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NCUA bans two from CU work (11/30/2012)

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ALEXANDRIA, Va. (12/3/12)--Joyce Judy, a former credit union president who allegedly invested $500,000 of a member's money in a racetrack that turned out to be an international scam, is one of two individuals now prohibited from participating in the affairs of any federally insured financial institution.

The National Credit Union Administration issued prohibition orders against Judy and Kimberly Unger on Friday.

Judy late last year was sentenced to 26 months in prison for one count of fraud. She has also been sentenced to three years of supervised release and has been ordered to repay $500,000 in restitution.

Judy was president of Little Rock, Ark.-based Arkansas Employees FCU when the investment incident occurred in late 2009. She allegedly persuaded a member to invest in what she thought was a certificate of deposit, said prosecutors. Judy pooled the funds with $500,000 of her own funds. A business partner wired the money overseas without her permission, and the funds disappeared.

Unger consented to her prohibition order to avoid the time, cost and expense of litigation. She is a former employee of Spencerport FCU, Spencerport, N.Y.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. For the full NCUA release, use the resource link.

Privacy notice bill would help consumers CUs CUNA

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WASHINGTON (12/3/12)--Legislation providing an exception for costly annual privacy policy notification requirements if the policy has not changed since it was last disseminated is favored by credit unions, Credit Union National Association (CUNA) President/CEO Bill Cheney wrote in a letter to Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.).

The bill, the Eliminate Privacy Notice Confusion Act (H.R. 5817), could receive a U.S. House vote today.

In the letter, Cheney notes that H.R. 5817 would eliminate a costly and unnecessary compliance burden for credit unions. "The bill eliminates repetitive notices that are often ignored by consumers, and enhances consumer protection by ensuring that when a consumer receives a privacy notification, it has significance and is not redundant. The legislation also reduces future compliance burden for credit unions and other financial institutions," Cheney wrote.

Separately, Cheney noted that CUNA's support for H.R. 5817 is in keeping with the association's persistent efforts to reduce the regulatory burden on credit unions.

Other initiatives include support for:
  • An ATM disclosure bill that passed the House earlier this year;
  • An examination fairness bill on which CUNA testified in February; and
  • Other legislation making reforms to the Consumer Financial Protection Bureau.
For the full letter, use the resource link.

MBL increase is common sense iHuffPoi column says

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WASHINGTON (12/3/12)--Increasing the credit union member business lending (MBL) cap is "simply common sense," John Arensmeyer, CEO of The Small Business Majority, and Erica Schroder, operations director at R Street Institute, said in a joint Huffington Post column published late last week.

The co-authors noted that while their organizations are often on opposite sides of the ideological spectrum, they both believe that the U.S. Congress must act to free up more small business credit. "In particular, we think lawmakers should approve a regulatory relief effort that would allow credit unions to lend more money to small business," they said.

The column cited a Small Business Majority survey, which found that more than 60% of small business owners are having issues accessing the credit they need. "Congress has made an effort to change this situation, such as creating a 'small business lending fund,' but the numbers demonstrate it's just not enough. A pragmatic solution to this problem is to change outdated regulations that limit credit unions--democratically governed, nonprofit financial cooperatives--from meeting consumer needs," the columnists wrote.

"Getting more credit to small business owners can get them, and the national economy, on track to a full and sustained recovery. There's no reason for Congress to delay action. Credit unions must be allowed to make more loans to small businesses," the column added.

Bills that would increase the credit union MBL cap to 27.5% of assets, up from the current 12.25% cap, have been introduced in the U.S. House (H.R. 1418) and Senate (S.2231).

The Senate MBL legislation could be considered any day during the lame duck session. The Credit Union National Association (CUNA) has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

For the full Huffington Post column, use the resource link.

Inside Washington (11/30/2012)

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  • WASHINGTON (12/3/12)--Martin J. Gruenberg and Thomas M. Hoenig were officially designated last week by President Barack Obama as the chairman and vice chairman of the Federal Deposit Insurance Corp. (FDIC).  On Nov. 15, the U.S. Senate confirmed both men for their respective positions. The president recently signed the orders making the confirmations official. Both were confirmed by the Senate for six-year terms as members of the FDIC board of directors on March 29, 2012 ...
  • WASHINGTON (12/3/12)--Officials of two key regulatory agencies told lawmakers they would take into account bank input on regulatory burdens as they finalize rules on capital and liquidity mandated by Basel III (American Banker Nov. 30). George French, deputy director of risk management supervision for the Federal Deposit Insurance Corp. told a joint hearing of two House Financial Services subcommittees last week that regulators recognize the close linkage and potential interactions have to be taken into account. Michael Gibson, director of the division of banking supervision and regulation for the Federal Reserve, said that agency is "sensitive" to the comments of community banks and has learned much from those comments. Lawmakers at the hearing said while there need to be improved capital requirements, regulators need to accommodate the unique characteristics of smaller institutions. Rep. Jeb Hensarling (R-Texas), the incoming chairman of the House Financial Services Committee, said it is a very poor case for more complex capital standards that do not recognize the difference between large money center banks and community financial institutions …
  • WASHINGTON (12/3/12)--Banking regulators should delay implementing the Volcker Rule for at least two years because of its complexity, the current and future chairmen of the House Financial Committee wrote in a letter to the heads of five regulatory agencies (American Banker Nov. 30). Given the time that it will take regulators to agree on one version of the Volcker Rule, as well as the tremendous uncertainty that market participants face in trying to anticipate what the final rule will look like, Chairman Spencer Bachus (R-Ala.), who will step down from his post at the end of this Congress, and Rep. Jeb Hensarling (R-Texas), who will succeed him next year, wrote that they respectfully suggest that the Federal Reserve Board delay the Volcker Rule's effective date until two years after the date on which the final rule is promulgated. The lawmakers sent the letter on Thursday to the heads of the Fed, Federal Deposit Insurance Corp., Commodity Futures Trading Commission, Securities and Exchange Commission and the Office of the Comptroller of the Currency.  The rule, which regulators are expected to finalize in early 2013, implements a provision of the Dodd-Frank Act banning proprietary trading by banks and is aimed at banks which hold federally insured deposits from placing depositors' money at risk. It is named for former Federal Reserve Chairman Paul Volcker, who has pushed the proposal. The lawmakers also asked the regulators to issue a cost-benefit analysis of the rule ...

Border Lodge CU closed by NCUA state regs

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ALEXANDRIA, Va. (12/3/12)--Border Lodge CU, Derby Line, Vt., became the 11th federally insured credit union to be liquidated in 2012 when the Vermont Department of Financial Regulation closed the credit union to conserve the assets and protect the interests of credit union members.

The state regulators appointed the National Credit Union Administration (NCUA) as liquidating agent.

State-chartered Border Lodge CU began operations in 1963. The credit union served 1,097 members and held $3.1 million in assets at the time of its closure. The credit union served employees of varied and approved occupational groups who work within Orleans County, Vt., and members of the immediate families of such persons and associations composed primarily of the same people, according to the NCUA.

Member deposits at the credit union are insured up to $250,000 by the National Credit Union Share Insurance Fund.

For the full NCUA release, use the resource link.

CUNA backs plan to allow FCU TIPS investments

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WASHINGTON (12/3/12)--Federal credit unions should be permitted to invest in Treasury Inflation Protected Securities, the Credit Union National Association (CUNA) said in a comment letter to the National Credit Union Administration (NCUA).

Allowing such investments, as proposed by the NCUA, will allow credit unions to protect against inflation and manage interest-rate risk, wrote CUNA Senior Vice President and Deputy General Counsel Mary Dunn. She also urged the agency to work with state regulators to find a way to let well-managed state credit unions invest in these securities.

Currently, investments in TIPS are allowed under a limited basis under a pilot program.

CUNA believes that "a credit union should undertake sufficient analysis before purchasing any TIPS and be able to manage its TIPS investments on an ongoing basis, current requirements regarding due diligence and risk management are sufficient, and no additional requirements in these areas should be imposed on credit unions in connection with TIPS authority,'' she wrote.

The TIPS market has been in existence for 15 years and TIPS are fully guaranteed by the U.S. government. The principal is adjusted based on changes in the Consumer Price Index, while the interest rate, which is paid semiannually on the adjusted principal, remains fixed.

Use the resource link to access CUNA comment letters.

FHFA guarantee fee changes could impact CUs CUNA

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WASHINGTON (12/3/12)--The Federal Housing Finance Agency's (FHFA) plan to adjust the guarantee fees that government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac charge for single-family mortgages will have a discriminatory effect on credit unions and other smaller financial institutions, the Credit Union National Association(CUNA) said in a comment letter.

The planned FHFA adjustments would increase the guarantee fees for single-family mortgages in states where GSE costs related to state foreclosure practices are higher than the national average; these states are Connecticut, Florida, Illinois, New Jersey, and New York.

The FHFA considered three factors as it developed the guarantee fee methodology. Those factors are:

  • The expected number of days it takes a GSE to foreclose on a home in a particular state;
  • The average per-day carrying cost that the GSEs incur in that state; and
  • The expected national average default rate on single-family mortgages acquired by the GSEs.
In the comment letter, CUNA Assistant General Counsel Luke Martone suggested that other factors be considered, such as the number of foreclosures over a set period of time, and how factors beyond the control of lenders or consumers, such as state law provisions on foreclosures or judicial review of foreclosure proceedings, affect the processing of foreclosures.

Overall, the comment letter encouraged the FHFA to work with lenders of all types and sizes, including credit unions, to reform the secondary market and to promote the housing market recovery.

For the full comment letter, use the resource link.

NCUA CU growth accelerated in Q3

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

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

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

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

The NCUA's third quarter data also showed:

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

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

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

For the full NCUA release, use the resource link.

Fed FinCEN seek BSA definition comments

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

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

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

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

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

For more on the ANPRM, use the resource link.

Credit ratings changes fidelity bond insurance on NCUA agenda

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

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

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

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

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

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

For the full NCUA agenda, use the resource link.

Fannie Freddie conforming loan limits unchanged for 2013

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

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

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

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

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

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

Inside Washington (11/29/2012)

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

Fee flexibility would help more avoid payday loans CUNA

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

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

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

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

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

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

CUNA also recommended that the NCUA:

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

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

CFPB reminds credit reporting agencies of legal role

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

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

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

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

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

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

Use the resource link to read more.

Hensarling to lead Fin Services Committee

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WASHINGTON (11/29/12)--Rep. Jeb Hensarling (R-Texas) will serve as House Financial Services Committee chairman when the 113th U.S. Congress convenes next year.

Hensarling was nominated by the House Republican Steering Committee on Tuesday, and that nomination was approved by the House Republican Conference on Wednesday. He will replace outgoing House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), who must move on from the financial services leadership position due to term limits.

In a release, Hensarling thanked Bachus "for his outstanding service on this committee over the last six years," calling the legislator "a tireless proponent of free enterprise and free markets."

The five-term Texas legislator added that he is grateful for the opportunity to lead the financial services committee, and looks forward to working alongside his colleagues "to foster the deepest, most liquid, competitive, efficient, innovative, and transparent capital markets the world has ever known."

Addressing "too big to fail" and regulatory burdens will be two priorities for the committee, Hensarling said.

Small biz stories highlight a day of MBL advocacy

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WASHINGTON (11/29/12)--Dayton, Ohio-area real estate developer Jerry Bush said he might not still be in business today were it not for his credit union.

Click to view larger image Sen. Sherrod Brown (D-Ohio), far right, heard the stories of several Ohio business owners whose businesses have survived the recession and prospered with the help of credit union loans. (CUNA photo)


He was one of 500 small business owners and credit union advocates from across the country that stormed the halls of the U.S. Congress to urge legislators to give credit unions the freedom to grow their member business lending (MBL) portfolios, and help small businesses, during the Credit Union National Association's (CUNA) National Hike the Hill.

Bush, who runs his custom homebuilding business with the help of his two sons, said his operation is one of hundreds in the state that have seen trouble in a down economy. His credit union, RiverValley CU, came through and gave him the loans that allowed him to keep his business running in troubled times. However, Bush noted that some credit unions are prevented from offering loans to businesses in similar straits by the 12.25%-of-assets credit union MBL cap.

Click to view larger image Rep. Lloyd Doggett (D-Texas), center right, speaks with with Daniel La Rocca, owner of Austin trucking company Rigar International, Carol Huntberger of Quality seafood , also of Austin, and Austin-area credit union CEOs. (Texas Credit Union League photo)
In one of many Wednesday meetings between his Ohio Credit Union League-led group and members of Congress, Bush told Sen. Sherrod Brown (D) he would "talk to anybody" to support his credit union. "These guys are the only ones over there helping people like me, and there are thousands of us," Bush said.

Government and Political Affairs John Florian said his group's meeting with Portman was very productive.

Overall, banks are not making the types of loans that credit unions are making, several small business owners and credit union representatives stressed.

Click to view larger image A League of Southeastern Credit Unions-led group discusses MBLs with Rep. Spencer Bachus (R-Ala.). (CUNA Photo)
One such lending situation was covered in a Texas Credit Union League meeting with congressional staff. In that meeting, Harriet May--who is a former president/CEO of El Paso, Texas-based GECU and is currently president emerita of that credit union--said her credit union stepped in when it was needed. She recounted one $20,000 loan that GECU made to a nearby Mexican restaurant.

The owner only needed the small loan to buy chiles for the next year--and could not get such a loan from nearby banks. GECU worked with the restaurant owner to develop a loan arrangement that would work for both parties, and the restaurant owner was able to keep her business going. "That's what credit unions do," May said, adding that these efforts make a difference in the greater community.

Credit union advocates and business owners noted throughout the day that the business loans made by credit unions are not high-risk loans. Further, the business loans credit unions are making are not being taken away from banks… they are loans that banks are, in fact, giving up.

Click to view larger image The Michigan Credit Union League and Affiliates group pauses for a photo in front of the U.S. Capitol. The group was scheduled to meet with 14 legislators and their staff on Wednesday. (Michigan Credit Union League and Affiliates photo)
In a meeting between a League of Southeastern Credit Unions group and outgoing House Financial Services Committee Chairman Spencer Bachus (R-Ala.), Alabama CU COO Kayce Bell said her credit union does not advertise its business lending practices in Tuscaloosa. Borrowers come to her credit union on their own, she said, because they have been rejected by banks.

Senate legislation (S. 2231) that would increase the MBL cap from the current 12.25%-of-assets lending limit to 27.5% of assets could be considered any day during the lame duck session. Similar U.S. House legislation, H.R. 1418, has also been introduced, and that bill has 142 cosponsors.

If enacted, the MBL bills would help credit unions inject $13 billion in new funds into the economy. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create over 140,000 new jobs in the first year after enactment.

CUNA President/CEO Bill Cheney this week stressed that how the MBL legislation gets passed does not matter. The point, he said, is making sure it passes. "This is the best chance that we have had in the past ten years to get this bill passed, once and for all," he said.

In support of the credit union, league and small business representatives hiking the Hill, CUNA has been running ads in Capitol Hill publications this week showcasing small business borrowers that credit unions helped when banks wouldn't.

The ad notes the Small Business Lending Enhancement Act is endorsed by the Conference of Mayors and almost 40 organizations committed to small business, and emphasizes that "it's time for Congress to enhance credit union lending to small businesses" by enacting the MBL bill.

NCUA releases additional budget info

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ALEXANDRIA, Va. (11/29/12)--The National Credit Union Administration's (NCUA) Tuesday release of supplemental 2013 budget information "is a positive step that can shed more light on the agency's allocation of resources," Credit Union National Association (CUNA) President/CEO Bill Cheney said.

"Further, the disclosure by the agency that it plans to make available to credit unions more information regarding its budget process is, in our view, movement toward greater transparency and accountability, which CUNA has strongly recommended. While we continue to have overall concerns about the growth of the budget, we are grateful the agency is listening to, and acting on, credit union views in this critical area," he added.

The agency this week made available:

  • A detailed budget narrative explaining changes in each major budget category, accompanied by graphics showing historical budget level trends, dollar and percentage changes from 2012, and a description of essential spending in each category;
  • A detailed pay and benefits narrative, showing expenditures with and without possible congressional approval of a federal employees' pay increase in 2013;
  • A chart illustrating the dollar changes in the 2013 budget components by category;
  • Graphics detailing trends for the past 14 years in the agency's budget relative to federally insured credit union deposits and assets, as well as the dollar value of federally insured credit union assets per NCUA full-time employee; and
  • A table contrasting changes in operating fees for federal credit unions in several asset ranges compared to their net income.
The NCUA said the release of the 2013 budget documents is the first step in making agency budget information more accessible. The agency plans to consolidate more 2013 budget information on its homepage, NCUA.gov, in the first quarter of next year.

For the NCUA budget information, use the resource link.

Inside Washington (11/28/2012)

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  • WASHINGTON (11/29/12)--Rep. Shelley Moore Capito (R-W.Va.), who chairs the House Financial Services subcommittee that oversees credit unions and other financial institutions, is running for the U.S. Senate.  Capito told the Associated Press that her state is experiencing changing leadership resulting in what she called a greater political balance between parties.  She said West Virginia needs a new and diverse voice in the U.S. Senate.  Capito is seeking the seat that has been held since 1985 by Democratic Sen. John D. Rockefeller.  The Credit Union National Association, through its Credit Union Legislative Action Council, backed Capito in this year's reelection campaign …
  • WASHINGTON (11/29/12)--The Federal Reserve isn't disclosing enough consumer information about credit cards, according to a report by CardHub.com. (American Banker Nov. 28)  A report by the website, which provides comparative information on credit cards for consumers, said the Fed's guidelines didn't require disclosure of what factors can cause rate increases on existing balances and in new transactions. The report said the rules will confuse consumers about what part of their card balances will be impacted by a rise in the annual percentage rate. It also noted that the Fed had told card issuers not to tell consumers when they are obliged to reverse a penalty APR.  The Federal Reserve has since ceded authority on credit card disclosure regulations to the Consumer Financial Protection Bureau. Then CFPB issued its own disclosure form last December, which the report praised
  • WASHINGTON (11/29/12)--An overwhelming majority of consumers don't obtain multiple offers nor do they do any other kinds of comparison shopping when buying their house, according to a report issued Tuesday by mortgage buyer Fannie Mae. (American Banker Nov. 28) A Fannie Mae survey found that 70% of consumers rely on the reputation of a financial institution when picking a lender and 58% of homebuyers didn't use any tool to figure out how much they will spend to purchase a new residence. Respondents said pre-existing relationships with the financial institution and referrals were more important than the recommendations of mortgage brokers or real estate agents.  According to the survey, 14% of lower-income respondents and 4% of higher-income consumers said advertising influenced them when deciding what lender they should use.  The data came from a survey of 3,003 consumers from April to June …
  • WASHINGTON (11/29/12)--In remarks to address the Exchequer Club here on Wednesday, the acting director of the Federal Housing Finance, Edward DeMarco, identified what he said were the  2012 accomplishments or his agency and also gave his perspective on the future of housing finance. Among his points, DeMarco noted that the government touches more than 9 out of every 10 mortgages. "With this in mind, it is essential that we transition the mortgage market to a more secure and sustainable and competitive model," he said. "FHFA is taking a number of steps – whether it is increasing guarantee fees or pursuing risk sharing alternatives – that have the potential to transfer some credit risk to the private sector. We will continue to try to make progress in this area, but if policymakers are serious about limiting the government's role, more direct action may be needed to have significant near-term effects. And, elected officials must give direction on how to end the conservatorships," he said …

CUs small biz reps rally on Capitol Hill for MBL vote

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WASHINGTON (11/28/12)--Kicking off the Credit Union National Association's (CUNA) National Hike the Hill Tuesday, Sen. Mark Udall (D-Colo.) thanked credit union and small business supporters for coming to Washington, D.C. to urge lawmakers to vote for legislation to increase the credit union member business lending (MBL) limit.

Click for slide showCUNA President/CEO Bill Cheney launches the Nov. 27-28 National Hike the Hill event during which more than 500 credit union and small business representatives will blanket Capitol Hill to urge legislators to approve U.S. House and Senate bills that would increase the credit union member business lending (MBL) cap. CUNA Senior Vice President of Legislative Affairs Ryan Donovan listens to Cheney's left. (CUNA Photo)
Udall, lead sponsor of the Senate's MBL bill, said he appreciated the work being done to back his efforts to move forward his bicameral, bipartisan legislation that will "continue to help our economy grow and create jobs."

"Let's get this bill done!," Udall exclaimed.

Five hundred credit union and small business representatives, from nearly every state in the union, will work to do just that as they push for greater credit union member business lending authority in meetings with their respective legislators today.

Head U.S. House MBL cosponsor Ed Royce (R-Calif.) urged the credit union and small business advocates to remind members of Congress during their visits that "getting America back to work is not a credit union versus bank issue, it is not a Republican versus Democrat issue. It is an opportunity we have right now to get credit in the hands of small business and create 140,000 jobs out there, and do it without borrowing money from overseas.

"Thanks to you, we are closer than we have ever been. We'll all work together to see this thing through," Royce added.

In other brief remarks, credit union champion Rep. Brad Sherman (D-Calif.) said there is "nothing more important" than lending to small businesses that are in need of capital. Rep. Paul Tonko (D-N.Y.) praised credit unions for their excellent track record. "You invest in communities. You make things happen," Tonko said.

Rep. Suzanne Bonamici (D-Ore.), who's first act as a member of congress was signing on to support the House MBL legislation, called the bill "a great way to help small businesses," and Rep. John Larson (D-Conn.) said credit unions, in working for the MBL cap increase, are "pressing the concerns of everyday people in America."

Rep. Steve Stivers (R-Ohio), called the credit union MBL cap increase "a private sector solution that will create jobs," and Rep. Gerald Connolly (D-Va.) noted that when banks weren't willing to lend, credit unions were.

House Financial Services Committee Chairman Spencer Bachus (R-Ala.), Rep. Earl Blumenauer (D-Ore.) and Rep. Tom Reed (R-N.Y.) were also among the lawmakers that attended the launch of the Hike the Hill event meant to increase support for U.S. House and Senate bills that would increase the MBL cap from the current 12.25%-of-assets lending limit to 27.5% of assets.

Senate MBL legislation (S. 2231) could be considered any day during the lame duck session, and CUNA President/CEO Bill Cheney said the vote could come in any number of formats: as a stand-alone bill, as part of a package with other legislation--or as part of a larger, must-pass piece of legislation.

Cheney stressed that how the MBL legislation gets passed does not matter. The point, he said, is making sure it passes.

