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CUNA/CFA Holiday Spending Survey Out Today

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WASHINGTON (11/27/13)--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 Chief Economist Bill Hampel present the 2013 Holiday Spending Survey today at the National Press Club in Washington.

This year, 1,002 persons were interviewed by landline or cell phone between Nov. 7 and 10. The respondents were asked whether they feel their financial situation has become better or worse in the past year. The survey also documents changes in consumer attitudes in spending compared to the last several years.

This year's survey will also reveal how the recent fiscal fights in the U.S. Congress, and the subsequent government shutdown, have impacted consumer confidence. The survey presentation is scheduled to begin at 10 a.m. ET in the National Press Club's Zenger Room.

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.

This is the 14th year that the CFA and CUNA have prepared and released the survey, which is unveiled ahead of Black Friday, the traditional start of the holiday shopping season.

Mortgage Rates, Amounts Down In October, FHFA Reports

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WASHINGTON (11/27/13)--Average mortgage interest rates and loan amounts both fell in October, the Federal Housing Finance Agency (FHFA) reported.

The FHFA said the average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.58% in October, a five basis point decrease from the previous month's total. The effective interest rate, which accounts for the addition of initial fees and charges over the life of the mortgage, was 4.49% in October. This is a two basis point reduction from the 4.51% rate recorded in September, FHFA said.

The decline interrupts what had been an "upward trend," the FHFA noted.

The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some adjustable-rate mortgage contracts, was down to 4.32%. That was a slight decrease of four basis points from the previous month.

The average loan amount for all loans was $269,000 in October, down $1,100 from $270,100 in August, the agency added.

Federation Looks To Increase CU CDFI Fund Participation

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WASHINGTON (11/27/13)--Noting that credit unions "remain underrepresented among the ranks of certified community development financial institutions (CDFI)," the National Federation of Community Development Credit Unions said it will work with state credit union leagues and others to increase credit union participation in the program.

"Though most of the 2,000 low-income credit unions in the U.S. are eligible, only 10% have obtained CDFI certification," the federation said. "Many eligible credit unions are discouraged by the application process, others by the historically low percentage of grants given to credit unions," the federation added.

The U.S. Treasury's CDFI Fund helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community.

Credit unions made 73 requests for a total of around $77 million in funds for the 2013 fiscal year. More than $21 million in CDFI Fund awards and grants were released to 35 low-income credit unions. Overall, 191 organizations were awarded a total of more than $172 million when fiscal 2013 CDFI Fund awards were announced in late September.

Serving low- and minimum-income consumers and financially underserved communities "is the place where mission and opportunity come together for credit unions," the federation said. "CDFI certification is the gateway to attracting local recognition as a community leader as well as to accessing additional public and private sector funds, the federation added.

For the full federation release, use the resource link.

FDIC: Bank Net Income Down $1.5B In 2013 3Q

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WASHINGTON (11/27/13)--Net income at Federal Deposit Insurance Corp.-insured commercial banks and savings institutions declined by $1.5 billion between the 2012 and 2013 third quarters, totaling $36 billion as of Sept. 30.

This is the first time in 17 quarters--since the second quarter of 2009--that earnings registered a year-over-year decline, the FDIC noted. The decline was mainly the result of a $4 billion increase in litigation expenses at one institution, the agency said, but lower revenue from reduced mortgage activity and lower gains on asset sales also played a part.

Nearly 9% of FDIC-insured banks were unprofitable during the quarter.
"Most of the positive trends we have been seeing in industry performance continued in the third quarter," FDIC Chairman Martin Gruenberg said. "Fewer institutions reported quarterly losses, lending grew at a modest pace, credit quality continued to improve, more banks came off the 'Problem List,' and fewer banks failed."

Other 2013 third quarter results reported by the FDIC include:
  • An average return on assets of 0.99%;
  • An average return on equity of 9.35%;
  • Net operating revenue of $163.3 billion;
  • An average net interest margin of 3.26%;
  • Total noninterest expenses of $2 billion; and
  • A $5.8 billion provision for loan losses.
For more on the bank financial results, use the resource link.

NEW: CUNA/CFA: Holiday Spending Expected To Increase This Year

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WASHINGTON (11/27/13, UPDATED: 10:15 A.M. ET)--More consumers plan to increase their spending during this year's holiday season, and fewer consumers plan to spend less than they did last year, according to the 14th annual holiday spending survey conducted by the Consumer Federation of America (CFA) and the Credit Union National Association.

Since 2012, the percentage who said they would spend more than the previous year rose from 12 to 13, while the percentage who said they would spend less declined from 38 to 32. These changes continue the trend from 2011, when only 8% said they would spend more while 41% said they would spend less.

Nearly one-in-four (24%) said their financial situation was better this year than in 2012, while 29% said their financial situation was worse. The percentage of those who said it was worse was the smallest since CFA and CUNA began asking the question in 2009.

"The survey suggests that holiday spending will increase at least as fast as last year. It is also encouraging that fewer Americans see their economic status as worsening, despite on-going federal budget issues in Washington," CUNA Chief Economist Bill Hampel said.

Watch News Now for more on the spending survey release..

NCUA OIG Past, Near Future Detailed In Report To Congress

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ALEXANDRIA, Va. (11/27/13)--The National Credit Union Administration's Office of the Inspector General "has been active on both the audit and investigative sides" this year. Details of that office's work and the NCUA's broader endeavors are provided in the OIG's Semiannual Report to the NCUA Board and the Congress.

The report highlights the OIG's and NCUA's work during the six months ended Sept. 30.

In the report, the OIG updates Congress on the status of some ongoing audits, including:
  • An independent evaluation of the NCUA's compliance with the Federal Information Security Management Act (FISMA) of 2013;
  • A review of the NCUA's 2013 financial statements;
  • Material loss reviews of Chetco FCU, Harbor, Ore., and Taupa Lithuanian CU, Cleveland, Ohio;
  • A review of the agency's process for documenting share insurance fund losses and credit union failures; and
  • A review of the NCUA's credit union success stories.
The report also summarizes OIG reviews of the NCUA's conference-related activities and expenses, the security of the NCUA's data center, and the material loss review of El Paso's FCU, El Paso, Texas.

An overview of federally insured credit union key financial indicators, and details on the NCUA's structure, staff, budget, and major projects during 2103 are also provided.

For the full report, use the resource link.

With Congress In Recess, CUNA Eyes Late 2013 Legislative Targets

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WASHINGTON (11/26/13)--The U.S. Congress is in recess during this short Thanksgiving week, but the Credit Union National Association is preparing to continue its work on tax reform and other issues once legislators return.

House members are scheduled to return on Dec. 2, and their target 2013 adjournment date is Dec. 13. Members of the Senate are set to return to Washington on Dec. 9. The Senate has not set a target adjournment date.

Senate tax reform documents released last week addressed international tax reform, tax administration and tax accounting rules, but not credit unions. However, additional components that would round out a broader reform effort, could be released before the end of the year, CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

"The next steps are not immediately clear, but to a large extent the immediate future of tax reform is linked pretty closely to the outcome of the budget conference committee, the debt ceiling and (to a lesser extent) the appropriations process," Donovan added. He said the House seems to be waiting to see the results of budget discussions between Senate Budget Committee Chairman Patty Murray (D-Wash.) and House Budget Committee Chairman Paul Ryan (R-Wis.) before it acts on tax. The budget conference committee has a "deadline" of Dec. 13.

A budget agreement, if reached, could result in the setting of targets, guidelines or instructions for tax-writers to follow in reform legislation. An agreement might also facilitate bi-partisan agreement on key areas of tax reform, Donovan said. "Of course, that scenario is still a long shot with just a few weeks to go in the legislative year," he said. The House will likely wait until early 2014 to take any action on tax reform.

Other items CUNA continues to watch include:
  • Senate housing finance reform legislation that could be introduced in December and marked up in January or February;
  • The Innovation Act of 2013 (H.R. 3309), which could be considered by the House by the end of the year;
  • The Credit Union Share Insurance Fund Parity Act (H.R. 3468), which could be a candidate for the suspension calendar before the end of the year; and
  • The Privacy Notice Modernization Act of 2013 (S.635), which could be considered in the Senate before the end of the year.

NCUA Letter Details CUSO Rule, Compliance Tips

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ALEXANDRIA, Va. (11/26/13)--An outline of the National Credit Union Administration's final rule on credit union service organization (CUSO) supervision, and compliance tips for credit unions, are provided in a new agency letter to credit unions (13-CU-13).

The CUSO rule, which was approved at the November NCUA open board meeting, will require CUSOs and their subsidiaries to directly file their financial statements with the NCUA and to forward those reports to state supervisors. The rule is targeted to CUSOs that engage in high-risk or complex activities such as credit lending, information technology and custody, safekeeping and investment management.

The final rule will become effective on June 30. A registry for CUSOs to file their documents with the NCUA will be finalized in late 2015.

While the unique collaborative business model of CUSOs fosters cooperation and shared innovation for credit unions, allowing them to achieve economies of scale, retain expertise, and better serve their members, CUSOs can also pose potentially widespread financial and operational risks to credit unions and the National Credit Union Share Insurance Fund, the NCUA noted in the letter.

"Without these changes to the CUSO regulations, NCUA cannot fully determine the financial condition of CUSOs, the full range of services offered by each CUSO, an accurate number of CUSOs in operation, or the relationship between a specific CUSO and a specific credit union," the agency explained.

The letter also contains details on the agency's developing CUSO registry, CUSO accounting tips, and information on how the agency rule will address less than adequately capitalized federally insured, state-chartered credit unions.

NCUA Chairman Debbie Matz in the letter recommended that credit unions that have or plan to make a loan to or investment in a CUSO familiarize themselves with the requirements of the final regulations, and contact their regional office or state supervisory authority if there are further questions.

For the full letter to credit unions, use the resource link.

Reg Advocacy Report Updates NCUA, CFPB News(1)

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WASHINGTON (11/26/13)--The latest information on last week's National Credit Union Administration open board meeting, and the Credit Union National Association's recent appeals to that agency for greater regulatory relief, are featured in this week's Regulatory Advocacy Report.
 
This week's edition of the Report also features:
  • Details on the Consumer Financial Protection Bureau's final mortgage disclosure regulations;
  • News on the NCUA's settlement with JPMorgan Chase; and
  • CUNA's new regulatory information sources, CompNOTES.
A resource chart with information on current CUNA comment calls is also provided in the Report.

For this week's Regulatory Advocacy Report, CUNA members can use the resource link.

2013 Holiday Spending Survey To Include New Consumer Spending Question

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WASHINGTON (11/26/13)--The Consumer Federation of America (CFA)/Credit Union National Association consumer holiday spending survey, which will be released for the 14th time on Wednesday, will contain new details on consumer behavior. For the first time, the survey asks consumers how their holiday spending plans have been affected by the recent federal budget controversy.
 
The survey will also include:
  • The latest look at consumers' holiday spending plans;
  • The difference in spending plans among income brackets;
  • Consumer concern about mortgages and making debt payments;
  • How the findings compare to consumer attitudes for the last several years; and
  • How consumer attitudes have changed over the past 14 years.
CUNA Chief Economist Bill Hampel and CFA Executive Director Stephen Brobeck will also provide helpful advice to help consumers manage holiday spending and avoid holiday debt overload when they present the survey.

The CFA/CUNA survey was conducted between Nov. 7 and 10, and is released just ahead of Black Friday and the traditional 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.

Cheney Report Updates CUs On National, Local Tax Fights

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WASHINGTON (11/25/13)--In this week's edition of The Cheney Report, Credit Union National Association President/CEO Bill Cheney updates credit unions on the status of national tax talk, and details what South Dakota credit unions are doing to repel tax attacks on a local level.

