Permanent link
ALEXANDRIA, Va. (12/1/10)--The National Credit Union Administration’s (NCUA) sale of NCUA Guaranteed Notes (NGNs) has netted $13.1 billion since October. The NCUA completed the second and third offerings in the series in November. The first of the two November offerings featured a Class A1 offering of $613.2 million in notes which paid a fixed-rate coupon of 1.6% yearly. A Class A2 offering of $1.361 billion in notes, paying 2.9%, and a Class A-PT offering of $1.786 billion in notes, paying 2.65%, were also put on the market last month. A second November transaction featured $2.62 billion in Senior I-A notes and $2.862 billion in Senior II-A notes that were backed by floating rate securities. The notes will pay 0.37% and 0.47% annually, respectively, and are subject to yearly maximum note interest rate caps of 7%. The NCUA settled its initial offering of notes in late October. The NGNs are comprised of $35 billion of distressed assets that were conserved from failed and conserved corporate credit unions, and are fully backed by the U.S. Government. The NCUA has amended its definition of low-risk assets to allow credit unions to invest in NGNs. For the full NCUA release, use the resource link.

Tough oversight could have blunted NCUSIF impact

 Permanent link
ALEXANDRIA, Va. (12/1/10)--The National Credit Union Administration’s (NCUA) Office of the Inspector General (OIG) has found that more aggressive NCUA supervisory actions could have helped the NCUA avoid the failure of nine credit unions and prevented the National Credit Union Share Insurance Fund from taking on substantial losses. The report focuses on significant findings from 10 of the NCUA OIG’s material loss reviews that were completed between November of 2008 and this October. The actions of the 10 individual credit unions reviewed, which included poor strategic planning and oversight, as well as outright fraud, “greatly contributed” to the failures, the OIG noted. The OIG identified examiner deficiencies in quality control efforts in the NCUA’s supervision of New London Security CU, High Desert FCU, and St. Paul Croatian FCU. The OIG also found that the NCUA used inadequate examination procedures during its inspections of these credit unions, as well as its inspections of Huron River Area CU, Center Valley FCU, Cal State 9 CU, Eastern Florida Financial CU, Clearstar Financial CU, and Ensign FCU. The report noted that the NCUA specifically failed to adequately monitor many lending programs and internal controls related to investment activity, and allowed fraud to continue to take place by ignoring several red flags that were present at some of the listed credit unions. Going forward, the OIG has recommended changes to the way that some CAMEL Code ratings are assigned and documented, and has suggested that the NCUA place a greater emphasis on Call Report monitoring. The NCUA should also emphasize the importance of reviewing asset concentrations, credit unions’ due diligence practices over new programs, services and third-party relationships, the OIG added. The report also encouraged the NCUA to review its requirements and levels that trigger quality control reviews, to provide national guidelines for the quality control process, and to require supervisory examiners to provide written response to the results of quality control review on any recommendations made by the quality control review. The NCUA agreed with the majority of the OIG’s recommendations, and said that it has either already implemented measures or is working on measures that would address some of the cited deficiencies. For the full NCUA OIG report, use the resource link.

Corp CU comment deadline extended

 Permanent link
ALEXANDRIA, Va. (12/1/10)--The due date for comments on the National Credit Union Administration’s (NCUA) recently proposed amendments to its corporate credit union rules has been extended until Jan. 28. Credit Union National Association (CUNA) President/CEO Bill Cheney said that CUNA appreciates the NCUA's "responsiveness to the needs of the credit union movement for more time to fully evaluate this important proposal." The NCUA originally provided credit unions and other concerned parties with a 30 day comment window. CUNA last week urged the NCUA to extend the comment period, saying that many aspects of the proposal "are in need of careful review by credit unions and the agency." The NCUA's corporate changes, which were proposed during the agency's November open meeting, would limit credit union membership in corporates to one corporate at a time and change some internal control and reporting requirements via technical amendments. The NCUA at that time also proposed implementing "voluntary" Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessments to privately insured credit unions and non-credit unions, such as credit union leagues, which are members of a corporate. NCUA Chairman Debbie Matz said that the extended comment period “will balance the need for stakeholders to provide thoughtful feedback on the complex issues raised in our newly proposed corporate rule, while ensuring that the final provisions from both corporate rulemakings will take effect over a closely coordinated time frame. The end result will be a corporate system that is better positioned to manage risks and safely serve member credit unions,” Matz added. The NCUA has recently said that it welcomes comments on the proposals, and has specifically solicited input on any alternative approaches that may also be able to address the agency's concerns. For the full NCUA release, and the NCUA’s recent corporate credit union proposal, use the resource links.

Inside Washington (11/30/2010)

 Permanent link
* WASHINGTON (12/1/10)--The Federal Deposit Insurance Corp., saying it understands more about the relationship between big banks and risk after the recent financial crisis, will revise the formula it uses to calculate risk-based premiums, American Banker Nov. 30. The agency will add new factors to the calculation, including the level of concentration of higher-risk assets and a bank’s ratio of core to total funding. The FDIC’s existing assessment formula is based on the 2006 deposit insurance reform law. For most banks, the formula includes performance ratios to calculate the rate. For large banks, other factors, such as debt ratings, also are included. The FDIC first issued changes to the assessment plan in April. The latest revisions were released Nov. 9 to conform with changes brought about by the Dodd-Frank regulatory law … * WASHINGTON (12/1/10)--The U.S. Office of Financial Research (OFR), which was established improve data gathering within financial markets, is seeking to create a universal method for identifying financial firms and transactions Reuters Nov. 30. In a submission posted in the Federal Register on Tuesday, the OFR says it will invite comments on the “desired characteristics for a Legal Entity Identifier,” similar to bank routing numbers, that would make it easier to track transactions. OFR said no universal standard exists for identifying legal entities that take part in financial markets, which creates transaction failures and settlement issues. OFR was established earlier this year by the Dodd-Frank regulatory act and is currently located within the U.S. Treasury Department under the supervision of Lewis Alexander, a counselor to Treasury Secretary Timothy Geithner … * ALEXANDRIA, Va. (12/1/10)—The closed portion of the National Credit Union Adminstration’s (NCUA) December meeting has been moved from Dec. 16 to Dec. 17, the NCUA said on Tuesday. The open meeting remain s on its original date of Nov. 16. The NCUA also moved the closed portion of last month’s meeting to a separate date. Busy schedules have forced the NCUA to juggle dates and times of its meetings in recent months. The agency has traditionally held its closed meetings immediately after its open meetings …

3Q call report CUs earnings up chargeoffs slow

 Permanent link
WASHINGTON (11/30/10)--All the major indicators that credit unions like to see growing--loans, assets, savings, net income and net worth--grew during third-quarter, according to the third-quarter Call Reports submitted by the nation's 7,402 federally insured credit unions. What's more, delinquency has leveled off and loan losses are falling, said the report, released Monday by the National Credit Union Administration (NCUA). "This is further confirmation that the worst of the financial crisis is behind us," said Bill Hampel, chief economist at the Credit Union National Association (CUNA). "We still have a way to go to get back to financial conditions that most credit unions would find appealing, but it sure is nice to be headed in the right direction. The big challenge for most credit unions going forward will be building loan volume, rather than having to deal with rising loan losses," Hampel told News Now. Return on Average Assets (ROA), a key measure of credit union earnings, increased to 0.45% from second quarter's 0.40%, said NCUA. Increasing operating expenses were offset by declining cost of funds, lower provision for loan loss expense, and higher fee and other income. Meanwhile, credit union membership continues to grow, reaching 90.8 million members. Assets, loans and shares grew during the traditionally slow-growing third quarter. While share growth continues to outpace loan growth, used-automobile and unsecured loans and credit cards remain popular, said NCUA. Used-vehicle loans expanded 1.8% and continued to lead loan growth during the third quarter while new vehicle loans declined 3.6%. Unsecured loans increased 1.4%, and real estate loans rose 0.1%. Overall credit union lending remained flat, posting a 0.1% increase. The delinquency ratio--while high--appears to have stabilized at 1.74% after reaching 1.76% in the first quarter and 1.73% in the second quarter. The net charge-off ratio continued to inch lower in the third quarter, falling to 1.13% from 1.16%. “Positive trends are emerging,” noted NCUA Chairman Debbie Matz. “Although difficult economic conditions persist, I am particularly encouraged by the return on average assets growing to 0.45%, up significantly from 0.18% at year-end 2009 and negative 0.05% at year-end 2008. Coupled with the aggregate net worth ratio holding steady at 9.9%, there is reason to believe that credit unions are making progress. "Having said that, NCUA is well aware of the stressed financial environment in which credit unions operate, and is committed to maintaining a rigorous supervisory regime that will enhance safety and soundness,” she said. As of September, loan modifications accounted for nearly 2% of all loans. While the pace of loan modifications slowed, growth continues as credit unions work to assist members, said NCUA. From June through September:
* Assets increased 0.4% to $907.9 billion from $903.9 billion; * Loans increased 0.1% to $567.1 billion from $566.4 billion; * Shares increased 0.3% to $779.9 billion from $777.8 billion; * Investments declined 1.8% to $226.2 billion from $230.3 billion; * Net income increased 11.3% to $3.0 billion from $1.8 billion; and * Net worth increased 1.4% to $90.6 billion from $89.3 billion.
For details, use the link.

Inside Washington (11/29/2010)

 Permanent link
* WASHINGTON (11/30/10)--Demand for Federal Home Loan Bank (FHLB) advances fell to $402 billion in the third quarter, their lowest point since 1999. The 10-year low prompts questions about the system’s future at a time when the Federal Reserve Board has made efforts to create liquidity in the economy, according to industry experts (American Banker Nov. 29). Advances are a core business of home loan banks. Attempts to reach into other areas, such as mortgage loan purchasing and mortgage-backed securities investments, have resulted in losses at several home loan banks. Karen Shaw Petrou, managing partner at Federal Financial Analytics Inc., said the FHLBs are experiencing difficulties in providing funding to insured depositories. Banks, in turn, attempted to increase earnings with investments, only to experience losses. These developments raise questions as the Obama administration puts together its housing reform package, said the Banker. Banks argue that the drop in advances is a natural part of the cycle resulting from FHLBs’ role in providing liquidity during the recent financial crisis …

SAFE Act webinar to cover registration regulations

 Permanent link
WASHINGTON (11/30/10)—The Credit Union National Association (CUNA) will inform credit unions on registering for and complying with the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) during a Dec. 9 webinar. The “SAFE Act--Get Ready to Comply with the Registration Requirements” webinar, which will take place between 3 p.m. and 4:30 p.m. ET, aims to educate credit unions and their employees about the new registration process which is expected to begin on Jan. 28. Credit unions will hear from the Conference of State Bank Supervisors (CSBS) about its new registration procedures, and the National Credit Union Administration on regulatory requirements and examiner expectations. The SAFE Act requires credit union mortgage loan originators and their employing institutions to register with the CSBS' National Mortgage Licensing System & Registry (NMLS). Compliance with the SAFE Act’s registration requirement is required within 180 days after the agencies provide public notice that the NMLS is accepting initial registrations. The first step will be for the credit union itself to register in early 2011 and then its covered employees will individually register. Registration is expected to run until mid-2011. Once the system is up and running, credit unions will be required to ensure that their mortgage loan originators are properly registered and prohibit any employees who are not registered from performing any mortgage loan origination duties. Residential mortgage loans, including home equity loans, are covered by the SAFE registration rules. For more on the webinar, use the resource links.

CUNA works toward lame duck MBL vehicle

 Permanent link
WASHINGTON (11/30/10)--As the brief, year-ending lame duck session truly begins this week, the Credit Union National Association (CUNA) continues to closely monitor action in the House and the Senate to find an appropriate vehicle that could carry legislation that would increase credit unions’ ability to engage in member business lending (MBL). “The key, obviously, is to attach our provisions to something that will become law. Our efforts face procedural realities, and obviously the underlying bill that would serve to move MBL provisions must be one that can get through the Senate and be passed with at least 60 votes,” CUNA Vice President of Legislative Affairs Ryan Donovan said. However, underscoring the uncertainty that generally accompanies a lame duck session, Donovan added that CUNA believes there is no more or less certainty surrounding credit union efforts to move MBL legislation than there is surrounding any other group’s legislative efforts. “No one knows what will happen in the Congress in the next few weeks,” he added. Congress could adjourn on Dec. 17, but the exact date that the 2010 congressional session will end on is still not known. CUNA is continuing discussions with Senate leadership regarding the MBL issue, and is also working elsewhere to broaden support both for the MBL legislation and other credit union issues. CUNA Senior Vice President of Political Affairs Richard Gose added that grassroots pressure continues to build behind the MBL effort, saying that credit unions “have garnered more support” for pro-MBL legislation over the last six months. Credit unions will want to keep an eye out for several relevant hearings this week, beginning with a Wednesday Senate Banking Committee hearing entitled "Problems in Mortgage Servicing From Modification to Foreclosure." Treasury official Phyllis Caldwell, Federal Deposit Insurance Corp. Chairman Sheila Bair, Federal Reserve Governor Daniel Tarullo, acting Federal Housing Finance Agency Director Edward DeMarco, and acting Comptroller of the Currency John Walsh are scheduled to testify during the hearing. The Senate Finance Committee will also examine tax reform during a Thursday hearing on historical trends in tax income and tax expenses. Representatives from the Treasury, the Joint Committee on Taxation, and the Congressional Budget Office will testify during that hearing.

NCUA assessments could continue well below FDICs CUNA

 Permanent link
WASHINGTON (11/30/10)--The deposit insurance fund assessments charged by the National Credit Union Administration (NCUA) over the last three years have averaged 25% lower than the assessments that the Federal Deposit Insurance Corporation (FDIC) has charged to banks during that same time period, according to a Credit Union National Association (CUNA) white paper. The paper, which examines past insurance fund assessments and projects the likely amounts of future assessments, found that the FDIC’s assessments levied since the beginning of 2008 have totaled 47 basis points (bp) of total deposits, equivalent to 52 bp on insured deposits. The NCUA’s total assessments have totaled 41 bp of insured shares over that same time period, a number that is nearly one-fifth below the amount charged by the FDIC. CUNA in the paper projects that both groups will have to impose significant assessments on their insured institutions to restore their funds in the coming years. The NCUA’s combined credit union assessments for both NCUSIF premiums and Corporate Stabilization charges will likely average eight bp per year until 2021, for a total of 90 bp. CUNA has projected that the FDIC’s assessments will total 144 bp by 2021, a full 50% above the total amount to be assessed by the NCUA. However, CUNA noted that both of these assessment estimates are derived from the NCUA and FDIC’s current expectations regarding future losses from failed institutions and the performance of various legacy assets. If the economic recovery is slower than expected, or stalls completely, future assessments will be higher than these projections. However, a stronger than expected recovery could reduce these future assessments, the paper added. "We are now facing the highest deposit insurance assessments for banks since the early 1990s, and for credit unions since the NCUSIF was capitalized in its current form in the early 1980s" said Bill Hampel, CUNA's chief economist. "This is the unfortunate consequence of the worst financial crisis in the U.S. since the 1930s," he added.

Comment letter backs NCUA low risk definition expansion

 Permanent link
WASHINGTON (11/30/10)--The Credit Union National Association (CUNA) in a Monday comment letter to the National Credit Union Administration (NCUA) said that it “strongly supports” the NCUA’s expansion of its definition of “low-risk assets” under prompt corrective action (PCA). CUNA asked for this change after an October meeting with several of its member credit unions. The NCUA last month amended the low-risk asset definition to include “debt instruments unconditionally guaranteed by the National Credit Union Administration.” This move allowed credit unions to purchase senior debt instruments known as “NCUA Guaranteed Notes” (NGNs). The NGNs are comprised of $35 billion of distressed assets that were conserved from failed and conserved corporate credit unions, and the NGNs are currently available on the open market. The NGNs carry a zero risk weight, as they are fully backed by the U.S. government. The NCUA in late October settled the first two NGN offerings, with its Senior Series I-A notes paying a floating-rate coupon of one-month London Interbank Offered Rate (LIBOR) plus 0.45% per annum, subject to a maximum note interest rate cap equal to 7% annually. The NCUA's Senior Series II-A notes will pay a fixed-rate coupon of 1.84% annually, according to the NCUA. CUNA in its comment letter advocated expanding the low-risk definition to include “other types of permissible credit union investments,” and asked the NCUA to “consider issuing a separate rulemaking to broaden the scope of the new definition to include similar low-risk investments, such as credit union investments in Federal Home Loan Bank securities.” CUNA also backed the NCUA’s decision to make the final rule effective upon publication in the Federal Register, saying that delaying the effective date would have made the first two NGN offerings “much less successful” or could have harmed the credit union system as a whole by delaying the sale of the NGNs. For the comment letter, use the resource link.

Fed pay freeze comment postponed by NCUA

 Permanent link
ALEXANDRIA, Va. (11/30/10)--President Barack Obama on Monday announced a pay freeze for all civilian government employees, and the National Credit Union Administration (NCUA) said that it would defer making any public comment on the freeze until the full details are released. The pay freeze, which will be in effect from the 2011 fiscal year until the end of fiscal 2012, will save an estimated $2 billion during the remainder of fiscal 2011. The plan will save $28 billion over the next five years, and more than $60 billion over the next 10 years, according to White House estimates released on Monday. The freeze “will apply to all civilian federal employees, including those in various alternative pay plans and those working at the Department of Defense--but not military personnel,” the White House said in a release. The pay freeze, however, needs congressional approval to become effective. The NCUA earlier this month approved $7 million in new spending to provide a net increase of 5.7% in pay and benefits to its employees. The NCUA increased its overall budget for 2011 by $25 million. Credit Union National Association (CUNA) President/CEO Bill Cheney has questioned the NCUA's budgetary increase, saying that CUNA was concerned that the NCUA was "asking for more resources from credit unions at a time when so many credit unions are feeling the pain of an obstinate recession."