"This is the best chance that we have had in the past ten years to get this bill passed, once and for all. We've won the policy argument, we've shown our commitment, we've built a strong coalition between credit unions and small businesses. Only the banks oppose us--and we know why. Let's get past the banks and their tired arguments. Let's move forward with our conviction that we can and will win on this bill--for our members, for our communities--and for country. It's the right thing to do," he said.

If enacted, the MBL bills would help credit unions inject $13 billion in new funds into the economy. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create over 140,000 new jobs in the first year after enactment.

The National Hike the Hill caps a strong year of support for the pro-business MBL cap increase legislation, which began with hill hikes before and during the 2012 CUNA Governmental Affairs Conference and continued in Washington and home districts throughout the year.

Small business owners from across the country also joined CUNA and credit unions for a spring Capitol Hill small business hike. Business owners and advocates later joined CUNA and credit unions to talk MBLs with members of Congress and their staff members at a September Capitol Hill event, and CUNA staff also held hundreds of meetings with congressional staff during the recently completed lame duck session.

Inside Washington (11/27/2012)

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  • NEW YORK (11/28/12)--Zurich-based UBS AG asked the U.S. Court of Appeals in Manhattan Monday to overturn a ruling that allows the Federal Housing Finance Agency (FHFA) to continue its suit against UBS and a dozen other banks over $6.4 million in losses from mortgage bonds sold to Fannie Mae and Freddie Mac. UBS argued that FHFA, which regulates the two mortgage-finance companies, failed to file the case within the three-year time period allowed under the statute of repose (Bloomberg Businessweek.com and American Banker Nov. 26). The suit centers on whether the 2008 law that created FHFA also extended the time it can file the claims. UBS maintains the agency sat on its claim. The FHFA maintains that if it is subject to time barriers, it would be severely constrained in recovering money for Fannie and Freddie and ultimately taxpayers would pay. The UBS action is one of 16 against mortgage underwriters that are pending before the U.S. District Court. The appeal focuses on distinctions between statutes of limitation and statutes of repose, legislative intent and more. The court's ruling has the potential to determine whether any of FHFA's cases can proceed, said the Banker
  • WASHINGTON (11/28/12)--A new Internal Revenue Service (IRS) rule that will take effect Jan. 7 is considered by some a boon for mortgage technology. IRS will begin accepting electronic signatures--specifically electronically signed 4506 T and 4506-EZ documents--to verify income. The forms are a part of nearly every mortgage and loan modification and will have a major impact on paper use and time, said the American Banker (Nov. 26). The forms are requests for transcripts of tax returns, which help lenders determine a borrower's ability to repay a loan. The new rule isn't expected to promote development of a new technology, but will allow existing signature technology to be used in income verification process. Several companies already are vying for lenders' attention as electronic signature providers …

NCUA could do more to help rural CUs CUNA

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WASHINGTON (11/28/12)--The National Credit Union Administration's (NCUA) move to expand the definition of "rural district" for fields of membership is a positive step, but could go even further, the Credit Union National Association (CUNA) said in a comment letter.

The NCUA in late September approved a proposal that would provide more flexibility to federal credit unions serving rural areas by expanding the rural district definition to geographic areas with 200,000 or fewer inhabitants or less than 3% of a given state's population. In a comment letter released this week, CUNA Deputy General Counsel Mary Dunn said the NCUA proposal does not go far enough to provide meaningful relief to those credit unions that provide services to rural communities.

CUNA analysis has found that states such as Wyoming, South Dakota, North Dakota, Montana, Alaska, Maine, West Virginia, Idaho, Utah and Nevada will not see additional relief under the recent NCUA proposal because rural districts in those states constitute a higher percentage of the state's total population. The NCUA has indicated that only 13 states will be able to obtain more flexibility for rural districts if its proposed definition change is approved. Those states include the most populous in the nation, such as California, New York, Illinois, Florida, Ohio, and Pennsylvania. Moreover, the larger the state, the greater the relief would be afforded under the current proposal, CUNA added.

"While credit unions in the 13 states affected by NCUA's proposal deserve relief, credit unions in other states do as well," CUNA said.

Dunn said the agency has the legal authority to expand the definition of "rural district" beyond what it has proposed. She urged the NCUA to allow as much authority as legally permissible to federal credit unions to facilitate their presence in these areas of the country that are often are in serious need of financial institution services.

The CUNA comment letter suggested the NCUA allow credit unions that serve rural areas to determine for themselves the size of their fields of membership, governed by the credit union's resources to serve the area sufficiently and its ability to manage safety and soundness concerns.

CUNA urged the NCUA to consider this approach and to further analyze how the "rural district" definition could be further modified to ensure credit union service continues in rural areas of the country. In the meantime, CUNA suggested the NCUA could grant rural credit unions greater flexibility by amending its proposal to allow credit unions to serve districts with populations of up to 500,000 or 4% of the state's population, whichever is greater.

For the full CUNA comment letter, use the resource link.

CFPB responds to CU CUNA concerns on remittances rule

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WASHINGTON (11/28/12)--The Consumer Financial Protection Bureau has announced its intentions to make some changes to its recent final rule on international money transfers--also known as remittances.

The list of expected changes reflects recommendations that the Credit Union National Association (CUNA) had made  during almost a dozen meetings with the bureau.

While the agency characterizes these changes as "limited," it is proposing amendments to the final rule that address issues CUNA's Remittances Working Group raised with CFPB Director Cordray on Oct. 18 and in subsequent meetings and during calls.

One will address what should happen if a consumer provides an incorrect account number for a transfer and how remittance providers must disclose certain third-party fees and foreign taxes.

The two other changes will address:

* The disclosure of certain foreign taxes and third-party fees; and

* The disclosure of sub-national, foreign taxes.

The CUNA recommendation not addressed is increasing the current 100 transfers per year exemption. CUNA has been urging that the CFPB significantly increase the exemption level so that many credit unions will not stop providing these services to their members because of the regulatory burdens.

While CUNA will continue working on the exemption issue, CUNA President/CEO Bill Cheney said this new proposal is a welcome development and one that CUNA plans to maximize in order to achieve meaningful relief for credit unions offering remittances services.

CUNA will be preparing a Comment Call on the proposal and coordinating its advocacy efforts with credit union leagues and key CUNA Committee and Council members.

The agency said Tuesday that it expects to extend the effective date of the remittance rule until 90 days after the adjustments are made final.

"We recognize that remittance providers may need time to make sure they're in compliance with the rule. We're expecting the new implementation date to be during spring 2013, and will keep you updated," the CFPB said.

Use the resource link to read the CFPB bulletin.

Progressive Policy Institute blasts Hill with MBL support

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WASHINGTON (11/28/12)--The Progressive Policy Institute (PPI), a Washington, D.C.-based think tank, is "blasting" Capitol Hill with a blog post that underscores PPI's position that increased member business lending authority for credit unions would "unleash billions to the smallest small businesses (50 employees or less) and allow new growth and hiring opportunities with no taxpayer assistance."

The PPI blog post notes that the recent three big-retail designated shopping days--"Black Friday," "Small Business Saturday," and "Cyber Monday"--all saw an increase in sales, which the blogger Jason Gold called "a good sign of consumer optimism heading into December."

That's good, Gold wrote, but added, "(A) big part of successfully growing their business is to have adequate access to financing. But 'tight credit' and 'small business' have been tied together by politicians and pundits as headwinds to economic recovery."

Gold drives his blog readers on Capitol Hill and elsewhere to a 2012 study by Brian Martin, "The Credit Gap: Easing the Squeeze on the Smallest Business." PPI said it was spotlighting Martin's paper to urge the U.S. Congress to pass bi-partisan legislation in the House (H.R. 1418) and Senate (S. 2231) that would raise the MBL cap to 27.5% of assets for well-capitalized and experienced credit unions.  The cap now sits at 12.25%.

The legislation could, PPI noted, provide up to $13 billion to small businesses in the first year after enactment alone and thereby create more than 140,000 new jobs at no cost to taxpayers.

See related News Now story: CUs, small biz reps rally on Capitol Hill for MBL vote.

NEW CFPB remittance rule to be delayed tweaked

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WASHINGTON (11/27/12 UPDATED 2 p.m. ET)--The Consumer Financial Protection Bureau has announced its intentions to make "certain limited adjustments" to its recent final rule on international money transfers--also known as remittances.

The list of expected changes reflects all but one adjustment that the Credit Union National Association (CUNA) had recommended during almost a dozen meetings with the bureau. 

In addition to the delay, there are three areas of proposed changes to the final rule. One will address what should happen if a consumer provides an incorrect account number for a transfer and how remittance providers must disclose certain third-party fees and foreign taxes.

The two other changes will address:

* The disclosure of certain foreign taxes and third-party fees; and

* The disclosure of sub-national, foreign taxes.

The CUNA recommendation not addressed is that of a safe harbor exemption. CUNA recommended that the CFPB provide a safe harbor from the final rule to exempt certain credit unions and other entities from the definition of a remittance transfer provider that provide  remittance transfers in the ordinary course of business if the entity provides a number of transfers below a safe harbor threshold.

The agency said Tuesday that it expects to extend the effective date of the remittance rule until 90 days after the adjustments are made final.

"We recognize that remittance providers may need time to make sure they're in compliance with the rule. We're expecting the new implementation date to be during spring 2013, and will keep you updated," the CFPB said.

Use the resource link to read the CFPB bulletin.

Periodic reviews of NCUA LICU policy beneficial CUNA

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WASHINGTON (11/27/12)--The National Credit Union Administration (NCUA) should revisit its Low Income Credit Union (LICU) designation process in 12 months' time and hold periodic reviews of its LICU policy thereafter, the Credit Union National Association (CUNA) recommended in a recent comment letter.

Overall, CUNA Deputy General Counsel Mary Dunn wrote that CUNA strongly supports the agency's proposal to extend the amount of time credit unions have to accept LICU designations to 90 days.

"There are many benefits associated with the low-income credit union designation, and CUNA wants to ensure all eligible credit unions that want to have the designation will be able to receive it," Dunn said.

At last month's open board meeting, the NCUA extended the LICU designation approval deadline by 60 days, saying the original 30-day response period was creating an obstacle for some credit unions to accepting the designation. NCUA Chairman Debbie Matz in an October release said credit unions should have sufficient time to properly assess whether to accept their offered LICU designations, and to complete their own internal approval processes, and the CUNA comment letter agreed with this agency assessment.

The LICU deadline extension proposal would also make minor technical amendments to NCUA's insurance regulation. The changes would allow the NCUA's Office of Consumer Protection, not regional directors, to designate federal credit unions as LICUs. (See related Oct. 19 News Now item: LICU-designation response time extended)

In the comment letter, Dunn said CUNA agrees with the NCUA's intention to notify federal credit unions of their low-income eligibility on a periodic basis. There should be additional opportunities to accept LICU designations in the future if a given federal credit union "does not or is not able to respond to a particular NCUA notification," Dunn said.

"In addition, NCUA should further clarify the process for the designation of low income credit unions that are state chartered, and work with state regulators to ensure the process works as well for state-chartered credit unions as it does for federally chartered credit unions," the letter added.

For the full CUNA comment letter, use the resource link.

Thrivent FCU OKd to acquire banks assetsliabilities

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ALEXANDRIA, Va. (11/27/12)--Thrivent FCU was announced as the fourth newly chartered credit union of 2012 on Monday, and is the second bank-to-credit union charter conversion in U.S. history.

The National Credit Union Administration (NCUA) in a release said the new credit union on Dec. 1 will take on $500 million in assets, and certain liabilities, formerly held by Thrivent Financial Bank. The acquisition is the result of a bank-to-credit union conversion approved by the NCUA, the Federal Deposit Insurance Corporation, the Federal Reserve and the Office of the Comptroller of the Currency.

Thrivent Financial Bank is a subsidiary of Thrivent Financial for Lutherans, the fourth largest privately held company in Minnesota.

Thrivent in a separate release said all loan and deposit customer accounts held at the bank, including individual retirement accounts not serviced by Thrivent Financial Bank's Trust & Investment Services business, will be transferred to the new credit union. Existing trust accounts, investment management accounts and those individual retirement accounts currently serviced by Thrivent Financial Bank's Trust & Investment Services business will continue to be serviced and supported at Thrivent Financial Bank, under a new name, "Thrivent Trust Company," the release added.

The new credit union will become the largest faith-based credit union in the United States. Thrivent FCU will take on 47,000 clients from the bank, and has a potential membership of 2.5 million members nationwide, according to the agency. It will serve members from two branches located in Minneapolis, Minn. and Appleton, Wisc. Online services and a call center will also be made available to members.

NCUA Chairman Debbie Matz in a release said "it is indeed noteworthy that the Thrivent management team recognizes the many benefits of the federal credit union charter." Matz said the new credit union "is well-positioned to achieve success," and congratulated "everyone who worked to make this conversion possible."

For the full NCUA release, use the resource link.

Credit unions are not strangers to Thrivent Financial for Lutherans, which was the result of a merger in 2001-2002 of the Aid Association for Lutherans and Lutheran Brotherhood. The two organizations had a trust bank, three credit unions and a community bank in the Twin Cities. At that time it picked the thrift charter, which provided flexibility to continue to offer all the products and services of all the banks and credit unions.

Todd Sipe, who will serve as president of the new credit union, said on Monday that Thrivent FCU "is a logical fit with Thrivent Financial for Lutherans' history of aligning faith and finances." The credit union "will be able to offer a unique combination of financial expertise, competitive products and educational services, and shared values with our members. Our purpose will be to strengthen communities by helping members be wise with money so they can support the people and causes they care about," Sipe added.

Sipe earlier this year said the bank researched the needs and preferences of its members and decided the credit union model was the best model. Members preferred to become a member-owned not-for-profit organization where profits are returned in the form of better rates and fees, he said. "The credit union model is a great model in today's environment… clearly credit unions do enjoy a trusted relationship, so it reinforces the relationship we already have with our clients," Sipe added.

CUNA gathers 500 CUs small biz reps to press for MBL passage

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WASHINGTON (11/27/12)--More than 500 credit union and small business supporters, representing nearly every state, will blanket Washington, D.C. today and Wednesday to urge legislators to approve U.S. House and Senate bills that would increase the credit union member business lending (MBL) cap as part of a Credit Union National Association (CUNA)-organized National Hike the Hill.

Sen. Mark Udall (D-Colo.), lead sponsor of Senate MBL legislation, is scheduled to welcome the credit union and small business groups to Washington at a Hike the Hill reception this evening. Sen. Sheldon Whitehouse (D-R.I.), Rep. Brad Sherman (D-Calif.), Rep. Steve Stivers (R-Ohio), Rep. Renee Elmers (R-N.C.), Suzanne Bonamici (D-Ore.) and other legislators are also expected to attend the reception.

The MBL advocates will meet with their respective members of Congress on Wednesday. The focus of these visits will be bills that would increase credit unions' current 12.25%-of-assets MBL cap to 27.5% of assets, S. 2231 and H.R. 1418. Both of those bills, if enacted, would help credit unions lend an additional $13 billion to small businesses. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create over 140,000 new jobs in the first year after enactment.

"Unlike banks, credit unions do not need taxpayer assistance to encourage them to do more business lending; credit unions only need authority from Congress," CUNA President/CEO Bill Cheney said on Monday.

A vote on MBL legislation is expected to be held before Congress adjourns for the year. The target adjournment date for this session of congress is Dec. 21.

S. 2231 has 21 cosponsors and H.R. 1418  has 143 cosponsors.

Support for both MBL bills has been strong, and this week's Hike the Hill is the third time that CUNA and small business advocates have joined forces to fight for an MBL cap increase. Small business advocates and owners most recently joined CUNA and credit unions to talk MBLs with members of Congress and their staff members at a September Capitol Hill event.

Cheney last month called on credit unions to ratchet up their MBL efforts to an even higher level. The CUNA CEO in recent weeks has encouraged leagues, credit union and small business partners to make as many congressional contacts as possible, whether they take on the form of in-person meetings, phone calls or emails. "We can do this. The time is now. Speak out. Let Congress know that credit unions are ready, willing and able to give small business, and our economy, the boost it needs," Cheney said.

For more on how best to contact your elected representatives and urge them to support MBL bills, use the resource link.

Inside Washington (11/26/2012)

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  • WASHINGTON (11/27/12)--U.S. Securities and Exchange Commission (SEC) Chairman Mary Schapiro will end her nearly four-year tenure at the top of the commission on Dec. 14, the agency said on Monday. SEC Commissioner Elisse Walter will take Shapiro's place, the White House announced. The New York Times reported that Walter may not serve her full term, adding that U.S. Treasury official Mary Miller and former Citigroup and Bank of America executive Sallie Krawcheck may be considered for the top SEC post …
  • WASHINGTON (11/27/12)--The Department of Justice (DOJ) last week claimed Texas' $285 million-asset State National Bank of Big Spring and assorted allies lacked the standing needed to challenge the legality of the Consumer Financial Protection Bureau (CFPB). (American Banker Nov. 21) Oklahoma, South Carolina and Michigan state attorneys general in September joined the bank's lawsuit, which claims that CFPB Director Richard Cordray was illegally appointed to lead that agency, and states that the CFPB itself is unconstitutional. The lawsuit also named the U.S. Treasury and other agencies and directors as defendants, arguing that elements of Dodd-Frank that give federal authorities the ability to seize and wind-down financial institutions are unconstitutional. The DOJ has noted that the bank must establish that it has been harmed for its legal challenge to have standing. While the bank has said pending regulations would harm its business prospects, the DOJ noted that none of these regulatory actions have actually occurred, and the bank's fear of future actions is not enough to support a court case …
  • WASHINGTON (11/27/12)--While the Senate Banking Committee has not released a formal agenda for next year's session of the U.S. Congress, committee spokesman Sean Oblack said Dodd-Frank oversight, mortgage finance reform, expiring authorizations and consideration of key Presidential nominees will likely be on the docket. (American Banker Nov. 25) However, Oblack noted, an official agenda will have to wait until committee Chairman Tim Johnson (D-S.D.) has had time to consult with new committee members and the committee's new ranking member. Congressional observers said legislators may feel more able to address issues within Dodd-Frank following the election. Republicans may also be more apt to focus on how the Dodd-Frank can be fixed, rather than aiming for a full repeal of the bill …
  • WASHINGTON (11/27/12)--The Mortgage Forgiveness Debt Relief Act, which exempts borrowers from paying taxes on short sales, principal reductions and other forms of debt forgiveness, will expire at the end of 2012 if the U.S. Congress does not act soon. (American Banker Nov. 21) Housing advocates have warned that the Act is a crucial part of housing market recovery efforts. Several bills that would extend the tax provisions have been introduced, but none have been passed. However, legislation that would extend the Act could be added to provisions meant to address the looming fiscal cliff. If the Act wins short-term extension, observers said it may not last much longer than that. They noted that improving housing markets, and increasing distance from the recent economic crisis, would make the tools offered by the Act harder to support in the long-term …

Senate MBL vote postponed this week

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WASHINGTON (11/27/12)--Reflecting the fast and furious pace of change in the current, month-long, lame duck congressional session, U.S. Senate leadership announced its schedule for the week and now is expected to take up Budget Act points of order and a plan to move forward on the Defense Authorization bill.

Absent from this week's Senate line up is a vote on S. 2231, a bill to increase credit union member business lending (MBL) authority. As late as this morning, MBL bill supporters were told to anticipate a vote this week--perhaps as soon as Wednesday.

However, after consultation with several Senate offices, the Credit Union National Association (CUNA) now does not expect a vote on S. 2231 this week. However, a vote is considered likely during the lame duck session, which is currently targeted to end Dec. 21.

S. 2231 would increase the MBL cap to 27.5% of a well-capitalized, experienced credit union's assets, up from the current 12.25% limit. H.R. 1418 is the House version of that legislation.

"The situation is and will remain fluid until a vote is cast," said CUNA Senior Vice President of Legislative Affairs Ryan Donovan Monday.

He emphasized that CUNA's grassroots advocacy effort this week, to push for a favorable vote on S. 2231, is very well timed.

More than 500 credit union and small business representatives are expected to be on Capitol Hill Tuesday and Wednesday participating in the CUNA-sponsored "Hike the Hill" to highlight the ways in which the legislation will bolster small businesses and help the economy at no cost to American taxpayers. (See related story: 500 CUs, small biz press for MBL passage this week.)

NEW Senate MBL vote postponed this week

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WASHINGTON (11/26/12 UPDATED 3:45 p.m. ET)--Reflecting the fast and furious pace of change in the current, month-long, lame duck congressional session, U.S. Senate leadership announced its schedule for the week and now is expected to take up Budget Act points of order and a plan to move forward on the Defense Authorization bill.

Absent from this week's Senate line up is a vote on S. 2231, a bill to increase credit union member business lending (MBL) authority. As late as this morning, MBL bill supporters were told to anticipate a vote this week--perhaps as soon as Wednesday.

However, after consultation with several Senate offices, the Credit Union National Association (CUNA) now does not expect a vote on S. 2231 this week.  However, a vote is considered likely during the lame duck session, which is currently targeted to end Dec. 21.

S. 2231 would increase the MBL cap to 27.5% of a well-capitalized, experienced credit union's assets, up from the current 12.25% limit.  H.R. 1418 is the House version of that legislation.

"The situation is and will remain fluid until a vote is cast," said CUNA Senior Vice President of Legislative Affairs Ryan Donovan Monday.

He emphasized that CUNA's grassroots advocacy effort this week, to push for a favorable vote on S. 2231, is very well timed.

More than 500 credit union and small business representatives are expected to be on Capitol Hill Tuesday and Wednesday participating in the CUNA-sponsored "Hike the Hill" to highlight the ways in which the legislation will bolster small businesses and help the economy at no cost to American taxpayers.

Senate vote on MBL bill expected this week

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WASHINGTON (11/26/12 UPDATED 1:00 p.m. ET)--The Credit Union National Association (CUNA) Monday told its membership to expect a vote this week--probably within the next 48 hours--on a Senate bill that would lift the credit union member business lending cap to 27.5% of assets, up from the current 12.25%.

Earlier this year Senate leadership pledged to hold a vote on S. 2231, which was drafted by Sen. Mark Udall (D-Colo.) and has 21 co-sponsors in the Senate. Whether it is as a stand-alone bill or combined in a package of other legislative issues, the MBL cap needs 60 votes to pass the U.S. Senate.

"CUNA has been having high-level meetings in the Senate, as well as in the House, and we are encouraged by those meetings," said CUNA Senior Vice President of Legislative Affairs Ryan Donovan. "We continue to work with our champions in the Senate to get the MBL language included into the right package." The House version of legislation to increase the MBL cap is H.R. 1418.