Credit unions were neither the subject--nor were they mentioned--in the first tax reform discussion draft released last week by Sen. Max Baucus (D-Mont.), chairman of the tax-writing Senate Finance Committee. However, Cheney wrote, "we do expect the momentum to pick up in the first part of the New Year." House Ways and Means Chairman Dave Camp (R-Mich.) has said an early 2014 markup of tax legislation is likely. "In the meantime, it's vital that we continue to loudly urge lawmakers 'Don't Tax My Credit Union,' as the content of these early legislative drafts--especially maintaining our tax exemption within them--remains crucial," Cheney added.

One group taking up the 'Don't Tax My Credit Union' fight on a local level is the Credit Union Association of the Dakotas, who, alongside credit unions from that state, has challenged efforts by South Dakota banks to attack the credit union tax exemption at the county level.

Bankers in the state are bringing "tax equity resolutions" for consideration by local county commissions, which call for county support of repeal of the exemption. However, Cheney mentioned, the credit unions are fighting back. One resolution which banks brought before a county commission was tabled, indefinitely, by a vote of 4-0, Cheney reported. "But the bankers are still at it--and we're working with the CUAD to help them in every way we can to push back this latest scheme by bankers to attack our tax status," he wrote.

This week's Cheney Report also includes:
  • Information on how United Educators CU, Apple Valley, Minn., has worked with the Minnesota Department of Commerce to create a program to help parents educate their children about managing their finances;
  • Results from last week's National Credit Union Administration board meeting; and
  • Details on CUNA's regulatory relief letter to the NCUA.
Use the resource link to read the latest in The Cheney Report.

NCUA: TCCUSF Estimates Down $2.3B

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WASHINGTON (11/25/13)--The upper end of remaining Temporary Corporate Credit Union Stabilization Fund assessment estimates declined by $2.3 billion between December 2012 and July 2013, thanks to a $1.6 billion decrease in expected costs and a $700 million assessment that was collected in October 2013, the National Credit Union Administration announced Friday.

"A great deal of disciplined work and careful planning has kept the Corporate Resolution on-track, and the new estimates are very good news," NCUA Chairman Debbie Matz said. "Our continued recoveries from Wall Street firms responsible for the corporate crisis, now totaling more than $1.75 billion, an improving economy and NCUA's continuing efforts to effectively manage losses are helping reduce future credit union assessments."

The estimates do not include funds from a $1.4 billion settlement that was reached with JP Morgan last week. (See Nov. 20 News Now: NCUA Receives $1.4B In JP Morgan Settlement.)

The agency reported that total future remaining TCCUSF assessments will likely be no higher than $1.6 billion. At the end of 2012, the projected range was $1.6 billion to $3.9 billion, the agency said. There will be no TCCUSF assessment in 2014, and Credit Union National Association Chief Economist Bill Hampel discussed what this news means for credit unions last week. (See Nov. 22 News Now: Inside Exchange Breaks Down NCUA Assessment News.)

"Factoring in both these latest reductions in loss estimates with an estimate of the net proceeds of the JP Morgan settlement, the current assessment range is now between minus $1 billion and plus half a billion dollars." Hampel said. A negative assessment implies a future rebate, he noted. "That means credit unions are more likely to see rebates than more assessment in the future, although the rebates will likely only occur several years in the future," Hampel said.

"The narrower range of projected remaining assessments reflects the actual performance of the failed corporate credit unions' legacy assets to date and NCUA's updated evaluation of the macroeconomic factors used in projecting the future performance of [NCUA Guaranteed Notes]," the agency said.

The NCUA noted that credit unions have paid $4.8 billion in assessments since 2009. "Although the Stabilization Fund will expire in 2021, assessments may end sooner," the agency said in a release.

The range of remaining assessments could be influenced by:
  • Changes in housing prices;
  • Interest rate changes;
  • Unemployment rate variations; and
  • Mortgage prepayments.
For more, use the resource link.

Small Ohio CU Serving Polish Veterans Liquidated By NCUA

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ALEXANDRIA, Va. (11/25/13)--Polish Combatants CU, Bedford, Ohio, was shuttered by the Ohio Division of Financial Institutions on Friday, with the National Credit Union Administration serving as liquidating agent.

The NCUA in a release said the credit union was closed after regulators determined the credit union had no prospect for restoring viable operations.

The credit union, which was chartered in 1957 to serve Polish World War II veterans, had 52 members and held $120,450 in assets at the time of its closing. Polish Combatants CU is the 13th federally insured credit union liquidation of 2013, NCUA said.

Member deposits are federally insured by the National Credit Union Share Insurance Fund up to $250,000. NCUA's Asset Management and Assistance Center will issue correspondence to individuals holding verified share accounts in the credit union in the coming days.

CFA/CUNA To Present 2013 Holiday Spending Survey Wednesday

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WASHINGTON (11/25/13)--For the 14th 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 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 traditional 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.

Vet, Servicemember Protections Highlighted In NCUA Video

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ALEXANDRIA, Va. (11/25/13)--The many protections provided by the Servicemembers Civil Relief Act and the Military Lending Act are detailed in a new National Credit Union Administration video.

"Our servicemembers, veterans and their families have made sacrifices for their country, and yet unscrupulous lenders lure them into a cycle of financial chaos," NCUA Chairman Debbie Matz said. "The latest Consumer Protection Update reaffirms NCUA's commitment to ensuring that our nation's servicemembers are educated about their rights and won't have to worry about their finances while defending our nation."

Campaigns such as Military Saves Week and Military Consumer Protection Day are also highlighted in the video.

"Credit unions provide low-cost financial products and services to the military and defense communities worldwide. I encourage all credit unions to share this new video with their members and make sure that those who protect our country are themselves protected from usurious loans and predatory lenders," Matz added.

The video encourages credit unions to take part in the 2014 America Saves campaign and the 2014 Military Saving campaign. The NCUA also highlights servicemember financial resources on its MyCreditUnion.gov and Pocket Cents web sites.

NCUA Sets Dec. 17 Succession Planning Webinar

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ALEXANDRIA, Va. (11/25/13)--Establishing effective succession plans for credit union management and other leadership positions will be the topic of a free Dec. 17 National Credit Union Administration webinar.

The webinar, entitled "Succession Planning," is scheduled to begin at 2 p.m. (ET). The NCUA's Office of Small Credit Union Initiatives will host the webinar. OSCUI Economic Development Specialist John Dock, Holly Herman, a management consultant with the firm Achieving Skills, and Julie Kappenman, Director of Association Compliance Services at the Mountain West Credit Union Association, will present the webinar.

Succession planning processes for emergency CEO succession and the advancement or dismissal of key personnel will be discussed during the webinar.

The NCUA said webinar participants may submit questions in advance by sending an e-mail to WebinarQuestions@ncua.gov. The subject line of the e-mail should read "Succession Planning Webinar."

To register for the NCUA webinar, use the resource link.

NCUA 2014 Budget Contains 6.7% Increase

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ALEXANDRIA, Va. (11/22/13)--The National Credit Union Administration's proposed 2014 budget is $268.2 million, an increase of 6.7% from the 2013 NCUA budget. This is the sixth straight year that the agency's planned expenditures have grown.

Click to view larger image NCUA board member Michael Fryzel, left, talks numbers with agency CFO Mary Ann Woodson at Thursday's open board meeting. (CUNA Photo)
"The Credit Union National Association remains very concerned about the size of the agency's budget and the continued budget growth for NCUA, particularly in light of the welcome decline in the assets in troubled credit unions over the past few years," CUNA President/CEO Bill Cheney said. "Credit unions have to manage resources prudently or be subject to sanctions. The NCUA should not set one standard for itself and another for credit unions. Credit unions remain concerned that they work hard to contain costs and they feel their agency should do so as well," Cheney noted.

The total amount of 2014 funding increase is $16.9 million.

Employee pay and benefits account for 73%, or $194.6 million, of the 2014 budget.

The NCUA also plans to add $1.7 million in new administrative expenses, an increase in contract service expenses of about $3.1 million and $652,796 in new travel expenses.

CUNA has repeatedly encouraged NCUA to use restraint as it sets its budget. CUNA's Examination and Supervision Subcommittee is reviewing the NCUA's budget decision and related budget documents carefully to determine how additional oversight of the agency's budget can be achieved.

The NCUA's original 2013 budget was set at $251.4 million, but the agency in July reduced its projected 2013 budget by $2.6 million a move CUNA supported and commended.

The agency also released the 2014 overhead transfer rate and operating fee scale during Thursday's open board meeting.

The overhead transfer rate has been modified from the current 59.1% to 69.2%. According to the agency, the transfer rate modification is primarily due to the results of the Examination Time Survey for 2013.

Examiners reported spending 88% of their examination and supervision time on insurance related procedures for the time survey ending in 2013, compared to 67% in the previous survey cycle.

CUNA has urged the NCUA to continue to refine its methodology related to the OTR to provide additional clarity.

The agency also approved a 2014 natural person federal credit union operating fee rate reduction of 18.4%, and a 5.1% increase in the asset dividing point for the 2014 operating fee scale that the agency uses to determine the fee assessed to federal credit unions. Federal credit unions with assets less than $1 million will not be assessed an operating fee for 2014. The operating fees for federal credit unions, which will be assessed based on assets as of December 31, 2013, will be due to NCUA no later than April 15, 2014.

CUNA commended this decision for the operating fee to remain at no more than one month's expenses of the agency.

Final CUSO Rule Approved By NCUA

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ALEXANDRIA, Va. (11/22/13)--The National Credit Union Administration's final rule addressing credit union service organization (CUSO) supervision is revised from the agency's earlier proposal, but the Credit Union National Association remains concerned about the authority of the agency to exercise direct authority over CUSOs.

Under the proposal released in 2011, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. The final rule, approved during Thursday's open board meeting, keeps those controversial provisions.

However, the NCUA noted that the final rule is more limited in scope than the proposed rule: The final rule is targeted to CUSOs that engage in high-risk or complex activities such as credit lending, information technology and custody, safekeeping and investment management.

Special requirements for a credit union investing in, lending to, or receiving services from the CUSO include:
  • Services provided to each credit union;
  • The investment amount, loan amount, or level of activity of each credit union; and
  • The CUSO's most recent year-end audited financial statements.
In addition, CUSOs engaging in credit and lending services will be required to report the following activity by loan type:
  • The total dollar amount of loans outstanding;
  • The total number of loans outstanding;
  • The total dollar amount of loans granted year-to-date; and
  • The total number of loans granted year-to-date.
NCUA acknowledged that all federally-insured credit unions with loans to or investments in CUSOs will be required under the final rule to make changes in the agreements they currently have with their CUSOs.
 
The final rule also requires all subsidiary CUSOs to follow applicable laws and regulations and applies all of the regulation's requirements to subsidiary CUSOs. The final rule will become effective on June 30. A registry for CUSOs to file their documents with the NCUA will be finalized in late 2015.

CUNA has actively advocated for another approach since the CUSO rule was proposed and has said the NCUA should take care not to extend its reach beyond its statutory authority. CUNA maintains that the Federal Credit Union Act does not confer authority over CUSOs to the federal credit union regulator except through the oversight of credit unions.

"The NCUA should work with natural person credit unions that obtain services from the CUSOs to provide the financial information on CUSOs the agency needs," CUNA Deputy General Counsel Mary Dunn said following the November board meeting. The agency has said that this method is inefficient and restricts its ability to conduct offsite monitoring and evaluate systemic risks posed by CUSOs.

The NCUA has argued that enhancing the monitoring of CUSOs would protect consumers, credit unions and the National Credit Union Share Insurance Fund (NCUSIF). However, CUNA has said that while a small number of CUSOs have had issues, CUSOs as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF, and therefore a targeted regulatory approach would be more appropriate.

Inside Exchange Breaks Down NCUA Assessment News

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WASHINGTON (11/22/13)--In the latest edition of Inside Exchange, Credit Union National Association Chief Economist Bill Hampel discusses with Paul Gentile, CUNA's executive vice president of communications, the impact of the National Credit Union Administration's decision to hold the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment range at zero for 2014.