Inside Washington (11/24/2010)

 Permanent link
* WASHINGTON (11/29/10)--While banks and thrifts posted profits of $14.5 billion in the third quarter of 2010, a pullback in reserves helped drive the gains, and Federal Deposit Insurance Corp. (FDIC) NChairman Sheila C. Bair last week warned that capital should remain a focus amid continued housing uncertainty. An industry loan loss provision of $34.9 billion, the smallest in three years, drove earnings, as did higher interest income from recent accounting changes. The loan loss provision was 44% smaller than a year earlier. Total loss reserves dropped by 3.8%, to $242 billion, the second straight quarterly dip. Because many institutions entered the recent housing crisis with insufficient reserve levels, Bair warned against reducing the reserves without strong evidence of improved loan performance. The industry’s third-quarter asset growth--an increase of 1.2% to $13.4 trillion--was primarily the result of trading and other investment activities, not lending. Bair also warned about contingent liabilities banks could face from loan-documentation discrepancies that may result in banks being forced to take back securitized loans. Several big banks have been sued by government-sponsored enterprises for this reason … * WASHINGTON (11/29/10)--The Federal Deposit Insurance Corp. (FDIC) has issued final guidance to address the risks associated with overdraft payment programs. The guidance is intended to “ensure robust oversight of automated overdraft programs” offered by certain FDIC-insured institutions. FDIC Chairman Sheila C. Bair said when financial institutions spot a pattern of excessive use of an automated overdraft program, they should contact their customers about a more appropriate and lower-cost alternative that better suits the customers’ needs. In response to concerns about automated overdraft programs, the FDIC on Aug. 11 proposed for public comment guidance on how the banking institutions it supervises should monitor and oversee overdraft programs. The proposed guidance stemmed from both the FDIC's November 2008

iCompliance Challengei covers SAR reporting

 Permanent link
WASHINGTON (11/29/10)--The Credit Union National Association (CUNA) has advised that credit union employees completing supplemental suspicious activity report (SAR) forms may provide a range of dates that a suspected activity has taken place, rather than simply providing the most recent time that a suspicious activity may have happened. According to FinCEN’s instructions, employees should complete the supplemental SAR form and provide a range of dates of suspicious activity that capture activity from the beginning date, as documented on the initial SAR report, up to the most recent occurrence. The dollar amount of the potentially criminal activity should be provided in the aggregate, and should reflect the total of all transactions and not the loss to the credit union. Previously issued SARs should also be mentioned, and the activity itself should be well documented, CUNA added in this month’s Compliance Challenge. The Compliance Challenge also noted that credit unions should retain their own copies of filed SARs and any supporting documentation for a period of five years following the initial SAR filing. FinCEN is unable to verify receipt of previously filed SARs or provide a copy of a previously filed SAR to institutions, the Compliance Challenge notes. For the full Compliance Challenge, use the resource link.

Cheney seeks NCUA corp. CU comment extension

 Permanent link
WASHINGTON (11/29/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney has urged the National Credit Union Administration (NCUA) to extend the comment period for its recently released revisions to corporate credit union rules by a further 60 days. The NCUA’s corporate changes, which were proposed during the agency's November open meeting, would limit credit union membership in corporates to one corporate at a time and change some internal control and reporting requirements via technical amendments. The NCUA also proposed implementing "voluntary" Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessments to privately insured credit unions and non-credit unions, such as credit union leagues, which are members of a corporate. Cheney earlier this month said that these proposed corporate credit union membership requirements and proposed voluntary TCCUSF assessments for non-federally insured entities are areas that "are in need of careful review by credit unions and the agency." While the proposed NCUA changes were given a 30-day comment period, Cheney said that extending the comment deadline for a further 60 days “is reasonable given the importance of the matters the agency is contemplating as well as the numerous other regulatory issues facing credit unions.” Granting additional time to review the NCUA’s proposal and create well-reasoned comments “will benefit credit unions as well as the agency,” Cheney added. The NCUA has said that it welcomes comments on the corporate credit union proposals, and has specifically solicited input on any alternative approaches that may also be able to address the agency's concerns. The corporate proposals could come into effect by late January if the comment period is not extended. For the full comment letter, use the resource link.

OIG notes NCUA IT drawbacks progress

 Permanent link
WASHINGTON (11/29/10)--While the National Credit Union Administration (NCUA) has recently made a significant increase to its 2011 budget to cover increased credit union examinations, its own Office of Inspector General has recommended that the NCUA fix some of its own internal practices by improving its security configuration program. The OIG also recommended that the NCUA improve its contingency planning program for its Federal Information Security Management Act (FISMA) systems in its review of the NCUA’s information systems, security program and controls for compliance with FISMA. The NCUA should also enhance its procedures for ensuring that terminated and inactive user accounts are removed from its systems and implement continuing education requirements for its information technology (IT) employees, the OIG added. The OIG also listed more specific IT-related recommendations for the NCUA, including enhancing the NCUA’s security control assessments, improving its oversight of external service providers and remote access controls, and reviewing its use of Social Security numbers and other personal information. The OIG review credited the NCUA with improving its overall IT security program during the past year. Those improvements included enhancing its policies and procedures, completing e-Authentication risk assessments for its two e-Authentication systems, and completing security control assessments for five of its six FISMA systems. For the full OIG review, use the resource link.

Comment on FinCEN SAR database changes sought

 Permanent link
WASHINGTON (11/29/10)--The Credit Union National Association (CUNA) has asked credit unions to comment on the Financial Crimes Enforcement Network’s (FinCEN) proposed changes to its Bank Secrecy Act (BSA) database. FinCEN has released a series of proposed data fields within the database related to Suspicious Activity Report (SAR) filings by financial institutions. The network has not proposed any new regulatory requirements or attempted to change any SAR-related requirements. Rather, FinCEN is seeking comment on technical matters related to transitioning from the current paper-based system to a modernized information technology environment designed for electronic reporting. The new database will accept XML-based dynamic, state-of-the-art reports, and added that few changes to the existing batch and computer-to-computer filing processes will be made, FINcen said. Comments should be sent to CUNA by Dec. 8. FinCEN will accept comments on the proposal until Dec. 14. For the full comment call, use the resource link.

Final rule analysis covers NCUA RegFlex changes

 Permanent link
WASHINGTON (11/29/10)--The Credit Union National Association (CUNA) has released a final rule analysis on the National Credit Union Administration’s (NCUA) amendments to the Regulatory Flexibility (RegFlex) Program. Under the RegFlex changes, RegFlex credit unions will need to comply with the general limitation of a federal credit union's investment in fixed assets to no more than 5% of its shares and retained earnings. These credit unions will also be subject to certain stress test standards and will be forced to comply with collateral and security provisions that include obtaining the personal liability and guarantee of member business loan borrowers. The NCUA passed the RegFlex changes in an open board meeting held last month. During that meeting, NCUA Chairman Debbie Matz said that the changes were needed to protect the National credit Union Share Insurance Fund. Board member Michael Fryzel also backed the final rule, saying that the original RegFlex rules "may have been too flexible." Board member Gigi Hyland opposed the changes. CUNA has questioned the need for these RegFlex changes, saying that the changes will render the RegFlex program much less helpful to credit unions. CUNA plans to work with the NCUA to revitalize the RegFlex Program if the opportunity presents itself. The final rule comes into effect on November 29. For the CUNA Final Rule Analysis, use the resource link.

NCUA still open to assessment ideas says Matz

 Permanent link
WASHINGTON (11/24/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz last week said that her agency is open to suggestions on possible ways to address the corporate credit union system’s liquidity needs so that the estimated 2011 corporate stabilization assessment of 20 to 25 basis points (bp) might be reduced. Speaking at the Association of American Credit Union Leagues (AACUL) annual meeting in Dallas, Matz added that the NCUA was “certainly open” to suggestions, and would “at least listen” to see if any suggestions were workable. In ten town hall meetings throughout October, NCUA officials cautioned that corporate stabilization assessments would be higher in 2011 and 2012 due to the need to repay medium-term notes that were issued in 2009 to preserve liquidity in the corporate system. The NCUA last week projected total dual assessments of 20-35 bp for 2011. Increasing losses at natural person credit unions could require a National Credit Union Share Insurance Fund (NCUSIF) assessment ranging from zero to 10 bp; and repaying borrowings triggered by losses at corporate credit unions could require a Temporary Corporate Credit Union Stabilization Fund assessment of 20-25 bp, according to NCUA staff. These assessments could collect up to $2.7 billion in funds. The Credit Union National Association (CUNA) discussed the assessment issue with the NCUA after Thursday’s board meeting. Matz also asked CUNA, credit union leagues, and individual credit unions to comment on proposed limits to corporate credit union membership that were released during last Thursday’s meeting. (See related stories in Nov. 19 edition of News Now.) Matz also discussed the NCUA’s 2011 budget increase during her remarks, saying that the NCUA’s salary increase and corresponding budget increase are due primarily to additional personnel hires needed to complete the agency’s annual examination program and a previously negotiated 6.1% pay raise that is in the current NCUA employee collective bargaining agreement. NCUA managers and others who are not in the bargaining unit are budgeted to receive an average raise of 3%. The NCUA’s budget will increase by $25 million in 2011, with most of that increase going to cover the addition of 78 staff positions and a pay raise that for some employees could go as high as 8% after factoring in “locality pay” adjustments that are mandated across the federal government. CUNA President/CEO Bill Cheney last week questioned the NCUA’s budgetary increase, saying that CUNA was concerned that the NCUA was "asking for more resources from credit unions at a time when so many credit unions are feeling the pain of an obstinate recession."

Inside Washington (11/23/2010)

 Permanent link
* WASHINGTON (11/24/10)--The Federal Housing Finance Agency on Monday issued a proposal that could potentially lead to the consolidation of entities within the Federal Home Loan Bank System (FHLBS), according to industry observers (American Banker Nov. 23). The proposal provides guidelines and procedures for the voluntary mergers of any of the 12 banks within the FHLBS. While Home Loan banks can currently merge, the existing Housing and Economic Recovery Act does not offer specific guidelines or terms of approval for mergers. The proposal comes one week after the FHFA disclosed that seven of the 12 FHL banks had very low supervisory ratings, according to Karen Shaw Petrou, managing partner at Federal Financial Analytics Inc. Petrou said the proposal reflects the condition of these banks and gives them reason to consider their strategic options. Under the proposal, the FHFA said it would consider a merger where two banks combine to form an entirely new bank. Purchase-and-assumption agreements, in which one or more banks acquire the assets and assume most of the liabilities of another bank, would also be considered … * WASHINGTON (11/24/10)--With unemployment rates still high and economic growth sluggish, two more of the Obama administration’s top economic advisers are leaving the White House (The Wall Street Journal Nov. 23). National Economic Committee Deputy Director Diana Farrell and U.S. Treasury Department Assistant Secretary for Financial Institutions Michael Barr will depart by the end of the year, the White House said. Both Farrell and Barr helped shape the financial overhaul legislation passed by Congress earlier this year. Barr met with credit union trade association officials, including representatives from the Credit Union National Association, during the process. Farrell played a key role in the restructuring of General Motors and Chrysler, and also was involved in the administration’s efforts to address the mortgage crisis … * WASHINGTON (11/24/10)--Bankers are worried that language in the Dodd-Frank regulatory reform law will give the Consumer Financial Protection Bureau (CFPB) too much leeway in banning certain financial products or services. While the agency can currently limit or bar a practice it defines as unfair or deceptive, bankers fear that adding the word “abusive” to that criteria will give the CFPB too much flexibility, (American Banker Nov. 23). Until 2008, the Federal Reserve Board had the power to ban unfair or deceptive products, and the Fed used that power sparingly. For example, only when it was pressured by Congress in 2008 did the Fed ban certain credit card practices. The Dodd-Frank law transferred that power to the CFPB and added “abusive” as a category of product that the agency can ban or restrict. Laurence Platt, a partner with the law firm K&L Gates, said plenty of case law defines what is unfair and deceptive, but similar standards don’t exist for the term “abusive.” Some regulators did not harbor the same worries. New York Banking Superintendent Richard Neiman suggested the term “abusive” was added to ensure that advantage was not taken of consumers. Dodd-Frank did offer a definition of “abusive,” describing it as a product or service that materially interferes with a consumer’s ability to understand a term or condition of a product or takes unreasonable advantage of the ability of a consumer to understand it … * WASHINGTON (11/24/10)--House Financial Services Committee Chairman Barney Frank expressed disappointment with Republicans for joining foreign central banks in their recent criticism of the Federal Reserve Board (American Banker Nov. 23). Frank said it was the role of lawmakers to debate economic policy rather than join attacks by foreign central banks whose cause is to convince the Federal Reserve to subordinate U.S. economic needs in favor of their own currency requirements. Republican congressional leaders last week sent a letter to Fed Chairman Bernard Bernanke expressing their reservations about the Fed’s decision to purchase $600 billion in Treasury bonds, as a quantitative easing to boost the economy … * WASHINGTON (11/24/10)--The first meeting of the Financial Stability Oversight Council, the new regulatory panel given authority by the U.S. Congress to remove risks to the financial system, sparked an onslaught of 1,500 public comment letters when the council asked two controversial questions: How should regulators define the term "systemically significant" as it would apply to non-bank firms, a designation that would bring tougher oversight? And how should regulators go about banning propriety trading under what has come to be known as the "Volcker Rule"? (Washington Post Nov. 22) It seems everyone had something to say as opinions--ranging from long essays pondering the intricate aspects of the rule to short notes simply urging a new regulatory toughness--were sent by industry executives, explaining why their institutions should not be considered systemically important, as well as consumer advocates and ordinary citizens. The council was scheduled to conduct its second session, with a closed meeting in the morning and an open meeting at noon, yesterday …

FAF announces new FASB GASB review process

 Permanent link
WASHINGTON (11/24/10)--The Financial Accounting Foundation (FAF) recently announced a new process for conducting post-implementation reviews of the accounting and financial reporting standards issued by the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). FASB is responsible for developing and maintaining U.S. generally accepted accounting principles, which credit unions over $10 million in assets must comply with. The process will be independent of FASB and GASB’s current standard-setting processes and will ensure the continued autonomy of those standard-setting processes, the FAF added. FAF Chairman John Brennan said that the new post-implementation review process “strikes the appropriate balance” between ensuring the effectiveness of FASB and GASB and protecting their independence as standard setters. The process will also “provide a vitally important mechanism for obtaining ‘real world’ feedback and analysis on the application, usefulness, and effectiveness of standards set by our Boards,” Brennan added. The FAF reviewers will work to assess whether the standards set by FASB and GASB meet their intended financial reporting objectives, and will report their results to FAF Trustees and FAF President Teresa Polley. The FAF’s review staff will be comprised of current FASB and GASB staff. Initially, the reviewers will examine both a single FASB and GASB standard in order to test the review process. Testing of the FASB standard should be completed by mid-2011, according to the FAF. One of FASB’s standard setting goals is update to financial instrument accounting standards by requiring most financial assets and liabilities to be reported under Generally Accepted Accounting Principles (GAAP) at fair value. Credit unions over $10 million in assets are required to comply with GAAP, and would be required to comply with these changes. CUNA has opposed these changes, saying that the changes would provide no benefit to credit unions while substantially increasing their compliance costs. For the full FAF release, use the resource link.

FinCEN plan allows limited SAR sharing

 Permanent link
WASHINGTON (11/24/10)--The Financial Crimes Enforcement Network (FinCEN) on Tuesday released a final rule that FinCEN Director James Freis said would “promote the protection of Suspicious Activity Report (SAR) information while seeking to ensure that the appropriate parties, but only those parties, have access to SARs.” According to a FinCEN release, the new FinCEN SAR confidentiality regulations “clarify the scope of the statutory prohibition against the disclosure by a financial institution or by a government agency of a SAR or any information that would reveal the existence of a SAR.” The new rules “expand the ability of certain financial institutions to share SAR information with most affiliates,” according to FinCEN. Freis said that this expansion “will help the financial industry protect itself from abuses of financial crime, be consistent with industry efforts to strengthen enterprise-wide risk management, and also promote the reporting of even more useful information to FinCEN and law enforcement investigators.” FinCEN has also promoted the importance of SAR confidentiality to financial institutions, their federal and state regulators, members of the law enforcement community, and self-regulatory organizations via an advisory, and has also provided tailored SAR confidentiality rule guidance for both depository institutions and securities/futures institutions. Under the new guidance, these entities will be permitted to share SAR information with domestic affiliates that are also subject to SAR rules, but will not be allowed to share SAR information with foreign affiliates. The Credit Union National Association in the past has urged caution when sharing SAR information. Both the final rule and the guidance will become effective 30 days after they are published in the Federal Register. For the FinCEN release, use the resource link.

Fed should withdraw Reg Z mortgage proposal CUNA

 Permanent link
WASHINGTON (11/24/10)--The Credit Union National Association (CUNA) has requested that the Federal Reserve Board withdraw an interim final rule that revises several Regulation Z mortgage loan disclosure requirements “as soon as possible” and “impose a general moratorium on the overall Regulation Z rulemaking process that is currently in progress.” While CUNA has always supported reasonable pro-consumer disclosures, the disclosures required under the Fed’s rule “will impose significant burdens on credit unions that will serve only to confuse consumers, without any corresponding benefits,” CUNA said in a comment letter. The Fed changes will implement provisions of the Mortgage Disclosure Improvement Act (MDIA), which was enacted in 2008, and will require lenders to disclose how borrowers’ mortgage payments will change over time so they may be alerted to the risks of payment increases before they consummate the loan. The rule also requires lenders to disclose a statement that there is no guarantee the consumer will be able to refinance the loan to obtain a lower rate and payment. CUNA in the comment letter said that the disclosures required by the rule are duplicative of disclosures that are currently required under the Real Estate Settlement Procedures Act (RESPA), and would likely need to be changed again in the near future. Specifically, the recently enacted Dodd-Frank Act will soon require RESPA disclosures to be combined with the Truth in Lending Act (TILA) disclosures. Though CUNA has advocated that the Fed withdraw the rules entirely, CUNA has also proposed changes to the rule if it remains set to come into effect. The compliance burdens associated with the Fed’s current plan to provide borrowers with an estimate of the maximum mortgage rate during the first five years of their loan would not provide any great benefit to consumers. Instead, CUNA has proposed that the Fed require financial institutions to provide these disclosures at the time that the mortgage is first adjusted. CUNA has also asked the Fed to provide additional guidance on proposed escrow payment disclosures, and has asked the Fed to delay the current Jan. 30, 2011 effective date if the rule is not removed altogether. The full comment letter is available as a link below.