More than 500 credit union and small business representatives are expected to be on Capitol Hill Tuesday and Wednesday (participating in a CUNA-sponsored "Hike the Hill" grassroots advocacy effort) to push for a favorable vote on S. 2231. The bill has the backing of the Obama administration.

Noting that the banks are flying in their representatives to meet with federal lawmakers, CUNA EVP of Governmental Affairs John Magill noted that they will be in Washington, D.C. to fight the credit union effort, as well as to push their own agenda.

"The banks' opposition is not surprising but it is disappointing especially given their treatment of small businesses, which have been struggling to obtain bank credit the last five years," said CUNA EVP John Magill.

"This bill helps small businesses and it helps the economy at no cost to the taxpayer. We don't need the banks' blessing on this.  They don't control the U.S. Congress," Magill said.

Magill underscored, however, that there is always a good deal of uncertainty in any post-election, lame duck session of Congress and that schedules can change, for better or worse, at a moment's notice.

Small CU consulting program deadline approaching

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ALEXANDRIA, Va. (11/26/12)--The National Credit Union Administration (NCUA) last week reminded credit unions that the nomination deadline for its Office of Small Credit Union Initiatives (OSCUI) Consulting Program is approaching.

Nominations for the first 2013 round of the program must be received by Friday, the NCUA said.

OSCUI Director William Myers said the program has much to offer eligible credit unions. "Those that participated in the first round earlier this year received a great deal of value, and we're hopeful more credit unions will take advantage of the opportunity," he added.

Through the consulting program, OSCUI offers budgeting, marketing, policy development and strategic planning assistance. The experienced economic development specialists that offer this assistance also help credit unions tackle other examination issues.

Credit unions with less than $10 million in total assets, charters that have been approved within the past 10 years, or low-income designations may apply for the consulting program.

More than 200 credit unions took part in the program's most recent round. For more information and  a nomination form, use the resource link.

Inside Washington (11/21/2012)

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  • WASHINGTON (11/26/12)--Federal Reserve Board Chairman Ben Bernanke Tuesday warned that lingering uncertainties about the fiscal cliff, the raising of the debt limit and concern about the federal budget are contributing to an increased sense of caution on financial markets and having an adverse effect on the economy. "Continuing to push off difficult policy choices will only prolong and intensify these uncertainties," said Bernanke, in a speech before the New York Economic Club. Bernanke cited a Congressional Budget Office study that suggested going over the fiscal cliff could create a shock that would send the economy back into recession. As fiscal policymakers face the critical decisions, they should seek to minimize federal budget deficit, Bernanke said. The federal budget is on an "unsustainable path," he said. Policymakers should also avoid contributing to the "headwinds" that are hold back the economy. The headwinds include a slow housing market, a tight credit market, an uncertain financial climate in Europe and tight budget conditions for state and local governments …
  • NEW YORK (11/26/12)--The Federal Home Loan Bank of New York announced Tuesday that, as a result of the uncertainty posed by provisions of the Dodd-Frank Act and rules released by the Consumer Financial Protection Bureau (CFPB), it plans to stop processing international wire transfers for its members on Dec. 31. Dodd-Frank required the CFPB to issue rules on remittance transfers wires. In turn, the CFPB has issued rules to protect U.S. consumers who send money electronically to foreign countries. Those rules are slated to take effect Feb. 7 …

Spending survey receives broad press coverage

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WASHINGTON (11/26/12)--Last week's release of the Credit Union National Association's (CUNA) and Consumer Federation of America's (CFA) 13th annual projection of consumers' holiday spending plans garnered widespread press coverage.

Among the television, cable and radio networks, and newspaper groups that attended or covered the press conference:
  • ABC Radio;
  • CNN;
  • Bloomberg; and
  • CBS.
CUNA Chief Economist Bill Hampel, at the podium, presents the results of this year's CUNA/Consumer Federation of America 2012 holiday spending survey. (CUNA Photo)
CBS Radio and Bloomberg print reporters were among those that followed up with CUNA after the event, and CUNA Chief Economist Bill Hampel also discussed the survey on Fox Business Network early on "Black Friday," Nov. 23.

The survey, which was unveiled during a Wednesday event at the National Press Club in Washington, D.C., found that more consumers plan to spend more than they did last year, while fewer plan to reduce their 2012 holiday spending.

Overall, Hampel estimated that 2012 holiday spending could increase by between 3.5% and 4% compared to 2011's totals. This improvement represents the fourth year of gradual improvement in holiday spending plans since a sharp decline in such plans in 2008, Hampel said. (See related News Now story: Holiday spending will continue upward trend, CUNA/CFA say)

Mark Wolff, CUNA senior vice president of communications, noted that CUNA "has been doing this joint press event with CFA for 13 years now as another way to reinforce with the public and through the media that credit unions are a trusted resource for consumers."

NMLS webinar set for Dec 6

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WASHINGTON (11/26/12)--Annual renewal processes for federal registrations will be reviewed during a Dec. 6 webinar, the Nationwide Mortgage Licensing System & Registry (NMLS) announced last week.

The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires credit union mortgage loan originators (MLOs) and their employing institutions to register with the NMLS, which became active in early 2011. The NMLS registry is intended to increase consumer protection and to help financial regulators coordinate and share mortgage originator information.

The NMLS noted that the Dec. 6 webinar is intended for financial institution account users, not individual MLOs. The registration fee is $75.

In a release, the NMLS said the webinar will address:

  • Tools and resources available to help with NMLS renewal;
  • Completing renewal of the institution account;
  • Initiating renewal for employed MLOs manually;
  • Initiating renewal for employed MLOs using an upload feature;
  • Individual renewal attestation process;
  • Utilizing the renewal activation report; and
  • Confirming renewal complete in NMLS.
All NMLS accounts for financial institutions must be renewed annually, and this year's renewal period is scheduled to end on Dec. 31.

Credit unions and other MLOs are required to ensure that their mortgage loan originators are properly registered and prohibit any employees who are not registered from performing any residential mortgage loan origination duties.

For more on the webinar, use the resource link.

Holiday spending will continue upward trend CUNACFA say

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WASHINGTON (11/26/12)--The 2012 Consumer Federation of America (CFA)/Credit Union National Association (CUNA) holiday spending survey has found that more consumers plan to spend more than they did last year, while fewer plan to curtail their spending this year, CUNA Chief Economist Bill Hampel said last week.

Click for slide show Credit Union National Association (CUNA) Chief Economist Bill Hampel (right) and Consumer Federation of America (CFA) Executive Director Stephen Brobeck announce the results of their 13th annual joint survey on consumer holiday spending expectations. The survey results showed a strong connection between holiday spending plans and family financial situations. Thirty-one percent of those who feel more financially secure this year said they would spend more this holiday season, while 66% of those whose financial situation has worsened said they planned to spend less. (CUNA Photo)
In the past year, the percentage of consumers who said they would spend more than last year rose from 8% to 12%. Those who said they would spend less declined from 41% to 38%.

The survey, which is the 13th compiled by the CFA and CUNA, was presented at The National Press Club in Washington, D.C. Hampel was joined by CFA Executive Director Stephen Brobeck to present the survey findings. The survey takes a timely read on consumer sentiment, and is released to coincide with the start of the holiday shopping season. It was conducted Nov. 9 through 13 and polled 1,012 consumers.

Overall, Hampel estimated that 2012 holiday spending could increase by between 3.5% and 4% compared to 2011's totals.

Hampel said "this represents the fourth year of gradual improvement in holiday spending plans since a sharp decline in such plans in 2008." The 2012 survey results are not a dramatic shift from last year's totals, but represent another step in America's continuing economic recovery, he added.

The 2012 survey showed close connections between financial condition and planned spending, with 31% of those that said they would spend more this year indicating their financial condition had improved since 2011. Eleven percent of respondents with incomes under $25,000 said they would spend more this year, while 44% said they planned to spend less. Eighteen percent of those with family incomes of more than $100,000 said they planned to spend more this year, while 31% at that income level said they would decrease their total holiday spending.

Overall, nearly one-in-four of the survey respondents found their financial situation has improved in the past year, and 33% said their personal financial condition has worsened. These changes are both improvements when compared to 2011's results.

The CFA and CUNA suggested that consumers looking to spend less this holiday season avoid impulse buying by sticking to a predetermined budget for gifts, holiday foods, party clothes and holiday decor.

Consumers can also use the Internet to comparison shop, and will benefit by starting their holiday shopping sooner rather than later.

Starting a holiday savings account or curbing spending by finding low- or no-cost ways to celebrate the holidays are also options, Brobeck said.

CUNA and CFA's tips to help consumers manage holiday debt, which traditionally accompany the survey findings, also note that holiday club accounts can be found at many credit unions, as can credit cards that typically have lower rates than those of other financial institutions.

The CUNA/CFA release suggests consumers looking to join a credit union go to aSmarterChoice.org, the consumer web site established by CUNA and credit union leagues.

NEW Holiday spending will continue upward trend CUNACFA say

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WASHINGTON (UPDATED: 3:00 P.M. ET, 11/21/12)--The 2012 Consumer Federation of America (CFA)/Credit Union National Association (CUNA) holiday spending survey has found that more consumers plan to spend more than they did last year, while fewer plan to curtail their spending this year, CUNA Chief Economist Bill Hampel said Wednesday.

In the past year, the percentage of consumers who said they would spend more than last year rose from 8% to 12%. Those who said they would spend less declined from 41% to 38%.

The survey, which is the 13th compiled by the CFA and CUNA, was presented at The National Press Club in Washington, D.C. Hampel was joined by CFA Executive Director Stephen Brobeck to present the survey findings. The survey takes a timely read on consumer sentiment. It was conducted Nov. 9 through 13 and polled 1,012 consumers.

Overall, Hampel estimated that 2012 holiday spending could increase by between 3.5% and 4% compared to 2011's totals.

Hampel said "this represents the fourth year of gradual improvement in holiday spending plans since a sharp decline in such plans in 2008." The 2012 survey results are not a dramatic shift from last year's totals, but represent another step in America's continuing economic recovery, he added.

The 2012 survey showed close connections between financial condition and planned spending, with 31% of those that said they would spend more this year indicating their financial condition had improved since 2011. Eleven percent of respondents with incomes under $25,000 said they would spend more this year, while 44% said they planned to spend less. Eighteen percent of those with family incomes of more than $100,000 said they planned to spend more this year, while 31% at that income level said they would decrease their total holiday spending.

Overall, nearly one-in-four of the survey respondents found their financial situation has improved in the past year, and 33% said their personal financial condition has worsened. These changes are both improvements when compared to 2011's results.

The CFA and CUNA suggested that consumers looking to spend less this holiday season avoid impulse buying by sticking to a predetermined budget for gifts, holiday foods, party clothes and holiday decor.

Consumers can also use the Internet to comparison shop, and will benefit by starting their holiday shopping sooner rather than later.

Starting a holiday savings account or curbing spending by finding low- or no-cost ways to celebrate the holidays are also options, Brobeck said.

CUNA and CFA's tips to help consumers manage holiday debt, which traditionally accompany the survey findings, also note that holiday club accounts can be found at many credit unions, as can credit cards that typically have lower rates than those of other financial institutions.

The CUNA/CFA release suggests consumers looking to join a credit union go to aSmarterChoice.org, the consumer web site established by CUNA and credit union leagues.

Cheney links Small Biz Saturday to CU MBL support

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WASHINGTON (11/21/12)--Small Business Saturday, which is coming up this weekend, is a day to support the backbone of our nation's economy and keep communities thriving. Credit Union National Association (CUNA) President/CEO Bill Cheney said legislators could help support small business every day of the year by increasing the credit union member business lending (MBL) cap.

Few have been affected more by the financial crisis than small business owners, and many of those owners found the banks they had relied on for years had abandoned them when they needed support the most, Cheney said. "Lines of credit were pulled. Loans were called.  Businesses closed. Hard working people lost jobs."

However, he noted, credit unions have been lending to small businesses for more than 100 years and continued to lend to small business owners as the banks pulled back. Credit union business lending portfolios grew 45% during the recession. Over the same time, bank business offerings contracted by 15%, Cheney said.

"Some of the small businesses open for business on Saturday would not be there but for their credit union.  But, banking lobbyists' opposition to the Credit Union Small Business Jobs Act could mean they may not be there next year on Small Business Saturday," Cheney wrote.

Cheney encouraged members of the U.S. Congress to help credit unions continue to help small businesses by enacting a pro-MBL bill, S. 2231, before this year is out.

S. 2231 would increase credit unions' current 12.25%-of-assets MBL cap to 27.5% of assets. Similar House legislation has also been introduced. Advocacy for these two MBL cap increase bills will be the main focus of a late-November National Hike the Hill.

CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

In a pro-MBL column that ran in the Huffington Post, American Consumer Institute (ACI) Center for Citizen Research President Steve Pociask said these credit union investments could create a multiplier effect, contributing $32.7 billion to U.S. Gross Domestic Product, $8.2 billion in employment earnings and 188,000 new jobs. (See related Nov. 20 story: MBL cap harms biz competitiveness, ACI notes in HuffPo)

CFACUNA present 2012 holiday spending survey today

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WASHINGTON (11/21/12)--Holiday spending plans, consumer debt concerns and the nation's general feelings about the economy will be revealed when Consumer Federation of America (CFA) Executive Director Stephen Brobeck and Credit Union National Association (CUNA) Chief Economist Bill Hampel present the 2013 Holiday Spending Survey today at the National Press Club in Washington.

The survey presentation is scheduled to begin at 10 a.m. ET in the National Press Club's Zenger Room.

This is the 13th year that the CFA and CUNA have teamed up to present the survey, which is released ahead of Black Friday, the official start of the holiday shopping season.

The survey, which was conducted between Nov. 9 and 13, documents the change in consumers' attitude in spending compared to the last several years as the economy continues to recover from the most severe recession in decades. The survey also benchmarks whether consumers feel their financial situation has become better or worse in the past year, and will disclose, for the first time, whether queried consumers have the cash on hand to cope with an unexpected $1,000 expense.

The CFA and CUNA also present tips for managing holiday spending, including low-cost and free ways for families to celebrate the holiday, during the survey release.

The release of the survey typically garners heavy media attention from local, national and international news outlets, including ABC News, CNN, National Public Radio, Xinhua, FOX News, Reuters and Business News Americas.

Fed CFPB set 2013 credit lease thresholds

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WASHINGTON (11/21/12)--The minimum fee trigger for Home Ownership and Equity Protection Act (HOEPA) requirements will be increased to $625 in 2013, the Federal Reserve and Consumer Financial Protection Bureau (CFPB) reported this week.

The agencies are required to adjust the amount of mortgage fees that trigger additional disclosures under Truth in Lending as required under HOEPA each year.

The Fed and CFPB release also noted that the protections of the Truth in Lending Act (TILA) and the Consumer Leasing Act will generally apply to consumer credit transactions and consumer leases of $53,000 or less in 2013. However, the agencies noted, private education loans and loans that are secured by mortgages and other property will be subject to TILA regardless of the amount of the loan.

For the Fed release, use the resource link.

CUs economy covered in Cheney iReutersi appearance

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WASHINGTON (11/21/12)--Credit unions have seen record membership and loan growth in recent months, and should continue to have strong growth in both of these areas, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a Tuesday interview with Reuters reporter Fred Katayama.

Cheney also discussed the housing market, mortgage rates, the looming fiscal cliff and other issues during the interview.



Cheney said the housing market is making a slow, steady recovery that CUNA believes should continue. Mortgage rates should also stay relatively low into the future. While there may be a slight increase in mortgage rates over the next year, that increase may not be more than 50 basis points, he said. And, while the mortgage rates charged by credit unions and banks are often very similar, "credit union fees are much lower--so you still save money with a mortgage at a credit union," Cheney added.

Credit unions are well positioned for any economic outcome, and fared well during the economic crisis.

"Because credit unions were careful lenders before the crisis and also during the crisis, they didn't turn their backs on their members. They were there making loans throughout the crisis and that helped them build that market share and they are going to continue to do that," he added.

Credit unions "can weather any storm," including potential issues caused by the looming fiscal cliff, Cheney added. Regarding the fiscal cliff, Cheney said he is confident that the U.S. Congress can come up with a framework to resolve pressing tax and spending issues, but "there are no guarantees in Washington these days." Legislators may create a temporary solution and return to address the issues at a later date, he said.

MBL cap harms biz competitiveness ACI notes in iHuffPoi

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WASHINGTON (11/20/12)--There is no downside, just upside, to lifting the credit union member business lending (MBL) cap and letting small businesses grow, American Consumer Institute (ACI) Center for Citizen Research President Steve Pociask said in a Huffington Post column.

"Public policy needs to encourage competition, remove market entry barriers and stimulate private investment…Artificial barriers like lending caps are designed to protect big banks, not consumers and not small businesses," he added.

Pociask noted that banks rejected 60% of small business loan applications last year, and reduced their small business lending practices by 20% during the last recession. "Without capital, small businesses do not expand, entrepreneurial dreams are put on hold and jobs are not created."

Credit unions have tried to help small businesses expand, increasing their small business lending activities by 40% during the last recession, Pociask noted. However, he said, "the outdated cap on credit union lending is suppressing small business access to capital."

The MBL cap currently stands at 12.25% of a credit union's assets. U.S. House and Senate legislation that would increase the cap to 27.5% of assets has been introduced, and a Senate vote on credit union MBL legislation, S. 2231, has been promised during this session.

Advocacy for these MBL cap increase bills will be the main focus of a late-November National Hike the Hill being organized by the Credit Union National Association (CUNA) and the state credit union leagues.

CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

These credit union investments would create a multiplier effect, Pociask said. He estimated that the knock-on impact of a credit union MBL cap increase could mean a $32.7 billion contribution to U.S. Gross Domestic Product, $8.2 billion in employment earnings and 188,000 new jobs.

An MBL cap increase could also mean more small business loans at lower market risk, he added. Credit union investment in small business could also lead to advancements in new technology, and a host of additional economic benefits "that make consumers and small businesses big winners.

"Whatever the actual benefits turn out to be, one thing we know--the resulting economic expansion will not put taxpayers on the hook, like the big bank bailouts have," Pociask said.

For the full HuffPost piece, use the resource link.

Inside Washington (11/19/2012)

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  • WASHINGTON (11/20/12)--After announcing that the Federal Housing Administration continues to be impacted by losses from mortgages originated prior to 2009, FHA Acting Commissioner Carol Galante Friday outlined a series of steps it will take after an audit discovered a $16.3 billion shortfall in the agency's capital reserves (American Banker Nov. 19). The measures include increased insurance premiums, accelerated short sales and aggressive sales of defaulted loans. The U.S. Department of Housing and Urban Development Friday released its annual report to Congress on the financial condition of the FHA Mutual Mortgage Insurance (MMI) Fund. The independent study found that as the housing market continues to recover, the capital reserve ratio of the MMI Fund used to support FHA's single-family mortgage and reverse mortgage insurance programs fell below zero to -1.44%, which accounts for the $16.3 billion shortfall …
  • WASHINGTON (11/20/12)--To save millions in premium payments, Fannie Mae is seeking alternatives to the dominant carriers in the forced-placed insurance market, the American Banker (Nov. 19) reported Monday. Under a plan submitted to the Federal Housing Agency, Fannie would require banks and other mortgage servicers to replace existing force-placed policies on loans it guarantees with insurance provided by a consortium of carriers offering 30% to 40% discounts. The plan has not been made public. Force-placed insurance is a form of hazard coverage banks buy to protect the properties of buyers who have let their homeowners' insurance lapse …
  • WASHINGTON (11/20/12)--Fifteen million dollars in civil money penalties has been assessed against First Bank of Delaware, Wilmington, Del., for that bank's alleged failure to implement an effective Bank Secrecy Act/anti-money laundering compliance program. The Federal Deposit Insurance Corp. (FDIC) and the Financial Crimes Enforcement Network (FinCEN) announced concurrent regulatory actions against the bank on Monday. The bank also settled civil charges that were brought by the U.S. Department of Justice. In a release, the FDIC and FinCEN said First Bank of Delaware lacked the internal controls needed to detect and report evidence of money laundering and other suspicious activity ...
  • WASHINGTON (11/20/12)--U.S. Secretary of Education Arne Duncan on Monday announced that 500 colleges and universities have committed to using the Consumer Financial Protection Bureau's (CFPB) Financial Aid Shopping Sheet for the 2013-2014 academic year. The CFPB and the Department of Education have worked together to improve how schools communicate financial aid offers to students. "The Shopping Sheet provides a standardized award letter allowing students to easily compare financial aid packages and make informed decisions on where to attend college. Students and their families now have a clear, concise way to see the cost of a particular school," Duncan said …

CFPB FTC investigating alleged mortgage ad violations

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WASHINGTON (11/20/12)--The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have joined to warn about 12 mortgage lenders and mortgage brokers that some of their marketing practices may be illegal.

The CFPB and FTC said consumer complaints in some cases drove them to examine more than 800 randomly selected mortgage-related ads. The ads were scrutinized for potential violations of the 2011 Mortgage Acts and Practices Advertising Rule, the CFPB release said. Ads examined included online ads, print ads and direct mail solicitations. They promoted mortgage loans, refinancings and reverse mortgages. 

The CFPB mainly focused on mortgage advertisements. The FTC examined ads from realtors, builders and lead generators.

The CFPB is also investigating six companies for potentially serious violations.

"Misrepresentations in mortgage products can deprive consumers of important information while making one of the biggest financial decisions of their lives," CFPB Director Richard Cordray said. "Baiting consumers with false ads to buy into mortgage products would be illegal. We will conduct a fair and rigorous investigation into these issues and will take appropriate action for any violations we find."

The agencies urged the lenders and brokers to review all their advertising for potential violations. Many of the advertisements in question are tied to products marketed to older Americans and military veterans.

According to a CFPB release, potential violations include:

  • Inaccurate or dishonest interest rate information;
  • Misleading information on reverse mortgage costs; and
  • Misrepresentations regarding the amount of cash or credit that will be made available to reverse mortgage participants.
The CFPB also cited instances in which reverse mortgage lenders promised borrowers they would be able to stay in their homes payment-free. The CFPB noted that reverse mortgage borrowers are normally required to continue paying for taxes and insurance--and will most likely lose their homes if they don't.

The use of official-looking seals or logos that imply some kind of government connection is also a prohibited practice, the CFPB said. "Although government agencies do guarantee some loans, they are not involved in the actual lending or advertising of loans," the CFPB release added.

For more on the investigations, use the resource link.

Future NCUA nominee must understand reg burden CUNA

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WASHINGTON (11/20/12)--As the Senate announces its confirmation of two new Federal Deposit Insurance Corp. (FDIC) officials, the Credit Union National Association (CUNA) is taking the opportunity to note that any future nominee for a similar position on the National Credit Union Administration's (NCUA) board must understand regulatory burden.