"The assessments are behind us," Hampel said. And what about a rebate? While he advised credit unions "don't count on it too soon," a rebate should be recognized when the TCCUSF expires around the end of the decade.

The assessment range was announced at Thursday's open board meeting. (See News Now story: No TCCUSF Assessment In 2014.)

No TCCUSF Assessment In 2014

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WASHINGTON (11/22/13)--The National Credit Union Administration does not plan to charge a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment in 2014. However, the NCUA warned that a TCCUSF assessment may be considered "if adverse conditions develop."

The National Credit Union Share Insurance Fund assessment for 2014 will be between zero and five basis points (bp), the agency added during Thursday's November open board meeting.

The Credit Union National Association urged the NCUA to set the range for the TCCUSF assessment as narrow as possible, starting with zero bp. CUNA Chief Economist Bill Hampel broek down what the assessment means for credit unions in a new Inside Exchange piece. (See News Now: Inside Exchange Breaks Down NCUA Assessment News.)

The NCUA is expected to receive $1.4 billion through a settlement with JP Morgan announced this week. The settlement funds "will greatly benefit credit unions" and "will enable NCUA to greatly reduce the assessments that all credit unions have to pay," NCUA Chairman Debbie Matz said this week.

Factoring the net proceeds from the JP Morgan settlement, the remaining assessment range falls to around minus $1 billion to plus $500 million, Credit Union National Association Chief Economist Bill Hampel said. "In other words, future rebates are now very likely," he said.

Credit unions have paid $4.8 billion in TCCUSF assessments since the fund was established. The projected net remaining assessments over the life of the TCCUSF, based on estimates from the second quarter of 2013, now range from -$0.2 billion to $1.6 billion.

CFPB Bills Passed By Financial Services Committee

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WASHINGTON (11/22/13)--Six bills that would usher in Consumer Financial Protection Bureau reforms were passed by the House Financial Services Committee on Thursday.

Bills approved by the committee and supported by the Credit Union National Association include:
  • The Responsible Consumer Financial Protection Regulations Act (H.R. 2446), which would replace CFPB Director Richard Cordray with a five-member commission;
  • The Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 3193), which would authorize the Financial Stability Oversight Council to stay or set aside any CFPB regulation that is found to be inconsistent with safe and sound operations of financial institutions. The bill would also require the CFPB to take into consideration the impact of its rules on insured depository institutions;
  • The Consumer Right to Financial Privacy Act (H.R. 2571), which would prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer unless proper disclosures are provided to the consumer;
  • H.R. 3183, which would require the CFPB to provide at a consumer's request one free annual report disclosing all of the information about the consumer held by the CFPB; and
  • The Bureau of Consumer Financial Protection Accountability and Transparency Act (H.R. 3519), which would subject CFPB funding to congressional appropriations.
The CFPB Pay Fairness Act of 2013 (H.R. 2385) was also approved.

Yellen Fed Nomination Wins Committee Approval

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WASHINGTON (11/22/13)--Only a full Senate vote stands between Janet Yellen and the chair of the Federal Reserve Board, after her nomination was approved by the Senate Banking Committee Thursday.

The committee voted 14 to 8 to approve the nomination, which is likely to move swiftly through the Senate after that body Thursday voted to reduce the 60-vote threshold to 51 votes for executive and judicial nominee approval.

Committee Chairman Tim Johnson (D-S.D.) called Yellen "a model candidate for Chair of the Fed." She "understands the challenges facing our economy and the balance the Fed must strike as we navigate the path back to full employment," and has also demonstrated "that she understands the importance of completing ongoing Wall Street reform rulemaking and of the Fed's regulatory role in supervising the riskiest banks."

If confirmed, Yellen would replace Fed Chairman Ben Bernanke, whose term ends Jan. 31. She would become the first woman to head the Fed, or any other central bank, and would lead the Fed for a four-year term.

Yellen has served as vice chair of the Board of Governors of the Federal Reserve System since Oct. 4, 2010. Her term ends on Jan. 31, 2024. She also has served as president/CEO of the Twelfth District Federal Reserve Bank, at San Francisco.

NEW: NCUA 2014 Budget Contains 6.7% Increase

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ALEXANDRIA, Va. (11/21/13, UPDATED: 11:15 A.M. ET)--The National Credit Union Administration today approved a 2014 budget of $268.2 million. This spending plan represents an increase of 6.7% from the 2013 NCUA budget and is the sixth straight year that the agency's planned expenditures have grown.

"The Credit Union National Association remains very concerned about the size of the agency's budget and the continued budget growth for NCUA, particularly in light of the welcome decline in the assets in troubled credit unions over the past few years," CUNA President/CEO Bill Cheney said.

"Credit unions have to manage resources prudently or be subject to sanctions. The NCUA should not set one standard for itself and another for credit unions. Credit unions remain concerned that they work hard to contain costs and they feel their agency should do so as well," Cheney noted.

The total amount of 2014 funding increase is $16.9 million.

Employee pay and benefits account for 73%, or $194.6 million, of the 2014 budget.

The NCUA also plans to add $1.7 million in new administrative expenses, an increase in contract service expenses of about $3.1 million and $652,796 in new travel expenses.

The Credit Union National Association has repeatedly encouraged NCUA to use restraint as it sets its budget and CUNA's Examination and Supervision Subcommittee is reviewing today's budget decisions and related budget documents carefully to determine how additional oversight of the agency's budget can be achieved.

The NCUA's original 2013 budget was set at $251.4 million, but the agency in July reduced its projected 2013 budget by $2.6 million, a move CUNA supported and commended.

Patent Reform, CFPB Bills See Committee Action

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WASHINGTON (11/21/13)--Two topics of interest to credit unions were tackled in Wednesday U.S. House markup sessions: Legislation that would crack down on "patent trolls," and another that would alter the leadership structure of the Consumer Financial Protection Bureau.
 
The patent bill, called "The Innovation Act of 2013" (H.R. 3309), was reported out of the House Judiciary Committee 33-5. Several amendments had been offered during the markup process and debate on those amendments continued late into the day.

The bill was introduced by Rep. Bob Goodlatte (R-Va.) late last month. It would crack down on the so-called "trolls" who abuse the patent system by using low-quality patents to try to extract settlements from credit unions and other parties.  The Credit Union National Association supports the bill.

Debate by the House Financial Services Committee on six bills that would alter aspects of the Consumer Financial Protection Bureau also lasted into the evening, as committee members recessed for votes on the House floor late Wednesday afternoon. A vote on those bills is scheduled to be held this morning.
 
Bills addressed during the markup session and supported by CUNA include:
  • The Responsible consumer Financial Protection Regulations Act (H.R. 2446), which would replace CFPB Director Richard Cordray with a five-member commission;
  • The Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 3193), which would authorize the Financial Stability Oversight Council to stay or set aside any CFPB regulation that is found to be inconsistent with safe and sound operations of financial institutions. The bill would also require the CFPB to take into consideration the impact of its rules on insured depository institutions;
  • The Consumer Right to Financial Privacy Act (H.R. 2571), which would prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer unless proper disclosures are provided to the consumer;
  • H.R. 3183, which would require the CFPB to provide at a consumer's request one free annual report disclosing all of the information about the consumer held by the CFPB; and
  • The Bureau of Consumer Financial Protection Accountability and Transparency Act (H.R. 3519), which would subject CFPB funding to congressional appropriations.The CFPB Pay Fairness Act of 2013 (H.R. 2385) was also on the markup agenda.
Watch News Now for updates on the progress of both sessions.

NEW: NCUA Approves Final CUSO Rule

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ALEXANDRIA, Va. (11/21/13, UPDATED 11 A.M. ET)--The National Credit Union Administration's final rule addressing credit union service organization (CUSO) supervision, adopted today, is revised from the agency's proposal but concerns remain about the authority of the agency to exercise direct authority over CUSOs.

Under the proposal released in 2011, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. The final keeps those controversial provisions.

However, the NCUA noted that the final rule is more limited in scope than the proposed rule: The final rule is targeted to CUSOs that engage in high-risk or complex activities such as credit lending, information technology and custody, safekeeping and investment management.

The final rule will become effective on June 30. A registry for CUSOs to file their documents with the NCUA will be finalized in late 2015.

The Credit Union National Association has actively advocated for another approach since the CUSO rule was proposed and has said the NCUA should take care not to extend its reach beyond its statutory authority. CUNA maintains that the Federal Credit Union Act does not confer authority over CUSOs to the federal credit union regulator except through the oversight of credit unions.

The NCUA should work with natural person credit unions that obtain services from the CUSOs to provide the financial information on CUSOs the agency needs. The agency has said that this method is inefficient and restricts its ability to conduct offsite monitoring and evaluate systemic risks posed by CUSOs.

The NCUA has argued that enhancing the monitoring of CUSOs would protect consumers, credit unions and the National Credit Union Share Insurance Fund (NCUSIF). However, CUNA has said that while a small number of CUSOs have had issues, CUSOs as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF,and therefore a targeted regulatory approach would be more appropriate.

The CUSO rule was first slated for a final vote in June 2012, when it was the lone item on the agency's open board meeting. That meeting was cancelled.

CFPB Announces First Payday Lender Enforcement

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WASHINGTON (11/21/13)--The Consumer Financial Protection Bureau announced Tuesday its first enforcement action against a payday lender.
 
The regulator said that it reached a settlement with Cash America International over robo-signing practices in debt collection lawsuits that affected approximately 14,000 people.
 
Cash America International, one of the largest payday lenders in the U.S., has agreed to terms that could see it paying up to $14 million in reimbursements. It will also pay a $5 million fine for the infringements and other misconduct, the CFPB reported.
 
The regulator said the offending loans were made between Jan. 1, 2008 and Oct. 1 2012, by Cash America International affiliates: Ohio Neighborhood Finance, Inc.; Cash America Pawn, Inc.; Cashland Financial Services, Inc.; Cash America Net of Ohio, LLC; Ohio Neighborhood Credit Solutions, Inc., and CNU of Ohio, LLC.
 
When CFPB announced earlier this month that it would accept complaints on payday lenders, the Credit Union National Association praised the move, but said it should focus on unregulated entities (News Now Nov. 7).

Credit Union National Associatin President/CEO BIll Cheney commended the CFPB on its action. He said, "Credit unions offer an alternative that serves their members' needs, without creating a dependency." He added, however, that CUNA remains concerned that the agency not over-regulate in this area, and inadvertently put credit union alternatives out of commission for those members who need this service.
 
Under federal rules, credit unions are allowed to make short-term, small-amount loans with an annual interest rate of no more than 18%, with some exceptions. Under National Credit Union Administration guidelines, federally chartered credit unions are allowed to charge no more than 10 percentage points above the established usury ceiling--currently, the statutory maximum is 28%. 

Most credit unions that offer alternatives to conventional payday loans also limit fees, encourage members to open savings accounts and provide financial counseling.

Merchants Rehash Arguments In Interchange Brief

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WASHINGTON (11/21/13)--Merchants in a Wednesday brief argued that the U.S. Court of Appeals for the District of Columbia Circuit should affirm an earlier court decision that struck down the Federal Reserve's debit card interchange fee cap and network non-exclusivity regulations.

U.S. District Judge Richard Leon in July ruled in favor of a merchant request to strike down the Fed's price caps on debit card interchange fees. He said that the Fed did not follow narrow congressional intent when it implemented the cap. The Fed has appealed that decision.

The merchants in their Wednesday brief argued:
  • The Fed's interpretation of the interchange fee standard outlined in the Durbin Amendment is incorrect, and must be invalidated;
  • The Fed's implementation of the interchange fee statute's non-exclusivity requirement is also incorrect, and must be altered; and
  • The interchange fee standard violates the Administrative Procedure Act.
The merchants brief also took issue with the Fed's estimates of the cost of providing debit cards to users.

Amicus briefs were also filed on behalf of Sen. Richard Durbin (D-Ill.), as well as several other retailers.