CUNACFA Holiday spending could inch up this year

 Permanent link
WASHINGTON (11/23/10)—With unemployment rates hovering around 10% this year and the economy perhaps working toward a sluggish return to normal, a Credit Union National Association (CUNA)/Consumer Federation of America (CFA) survey has offered a glimpse of some improvement in holiday retail sales. One in ten respondents to a CUNA/CFA holiday spending survey said that they would spend more than they spent last year when making their yearly gift selections. That beats 2009 results when only 8% intended to increase their holdiay spending. The survey, which was presented during a Monday event at The National Press Club in Washington, D.C., was executed between Nov. 11 and 14 and questioned 1000 adults. This is the 11th consecutive year that CUNA and the CFA have partnered to conduct the survey and offer consumer advice on managing holiday debt. Speaking during the Monday press conference, CUNA Senior Economist Mike Schenk said that 23% of respondents said that their financial condition had improved over the past year, indicating that holiday spending could see an upturn. However, 41% of consumers surveyed this year said they intend to cut back their holiday spending, compared to 43% last year. One quarter of respondents said that they were holding back due to concerns over the state of the economy, and 33% said that they were restricting their spending due to their own personal financial situations. Just over one in ten of the respondents said that they were opting to save rather than spend. A total of 47% said that they would spend the same amount they spent last year. CUNA and CFA suggested that consumers can keep their individual levels of holiday debt under control by sticking to a predetermined budget for gifts, holiday foods, party clothes, holiday decor and postage. Consumers will also benefit financially from comparison shopping and paying with cash or lower-interest credit union cards. CUNA and the CFA also noted that while new rules that restricted gift card expiration dates and fees make them a safer gift, those that give gift cards “should still read the fine print.” Consumers can also plan for future holidays by shopping post-holiday sales for next years' gifts and starting a holiday savings account that they will contribute to over the course of the year, or take the novel approach of curbing spending through low- or no-cost ways to celebrate the holidays, CFA Executive Director Stephen Brobeck suggested. Nearly 20 national and local media outlets covered Monday's release of the consumer holiday spending projections. (See related story in today's News Now: Local, national press cover spending survey release.)

NCUA releases U.S. Central details to corporate litigant

 Permanent link
ALEXANDRIA, Va. (11/23/10)—The National Credit Union Administration (NCUA) has provided Corporate America CU with access to approximately 750,000 pages of documents regarding the failed U.S. Central FCU. The documents were sought by Corporate America via a Freedom of Information Act (FOIA) request made in June, after Corporate America had first tried to subpoena these documents in May. Corporate America filed a FOIA lawsuit in the U.S. District Court for the Northern District of Alabama earlier this month seeking to compel NCUA to release the documents, but Corporate America voluntarily withdrew the FOIA lawsuit last week. The NCUA has confirmed that it has “already provided Corporate America with access to documents that were the subject of the lawsuit." "The matter has been resolved and the suit dismissed,” the NCUA added. Corporate America sought these documents in connection with its separate lawsuit against the former directors and officers of U.S. Central, which is also pending in the U.S. District Court for the Northern District of Alabama. That case is slated to go to trial in August 2011 and alleges securities law violations, breach of fiduciary duty, and similar claims against U.S. Central's former management.

Restitution employment ban ordered for two by NCUA

 Permanent link
ALEXANDRIA, Va. (11/23/10)—Two former credit union employees have been banned from future work at any federally insured financial institution, as well as ordered to pay substantial restitutions, under prohibition orders issued by the National Credit Union Administration (NCUA). In a Monday announcement, the NCUA noted the following details of the enforcement orders:
* Eugene Miley, an institution affiliated party of Moonlight CU in Worthington, Pa.; Stanwood Area FCU in New Stanton, Pa.; and Vantage Trust FCU in Wilkes-Barre, Pa., was convicted of theft and sentenced to 58 to 148 months in prison, 300 hours of community service, and will be required to pay more than $2 million in restitution; and * Ira Rudin, a former employee of Central CU in Rego Park, N.Y., was convicted of embezzlement. Rudin was sentenced to 21 months imprisonment, threeyears supervised release, and ordered to pay $175,000 in restitution.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Corporate America buys Constitution Corporates CUSO

 Permanent link
ALEXANDRIA, Va. (11/23/10)--Corporate America CU has purchased Constitution Corporate FCU’s credit union service organization, known as Smart Source Solutions, the National Credit Union Administration (NCUA) reported on Monday. Corporate America’s purchase and assumption order was accepted by the NCUA, and that corporate credit union will take control of Smart Source by the end of this month. In a release, the NCUA said that Corporate America’s proposal was accepted following a bidding process in which both credit union and non-credit union entities were involved. The NCUA added that it selected Corporate America’s bid “after determining it offered the best solution for customers of Smart Source Solutions and was in the best interest of the National Credit Union Share Insurance Fund.” The NCUA late last week announced that Constitution Corporate would be liquidated on Nov. 30. The NCUA took control of the mortgage-backed securities on Constitution's balance sheet to facilitate the securitization of those assets. The payment processing systems and members of Constitution Corporate are in the process of being transferred to Members United Bridge Corporate FCU, a bridge corporate created when Members United Corporate FCU was liquidated. Bridge corporates also formed around the liquidations of U.S. Central FCU, Western Corporate FCU, and Southwest Corporate FCU.

Inside Washington (11/22/2010)

 Permanent link
Inside Washington
* WASHINGTON (11/22/10)--Regulators claim they are taking action against mortgage servicers that fail to follow mortgage guidelines, but observers maintain the agencies are ineffective in punishing noncompliant firms. At a House Financial Services housing subcommittee hearing on Thursday, the Treasury Department and the Federal Housing Administration said servicers have failed to comply with the conditions of government programs less than 5% of the time, and those firms for the most part have been ordered to make the necessary improvements to ensure approval (American Banker Nov. 22. But lawmakers like Rep. Maxine Walters (D-Calif.) argued that monetary penalties or sanctions should be leveled against firms that failed to comply with the Home Affordable Modification Program (HAMP). Under the program, the Treasury can deny compensation to noncompliant servicers. Julia Gordon, a senior policy counsel at the Center for Responsible Lending, said that without the threat of penalties, HAMP is unlikely to modify the behavior of consistently noncompliant firms …

Local national global press cover spending survey release

 Permanent link
Click for slide show CUNA Senior Economist Mike Schenk, left, and CFA Executive Director Stephen Brobeck, right, take questions following the release of the 2010 CUNA/CFA Holiday Spending Survey.
WASHINGTON (11/23/10)--Nearly 20 media outlets, ranging from global to local, covered the Credit Union National Association’s (CUNA) and Consumer Federation of America’s (CFA) 11th annual projection of consumers' holiday spending plans. The results of the spending survey, which were gathered between Nov. 11 and 14, were released during a Monday event at The National Press Club in Washington, D.C. CUNA and CFA also pair the results with advice to help consumers keep holiday debt under control. "This press event is another way to keep credit unions and CUNA visible in the national media and reinforce that credit unions are a trusted resource for consumers," said Mark Wolff, CUNA senior vice president of communications. The survey of more than 1,000 adult Americans indicated that overall holiday spending could increase, as 23% of respondents said that their financial condition had improved over the past year. A total of 19% reported improving financial prospects in last year’s survey. Among the television, cable and radio networks, and newspaper groups that attended or covered the press conference:
* NBC News * CNN * CBS News * Bloomberg * FOX News * ABC Radio News * Hearst TV * Dow Jones * The Associated Press
Reporters from the CBS Evening News with Katie Couric, National Public Radio, KNX radio in Los Angeles, a D.C.-area NBC affiliate, Cox TV and The Huffington Post also reached out to CUNA for further information after the event.

WesCorp risk management was inadequate NCUA says

 Permanent link
ALEXANDRIA, Va. (11/22/10)--The National Credit Union Administration (NCUA) has found that the management of failed Western Corporate Federal Credit Union (WesCorp) “did not implement appropriate risk management practices to adequately limit or control significant risks in its investment strategy” before its ultimate conservatorship in early 2009. This and other findings are detailed in the NCUA Office of Inspector General’s (OIG) report, which was released on Friday. The goals of the review were to determine why NCUA placed WesCorp under federal conservatorship and assess the NCUA‘s supervision of WesCorp, the OIG said in its report. To complete the review, the OIG analyzed NCUA examination reports, supervision reports and other correspondence, interviewed NCUA staff, reviewed NCUA policies, procedures and financial statements, and reviewed WesCorp’s policies, procedures, and investment documents. The review found that WesCorp’s excessive investments in privately-issued residential mortgage backed securities resulted “in a significant concentration risk, and left WesCorp increasingly vulnerable to significant credit risk, market risk, and liquidity risk through the portfolio‘s exposure to economic conditions in the residential real estate sector.” The OIG report also shifted some blame to the NCUA, saying that the NCUA’s Office of Corporate Credit Unions (OCCU) “did not adequately and aggressively address WesCorp‘s increasing concentration” of these investments. “OCCU examiners did not have the regulatory leverage to limit or stop the growth” of those investment purchases. Early action by the NCUA “would have likely mitigated WesCorp‘s severely distressed financial condition and expected loss,” potentially averting the NCUA’s conservatorship of WesCorp. The OIG recommended that the NCUA “provide corporate credit unions with more definitive guidance on limiting investment portfolio concentrations” in the future.

Inside Washington (11/19/2010)

 Permanent link
* WASHINGTON (11/22/10)--Bankers want regulators to create a long list of exceptions to the Dodd-Frank Act’s Volcker Rule, which restricts banks’ ability to participate in some types of investments and other risky activities. Comment letters sent to regulators seek exceptions that would expand banks’ ability to invest in private-equity firms and hedge funds, alter the definition of proprietary trading to give banks more freedom in making investments, and expand the list of “permissible activities” for banks (American Banker Nov. 19). Several lawmakers joined Paul Volcker, former Federal Reserve Board chairman, in calling for the development of clear rules that provide concise definitions and specific guidance to prevent ambiguity and make it easier to enforce the laws. But banking industry leaders and other lawmakers are seeking plentiful exemptions and broad definitions to give more latitude to financial institutions … * WASHINGTON (11/22/10)--Regulators were the target of strongly-worded criticism from both sides of the political aisle at a House Financial Services subcommittee hearing that examined flaws in the foreclosure process. Several legislators noted that regulators were unaware of the practice of “robo-signing” and other failings in the foreclosure process until the media disclosed the issues, even in situations where problems were previously identified by mortgage servicers’ internal controls. Rep. Maxine Waters, D-Calif., said mortgage servicers are unlikely to view regulatory consequences as a serious threat because regulators have consistently failed to both identify problems and levy fines when problems occur (American Banker Nov. 19). The hearing also explored consumers’ inability to reach mortgage servicers to discuss issues or negotiate mortgage modifications … * WASHINGTON (11/22/10)--George Madison, general counsel for the Treasury Department, said the Consumer Financial Protection Bureau (CFPB) can issue rules, release studies and gather feedback even though a permanent director has yet to be appointed (American Banker and The Boston Globe Nov. 19). Madison told the audience at a public policy luncheon sponsored by Women in Housing and Finance that the agency might go out for comment on proposed rules before existing federal agencies transfer their authority to the new agency on July 21, 2011. Elizabeth Warren is responsible for launching the CFPB in her role as assistant to the president and special advisor to the secretary of the Treasury. The banking industry has been a vocal critic of the potential scope of the CFPB’s authority and has opposed Warren’s role in shaping the new agency. To date, President Obama has not nominated a CFPB director … * ALEXANDRIA, Va. (11/22/10)--The National Credit Union Administration (NCUA) issued the following notice on Friday: “Due to unforeseen technical issues, the invoice payments for your capitalization deposit adjustment and share insurance premium that were originally scheduled for ACH withdrawal on Monday, November 22nd, will be withdrawn from credit union accounts today, Friday November 19th. This will affect credit unions with invoice amounts due to NCUA that use Pay.Gov for ACH payments. If your institution pays by check, this will not affect your institution. We apologize for this last minute change. In addition, refunds will be paid as scheduled today.” …

FHFA Max conforming loan limits steady through mid-2011

 Permanent link
WASHINGTON (11/22/10)--The Federal Housing Finance Agency (FHFA) on Friday announced that the maximum conforming loan limits for mortgages originated in the first nine months of 2011 will remain unchanged from 2010 limits. The maximum conforming loan limits “are generally $417,000 but can be as much as $729,750 in certain high cost areas in the contiguous United States,” the FHFA said in a release. A continuing congressional resolution requires Fannie Mae and Freddie Mac to set the loan limits for mortgages originated during the federal government’s 2011 fiscal year at an amount “equal to the higher of the maximums determined under the Economic Stimulus Act (ESA) of 2008 and the Housing and Economic Recovery Act (HERA) of 2008,” the FHFA release added. The ESA limits are fixed dollar amounts, while the HERA limits are updated annually, the FHFA added. For the full release, use the resource link.

30- 15-year mortgage rates rise from record lows

 Permanent link
WASHINGTON (11/15/10)--The average rate on both 30-year and 15-year fixed-rate mortgages rose from previous record lows this week. As reported in Freddie Mac's most recent mortgage rate survey, both mortgage rate averages showed double-digit basis point increases, with 30-year mortgages averaging 4.39% and 15-year mortgages averaged 3.76%. Those mortgage rates averaged 4.17% and 3.57% last week, respectively. Both five-year and one-year adjustable rate mortgages remained low, with average rates of 3.4% and 3.26% reported. Freddie Mac Vice President/Chief Economist Frank Nothaft noted that rates on shorter-maturity loans also rose, “although by somewhat lesser amounts.” For the full release, use the resource link.

Constitution Corporate to be liquidated

 Permanent link
ALEXANDRIA, Va. (11/22/10)--Constitution Corporate FCU (Constitution) will be liquidated on Nov. 30, the National Credit Union Administration (NCUA) announced Friday. Constitution was placed into conservatorship on Sept. 24. The liquidation, the NCUA said, is the next step in gaining control of the mortgage-backed securities on Constitution’s balance sheet to facilitate the securitization of those assets and is the same process undertaken at four other corporate credit unions that had “significant investments in distressed securities. “ The agency reiterated that it is committed to uninterrupted payment processing and other critical services for Constitution’s members and therefore is transferring the to-be liquidated corporate’s operations to Members United Bridge Corporate FCU, a bridge corporate created when Members United Corporate FCU was liquidated. Bridge corporates also formed around the liquidations of U.S. Central FCU, Western Corporate FCU, and Southwest Corporate FCU. “NCUA made this decision after determining it was in the best interest of Constitution’s members and the (National Credit Union Share Insurance Fund),” the agency announcement said.

CUNA-CFA to predict 2010 holiday spending

 Permanent link
WASHINGTON (11/19/10)--The Credit Union National Association (CUNA) and the Consumer Federation of America (CFA) on Monday will join for the 11th time to deliver the latest look at consumers’ holiday spending plans. CUNA Senior Economist Mike Schenk and CFA Executive Director Stephen Brobeck will present the CUNA/CFA survey, which was compiled in early November. The survey asks for the first time whether consumers feel their financial situation has gotten better or worse compared to a year ago, and provides fresh findings on consumer attitudes toward their financial condition and holiday spending plans. It also documents changes in consumer attitudes toward spending compared to the last several years as the economy strives to recover from the most severe recession in decades. The survey will be released at 10 a.m. ET in the National Press Club’s Zenger Room.

NCUA ups 2011 budget by 25 million

 Permanent link
ALEXANDRIA, Va. (11/19/10)--The National Credit Union Administration (NCUA) on Thursday approved a $25 million increase for its 2011 budget, and said that $750,000 will be dedicated to bolster examination and supervisory programs. The total budget for 2011 will be just over $225 million, 12% larger than the budget approved for 2010. The NCUA said that the increase is partly to cover adding 78 staff positions, and spending $7 million to cover a net growth of 5.7% in pay and benefits. However, nearly half of the budget increase will go to program additions and changes.
Click to view larger image Click for larger view
The NCUA board also approved an overhead transfer rate increase from 57.2% to 58.9%. Additionally, the agency voted to increase the asset level dividing points for the natural person federal credit union operating fee scale by 3.4% and to decrease the natural person federal credit union operating fee rates by 2.86%. Credit Union National Association (CUNA) President/CEO Bill Cheney said that CUNA is concerned that the “agency is asking for more resources from credit unions at a time when so many credit unions are feeling the pain of an obstinate recession,” adding that CUNA will review the proposed increase “carefully” and will “seek more answers from the NCUA.” A total of $750,000 of the budget will be provided to the Office of Examination and Insurance “to continue an operational review of the agency-wide examination and supervision program,” the NCUA said. The NCUA’s Office of Inspector General will receive nearly $1 million to continue its work on material loss reviews of failed credit unions and conduct independent financial audits of the NCUA’s books. Nearly $3.5 million of the funds will go to the NCUA’s annual exemption program, which will add 53 examiners and six supervisory examiners to various NCUA regional offices. Doing so will allow the NCUA to increase its scheduled in-house visits to troubled credit unions to once every three months. NCUA Chairman Debbie Matz noted that the NCUA’s increased emphasis on credit union examinations leads to “safer” credit unions, and said that she hoped that the increased exams would ultimately lead to lower credit union assessments in the future. For the NCUA releases, use the resource links.