CUNA Deputy General Counsel Mary Dunn said CUNA will continue to  advocate for "a well-qualified individual who fully appreciates the need for a positive regulatory environment that will facilitate growth while supporting reasonable safety and soundness."

Although FDIC officials have been appointed, credit unions should likely expect the NCUA appointment to take longer. NCUA Chairman Debbie Matz last month, noting that the timeline for filling the open board spot created by board member Gigi Hyland's recent departure is up to the White House and U.S. Senate, indicated that the position likely will not be filled in the near future.

Legislators last week approved Martin Gruenberg to serve as FDIC chairman. He has served as acting chairman since July 8, 2011. Thomas Hoenig, who previously served as Kansas City Federal Reserve chief, will serve as vice chairman of the FDIC. Both nominations were unanimously approved by the Senate. Both men are scheduled to serve six-year terms.

President Barack Obama will need to fill a number of cabinet and general government positions as he enters his second term, with Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner among those that have said they will not return to their posts.

Impact of Sandy covered in NCUA video update

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ALEXANDRIA, Va. (11/20/12)--The aftereffects of Hurricane Sandy and the impact of the storm on credit unions and members ares addressed in the National Credit Union Administration's (NCUA) latest YouTube economic briefing.

NCUA Chief Economist John Worth also discusses general economic trends.



The video is the latest in a series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The videos can also be viewed on the NCUA's YouTube page by using the resource link below.

Inside Washington (11/16/2012)

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  • WASHINGTON (11/19/12)--Despite signs of recovery, the housing market is "far from being out of the woods," Federal Reserve Board Chairman Ben Bernanke said Thursday. House prices nationally have increased for nine consecutive months, residential investment has risen about 15% from its low point, and sales of both new and existing homes have edged up, Bernanke noted. However, construction activity, sales, and prices remain much lower than they were before the crisis. About 20% of mortgage borrowers owe more than their homes are worth. Despite marked improvements in overall credit quality, 7% of mortgages are either more than 90 days overdue or in the process of foreclosure. Tight credit was also an important factor in the weak recovery, Bernanke said. The Federal Reserve''s Senior Loan Officer Opinion Survey on Bank Lending Practices indicates that lenders began tightening mortgage credit standards in 2007 and have not significantly eased standards since. "Terms and standards have tightened most for borrowers with lower credit scores and with less money available for a down payment," Bernanke said …
  • WASHINGTON (11/19/12)--An independent audit released Friday reported that the Federal Housing Administration (FHA) incurred $16.3 billion in projected losses as of the end of the third quarter of this year (American Banker Nov. 16). The Banker article said that the losses may require the first taxpayer bailout in the agency's 78-year history. The audit found the FHA's reserve ratio had fallen to the negative (-1.44%). There is a statutory requirement that FHA maintain at least a 2% reserve. The article noted that the Department of Housing and Urban Development, which oversees FHA, was expected to announce a series of changes late Friday intended to bolster the flagging capital reserve and avoid the likelihood that FHA would have to draw from the U.S. Treasury …

CFPB delays some mortgage disclosure dates

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WASHINGTON (11/19/12)--The Credit Union National Association (CUNA) on Friday noted that without the effective date delay announced by the Consumer Financial Protection Bureau (CFPB) for several mortgage disclosures, credit unions and other lenders would have had to change their disclosure forms twice.

Final versions of new mortgage regulations, and related disclosures that combine elements of Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures into a single document are expected to be released in January. The CFPB is also developing rules to implement these disclosure form changes, and other related disclosures.

The disclosure changes and rules are expected to become effective sometime next year, according to the CFPB. An exact effective date has not been determined.

The CFPB on Friday said mortgage providers will not need to provide certain disclosures until after the CFPB's previously proposed mortgage disclosure rules are finalized. The provisions that the CFPB will delay are:
  • Warning regarding negative amortization features;
  • Disclosure of state law anti-deficiency protections;
  • Disclosure regarding creditor's partial payment policy;
  • Disclosure regarding mandatory escrow accounts;
  • Disclosure regarding waiver of escrow at consummation;
  • Disclosure of monthly payment, including escrow, at initial and fully-indexed rate for variable-rate transactions;
  • Repayment analysis disclosure to include amount of escrow payments for taxes and insurance;
  • Disclosure of settlement charges and fees and the approximate amount of the wholesale rate of funds;
  • Disclosure of mortgage originator fees;
  • Disclosure of total interest as a percentage of principal; and
  • Optional disclosure of appraisal management company fee.
The CFPB said that timing the effective date of the delayed disclosures to coincide with the effective date of broader TILA/RESPA changes "would ensure that the features of consumer credit transactions secured by real property are fully, accurately, and effectively disclosed to consumers in a manner that permits consumers to understand the costs, benefits, and risks associated with the product or service, in light of the facts and circumstances."

CUNA President/CEO Bill Cheney noted that in virtually every meeting with the CFPB, and in every comment letters CUNA has sent on these issues, CUNA has urged an effective date delay. "We're grateful that the CFPB listened to us," he said.

"This extra time will give CUNA and our members more opportunities to urge the agency to minimize the impact of these proposed rules on credit unions," Cheney added. However, Cheney noted that other CFPB rules that CUNA continues to be concerned about, such as rules addressing mortgage servicing and ability to repay rules, are not delayed and are still expected by Jan. 21.

CFA-CUNA reveal consumers holiday spending plans Weds

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WASHINGTON (11/19/12)--For the 13th consecutive year, news media from across the nation will be tuning in Wednesday as the Consumer Federation of America (CFA) and the Credit Union National Association (CUNA) release their latest consumer holiday spending survey.

CUNA Chief Economist Bill Hampel and CFA Executive Director Stephen Brobeck are scheduled to present the findings of the survey, which provides a glimpse into consumer holiday spending plans. Holiday debt concerns and general attitudes about the economy are also addressed by the survey.

CUNA and the CFA also will present tips for managing holiday spending, including low-cost and free ways for families to celebrate the holiday.

The survey is released just ahead of Black Friday and the official start of the holiday shopping season.

The release of the survey typically garners heavy media attention from local, national and international news outlets, including ABC News, CNN, National Public Radio, Xinhua, FOX News, Reuters and Business News Americas.

Matz named to NeighborWorks post

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ALEXANDRIA, Va. (11/19/12)--National Credit Union Administration (NCUA) Chairman Debbie Matz has been appointed vice chair to the board of directors of NeighborWorks America, an affordable housing and community development organization.

Matz previously served on the NeighborWorks board in 2004, and she said she is "honored to return" and help the organization continue its outstanding work to ensure individuals and families have access to safe, affordable homes.

Matz will take on the NCUA's slot on the NeighborWorks Board. That spot was previously filled by former NCUA board member Gigi Hyland, who left the NCUA this fall.

NeighborWorks also named Federal Reserve Board Governor Sarah Bloom Raskin as board chair.

NeighborWorks America works to provide access to homeownership and to safe and affordable rental housing. In the past five years, NeighborWorks' affiliated organizations have generated more than $19.5 billion in reinvestment in their communities, according to a release, which also stated that NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.

Determined by statute, NeighborWorks America's board consists of the heads of the financial regulatory agencies and the U.S. Department of Housing and Urban Development, who are presidential appointees subject to Senate confirmation, or their statutorily designated representatives.

2013 TCCUSF assessment will be eight to 11 bp

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WASHINGTON (11/16/12)--The 2013 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment will likely be between eight and 11 basis points (bp), and a National Credit Union Share Insurance Fund (NCUSIF) premium may not be assessed next year, the National Credit Union Administration (NCUA) announced at its Thursday open board meeting.

The NCUSIF assessment, the agency said, could be zero or as much as five bp.

Credit Union National Association (CUNA) Chief Economist Bill Hampel said the NCUA's TCCUSF assessment range is surprising.

"Based on the latest estimates of total remaining losses to be covered on the legacy assets posted by NCUA just last month, annual assessments of eight bp to 11 bp would cover the midpoint of expected losses in just 3.5 to 4.5 years. That seems unnecessarily short considering the stabilization fund has nine years remaining," he said.

Credit unions have already paid $4.1 billion in TCCUSF assessments, and the NCUA recently reduced the projected cost of corporate credit union stabilization assessments to between $6 billion and $8.9 billion. This represents a $400 million reduction from the previous maximum cost of $9.3 billion.

With the new estimates, credit unions will need to pay between $1.9 billion and $4.8 billion in additional assessments before the stabilization fund expires in 2021.

CUNA had suggested a 2013 assessment of closer to five bp, saying that level of TCCUSF assessment "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be."

The NCUA expects to decide the level of the TCCUSF assessment next July, as it has done in the past.

The agency on Thursday also modified the Overhead Transfer Rate (OTR) for 2013 to 59.1%. The current OTR is 59.3%.

Under the Federal Credit Union Act, the NCUA may transfer funds from the NCUSIF to fund its administrative and other expenses related to federal share insurance. NCUA uses the OTR to allocate those expenses.

The agency will be reviewing the definition of what is "insurance-related" and may incorporate any changes in that definition when it sets the OTR for 2014.

According to the agency, the planned 2013 modification in the OTR is due to the following factors:
  • Modification of the state supervisory authority (SSA) Imputed Value calculation to include certain costs;
  • The 2013 workload budget for federal examination and supervision was reduced by over 1,794 hours;
  • The 2013 workload budget for state examination and supervision increased by over 8,191 hours;
  • Examiners reported spending 67.3% of their examination and supervision time on insurance related procedures for the time survey ending in 2012, compared to 65.1% in the previous survey cycle; and
  • The 2013 budget of $251.4 million for the cost of NCUA resources and programs increased over the previous year's budget of $236.9 million.
For more on the NCUA meeting, use the resource link.

CUNA outraged by NCUAs proposed 2013 budget

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WASHINGTON (11/16/12)--The Credit Union National Association (CUNA) is outraged by the National Credit Union Administration's (NCUA) planned 2013 spending increase, and will be pursuing this with other policymakers to achieve greater accountability and transparency in the agency's budgetary process, CUNA President/CEO Bill Cheney said Thursday.

Click to view larger image NCUA Chairman Debbie Matz, center, said the NCUA is "committed to running the agency as efficiently as possible," and called the NCUA"s yearly budgets sound investments for credit unions. (CUNA Photo)
The NCUA approved a 2013 budget of $251.4 million. This spending plan represents an increase of 6.1% from 2012's NCUA budget. The NCUA noted that this 6.1% increase is a lower rate than the projected 6.5% increase in credit union industry assets.

The total amount of 2013 funding increase is $14.5 million, and $12.8 million of this increase would go to possible staff pay increases, employee benefits, locality pay, and full funding for full-time employees (FTEs) that were only partially funded in 2012, according to the NCUA.

The agency noted that this number could change if Congress does not approve a federal employee pay increase for next year.

The NCUA also plans to add $150,000 in new administrative expenses, an increase in contract service expenses of about $980,000 and $800,000 in new travel expenses.

Employee pay and benefits account for 73%, or $183.6 million, of the 2013 budget, which does not call for any changes in the number of FTEs.

"This is a realistic, responsible and prudent budget. It's a sound investment for credit unions to protect their bottom lines and the Share Insurance Fund from any industry losses," NCUA Chairman Debbie Matz said. Matz said the agency's 2013 budget also "sends a strong signal" that credit unions are improving.

"For credit unions, this budget increase is exasperating, particularly as other federal financial institution regulators have held the line on their own budgets," Cheney countered. "Clearly, the NCUA believes it has no reason to take a similar line--one that the President of the United States has personally mandated for federal agencies."

The 2013 budget represents the fourth-straight year that the agency has increased its budget. Cheney said the issue of ever-increasing budgets "necessitates greater oversight, accountability and transparency.

"We will express our deep concerns to the Obama administration, as well as lawmakers regarding oversight of the NCUA's budget. The agency must be held accountable for its budget decisions--and we intend to ensure that will happen," he added.

NCUA Chief Financial Officer Mary Ann Woodson, who presented the budget at the NCUA open meeting, said the agency will take steps to make budget information easier to find on the NCUA's website. CUNA earlier this week urged the agency to provide more transparency to credit unions about its budget decisions, before and after the budget is adopted in final form. A website detailing NCUA budget information could help create this much needed transparency, the CUNA letter noted.

The 2013 operating fee for federal credit unions will increase by 0.24% as a result of the new budget. The NCUA also approved a 6.5% increase in the asset dividing point for the 2013 operating fee scale that the agency uses to determine the fee assessed to federal credit unions. The corporate federal credit union rate scale remains unchanged, and federal credit unions with less than $1 million in assets will not be assessed an operating fee for 2013.

The operating fees for federal credit unions, which will be assessed based on assets as of Dec. 31, 2012, will be due to NCUA no later than April 30, 2013.

Warren praises CUs may head to Banking Committee

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WASHINGTON (11/16/12)--In her victory speech the night of the Nov. 7 federal elections--now on YouTube and being circulated by the Massachusetts Credit Union League--Senator-elect Elizabeth Warren (D-Mass.) thanked credit unions for their support.

In including credit unions in her long list of thank yous, Warren said, ""Credit unions…yes…love my credit unions.'' She added that "all of you have my back and I promise you, I'll have your back."

Warren, a Harvard Law School professor who conceived and helped set up the Consumer Financial Protection Bureau (CFPB), was endorsed by the Massachusetts league.

According to Politico and other publications, Warren has received support from key Senate lawmakers, including Banking Committee Chairman Tim Johnson (D-S.D.), to join that panel if she is interested. The committee has oversight of credit unions and other financial institutions.

When announcing the league endorsement in July, Massachusetts league President Daniel Egan said Warren "has been a strong and vocal proponent of the benefits that credit unions provide to working families across the Commonwealth and around the country."

He added, "It is our hope and expectation that Elizabeth will be a United States Senator who will ensure that credit unions and their members have an advocate in the Senate because the big banks in this country already have enough of them."

The Credit Union National Association worked closely with Warren while she was setting up the CFPB and has developed a good working relationship with her.

Warren defeated Sen. Scott Brown (R-Mass.) 54%-46%.

Inside Washington (11/15/2012)

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  • WASHINGTON (11/16/12)--Regulators offered assurances that a final rule implementing Basel III capital and liquidity requirements will not harm community banks. At a Senate Banking Committee hearing on Basel III, officials from the Federal Reserve Board, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency said they are aware of the threat Basel III poses to smaller institutions. Regulators said last week they would indefinitely delay the U.S.' adoption of Basel III as they consider more than 2,000 comment letters they have received since issuing a series of proposals in June. The U.S., along with other member nations, had pledged to begin implementation of Basel III by Jan. 1. "To date, many commenters have raised concerns about the generally higher level of capital requirements for community banks," George French, FDIC deputy director for risk management, said at the hearing. "A number of commenters have requested that the agencies not apply the Basel III or standardized approach for notice of proposed rulemaking to community banks. Some commenters have requested that the agencies withdraw the standardized approach notice of proposed rulemaking" …
  • WASHINGTON (11/16/12)--Community bankers are fighting to extend the Transaction Account Guarantee (TAG) program beyond its current Dec. 31 expiration date, while at the same time exploring for alternative means of liquidity should the program end (American Banker Nov. 15). TAG, created by the Federal Deposit Insurance Corp. during the financial crisis, provides unlimited federal backing for noninterest-bearing deposits. Without an extension, community banks could lose accounts with more than $250,000 to bigger banks …
  • WASHINGTON (11/16/12)--The economic and financial market scenarios that will be used in an upcoming round of large financial institution stress tests were released by the Federal Reserve on Thursday. The stress test covers baseline, adverse, and severely adverse scenarios.Economic activity, unemployment, exchange rates, prices, incomes, and interest rates are among the 26 variables addressed in the stress tests …

NEW CUNA outraged by NCUAs proposed 2013 budget

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WASHINGTON (UPDATED: 12:15 p.m. ET, 11/15/12)--The Credit Union National Association (CUNA) is outraged by the National Credit Union Administration's (NCUA) planned 2013 budget increase, and will be pursuing this with other policymakers to achieve greater accountability and transparency in the agency's budgetary process, CUNA President/CEO Bill Cheney said today.

The NCUA today approved a 2013 budget of $251.4 million. This budget represents an increase of 6.1% from 2012's NCUA budget.

The total amount of 2013 budget increase is $14.5 million, and $12.8M of this budget increase would go to possible staff pay increases, employee benefits, locality pay, and full funding for full-time employees that were only partially funded in 2012.

The agency noted that this number could change if Congress does not approve a federal employee pay increase for next year.

The approved budget would require an increase in the operating fee for federal credit unions of 0.24%.

For more on the NCUA meeting, read News Now's Friday edition.

CUNAs Hampel at White House tax discussion

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WASHINGTON (11/15/12)--How to avoid falling off the approaching "fiscal cliff" was the subject of a White House meeting Wednesday that was attended by Credit Union National Association (CUNA)Chief Economist Bill Hampel.

"Fiscal cliff," of course, is the newly minted and widely used phrased used to refer to the effect of a number of laws which, if unchanged, could result in a tough combination of tax increases and spending cuts that could weigh heavily on economic growth starting in 2013.

Hampel said the meeting he attended was a forum to discuss generating grassroots support for President Obama's approach to addressing the fiscal cliff.

Hampel told News Now that the White House emphasized that the president wants to proceed with policy that would avoid raising taxes on the middle class or eviscerating government spending.

"The credit union tax status was not an issue at this meeting," Hampel said, "nor was the subject of later tax reforms raised during the Wednesday session."

The tax-exempt status of credit unions, in fact, has not been mentioned in any of the current tax reform discussions. However, preserving the credit union tax status is a top CUNA priority, and CUNA will remain engaged and vigilant as tax reform discussions move forward.

CUNA identifies CU tax language is an error in bill

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WASHINGTON (11/15/12)--When the full text of H.R.6474 became available Wednesday and the Credit Union National Association (CUNA) identified language within that threatened the federal income tax exemption for federal and state-chartered credit unions, CUNA and the League of Southeastern Credit Unions immediately arranged meetings with the office of the bill's drafter, Rep. Dennis Ross (R-Fla.), and learned an error had been made.

The bill was noticed on Sept. 20 in the Congressional Record but at that time only the bill number and a very generic description was published.  There was no further bill text made available until yesterday.

"When we became aware of the specific language in this legislation, we immediately sought a meeting with Rep. Ross's staff," CUNA President/CEO Bill Cheney said Wednesday.

"In the course of our discussions with staff, they indicated emphatically that the inclusion of the credit union tax status was a drafting error--the credit union tax status was intended to be retained, not eliminated," Cheney emphasized.

Unfortunately, Cheney advised credit unions, the rules of the House do not permit the withdrawal or modification of the bill at this time.

However, the congressman's staff assured CUNA changes to bill would be made immediately if the bill sees any movement in the House. With the short remaining legislative calendar, it is considered unlikely that the bill will see action.  It would have to be re-introduced next year to be considered, and, based on the congressman's assurances, it would be modified before re-introduction.

Cheney pointed out that Ross is a strong supporter of credit unions and noted that CUNA appreciates the quick clarification his staff has made on this issue.

"This episode is a reminder of the threat that the tax status is under in an environment where Congress is considering comprehensive tax reform.  We have been and continue to monitor tax legislation closely; and, we will continue to work closely with policymakers to ensure that the credit union tax status is maintained," Cheney vowed.

CFPB reaches out to financial services innovators

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WASHINGTON (11/15/12)--Project Catalyst, a new Consumer Financial Protection Bureau (CFPB) initiative that will bring the agency and innovators together to promote consumer-friendly innovation and entrepreneurship in financial services and financial products markets, was announced on Wednesday.

Through Project Catalyst, the agency said it hopes to:

  • Establish firm lines of communication with innovators and be accessible to all those who may be affected by the CFPB's regulations, including those on the front lines of innovation;
  • Better understand new and emerging financial market products, and potentially adapt existing regulations to address new innovations in financial market products; and
  • Engage with innovators that have new ideas that beget consumer-friendly innovation.
CFPB Director Richard Cordray in a release said the collaborations fostered by the project will help the agency "better understand what works and does not work to improve life for consumers in the marketplace." Disclosure testing will also be an area of emphasis for the new project, and Cordray said the CFPB will also work with groups that are trying to improve consumer disclosures The CFPB may develop trial disclosures in the future, he added.

The agency has asked for information from individuals or groups that have noticed ways financial regulations could be improved to better foster consumer-friendly innovation, and said that these suggestions could be forwarded on to financial policymakers. The CFPB is also reaching out to employees or firms that are developing their own new consumer-friendly products, and wish to collaborate with the agency or launch a pilot version of these products.

The CFPB is already sharing data about consumer behaviors and trends with three firms. Those firms are consumer account protection provider BillGuard and "alternative banking" firms Plastyc and Simple.

The CFPB said its work with BillGuard will help it better understand trends in billing dispute resolution and consumer complaints. The collaborative efforts with Plastyc and Simple will will give the CFPB insight on consumer spending habits and saving.

For more on the CFPB project, use the resource link.

Assessments budget top todays NCUA agenda

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ALEXANDRIA, Va. (11/15/12)--Potential share insurance and corporate assessment ranges for 2013, and an agency budget for that year, will be some of the items unveiled when the National Credit Union Administration (NCUA) meets today.

The Credit Union National Association (CUNA) on Tuesday urged the agency to contain its 2013 costs, suggesting that the NCUA reject additional budget growth and hold the line on travel expenses. CUNA also recommended the NCUA increase budget transparency and accountability. CUNA President/CEO Bill Cheney noted that these recommendations are based on the "very serious concerns" credit unions have about the management of the agency's budget, based on "substantial increases the NCUA has approved" over the last three years.

CUNA has also suggested the agency could charge a 2013 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment of no more than 5 basis points (bp). That level of TCCUSF assessment "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be," CUNA Chief Economist Bill Hampel said last month. The NCUA has said the 2013 TCCUSF assessment is likely to be in the range of 5 bp to 10 bp.

The agency did not charge a National Credit Union Share Insurance Fund (NCUSIF) premium in 2012, and the amount of a 2013 assessment, if any, is not known.

Overhead transfer rates (OTR) and operating fee scales are also on the agenda.

For more on the NCUA board meeting, use the resource link.

Higher small CU threshold needed at SBANCUA CUNA

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WASHINGTON (11/15/12)--More credit unions could see their regulatory burdens ease if the Small Business Administration goes through with its proposal to raise the size standard to $500 million for a credit union to be considered a small entity, the Credit Union National Associatin (CUNA) wrote in a Nov. 13 comment letter.