The Fed has a Dec. 4 deadline to respond.

Circuit Judges David Tatel, Harry Edwards, and Stephen Williams will hear oral arguments from the Fed and merchants at 9:30 a.m. (ET) on Jan. 17.

CU Field Hearing Witness Urges CFPB To Reduce Reg Burden

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WASHINGTON (11/21/13)--Boston Firefighters CU CEO Bernie Winne on Wednesday urged the Consumer Financial Protection Bureau to be cognizant of who credit unions are, what their role is, what their role was before the crisis, and the good deeds that they do in their communities as the bureau continues its regulatory work.

Winne was a panelist at the CFPB's "Know Before You Owe: Mortgages" field hearing in Boston, Mass. The bureau during the hearing released a final rule on the integration of Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures, and new integrated disclosures. The Credit Union National Association is examining the disclosures and regulations, and is developing a summary. The regulations and disclosures contain some enhancements that were suggested by CUNA and credit unions. (See Nov. 20 News Now story: CU Suggestions In Final CFPB Mortgage Forms.)

The mission of credit unions and the CFPB are very similar, Winne noted during the hearing: Both are consumer oriented. Winne said the concept of simple and honest banking is a hallmark of his credit union, and added that Boston Firefighters CU believes that a knowledgeable member is a good member.

The credit union CEO said the new regulations will help his credit union mortgages look good compared to other options. Deals that Boston Firefighters may have lost in the past due to misinformed consumers should now come their way, he added.

However, Winne said, his credit union is small and is significantly impacted by new regulatory burdens. Boston Firefighters CU has worked closely with underwater homeowners to refinance their mortgages. New regulations could force his credit union to replace some of the simple products it offers with more complex products.

Overall, less is better at the closing table, he emphasized, suggesting that the bureau could improve on the disclosures it released Wednesday by finding a way to include more valuable information at a reduced page count.

For more on the CFPB disclosures and regulations, use the resource link.

NEW: No TCCUSF Assessment In 2014

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WASHINGTON (11/21/13, UPDATED: 10:15 A.M. ET)--The National Credit Union Administration will not charge a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment in 2014. The National Credit Union Share Insurance Fund assessment for 2014 will be between zero and five basis points (bp), the agency added.
 
The Credit Union National Association urged the NCUA to set the range for the TCCUSF assessment as narrow as possible, starting with zero bp.
 
Credit unions have paid $4.8 billion in TCCUSF assessments since the fund was established. The projected net remaining assessments over the life of the TCCUSF, based on estimates from the second quarter of 2013, now range from -$0.2 billion to $1.6 billion.
 
The NCUA also will receive $1.4 billion through a settlement with JP Morgan announced this week. The settlement funds "will greatly benefit credit unions" and "will enable NCUA to greatly reduce the assessments that all credit unions have to pay," NCUA Chairman Debbie Matz said this week.

A final rule on credit union service organizations and the 2014 NCUA budget, overhead transfer rate and operating fee scale are also on today's open board meeting agenda.

Senate Finance Hears From Bloom Raskin On Treasury Nomination

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WASHINGTON (11/21/13)--Sarah Bloom Raskin came before the Senate Finance Committee Wednesday as the panel considered the Federal Reserve Board governor's nomination to become deputy secretary of the U.S. Treasury Department.
 
If the nomination is approved by the committee and confirmed on the floor of the U.S. Senate, Bloom Raskin would be the first female to serve in the deputy secretary post.
 
She described the Treasury Department in her testimony as the executive agency charged with promoting economic prosperity and financial stability. She said it has a "sacred trust to advance the fortunes and livelihood of our people, our businesses, our communities, and our nation."
"The government does not create wealth and prosperity and innovation in our economy, but it does create the conditions in which our people and businesses can, and therefore its role is central and indispensable," she said.
Also in her testimony in support of her confirmation, the Treasury nominee detailed both her private and public sector experience, which included time as Senate Banking Committee counsel under three different chairmen.
 
Bloom Raskin said that her time as a private sector attorney has given her "invaluable management experience," and also taught her "what those in the financial marketplace seek most from government: stability, predictability, fairness, a sense of proportion, attention to the unintended consequences of regulation, pragmatism, and bipartisan effort towards economic prosperity and public efficiency."  
 
As a public servant, as Commissioner of Financial Regulation for the State of Maryland from 2007-2010 and a Fed governor from 2010 to present, she has worked for stability for the country's financial sector and, at the Fed, to "maximize employment, maintain price stability, and restore the underlying strength and vibrancy of the American economy." 

The finance panel also heard the testimony of Rhonda Schnare Schmidtlein, who has been nominated to serve on the International Trade Commission.

Fed, CFPB Set 2013 TILA, Lease Thresholds

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WASHINGTON (11/21/13)--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 $53,500 or less in 2014, the Federal Reserve reported this week. The agencies are required to adjust this threshold each year.

Private education loans and loans secured by real property, such as mortgage, will be subject to the TILA regardless of the amount of the loan, the Fed said.

The threshold adjustments reflect the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1, 2013 and will take effect on Jan. 1, 2014, the Fed said.

For the Fed release, use the resource link.

Senate's First Tax Discussion Drafts Address International Tax

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WASHINGTON (11/20/13)--The head of the Senate Finance Committee, Sen. Max Baucus (D-Mont.), released three draft options today, all concerning international taxation. It is expected that two other discussion drafts will be released later this week, those regarding tax administration and the cost recovery method of accounting. 

As expected, the discussion drafts released Tuesday do not affect credit unions or other not-for-profit entities. The Credit Union National Association (CUNA) and other stakeholders are monitoring developments closely as lawmakers appear to be keeping a schedule of launching fully into tax reform discussions this Fall.

CUNA and credit union members across the country continue to keep pressure on Congress with the unified message, "Don't Tax My Credit Union."

As CUNA Senior Vice President of Legislative Affairs Ryan Donovan has noted, "Credit unions must make sure that lawmakers on all levels truly understand that a new tax on credit unions would be a tax on their 97 million members."

To date the "Don't Tax My Credit Union" campaign has garnered almost 1.2 million separate message s to Congress, rallying support through social media and state credit union leagues.

CFPB Report Reinforces Need For Fin Lit Spending

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WASHINGTON (11/20/13)--Financial product marketing spending far outpaces funding for financial education efforts, a situation that the Consumer Financial Protection Bureau said "can make it difficult for consumers to find objective information."

The CFPB detailed this spending discrepancy in a report entitled "Navigating the Market." The study examined financial education spending by nonprofits, the federal government, financial institutions, state governments, municipal governments and school districts, and philanthropic giving groups, and spending on awareness advertising and direct marketing.

"When consumers receive the vast majority of their financial information from companies that are trying to promote an image or sell products, consumers have very little unbiased information," CFPB Director Richard Cordray said.

Financial services firms spend $17 billion annually to market financial products and services to consumers, while $670 million is spent annually to provide financial education to consumers, the CFPB said.

Nearly $2.5 billion in financial marketing funds are used to promote credit and loan products, and around $1.4 billion was spent to advertise checking accounts, savings, and other bank related services, the CFPB said. The majority of this advertising was done through television ads, but newspaper, radio, magazine, display and outdoor ads were also used, the CFPB said. Around $12 billion was spent on direct advertising, which aims to get consumers to make immediate purchases. Nearly half of this direct marketing total was spent on online advertising endeavors.

Financial institutions came in third in financial education spending, providing around $31 million for those efforts. Overall, nonprofit spending accounted for $472 million of the funds spent on educational efforts, while the federal government spent $130 million, the CFPB noted.

The study, Cordray noted, "further reinforces the dire need for more and better financial education in this country."

Credit unions continue to work to close the financial education knowledge gap, providing financial counseling to more than 1.5 million consumers each year, according to a National Credit Union Foundation report entitled "Credit Unions: Focused on Financial Capability across the Nation." In total, credit unions invested more than $140 million in financial literacy efforts in 2010.

Credit unions also provide financial education through on-campus credit union branches, which held more than $34 million in funds from 111,500 student members as of 2010. Nearly 5,000 student workers received on-the-job training experiences at those 1,400 in-school credit union branches.

Merchant Briefs Due Today In Interchange Case vs. Fed

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WASHINGTON (11/20/13)--Merchant briefs are due today in the ongoing debit interchange fee legal battle known as NACS, et al. v. Board of Governors of the Federal Reserve System.
 
The plaintiff merchants group has alleged that the Federal Reserve Board has made errors in implementing a Dodd-Frank-imposed debit interchange fee cap and Judge Richard Leon of the U.S. District Court for the District of Columbia issued a July decision to strike down the Fed's price caps on debit interchange fees.  
 
 Leon, however, stayed the vacated rule to avoid what the Credit Union National Association warned in an amicus brief would be chaos in the market.
 
The Fed filed its brief in support of its rule on Oct. 20.implementing the debit card interchange cap required by the Dodd-Frank Act. The brief must be submitted to the U.S. Court of Appeals for the District of Columbia Circuit.
 
The next round in the legal battle will be oral arguments for both sides at  9:30 a.m.  (ET) on Jan. 17. The arguments will be heard by a three-judge panel in the U.S. Court of Appeals for the District of Columbia Circuit.

Circuit Judges David Tatel, Harry Edwards, and Stephen Williams will hear the appeal.

CUNA Sends Comprehensive Reg Improvement List to NCUA

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WASHINGTON (11/20/13)--The Credit Union National Association is urging the National Credit Union Administration to do all it can to cut credit union regulatory burdens and build a regulatory environment and examination culture that enhances the ability of credit unions to serve their members.  
 
In a letter to the NCUA, CUNA detailed a list of regulatory areas that are of key concern to credit unions, and also noted the impact of the Consumer Financial Protection Bureau and other regulators on the daily operations of credit unions.
 
CUNA President/CEO Bill Cheney wrote to NCUA Chair Debbie Matz:
"We urge the agency, rather than continuing the parade of new rules that apply on a broad basis, to utilize its array of supervisory powers to focus on problem credit unions. We also urge NCUA to do all it can to allow well-managed credit unions the space and latitude they need to serve their members of today and to attract new members for tomorrow."
 
CUNA also advocated that the NCUA always consider the magnitude of regulatory requirements--from a variety of regulators--that credit unions must already meet in all areas of their operations before imposing any new requirements. CUNA added that the agency should work to eliminate rules that are outdated, unnecessary, or simply provide minimal benefits.
 
Among the letter's other top issues are two that directly affect credit union bottom lines, the NCUA budget, which is funded by the credit union system, and the assessment for the Corporate Stabilization Fund for 2014. Both topics are scheduled for action at the Nov. 22 NCUA open board meeting.
 
CUNA urged the agency to keep credit unions' costs as low as possible.
 
"CUNA, the leagues, and credit unions do not want the agency to be underfunded. At the same time, we strongly oppose large, steady increases in the face of the solid financial performance by the credit union system, which continues to rebound from the financial crisis," wrote CUNA's Cheney in the Nov. 18 letter.
 
"Credit unions are frustrated about the agency's budget due in large part because there seems to be little opportunity for oversight by Congress or the credit unions that pay the costs of NCUA's expenses or a connection between spending and the achievement of strategic goals.
 
CUNA also addressed the agency's plan to regulate credit union service organizations (CUSOs), which is also on the NCUA agenda this week. CUNA underscored that, under the Federal Credit Union Act, the NCUA has very limited authority where CUSOs are concerned.
 
Other issues addressed in detail in the letter include: 
  • Risk-based net worth: CUNA noted that the NCUA has ample supervisory tools to handle problem cases and urged the agency to advance supplementary capital;
  • Examination and exam appeals process: CUNA encourages the development of an Examinations Working Group;
  • Financial Accounting Standards Board (FASB) proposals and rules: CUNA reiterated that NCUA's support on FASB issues is critical;
  • NCUA's derivatives proposal: CUNA recommended the agency move forward to approve the plan that would let well-run federal credit unions to use simple derivatives for the sole purpose of hedging against interest rate risks; and
  • CUNA said the NCUA should allow for an expedited process, when warranted for waivers for member business lending and loan participation requirements.
The comprehensive CUNA letter also focused on the NCUA's important role in payments developments, its engagement on cybersecurity coordination, and the importance that regulatory strictures not act to discourage student lending.