Inside Washington (11/18/2010)

 Permanent link
* WASHINGTON (11/19/10)--Sheila Bair will focus on bank resolution rules and capital requirements in the seven months remaining before her five-year term as chairman of the Federal Deposit Insurance Corp. ends June 26, 2011. In comments made during an interview and a public appearance, Bair said her priority will be putting rules in place to address the resolution of large financial institutions, including how claims are processed and operations are untangled (American Banker Nov. 18 and Bloomberg.com Nov. 17). Bair also said regulators must strengthen bank capital requirements to ensure that U.S. lenders can compete with international firms. Bair was on the committee that drafted the Basel III global agreement to raise both the amount of capital required and the standards for defining capital. Bair has refused to consider continuing at the FDIC or heading the Consumer Financial Protection Bureau. After she leaves office, Bair is considering writing a book that would provide an insider’s account of the 2008 financial crisis and examine factors that could prompt the next banking crisis … * WASHINGTON (11/19/10)--The Federal Reserve Board issued guidance requiring the nation’s 19 largest banks to submit capital plans that must gain Federal Reserve approval before the banks can raise dividends or buy back shares. The 19 banks must use the plans to prove they can continue operations and withstand losses even under “adverse” conditions (American Banker Nov. 18). Key criteria include the ability to meet Basel III capital requirements and absorb losses based on models that predict how a bank would perform in specific scenarios, including widespread economic challenges. The banks must also show how they will repay U.S. government funding, if applicable, before increasing dividends. The 19 banks covered by the guidance were subject to stress tests in 2009 … * WASHINGTON (11/19/10)--Rep. Melissa Bean, D-Ill., contradicted rumors of an appointment to head the Consumer Financial Protection Bureau at a press conference where she conceded her seat in Congress to election opponent Joe Walsh, a Republican. A moderate who has served on the House Financial Services Committee, Bean said she did not think she would be appointed to lead the consumer agency (American Banker Nov. 18). When this week’s counting of provisional and absentee votes was completed, Bean lost to Walsh by 290 votes in a wealthy district that leans toward Republicans. Bean served three terms in the House of Representatives …

Corp. CU rate shopping to be limited by NCUA amendment

 Permanent link
ALEXANDRIA, Va. (11/19/10)--The National Credit Union Administration (NCUA) has proposed limiting credit union membership in corporates to one corporate at a time and changing some internal control and reporting requirements via technical amendments to its corporate credit union rules. The corporate amendments, which, if approved, would also require corporate credit unions to establish enterprise-wide risk management committees and to record all votes by directors in official board minutes, were unanimously approved by the board on Thursday. The NCUA also proposed implementing "voluntary" Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessments to privately-insured credit unions and non-credit unions, such as credit union leagues, which are members of a corporate.
Click to view larger image NCUA board member Gigi Hyland (front right) discusses the potentially negative impact that limiting credit unions to a single corporate credit union could have on the credit union system during the NCUA's Thursday open board meeting. (CUNA Photo)
Credit Union National Association (CUNA) President/CEO Bill Cheney said that the proposed corporate CU membership requirements and proposed voluntary TCCUSF assessments for non-federally insured entities are areas that “are in need of careful review by credit unions and the agency.” The corporate credit union membership limit is an attempt to protect against “rate shopping” and “unnecessary competition between corporates.” In a draft of the proposed rule, the NCUA said that rate shopping “resulted in increased competition and, in some cases, led to unsafe investment activities as corporates sought higher investment yields to subsidize share dividends and service costs.” Credit unions may belong to two corporates for the short period of time that they are transitioning between corporates. Credit unions will be prohibited from “making any investment, including a share or deposit account, a loan, or a capital investment” in a corporate of which it is not a member. Credit unions that are currently members of two or more credit unions will not be required to give up their membership in those credit unions, however. Though NCUA board member Gigi Hyland approved the proposed rule, she added that she was concerned by the rule’s potential to limit credit union choice. Hyland also said that she is interested in receiving comments on the issue of only being able to belong to one corporate and welcomed suggestions of any alternative approaches that may also be able to address the agency's concerns. The NCUA would promote the “equitable sharing” of TCCUSF expenses among all members of corporate credit unions by requesting that existing non-federally insured credit unions (FICU) “make voluntary payments to the TCCUSF” by paying “an amount calculated as a percentage of the non-FICU member’s previous year-end assets.” Corporates would hold member votes on whether or not to expel non-FICUs that decline to make requested payments or that make payments “in an amount less than requested.” The NCUA has also added some slight technical changes to portions of the original corporate rule that addressed executive compensation disclosures, corporate credit union auditing and reporting requirements, and management’s reports on various corporate credit union activities. Specifically, the NCUA is seeking greater detail regarding affiliate transactions, legal lending limits, loans made to insiders, restrictions on capital and share dividends, and regulatory reporting. All of the NCUA’s proposed changes will have a 30-day comment period, and board members said that they were looking forward to receiving credit union input on the proposed changes. The proposal, if approved, would possibly become effective as soon as end of January. For the full NCUA proposal, use the resource link.

James to head new NCUA Office of Minority and Women

 Permanent link
ALEXANDRIA, Va. (11/19/10)—When the National Credit Union Administration’s (NCUA’s) newly formed Office of Minority and Women Inclusion (OMWI) opens on Jan. 21, it will be longtime NCUA employee Tawana Y. James standing at the helm. James has more than 30 years of service with NCUA and has served as director of the agency’s Office of Small Credit Union Initiatives, regional director, deputy executive director, deputy director of the Office of Examination and Insurance, and Associate Regional Director of Operations. The OMWI, according to NCUA, is being developed in response to requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July. As OMWI director, James will oversee that law’s requirements related to diversity in management, employment, and business activities, including:
* Equal employment opportunity and the racial, ethnic, and gender diversity of the work force and senior management of the agency; * Increased participation of minority-owned and women-owned businesses in the programs and contracts of the agency, including standards for coordinating technical assistance to such businesses; * Assessment of the diversity policies and practices of entities regulated by the agency; and * Preservation of credit unions run by minorities and/or serving minorities.

Projected corporate fund assessment a concern CUNA

 Permanent link
ALEXANDRIA, Va. (11/19/10)--While the National Credit Union Administration’s (NCUA) proposed National Credit Union Share Insurance Fund (NCUSIF) assessment of 0 to 10 basis points “is right within the range” that the Credit Union National Association (CUNA) expected, CUNA President/CEO Bill Cheney said that CUNA is “troubled with the projected corporate stabilization assessment.” The NCUA projected total dual assessments of 20-35 basis points (bp) for 2011. Staff estimated that growing losses at both corporate and natural person credit unions could require an NCUSIF assessment ranging from zero to 10 bp and a Temporary Corporate Credit Union Stabilization Fund assessment of 20-25 bp, bringing the estimated total assessment to 20 to 35 bp. These assessments could collect up to $2.7 billion in funds. NCUA Chairman Debbie Matz noted that the current basis point projection is only an estimate, and could shift due to increases or decreases in the number of credit union failures or CAMEL Code troubled credit unions. However, Cheney said, CUNA is particularly concerned with what appears to be "frontloading" of 20-25 bp. “The whole purpose of the corporate stabilization fund, as enacted by Congress, was to spread the expense to credit unions over an extended period of time. Further, the ‘legacy assets’ resolution plan, unveiled by NCUA in September, had as a central tenet a repayment by credit unions spread over 11 years, divided somewhat equally over that period,” Cheney said. The NCUA proposal, which was released at Thursday’s open board meeting, “almost defeats the purpose of spreading the cost over 11 years,” the CUNA leader added. CUNA has suggested that the NCUA alter its plan by allowing for the pre-payment of assessments over several years. Specifically, Cheney said, the NCUA could still assess 20 to 25 bp to meet liquidity needs, while only charging 9 bp in the following years. “This is a cash flow issue, which can be dealt with by pre-paid assessments as opposed to full assessments charged in one year,” Cheney said. Reporting on the status of its NCUSIF, the NCUA noted that the percentage of total assets held by CAMEL Code 4 and 5 credit unions seems to have leveled off at around 5%. The percentage of assets held by CAMEL Code 3 credit unions also remained somewhat steadily, with a percentage in the high teens (17%). The number of troubled CAMEL Code 4 and 5 and Code 3 credit unions rose by 4 and 5, respectively, between September and October, NCUA staff added.

NCUA to create loan loss resolution tool

 Permanent link
ALEXANDRIA, Va. (11/18/10)—Saying it was “taking a page” from the Federal Deposit Insurance Corp.’s (FDIC's) recent action plan to increase available tools to resolve large, complex financial institutions, the National Credit Union Administration (NCUA) Wednesday announced its own Loss Share Program. The agency said it would begin immediately to develop the pilot program, and that it anticipates that losses to the National Credit Union Share Insurance Fund (NCUSIF) will be reduced through a program that, like the FDIC’s, gives agency support to an acquiring institution’s purchase and service of pools of loans. The FDIC reimburses the acquiring financial institution a percentage of any loan losses. “This pilot represents an innovative and sensible effort by NCUA to minimize losses to the NCUSIF and foster a lower-cost, market-based solution to the problems associated wth failures,” noted NCUA Chairman Debbie Matz in a release. “By drawing on the experiences of FDIC, and tailoring the program to the unique nature of credit unions and the distinct structure of the NCUSIF, I am confident that the pilot program will be a worthwhile initiative. I look forward to carefully evaluating the results,” Matz added. The NCUA said loss share agreements could potentially defer NCUSIF losses or even reduce losses if loan value increases. “The FDIC experience has also shown that loss sharing can add clarity about risk in an acquiring institution‘s loan portfolio,” the release said. As part of the NCUA pilot, the agency will gauge the cost benefits of overseeing loss-share agreements that have eight- to 10-year time horizons.

Tweaking corporate rule on NCUAs plate today

 Permanent link
WASHINGTON (11/18/10)—The National Credit Union Administration's (NCUA) decision to extend the corporate credit union business plan deadline, which was previously set to be Dec. 31, until March 31, should be formally announced at today’s NCUA open board meeting. The corporate credit union business plans are expected to detail the individual corporate credit union's future plans for operations, focusing on capitalization and the services that they plan to offer to natural person credit unions. CUNA asked the NCUA to extend the deadline for these plans after many attendees of a recent CUNA corporate credit union task force said that the Dec. 31 due date was too soon. The NCUA will further address the corporates as it releases new corporate CU rules. Those rules could address corporate membership fees, internal reporting, risk management, and other issues. NCUA General Counsel Bob Fenner said that these would be among the changes sought by the NCUA when the agency released its original corporate rule in late September. The NCUA's agenda also includes discussion of its overhead transfer rate and operating fee scale, and the customary discussion of the status of the NCUA’s insurance funds will also take place. However, the NCUA’s closed board meeting, which normally follows the open meeting, took place on Wednesday. For the full NCUA meeting schedule, use the resource links.

CUs MBL lift backed again in online pub iFrum Forumi

 Permanent link
WASHINGTON (11/18/10)—Congress should enact member business lending cap lift legislation “without delay” if that body “wants to show it’s serious about getting the economy moving again,” columnist Eli Lehrer wrote in a recently published Frum Forum online editorial. The Credit Union National Association (CUNA) has estimated that lifting the MBL cap to 27.5% of total assets, as has been proposed, would help small businesses create over 100,000 new jobs. “The bill doesn’t allocate a dime from the federal Treasury and will produce billions of dollars in new loans, mostly to smaller businesses,” Lehrer said. “If implemented, the proposal will provide loans to businesses that wouldn’t otherwise get them, encourage more lending by banks, and offer a market oriented piece of economic stimulus,” he added. “A very large portion of credit union business loans go to businesses that simply wouldn’t get credit anywhere else,” said Lehrer, adding that the level of industry-specific specialization, coupled with default rates that are similar to those seen at banks, shows that credit unions “clearly know what they’re doing when they make these loans.” Extending credit unions’ ability to lend will also keep banks honest by encouraging more bank lending as well, Lehrer said. Lehrer, who has backed the MBL legislation in previous editorials, has said increased member business lending "deserves consideration both on its own and as a template for bipartisan action to get the economy moving." For the full editorial, use the resource link.

Fair value burner still hot

 Permanent link
WASHINGTON (11/18/10)--The Financial Accounting Foundation (FAF) appointed a new CEO and four new members to its Board of Trustees this week, and Financial Accounting Standards Board (FASB) Acting Chair Leslie Seidman has said that the FASB’s search for its own board additions will not derail its work on fair value and other pressing issues. Seidman made her comments, as reported in American Banker, before a recent Financial Executives International conference. Teresa Polley, who has worked with FASB in the past, will work with new FAF Board of Trustees members Carol Anthony Davidson, Stephen Howe, W.M. Lawhon and Mary Stone going forward. The FAF is comprised of members of the private sector and is tasked with overseeing FASB and the Governmental Accounting Standards Board (GASB). The Credit Union National Association (CUNA) has met several times with the FAF’s Grace Hinchman to discuss CUNA's concerns with FASB's proposal on accounting for financial instruments, as well as other projects. FASB has not yet appointed the two new board members needed to take it to the full board membership of seven. FASB was previously comprised of five board members. CUNA also recently reached out to FASB to specifically discuss the fair value issue, with CUNA Accounting Subcommittee Chairman and Patelco CU Chief Financial Officer Scott Waite telling FASB members during an open meeting that reporting fair value under U.S. Generally Accepted Accounting Principles (GAAP) is simply not useful to the members, creditors, board members, and regulators of credit unions. Waite told the FASB panel that credit unions "provide an economic value to consumers by leveraging their not for profit status in the higher rates on deposit and lower rates on loans." FASB’s fair value proposal, which is still being developed, would require most financial assets and liabilities to be reported under GAAP at fair value. Credit unions over $10 million in assets are required to comply with GAAP. CUNA Senior Vice President/Deputy General Counsel Mary Dunn has said that CUNA will "continue pursuing a positive result for credit unions" as FASB works on the final rule, which could potentially take effect in 2013.

Interagency foreclosure report coming early 2011

 Permanent link
WASHINGTON (11/18/10)—A full examination of financial institutions’ “policies, procedures, and internal controls related to foreclosure practices” should be released in early 2011, with federal regulators taking supervisory action and holding institutions “accountable for poor practices” as needed, Federal Reserve Board Governor Elizabeth Duke said in a prepared statement. Duke will be one of five regulators testifying later today before a House housing and community opportunity subcommittee hearing on “Robo-Signing, Chain of Title, Loss Mitigation and Other Issues in Mortgage Servicing.” Duke is expected to tell lawmakers later today that troubles in the mortgage loan servicing and foreclosure processes could “result in improper loss of a home or premature eviction” and could, at a minimum, cause consumers to “further mistrust the loan servicing process.” “For individual borrowers, uncertainty about the prospect or timing of foreclosure makes everyday decisions difficult,” and many borrowers “have little incentive to invest in or maintain” their homes due to fears that they may lose their home due to foreclosure, Duke said. The reported problems in “mortgage loan origination, securitization, and loan foreclosures,” as well as “the mishandling of documentation in foreclosure proceedings,” could also slow the overall market, Duke adds. “In cases where actual problems are found, regulators will require lenders and servicers to correct not only the faulty documents themselves but the faulty systems that allowed them to occur. Institutions with widespread problems may be subject to fines and fees in addition to the costs associated with correcting the errors,” the statement said. Duke's written testimony also said that the Fed is encouraging lenders to resolve home loan issues via loan modifications rather than “unnecessary foreclosures.” U.S. Treasury Homeownership Preservation Chief Phyllis Caldwell, Department of Housing and Urban Development Assistant Secretary David Stevens, Comptroller of the Currency John Walsh, and acting Federal Housing Finance Agency Director Edward DeMarco will also testify. The subcommittee has also asked finance industry insiders and academics to testify during the hearing. In a similar hearing held in the Senate this week, Banking Committee Chairman Christopher Dodd (D-Conn.) called for the Financial Stability Oversight Council to examine mortgage servicing as a potential systemic threat, and said that further investigation of mortgage servicers may be warranted. (See related story in Inside Washington)

Inside Washington (11/17/2010)

 Permanent link
* WASHINGTON (11/18/10)--Leading Republican legislators want to remove unemployment from the Federal Reserve’s dual mandate of price stability and unemployment, and have asked the Fed to drop plans to buy an additional $600 billion in U.S. Treasury bonds. The bond purchase represents a strategy of “quantitative easing” that attempts to promote employment and keep prices stable. Rep. Mike Pence, chairman of the House Republican Conference, introduced a bill that would shift the Federal Reserve from its current mandate of focusing on unemployment and price stability to instead concentrate on price stability and inflation (American Banker Nov. 17). Pence joined a group of conservative critics in claiming that pursuing quantitative easing could undermine currency standards and fuel inflation while failing to significantly impact employment. Sen. Bob Corker (R-Tenn.), a member of the Senate Banking Committee, also endorsed redirecting the Federal Reserve’s mandate… * WASHINGTON (11/18/10)--Bigger problems than robo-signing could be disclosed by additional investigation of mortgage servicers, speakers at a Senate foreclosure hearing said. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and other senators cited specific examples of unjust foreclosure actions to support their doubts about the foreclosure practices of mortgage servicers (American Banker Nov. 17). Dodd and other Democrats called for the Financial Stability Oversight Council to examine mortgage servicing as a potential systemic threat. Consumer groups continue to claim that mortgage servicers improperly pursue many foreclosures, with protesters from the Neighborhood Assistance Corp. of America briefly disrupting the hearing to challenge statements made by a JPMorgan Chase Home Lending official. Iowa Attorney General Thomas Miller testified that state attorneys general have found other issues in addition to robo-signing but refused to provide details, citing an ongoing investigation. Republican senators also criticized the foreclosure process and noted that regulators failed to detect problems … * WASHINGTON (11/18/10)--The Federal Reserve Board has requested comment on a proposed rule dealing with the period of time allowed for banking firms to bring their activities into compliance with the Dodd-Frank Act’s Volcker Rule. The Volcker Rule prohibits banking entities from engaging in proprietary trading in securities, derivatives or certain other financial instruments, as well as from investing in, sponsoring or having certain relationships with a hedge fund or private equity fund. Banking firms have two years to bring their activities into compliance with the Volcker Rule, although the board is allowed to extend this conformance period for specified periods under certain conditions, a Federal Reserve release said. The Dodd-Frank Act calls for the board to issue rules to implement the conformance period. Comments on the proposed rule must be submitted within 45 days of publication in the Federal Register, which is expected to occur soon …

Compliance The deal on risk-based pricing notices

 Permanent link
WASHINGTON (11/17/10)--Risk-based pricing notices must be provided before the first transaction is made under open-end loan plans, but not earlier than the time that an approval decision is communicated to the member, according to the Credit Union National Association (CUNA). In this month’s Compliance Challenge, CUNA noted that additional notices are not required for subsequent line of credit advances, but separate notices are required whenever the lending credit union makes periodic reviews of a given account. These account reviews can take place, for example, on a semi-yearly or yearly basis, and must, like the notices that are provided for credit applicants, include a statement that the consumer’s credit report includes information about the consumer’s credit history. The review notices must be provided at the time that the decision to increase the annual percentage rate (APR) of a given loan is communicated to the member or consumer, “or no more than five days after the APR increase if no such notice is provided, if permitted by law,” CUNA said. This next section is confusing here since the original creditor only comes into play w/ the risk-based pricing notice provided to loan applicants, not existing borrowers. This was from another Q&A. For the full Compliance Challenge, use the resource link.

MBL opportunities coming up in Congress CUNA says

 Permanent link
WASHINGTON (11/17/10)--While it is unclear how much the Congress will accomplish during the year-ending lame duck Congressional session, the Credit Union National Association (CUNA) will attempt to attach member business lending related legislation to any and all legislative vehicles that look likely to progress through Congress. CUNA Vice President of Legislative Affairs Ryan Donovan said that “there is plenty that could keep Congress in session through much of the month of December, and that gives us more time to continue to push the enactment of the MBL cap increase.” CUNA is working with Senators Mark Udall (D-Colo.), Charles Schumer (D-N.Y.) and Harry Reid (D-Nev.) to advance the MBL cap lift legislation, and is currently laying the ground work for further work when the new Congress begins next year. The most noteworthy hearing of this week took place on Tuesday, as the Senate Banking Committee approved the nomination of Peter Diamond for the Federal Reserve’s Board of Governors. The Committee also discussed mortgage servicing, modification and foreclosure issues during the hearing.