Raising the threshold from its current level of $175 million would enable more credit unions "to benefit from provisions that require federal agencies to assess and minimize regulatory costs for smaller entities, including the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA),'' wrote CUNA Deputy General Counsel Mary Mitchell Dunn.

She noted those credit unions with assets under $500 million generally have fewer human resources to address their large and growing regulatory burdens and most do not have a full-time compliance officer on their staff. Raising the threshold would increase the percent of credit union and bank assets under the threshold from 3.5% today to 8.6%. 

As required by the Small Business Jobs Act of 2010, the SBA must conduct a detailed review of at least one-third of the size standards that apply to small businesses every 18 months.

Dunn also urged the SBA and its Office of Advocacy to support a substantial increase in the threshold that the National Credit Union Administration (NCUA) uses to define "small entity," NCUA's equivalent of "small business." NCUA's size standard, $10 million, has not been revised since 2003 and the NCUA is seeking comments now on how its size standard should be revised.  

Dunn said CUNA favors having the NCUA set the size standard at the same level as SBA and supports having the NCUA review the standard every 18 months. CUNA has communicated those views to the NCUA via a separate letter.

She also urged the SBA and Office of Advocacy to continue to actively participate in the SBREFA review process and do all they can to urge the Consumer Financial Protection Bureau to minimize costs for smaller credit unions that result from new or existing regulations.

More guidance for FIs to help Sandy-stricken borrowers

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WASHINGTON (11/15/12)--The National Credit Union Administration (NCUA) and other federal financial regulators have urged financial institutions to "consider all reasonable and prudent steps" to help members and customers impacted by Hurricane Sandy.

The Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency joined the NCUA in releasing supplemental guidance to their Oct. 30 statements about financial institutions and borrowers affected by the storm.

In a release on the guidance, the agencies said prudent efforts by institutions to meet members' or customers' cash and financial needs generally will not be subject to examiner criticism.

The efforts may include:

  • Waiving ATM fees for customers and non-customers
  • Increasing ATM daily cash withdrawal limits
  • Waiving overdraft fees
  • Waiving early withdrawal penalties on time deposits
  • Waiving availability restrictions on insurance checks
  • Easing restrictions on cashing out-of-state and non-customer checks
  • Easing credit card limits and credit terms for new loans; and
  • Waiving late fees for credit card and other loan balances.
Financial institutions may also offer payment accommodations, such as allowing loan customers to defer or skip some payments or extending the payment due dates. These steps would avoid delinquencies and negative credit bureau reporting caused by storm-related disruptions, the release said.

The release also addresses loan modifications and customer/member identification requirements.

For the full release, use the resource link.

For more coverage of credit union work post-Sandy, see these related stories: CUANY, NCUA reps meet on post-Sandy strategies; and N.J. CUs continue struggles from Sandy's aftermath.

2013 CUNA compliance school dates set

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WASHINGTON (11/15/12)--Two Credit Union National Association (CUNA) Regulatory Compliance School dates have been scheduled for 2013: April 21-26 in New Orleans and Sept. 15-20 in Tempe, Ariz.

The compliance schools feature annual regulatory updates, general overviews and advanced sessions. They are designed to provide credit union professionals of all backgrounds and skill levels an understanding of the major regulations affecting credit unions and their regulatory duties.

To account for differing degrees of compliance familiarity, the school offers two learning levels: Introduction and Update.

The Introduction curriculum will provide attendees with full day courses on sections of regulations, and same-day tests on those regulations. Rather than requiring memorization of all regulatory elements, attendees are instead provided with the knowledge and resources to locate those intricate details when future compliance questions arise.

The Update curriculum focuses on today's most pressing compliance issues, with information straight from CUNA's compliance team. Breakout sessions will also allow attendees to choose specialized pursuits that are of the most value to them.

Testing to earn the Credit Union Compliance Expert designation will also be made available onsite.

Topics for the 2013 Compliance School sessions are still being developed.

For more on the 2013 schools, use the resource link.

Inside Washington (11/14/2012)

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  • WASHINGTON (11/15/12)--The Nov. 13 issue of American Banker reported that the House Financial Services Committee is set to lose 20% of its make up due to retirements and campaign losses among its 61 panel members. The article said five Democrats and seven Republicans will be exiting--and there will be a leadership shake up as well as the current chairman, Rep. Spencer Bachus (R-Ala.), is "widely anticipated" because of term limits to make way at the top for Rep. Jeb Hensarling (R-Texas). And on the Democrats' side, Rep. Maxine Waters (D-Calif.) is expected to take over as ranking minority member for retiring Rep. Barney Frank (D-Mass.). Frank is cited as the loss to the committee membership that may make the biggest impact, in part, because of his deep and extensive knowledge of financial services issues …
  • WASHINGTON (11/15/12)--Newly elected senator from Massachusetts Elizabeth Warren, a Democrat, is seen as a natural to become a member of that body's banking committee and has leadership support for such a position if she reveals an interest in it, according to a recent article in Politico (Nov. 13).  Warren helped build the Consumer Financial Protection Bureau, which was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act, and is generally viewed as a Wall Street critic. Among her supporters Politico notes that Senate Banking Committee Chairman Tim Johnson (D-S.D.) has said he had a good working relationship with Warren and would welcome her to the committee if she wishes to join its ranks …
  • WASHINGTON (11/15/12)--The Financial Stability Oversight Council (FSOC) is trying to force the U.S. Securities and Exchange Commission (SEC) to strengthen its rules for money market mutual funds (MMMF)--a move FSOC has criticized the SEC for failing to take since the financial crisis. FSOC is comprised of a group of 10 regulators including the S.E.C. chair. On Tuesday, FSOC voted to recommend that the SEC adopt one or all three of actions backed by the council. They include  requiring MMMFs to establish a floating net-asset value, replacing the currently used $1-a-share price, or requiring the funds to set aside more cash to offset potential lost value  of their holdings (The New York Times, Nov. 13) …

Inside Washington (11/13/2012)

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  • WASHINGTON (11/14/12)--A lawsuit filed by the Federal Housing Finance Agency (FHFA) charging Bank of America subsidiary Merrill Lynch with misleading Fannie Mae and Freddie Mac into buying billions of dollars of risky mortgage debt can proceed, a federal judge ruled Monday. The FHFA alleges that Merrill and other firms misrepresented that underlying mortgages complied with certain underwriting guidelines and standards (American Banker Nov. 13). The suit involves 88 mortgage-backed securities certificates that corresponded to 72 securitizations by Merrill. U.S. District Judge Denise Cote denied Merrill's claim that a District of Columbia law required the FHFA to demonstrate that Fannie and Freddie relied on the underwriter's claims. Merrill also maintained that the FHFA had forfeited its right to recover the amounts Fannie and Freddie paid for the securities because the statute of limitations had expired before the FHFA filed its lawsuit and that the agency cannot seek punitive damages …
  • WASHINGTON (11/14/12)--Federal Reserve Board Gov. Elizabeth Duke Friday suggested mortgage regulations should be eased for community banks. Increased regulatory standards may limit community banks' ability to compete in the mortgage lending market, she said. "Balancing the cost of regulation that is prescriptive with respect to underwriting, loan structure, and operating procedures against the lack of evidence that balance sheet lending by community banks created significant problems, I think an argument can be made that it is appropriate to establish a separate, simpler regulatory structure to cover such lending," Duke said in a speech to the Community Bankers Symposium. Credit unions make up 7% of home originations, according to information collected under the Home Mortgage Disclosure Act. Banks with between $500 million and $10 billion of assets account for about 13% of home loan originations, while those under $500 million of assets account for about 5% …
  • WASHINGTON (11/14/12)--Raj Date, the No. 2 official at the Consumer Financial Protection Bureau (CFPB), announced Monday he will leave the agency. Date's departure will likely take place in January after he helps the agency finalize several mortgage rules, including the qualified mortgage rule, which the agency is required to implement as part of the Dodd-Frank reform law (American Banker Nov. 13). Date had served as the agency's de facto leader following the departure of Elizabeth Warren, who formed the CFPB, and before the hiring of the agency's current director, Richard Cordray …

NCUA 2013 spending restraint is needed CUNA urges

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WASHINGTON (11/14/12)--With the National Credit Union Administration (NCUA) set to announce its 2013 budget at this week's  open board meeting, the Credit Union National Association (CUNA) continued to urge the agency to contain its costs and warned that if the agency increases its annual budget it would be the fourth consecutive year to do so.

Rejecting additional budget growth, holding the line on travel, increasing transparency and accountability are the top recommendations made by CUNA. CUNA President/CEO Bill Cheney noted that these recommendations are based on the "very serious concerns" credit unions have about the management of the agency's budget, based on "substantial increases the NCUA has approved" over the last three years.

In a letter to the NCUA, Cheney noted that the general financial condition of credit unions has improved in recent years as the country moves past some of its worse economic woes. He also noted that the number of troubled credit unions has declined.

However, he pointed out that the number of credit unions in the system has also declined by 10.8% while the NCUA's budget has expanded by 48.1% between 2009 and 2012. The number of agency employees, represented by full time equivalent (FTE) positions, has risen from 965 to 1,261.5, a 30.7% increase. Moreover, travel costs are up 69% and contract service expenses have mushroomed by 130% during this same time frame, Cheney said.

"The NCUA's budget is funded overwhelmingly by credit unions, and they deserve to have their funds allocated prudently and efficiently to support reasonable safety and soundness objectives," Cheney noted.

He also urged the NCUA to provide more frequent, detailed and useful information to credit unions on the budget, the assumptions supporting the budget, and the connection between the budget and the agency's strategic plan.

The NCUA approved a 2012 budget of $234.8 million. CUNA noted that the NCUA last July moved to reduce that budget by 1% or $2 million, and said this change "was a positive step, although NCUA increased staffing by two positions."

The agency in July also said that "projecting the cost of agency-wide staffing for the remainder of 2012 provides a $3.7 million reduction to the budget. "We are hopeful that statement will hold up," Cheney said.

CUNA also urged the agency to provide more transparency to credit unions about its budget decisions, before and after the budget is adopted in final form, Cheney said. A website detailing NCUA budget information could help create this much needed transparency, he noted.

Cheney noted that the recommendations made by CUNA are reasonable ones "that will enhance the agency's efficiency as well as ensure credit unions have access to appropriate information about the agency's budget and resource allocations."

For the full letter, use the resource link.

CUNA asks Obama to add CUs to job discussions

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WASHINGTON (11/14/12)--The White House should include credit unions in upcoming discussions on ways to enhance job creation and economic growth, the Credit Union National Association (CUNA) said in a letter to President Barack Obama just one week after his re-election.

Obama last week said he would invite business, labor and civic leaders from across the country to Washington, D.C. to discuss employment and economic issues.

"In recognition of the important role that credit unions play in helping small businesses as well as consumers survive the current economic downturn and prosper into the future, credit unions should be included in [these] discussions," CUNA President/CEO Bill Cheney wrote.

CUNA backs U.S. House and Senate bills that would increase the member business lending authority to 27.5% of assets, up from the current limit of 12.25%. If enacted, CUNA estimates that the legislation would serve to inject $13 billion in business loans into the economy and create as many as 140,000 new jobs in the first year--at no cost to taxpayers.

In the CUNA letter to the White House, Cheney noted that U.S. credit unions currently serve 95 million members and have assets of over $1 trillion, which equals greater than 35% of the assets of all institutions insured by the Federal Deposit Insurance Corporation with assets under $10 billion.

"Credit unions are significant institutions in the lives of America's consumers and small businesses," and serve as an important source of affordable loans and favorable savings rates, he added.

Credit unions granted $157 billion in loans of all types in the first six months of 2012, representing a 29% increase in the amount of originated loans when compared to the same time period in 2011. "This represents the largest dollar amount of loan originations in the first six months of the year in credit union history," Cheney said.

He also noted the important role that credit unions already serve in supporting small businesses. Credit unions held $41 billion in small business loans as of December 2011, and stand ready to do more if the MBL bills are passed.

Senate leadership has committed to a floor vote on the MBL legislation, and advocacy for MBL cap increase bills in the Senate (S. 2231) and House (H.R. 1418) will be the main focus of a late-November National Hike the Hill being organized by CUNA and the state credit union leagues.

H.R. 1418 has 140 cosponsors and S. 2231 has 21 cosponsors. During the Nov. 27-28 CUNA advocacy event, credit unions and small business owners will urge members of Congress to move forward and pass the MBL bills.

Compliance Confiscating counterfeit cash (11/13/2012)

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WASHINGTON (11/14/12)--The compliance experts at the Credit Union National Association received an interesting question recently: How should a credit union handle suspected counterfeit currency? Specifically, are credit unions allowed to confiscate it--even when the member insists that we return it?

Knowing that the answer would be of interest to many, the compliance team featured the answer Thursday on CUNA's go-to compliance resource, CompBlog.

The U.S. Secret Service provides this guidance:

  • Do not return counterfeit currency to the passer;
  • Delay the passer if possible;
  • Observe the passer's description, as well as that of any companions, and the license plate numbers of any vehicles used;
  • Contact your local police department or U.S. Secret Service field office. These numbers can be found on the inside front page of your local telephone directory;
  • Write your initials and the date in the white border areas of the suspect note;
  • Limit the handling of the note. Carefully place it in a protective covering, such as an envelope; and,
  • Surrender the note or coin only to a properly identified police officer or a U.S. Secret Service special agent.
For more information go to the U.S. Secret Service website by using the resource link below.

The Secret Service has a "Know Your Money" page that warns: Those who fail to carefully examine the money they receive or who cash checks and bonds without requesting proper identification are potential victims. Only with the public's cooperation can the U.S. Secret Service reduce and prevent these crimes.

The site is designed to help detect counterfeit currency and guard against forgery loss.

FinCEN sets Dec. 3 due diligence discussion

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WASHINGTON (11/14/12)--The Financial Crimes Enforcement Network (FinCEN) will host a fifth and final roundtable discussion on proposed consumer due diligence (CDD) regulations that would require financial institutions and others to establish and maintain member and customer account monitoring policies.

The FinCEN roundtable will take place on Dec. 3 at the Miami Branch of the Federal Reserve Bank of Atlanta. The meeting will consist of two separate three-hour sessions. The first session will start at 9:30 am ET, and the second session will begin at 1:30 pm ET. FinCEN said advanced registration is required.

Discussion will focus on FinCEN's March Advanced Notice of Proposed Rulemaking that would codify, clarify, consolidate and strengthen CDD rules. The CDD proposal, which would apply to financial institutions, securities brokers and dealers, mutual fund brokers and dealers, futures commission merchants, and some introducing commodities brokers, addresses standards for verifying the identity of each member/customer and understanding the "nature and purpose" of each account held at an institution to assess the likelihood of suspicious activity.

The FinCEN plan, if made final, would be one part of a broader U.S. Treasury strategy to enhance financial transparency in order to strengthen efforts to combat financial crime, including money laundering, terrorist financing, and tax evasion.

How and when financial institutions collect "beneficial ownership" information from their customers and members, and how this information is verified, will be discussed during the meeting. FinCEN is also interested in any costs associated with obtaining this information. Roundtable attendees will also have the chance to discuss how they conduct due diligence on trust accounts, and how financial institutions identify whether their customers are or are not "shell companies."

The Credit Union National Association (CUNA) supports the objectives of the FinCEN proposal, but noted the burdens and costs credit unions could face as a result would far outweigh the purported benefits to FinCEN. CUNA has suggested that FinCEN abandon the due diligence proposal and, alternatively, work with the National Credit Union Administration and other federal financial regulators to further clarify current Bank Secrecy Act and anti-money laundering rules.

For more on the FinCEN meeting, use the resource link.

NEW Budget cuts urged ahead of November NCUA meeting

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WASHINGTON (11/13/12, UPDATED 3:45 p.m. ET)--With the National Credit Union Administration's 2013 budget set to be announced at this week's  open board meeting, the Credit Union National Association (CUNA) continued to urge the agency to contain its costs and warned that if it increases it annual budget it would be the fourth consecutive year to do so.

In a letter to the NCUA, CUNA President/CEO Bill Cheney noted that the general financial condition of credit unions has improved in recent years as the country moves past some of its worse economic woes. He also noted that the number of troubled credit unions has declined.

However, he pointed out that the number of credit unions in the system has also declined by 10.8% while the NCUA's budget has expanded by 48.1% between 2009 and 2012. The number of agency employees, represented by full time equivalent (FTE) positions, has risen from 965 to 1,261.5, a 30.7% increase.  Moreover, travel costs are up 69% and contract service expenses have mushroomed by 130% during this same time frame, Cheney said.

"The NCUA's budget is funded overwhelmingly by credit unions, and they deserve to have their funds allocated prudently and efficiently to support reasonable safety and soundness objectives," Cheney noted.

He also urged the NCUA to provide more frequent, detailed and useful information to credit unions on the budget, the assumptions supporting the budget, and the connection between the budget and the agency's strategic plan.

The NCUA approved a 2012 budget of $234.8 million. CUNA noted that the NCUA last July moved to reduce that budget by 1% or $2 million, and said this change "was a positive step, although NCUA increased staffing by two positions."

The agency in July also said that "projecting the cost of agency-wide staffing for the remainder of 2012 provides a $3.7 million reduction to the budget. "We are hopeful that statement will hold up," Cheney said.

CUNA also urged the agency to provide more transparency to credit unions about its budget decisions, before and after the budget is adopted in final form, Cheney said. A website detailing NCUA budget information could help create this much needed transparency, he noted.

Barbour McAuliffe A political point-counterpoint at CUNAs 2013 GAC

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WASHINGTON (11/13/12)--National political stars Haley Barbour and Terry McAuliffe will face off in an entertaining and thought-provoking point-counterpoint political discussion at the Credit Union National Association's (CUNA) 2013 Governmental Affairs Conference (GAC).

Barbour has served as governor of Mississippi and chairman of both the Republican Governors Association and Republican National Committee. Barbour, who was once called "the most powerful Republican in politics," has been hailed as one of the country's top political strategists. He is also respected for his work on Mississippi job creation, health care, education and energy, and his handling of Hurricane Katrina in 2005 and the 2010 Gulf of Mexico oil spill.

McAuliffe, former chairman of the Democratic National Committee (DNC) and Bill Clinton's re-election committee, most recently led Hillary Clinton's campaign for the Democratic nomination for president. McAuliffe has been called the most successful political fundraiser of all time, having, under his tenure as chairman of the DNC, raised more than $535 million for an ailing Democratic Party, breaking all previous records for funds raised by either party. He now works as the founder and chairman of GreenTech Automotive, an electric and hybrid vehicle manufacturing company.

Barbour and McAuliffe, having first encountered one another in the 1990s while respectively attacking and defending Clinton, became friends as well as competitors and are accustomed to sharing a stage.

NBC News anchor and best-selling author Tom Brokaw and award-winning personal finance journalist and author Jean Chatzky are also scheduled to speak on that same stage, and more speakers and session topics will be added to the 2013 GAC lineup in the weeks to come.

ABBA tribute band ABBA The Concert will kick off the 2013 GAC on Feb. 24.

The 2013 GAC will run until Feb. 28 at the Washington Convention Center. The 2013 GAC theme, Powerful Cause, Positive Effect, reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

CUNA's GAC is the credit union movement's premier political event and its largest national conference, each year providing more than 4,000 credit union executives and board members an opportunity to hear influential leaders from Congress, presidential administrations and federal regulatory agencies.

GAC attendees will also have the chance to meet directly with their members of Congress in Washington.

Recognized as the key conference to attend for political impact, credit union networking and industry updates, the GAC also offers a wide array of educational breakout sessions, the industry's largest exhibitor showcase, guest/family programs to tour Washington's sights, and special entertainment including an opening concert and the closing Gala Reception and Dance.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC.

Registration is now open for CUNA's GAC, which features presentations by top federal lawmakers and regulators, as well as break-out sessions on key credit union issues.

Use the resource link to register.

Orientation elder abuse hearing on tap as Congress returns

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WASHINGTON (11/13/12)--The U.S. Congress will return to regular business this week in a post-election, lame duck session, with plenty on the plate as the year draws to a close.

Even with five House races not yet called as of last night, orientation for incoming House and Senate members will be held starting this week. Elections for new committee and subcommittee leadership will also take place. This week Republicans will determine who will take on their leadership roles for 2013-onward.  Democrats are scheduled to hold their own committee and subcommittee leadership elections the week of Nov. 26.

The Credit Union National Association (CUNA) will discuss member business lending and other credit union priorities with new and veteran members of Congress as they return.

Legislatively, Congress has a few large issues to resolve, including a solution to address the so-called "fiscal cliff." If legislators fail to compromise on various spending and tax issues by year end, $1.2 trillion in deficit reduction moves will be initiated on Jan. 2.

There are also appropriations bills, various tax extenders, and the Farm Bill that need to be addressed.

A Senate cycbersecurity bill (S. 3414) is one item that could be considered this week. That bill, which was last discussed in the summer, would establish voluntary information protection standards for government agencies, utilities, and other public and private entities. The bill would also establish a National Cybersecurity Council, drawing members from various federal agencies. CUNA has noted that some voluntary security standards could eventually become mandatory, thus imposing a new burden on financial institutions. CUNA has repeatedly said that the data security standards followed by credit unions and other financial institutions are strong, and it remains committed to ensuring that any data security measure passed by Congress does not negatively impact credit unions.

Hearings will also be held as the House and Senate return to a somewhat regular schedule.

The Senate Banking Committee on Wednesday will hold a hearing titled "Oversight of Basel III: Impact of Proposed Capital Rules." Slated to testify are Michael Gibson, director of the Federal Reserve Board of Governors Division of Banking Supervision and Regulation; John Lyons, chief national bank examiner in the Office of the Comptroller of the Currency; and George French, deputy director of the Federal Deposit Insurance Corp., Policy, Division of Risk Management Supervision.

The Senate Select Committee on Aging will hold a Thursday hearing on preventing elder financial abuse. Consumer Financial Protection Bureau Office of Older Americans Assistant Director Hubert "Skip" Humphrey III is scheduled to testify. Kay Brown, director of education, work force and income security at the Government Accountability Office, Paul Smocer of the Financial Services Roundtable and San Diego, Calif., Deputy District Attorney Paul Greenwood are also expected to speak.

Congress will break at the end of the week for the Thanksgiving holiday, but will return the following week. This lame duck session of Congress is expected to end on Dec. 14, but may also be extended.