CUNA further noted that the NCUA's pending proposal on stress testing for the largest credit unions would be costly and is not required by the Dodd-Frank Act.
 
CUNA commended the NCUA for a number of its recent actions that brought regulatory relief, and underscored the importance of the agency's October guidance to improve the federal examination process, and the NCUA's action this year to cut its operating budget by $2.6 million from its original projections, among other important decisions. CUNA added that the agency NCUA should use its own positive regulatory steps as a template for future regulatory relief for credit unions.

A copy of the letter was sent to each of the three NCUA board members: Chair Debbie Matz and board members Michael Fryzel and Richard Metsger.

CU Suggestions In Final CFPB Mortgage Forms

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WASHINGTON (11/20/13)--The Consumer Financial Protection Bureau's (CFPB) "Know Before You Owe" mortgage disclosure forms, which will be released later today at a bureau field hearing, contain changes advocated by credit unions and the Credit Union National Association.
 
Bernie Winne, CEO at Boston Firefighters CU, will speak on behalf of credit unions, CUNA and the Massachusetts Credit Union League (MCUL) at a CFPB hearing today. CFPB Director Richard Cordray is also scheduled to meet with MCUL representatives after the session.

The field hearing, entitled "Know Before You Owe: Mortgages," will be held in Boston, Mass., and is scheduled to begin at 11 a.m. (ET).

Among the changes is the removal of language that would have required lenders to maintain "standardized, machine-readable" electronic versions of loan estimates and closing disclosures provided to consumers. The CFPB also removed a total cost of funds disclosure from both the Loan Estimate and Closing Disclosure. This disclosure, which would have required credit unions to reveal the approximate amount of the wholesale rate of funds in connection with a given mortgage loan, was "of questionable value to consumers," CUNA noted.

Credit unions and others also opposed CFPB regulations that would have counted Saturday in the three-day window lenders were given to provide Loan Estimate forms to new mortgage borrowers. The CFPB final rule does not count Saturdays as a "business day" for this purpose.
 
The final disclosure forms and related regulations do not adopt a more inclusive annual percentage rate (APR) and finance charge definition. However, the bureau said it would review both definitions as part of their five-year review of the regulations. Changes may be incorporated at that time, they said.
 
The final version of the forms and regulations will also:
  • Require the Closing Disclosure, which is designed to take the place of the existing HUD-1, to be provided to borrowers three days in advance of a mortgage loan closing; and
  • Require Spanish versions of the Closing Disclosure and Loan Estimate forms to be provided under certain circumstances for the benefit of Spanish-speaking consumers.

Patent 'Troll' Bill Markup Is Today

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WASHINGTON (11/20/13)--In advance of a markup session today, the Credit Union National Association and a coalition of partners sent a letter of support to lawmakers for "The Innovation Act of 2013" (H.R. 3309), which intends to help clean up a scourge known as "patent trolls."
 
The so-called "trolls" use low-quality patents to try to extract settlements from credit unions and others and are an abuse of the patent system, CUNA has said.
 
Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones, among other examples of this form of abuse.
 
CUNA has strongly advocated for improvements to a program that allows financial institutions to pursue invalidity claims at the Patent and Trademark Office when confronted with a patent claim. The program provides financial institutions with powerful tools to defend themselves, but carries a hefty price tag--starting at $35,000 just for the filing fee. The Innovation Act contains a provision to allow that fee to be waived on a discretionary basis, with an idea of benefiting credit unions and community banks.
 
H.R. 3309, which was introduced by Rep. Bob Goodlatte (R-Va.) late last month, would remove some of the financial incentives sought by firms that assert low-quality patents in the hope of quick settlements.
 
The mark up is scheduled to by the House Judiciary Committee for 11:15 a.m. (ET).

CUNA's Donovan Talks Tax Reform Rumors In The Hill

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WASHINGTON (11/20/13)--Rumors continue to swirl as the Credit Union National Association and others await the release of congressional tax reform plans. The Hill this week noted that House Ways and Means Committee Chairman Rep. Dave Camp (R-Mich.) has closely guarded details of the plans, with CUNA Senior Vice President of Legislative Affairs Ryan Donovan saying "even if someone told us what's in it, I'm not sure we'd have a lot of confidence in that until we saw it on paper."

Donovan said he wishes he knew what Camp's committee was planning.

"But even if I thought I knew, I'm not sure how much confidence you should have in it, because we've seen nothing," he said in The Hill. Retailer groups and other business interests are also working to obtain details, but said they have not had success.

Lobbying groups across Washington are also waiting and watching, with many saying they have not seen a legislator so successfully shield his secrets. The respect for Camp within his own committee is one factor helping his efforts, the story said.

Avoiding leaks, Donovan said, is vital, since the stakes of tax reform are so high. Others said Congress would not want to be seen as picking winners and losers in the tax fight.

Camp, according to The Hill, has said the tax reform debate may continue into early next year.

As budget and tax talks continue, CUNA is urging credit unions and their members to use social media sites including Facebook, micro-video site Vine and other outlets to tell their legislators, "Don't Tax My Credit Union!"

Credit union and member tax advocacy efforts have remained strong. Almost 1.2 million separate congressional contacts have been made since mid-May to support credit unions in the tax talks.

For more on the Don't Tax my Credit Union efforts, use the resource link.

CU Seat Essential If CFPB Leadership Becomes a Panel

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WASHINGTON (11/20/13)--If the single Consumer Financial Protection Bureau director model is replaced with a panel, a seat specifically designated for a person with experience related to credit unions must be added, the Credit Union National Association emphasized in a letter sent to the House Financial Services Committee today.

The letter was sent for the record of a full committee markup on six CFPB bills.

The Responsible consumer Financial Protection Regulations Act (H.R. 2446) is one of the bills slated for markup. The bill, introduced by Rep. Spencer Bachus (R-Ala.), would replace CFPB Director Richard Cordray with a five-member commission.

CUNA also recommended that the proposed five-member board be expanded further. "The concern we raise is that there's no guarantee that the CFPB Board would include someone who had experience running a financial institution, specifically a credit union, and that without such experience, there would not be an appreciation for the totality of regulatory burdens facing credit unions," CUNA President/CEO Bill Cheney wrote.

Other bills set for markup and supported by CUNA include:
  • The Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 3193), which would authorize the Financial Stability Oversight Council to stay or set aside any CFPB regulation that is found to be inconsistent with safe and sound operations of financial institutions. The bill would also require the CFPB to take into consideration the impact of its rules on insured depository institutions;
  • The Consumer Right to Financial Privacy Act (H.R. 2571), which would prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer unless proper disclosures are provided to the consumer;
  • H.R. 3183, which would require the CFPB to provide at a consumer's request one free annual report disclosing all of the information about the consumer held by the CFPB; and
  • The Bureau of Consumer Financial Protection Accountability and Transparency Act (H.R. 3519), which would subject CFPB funding to congressional appropriations.
The CFPB Pay Fairness Act of 2013 (H.R. 2385) is also on the hearing agenda.

NCUA Receives $1.4B In JP Morgan Settlement

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ALEXANDRIA, Va. (11/20/13)--The National Credit Union Administration has added another settlement to its victory pile related to lawsuits to regain costs associated with losses to the corporate credit unions brought by residential mortgage-backed securities of alleged questionable quality. The U.S. Department of Justice Tuesday announced that JP Morgan Securities would pay $13 billion in total.

The NCUA will receive $1.4 billion under the terms of the settlement.

"All this really comes down to holding responsible parties accountable...In agreeing to this settlement, the world's largest bank has taken a measure of responsibility for actions that caused severe damage to the credit union system," NCUA Chairman Debbie Matz said. The settlement, she added, "will greatly benefit credit unions" and "will enable NCUA to greatly reduce the assessments that all credit unions have to pay.

The settlement announcement comes just two days before the NCUA discusses the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment on natural person credit unions for 2014 at its open board meeting.

Credit Union National Association President/CEO Bill Cheney said Tuesday that the announcement gives even more weight to CUNA's recommendation that the TCCUSF projected assessment range for next year be set at 0% of insured shares. The NCUA is expected to discuss a projected assessment of 0% to 5% at its Thursday open board meeting.

"The NCUA has taken a strong leadership role in its work to regain costs it says were caused by securities firms that knowingly sold products of questionable value. It must now make sure that the regained funds benefit the credit unions who have carried the cost of those actions," he said.

The DOJ is also reportedly considering criminal charges against JP Morgan.

The NCUA lawsuits alleged JP Morgan oversold the quality of certain mortgage-backed securities (MBS's) it issued, underwrote and sold to U.S. Central FCU, Western Corporate FCU and other corporates from 2006 to 2007. The corporates collapsed in 2009, and NCUA, as their liquidating agent, sued a number of Wall Street banks who issued or underwrote the securities that contributed to the corporates' collapse.

The agency alleged systemic disregard of underwriting guidelines stated in the offering documents and says the alleged misrepresentations caused U.S. Central and WesCorp to believe the risk of loss on the investments was minimal, when in fact, the risk was substantial.

In addition to JP Morgan, the NCUA has also filed lawsuits against RBS Securities, Wachovia Capital Markets and Wells Fargo, Barclay's Capital Inc., Goldman Sachs, and UBS Securities. The agency has also settled claims of more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.

First Senate Tax Discussion Draft Could Come Today

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WASHINGTON (11/19/13)--The head of the Senate Finance Committee, Sen. Max Baucus (D-Mont.), has updated the ETA on the release of the first in a series of tax reform discussion drafts, Politico reported Monday. Baucus is expected to begin the unveilings today.
 
The timing is in keeping with what tax policy writers on Capitol Hill have been saying since the summer--that they intend to launch into tax reform and prepare for a vote during the Fall.  
 
Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said Monday that CUNA does not expect anything related to not-for-profits to be included in this week's drafts.  They are most likely to address international taxes and Internal Revenue Service reforms.
 
However, Donovan emphasized that a high level of advocacy on behalf of credit unions must continue. "Credit unions, credit union members--all credit union supporters--must continue to advocate for the current credit union federal tax status," Donovan said. Credit unions are assigned that tax status because they are not-for-profit, member-owned cooperatives with the statutory mission to promote thrift and provide credit for provident purposes to their members.

"Credit unions must make sure that lawmakers on all levels truly understand that a new tax on credit unions would be a tax on their 97 million members," Donovan said.
 
Tax reform talks have been buzzing all year and in the midst of the reform effort, credit unions and their members are using CUNA and state credit union leagues' resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

The effort has garnered almost 1.2 million separate congressional contacts, made since mid-May, to support credit unions in the tax talks.

CUNA research indicates that credit unions generally offer higher returns on savings, lower rates on loans, and most importantly, low or no fees--and that these benefits combine to result in more than $8 billion in direct financial benefits each year to American taxpayers.

NEW: Comprehensive CUNA Letter Urges NCUA To Cut Burdens

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WASHINGTON (11/19/13, UPDATED 4:00 p.m. ET)--The Credit Union National Association is urging the National Credit Union Administration to do all it can to cut credit union regulatory burdens and build a regulatory environment and examination culture that enhances the ability of credit unions to serve their members.  
 
In a letter to the NCUA, CUNA detailed a list of regulatory areas that are of key concern to credit unions, and also noted the impact of the Consumer Financial Protection Bureau and other regulators on the daily operations of credit unions.
 
CUNA President/CEO Bill Cheney wrote to NCUA Chair Debbie Matz:
"We urge the agency, rather than continuing the parade of new rules that apply on a broad basis, to utilize its array of supervisory powers to focus on problem credit unions. We also urge NCUA to do all it can to allow well-managed credit unions the space and latitude they need to serve their members of today and to attract new members for tomorrow."
 