FHA report to lawmakers shows improvements

 Permanent link
WASHINGTON (11/17/10)—The capital reserve ratio of the Federal Housing Administration’s (FHA’s) Mutual Mortgage Insurance (MMI) Fund has held steady over the last 12 months and insurance claims declined significantly, according to the FHA’s just-released annual report to the U.S. Congress. The MMI Fund is FHA’s principal insurance account that includes all single-family and reverse mortgage activity. The FHA report said the economic value of FHA’s single-family insurance program grew by more than $1 billion, to $4.7 billion in 2010, up from $3.6 billion in 2009. In a statement accompanying the public release of the report, FHA said that its survey, like last year’s, shows that FHA is “sustaining significant losses from loans insured prior to 2009 and its capital reserve ratio remains below the congressionally mandated threshold of 2% of all insurance-in-force.” However, the release continued, the report concludes that “under conservative assumptions of future growth of home prices, and without any new policy actions, FHA’s capital ratio is expected to approach two percent in 2014 and exceed the statutory requirement in 2015.” “It’s clear that FHA is in a stronger position today than we were just one year ago,” said FHA Commissioner David H. Stevens. “While we are not yet completely out of the woods, based on the evidence we’re seeing, FHA is weathering the economic storm while helping to create a firm foundation for our nation’s recovery.” Use the resource link to access the FHA report.

CUs shouldnt have to follow FTC UDAP rule says CUNA

 Permanent link
WASHINGTON (11/17/10)--State-chartered credit unions, which would fall under a proposed Federal Trade Commission (FTC) rule addressing unfair and deceptive (UDAP) mortgage practices, need flexibility in meeting the UDAP requirements, the Credit Union National Association (CUNA) said in a recent comment letter. CUNA recommended that the FTC should allow state-chartered credit unions to be in compliance with the proposed rule if those credit unions are successfully following current and future mortgage lending rules that apply to all financial institutions. The FTC proposal, which does not impact federal credit unions, would ban "all material misrepresentations in advertising about consumer mortgages." The proposed rule, which also does not cover banks and thrifts, specifically targets mortgage lenders, brokers, and servicers; real estate agents and brokers; advertising agencies; home builders; lead generators; rate aggregators; and other entities under the FTC's jurisdiction. The proposal, originally released in September, would, in part, ban misrepresentations in commercial communications and advertisements regarding any term of any mortgage credit product and would also impose corresponding recordkeeping requirements. CUNA's comment letter emphasizes that state-chartered credit unions are already heavily regulated and should treated like other financial institutions, and not be covered under this rule. The FTC rule would be duplicative of other current mortgage rules, as well as future rules under the Dodd-Frank Act, and would unnecessarily add to the already “staggering” compliance burden of state-chartered credit unions. While CUNA supported the FTC’s efforts to do more to address predatory lending practices, CUNA also noted that credit unions have not engaged in any of the practices addressed in the FTC proposal. CUNA has also recommended that the FTC's rules focus on practices that are not adequately addressed under current law, but not prohibit or favor certain practices. The National Association of State Credit Union Supervisors (NASCUS,) in a separate comment letter also supported exempting state-chartered credit unions from the proposed mortgage rule, saying that "while consumer protection is a critical regulatory issue," additional advertising rules and record retention requirements should not be extended "exclusively to a single depository charter, particularly when the proposed rules are duplicative of existing rules." NASCUS instead recommended that the FTC "focus its efforts on filling in regulatory gaps and addressing non depository entities lacking the existing comprehensive regulation of credit unions and banks." For the full CUNA comment letter, use the resource link.

Inside Washington (11/16/2010)

 Permanent link
* ALEXANDRIA, Va. (11/17/10)—The National Credit Union Administration has revised the agenda for today’s closed meeting. The new schedule lists the following matters to be considered: Pilot Programs (2). Closed pursuant to some or all of the following: exemptions (4) and (8); Insurance Appeals (3). Closed pursuant to some or all of the following: exemptions: (4) and (6); Personnel (2). Closed pursuant to some or all of the following: exemption (2); and Consideration of Supervisory Activities (4). Closed pursuant to some or all of the following: exemptions (8), (9)(A)(ii) and (9)(B)… *WASHINGTON (11/17/10)--Elizabeth Warren is recruiting staff to organize and conduct the Consumer Financial Protection Agency’s supervision of large firms offering consumer credit. Warren is the special assistant to the president charged with launching the agency. Steven Antonakes, the Massachusetts bank commissioner, is likely to be recruited to lead the supervision unit for financial institutions that offer consumer products such as mortgages and credit cards (Wall Street Journal Nov. 12). And observers speculated that Peggy Twohig, director of the U.S. Treasury’s Office of Consumer Protection, will organize the unit that will oversee non-bank supervision, which includes debt collectors, payday lenders and mortgage originators. Wall Street is scrutinizing Warren’s staff selections as she creates a supervisory structure aimed at ensuring that consumers are protected from risky products and abusive practices. The agency is expected to recruit additional staff from outside government as well as the ranks of federal bank examiners … * WASHINGTON (11/17/10)--Regulators are pondering whether big banks should be required to create subsidiaries for their international operations. Known as “subsidiarization,” this practice could make it easier to separate international business divisions when American regulators take resolution action against a big bank. Bankers attending a Federal Deposit Insurance Corp. (FDIC) roundtable event last month resisted the idea, citing the need to be able to easily move capital and manage liquidity across all areas of operations (American Banker Nov. 16). But other regulators counter that it is currently difficult to achieve resolution when a firm has operations in many different nations that each have their own financial rules. Regulators also said subsidiarization could make it easier to clearly identify separate business lines. Global resolution rules do not exist at this time, although leaders at the recent Group of 20 conference in South Korea urged the Basel Committee and the Financial Stability Board to address the issue …

Inside Washington (11/15/2010)

 Permanent link
* WASHINGTON (11/16/10)--The nomination of Joseph Smith, commissioner of banks in North Carolina, to serve as director of the Federal Housing Finance Agency (FHFA) won acclaim from a number of sources who said he is a consensus broker and careful listener. FHFA will play a crucial role in the upcoming reform of the housing finance system. Both consumer advocates and banking industry leaders praised Smith’s nomination, which must be confirmed by the U.S. Senate (American Banker Nov. 15). In North Carolina, Smith helped develop strong regulations for nonbank mortgage lenders and backed the development of a national mortgage licensing system. Colleagues also described him as one who seeks practical solutions while balancing the needs of consumers and bankers. Smith has yet to share his opinion on the reform of government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. The Dodd-Frank Act requires the administration to present its plan for reshaping U.S. housing policy, including the housing finance GSEs, no later than January 2011. Edward DeMarco has been FHFA acting director since Sept. 1, 2009 … WASHINGTON (11/16/10)--The Basel III rules on global capital represent an important step forward despite their flaws, said Federal Reserve Governor Daniel Tarullo. Speaking during a Dodd-Frank Act conference at George Washington University, Tarullo said the Basel III rules address some areas of capital regulation that were lacking, such as a new minimum common equity ratio (American Banker Nov. 15). The Group of 20 (G-20) nations last week approved Basel III standards calling for banks to hold common equity of 4.5% by 2015. In addition, banks must hold a 2.5% conservation buffer, which will be gradually introduced by 2019, and increase Tier 1 levels from 4% to 6% by 2015. But the Basel III rules failed to address some issues, such as the impact of economic cycles on capital regulation and the amount of additional capital “surcharge” needed for systemically important financial institutions. Tarullo also called for consistent implementation of Basel III rules … * WASHINGTON (11/16/10)--National figures emphasized the need to address America’s budget deficit in weekend television interviews and appearances. Sen. Kurt Conrad (D-N.D.) told “This Week with Christine Amanpour” that borrowing 40 cents of every $1 spent is an “unsustainable” practice that dooms America to become a second-rate economic power (The New York Times Nov. 14). Conrad is chairman of the Senate Budget Committee and a member of the president’s bipartisan commission on reducing the national debt. The bipartisan committee’s chairmen recently proposed reining in the deficit by cutting military and domestic spending, gradually increasing the retirement age for Social Security to 69 and eliminating major tax deductions. Speaking on “Meet the Press” and “Fox News,” David Axelrod, senior adviser to President Obama, said extending tax cuts for wealthy Americans would cost $700 billion in the next decade and favored permanently retaining cuts only for couples earning less than $250,000. Also speaking on “Meet the Press,” Sen. John McCain (R-Ariz.) favored extending tax cuts for all income groups, including Americans earning more than $250,000, until the recession ends … * WASHINGTON (11/16/10)—Whistle-blowers who expose corporate wrongdoing that leads to penalties of more than $1 million could qualify for substantial financial rewards from a $451 million reward fund established by the Dodd-Frank Act. The fund will pay for tips about violations of specific securities and commodity laws to help overcome the tendency to remain silent within the financial services industry (The New York Times Nov. 14). The whistle-blowers’ fund replaces a bounty program that was supposed to reward whistle-blowers but paid out only $160,000 over 20 years. People assigned to investigate corporate wrongdoing and those involved in violations are excluded from receiving rewards. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission oversee the program, which mandates payment of 10% to 30% of the penalty or the amount recovered when a tip provides the basis for a case. Employees are encouraged to report violations to corporate compliance departments first, with a 90-day grace period for bringing the issue to the SEC …

Cheney NCUA corp. CU deadline extension was needed

 Permanent link
WASHINGTON (11/16/10)--Credit Union National Association President/CEO Bill Cheney on Monday said that the National Credit Union Administration’s decision to extend the previous December 31 corporate credit union business plan deadline until March 31 “will allow some breathing room for corporates and the movement to consider broader solutions that will ensure all (credit unions) have ready and efficient access to the services they depend upon." The NCUA confirmed the decision to CUNA yesterday. While it is “important” that credit unions have a deadline in place to “encourage progress,” Cheney noted that the need for a limited deadline extension was widely expressed during CUNA's recently completed Corporate Credit Union Issues Summit, which took place on Saturday in Chicago, Ill. CUNA immediately raised these concerns with top officials at NCUA, and Cheney said that he was “pleased NCUA has responded to CUNA and others so quickly." Several summit participants told CUNA staff that the deadline extension is a positive development that will be helpful as corporate and natural person credit unions consider their options. The corporate credit union business plans are expected to detail the individual corporate credit union’s future plans for operations, focusing on capitalization and the services that they plan to offer to natural person credit unions.

NCUAs Matz regulators join to back student fin. lit.

 Permanent link
ALEXANDRIA, Va. (11/16/10)--The National Credit Union Administration (NCUA) on Monday officially joined the U.S. Department of Education and the Federal Deposit Insurance Corp. (FDIC) to “facilitate partnerships among schools, financial institutions, federal grantees and other stakeholders to provide effective financial education; increase access to safe, affordable and appropriate accounts at federally insured banks and credit unions, and encourage saving.” NCUA Chairman Debbie Matz joined Department of Education head Arne Duncan and FDIC Chairman Sheila Bair in a Monday event at Alexandria, Va.’s T.C. Williams High School. The regulators toured a student-run credit union met with students from T.C. Williams’ Academy of Finance, as well as other students, educators and parents. Matz said that there is “no better place” for students to learn about financial concepts “than from their teachers at school, and no better partner to provide subject matter expertise for schools than financial institutions. “In many underserved communities, studies show that parents learn about finances from their children, so youth financial education can benefit adults as well,” Matz added. The agency heads also signed an agreement that will lend the support of the NCUA and the FDIC to a Department of Education low-income college access program. Under the agreement, the agencies will also “work together to increase participation in the National Financial Capability Challenge, a voluntary awards program designed to challenge educators to teach high school students the basics of personal finance, and reward success.” For the full release, use the resource link.

Cooperative solutions among themes at CUNA corp. issues summit

 Permanent link
WASHINGTON (11/16/10)--The future role of corporate credit unions in providing key payments, settlement, liquidity, and investment advisory services to natural person credit unions was addressed by nearly 80 attendees of the Credit Union National Association’s (CUNA) Corporate Credit Union Summit, which took place in Chicago on Nov. 13. CUNA President/CEO Bill Cheney on Monday said that the 80 attendees, who represented corporate and natural person credit unions, credit union leagues, trade associations, and third-party system service providers, “recognized there really is no more important issue facing the (credit union) movement today than the future of the corporate network and the services it provides to natural person credit unions.” Cheney reiterated that the goal of the summit “was not for CUNA to impose a solution,” but “to bring key participants together, have a dialogue, seek opportunities for coordination, and begin to chart a path to ensure all credit unions will have access to the critically important services they need to run their operations—especially payments, settlement and liquidity services.” “The system is in a state of flux, and the decisions the (credit union) movement makes in the next few months will have very long-lasting effects,” he said. Overall, Cheney said, credit unions are “a cooperative movement” and thus “need to find a system-based solution. “A cooperative solution and a viable business model are not mutually exclusive,” Cheney added. The attendees also agreed that greater back office consolidation and, potentially, front office consolidation would be helpful, but said that passive consolidation would not be a viable option. Increased, quicker consolidation and aggregation “needs to take place in the corporate system to provide the scale and scope needed to deliver payments and settlement services efficiently and seamlessly,” Cheney said. The summit attendees noted that a comprehensive external analysis of the corporate credit union system should be pursued, and should be completed by the end of the first quarter of 2011. CUNA has also formed a new working group, comprised of some members of its current corporate credit union working group alongside new additions.

NCUA unveils Times Square deposit insurance ad

 Permanent link
ALEXANDRIA, Va. (11/16/10)--The National Credit Union Administration (NCUA) on Monday continued its "Keep Your Money NCUA-safe" public awareness campaign by unveiling a 520 square-foot ad in New York’s Times Square. The 15-second ad, which features NCUA campaign spokesperson Suze Orman touting the benefits and safety of federally insured credit union deposits, will run on a 26-foot tall commercial message board. That message board, which is centrally located in Times Square, also broadcasts The Late Show with David Letterman and other CBS programming, and is viewed by an estimated 1.5 million people per day. The ad will run until Jan. 1.
NCUA Chairman Debbie Matz said that the newest phase of the NCUA’s ad campaign “could not have come at a more opportune time. “With millions of consumers flooding Times Square for the Thanksgiving Parade, the 'Black Friday' start to the holiday shopping season, New Year’s Eve, and other days that see large numbers of visitors, NCUA’s share insurance campaign has hit prime time,” Matz added. The NCUA has also publicized its $250,000 credit union share insurance coverage through video and radio ads, as well as a comprehensive website that includes an insurance coverage calculator and other resources. The NCUA has also created an online widget that links to that website and a facebook page. To view the NCUA’s advertisement, click on the picture above. For the full NCUA release, use the resource link.

More tax on CUs would hurt consumers CUNA

 Permanent link
WASHINGTON (11/15/10)—Credit unions may “close or convert to for-profit banks” if the current credit union tax exemption is revoked, a move that would provide consumers with “few, if any other mainstream financial choices,” Credit Union National Association (CUNA) President/CEO Bill Cheney said on Friday. “Even if a credit union chooses not to convert, it will inevitably be forced to raise lending rates and fees and lower its returns to its members/ accountholders. Further, taxing credit unions would also divert funds that would otherwise be used to build capital and provide a cushion against any future losses, thereby protecting members and the National Credit Union Share Insurance Fund,” Cheney added. Eliminating the credit union exemption would also essentially raise taxes on 92 million current credit union members, Cheney said. The National Commission on Fiscal Responsibility and Reform's draft report on deficit reduction options, which was released last week, named tax expenditures as one way that the country’s debt could be cut. However, the report did not mention credit unions by name. Options promoted by the report include eliminating all $1.1 trillion of tax expenditures, eliminating and modifying some business tax expenditures, and reforming the tax code itself, while also putting in place “an across-the-board 'haircut' for itemized deductions, employer health exclusion, and general business credits that would take effect in 2013 if reform is not yet enacted." These proposals are in their infancy, and would require a super majority of 14 if the commission's 18 members to be officially recommended to lawmakers. The proposed reforms would also need both congressional and Presidential approval to be passed into law. Cheney last week said that CUNA would continue to work with the commission, the Obama administration and Congress to “help all comprehend the importance of the tax exemption on the long-term well-being of the nation's credit unions and, by extension, the 92 million consumers they serve.”

Bridge corporates created for Members United Southwest

 Permanent link
ALEXANDRIA, Va. (11/15/10)--Members United Bridge Corporate FCU and Southwest Bridge Corporate FCU will now assume the “existing business” of the conserved corporate credit unions Members United FCU and Southwest Corporate FCU, the National Credit Union Administration announced on Friday. The NCUA officially chartered the two new bridge corporates on Friday, and chartered U.S. Central Bridge Corporate FCU and Western Bridge Corporate FCU in early October. NCUA Chairman Debbie Matz in a release said that the creation of the four bridge corporates “ensures that 4,600 member credit unions continue to have access to essential liquidity and payment services.” The new bridge corporates have purchased and assumed the assets and member share deposits of their respective conserved corporate credit unions. All four of the bridge corporates will offer little in the way of new services, but will service existing loans and offer new loans for "settlement purposes" only, according to the NCUA. Fields of membership for the new corporates will be identical to that of the now-conserved corporates, and new members will not be accepted, the NCUA added. The bridge corporates will not operate indefinitely, and the NCUA has said that it will operate the bridge corporates until current members find their own individual service solutions. For the full NCUA release, use the resource link.

NCUA open meeting specifics revealed

 Permanent link
ALEXANDRIA, Va. (11/15/10)--A new interim National Credit Union Administration (NCUA) final rule regarding corporate credit unions will likely address, among other items, whether privately insured credit unions should help pay for the NCUA’s corporate credit union stabilization efforts. The interim final rule, which will be introduced at this Thursday’s NCUA open board meeting, will also fine tune some definitions and address whether natural person credit unions should be limited to membership in one corporate credit union, according to the Credit Union National Association (CUNA). The interim final rule may also address whether corporate credit unions should be able to assess membership or annual fees on their member credit unions, CUNA added. CUNA President/CEO Bill Cheney on Friday said that CUNA’s Corporate Credit Union Next Steps Working Group will help develop CUNA’s response to the new corporate CU documents. The NCUA will also consider the 2011 operating fee scale and operating fees for federal credit unions during the meeting, and will discuss the range of its National Credit Union Share Insurance Fund premium for the coming year as well. Discussion of the overheard transfer rate, which currently stands at 57.2%, is also on the agenda. The overhead transfer rate represents funds that are transferred from the NCUSIF to NCUA to pay for insurance-related agency costs. Pilot programs, insurance appeals, personnel issues, and supervisory activities are on the agenda for the NCUA’s closed meeting, which will take place on Wednesday. For the NCUA agendas, use the resource links.