Inside Washington (11/09/2012)

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  • WASHINGTON (11/13/12)--Increasing scrutiny from regulators on loss-reserves could place banks under pressure from certified public accountants (CPAs). Regulators have warned banks they don't want them releasing their reserves too quickly (American Banker Nov. 9). Banks, in turn, have changed the way they calculate reserves, either by adjusting the impact of historical losses or by closer inspection of projections. Those new methods could affect the bottom line, prompting scrutiny from banks' accountants. CPAs will not approve audits if reserves do not accurately reflect financial performance, said David Seleski, the president and chief executive at Stonegate Bank in Fort Lauderdale, Fla. Banks could end up in the middle of a battle between regulators and CPAs, Seleski said ...
  • WASHINGTON (11/13/12)--The Financial Stability Oversight Council will meet today to discuss recommendations to revamp money-market mutual fund regulations. U.S. Treasury Secretary Timothy Geithner, who chairs the FSOC, has been pressed the Securities and Exchange Commission (SEC) to initiate reforms of the money-market fund industry (American Banker Nov. 9). In a letter to the oversight council he said reforms are essential to the stability of the U.S. financial system. SEC Chairman Mary Schapiro has introduced a reform proposal, but it has not been approved by the agency's board. Geithner asked the FSOC in September to issue two alternative reforms proposed by Schapiro and another alternative that would impose capital and enhanced liquidity standards …
  • WASHINGTON (11/13/12)--Rep. Judy Biggert's (R-Ill.) loss to former Democratic Rep. Bill Foster on Tuesday will open up a slot on the House Financial Services Committee. Biggert's loss was due in part to redistricting (American Banker Nov. 9). Biggert serves as chairman of the subcommittee on insurance, housing and community opportunity. She has been a critic of the Dodd-Frank reform law and the country's mortgage finance system, including Fannie Mae and Freddie Mac and the Federal Housing Administration. Biggert was also willing to work in a bipartisan manner and has industry, noted Edward Mills, a financial policy analyst at FBR Capital Markets and former Hill aide. An attorney, she had a private law practice specializing in real estate, estate planning and probate law before serving in Congress ...
  • WASHINGTON (11/13/12)--The Federal Deposit Insurance Corp. (FDIC) announced a new tool for examiners Thursday. The tool, called ePrep, will customize requests to fit each bank's specific structure (American Banker Nov. 9). The system was built with community banks in mind, Kristie Elmquist, the FDIC's Dallas regional director, said at a meeting of the FDIC's community bank advisory committee. The new pre-exam tool has been piloted in exams at 30 banks, and is slated for full release by early 2013. ePrep allows examiners seeking pre-exam information to specify the type of exam and the types of bylaws, executive committee minutes, loan and liquidity information, and other characteristics specific to the bank being examined …

Online media added to CUNA advocacy toolkit

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WASHINGTON (11/13/12)--Credit union-supported candidates saw great success in last week's elections, and advocacy for these candidates, in some cases, was provided by the Credit Union National Association's first forays into new media political advocacy.

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CUNA's Credit Union Legislative Action Council (CULAC) allocated portions of its independent expenditure (IE) budget toward "new media" campaigns for three U.S. House candidates: Dan Maffei (D-N.Y.), Chris Collins (R-N.Y.) and Iowa candidate Kristie Vilsack (D).

Maffei and Collins both defeated sitting House incumbents. Vilsack lost her House race.

CULAC's advocacy for these candidates took the form of demographically targeted online advertising on web-based media platforms such as social media site Facebook, online radio site Pandora, and banner or sidebar ads on various websites. The candidates also received search-based advertisement placement through Google's AdWords product.

The ads redirected users that clicked on them to a  CULAC-managed website or Facebook page, helping the users learn more about the candidate and their policy priorities. "The ads were targeted only to IP addresses within the given candidate's district, and with a high certainty to be seen by the targeted demographic based on factors like which websites the targeted voters regularly visit," CUNA Vice President of Political Affairs Trey Hawkins said.

"We know the ads were displayed hundreds of thousands of times, and clicked on thousands of times," he added. Hawkins noted that the pro-candidate Facebook pages were "liked" by hundreds of people in each district, including credit union members.

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"Overall, this was just a small portion of our overall budget for independent expenditures, but we thought it was another worthy avenue to educate voters, and in the case of the Facebook pages, mobilize and activate supporters for our candidates," Hawkins said. CULAC spent more than $1 million on IEs this election cycle.

CUNA supported 388 candidates for the House and Senate in Tuesday's election, and in 96% of those races the credit union-friendly candidates won. CULAC remains the most bipartisan political action committee (PAC) in opensecrets.org's list of the top 20 PAC contributors for this election, with funding nearly evenly divided between the two major parties.

While last week's elections marked the end of a busy period for CUNA and CULAC, there is no rest for the weary, as credit union efforts have turned toward grassroots advocacy for member business lending cap increase legislation and other credit union priorities.

CUNA is hosting a late November Hike the Hill to make one final push for MBL passage in this session of Congress. CUNA President/CEO Bill Cheney is encouraging credit union supporters and small business owners to travel to Washington and let their voices be heard. (See related story: Time is now to take MBL action: CUNA Video)

NCUA joins N.J. league for Sandy relief

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NCUA Chairman Debbie Matz loads the agency's hurricane aid truck. (NCUA Photo)
NJCUL President/CEO Paul Gentile, left, and NCUA Adviser Buddy Gill unload a truck-full of donations at NJCUL headquarters. (NJCUL Photo)
ALEXANDRIA, Va (11/13/12)--New Jersey Credit Union League (NJCUL) President/CEO Paul Gentile last week thanked the National Credit Union Administration for its "extraordinary" hurricane relief efforts.

"We are so grateful to the agency. NCUA Chairman Debbie Matz very quickly reached out to us to extend help, and she and NCUA delivered," Gentile added.

National Credit Union Administration (NCUA) Adviser Buddy Gill late last week drove a 20-foot moving truck filled with clothing, blankets, pillows, and canned goods from NCUA offices in Alexandria, Va. to the NJCUL's office in Hightstown, N.J. The goods were donated by NCUA staff throughout the week.

"I couldn't believe how packed NCUA's truck was with clothing, water and dry goods. They did an amazing job. It took the League staff over an hour to unload because there was so much," Gentile said. He also offered a special thanks to Gill for his role in delivering the goods.

Rutgers FCU also donated clothing and food to the league.

The NCUA and Rutgers FCU donations will be made available to credit union employees, volunteers, members, and communities affected by Hurricane Sandy. New Jersey credit unions that wish to help with distribution of these goods can contact NJCUL.

CUs provide insight on member service education efforts CFPB

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WASHINGTON (11/13/12)--The insights gained from discussions with the Credit Union Advisory Council (CUAC) and the Consumer Advisory Board (CAB), which features two credit union representatives, were noted in a recent Consumer Financial Protection Bureau (CFPB) release.

The CFPB formed these advisory councils to gather industry input and discuss how the agency can work with financial institutions to improve the financial market for consumers. The groups meet throughout the year.

Member service and education efforts were top items discussed by credit unions during recent meetings of these two advisory groups, the CFPB said. "Credit unions' not-for-profit mission and dedication to financial empowerment and financial education sets credit unions apart as trusted and reliable leaders and partners in local communities," the agency added in a release.

The CFPB said its early October CUAC meeting featured a lively discussion about credit unions' role in leveling the playing field for consumers. CUAC members debated "whether their role as institutions is to provide cash-crunched consumers with viable and more cost-efficient alternatives to high-interest payday loans or to provide education and services designed to help their members become less reliant on short-term small-dollar loans," the CFPB said.

CUAC members during the meeting also expressed great interest in and support for the CFPB's financial education efforts, the agency said. The CFPB noted that member institutions of the CUAC and another group, the Community Bank Advisory Council (CBAC), have worked with local schools, community colleges, community organizations and churches to promote greater financial literacy.

The CUAC, CAB and CBAC all expressed concern over growing regulatory burdens, and emphasized that smaller financial institutions like community banks and credit unions can be greatly challenged by the presence of a new regulator, the CFPB said. All of these groups encouraged the CFPB to "make sure that the cost of complying with new regulations is not overly burdensome on small institutions," the agency added.

The CAB is comprised of 25 members with expertise in consumer protection, financial services, community development, fair lending, civil rights, and consumer financial products or services. Bill Bynum, CEO of Hope Enterprise Corp. and Hope Community CU, Jackson, Miss., is CAB vice president. Laura Castro de Cortes, vice president of alternative financial services for Centris FCU, Omaha, Neb., is also a CAB member.

The 15 members of the CUAC are:

  • Bernard Balsis, IEG FCU, Hawaii;
  • Rose Bartolomucci, Towpath CU, Ohio;
  • Gary Bell, Cooperative FCU, California;
  • John Buckley, Gerber FCU, Michigan;
  • Carla Decker, District Government Employees FCU, Washington, D.C.;
  • Ron Ehrenreich, Syracuse Cooperative FCU, New York;
  • Kevin Foster-Keddie, Washington State Employees CU, Washington;
  • Mitchell Klein, Police and Firemen FCU, Pennsylvania;
  • Lily Lo, Northeast Community FCU, California;
  • Maria Martinez, Border FCU, Texas;
  • Marcus Schaefer, Truliant FCU, North Carolina;
  • Camille Shillenn, Unified People's CU, Wyoming;
  • Helen Godfrey Smith, Shreveport FCU, Louisiana;
  • Gregg Stockdale, 1st Valley CU, California; and
  • David Wright, Services Center FCU, South Dakota.

Time is now to take MBL action CUNA Video

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WASHINGTON (11/13/12)--The Credit Union National Association (CUNA) is pushing hard for a vote on member business lending (MBL) cap legislation during the lame duck session of Congress, and CUNA President/CEO Bill Cheney in a video said he needs the help of credit unions and small business owners "to make this vote a reality."



MBL legislation made Sen. Majority Leader Harry Reid's (D-Nev.) list of 'to-do-items for this lame duck session of Congress, and Senate leadership has committed to a floor vote on MBL legislation. CUNA and credit union leagues are also urging credit unions to participate in a national Washington fly-in set for Nov. 27-28, during the heart of Congress' lame duck session, expressly to advocate for an MBL vote. Word surfaced last week that the banking trade associations are organizing a fly-in of their own in an attempt to counter credit union efforts--another reason CUNA is urging credit unions to respond to this call for action.

Cheney's new MBL video also features commentary from Senate MBL chief sponsor Sen. Mark Udall (D-Colo.) and clips from a recent Capitol Hill pro-MBL rally held by CUNA and pro-MBL coalition partners.

"Altogether, our actions stress the crucial role credit unions play in small business expansion and job growth. We have made a strong case; many in Congress support us," Cheney said.

CUNA and credit union leagues already have met with nearly every member of Congress to set the stage for an MBL vote, and members of the CUNA-organized coalition of 40 pro-small business groups are also actively making the case for more credit union business lending in their own meetings with lawmakers.

But the argument could still be made stronger, Cheney emphasized. "Every league, credit union and small business partner must contact their Senators and House members--no matter if you do or don't make business loans. We need as many contacts as possible: In-person meetings, phone calls, emails," he said. "We can do this. The time is now. Speak out. Let Congress know that credit unions are ready, willing and able to give small business, and our economy, the boost it needs," Cheney added.

The lame duck session is scheduled to begin when members of Congress return to Washington today.

CUNA is prepared for a straight up-or-down vote on stand-alone MBL legislation, but CUNA is also eyeing "a number of good vehicles that MBLs could hitch a ride on," CUNA Executive Vice President John Magill said.

Gentile named Executive Vice President Strategic Communications and Engagement for CUNA

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WASHINGTON (11/9/12)--The Credit Union National Association (CUNA) has named New Jersey Credit Union League President/CEO Paul Gentile to the newly created position of Executive Vice President, Strategic Communications and Engagement, effective Jan. 7.

"I am excited to have a leader of Paul's caliber join the CUNA team. He brings a proven track record of success and innovation with the New Jersey Credit Union League and now he will be instrumental in helping CUNA advance the credit union system throughout the country," said CUNA President/CEO Bill Cheney.

Gentile has served as NJCUL's CEO since December of 2007. Prior to that, he was the editor/publisher of Credit Union Times. He currently serves on the boards of CUNA and the National Credit Union Foundation.

Reporting directly to Cheney, Gentile will lead CUNA's communications, its business and consumer publishing units, the sales and marketing functions, and join with the executive team in providing strategic support across the organization.

"In his new role Paul will be developing and implementing an overarching, company-wide communications and marketing strategy so that we can more completely and comprehensively engage all of our key audiences and stakeholders," said Cheney. "I have watched Paul's commitment to improving the credit union system over the years and his ability to create momentum for new initiatives. His talents will serve CUNA and the credit union system well."

"The New Jersey Credit Union League could not have achieved what it did for the last several years without the relentless support of its member credit unions and the talent and commitment of its staff and board," said Gentile. "It was a privilege to serve New Jersey credit unions. I look forward to continuing that service on the national level, working alongside Bill and the CUNA team during this critical time for credit unions."

During Gentile's five-year tenure, NJCUL spearheaded a number of initiatives to drive member value. They include the following:

  • Passage of municipal deposit legislation that allows New Jersey credit unions to compete in the state's $15 billion municipal deposits market;
  • Creation of the "Banking You Can Trust" consumer awareness campaign that consistently garners New Jersey one of the nation's highest credit union membership search totals through aSmarterChoice.org;
  • Launch of a cutting-edge new conference format, "Credit Union Reality Check";
  • Leadership of the CUNA/league effort to create a national consumer awareness site, aSmarterChoice.org;
  • Development of an NCUA examination survey, NJ READ, that provides NCUA on-the-ground data on examination practices at credit unions;
  • Implemented a statewide video conferencing education system to change the way credit unions interact and to save travel time and money;
  • Creation of a statewide shared compliance program that brings affordable, on-site compliance support to credit unions; and,
  • Launch of a high-tech videoconferencing system that utilizes satellite sites in the north and the south, along with the centrally located league site, to give CUs a more affordable and accessible way to attain education.
NJCUL's board of directors has appointed a search committee to conduct a nationwide search to find a new CEO.

"We wish Paul all the best and appreciate his contributions to the New Jersey credit union system. We look forward to his work on the national level," said NJCUL Chairman and Garden Savings FCU President/CEO Louis Vetere. "The league will move forward in the best interest of our membership and ensure NJCUL continues to be the powerful advocate that it is today. From our 'Banking You Can Trust' consumer campaign to our growing reputation in Trenton, we are well positioned for the future."

Inside Washington (11/08/2012)

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WASHINGTON (11/9/12)--The Senate Banking Committee will hold a hearing Wednesday--the second work day of the post-election, lame duck congressional session -- on Basel III capital and liquidity requirements. Scheduled to testify are Michael S. Gibson, director, Division of Banking Supervision and Regulation of the Federal Reserve; John Lyons, chief national bank examiner, Office of the Comptroller of the Currency (OCC); and George French, deputy director of policy, Division of Risk Management Supervision, Federal Deposit Insurance Corp. This is the first hearing held by the committee on the plan, released in June by the Federal Reserve Board, the FDIC and the OCC (American Banker Nov. 8). Regulators have received more than 1,000 comment letters regarding the proposed standards …

NCUA budget assessments on November agenda

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ALEXANDRIA, Va. (11/9/12)--The 2013 budget, overhead transfer rate (OTR), operating fee scale and projected share insurance and corporate assessments are all on the agenda for the National Credit Union Administration's (NCUA) Nov. 15 open board meeting.

The NCUA's original 2012 budget was set at $236.9 million, but the agency in July reduced its projected 2012 budget by $2 million. The Credit Union National Association (CUNA) called this reduction a step in the right direction, and has encouraged the agency to make greater budget cuts.

Last year's OTR was set at 59.3%, and the agency reduced the 2012 operating fee rate for federal credit unions by .90% when compared to 2011's rate. The NCUA in 2012 charged operating fees of $0 for assets up to $500,000 and $100 for assets from $500,001 to $750,000. Operating fees were charged on a sliding scale for credit unions with assets greater than $750,000.

The agency did not charge a National Credit Union Share Insurance Fund (NCUSIF) premium in 2012.

CUNA Chief Economist Bill Hampel last month said the 2013 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment is likely to be in the range of 5 basis points (bp) to 10 bp. A 2013 TCCUSF assessment of no more than 5 bp "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be," he said.

The NCUA assessed a 2012 TCCUSF charge of 9.5 bp, and that charge was expected to bring in $790.5 million in funds to help cover the costs of corporate credit union stabilization.

Credit unions have already paid $4.1 billion in TCCUSF assessments, and the NCUA recently reduced the projected cost of corporate credit union stabilization assessments to between $6 billion and $8.9 billion. This represents a $400 million reduction from the previous maximum cost of $9.3 billion.

With the new estimates, they will need to pay between $1.9 billion and $4.8 billion in additional assessments before the stabilization fund expires in 2021. Hampel in recent weeks projected a range of assessment possibilities for the agency and credit unions. (See Nov. 2 News Now story: NCUA reduces TCCUSF high estimate by $400M)

For more on the NCUA board meeting, use the resource link.

CUNA suggests alternative HOEPA coverage trigger

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WASHINGTON (11/9/12)--The Consumer Financial Protection Bureau (CFPB) is planning to expand its definition of finance charge for mortgages, and this expanded finance charge definition, if adopted, could subject more credit union loans to additional limits and requirements under the Home Ownership Equity Protection Act (HOEPA)--referred to as "high-cost" loans--the Credit Union National Association (CUNA) said in a comment letter.

Under the CFPB's related finance charge definition proposal, lenders would be required to include most up-front costs associated with a mortgage in the finance charge disclosed to borrowers. Loan charges or fees would need to be included in the finance charge, but late fees, delinquency or default charges, seller's points, some escrow payments and most insurance premiums would not need to be included.

Since the finance charge is a large part of the annual percentage rate (APR) calculation, an expanded definition of "finance charge" would result in an expanded or increased APR. An increase in the APR is likely to cause more mortgage loans to meet or exceed HOEPA's APR coverage thresholds, CUNA Assistant General Counsel Luke Martone noted.

The CFPB has proposed two new thresholds for determining whether a given loan would or would not be subject to HOEPA coverage. The agency will likely choose one of these two thresholds for the final rule.

Martone said CUNA has serious concerns with both alternatives the CFPB has offered, and suggested a third approach that blends elements of the two CFPB approaches.

If adopted by the CFPB in the final rule, the CUNA alternative approach could mitigate for credit unions the unintended increase in HOEPA coverage that would result from an expanded finance charge, he said.

For more on the CFPB HOEPA thresholds, and the CUNA comment letter, use the resource link.

ABBA The Concert kicks off 2013 CUNA GAC

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WASHINGTON (11/9/12)--ABBA tribute band ABBA The Concert will kick off the Credit Union National Association's (CUNA) 2013 Governmental Affairs Conference on Feb. 24 with a dazzling performance of ABBA's iconic hits, including Dancing Queen, Mama Mia, SOS and Take a Chance on Me.

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The 2013 GAC lineup also features NBC News anchor and best-selling author Tom Brokaw and award-winning personal finance journalist and author Jean Chatzky, and more speakers and session topics will be announced in the weeks to come.

ABBA The Concert, featuring Waterloo the band, bills itself as "the best ABBA since ABBA." The tribute group was formed in 1996 and quickly became known for its stunningly ABBA-esque sound and performances. The group has always included two members of the original ABBA rhythm section, and has performed more than 1,000 shows in more than 20 countries worldwide.

CUNA Councils Vice President David Rohn said CUNA Councils is delighted to again sponsor the GAC-opening concert. "Sunday's show promises to be a memorable experience--a concert full of popular hits and high-energy fun that all attendees will enjoy," he added.

The 2013 GAC will run from Feb. 24-28 at the Washington Convention Center. The 2013 GAC theme, Powerful Cause, Positive Effect, reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

CUNA's GAC is the credit union movement's premier political event and its largest national conference, each year providing more than 4,000 credit union executives and board members an opportunity to hear influential leaders from Congress, presidential administrations and federal regulatory agencies.

GAC attendees will also have the chance to meet directly with their members of Congress here in Washington.

Recognized as the key conference to attend for political impact, credit union networking and industry updates, the GAC also offers a wide array of educational breakout sessions, the industry's largest exhibitor showcase, guest/family programs to tour Washington's sights, and special entertainment including an opening concert and the closing Gala Reception and Dance.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC.

Registration is now open for CUNA's GAC, which features presentations by top federal lawmakers and regulators, as well as break-out sessions on key credit union issues.

Use the resource link to register.

Compliance Confiscating counterfeit cash

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WASHINGTON (11/9/12)--The compliance experts at the Credit Union National Association received an interesting question recently: "How should a credit union handle suspected counterfeit currency? Specifically, are credit unions allowed to confiscate it--even when the member insists that we return it?"

Knowing that the answer would be of interest to many, the compliance team featured the answer Thursday on CUNA's go-to compliance resource, CompBlog.

As the letter writer already knew, if a credit union rece4ives counterfeit cash it must file a Suspicious Activity Report--or SAR--under requirements of the Bank Secrecy Act.

But beyond that, the U.S. Secret Service provides this guidance:

  • Do not return counterfeit currency to the passer;
  • Delay the passer if possible;
  • Observe the passer's description, as well as that of any companions, and the license plate numbers of any vehicles used;
  • Contact your local police department or U.S. Secret Service field office. These numbers can be found on the inside front page of your local telephone directory;
  • Write your initials and the date in the white border areas of the suspect note;
  • Limit the handling of the note. Carefully place it in a protective covering, such as an envelope; and,
  • Surrender the note or coin only to a properly identified police officer or a U.S. Secret Service special agent.
For more information go to the U.S. Secret Service website by using the resource link below.

The Secret Service has a "Know Your Money" page that warns: Those who fail to carefully examine the money they receive or who cash checks and bonds without requesting proper identification are potential victims. Only with the public's cooperation can the United States Secret Service reduce and prevent these crimes.

The site is designed to help detect counterfeit currency and guard against forgery loss.

Robust lame duck brings CU opportunities CUNA predicts

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

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

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

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

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

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

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

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

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

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

Inside Washington (11/07/2012)

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

CUNA urges CFPB to rethink finance charge action

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

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

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

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

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

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

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

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

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

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

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

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

For the full comment letter, use the resource link.

CUNA- CU-backed candidates have a strong outcome

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HUD expands hurricane housing relief

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

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

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

HUD said it is:

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

For the full HUD release, use the resource link.