CUNA also advocated that the NCUA always consider the magnitude of regulatory requirements--from a variety of regulators--that credit unions must already meet in all areas of their operations before imposing any new requirements. CUNA added that the agency should work to eliminate rules that are outdated, unnecessary, or simply provide minimal benefits.
 
Among the letter's other top issues are two that directly affect credit union bottom lines, the NCUA budget, which is funded by the credit union system, and the assessment for the Corporate Stabilization Fund for 2014. Both topics are scheduled for action at the Nov. 22 NCUA open board meeting.
 
CUNA urged the agency to keep credit unions' costs as low as possible.
 
"CUNA, the leagues, and credit unions do not want the agency to be underfunded. At the same time, we strongly oppose large, steady increases in the face of the solid financial performance by the credit union system, which continues to rebound from the financial crisis," wrote CUNA's Cheney in the Nov. 18 letter.
 
"Credit unions are frustrated about the agency's budget due in large part because there seems to be little opportunity for oversight by Congress or the credit unions that pay the costs of NCUA's expenses or a connection between spending and the achievement of strategic goals.
  CUNA also addressed the agency's plan to regulate credit union service organizations (CUSOs), which is also on the NCUA agenda this week. CUNA underscored that, under the Federal Credit Union Act, the NCUA has very limited authority where CUSOs are concerned.
  Other issues addressed in detail in the letter include:
  • Risk-based net worth: CUNA noted that the NCUA has ample supervisory tools to handle problem cases and urged the agency to advance supplementary capital;
  • Examination and exam appeals process: CUNA encourages the development of an Examinations Working Group;
  • Financial Accounting Standards Board (FASB) proposals and rules: CUNA reiterated that NCUA's support on FASB issues is critical;
  • NCUA's derivatives proposal: CUNA recommended the agency move forward to approve the plan that would let well-run federal credit unions to use simple derivatives for the sole purpose of hedging against interest rate risks; and,
  • CUNA said the NCUA should allow for an expedited process, when warranted for waivers for member business lending and loan participation requirements.
The comprehensive CUNA letter also focused on the NCUA's important role in payments developments, its engagement on cybersecurity coordination, and the importance that regulatory strictures not act to discourage student lending.

CUNA further noted that the NCUA's pending proposal on stress testing for the largest credit unions would be costly and is not required by the Dodd-Frank Act.
 
CUNA commended the NCUA for a number of its recent actions that brought regulatory relief, and underscored the importance of the agency's October guidance to improve the federal examination process, and the NCUA's action this year to cut its operating budget by $2.6 million from its original projections, among other important decisions. CUNA added that the agency NCUA should use its own positive regulatory steps as a template for future regulatory relief for credit unions.
 
A copy of the letter was sent to each of the three NCUA board members: Chair Debbie Matz and board members Michael Fryzel and Richard Metsger.
 

Liquidity Rule Details, Tips, Star On NCUA YouTube Video

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ALEXANDRIA, Va. (11/19/13)--In a new YouTube video, National Credit Union Administration staff provide details on the agency's new liquidity and contingency planning regulation, upcoming compliance deadlines, and additional resources the agency is providing for credit unions.
 
The video reflects an October NCUA Letter to Credit Unions on this issue, "Guidance on How to Comply with NCUA Regulation §741.12 Liquidity and Contingency Funding Plans" (13-CU-10). (See resource link for Oct. 28 News Now story: NCUA Letters Detail Liquidity, E-Filing Regs For CUs.) The YouTube spot is hosted by NCUA Director of Examination and Insurance Larry Fazio and NCUA Division of Capital and Credit Markets Director J. Owen Cole, Jr.



Under the final rule, which was approved at last month's NCUA open board meeting:
  • Credit unions with less than $50 million in assets would need to maintain a basic written emergency liquidity policy, but would not be required to take further action;
  • Credit unions with assets of $50 million or more would be required to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations; and
  • Credit unions with assets of $250 million or more would be required to have access to a backup federal liquidity source for emergency situations.
The final rule effective date is March 31.

Reg Advo Report Previews CUSO Final Rule

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WASHINGTON (11/19/13)--In this week's Regulatory Advocacy Report, the Credit Union National Association takes a look at credit union service organization (CUSO) regulations that are expected to be unveiled this week.

A final CUSO rule is one of the key items on the November National Credit Union Administration open board meeting agenda. Under a proposal released last year, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors.

The NCUA currently has the authority to inspect the books and records of some CUSOs, but that authority is not universal, and the agency works with natural person credit unions that obtain services from the CUSOs to provide the majority of financial information on CUSOs. The agency has said that this method is inefficient and restricts its ability to conduct offsite monitoring and evaluate systemic risks posed by CUSOs

However, CUNA maintains that the Federal Credit Union Act does not confer greater authority over CUSOs to the federal credit union regulator.

"NCUA has indicated the final rule is an improvement over the proposal and we will be reviewing it in detail to determine if we agree and how it will affect the credit union system," CUNA Deputy General Counsel Mary Dunn wrote in this week's Report.

The agency's 2014 operating budget and corporate stabilization fund assessments are also on the agenda, and are discussed in this week's Report. Other issues addressed in the Regulatory Advocacy Report include:
  • New NCUA enterprise risk management guidance;
  • The Consumer Financial Protection Bureau's housing counselor list tool and accompanying guidance;
  • CUNA's request for comment on the NCUA's capital planning and stress testing proposal; and
  • CUNA's request for comment on the Federal Reserve Banks' payment system improvement paper.
A resource chart with information on current CUNA comment calls is also provided in the Report.

For this week's Regulatory Advocacy Report, CUNA members can use the resource link.

NEW: JP Morgan To Pay $13B Settlement

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ALEXANDRIA, Va. (11/19/13, UPDATED: 3 P.M. ET)--The National Credit Union Administration has added another settlement to its victory pile related to lawsuits to regain costs associated with losses to the corporate credit unions brought by residential mortgage-backed securities of alleged questionable quality. The U.S. Department of Justice has just announced that JP Morgan Securities would pay $13 billion in total.

The NCUA will receive $1.4 billion under the terms of the settlement.

The DOJ is also reportedly considering criminal charges against JP Morgan.

The settlement announcement comes just two days before the NCUA discusses the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment on natural person credit unions for 2014 at its open board meeting.

Credit Union National Association President/CEO Bill Cheney said Tuesday that the announcement gives even more weight to CUNA's recommendation that the TCCUSF projected assessment range for next year be set at 0% of insured shares. The NCUA is expected to discuss a projected assessment of 0% to 5% at its Thursday open board meeting.

"The NCUA has taken a strong leadership role in its work to regain costs it says were caused by securities firms that knowingly sold products of questionable value. It must now make sure that the regained funds benefit the credit unions who have carried the cost of those actions," he said.

The NCUA lawsuits alleged JP Morgan oversold the quality of certain mortgage-backed securities (MBS's) it issued, underwrote and sold to U.S. Central FCU, Western Corporate FCU and other corporates from 2006 to 2007. The corporates collapsed in 2009, and NCUA, as their liquidating agent, sued a number of Wall Street banks who issued or underwrote the securities that contributed to the corporates' collapse.

The agency alleged systemic disregard of underwriting guidelines stated in the offering documents and says the alleged misrepresentations caused U.S. Central and WesCorp to believe the risk of loss on the investments was minimal, when in fact, the risk was substantial.

In addition to JP Morgan, the NCUA has also filed lawsuits against RBS Securities, Wachovia Capital Markets and Wells Fargo, Barclay's Capital Inc., Goldman Sachs, and UBS Securities. The agency has also settled claims of more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.

CUNA Seeks Comment On Two ACH Proposals

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WASHINGTON (11/19/13)--Credit unions have until Jan. 13 to comment on a pair of NACHA--The Electronic Payments Association proposals that aim to reduce risk and exceptions on Automated Clearing House (ACH) networks. 
 
The Credit Union National Association is interested in how these proposals would affect credit union operations and compliance on the ACH Network and will develop a comment letter to NACHA. CUNA seeks credit union comment by Dec. 16 to help inform the CUNA letter.
 
The first of the two NACHA proposals addresses ACH Risk and Enforcement. The proposal would improve NACHA's ability to identify and enforce rules against "outlier" originators responsible for the highest levels of exceptions. The proposal would also:
  • Reduce the existing return rate threshold for unauthorized debits from 1.0% to 0.5%;
  • Establish a return rate threshold for account data quality returns (i.e., administrative returns) at 3% and an overall debit return rate threshold (for all return reason codes) at 15%;
  • Clarify the definition of a "reinitiated entry";
  • Apply risk management rules to third-party senders; and
  • Expand NACHA's enforcement authority.
The second proposal aims to reduce exceptions by establishing economic incentives for Originating Depository Financial Institutions (ODFI) to improve the quality of ACH transactions they originate. Under the proposal, an ODFI would pay fees based on exceptions to partially offset the Receiving Depository Financial Institution's costs for exception processing and customer service. This would happen in the following instances:
  • A return due to erroneous data;
  • A notification of change; and/or
  • A return due to an unauthorized entry.
To comment on the NACHA proposals, use the resource link.

Two Housing Finance Hearings Anchor Washington Week

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WASHINGTON (11/19/13)--Housing finance reform will again be a hot topic as the U.S. Congress meets before the Thanksgiving holiday break.

Today's hearing, entitled "Housing Finance Reform: Fundamentals of Transferring Credit Risk in a Future Housing Finance System," will feature testimony from Federal Housing Finance Agency (FHFA), Freddie Mac, and Fannie Mae representatives, among others.

The powers and structure of a strong regulator will be examined in the second Senate Banking Committee housing hearing of the week. FHFA General Counsel Alfred Pollard, Federal Deposit Insurance Corp. Division of Insurance and Research Director Diane Ellis and Arizona Department of Insurance Assistant Director Kurt Regner, CFE, are among those scheduled to speak at the Thursday, Nov. 21 hearing.

The Senate Banking Committee is holding weekly hearings on the topic with the hopes of crafting plans for a future housing finance market. The ranking committee Republican, Rep. Mike Crapo (Idaho), recently said a bill could be marked up soon.

The House Financial Services Committee has also scheduled a Wednesday markup of pending legislation related to the Consumer Financial Protection Bureau.

Other hearings scheduled this week include:
  • A Tuesday House Financial Services oversight and investigations subcommittee hearing entitled "A General Overview of Disparate Impact Theory";
  • A Tuesday House Financial Services housing and insurance subcommittee hearing entitled "Implementation of the Biggert-Waters Flood Insurance Act of 2012: Protecting Taxpayers and Homeowners"; and
  • A joint Senate Banking subcommittee hearing entitled "The Present and Future Impact of Virtual Currency."
On Thursday, the House Financial Services capital markets and government sponsored enterprises subcommittee has scheduled a hearing on the Restoring Main Street Investor Protection and Confidence Act (H.R. 3482).

NCUA: Minority-Owned CUs Equal 12% of FICUs, Hold 3.5% Of Assets

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ALEXANDRIA, Va. (11/18/13)--The 805 credit unions that met minority depository institution criteria as of June 30 held $36.9 billion in assets, and are owned by 4.8 million members, the National Credit Union Administration said in its Minority Depository Institutions (MDI) Congressional Report.

The minority credit unions represent 12% of all federally insured credit unions, and hold 3.5% of the total assets in all federally insured credit unions.

Overall, minority depository institutions are financially sound, the NCUA report revealed. Most MDI credit unions have satisfactory CAMEL composite ratings and at least adequate net worth ratios, the NCUA said. On average, their net worth is 11.1%. Nearly all (95%) of minority depository institutions are well-capitalized, with net worth ratios of 7% or more.

Just over 80% of minority depository institutions hold $50 million or less in assets, and 8% hold $50 million to $100 million in assets. Another 8% hold $100 million to $500 million in assets. Due to the minority depository institutions' small asset sizes, most are challenged by the lack of sufficient resources, which demonstrates their need for technical assistance, the NCUA said.