Inside Washington (11/12/2010)

 Permanent link
* WASHINGTON (11/15/10)--Three trade groups sent a joint letter to the Securities and Exchange Commission asking for relief from “unreasonable and unwarranted” fees charged by CUSIP Global Services, commonly referred to as the CUSIP Service Bureau. The Bond Dealers of America, the Investment Adviser Association and the Government Finance Officers Association asked the SEC to use its jurisdiction to take control of the growing dispute over CUSIP fees and were particularly concerned about situations when federal regulators mandate their use. Standard & Poor’s manages the CUSIP bureau on behalf of the American Bankers Association (ABA). CUSIP alphanumeric codes are purchased by security issuers and used to identify government and municipal securities and stocks of registered U.S. firms. The dispute focuses on the CUSIP bureau’s attempt to charge licensing fees for the use of CUSIP codes – regardless of the source of the identifier or how it is used – from investment advisers, bond dealers and financial institution representatives (American Banker Nov. 12). These groups have typically used the codes in trade confirmations, account statements and other routine documents without being required to pay CUSIP annual fees, which can range from roughly $10,000 to hundreds of thousands of dollars. Editor’s Note: The ABA’s CUSIP has no connection to the National Credit Union Administration’s (NCUA’s) Credit Union System Investment Program (CU SIP), which was created in 2008 to enable participating creditworthy credit unions to borrow from the Central Liquidity Facility (CLF) and invest the proceeds in participating corporate credit unions …

Obama to nominate Smith as FHFA director

 Permanent link
WASHINGTON (11/15/10)—President Obama announced Friday that he intends to nominate North Carolina Bank Commissioner Joseph A. Smith, Jr. to become director of the Federal Housing Finance Authority. Smith has been commissioner of banks since June 2002 and his current term in that post ends March 31, 2011, according to the White House announcement. He is immediate past chairman of the Conference of State Bank Supervisors and the founding member of the board of managers of State Regulatory Registry LLC. Smith would replace acting FHFA Director Edward De Marco if the North Carolinian is confirmed by the U.S. Senate. De Marco has been acting director for about a year. The change in command is set against a back drop of potential reforms. The administration is working to draft revisions to the country’s housing-finance system, including a revamp of the government-sponsored entities, Fannie Mae and Freddie Mac—regulated by the FHFA. Fannie and Freddie were placed into conservatorship in 2008.

Mortgage rates drop to record lows

 Permanent link
WASHINGTON (11/15/10)--The average rate on both 30-year and 15-year fixed-rate mortgages fell to all-time record lows last week. As reported in Freddie Mac’s most recent mortgage rate survey, 30-year mortgages averaged 4.17% and 15-year mortgages averaged 3.57%, with both fixed rate loans falling more than five basis points below their previous weekly averages. Fixed rate 30- and 15-year mortgages averaged 4.91% and 4.36% this time last year, respectively. Both five-year and one-year adjustable rate mortgages were low, with average rates of 3.25% and 4.46% reported. “Despite historically low mortgage rates, however, the housing recovery continues to be slow owing in part to household job uncertainty and tight credit conditions,” Freddie Mac Vice President/Chief Economist Frank Nothaft said. For the full release, use the resource link.

Presidents commission releases deficit-reduction draft plan (11/11/2010)

 Permanent link
WASHINGTON (11/12/10)--While the National Commission on Fiscal Responsibility and Reform's just-released draft report on deficit reduction options does not mention credit unions by name, tax expenditures are on the panel's target list. The commission is President Obama's bipartisan advisory group charged with coming up with ways to cut the country's debt. Under the very broad brush strokes of the commission's proposals, the panel could eliminate the credit union tax exemption without taking into consideration whether such a change in policy could have dire consequences. As Credit Union National Association President/CEO Bill Cheney noted Wednesday, underscoring CUNA's adamant and unwavering support of credit unions' tax status, "If taxed, could credit unions as cooperative, not-for-profit financial institutions continue to effectively serve their members? Our answer: Absolutely not!" However, Cheney noted, the commission draft has an uphill battle to see daylight. It requires a super majority of 14 if the commission's 18 members to be officially "recommended," and some observers say that will be tough to get. Even if that battle is won, the proposals would still face a full vetting by the Congress and would require congressional passage and the President's signature. As Cheney added, "This is really the beginning of what could be a long process and these recommendations by their own wide scope face a tough road ahead. CUNA will continue to work with the entire debt reduction commission, the Obama administration and the U.S. Congress to help all comprehend the importance of the tax exemption on the long-term well-being of the nation's credit unions and, by extension, the 92 million consumers they serve." The commission draft report outlines three tax options: * "The Zero Plan," which mentions an option to "eliminate all $1.1 trillion of tax expenditures." It continues, "Add back in any desired tax expenditures, and pay for them by increasing one or all of the rates from their zero-expenditure low." * "Wyden-Gregg Style Reform" lists the option to "eliminate and modify several business tax expenditures..." Four tax expenditures are listed, but not credit unions. * "Tax Reform Trigger" calls on Capitol Hill's tax-writing committees to "develop and enact comprehensive tax reform by end of 2012" and "put in place an across-the-board 'haircut' for itemized deductions, employer health exclusion, and general business credits that would take effect in 2013 if reform is not yet enacted."

Inside Washington (11/11/2010)

 Permanent link
* WASHINGTON (11/12/10)--Large banks are likely to feel the greatest impact from proposed assessment changes announced this week by the Federal Deposit Insurance Corp (FDIC). Instead of calculating premiums based on domestic deposits, the FDIC is seeking to base premiums on assets minus capital to reflect total liabilities and meet mandates created by the Dodd-Frank law. Large banks benefit from the existing deposit-based formula because they can engage in foreign deposits or other alternative funding options without paying a premium to the FDIC, although the FDIC still carries the risk. Observers said large banks could react to the change by increasing competition for domestic deposits, focusing on noninterest income or switching to funding sources that fall outside reporting requirements (American Banker Nov. 9/10). The change in the premium base prompted the FDIC to propose new assessment rates, with banks asked to pay rates ranging from 5 to 35 basis points per average total assets minus Tier 1 capital, which compares to the existing range of 12 to 45 basis points per domestic deposits. Small banks are likely to gain the greatest benefit from the new assessment system. The FDIC also adjusted its risk-based rating system for all banks to reflect the premium shift and said it would adjust its earlier proposal to revise the risk formula for banks with assets above $10 billion to reflect Dodd-Frank requirements … * WASHINGTON (11/12/10)--Elizabeth Warren has put credit cards at the top of the list of issues that will be tackled by the Consumer Financial Protection Bureau. Warren is charged with launching the new agency in her role as assistant to the president and special advisor to the U.S. Treasury secretary. In an interview earlier this week, Warren said the fine print in credit card disclosures should be eliminated (American Banker Nov. 10). Instead, credit card companies should provide information about up-front fees, interest rates, penalties and reward programs in a format that allows consumers to easily compare credit card products. During two months’ of meetings with financial institution representatives, Warren said leaders of community financial institutions focused on compliance issues, while large bank representatives were concerned about a fair marketplace for competing on offerings such as consumer credit …

Healthy eating gets CDFI boost

 Permanent link
WASHINGTON (11/12/10)--The Community Development Financial Institutions (CDFI) Fund has selected the Opportunity Finance Network (OFN) to aid in its Healthy Food Financing Imitative. The food initiative will “provide critical training to CDFIs to utilize federal grants, below-market rate loans, loan guarantees and tax credits that can attract private sector capital for an even greater investment in projects that increase access to fresh produce and other healthy foods” in so-called “food deserts,” the CDFI Fund said in a release. The release defines “food deserts” as “urban neighborhoods and rural towns with limited access to affordable and nutritious food.” The CDFI Fund cited a United States Department of Agriculture estimate which stated that over 23 million Americans live in these “deserts.” “Well-targeted financing, technical assistance, and community partnerships can help to improve access to healthy foods, develop and equip grocery stores, create new markets for small businesses and farmers, strengthen the producer-to-consumer relationship, and support broader economic development efforts to revitalize distressed rural and urban communities,” the release added. CDFI Fund Director Donna Gambrell said that “the training enabled by the CDFI Fund's Capacity-Building Initiative will help to lay a strong foundation so that all CDFIs are prepared for the unique opportunities presented by funding that the Administration has requested in 2011 under the Healthy Food Financing Initiative.” The National Federation of Community Development Credit Unions is one of many related organizations that are providing technical support to OFN. The OFN is a “network of private financial intermediaries identifying and investing in opportunities to benefit low-income and low-wealth people in the U.S.,” the release said, adding that the OFN has frequently worked with CDFIs in the past. For the full release, use the resource link.

Fed unveils online credit report info for consumers

 Permanent link
WASHINGTON (11/12/10)—The Federal Reserve has announced the release of an online resource for consumers struggling to understand credit reports, credit scores, and the importance of protecting personal credit histories. The Fed’s new “Consumer’s Guide to Credit Reports and Credit Scores” describes the content of a credit report, explains how a credit score is used by companies that request them, and discusses the role of credit bureaus in collecting and disseminating this information. Mortgage lenders, financial institutions, insurers, utilities, employers, and other businesses may obtain credit reports from credit bureaus to assess how an individual manages financial responsibilities. n announcing the new online resource, the Fed noted that consumers “need to know what's in their credit report and understand how negative information, such as late payments or a bankruptcy filing, might affect a lender's decision to grant credit.” The agency said the guide answers questions ranging from "What is a credit score?" to "How can I get a free copy of my credit report?" to "How long does negative information stay on my credit report?" It also provides tips to consumers interested in improving their credit scores, as well as step-by-step instructions for correcting an error in a credit report.

New NGN release on the way

 Permanent link
ALEXANDRIA, Va. (11/12/10)--The National Credit Union Administration (NCUA) has set pricing guidance for an additional $5.5 billion of its NCUA Guaranteed Notes, Bloomberg News has reported. Citing an anonymous source, Bloomberg reported that “the largest, $2.86 billion-portion of the debt with a projected average life of 5.77 years may yield about 45 basis points more than the one-month London interbank offered rate.” The NCUA late last month settled the initial offering of its Senior Series I-A NGNs, which were comprised of $3.28 billion of assets and were mainly backed by senior floating rate securities. Those notes also paid a floating-rate coupon of one-month LIBOR plus .45% per annum, subject to a maximum note interest rate cap equal to 7.00% annually. The NCUA also settled its Senior Series II-A NGNs last month. Those notes are comprised of $566.5 million in assets, are mainly backed by fixed-rate pass-through securities, and will pay a fixed-rate coupon of 1.84% annually, according to the NCUA. Credit unions received nearly 10% of the total allocation for both the I-A and II-A notes, the NCUA said. The NCUA is offering $35 billion of the NGNs, which are fully backed by the federal government, on the open market. The NGNs are backed by portions of private label, residential mortgage-backed securities that were held by several now-conserved corporate credit unions.

Caution needed if automating small loans NCUA

 Permanent link
ALEXANDRIA, Va. (11/12/10)--While fully-automated loan application, underwriting, and funding systems are “legally permissible under the Federal Credit Union Act,” the National Credit Union Administration has urged that credit unions “be cautious and ensure an automated system meets various regulatory compliance requirements and addresses safety and soundness concerns.” In a recently released NCUA legal opinion, Associate General Counsel Hattie Ulan responded to a credit union’s question related to its establishment of a loan processing system for small personal loans. The credit unions system “would permit a member to apply online for a loan, would run a credit report and compare the member’s credit report score to the FCU’s lending criteria, and, on the sole basis of the credit report score, fund the loan,” according to the NCUA release. The NCUA recommended that credit unions take some precautions, though, such as preventing employees from acting as both approving loan officers and loan fund disbursers. The NCUA in a separate legal opinion recommended that credit unions “have loan officers make discretionary lending decisions” on loan applications that their automated loan system lending criteria may deny. The NCUA letter also warns that “relying on credit report information to deny membership may trigger, among other legal issues, potential problems and regulatory compliance requirements under the Fair Credit Reporting Act.” The NCUA also noted that automated loan application systems “may raise safety and soundness concerns because a human audit of the application and loans the system approves occurs only after funds have been disbursed.” For the full letter, use the resource link.

Corp. CU rule refinements on NCUA agenda

 Permanent link
ALEXANDRIA, Va. (11/12/10)—Technical corrections to the National Credit Union Administration’s (NCUA) corporate credit union rules will lead the agenda at the November open board meeting, which will take place next Thursday. NCUA General Counsel Bob Fenner in late September said that the NCUA would release additional refinements to its corporate rule, adding that the agency would address corporate membership fees, internal reporting, risk management, and other issues through these corrections. The nature of the NCUA’s planned corrections is not known at this time. The NCUA’s new corporate credit union rule, which was introduced in late September, adjusts corporate capital requirements, prohibits the purchase of private-label mortgage-backed securities or subordinated securities, limits the ability to award so-called "golden parachute" executive compensation packages to corporate credit union executives, and imposes new standards for corporate credit union board membership. The NCUA's 2011/2012 operating budget will also be discussed during the meeting. The agency approved a fiscal 2010 budget of just over $200 million last year, a 13% increase over the prior year’s budget. The majority of that budget increase went to NCUA program and staff additions. The agency’s overhead transfer rate and operating fee scale are also on the agenda, and the NCUA will also discuss the status of its insurance funds during the meeting. A closed NCUA session will take place on Wednesday morning. Pilot programs, insurance appeals, personnel issues, and supervisory activities are on the agenda for that meeting. For the full NCUA meeting schedules, use the resource links.

NCUA part of federal fin. ed underbanked effort

 Permanent link
WASHINGTON (11/12/10)--The National Credit Union Administration (NCUA) on Wednesday announced that it will join the Federal Deposit Insurance Corporation (FDIC) and the U.S. Department of Education in a joint effort to “promote financial education, financial access, and asset building among students and families.” NCUA Chairman Debbie Matz will join U.S. Secretary of Education Arne Duncan and FDIC Chairwoman Sheila Bair as they meet with students at Alexandria, Va.’s T.C. Williams High School on Monday. The agencies in a release said that “the goal of the partnership is to help more students learn the basics of handling their finances appropriately and develop habits that lead to strong financial futures, including saving.” “The partnership encourages financial institutions, schools, and other stakeholders to work together to support youth financial education and to provide students and families with access to safe, affordable, and appropriate accounts at federally-insured banks and credit unions,” the release added. For the full release, use the resource link.

FDIC executes assessment changes

 Permanent link
WASHINGTON (11/10/10)—The Federal Deposit Insurance Corporation (FDIC) on Tuesday released proposals that would base bank assessments on assets and “re-propose (some) changes for the deposit insurance assessment system.” Specifically, the FDIC proposed changing the assessment base for banks “from adjusted domestic deposits to average consolidated total assets minus average tangible equity.” This move would increase the size of the assessment base, according to the FDIC. The FDIC has also proposed lowering its existing assessment rates, since the assessment base is increasing. FDIC Chairman Sheila Bair in a release said that "while the change in the assessment base affects the amounts paid by individual institutions, this proposed rule is designed to keep the total amount collected from the industry very close to unchanged. This proposal will align with the restoration plan recently approved by the Board to reflect the higher reserve ratio required under Dodd-Frank." The FDIC has also proposed eliminating “risk categories and debt ratings from the assessment calculation for large banks,” replacing those categories and ratings with scorecards. “The scorecards would include financial measures that are predictive of long-term performance,” the FDIC said. The risk-based rate is based on multiple financial and supervisory factors, which vary based on the size of the institution. The FDIC should reveal additional changes in risk factors used for large financial institutions in a separate, to be issued proposal. The proposals, which will be available for comment for 45 days after their release in the Federal Register, could become effective in April of 2011. For the full release, use the resource link.

Judge dismisses Kappa Alpha Psi suit v. liquidation

 Permanent link
WASHINGTON (11/10/10)—Kappa Alpha Psi FCU’s attempt to reverse the National Credit Union Administration’s (NCUA) August liquidation order was rejected in U.S. Federal Court on Tuesday. NCUA director of public and congressional affairs John McKechnie told News Now that “the judge's ruling in the Kappa Alpha Psi case speaks for itself. Beyond that, NCUA has no further comment except to say that we are pleased that the judge reaffirmed the validity of our actions in the matter." Kappa Alpha Psi was a community development credit union and was affiliated with the African-American fraternity of the same name. The credit union, which operated online and served fraternity members and affiliated organizations, was established on Nov. 4, 2004. The NCUA in early August ordered the liquidation of the $750,000 asset credit union due to the credit union's inability to generate consistent operational profits, build its net worth position, grant quality loans and adequately collect on delinquent loans. The credit union reported a net worth ratio of 0.58% as of Dec. 31, 2009. The NCUA requires newer credit unions to be "adequately capitalized" with a 6% net ratio within 10 years of its charter. Kappa Alpha Psi challenged the liquidation, claiming that its net worth ratio was affected by "full accrual accounting" and NCUA's assessments related to its Temporary Corporate Credit Union Stabilization Fund. The credit union said it saw a "significant drop" in its net worth ratio between 2007 and 2009 that "was attributable to 'full accrual' accounting and NCUA assessments related to its ongoing corporate credit union system resolution plan. The NCUA formally carried out the liquidation orders on Aug. 13, while Kappa Alpha Psi was also bringing an injunction request to court. The credit union dropped the injunction after the NCUA redistributed its assets to the former credit union’s members.

Kids savings underserved on FDIC panel agenda

 Permanent link
WASHINGTON (11/10/10)—Children’s savings and underserved consumers are the top issues of an upcoming Federal Deposit Insurance Corp. (FDIC) Advisory Committee on Economic Inclusion (ComE-IN) meeting. ComE-In was formed in 2007 by the agency to explore ways of bringing unbanked consumers into the mainstream of financial services. At its inaugural meeting November of that year, Norb Kaczmarek, president/CEO of Erie (Pa.) FCU and chairman of the Pennsylvania Credit Union Association, presented information on the Credit Union Better Choice Program, a payday lending alternative designed in conjunction with state officials. At the Nov. 16 meeting, The advisory panel specifically will be looking at recent studies of underserved consumers, as well as government-sponsored children's savings programs that are offered in several countries, Canada, Singapore, and South Korea included. In announcing the meeting in a release, FDIC Chairman Sheila Bair said, "I am especially interested in hearing the Committee members' views about how the FDIC can advance the children's savings account concept for (low- to moderate-income) and underserved families in the United States." "International programs and pilot programs in the U.S. have shown that children's savings accounts can be a great way to instill a habit of saving and can help young people build a savings cushion for the future," said. Bair. "I am especially interested in hearing the committee members' views about how the FDIC can advance the children's savings account concept for LMI and underserved families in the United States." When asked if a credit union representative would be invited to the upcoming session to discuss extensive credit union involvement in the areas to be discussed an FDIC spokesman said he believed the discussion would be centered on FDIC-insured banks. One way that credit unions encourage children to save is by providing access to their savings accounts from the "workplace"--school. As of Aug. 25, the Credit Union National Association had received reports from 244 credit unions that operate strudent-run branches in 908 elementary, middle, and high schools in 42 states and the District of Columbia. The FDIC advisory meeting is open to the public at the FDIC headquarters building at 550 17th Street, N.W., Washington, D.C.