Matz says reg modernization remains post-election priority

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

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

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

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

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

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

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

Inside Washington (11/06/2012)

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  • WASHINGTON (11/7/12)--The Federal Deposit Insurance Corp. (FDIC) on Monday advised financial institutions to inform customers in advance that special coverage of certain deposits, granted during the financial crisis, may expire. The FDIC's blanket coverage for noninterest-bearing transaction accounts will expire at yearend, as defined in the Dodd-Frank Act. Community banks have pressed for the coverage to be extended. Bankers maintain that ending the coverage now could cause depositors to flee and boost liquidity at institutions with an implicit government guarantee. However, in a letter issued Monday the FDIC requested that all insured depository institutions (IDIs) prepare their customers. "Although the Dodd-Frank Act imposes no specific notice requirement for IDIs in connection with the expiration of temporary unlimited coverage for NIBTAs, we encourage IDIs, as a matter of prudent commercial practice, to remind their [Noninterest Bearing Transaction Account] depositors about the pending expiration and the impact that expiration will have on their deposit insurance coverage," the letter said. The amount held in a noninterest-bearing transaction account by any credit union member or depositor is also fully, though temporarily, insured under Dodd-Frank. This unlimited coverage is separate from, and in addition to, the coverage provided to members with respect to other accounts held at an insured credit union …
  • WASHINGTON (11/7/12)--The Federal Housing Finance Agency (FHFA) has added 30 days to its comment period for its proposed rulemaking concerning stress testing of Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Comments are now due by Dec. 4. The Dodd-Frank Act requires certain financial companies with total consolidated assets of more than $10 billion, and which are regulated by a primary federal financial regulatory agency, to conduct annual stress tests to determine whether the companies have the capital necessary to absorb losses as a result of adverse economic conditions …
  • WASHINGTON (11/7/12)--Goldman Sachs is requesting U.S. Supreme Court to overturn a mortgage securities class-action lawsuit. Goldman is challenging a Sept. 6 decision by the 2nd U.S. Circuit Court of Appeals in New York allowing the lawsuit, which accuses it of misleading investors about the securities' risks (American Banker Nov. 6). The court allowed NECA-IBEW Health & Welfare Fund to sue Goldman on behalf of investors for allegedly misleading investors about mortgage-backed securities the fund itself did not own. The bank maintains the suit could cost it billions of dollars. NECA purchased securities from two of 17 trusts Goldman offered in 2007 and 2008. The fund purchased $390,000 worth of securities from one trust and $50,000 from another, according to Goldman's appeal …
  • WASHINGTON (11/7/12)--The Consumer Financial Protection Bureau has released a list of financial tips for consumers recovering from the impact of Hurricane Sandy. The tips include advice on how to proceed with insurance claims, disaster assistance, and contractors ...

NCUA hails WesCorp repayment as major milestone

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ALEXANDRIA, Va. (11/7/12)--The Nov. 2 payment of a $1.5 billion obligation of now-defunct Western Corporate FCU (WesCorp) is a major step forward in the National Credit Union Administration's (NCUA) work to resolve corporate credit union issues, the agency said.

The $1.5 billion WesCorp Medium Term Note obligation was one cost incurred when the NCUA acted to stabilize the corporate credit union system. Last week's $1.5 billion payment was made with the proceeds of credit union assessments, cash on deposit and other assets from the failed corporate credit unions, the NCUA said.

The WesCorp repayment is "an important milestone in NCUA's efforts to resolve the failure of five corporate credit unions in an orderly manner and maintain confidence in the credit union system," NCUA Chairman Debbie Matz said in an agency release. "With this final payment completed, we will continue our efforts to mitigate costs to federally insured credit unions over the remaining life of the [Temporary Corporate Credit Union Stabilization Fund (TCCUSF)]," she added.

The agency also paid off a $2 billion medium term note obligation of another failed corporate, U.S. Central FCU, last month. Members United Corporate FCU, Constitution Corporate FCU and Southwest Corporate FCU were liquidated by the NCUA in the fall of 2010, and costs related to these failed corporates were also paid by the TCCUSF.

A total of $5.1 billion in outstanding borrowings from the U.S. Treasury still need to be repaid by the TCCUSF, the NCUA release added. The agency noted that this outstanding balance may be repaid over the remaining life of the stabilization fund, which expires in June 2021. The NCUA said it will determine future assessments to repay this balance.

The NCUA last week reduced the projected cost of corporate credit union stabilization assessments to between $6 billion and $8.9 billion, a $400 million reduction from the previous maximum cost of $9.3 billion.

Credit unions have already paid $4.1 billion in TCCUSF assessments, including a 2012 TCCUSF assessment of 9.5 basis points (bp) of their insured shares as of June 30. With the new estimates, they will need to pay between $1.9 billion and $4.8 billion in additional assessments before the stabilization fund expires in 2021.

Credit Union National Association (CUNA) Chief Economist Bill Hampel said the 2013 TCCUSF assessment is likely to be in the range of 5 bp to 10 bp. A 2013 TCCUSF assessment of no more than 5 bp "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be," he said. (See Nov. 2 News Now story: NCUA reduces TCCUSF high estimate by $400M)

The NCUA plans to release its own estimate of the 2013 assessment this month.

For the full NCUA release, use the resource link.

CUNA says mortgage disclosure fixes needed by CFPB

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WASHINGTON (11/7/12)--Credit unions are concerned that the Consumer Financial Protection Bureau's (CFPB) proposed mortgage disclosure changes could increase the cost of providing those loans, Credit Union National Association (CUNA) Senior Assistant General Counsel Jared Ihrig wrote in a Tuesday comment letter.

CUNA in the comment letter offered a number of recommendations that--if adopted--would mitigate the impact of the CFPB's pending mortgage disclosure proposals on credit unions while fully protecting consumers' access to key information about home mortgage products.

The CFPB proposal, which is expected to be made final early next year, attempts to combine the complicated documents required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into a single disclosure.

CUNA wrote that it supports the objective of consolidated mortgage disclosures, but noted that the proposed rule would be overly burdensome for credit unions to properly complete, generate, deliver and explain to mortgage loan applicants.

To ease the process, CUNA urged the agency to consider a number of recommendations, including:
  • Exempting credit unions from certain portions of the final rule to minimize costs for credit unions where possible;
  • Providing further clarity concerning the definition of "application" under RESPA for purposes of requiring the issuance of the CFPB's proposed Loan Estimate;
  • Releasing explicit guidance regarding how to handle mortgage loan transactions that are initiated under existing Regulation Z and Regulation X rules, but are not yet consummated as of the time that new rules become effective;
  • Eliminating portions of the mortgage disclosure proposal that would require lenders to maintain "standardized, machine-readable" electronic versions of loan estimates and closing disclosures provided to consumers; and
  • Allowing a lengthy implementation period and a delayed mandatory compliance date that is at least 18 to 24 months after the adoption of any final rule to implement the new mortgage disclosures.
CUNA also suggested that the CFPB retain the existing 10% tolerance level as required by current RESPA regulations with respect to third party charges such as appraisal and title services.

In the letter, CUNA said it also strongly supports the CFPB's proposal to eliminate the total interest percentage and lender cost of funds disclosures required by Section 1419 of the Dodd-Frank Act, as these are of questionable value to consumers.

For the full CUNA comment letter, use the resource link.

A second CUNA comment letter on portions of the TILA/RESPA changes that impact finance charges will also be released this week.

iCompBlog Wrap-Upi offers remittance transfer toolkit

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WASHINGTON (11/7/12)--A checklist of resources that will help credit unions prepare for and comply with the Consumer Financial Protection Bureau's upcoming remittance transfer rule is one of many resources included in the October edition of the Credit Union National Association's (CUNA) CompBlog Wrap-Up.

The CFPB's new international remittance transfer rule is scheduled to go into effect on Feb. 7. Under the CFPB's rule, remittance transfer providers would be required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, fees and taxes  associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors.

In the Wrap-Up, CUNA Federal Compliance Counsel Colleen Kelly lays out links for a recent CFPB webinar on the remittance rules, a small business compliance guide, and a list of countries that have been granted some safe harbor from the rule.

Steps that credit unions will need to take to ensure that their institution, and its mortgage loan originators, are on track for compliance with the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) are also covered in the Wrap-Up.

The Nationwide Mortgage Licensing System & Registry (NMLS) Annual Renewal Period begins Nov. 1 and ends Dec. 31 each year. Both credit unions that offer residential mortgage loans and most individual MLOs need to annually renew their registrations through NMLS, as required by the SAFE Act, the Wrap Up notes.

CUNA Director of Compliance Information Valerie Moss in the Wrap Up also reminds credit unions of the need for yearly independent testing of their SAFE Act policies and procedures, and notes that MLOs will soon be subject to new duties under the Truth in Lending Act (TILA).

And, as it does every month, the October CompBlog Wrap-Up lists the upcoming effective dates of new regulations, important compliance articles and reports to read, as well as CUNA training programs.

For more of the CUNA CompBlog Wrap-Up, and other compliance gems, use the resource links.

Cheney on iFoxi CU structure means lower fees

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WASHINGTON (11/7/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney discussed the better rates and lower fees that credit unions offer their members, and the growth that those rates and fees have helped create both before and after last year's Bank Transfer Day, in an appearance this week on Fox Business Network's Willis Report.

How successful was last year's Bank Transfer Day? Cheney in a live interview with Fox Business' Gerri Willis noted recent credit union membership growth has occurred at the fastest rate seen in a more than a decade.



Last year, Bank Transfer Day gained significant social and traditional media attention, and helped spur credit union membership growth of more than 2.2 million in the 12 months ended June 20, 2012.  He noted the 2.2 million gain in new CU members is nearly twice what is typically seen in that period and four times what CUs experienced the prior year.

"Something happened with Bank Transfer Day, and it continues," Cheney said. Not-for-profit, member-owned credit unions have attracted people tired of paying high fees at banks, he explained.

The CUNA CEO also discussed the benefits of credit union membership during his Fox Business appearance.

Willis cited Consumer Reports numbers that show credit unions charge far less than banks for overdraft fees and stop payment fees. Consumer Reports also found credit unions they surveyed did not charge for online bill pay services, and required lower minimum balances to waive typical member fees.

"How is it that credit unions can give consumers, in many cases, a better deal than some of the biggest banks in the world?" Willis asked Cheney.

Cheney said credit unions, which are member-owned, are "fundamentally different" than banks. They focus on their members, and can return earnings to their members in the form of lower fees, he added.

Asked about consumer access, Cheney said most credit unions are part of national ATM networks like the CO OP Network, and 4,000 also participate in shared branching. "Your credit union may not have 30,000 ATMs, but you have access to them, surcharge free, if you are a member of a credit union," Cheney said.

Separately, a CUNA radio news release featuring Cheney's comments on credit union growth and appeal since last year's Bank Transfer Day has been distributed to 225 radio outlets, including Fox News Radio and the USA Radio Network.

[Editor's note: Although the Fox segment was erroneously titled "Two Million Transfer to Credit Unions in Decade," the news segment correctly states that credit union membership grew more than 2.2 million in the 12 months ended June 20, 2012.]

this is a double of Inside Washington

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WASHINGTON (11/7/12)--The Federal Deposit Insurance Corp. (FDIC) on Monday advised financial institutions to inform customers in advance that special coverage of certain deposits, granted during the financial crisis, may expire. The FDIC's blanket coverage for noninterest-bearing transaction accounts will expire at yearend, as defined in the Dodd-Frank Act. Community banks have pressed for the coverage to be extended. Bankers maintain that ending the coverage now could cause depositors to flee and boost liquidity at institutions with an implicit government guarantee. However, in a letter issued Monday the FDIC requested that all insured depository institutions (IDIs) prepare their customers. "Although the Dodd-Frank Act imposes no specific notice requirement for IDIs in connection with the expiration of temporary unlimited coverage for NIBTAs, we encourage IDIs, as a matter of prudent commercial practice, to remind their [Noninterest Bearing Transaction Account] depositors about the pending expiration and the impact that expiration will have on their deposit insurance coverage," the letter said. The amount held in a noninterest-bearing transaction account by any credit union member or depositor is also fully, though temporarily, insured under Dodd-Frank.  This unlimited coverage is separate from, and in addition to, the coverage provided to members with respect to other accounts held at an insured credit union …

WASHINGTON (11/7/12)--The Federal Housing Finance Agency (FHFA) has added 30 days to its comment period for its proposed rulemaking concerning stress testing of Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Comments are now due by Dec. 4. The Dodd-Frank Act requires certain financial companies with total consolidated assets of more than $10 billion, and which are regulated by a primary federal financial regulatory agency, to conduct annual stress tests to determine whether the companies have the capital necessary to absorb losses as a result of adverse economic conditions …

WASHINGTON (11/7/12)--Goldman Sachs is requesting U.S. Supreme Court to overturn a mortgage securities class-action lawsuit. Goldman is challenging a Sept. 6 decision by the 2nd U.S. Circuit Court of Appeals in New York allowing the lawsuit, which accuses it of misleading investors about the securities' risks (American Banker Nov. 6). The court allowed NECA-IBEW Health & Welfare Fund to sue Goldman on behalf of investors for allegedly misleading investors about mortgage-backed securities the fund itself did not own. The bank maintains the suit could cost it billions of dollars. NECA purchased securities from two of 17 trusts Goldman offered in 2007 and 2008. The fund purchased $390,000 worth of securities from one trust and $50,000 from another, according to Goldman's appeal …

WASHINGTON (11/7/12)--The Consumer Financial Protection Bureau has released a list of financial tips for consumers recovering from the impact of Hurricane Sandy. The tips include advice on how to proceed with insurance claims, disaster assistance, and contractors ...

CUNA map helps voters ID CU-friendly candidates

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WASHINGTON (11/6/12)--Are you wondering which candidates in your state or district are credit union friends? The Credit Union National Association (CUNA) has posted an interactive map listing pro-credit union candidates supported by the Credit Union Legislative Action Council (CULAC) and state credit union leagues for the 2012 General Election cycle.

The map lists U.S. Senate and House candidates, along with House district information. Users can simply scroll over their state to see which candidates have received CULAC and state credit union league support during this cycle.

"Users can know that by voting for these CULAC- and state-league-supported candidates, they are voting for a credit union friend," CUNA Vice President of Political Affairs Trey Hawkins said.

The map, like other CULAC efforts, highlights candidates from both major political parties, and independents. "First and foremost we look to help candidates that understand and support credit unions," Hawkins said.

Credit union advocacy and volunteer efforts continued in the days just before the election, with credit unions and credit unions also educated candidates about credit unions and their issues during this cycle. (See Nov. 5 News Now story: CUs ramp up for tomorrow's elections)

"Credit unions across the country have been extremely active in this cycle, and that kind of civic engagement is gratifying," Hawkins said.

CULAC has again been named as the most bipartisan political action committee (PAC) in opensecrets.org's list of the top 20 PAC contributors for this election cycle, and CUNA and CULAC have spent more than $1 million on independent expenditures and partisan communications during this election cycle.

Independent expenditures are advertising vehicles aimed at voters, while partisan communications are targeted specifically at credit union members.

CUNA spent $2.9 million on direct contributions to candidates and committees during this cycle, and that money was evenly divided between the two major parties: 47% of the funds went to Democrats, 51% went to Republicans, and 2% went to independent candidates.

At least 90 candidates have received maximum support from CULAC, including incumbents in highly competitive races, such as Rep. Brian Bilbray (R-Calif.), Sen. Jon Tester (D-Mont.), Rep. Frank Guinta (R-N.H.), Rep. Brad Sherman (D-Calif.) and Rep. Tom Latham (R-Iowa).

U.S. House candidate Chris Collins (R), retired Illinois National Guard General and U.S. House candidate Bill Enyart (D-Ill.), Cheri Bustos (D-Ill.), Iowa U.S. House candidate Christie Vilsack (D) and Dan Maffei (D-N.Y.) are also among the candidates that have received such support.

For the CULAC candidate map, use the resource link.

Lame duck vehicles could drive MBL bill

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WASHINGTON (11/6/12)--A potentially busy lame duck session could provide opportunities for legislation addressing the credit union member business lending (MBL) cap to move through the U.S. Congress, Credit Union National Association (CUNA) Executive Vice President John Magill said.

"There are certain bills that must be addressed before Congress adjourns for the year, such as expiring tax laws including the payroll and Bush tax cuts, a farm bill, a Defense Authorization bill, certain treaties and extension of a number of other important tax extenders. It'll be a lively session and we continue to pursue all avenues that could result in the passage of an MBL bill in coming weeks," Magill said.

The lame duck session is scheduled to begin when members of Congress return to Washington on Nov. 13. The House is scheduled to be in session for 16 days. An official Senate calendar for the days following the election has not yet been released.

While CUNA is prepared for a straight up-or-down vote on stand-alone MBL legislation, Magill said that such a vote is unlikely to occur during the lame duck session. Instead, he said, CUNA is eyeing "a number of good vehicles that MBLs could hitch a ride on."

Addressing the so-called "fiscal cliff," via a combination of tax increases and public spending cuts, is one of the largest political priorities on the horizon. If legislators fail to compromise on these spending and tax issues by year end, $1.2 trillion in deficit reduction moves will be initiated on Jan. 2. Little may happen to change the oft-reported gridlock in Congress after today's federal election, with Republicans likely to retain a majority in the U.S. House and Democrats in the Senate: It may still be difficult to move legislation through Congress due to partisan divisions.

However, both parties will need to work together to avoid the fiscal cliff, Magill said.

Appropriations bills, various tax extenders, and the Farm Bill, which expired on Sept. 30, will also need to be addressed by Congress.

MBL language could be added to any of these priority bills, which are very important for members on both sides of the aisle, Magill noted. However, he said there will be plenty of competition for amendment slots on any larger pieces of legislation that move through the House or Senate.

CUNA and grassroots credit union supporters will need to be as visible as possible during the lame duck session to break through the noise and ensure MBL legislation is added to these larger bills, he said.

Senate leadership has committed to a floor vote on MBL legislation, and advocacy for MBL cap increase bills in the U.S. Senate (S. 2231) and House (H.R. 1418) will be the main focus during a late November National Hike the Hill. The Hike, which will bring credit union supporters, leagues and small business owners from across the country to Washington on Nov. 27 and 28, will increase the MBL cap lift's prospects for passage.

"We have the chance to do something good for our country's small businesses, our economy at large--and for the future of credit unions--if we can turn out, push this bill over the top and win this vote," CUNA President/CEO Bill Cheney said announcing the advocacy effort. The MBL bills, which have bi-partisan support, would increase the credit union MBL cap to 27.5% of assets. H.R. 1418 has 140 cosponsors and S. 2231 has 21 cosponsors.

The credit union MBL legislation is among 26 items on Senate Majority Leader Harry Reid's list of unfinished legislative items, National Journal reported on Monday. However, National Journal noted that the length of that list means that some listed items may not be taken up before the year ends.

"Trying to predict a lame duck session is like trying to predict the weather for next June 1 with any accuracy" Magill said.

CUNA analysis shows the MBL cap increase would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment. Both benefits would come at no cost to taxpayers.

CUNA also will watch the progress of other legislation of interest to credit unions, including bills that could ease credit unions' access to supplemental capital, provide ATM fee disclosure fixes, address cybersecurity issues, and change aspects of the financial institution examination process.

CUNA backs FHFA short sale changes but urges restraint

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WASHINGTON (11/6/12)--The Federal Housing Finance Agency's (FHFA) efforts to streamline short sales for mortgage servicers, lenders, and borrowers, and promote housing market recovery, are positive, but a broader application of new short sale guidelines could have a negative impact on home mortgage financing, the Credit Union National Association (CUNA) said in a comment letter.

Federal Housing Finance Agency (FHFA) guidelines that went into effect on Nov. 1 will allow homeowners whose mortgages are held by Fannie Mae or Freddie Mac to sell their homes through the short sale process, provided they have an eligible hardship and are current on their mortgage payments. The death of a spouse or home co-owner, divorce, disability and job relocations of 50 miles or more will be considered eligible hardships under the new guidelines. Additional approval from Fannie Mae or Freddie Mac will not be needed in these cases.

Military personnel who are being relocated due to Permanent Change of Station orders would also be automatically eligible for short sales, and would not be obligated to contribute funds to cover the shortfall between the outstanding loan balance and the sales price on their homes under the new guidelines.

The guidelines also streamline the short sale process for homeowners that have missed several mortgage payments or have low credit scores. Fannie Mae and Freddie Mac will also be permitted to offer as much as $6,000 to second lien holders to expedite short sale closings. The guidance also clarifies when applications and sales offers must be submitted for a home sale to be considered a short sale.

CUNA Regulatory Counsel Dennis Tsang in the letter encouraged the FHFA to limit the application of new short sale guidelines to short sales only and not apply them to other types of borrower situations in which the borrower would like to remain in the home. The guidelines could also interfere with the ability of creditors to pursue deficiencies under state law, the letter added.

CUNA urged the FHFA to closely monitor the implementation of the new short sale guidelines, and to solicit and incorporate additional feedback from mortgage participants regarding the short sale program throughout its implementation.

For the full CUNA comment letter, use the resource link.

Inside Washington (11/05/2012)

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  • WASHINGTON (11/6/12)--Banks are urging the Consumer Financial Protection Bureau (CFPB) to change a proposed new regulation governing remittance transfers that takes effect in February. Under the rule, providers will be required to disclose the total amount of money that a recipient would receive through a transfer, factoring in the exchange rate, and any fees or foreign taxes, and the date that the money will be available. The time when the customer first requests the transfer, and when the payment is made also must be disclosed. Consumers will have about 30 minutes after the payment is made to cancel a transaction. Bankers say the tax information that the new rule requires them to disclose will not be accessible in the time required. "It is important that you understand that a database of all worldwide taxes and their related exemptions and exclusions that are applicable to international transfers and available in real time simply does not exist today," banking groups said in an Oct. 17 letter to the CFPB. Credit Union National Association President/CEO Bill Cheney last week reiterated CUNA's and credit unions' suggestions for fixing pending remittance regulations in a letter to CFPB Director Richard Cordray (News Now Nov. 5). In a letter to Cordray, CUNA said credit unions do not fear losing income as a result of these regulations--credit unions charge minimal fees for these services and some actually lose money on these transfers. However, they do worry that members will be forced to stop using their credit unions for such services and have to rely instead on other providers that will charge them much more …

Public version of new NCUA supervisory manual available

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ALEXANDRIA, Va. (11/5/12)--A public version of the National Credit Union Administration's (NCUA) new National Supervision Policy Manual (NSPM) was released on Friday.

The manual details internal NCUA operations and supervisory procedures for agency staff. Portions of the manual were removed from the public release version.

The NCUA developed the new NSPM over a two-year span. The new NSPM creates uniform operations and procedures for supervision throughout the country and improves the agency's ability to operate efficiently across regions, the NCUA said. Agency examiners were first trained on the new procedures in April, and that training process is ongoing.