The NCUA has developed a proposed MDI Preservation Program, under which credit unions with high percentages (50% and above) of minority members and management would be eligible to receive minority credit union status from the agency. This status would grant them access to NCUA Office of Small Credit Union Initiatives resources, including grant program eligibility. The NCUA is currently reviewing credit union comments on the proposal.

For the full NCUA report, use the resource link.

Cheney Report: Even Banks Call CU Tax Status 'Apple Pie'

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WASHINGTON (11/18/13)--The American Bankers Association (ABA) and Independent Community Bankers Association (ICBA) continue to fight tooth and nail to add to the tax load of credit unions. However, at least one banker has publicly conceded the credit union tax status is like America's "apple pie," Credit Union National Association President/CEO Bill Cheney reported in this week's edition of The Cheney Report.

The Report quotes Capital Bank of New Jersey President/CEO David Hanrahan Sr., who, as reported in American Banker, recently told an ABA conference that fighting the credit union tax status "is like trying to outlaw apple pie. "

While we appreciate this comment from a banker, he isn't drafting tax reform and the ABA and ICBA continue to relentlessly urge lawmakers to remove the tax exemption, Cheney wrote. "The only way to ensure this 'apple pie' quote becomes reality is to continue our strong advocacy on protecting the exemption," he said.

Cheney encouraged credit unions and their members to continue to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

In this week's Unite for Good update, Cheney shared the united effort of 20 southern California credit unions. Those credit unions banded together to back the CU SoCal Helping Hands charity, raising $14,000 in donations for the Children's Hospital of Orange County's (CHOC) 23rd Annual Walk in the Park at the Disneyland Resort in Anaheim.

The credit union efforts, which united a group of 825 walkers for the event, will help support the regional pediatric healthcare system serving children and families in Southern California.

CUNA continues to collect stories that showcase how credit unions are helping reach CUNA's shared, strategic vision in which Americans choose credit unions as their best financial partner on UniteforGood.org.
 
This week's Cheney Report also includes:
  • A preview of this week's National Credit Union Administration board meeting agenda;
  • CUNA comments to regulators on increasing mortgage rule compliance leeway for credit unions;
  • Information on how credit unions are working to fight elder financial abuse; and
  • Last week's House Financial Services Committee approval of standalone credit union regulatory relief measure, the first to pass through that committee in nearly 15 years.
Use the resource link to read the latest in The Cheney Report.

CUNA Works To Help CUs Stay Remittance Providers

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WASHINGTON (11/18/13)--The Consumer Financial Protection Bureau's remittance regulations are now effective, and in the aftermath of regulatory implementation, the Credit Union National Association continues to advocate for credit union interests.
 
"CUNA recently provided additional information to the CFPB on credit unions that plan to stop or reduce remittance transfers, and CUNA appreciates credit unions that have continued to work with us," CUNA Deputy General Counsel Mary Dunn said.
 
Over the past two years, CUNA's International Remittances Working Group has met with CFPB Director Richard Cordray and agency staff, and CUNA staff have had numerous meetings and telephone conversations with CFPB officials to urge more flexibility for credit unions on remittance issues.

"While CUNA and credit unions supported additional flexibility and the delayed compliance date from the April 2013 remittance final rule, we continue to share concerns we hear from credit unions," Dunn said.
 
CUNA continues to work with providers to see if they can help credit unions with continuing remittances. CUNA Strategic Services Provider MoneyGram is available to help credit unions provide international transfers that are in compliance with the CFPB rule.
 
"MoneyGram money transfer services are already trusted by financial institutions around the world who can leverage MoneyGram's network of more than 334,000 locations in nearly 200 countries, including one of the largest network of agents in Mexico and Central America. Start-up is fast via the MoneyGram online Affiliate Program," MoneyGram International Vice President of Banking Solutions Rex Northen noted.
 
Under the CFPB rule, remittance transfer providers are required to give prepayment and receipt disclosures to the consumer-sender that include the exchange rate, certain 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.
 
A CUNA survey of credit union remittance concerns released in August revealed:
  • About 35% of respondent credit unions will have to increase service fees;
  • Eight percent plan to reduce international wire or automated clearinghouse services;
  • Nearly one-in-four (23%) will discontinue international wire or ACH completely; and
  • About 6% of respondents will discontinue all types of international remittances.
Other issues highlighted by the survey results include working with correspondent institutions and vendors to implement the disclosures in time, as well as training staff.

The Federal Reserve Banks have also provided additional compliance resources through FedGlobal ACH. This program can help credit unions and others comply with the CFPB requirements.

Fryzel At AACUL: NCUA Must 'Right-size' CU Risk-Based Capital Rules

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PALM BEACH, Fla. (11/18/13)--National Credit Union Administration board member Michael Fryzel said the agency should take "neither an overly stringent nor an overly permissive approach" as it crafts risk-based capital rules. "I advocate 'right sizing' NCUA's risk-based rules," he said.

Fryzel made his remarks before more than 110 attendees at the American Association of Credit Union Leagues' (AACUL) 2013 Winter Meeting. "Risk-based capital, properly formulated, should match up with the real-world activities of a credit union," Fryzel said. "Greater net worth might be necessary, depending on the type of activities that credit unions pursue as they serve their members," he added.

The agency is developing a new risk-based capital framework. The agency has said this framework will protect credit unions and consumers from losses, and replace the "outdated and insufficient" one-size-fits-all capital requirement.

The NCUA plan could result in higher capital levels for credit unions with high concentrations of risky assets. The current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, the agency has said credit unions with assets of $50 million and above could be subject to improved risk-based capital requirements to better correlate required capital levels to risk.

"A credit union's function is serving customers' financial needs, which by definition carries risk," Fryzel said on Friday. "I want NCUA to recognize that risk, not as an extraordinary characteristic that should be avoided, but as part of doing business as a provider of financial services in the 21st century. I want to see standards that are as minimal as possible and as much as necessary. I will be keeping this vision in mind as NCUA considers changes to the industry's risk-based capital rules," he added.

NCUA Chairman Debbie Matz, in a recent Inside Exchange interview with the Credit Union National Association's Paul Gentile, discussed the upcoming risk-based capital rule as one of her broad-ranging topics in the interview.  She told Gentile that the new rule, if adopted, is unlikely to impact many credit unions. (See Nov. 6 News Now story: Matz Discusses Budget, CUSO Rule, Risk-based Cap With Gentile: Inside Exchange, Part II.)

For more of Fryzel's remarks, use the resource link.

Comments On Mortgage Borrower Counseling Rule Due Nov. 22

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WASHINGTON (11/18/13)--A Nov. 22 deadline is fast approaching for credit unions and other parties interested in commenting on the Consumer Financial Protection Bureau's interim final rule, which, among other things, will require that consumers receive counseling before obtaining high-cost mortgages.
 
The interim final rule is one that has already been approved and is scheduled to take effect on Jan. 10, 2014. However, the CFPB is seeking comments from stakeholders on how they will be affected by the changes. Further changes could be adopted to the interim rule before January.
 
The interim rule also makes servicers provide periodic account statements and rate adjustment notices to mortgage borrowers, as well as engage in early intervention when borrowers become delinquent. It clarifies the specific disclosures that must be provided before counseling for high-cost mortgages can occur, and describes proper compliance regarding servicing requirements when a consumer is in bankruptcy or sends a cease communication request under the Fair Debt Collection Practices Act.
 
The interim rule also makes technical corrections to provisions of other rules. See the resource link for more detail.
 

 
 

CFPB Plans Fines For Alleged Mortgage Loan Kickback Schemer

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WASHINGTON (11/16/13)--Republic Mortgage Insurance Corp. (RMIC) has agreed to the terms of a proposed Consumer Financial Protection Bureau consent order and will stop providing illegal kickbacks to mortgage lenders in exchange for business, and pay $100,000 in penalties.

RMIC, which is based in Winston Salem, N.C., has reportedly entered into these arrangements to span more than 10 years, according to the bureau.

The CFPB filing against RMIC alleges that company violated federal consumer financial law by engaging in widespread kickback arrangements with lenders across the country. RMIC provided kickbacks to mortgage lenders by purchasing captive reinsurance that was essentially worthless but was designed to make a profit for the lenders, the bureau claimed. According to the CFPB, the kickbacks were in exchange for referrals of private mortgage insurance business from the lenders.

"Kickbacks for mortgage insurance referrals are illegal, and can drive up costs for consumers seeking to buy a home," said CFPB Director Richard Cordray.

Under the order, RMIC will not enter into any new captive mortgage reinsurance arrangements with affiliates of mortgage lenders, or obtain captive reinsurance on any new mortgages, for a 10-year period. The CFPB will also monitor the companies to ensure compliance with the terms of the orders.

The CFPB earlier this year ordered four mortgage insurers to stop similar illegal payment schemes, and to pay a combined $15.4 million in penalties.

For the full CFPB release, use the resource link.

NCUA Budget, Assessments, CUSO Rule Lead Nov. Meeting Agenda

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ALEXANDRIA, Va. (11/15/13)--The 2014 budget, overhead transfer rate, operating fee scale and projected share insurance and corporate assessments are all on the agenda for the National Credit Union Administration's Nov. 21 open board meeting. A final rule on credit union service organizations (CUSO) is also on the agenda.

The NCUA's original 2013 budget was set at $251.4 million, but the agency in July reduced its projected 2013 budget by $2.6 million. In a recent edition of the Credit Union National Association's "Inside Exchange" video series, NCUA Chairman Debbie Matz told CUNA's Paul Gentile that the agency's 2014 budget will contain some increases to address long-awaited pay raises for some employees. Funds will also be raised to retrain staff to implement new rules, regulations and benefits for credit unions, she said. (See Nov. 6 News Now: Matz Discusses Budget, CUSO Rule, Risk-based Cap With Gentile: Inside Exchange, Part II.)

There will be no National Credit Union Share Insurance Fund (NCUSIF) premium assessment in 2013. CUNA has also encouraged the NCUA to refrain from charging a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment this year. Instead, the agency should monitor how the economy in general and housing markets progress, CUNA suggested. A quarterly report on the status of the TCCUSF will also be presented during the board meeting.

As for the final CUSO rule: Under a proposed version of that rule released in 2011, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. The NCUA currently has the authority to inspect the financials and records of some CUSOs, but the majority of financial information on CUSOs is provided by natural person credit unions that obtain services from the CUSOs.

A final version of the rule was to be unveiled in June, but the NCUA postponed its release.

CUNA has said that while some CUSOs have had issues, CUSOs as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF.

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

Yellen Talks Reg Burden At Fed Confirmation Hearing

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WASHINGTON (11/15/13)--The Federal Reserve should continue to limit regulatory burdens for small financial institutions, taking into account their distinct role and contributions, Federal Reserve Board Chair nominee Janet Yellen said during a Thursday confirmation hearing.

Yellen made her remarks before the Senate Banking Committee.

She said the Fed could also work to level the playing field between large, too-big-to-fail institutions and smaller institutions. Yellen in later remarks also said the Fed needs a model for supervision of smaller institutions that's different and less onerous.

Sen. Pat Toomey (R-Pa.) during the hearing remarked that the regulatory compliance burden for institutions that pose no systemic risk is too large. Yellen told Toomey she would do something about this issue as Fed chair.

In other prepared remarks, the Fed nominee said she was "committed to using the Fed's supervisory and regulatory role to reduce the threat of another financial crisis." Capital and liquidity rules and strong supervision are important tools for addressing the problem of financial institutions that are regarded as too big to fail, she said.

Overall, the Federal Reserve has sharpened its focus on financial stability and is taking that goal into consideration when carrying out its responsibilities for monetary policy, Yellen said. "I support these developments and pledge, if confirmed, to continue them," she added. Yellen also pledged to make the Fed a more open and transparent institution during her potential tenure.