IRS announces 11 million in 2011 VITA grants

 Permanent link
WASHINGTON (11/10/10)—At least four credit unions were among 177 organizations awarded $11 million in total matching grants by the Internal Revenue Service (IRS) to support their Volunteer Income Tax Assistance (VITA) programs, which offer free tax preparation services to low- and moderate income consumers. Many credit unions offer VITA programs, in part, to steer tax filers away from the costly refund anticipation loans (RALs). RALs are short-term, high-interest loans that are heavily marketed by some paid tax-preparation firms during tax time. They can deplete hundreds of dollars from a typical tax refund. The IRS said the grant funds may be used to:
* Enable VITA programs to extend services to underserved populations and hardest to reach areas, both urban and non-urban; * Increase the capacity to file returns electronically; * Heighten quality control and improve accuracy of returns prepared by the VITA sites; and * Enhance training of volunteers.
The IRS said there was a strong response to the 2011 VITA grant program with 374 organizations submitting applications requesting more than $33 million in matching funds. The agency reported that, for tax year 2010, individuals and families with an adjusted gross income of $49,000 or lower are eligible for VITA assistance. The National Credit Union Foundation's REAL Solutions program estimated in 2009 that credit uions’ free tax preparation, electronic filing, and refund deposits provided by the VITA program to low-income tax filers has saved those tax filers a combined $20 million. A total of 541 credit unions participated in the VITA program in 2009, according to the National Credit Union Admnistration. Use the resource link below to see grant recipients.

Presidents commission releases deficit-reduction draft plan

 Permanent link
WASHINGTON (11/10/10)--While the National Commission on Fiscal Responsibility and Reform’s just-released draft report on deficit reduction options does not mention credit unions by name, tax expenditures are on the panel’s target list. The commission is President Obama's bipartisan advisory group charged with coming up with ways to cut the country’s debt. Under the very broad brush strokes of the commission’s proposals, the panel could eliminate the credit union tax exemption without taking into consideration whether such a change in policy could have dire consequences. As Credit Union National Association President/CEO Bill Cheney noted Wednesday, underscoring CUNA’s adamant and unwavering support of credit unions’ tax status, “If taxed, could credit unions as cooperative, not-for-profit financial institutions continue to effectively serve their members? Our answer: Absolutely not!” However, Cheney noted, the commission draft has an uphill battle to see daylight. It requires a super majority of 14 if the commission’s 18 members to be officially "recommended," and some observers say that will be tough to get. Even if that battle is won, the proposals would still face a full vetting by the Congress and would require congressional passage and the President's signature. As Cheney added, “This is really the beginning of what could be a long process and these recommendations by their own wide scope face a tough road ahead. CUNA will continue to work with the entire debt reduction commission, the Obama administration and the U.S. Congress to help all comprehend the importance of the tax exemption on the long-term well-being of the nation’s credit unions and, by extension, the 92 million consumers they serve.” The commission draft report outlines three tax options:
* “The Zero Plan," which mentions an option to "eliminate all $1.1 trillion of tax expenditures." It continues, "Add back in any desired tax expenditures, and pay for them by increasing one or all of the rates from their zero-expenditure low." * "Wyden-Gregg Style Reform" lists the option to "eliminate and modify several business tax expenditures…" Four tax expenditures are listed, but not credit unions. * "Tax Reform Trigger" calls on Capitol Hill's tax-writing committees to "develop and enact comprehensive tax reform by end of 2012" and "put in place an across-the-board ‘haircut’ for itemized deductions, employer health exclusion, and general business credits that would take effect in 2013 if reform is not yet enacted."

Lame duck Congress still has action plan

 Permanent link
WASHINGTON (11/9/10)--With the House and Senate returning for the final days of the 11th Congress next week, the Credit Union National Association (CUNA) will again begin actively searching for a vehicle for potential member business lending legislation. That vehicle could come in the upcoming lame duck session, or in next year’s 112th Congress. The MBL legislation would lift the cap to 27.5% of total assets, infusing $10 billion in new credit into small businesses at no cost to taxpayers. These funds would help small business owners create over 100,000 new jobs, according to CUNA. CUNA Senior Vice President of Legislative Affairs John Magill said that the MBL legislation could fit in to the House agenda if Republicans follow up on campaign promises of reducing government spending and helping small businesses create jobs. Magill believes that the 112th Congress’s split chambers could make it difficult to move new legislation through. However, smaller items such as the potential enactment of capital reform for credit unions, could see debate. Further discussions of the Community Reinvestment Act, mortgage cramdown provisions, and overdraft protection legislation will be less likely, he added. Housing finance reform will likely remain a high priority for both the House and Senate finance committees, with much debate centering on the role of the federal government in the secondary mortgage market. While Rep. Maxine Waters (D-Calif.) last month announced a Nov. 18 hearing to discuss foreclosures and other related issues, that hearing is no longer on the schedule as of yesterday.

NCUA advises CUs on creditworthiness info

 Permanent link
ALEXANDRIA, Va. (11/9/10)—Federally backed credit unions in most cases “must consider information provided by a member that is not included in a traditional credit report” when making creditworthiness determinations, National Credit Union Administration Associate General Counsel Hattie Ulan wrote in a legal opinion letter. Ulan said that credit unions are required to do this in order to fully comply with section 202.6(b)(6) of the Federal Reserve Board’s Regulation B (Reg B). Reg B “includes requirements regarding additional information creditors must consider in determining creditworthiness in certain circumstances,” Ulan said. UIan added that creditors “may restrict the kinds of credit history and credit references they will consider in making a determination of creditworthiness as long as the restrictions are applied to all applicants without regard to any prohibited basis, such as race, sex, or marital status.” However, Ulan added, if a borrower requests it, “creditors must consider any information an applicant may present tending to indicate the credit history being considered does not accurately reflect the applicant’s creditworthiness.” This information must specifically be considered in situations where credit information that “relates to the same types of credit references and history the creditor would consider if reported through a credit bureau” is not reported through a credit bureau. For the full NCUA letter, use the resource link.

Slight decline in consumer credit at CUs

 Permanent link
WASHINGTON (11/9/10)—The total amounts in outstanding consumer credit, revolving credit and nonrevolving credit accounts held by credit unions all decreased slightly in Sept., the Federal Reserve (Fed) reported in its most recent consumer credit report. "The September weakness in credit union consumer credit reflects a continuation of household sector deleveraging. With short-term market interest rates near zero consumers continue to believe that it makes more sense to pay down debt than put excess cash in savings accounts," explained Mike Schenk, a top Credit Union National Association economist. "In the aggregate, the household debt-to-income ratio has declined from a high of about 125% to 110% at mid-year 2010," he said, The total amounts in outstanding consumer credit, revolving credit and nonrevolving credit accounts held by credit unions all decreased slightly in Sept., the Federal Reserve (Fed) reported in its most recent consumer credit report. Credit unions held $224.9 million in total consumer credit as of September, slightly down from the $226.5 million in credit reported in August. Revolving credit accounted for $35.3 million of the September total, with nonrevolving credit comprising the remaining $189.6 million, the Fed reported. The Fed reported that total consumer credit declined by 1.5%, revolving credit declined by 8.75%, and nonrevolving credit increased by 2.5% during the third quarter of 2010. Consumer credit increased by 1% in September, the Fed added. The Fed report includes credit card debt, auto loans and other debt not secured by real estate. It excludes home mortgages and home equity lines of credit.

Inside Washington (11/08/2010)

 Permanent link
* WASHINGTON (11/9/10)--House Republicans plan to use their oversight powers to influence regulators as they implement the Dodd-Frank regulatory reform law (American Banker Nov. 8). While efforts to repeal Dodd-Frank appear unlikely to succeed, GOP lawmakers can significantly impact the law’s reach by holding oversight hearings, sending letters to regulators and scrutinizing rules as they are drafted. Dodd-Frank provisions already targeted by the GOP are the creation of the Consumer Financial Protection Bureau, including the appointment of Elizabeth Warren as advisor to the president to launch the agency, and the Volcker Rule that aims to restrain large financial institutions from making risky investments. Republicans said these provisions could hurt U.S. firms’ ability to compete and impair job creation efforts. In some cases, legislators’ awareness could provide backing for regulatory proposals such as the Federal Deposit Insurance Corp. (FDIC) plan to make creditors involved in the failure of a large bank take “haircuts,” which limit their claims. Legislators may also target the Durbin amendment, which empowers the Federal Reserve to regulate interchange fees on debit cards … * WASHINGTON (11/9/10)--Thirty-five of the more than 80 new Republican lawmakers elected to the U.S. House of Representatives have never previously served in an elective office. Newly elected GOP representatives come from varied backgrounds, including six medical doctors, three car dealers, two funeral home directors, a former Federal Bureau of Investigation (FBI) agent, a pizza restaurant owner and a Northwest Airlines pilot ( Politics Daily Nov. 8). They add to the ethnic and gender diversity of Congress with five Latinos, two African-Americans and at least seven women. High-profile winners of mid-term elections included Jon Runyan of New Jersey, a former lineman for the Philadelphia Eagles, and Sean Duffy of Wisconsin, who appeared on the MTV reality show “The Real World, Boston” …

Administrations Finance Council announces first meeting

 Permanent link
WASHINGTON (11/8/10)—President Barack Obama's Advisory Council on Financial Capability will hold its first meeting on Nov. 30. Defense Credit Union Council President/CEO Arty Arteaga is among those taking part in the meeting. The group, according to an Administration release, is comprised of two ex officio Federal officials and an additional 11 non-governmental members with experience in the areas of financial services, consumer protection, financial access, and education. The group has been tasked with promoting and enhancing “individuals' and families' financial capability,” according to the release. “Organizational matters and strategic areas of focus” will be the focus of this first meeting, the release added. The meeting will be open to members of the general public.

CUNAs McLain covers mortgage payment disclosures

 Permanent link
WASHINGTON (11/8/10)--In a recent Credit Union Magazine column, Credit Union National Association (CUNA) Senior Compliance Counsel Mike McLain addressed the Federal Reserve’s interim rule that revises disclosure requirements for closed-end mortgages under its Regulation Z. According to McLain, the new Fed rule alters existing disclosure requirements by requiring disclosure of how mortgage payments can increase, decrease or otherwise change over time. Information on both the rates and various features of the loans must be disclosed. Specifically, initial interest rates, and the corresponding monthly cost of the mortgage payments, associated taxes and insurance costs, must be included. Variable rate loan disclosures must contain information on the potential maximum rate that the loan could take on in the first five years and over the lifetime of the loan. Features of the loans, including information on balloon payments or other payment options, must be included, and a disclosure stating that mortgageholders are not guaranteed the right to refinance their mortgages must also be packaged alongside the other statements. “The interim rule applies to all transactions secured by a dwelling (principle residence or second home) and transactions secured by real property that don’t include a dwelling or other structures. Timeshare plans aren’t covered,” McLain added. Overall, the format of the disclosures must be “substantially similar to the model forms and clauses that are provided with the rule,” McLain said. For more on the disclosures, see this month’s edition of Credit Union Magazine.

Corporate CU summit kicks off this week

 Permanent link
WASHINGTON (11/8/10)—The Credit Union National Association (CUNA) later this week will bring together several credit union stakeholders in an attempt to develop a systemwide plan for the future of corporate credit unions. The summit, which will take place in Chicago on Sat., Nov. 13, will be strictly about dialogue, and will not attempt to “force outcomes,” CUNA Vice President of Communications Pat Keefe said. The summit will attempt to address the future role of corporate credit unions in providing key payments, settlement, liquidity, and investment advisory services to natural person credit unions. Natural person and corporate credit union representatives, state credit union league leaders, and other related groups will be among the 80 individuals in attendance. CUNA President/CEO Bill Cheney last month noted that a large number of credit unions and others asked CUNA to lead the meeting and “help the industry chart a path to the future on these issues.” However, CUNA is not taking sole ownership of the issue, and plans to work closely with the credit union system to help address questions that have arisen since the National Credit Union Administration (NCUA) approved new corporate credit union and legacy asset rules on Sept. 23. "There are no more important issues now than how we, together, address corporate credit union services. This is why CUNA will be hosting the summit and continuing our work to pursue solutions not only for the transition period under the new rule but for the future," Cheney said. The NCUA in late September revealed its final corporate credit union rule, which adjusts the current corporate capital requirements by replacing the current 4% minimum total capital ratio with a 4% minimum leverage ratio, a 4% tier one risk-based capital ratio, and an 8% total risk-based capital ratio for adequately capitalized corporate credit unions. The new rule will also prohibit the purchase of private-label mortgage-backed securities or subordinated securities, and limit the awarding of so-called "golden parachute" executive compensation packages in some instances. The new rules also impose some restrictions on the board composition of corporate credit unions. The NCUA plans to release additional refinements to its corporate plan as they are developed.

Inside Washington (11/05/2010)

 Permanent link
* WASHINGTON (11/8/10)--The Federal Reserve Board is being unusually open about the Federal Open Markets Committee’s decision to buy $600 million in additional long-term securities. Federal Reserve Chairman Ben Bernanke authored an op-ed article that appeared this week in the The Washington Post to spell out what is being done and the reasons behind the Fed’s actions. Bernanke’s article continues the Federal Reserve’s shift toward greater disclosure of the factors that are weighed in its decisions along with its goals for the future (American Banker Nov. 5). Observers said Bernanke is moving toward transparency as a way to boost confidence and support the economic agenda. Bernanke’s op-ed article did not address how the move is likely to impact the dollar or how it reflects overall fiscal policy. The Federal Reserve has made monetary policy moves of this size only twice before, in 2008 and 2009 … * WASHINGTON (11/8/10)--Regulators and officials from large banks are discussing how to develop “living wills” that would make it easier for regulators to respond if another banking crisis occurs. The Dodd-Frank law requires banks with the potential for systemic impact on the financial system to develop “living wills” plans. The Federal Deposit Insurance Corp. (FDIC) this week continued its series of roundtables focusing on the information that would be needed to give regulators a blueprint for untangling bank subsidiaries from holding companies after a crisis. Another key issue is determining the extent of a firm’s systemic reach. The FDIC and the Federal Reserve Board are charged with developing joint guidelines for developing the plans (American Banker Nov. 5). The agencies are expected to offer their guidance in early 2011 …

15-year fixed short term ARM rates stay low

 Permanent link
WASHINGTON (11/5/10)--Freddie Mac in its most recent mortgage rate report noted that the average rate on 30-year fixed-rate mortgages again increased slightly, while the rate on 15-year fixed-rate mortgages dropped during the week ended Nov. 4. The 30-year rate averaged 4.24%, up from the 4.23% rate reported last week and down from the 4.98% rate reported one year ago. The 15-year rate fell to 3.63% during the week, down .03% from the previous average reported a week ago. The 15-year fixed rate mortgages averaged 4.4% at this time last year. Both five-year and one-year adjustable rate mortgages were low, with average rates of 3.39% and 3.26% reported. Freddie Mac Vice President/Chief Economist Frank Nothaft said that “with little sign of inflation to push up long-term interest rates, fixed mortgage rates held relatively steady this week, while ARM rates hit new all-time record lows.” For the full release, use the resource link.

New CUNA task force studies housing issues

 Permanent link
WASHINGTON (11/5/10)—The Credit Union National Association (CUNA) has begun developing its response to the potential reform of government-sponsored entities (GSE) Fannie Mae and Freddie Mac by forming its new GSE Reform Task Force. “With the divided Congress, it is unclear how far reform of the GSEs will get," CUNA President/CEO Bill Cheney said referring to the midterm election, which resulted in a Republican majority in the House and a Democratic majority in the Senate. "However, we recognize that having a secondary market available to credit unions that make and want to sell home mortgage loans is a critical issue and CUNA wants to be involved in that discussion.” Policymakers have asked CUNA to provide concrete recommendations regarding the future of the GSEs. The task force, which will be chaired by Idaho Credit Union League President Alan Cameron, should provide its preliminary views on GSE reform to the U.S. Treasury by the end of this month. The Obama administration should issue its own proposal in January. The group, which will report to CUNA's Governmental Affairs Committee, will be comprised of the following members:
* Roger Ballard - Kinecta Federal CU; * Brian Barkdull - American Southwest CU; * Jim Blake - HarborOne CU: * Joe Brancucci - GTE Federal CU; * Kirk Kodeleski - Bethpage FCU; * Paul Kundert - University of Wisconsin CU; * Nadar Moghaddam - Financial Partners CU; * Dennis Pierce - CommunityAmerica CU; * John Radebaugh - North Carolina CU League; * Mark Spenny - Citizens Equity First CU; and * Rod Staatz - State Employees CU of Maryland.
“This group of credit union leaders we have assembled, working with our staff, will ensure our responses are comprehensive and are designed to fully address the needs of credit unions and their members regarding home mortgage loans,” Cheney added. Jeff Bloch, CUNA senior assistant general counsel, said that the administration’s approach may range from a secondary mortgage market that is completely operated by the federal government to a private market system that would not include federal guarantees.

Three Small CU Workshops remain in 2010

 Permanent link
ALEXANDRIA, Va. (11/5/10)-–There are still three 2010 sessions of the National Credit Union Administration’s (NCUA’s) Office of Small Credit Union Initiatives Workshops and Roundtables for which credit unions can register. The next one is slated for Nov. 6 in Los Angeles. The free workshops are geared toward credit unions with assets of $50 million or less, but are open to credit unions of all asset size groups. The 2010 workshop topics are:
* Issues facing credit unions; * Maximizing the bottom line; * Current regulatory hot topics; * Allowance for Loan Lease Losses (ALLL) ; and * Alternatives to predatory lending.
The remaining two workshops are scheduled for Nov. 13 in Silver Spring, Md.—just outside Washington, D.C.—and Nov. 19 in Jackson, Miss. The NCUA encourages credit unions with questions to contact the agency by phone at 703-518-6610 or email at OSCUITraining@NCUA.Gov . Use the resource link to register.