The manual also implements key recommendations from federally mandated Material Loss Reviews conducted by NCUA's Office of Inspector General. The agency plans to review and update the NSPM as needed.

NCUA Chairman Debbie Matz said the new NSPM "brings more consistency and clarity to NCUA's supervisory operations and procedures across the country. In the past, practices have sometimes varied by region, and we felt it was important to bring these processes into a framework to improve and standardize credit union supervision," she added.

"Credit unions have relayed to me they are already seeing exam consistency improvements since the NSPM procedures went live nationally in July of this year," Matz said.

The Credit Union National Association (CUNA) and its Examination and Supervision Subcommittee plan to discuss the new exam manual with NCUA Director of Examinations and Insurance Larry Fazio.

CUNA earlier this year said that while examination consistency can be positive, the goal is to have examiners treat credit unions in a consistently professional manner, allowing the credit unions to develop and implement their own solutions to address problems.

Hurricane NCUA reminds CUs members help is available

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ALEXANDRIA, Va. (11/5/12)--As the East Coast slowly recovers from Hurricane Sandy, the National Credit Union Administration (NCUA) is doing its part to help credit unions in impacted areas restore normal operations.

"After major natural disasters, Americans come together and help each other," NCUA Chairman Debbie Matz said. "NCUA is doing its part to assist credit unions and their members in the wake of Hurricane Sandy. Our examiners along the East Coast are checking with their credit unions to provide support and assistance; our consumer experts are answering the many financial questions that members may have; and we're expediting consideration of credit union emergency grant applications. NCUA will continue to do what's needed to help," she added.

The NCUA this week activated its disaster relief policy and continues to monitor the status of more than 2,000 credit unions that may have been affected by the storm. The agency said the vast majority of federally insured credit unions are fully operational, but some are only able to operate on a part-time basis or are only offering certain services, such as ATMs. Others are operating out of temporary offices.

Electrical outages, communications difficulties, and facility damages are among the issues reported by credit unions. A list of credit unions impacted by the storm is available on the NCUA site.

The agency earlier this week also reminded low-income credit unions of the Urgent Needs Initiative, which provides grants of up to $7,500 to help restore operations and fix facilities damaged by natural disasters and other unexpected events. The NCUA on Oct. 31 received the first grant request following the storm. The request, which was approved on Nov. 1, will help New York University FCU, New York, N.Y., replace destroyed laptops and obtain secure Internet access.

Calls to the NCUA's consumer assistance hotline have increased in the storm's wake, as callers have asked about the operational status of specific credit union facilities, outages of credit union ATMs facilities, websites and phones, and the status of direct deposits.

The NCUA noted that credit union members seeking emergency assistance related to the hurricane may call (800) 755-1030 for assistance.

For the full NCUA release, use the resource link.

CUNA leagues follow up on key CFPB issues

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WASHINGTON (11/5/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney last week reiterated CUNAs' and credit unions' suggestions for fixing pending remittance regulations in a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray.

The letter follows an October meeting of CFPB staff, CUNA and CUNA's International Remittances Transfer Regulation Working Group. Credit union leagues have also had productive meetings with the CFPB and Cordray in recent weeks.

Under the CFPB's rule, remittance transfer providers would be required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate,  fees and taxes  associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors. The bureau's new remittance rule will take effect Feb. 7.

In a letter to Cordray, CUNA said credit unions do not fear losing income as a result of these regulations--credit unions charge minimal fees for these services and some actually lose money on these transfers. However, they do worry that members will be forced to stop using their credit unions for such services and have to rely instead on other providers that will charge them much more.

The regulations could ultimately push members away from their credit unions, CUNA added. "Since credit unions have not caused any problems for consumers regarding these transfers, a rule that would bring even some credit union international remittance programs to a halt seems wholly unreasonable," CUNA said.

In the CFPB meeting, CUNA and working group members focused on three key areas the CFPB could improve for credit unions:

  • the exemption level under the final rule;
  • disclosure requirements and in particular, requirements regarding foreign taxes; and
  • the shift of liability to senders for consumer errors or problems caused by third party servicers that affect the timeliness, amount, or other issues associated with receipt of the funds in a foreign country.
Cordray said the agency would consider CUNA's views. For more detail on CUNA's views, use the resource link.

The Northwest Credit Union Association is one credit union group that met recently with Cordray and CFPB staff during a Washington visit. The Kentucky Credit Union League (KYCUL) and Idaho Credit Union League have also discussed Multi-Featured Open-End Lending programs and other key credit union issues with CFPB staff, and Cordray followed up with the KYCUL following this visit. The KYCUL discussed the burden an unintended consequences regulations can create during their talk with Cordray.

Cheney noted that the California Credit Union League will also meet with Cordray and CFPB staff this month, and other leagues have and will meet with CFPB representatives.

"These sessions are very useful to help reinforce the distinctions between credit unions and for-profit financial institutions," Cheney said.

Inside Washington (11/02/2012)

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  • WASHINGTON (11/5/12)--A federal lawsuit that charges Wells Fargo of wrongdoing in connection with loans insured by the Federal Housing Administration (FHA) should be barred because it conflicts with the terms of the multistate mortgage settlement, Wells Fargo contends. The $25 billion mortgage settlement  that a federal judge approved in April included, in addition to Well Fargo, Bank of America, Citigroup, JPMorgan Chase, Ally Financial, the Justice Department and 49 states (American Banker Nov. 2). The suit filed in October by the Manhattan U.S. Attorney's office regards loans insured by the FHA over roughly a decade beginning in May 2001. The settlement "wiped the slate clean" for Wells Fargo in terms of facing any further liability to the U.S., according to papers filed by the financial giant with U.S. District Judge Rosemary Collyer, who approved the settlement …
  • WASHINGTON (11/5/12)--Regional banks. that have previously let large firms and community banks promote their political agenda in Washington have begun spending more money on lobbying in the past two years. The banks are particularly concerned with the effects of Dodd-Frank rules such as Volcker ban on proprietary trading and procedures for unwinding failed banks (Bloomberg Nov. 2). The mid-sized banks contend they should be considered in a different light by regulators because they focus on traditional deposits and lending rather than the higher-risk activities. Atlanta-based SunTrust has spent $75,000 on lobbying this year after spending less than $5,000 on lobbying in 2011 and 2010, according to federal records. PNC, based in Pittsburgh, has invested $750,000 this year and $1.53 million in 2011 after spending $570,000 in 2010, records show. Regions Financial has spent $890,000 on lobbying so far this year compared with $1 million last year. In 2010 it spent $540,000 …
  • WASHINGTON (11/5/12)--The Federal Deposit Insurance Corp. (FDIC) has scheduled a Nov. 8 meeting of its Advisory Committee on Community Banking, the schedule that includes an update from staff working on the agency's Community Banking Initiatives, including a summary of the six community banker roundtables held across the country this year. It also includes updates on both the research agenda and supervisory process initiatives. The FDIC Advisory Committee on Community Banking was established in 2009 to provide the board of directors with guidance on a broad range of policy issues affecting small community banks and the communities they serve, with a focus on rural areas …

NCUAs 2013 open meeting schedule is here

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ALEXANDRIA, Va. (11/5/12)--The National Credit Union Administration (NCUA) just released its monthly meeting schedule for 2013.

Following long-standing practice, no meeting is scheduled for August. All open meetings are scheduled to begin at 10 a.m. (ET) on the following dates:
  • Jan. 10
  • Feb. 21
  • March 14
  • April 18
  • May 16
  • June 20
  • July 25
  • Sept. 12
  • Oct. 24
  • Nov. 21
  • Dec. 12
The 2013 board meeting schedule is subject to change.

CUNA urges unique treatment for CUs under FASB framework

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WASHINGTON (11/5/12)--Credit unions are unique in their structure and the Credit Union National Association (CUNA) asked the Financial Accounting Standards Board (FASB) to recognize the uniqueness as it develops a decision-making framework that will guide the recently created Private Company Council as it determines whether exceptions to U.S. Generally Accepted Accounting Principles--or GAAP--for credit unions and other private entities are appropriate.

CUNA generally supported FASB's proposed framework saying it includes successfully appropriate factors differentiating private companies from public companies that the PCC will examine in its assessment of whether exceptions to GAAP are necessary and appropriate.

However, CUNA took exception with FASB's approach that would require all private companies, including credit unions, that apply certain industry-specific accounting guidance to generally follow the same industry-specific guidance that public companies follow.

In its Oct. 31 comment letter, CUNA noted that credit unions—as not-for-profit, member-owned financial cooperatives—exist to serve their members not to make a profit.  Unlike most other financial institutions, credit unions do not issue stock or pay dividends to outside stockholders.

"They use their earnings to build capital and work hard to provide favorable rates on loans, and savings, and to charge lower fees," reminded CUNA Assistant General Counsel Luke Martone in the letter.

"We urge FASB to consider that the credit union business model is quite different from that of publicly traded entities. The stakeholders of a credit union for information purposes are its members and its regulator, not the public or shareholders who have purchased publicly traded stock."

Use the resource link to read the complete CUNA comment.

NEW 2013 NCUA open meeting schedule just released

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ALEXANDRIA, Va. (UPDATED 11/2/12, 3:20 p.m. ET)--The National Credit Union Administration (NCUA) just released its monthly meeting schedule for 2013.

Following long-standing practice, no meeting is scheduled for August. All open meetings are scheduled to begin at 10 a.m. (ET) on the following dates:
  • Jan. 10
  • Feb. 21
  • March 14
  • April 18
  • May 16
  • June 20
  • July 25
  • Sept. 12
  • Oct. 24
  • Nov. 21
  • Dec. 12
The 2013 board meeting schedule is subject to change.

IRS pushes back FATCA compliance date (11/01/2012)

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WASHINGTON (11/01/12)--The U.S. Internal Revenue Service (IRS) and the U.S. Treasury have pushed back the compliance date for key aspects of the Foreign Account Tax Compliance Act (FATCA) until 2014 and, in some cases, as far as 2017.

FATCA is designed to create a tax information reporting and withholding system for certain payments that are made to foreign financial institutions (FFIs) and other entities.

The IRS's proposed regulations to implement FATCA would require FFIs, including credit unions, to register with the IRS and detect taxable account activity by U.S. citizens in foreign countries. The FATCA rules would also require U.S.-based credit unions and financial institutions to file Forms 1042-S for payments of deposit interest or dividends in amounts of $10 or more that are made to nonresident alien members and customers. These financial institutions must also conduct due diligence regarding whether credit union members' payments to overseas FFIs are to an FFI that is not FATCA compliant.

The rules were scheduled to apply to payments made on and after Jan. 1, 2013. However, the IRS and Treasury in a release noted that many commenters said they would have issues following that implementation timeline. The Credit Union National Association earlier this year also noted that the compliance burdens and overhead costs credit unions would face as a result of these proposed changes would far exceed any benefit to the IRS.

As a result of these comments, the IRS and Treasury announced they are:

  • delaying the compliance date for FATCA due diligence procedures until January 1, 2014; and
  • delaying the date by which withholding agents which are not participating FFIs must document payees that do not comply with FACTA until July 1, 2014.
The compliance date for portions of FATCA that would require U.S. credit unions and other financial institutions to withhold 30% of any funds that are transferred to non-FATCA compliant FFIs will be pushed back until Jan. 1, 2017, the agencies added. Withholding on other types of payments is still expected to commence Jan. 1, 2014.

The delayed compliance dates will apply to U.S. and foreign credit unions, as well as other financial institutions.

Portions of the rule that impact Form 1042-S filings will still become effective on Jan. 1, 2013.

For the IRS/Treasury release on the FATCA changes, use the resource link.

NCUA reduces TCCUSF high estimate by 400M

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ALEXANDRIA, Va. (11/2/12)--The National Credit Union Administration (NCUA) on Thursday revised projections for the total cost of corporate credit union stabilization assessments to between $6 billion and $8.9 billion, a $400 million reduction from the previous maximum cost of $9.3 billion.

The NCUA in a release said the $400 million reduction in estimated costs reflects the performance of legacy assets held by the agency, and the NCUA's updated assessment of the macroeconomic factors used in projecting the future performance of NCUA Guaranteed Notes (NGNs). Funds that the agency has recovered through recent lawsuits against Wall Street firms are also added in to the $400 million total.

Credit unions have already paid $4.1 billion in assessments to the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), including a 2012 TCCUSF assessment of 9.5 basis points (bp) of their insured shares as of June 30. With the new estimates, they will need to pay between $1.9 billion and $4.8 billion in additional assessments before the stabilization fund expires in 2021.

Credit Union National Association (CUNA) Chief Economist Bill Hampel said the 2013 TCCUSF assessment is likely to be in the range of 5 bp to 10 bp. A 2013 TCCUSF assessment of no more than 5 bp "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be," he said.

Hampel noted the $400 million cost cut slightly reduces the expected amount of remaining corporate stabilization assessments to be paid by credit unions. "Just how much depends on the length of time over which the NCUA board decides to extend the remaining assessments," he added.

The $400 million reduction lowers the projected mid-point of the remaining assessments to be paid by $200 million, from $3.55 billion to $3.35 billion, Hampel said. "If the NCUA were to collect this midpoint assessment amount over a nine-year period, the annual assessments would need to be 3.5 bp of insured shares. At the previous loss estimates, the annual required assessment would have been 3.8 bp."

If NCUA officials chose to pay down the TCCUSF in five years instead of nine, annual assessments would be 7 bp under the new, lower loss projections. The bp projection under the previous loss estimates would have been 7.5 bp, according to Hampel.

All of these CUNA estimates assume 5% annual growth in insured shares, he said.

Keeping the next few years' assessments on the low-end will reduce the chance that assessments might actually overfund the actual losses, requiring a rebate at some point in the future, Hampel noted.

Market values of the remaining securities in the NCUA's legacy asset portfolios are rising, and continued recovery in the housing market could reduce the agency's projected corporate credit union loss estimates even further, he added. However, credit unions should not count on this reduction until it happens, Hampel said.

For the full NCUA release, use the resource link.

Cheney notes BTD anniversary in iHuffPosti column

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WASHINGTON (11/2/12)--Did last year's Bank Transfer Day have a lasting impact? "When you look at the numbers, it's hard to conclude otherwise," Credit Union National Association (CUNA) President/CEO Bill Cheney said in a Thursday column in The Huffington Post.

Last year's Bank Transfer Day on Nov. 5  gained significant social and traditional media attention, and spurred the greatest period of credit union membership growth in more than a decade, Cheney said. Credit unions added nearly 2.2 million new members in the 12-month period ended June 30, 2012, a total that is almost double the 1.2 million average growth credit unions have seen in similar 12-month periods over the past decade, he added.

The number of new checking accounts opened at credit unions also increased rapidly during this time period, totaling nearly 2.9 million. Further, hits on CUNA's consumer web site, aSmarterChoice.org, totaled 70,000 the day before Bank Transfer Day, and 40,000 on Bank Transfer Day itself. In the months that followed, the traffic has leveled off, but at a higher level than before--about 5,000 to 6,000 visits a week, Cheney wrote.

"Many of the people who have opened these new accounts at credit unions are younger, fee-conscious, and discovering most credit unions still offer free checking and lower fees generally," the CUNA CEO said. Consumers also found that many credit unions offer the services, access and convenience of large banks, "but in a decidedly consumer-friendly way, and with the kind of roots in their local communities that comes from being member-owned cooperatives," Cheney added.

And these new members are talking about their great credit union experiences in person and in social media outlets, "perpetuating [the] long stretch of new-member growth."

"All this suggests Bank Transfer Day and consumers' negative reaction to high bank fees was not a short-lived affair, but something more sustained," Cheney said. The one-year anniversary of Bank Transfer Day is this Monday.

For the full HuffPost story, use the resource link.

CFPB exams find card mortgage credit bureau issues

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WASHINGTON (11/2/12)--Consumer Financial Protection Bureau (CFPB) examinations over the past year have uncovered issues tied to consumer credit card approvals, credit reporting, and mortgage disclosures, the agency said in a recent report.

The CFPB report, released this week, addresses examinations undertaken July 21, 2011 and September 30, 2012.

In a release, the CFPB its examiners found mortgage providers in some cases did not provide their borrowers with clear and timely disclosures regarding the nature and costs of the real estate settlement process, such as through inaccurate Good Faith Estimates or HUD-1 forms. Some lenders also failed to accurately disclose interest rates, payment amounts, and payment schedules to their borrowers, the CFPB added.

Examiners also found that some financial institution employees lacked the training needed to fully comply with fair credit reporting requirements. This lack of training at times resulted in inaccurate information being forwarded on to credit reporting bureaus. Inaccurate information in a consumer's credit record may cause a consumer to pay more for credit than would otherwise be the case or be unjustifiably denied credit altogether, the CFPB noted.

The agency also released an appeals policy for the institutions it supervises, and an updated version of its own examination and supervision manual.

For the CFPB release, use the resource link.

Inside Washington (11/01/2012)

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  • WASHINGTON (11/2/12)--The Ohio Supreme Court on Wednesday ruled that lenders must have proper documentation in place before filing a foreclosure. In a unanimous ruling, the high court dismissed a lawsuit filed by Freddie Mac against Ohio homeowners Duane and Julie Schwartzwald. Freddie charged that the Schwartzwalds owed $245,000 after defaulting on a mortgage they received from Legacy Mortgage in 2005 (American Banker Nov. 1). Freddie attached a copy of the mortgage identifying the Schwartzwalds as borrowers and Legacy as lender to its complaint, but did not include a copy of a promissory note the Schwartzwalds had also signed. Freddie claimed it could not obtain the note. In the dismissing the suit, the high court ruled that parties initiating foreclosure actions cannot do so before obtaining an assignment of the promissory note and mortgage securing the borrower's loan
  • WASHINGTON (11/2/12)--Backers of the interchange fee law are criticizing a Washington, D.C. mobile payments company after the firm sent an e-mail informing customers that a fee increase was the result of the provision in the Dodd-Frank Act. Parkmobile USA, a mobile payments company with an exclusive contract for Washington, D.C. municipal parking areas, said in the e-mail that parking transaction fees would increase to 45 cents from 32 cents and were "triggered" by Dodd-Frank (American Banker Nov. 1). In response Sen. Dick Durbin, (D-Ill.) who authored the interchange fee law provision asked the company to retract the statement. A $7.5 settlement in retailers' class antitrust lawsuit against Visa and MasterCard over credit card interchange fees was filed Oct.  23 by class counsel for the plaintiffs in U.S. District Court for the Eastern District of New York (News Now Oct. 23). The settlement calls for Visa, MasterCard and the banks to create a $6.05 billion fund (which would be a record amount for a class action settlement) to repay retailers for past fees charged. It also stipulates that retailers would be permitted to assess "check out" fees or surcharges on credit card purchases, which has previously been prohibited by Visa and Mastercard rules. Several retail organizations and retailers oppose the settlement. Credit Union National Association President/CEO Bill Cheney has said that the surcharging aspect of the settlement--as well as the provision that consumer-owned credit unions would see a reduction in interchange revenue--are signs that the settlement does nothing for consumers …
  • WASHINGTON (11/2/12)--Borrowers with poor credit scores are subject to tighter lending standards for government-issued loans since the financial crisis, but those with high scores face largely the same standards as before the recession, according to the Federal Reserve's October Senior Loan Officer Opinion Survey. Responding to a special question on Federal Housing Administration (FHA) lending, a majority of domestic banks indicated that their lending standards for approving an application for an FHA-insured purchase mortgage were about the same as in 2006 for a borrower with a credit score of 660, but that standards had tightened for borrowers with lower FICO scores. Regarding residential real estate lending the past three months, banks reported that standards for both prime and nontraditional mortgages had remained unchanged on balance.  Respondents said in both the July and October surveys that demand for prime and nontraditional residential mortgage loans had increased …

CFPB should collaborate on financial ed efforts CUNA

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WASHINGTON (11/2/12)--The Consumer Financial Protection Bureau should work closely with other federal agencies that are currently pursuing financial literacy efforts in order to reduce government redundancies as well as to make it easier for consumers to access reputable sources of information on financial issues.

Those are key recommendations made by Credit Union National Association (CUNA) in a comment letter sent to the CFPB on Oct. 31.

CUNA, in a letter by Assistant General Counsel Luke Martone, noted that emotions and outside influences are among the common challenges that often prevent consumers from making effective financial decisions.

"Specifically, the ability to exhibit proper self-control is a major challenge for many consumers. Similarly, we believe many consumers struggle to accurately understand how today's financial decisions will impact tomorrow's financial position,'' CUNA wrote.

In addition, a major challenge is that "those with the greatest need for financial education are the ones with the least amount of available time to pursue such efforts.''

NCUA blocks former Mass. CU employee from FI work

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ALEXANDRIA, Va. (11/2/12)--Jessica L. St. Amand, a former employee of Somerville Municipal FCU in Somerville, Mass., is prohibited from any future participation in the affairs of federally insured financial institutions.

The National Credit Union Administration (NCUA) issued a prohibition order after, the agency says, St. Amand was convicted of four counts of identity fraud and sentenced to probation.

NCUA enforcement orders are available online at http://go.usa.gov/yiJ and for inspection at NCUA's Office of General Counsel between 9 a.m. and 4 p.m. Monday through Friday.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

FHFA CFPB building comprehensive mortgage database

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WASHINGTON (11/2/12)--The Federal Housing Finance Agency (FHFA) and Consumer Financial Protection Bureau (CFPB) announced Tuesday they have formed a partnership to create a National Mortgage Database—saying it will be the first comprehensive repository of detailed mortgage loan information.

The FHFA regulates Fannie Mae and Freddie Mac, as well as the 12 Federal Home Loan Banks. The agency reports that these government-sponsored enterprises provide more than $5.7 trillion in funding for the U.S. mortgage markets and financial institutions.

The new database will primarily be used to support the two agencies' policymaking and research efforts and to help regulators "better understand emerging mortgage and housing market trends." The designers said it will include information spanning the life of a mortgage loan from origination through servicing and include a variety of borrower characteristics.

Specifically, the database will include loan-level data about the mortgage including:

  • A borrower's financial and credit profile;
  • The mortgage product and terms;
  • The property purchased or refinanced; and,
  • The ongoing payment history of the loan.
 

Data will be updated on a monthly basis and track as far back as 1998.

The agencies assure that the database will not contain personally identifiable information and that precautions will be taken to ensure that individual consumers cannot be identified through the database or through any datasets that may be made available to researchers or the public.

Development of the database currently is underway and early versions could be completed in 2013.  The partner agencies said they are exploring ways to share the database information with other federal agencies, academics, and the public once the database is complete.

Use the resource link to read more about the coming database.