Inside Washington (11/04/2010)

 Permanent link
* WASHINGTON (11/5/10)—In a shout-out to the Credit Union National Association (CUNA), the U.S. Treasury Department noted the appearance of Treasury spokesperson Tepricka Morgan on CUNA’s Home & Family Finance Radio show. On the Oct. 24 show, Morgan highlighted the safety and reliability of direct deposit for federal benefit payments and mentioned the Treasury’s Direct Express card as an option for those without a banking relationship. The appearance was noted in the Treasury’s widely distributed “Go Direct” Partner Update, which publicizes the government’s campaign to increase direct deposit of federal benefits checks. CUNA is a national partner of the program and was among the 30 financial institution associations that were noted for including Go Direct information in their publications… * WASHINGTON (11/5/10)--Some GOP leaders pledged to use the House majority delivered by the midterm elections to dismantle most provisions of the Dodd-Frank law. In statements made following the election, some House Republicans said the Obama administration should abandon the Consumer Financial Protection Bureau (CFPB), while others wanted housing finance to be placed completely in the private sector. However, some GOP members suggested a modified approach, such as restructuring the CFPB and whittling back its budget. Democrats in leadership roles cautioned the GOP to act with restraint. In the Senate, where Democrats continue to hold a slim majority, Sen. Tim Johnson (D-S.D.) said it was unlikely that major changes would impact Dodd-Frank (American Banker Nov. 4). Johnson is expected to become chairman of the Senate Banking Committee. Other issues that some Republicans hope to tackle include greater oversight of the administration’s foreclosure prevention program and reducing the regulatory burden on community financial institutions … * WASHINGTON (11/5/10)--The Federal Deposit Insurance Corp. (FDIC) is expected to announce changes in the procedure for setting deposit insurance assessments next week. The changes include a new assessment method mandated by the Dodd-Frank law (American Banker Nov. 4). The revised approach would require the FDIC to multiple an institution’s risk-based rate by the institution’s total assets minus its tangible equity. In the past, the FDIC figured the price by multiplying an institution’s risk-based rate by its domestic deposits. The new approach is expected to set a price that better reflects large institutions funded by both deposits and other operations. The risk-based rate is based on multiple financial and supervisory factors, which vary based on the size of the institution. The agency is expected to reveal additional changes in risk factors used for large financial institutions in a separate proposal …

Inside Washington (11/03/2010)

 Permanent link
* WASHINGTON (11/4/10)--Former Federal Reserve Chairman Paul Volcker has asked the Financial Stability Oversight Council to use clear, concise language in regulations that will implement the “Volcker Rule.” Volcker sent a letter to the council to spell out his concerns about the need to avoid ambiguity. He noted that “firmly worded prohibitions and specificity” will be needed to guide regulators as the law is put into effect. The Volcker Rule places limits on depository institutions’ proprietary trading and forbids the sponsorship of, or investment in, private-equity funds and hedge funds. The Dodd-Frank law provides some exemptions to the rule, such as allowing “market-making” activities (American Banker Nov. 3). Volcker said it is essential to clearly define “market making” because the term could potentially be used to shield “proprietary wagers on the direction of individual securities or markets” … * WASHINGTON (11/4/10)--John Taylor, president and chief executive of the National Community Reinvestment Coalition, called on the federal government to intensify efforts to avert foreclosures (American Banker Nov. 3). Taylor noted in a press release that the government has power over Fannie Mae, Freddie Mac and the Federal Housing Administration, which provides the leverage necessary to decrease foreclosure activity. As a step toward reducing foreclosures, Taylor suggested the Federal Reserve Board should create incentives for banks to trim back the principal balance on loans held in mortgage-backed securities, which currently total $1.1 trillion. … * WASHINGTON (11/4/10)--Timothy Ward has been named Deputy Comptroller for Thrift Supervision, the office of the Comptroller of the Currency announced Wednesday. Ward, who joined the OCC in February, spent more than 26 years at the Office of Thrift Supervision, included a stint from 2007 to 2009 when he was Deputy Director for Examinations, Supervision, and Consumer Protection. Ward will lead the planning process for the OCC’s integration of the OTS examination and supervision functions and staff. Following the July 2011 transfer date, Ward’s position will continue under a Dodd-Frank Wall Street Reform and Consumer Protection Act requirement to establish a Deputy Comptroller position dedicated to thrift supervision… * WASHINGTON (11/4/10)--Mitchell Glassman, the Federal Deposit Insurance Corp. (FDIC) official who supervises bank takeovers, plans to retire on Dec. 3, according to an FDIC announcement. Glassman, who is the director of the division of resolutions and receiverships, supervised the FDIC’s seizure of 379 depository institutions in 2009 and 2010 (American Banker Nov. 3). During the financial crisis, the division’s workforce increased from 220 employees to more than 2,000. Glassman has served the FDIC for 35 years since joining its office in Kansas City, Mo. The FDIC has named James Wigand, the division’s deputy director, to serve as acting director …

NCUA offers merger registry guidance

 Permanent link
ALEXANDRIA, Va. (11/4/10)—As promised at its October open board meeting, the National Credit Union Administration (NCUA) has sent a Letter to Credit Union (No. 10-CU-22) describing the new national merger-partner register and what it hopes to achieve. “ If your credit union is interested in expanding your field of membership by merging with another credit union, you can now let your regulators know by signing up for NCUA’s new Merger Partner Registry,” says the letter signed by Chairman Debbie Matz. The communication describes the process of how to sign on to the registry and carries a boldface warning that signing up does not guarantee that a credit union will be selected as a merger partner. The NCUA says it has two goals the registry:
* To establish a wider pool of interested credit unions to consider assisted merger and P&A opportunities; and, * To improve transparency by shedding more light on NCUA’s process of selecting partners.
The letter instructs credit unions to contact their regional NCUA office with any questions about the registry. At the Oct. 21 meeting, agency staff gave a presentation regarding NCUA's recently launched Merger Partner Registry, part of the NCUA's Credit Union Online system, which credit unions already use to submit 5300 Call Reports. Use the resource link to access the NCUA letter.

CUNA CUs help bring strong election results

 Permanent link
WASHINGTON (11/4/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney noted that despite the “losses of Democratic friends,” credit unions had a strong 2010 midterm election, with 26 Senate candidates and 302 House candidates backed by the Credit Union Legislative Action Council (CULAC) winning their respective contests. Overall, as of Wednesday morning, 93% of candidates in called races who received CULAC support had won election, Cheney reported. He added that the successes can be attributed to "the strong, favorable image of credit unions, both among our own members and the voting public at large." "The election results, particularly in the races where we communicated directly with credit union members, bear that out and offer a road map not only for future efforts at the ballot box but for grassroots campaigns on credit union legislation as well,” Cheney said. A race involving Sen. Patty Murray (D-Wash.) remained too close to call at press time, and House races involving 8 additional CULAC-backed candidates remained undecided as well. CUNA, CULAC, state credit union leagues and individual credit unions spent a combined $3.9 million on various candidates, and $1.1 million on direct communications with voters in 13 general and primary races, targeting 12 states. CUNA’s targeted independent expenditures (IE) helped Sen. Majority Leader Harry Reid (D-Nev.) maintain his seat. Current Rep. Roy Blunt (R-Mo.) also won his Senate contest. In the House, CUNA-backed freshman Rep. Kurt Schrader (D-Ore.) and Rep. Cory Gardner (R-Colo.) also won. CUNA, the leagues and credit unions also backed winning House candidates Ed Perlmutter (D-Colo.), Larry Kissell (D-N.C.), Kevin Yoder (R-Kansas) and Steve Stivers (R-Ohio) via partisan mailing campaigns. While the loss of longtime credit union champion Rep. Paul Kanjorski (D-Penn.) is “a difficult loss for credit unions,” that loss “also demonstrates why CUNA has worked so hard to develop new up-and-coming champions on both sides of the aisle,” Cheney said. Over one million pieces of direct mail were sent to voters on behalf of various candidates, and CUNA finished this election cycle as the most bipartisan spender among the top 50 group that made independent expenditures during the election.

How did CUs fare CUNA election analysis

 Permanent link
WASHINGTON (UPDATED: 1:00 P.M. ET 11/3/10)--With the makeup of the 112th Congress falling into place after Tuesday's midterm elections, the Credit Union National Association (CUNA) CUNA has analyzed the near future for credit unions and legislation in general. The divide between a Republican House and a Democratic Senate could prove to be a challenge for new legislation, but smaller items such as the potential enactment of capital reform for credit unions, could see debate, CUNA Senior Vice President of Legislative Affairs John Magill said. Magill also noted that the tone of the House should shift away from the consumer protection dynamic seen in the past two years, a move that makes further discussions of the Community Reinvestment Act, mortgage cramdown provisions, and overdraft protection legislation less likely. Magill added that legislation that would increase the cap on member business lending done by credit unions could fit in to the House agenda if Republicans follow up on campaign promises of reducing government spending and helping small businesses create jobs. The fight for MBL legislation will continue in the upcoming lame duck session, which should begin next week, and will likely continue into the next session of Congress when it starts in January, Magill said. Congress will likely start its January work by considering tax reform and ways to tackle the federal budget deficit, and Republicans may use their newfound control of the House of Representatives to force symbolic votes to repeal the Health Care Reform law or parts of the financial reform bill. However, with President Obama wielding a veto pen, there may not be a true resolution to these votes. The committee agenda in both branches of Congress should remain the same, at first, with Housing finance reform remaining a top priority for both the House Financial Services Committee and the Senate Banking Committee. A key point in the coming debate will be the role of the federal government in the secondary mortgage market, a question with huge implications for credit unions. The recently enacted Dodd-Frank Act should also come up for discussion, as will the still developing Consumer Financial Protection Bureau, Magill said, adding that Republican-controlled House committees could seek to address the regulatory reforms in this manner, effectively working to change the enforcement of the new regulations from within instead of repealing them outright. CUNA expects the following representatives to assume control of key House committees:
* House Financial Services Committee Chairman: Spencer Bachus (R-Ala.); * House Ways and Means Committee Chairman: Dave Camp (R-Mich.); * House Appropriations Chairman: Jerry Lewis (R-Calif.); * House Judiciary Committee Chairman: Lamar Smith (R-Texas); * House Rules Committee Chairman: David Dreier (R-Calif.); * House Small Business Committee Chairman: Sam Graves (R-Mo.); and * House Oversight Chairman: Darryl Issa (R-Calif.)
Overall, with the 2012 campaign season likely to begin soon, an ambitious legislative agenda is not expected in the near future. CUNA was very active in the election process and overall, as of this morning, 93% of candidates in called races who received CULAC support won election.

The day after iNatl Journali looks at results

 Permanent link
WASHINGTON (11/3/10)—Four hundred attendees from many walks of Washington, D.C. life are expected to arrive this morning at the National Journal’s analysis of the Nov. 2 mid-term elections, a session co-sponsored by the Credit Union National Association (CUNA).
The half-day event, which will be webcast live, will feature National Journal editorial staff for an intensive look the likely impact election results will have on the U.S. Congress, the government’s executive branch, the “K Street” lobbying faction, and the most important policy issues of the day. The conference is designed to include thought-provoking keynote speakers as well as comprehensive analysis from National Journal’s,” Charlie Cook, Ron Fournier, Major Garrett, Sue Davis, Matt Copper, Jason Dick and the Hotline staff. Also in today’s News Now, CUNA takes a credit union-centric look at the elections. Use the resource link below for the National Journal Webcast.

NCUA should give new corporates leeway says CUNA

 Permanent link
WASHINGTON (11/3/10)--While supporting its proposed new policy on field-of-membership issues for corporate credit unions, the Credit Union National Association (CUNA) raised several concerns and provided recommendations to the National Credit Union Administration (NCUA) to improve the proposal. For example, the capital plan requirements addressed in the proposed corporate credit union chartering guidance should provide greater flexibility to newly chartered corporates, CUNA Deputy General Counsel Mary Dunn said in the letter. The letter was developed under the guidance of CUNA's Corporate Credit Union Next Steps Working Group chaired by Terry West, President and CEO of VyStar Credit Union. In the comment letter to the NCUA, CUNA added that the Federal Credit Union Act currently allows natural person credit unions to have up to 10 years to become adequately capitalized. “While this timeframe may not be appropriate for a new corporate, we do think reasonable latitude should be afforded new corporate credit unions, as long as they are following a plan to build capital that is approved by the Board,” CUNA said. CUNA also urged the NCUA “to clarify how a new corporate would be able to meet the specific requirement to maintain capital of at least four percent of its moving daily average net assets under the new corporate rule, ‘beginning on the date the Board issues the charter.’” The NCUA should also clarify portions of the proposal that would require organizations submitting corporate credit union charter applications to be comprised of “[s]even or more natural person representatives of natural person credit unions,” CUNA added. According to CUNA,” it is unclear whether each natural person subscriber must represent a different natural person credit union.” The NCUA should also allow some latitude on a case-by-case basis, CUNA added. CUNA proposed that the seven representatives could potentially “represent fewer than seven natural person credit unions such as five, as long as the member support requirements are met.” For the full comment letter, use the resource link.

Maine reps urge interchange caution

 Permanent link
WASHINGTON (11/3/10)--Reps. Mike Michaud and Chellie Pingree, both Democrats representing Maine, urged Federal Reserve (Fed) Chairman Ben Bernanke to “recognize” the protections for credit unions that were built into the Dodd-Frank Act as the Fed works to implement new interchange regulations. The interchange provisions require the Fed to set interchange fees paid by merchants. “While the law is clear that small issuers with $10 billion in assets or below are exempt from the debit interchange transaction regulations, they are not exempt from the impact that regulations on institutions above $10 billion in assets will have on small issuers,” the representatives said in a joint letter to Bernanke. The legislators also encouraged the Fed to ensure that merchants would not be given the ability to refuse transactions from consumers holding cards from specific card issuers. The letter also referenced a Credit Union National Association study which found that up to 67% of credit unions “would lose money on their debit card programs” if the interchange regulations reduced interchange-related revenues by 40%. The legislators said that it is “imperative” that the government’s interchange actions “do not inadvertently hurt the institutions that did not contribute to the financial crisis.”

Inside Washington (11/02/2010)

 Permanent link
* WASHINGTON (11/3/10)--The Financial Stability Board issued a 26-page report containing more than 20 recommendations aimed at strengthening oversight of systematically important financial institutions. The report noted that before the financial crisis some supervisors failed to provide an appropriate balance between risk assessment and capital requirements. The board’s proposed changes seek to make systematically important institutions less vulnerable to potential failure (American Banker Nov. 2). Recommendations include expanding supervisory powers as well as enhancing horizontal reviews and stress tests. Improved macroprudential surveillance was also recommended to identify trends and developments likely to harm institutions’ risk profiles. The Financial Stability Board called on the Basel Committee on Banking Supervision to use peer review to examine stress-testing practices in its 2009 paper and create a stronger tool for identifying future risks …

CUNA seeks comment on mort. appraiser independence

 Permanent link
WASHINGTON (11/3/10)--The Credit Union National Association (CUNA) has asked credit unions to comment on an interim final rule that is intended to ensure that real estate appraisers use independent judgment when preparing property valuations. The rule, which is required under the Dodd-Frank Act, will also seek to ensure that appraisers receive customary and reasonable payments for their services, and will prohibit appraiser coercion. The rule will also prevent appraisers that were hired by lenders from having financial or other interests in the properties or credit transactions, and will prohibit appraisers from materially misrepresenting the value of a consumer’s home. Creditors would also be forbidden from extending credit based on appraisals if the creditor knows beforehand of any violations involving appraiser coercion or conflicts of interest, unless the creditors determine that the property values are not materially misstated. In addition, if creditors are aware of violations by appraisers of applicable laws and rules, they would be required to report these to the appropriate state licensing agencies. This rule will replace the Home Valuation Code of Conduct that was rescinded by the Dodd-Frank Act. In a comment call, CUNA asks a number of questions regarding the interpretation of "customary and reasonable" compensation. CUNA also asked if the Fed should change the rule's safe harbors that differ based on whether the creditor is above or below a $250 million threshold. For the full comment call, use the resource link.

NCUA liquidates 17th CU of 2010

 Permanent link
ALEXANDRIA, Va. (11/02/10)--Spokane, Wash.’s The Union CU (TUCU) was officially liquidated by the National Credit Union Administration (NCUA) late last week. The $12 million asset credit union was the 17th federally backed credit union to be liquidated this year. TUCU served 3,115 members at the time of its closure. The NCUA was appointed liquidating agent by the Washington Department of Financial Institutions (DFI) last week after the state agency closed TUCU. The NCUA then entered into a pair of agreements that shifted some of TUCU’s assets and liabilities to Alaska USA FCU and Spokane, Wash.-based Numerica CU. In a joint letter to ex-members of TUCU, the CEOs of Alaska USA and Numerica said that “all share savings, certificates and checking accounts, as well as share/certificate secured loans, credit line loans with established overdraft protection agreements, and business credit cards were transferred to Numerica.” “All other loans, including personal credit card accounts, were transferred to Alaska USA,” the letter added. Numerica holds $1 billion in assets from 84,000 members. Alaska USA holds $4.1 billion in assets from 399,000 members. For the full NCUA release, use the resource link.

CDFI opens 2011 NACA funds for native communities

 Permanent link
WASHINGTON (11/2/10)--The 2011 round of the U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund’s Native American CDFI Assistance (NACA) Program officially began last week, the CDFI Fund said in a release. The NACA program, which is designed to encourage the creation and strengthening of certified CDFIs that primarily serve Native American, Alaskan Native and Native Hawaiian communities, will make $10 million in funds available to eligible CDFIs. The NACA funds may be used to finance capital or may be provided to financial institutions in the form of technical assistance grants. The CDFI Fund has provided a total of $46.8 million in funds since 2004. CDFI Fund Director Donna Gambrell said that the NACA Program “plays a critical role in our commitment to support Native communities and the efforts by the CDFI Fund will ensure that the number and the capacity of Native CDFIs will continue to increase nationwide." The CDFI Fund will explain the program and how to apply during a live NACA workshop in Denver, Colo., on Nov. 9. The application process also is covered during a pre-recorded webinar, which can be viewed at any time. Credit unions that wish to apply for NACA certification must do so by Dec. 2. The funding application deadline is Dec. 22. For more information, use the resource link.

Studies stats on NCUA indirect lending webinar agenda

 Permanent link
ALEXANDRIA, Va. (11/02/10)--The National Credit Union Administration (NCUA) has announced that the agenda for its Nov. 9 indirect lending webinar will include discussions of indirect lending red flags, best practices, guidance, case studies, and statistics. Q&A sessions also will take place during the webinar. The free webinar will begin at 2:00 p.m. ET and will “provide guidance, best practices and insights into indirect lending examination issues,” the NCUA said. NCUA Board Member Gigi Hyland will moderate the webinar, which will include input from NCUA Office of Examination & Insurance Director of Supervision Timothy Segerson, Office of Examination & Insurance officer Marcus Vander Wall, and Region V lending specialist Victoria Bennett. Risks associated with indirect lending include material shifts in balance sheet composition and increased credit risks, liquidity risks, transaction risks, compliance risks, and reputation risks, the letter said. In Letter to CUs 10-CU-15, which was released earlier this year, the NCUA warned that an "improperly planned or loosely managed indirect lending program can lead to unintended changes in the risk profile and financial performance" of credit unions. The agency in that letter recommended that credit unions mitigate these risks by properly establishing the goals and portfolio limitations for indirect lending programs, creating and following specific underwriting standards and vendor policies, and maintaining a "comprehensive, effective, and ongoing due diligence program." For the NCUA release, use the resource link.