Other topics touched on during the hearing include:
  • Unemployment rates;
  • Quantitative easing and general fiscal policy; and
  • Basel III regulations.
Committee Chair Tim Johnson (D-S.D.) praised Yellen's "strong track record in evaluating trends in the economy," noting that she provided early warning that housing prices were creating a bubble, and was first on the Fed to recognize the recession of 2008. "Such accurate economic judgment would be a tremendous quality of a Fed chair...We need her expertise at the helm of the Fed as our nation continues to recover from the Great Recession, completes Wall Street Reform rulemakings, and continues to enhance the stability of our financial sector," Johnson said.

NCUA Webinar Covers Fraud Signs, Solutions

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ALEXANDRIA, Va. (11/15/13)--Why credit union employees commit fraud, and how proper supervision and strong internal controls can help fight fraud were discussed during a Thursday National Credit Union Administration webinar.

The webinar, titled "Deterring Employee Fraud," featured fraud detection and prevention tips from Joni Lovingood, a senior consultant with CUNA Mutual Group, and Scott Butterfield of Your Credit Union Partner. The webinar was hosted by NCUA Office of Small Credit Unions Initiatives Economic Development Specialist Lauren Bethea.

The median loss in financial institution fraud cases is $140,000, according to an Association of Certified Fraud Examiners report.

Any credit union employee, including vice presidents, managers, collectors, data processors, tellers, loan officers and accountants, can commit an act of financial fraud, Lovingood said. Signs to look out for in the event of potential fraud include employee attitude changes and lifestyle, and spending and borrowing changes.

Credit unions can also inadvertently aid fraudsters by having inactive supervisory committees and internal auditors, performing inadequate background checks and maintaining lax internal controls.

An inactive and/or poorly trained supervisory committee, a weak internal control culture, and poor follow up of past audit findings are among the common internal control weaknesses cited by Butterfield. To remedy these issues, Butterfield suggested credit unions can:
  • Establish clear expectations for the supervisory committee and clarify the committee's audit framework, policies, protocol and audit specifications;
  • Provide risk, control and compliance training; and
  • Create an audit calendar that includes review and reporting for past audit findings.
Accountability and a system of checks and balances also can defend credit unions against employee dishonesty, Lovingood said. Surprise cash audits, loan reviews and file maintenance report reviews are among other steps credit unions can take to detect instances of fraud. And, Lovingood noted, insurance should not be a substitute for effective internal controls. The cost of insuring predictable losses will usually be more than the cost of retaining them, she emphasized.

Other tips to avoid fraud included:
  • Comprehensive audits;
  • Dual control of vaults; and
  • Frequent cash counts.
Stated credit union fraud policies can set the tone for the entire organization. CUNA Mutual Group has a sample fraud policy that can be made available to its policyholders, Lovingood said.

CUNA CompNOTES, Compliance Charts Provide New Reg Resources

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WASHINGTON (11/15/13)--As credit unions prepare for the Jan. 10 effective date for many of the new mortgage rules, credit unions continue to ask how they can most efficiently digest all of this new information. Two answers are offered by the Credit Union National Association's compliance staff: CUNA CompNOTES and Compliance Charts.

"It has been our experience working with so many credit unions and credit union leagues across the country that not all compliance people absorb compliance material the same way--particularly when we are faced with literally thousands of regulatory pages. For this reason, we are presenting the Consumer Financial Protection Bureau's mortgage rules, for compliance purposes, in a couple of formats--in a narrative form in CUNA's CompNOTES, as well as chart form," CUNA Federal Compliance Counsel Colleen Kelly said.

CUNA has broken up several of the new rules, such as mortgage servicing and loan origination, into smaller manageable topics.

CUNA's CompNOTES provide credit unions with not only the specific regulatory requirement for each area of the mortgage rules, but also the official CFPB interpretations and any helpful clarifications included in the summary information of the final rules.

CUNA's Compliance Charts include much of the same information, but in a non-narrative format. The charts also include more citations and are organized so that users can more readily track sections of the regulations.

To help credit unions access these resources quickly, CUNA has put together "CUNA's Catalogue of Mortgage Rules Compliance Resources," which features links to both CUNA's CompNOTES and Compliance Charts for all of the new rules. The catalogue also features links to CUNA's overview summary chart of the mortgage rules, which details what types of mortgages are covered by which regulations.

The catalogue also links to a lengthy compilation that lists all of CUNA's compliance resources to help credit unions master the mortgage lending requirements, broken down by the different regulations. This compilation not only includes the CompNOTES and charts, but also includes the many Credit Union Magazine articles, blog posts, Q&A documents, and eGuide details CUNA has available. There is also a link to the CFPB's resource page, and the bureau's small entity compliance guides.

For more, use the resource link.

Committee's Approval Of CU Trust Account Parity Is a Milestone

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WASHINGTON (11/15/13)--The House Financial Services Committee on Thursday approved legislation that would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts. The bill, known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468), was approved by voice vote.

Thursday's approval of the share insurance legislation is a milestone: It marked the first time since 1998 that a stand-alone piece of pro-credit union legislation was passed through the committee. During the markup session, original co-sponsor Rep. Ed Royce (R-Calif.) noted CUNA's support of the bill and thanked committee Chairman Rep. Jeb Hensarling (R-Texas) and co-sponsors for their help in moving the bill forward.

Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said CUNA has encouraged Congress to address this issue since 2008. The issue is also part of CUNA's 35-point regulatory relief plan.

"We appreciate the bipartisan approach that this legislation was given. The committee and the bill's sponsors worked closely with us and with the National Credit Union Administration on the language, which helped facilitate passage of the bill," he added. "CUNA looks forward to the House considering the bill as soon as possible. We also hope that H.R. 3468 is the first of many regulatory relief bills to move through this committee," Donovan said.

Under the bill, National Credit Union Share Insurance Fund coverage would be provided for accounts such as Interest on Lawyers Trust Accounts (IOLTAs) so they are treated for deposit insurance purposes on the same basis as similar accounts insured by the Federal Deposit Insurance Corp. The bill would correct an NCUA interpretation of the Federal Credit Union Act that puts credit unions at a disadvantage. The NCUA has said that for full insurance coverage, all the clients must be members, rather than just the attorney establishing the account.

CBO Lists 'Tax Large CUs Like Thrifts' As Discussion Item

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WASHINGTON (11/14/13)--Taxing large credit unions as thrift institutions is one option noted in the Congressional Budget Office's (CBO) list of budget and revenue options presented to the House-Senate Budget Conference Committee on Wednesday. The CBO made it clear that its list of options were discussion items and not recommendations.

"It's no surprise that credit unions are listed," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said. Taxing credit unions was mentioned as an option in 2005, 2007 and 2009 versions of the biennial report, but was not listed in or 2011.

Donovan said the addition of credit unions into this year's report shows they should remain focused on the budget process and how it could impact tax reform.

Other options listed in the CBO report include:
  • Treating large pass-through entities as C corporations. This change would impact many Subchapter S banks;
  • Eliminating the subchapter S option and taxing limited liability companies as C corporations. This change would impact one-third of the banks in the U.S. that are organized as Subchapter S corporations;
  • Taxing income earned by public electric utilities;
  • Capping nonprofit organizations' outstanding stock of tax-exempt bonds;
  • Taxing the Federal Home Loan Banks under the corporate income tax; and
  • Taxing qualified sponsorship payments to postsecondary sports programs.
As budget and tax talks continue, CUNA is urging credit unions and their members to use social media sites including Facebook, micro-video site Vine and other outlets to tell their legislators, "Don't Tax My Credit Union!"

Credit union and member tax advocacy efforts have remained strong. Almost 1.2 million separate congressional contacts have been made since mid-May to support credit unions in the tax talks.

For more on the Don't Tax my Credit Union efforts, use the resource link.

CU Parity Bill For Underlying Owners Of Lawyers' Trust Accounts Introduced

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WASHINGTON (11/14/13)--Legislation that would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts was introduced late Wednesday.
 
The bill, supported by the Credit Union National Association, is known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468) and was introduced by Reps. Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo.), as expected (News Now Nov. 12).
 
Specifically, the bill would provide National Credit Union Share Insurance Fund coverage for accounts such as Interest on Lawyers Trust Accounts (IOLTAs) so they are treated for deposit insurance purposes on the same basis as similar accounts insured by the Federal Deposit Insurance Corporation.

The House Financial Services Committee has scheduled a markup on the bill for today.

CUNA President/CEO Bill Cheney thanked the House Financial Services Committee chairman, Rep. Jeb Hensarling (R-Texas), and its ranking Democrat, Rep. Maxinie Waters (Calif.), for their leadership in bringing this relief measure up for committee action.
 
Upon the bill's introduction, CUNA sent a letter of support to Hensarling and Waters saying the credit union relief legislation is needed to correct a National Credit Union Administration interpretation of the Federal Credit Union Act that puts credit unions at a disadvantage. The NCUA has said that for full insurance coverage, all the clients must be members, rather than just the attorney establishing the account.
 
The inability of federally insured credit unions to extend share insurance coverage to IOLTAs and similar escrow accounts means that the accountholder must use a bank or thrift in order to receive the maximum deposit insurance coverage for all owners of the funds held in trust or escrow, the CUNA letter said.

Also to be considered at the Thursday markup is H.R. 3329, a bill introduced by Rep. Blaine Luetkemeyer (R-Mo.) to increase from $500 million to $1 billion the cap on the application of the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors.

Waters Calls For Quick TRIA Reauthorization

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WASHINGTON (11/14/13)--The Terrorism Risk Insurance Act should be reauthorized "quickly, cleanly and for the long-term," ranking House Financial Services Committee Democrat Maxine Waters (D-Calif.) said during a Wednesday hearing.

TRIA, which requires property and casualty insurers to offer coverage for foreign acts of terrorism on U.S. soil and provides a federal backstop for that coverage, is scheduled to expire at the end of 2014.

"TRIA must remain in place to ensure a speedy recovery after an attack, to avoid market disruptions, and to protect schools, jobs and businesses," she added.

The National Association of Realtors, U.S. Chamber of Commerce, International Association of Amusement Parks & Attractions, Jewish Federations of North America, National Conference of Insurance Legislators, U.S. Conference of Mayors, American Hotel and Lodging Association, National Association of Mutual Insurance Companies, the International Council of Shopping Centers and every major national sports league and organization are among the groups supporting a TRIA renewal, Waters noted.

The Terrorism Risk Insurance Program Reauthorization Act of 2013 (H.R. 2146), which would extend TRIA coverage until Dec. 31, 2024, was introduced this May by Rep. Michael Capuano (D-Mass.). The bill has 42 cosponsors.

Wednesday's hearing, entitled "The Future of Terrorism Insurance: Fostering Private Market Innovation to Limit Taxpayer Exposure," featured testimony from:
  • Lloyd's of London Risk Management Director and General Counsel Sean McGovern;
  • Validus Reinsurance, Ltd. CEO Kean Driscoll;
  • Former South Carolina Director of Insurance Ernest Csiszar;
  • Fermat Capital Management, LLC Managing Principal Dr. John Seo; and
  • Insurance Information Institute President and Economist Robert Hartwig.

CUNA, Others Oppose G-Fees' Use In Revenue Reconciliation

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WASHINGTON (11/14/13)--Credit risk guarantee fees charged by government-sponsored enterprises Fannie Mae and Freddie Mac must not be used as a potential revenue source during budget reconciliation talks, the Credit Union National Association said in a Wednesday letter to members of the U.S. Congress.

The letter was sent as a statement for the record of a Wednesday House-Senate conference committee meeting on S.Con.Res.8. That bill would revise fiscal 2013 budget levels, set the congressional budget for fiscal 2014, and set budgetary levels for the 2015-2023 fiscal years.

Members of Congress are currently working to reconcile Senate and House versions of the Fiscal Year 2014 Budget Resolution.

In a letter to the two legislators, CUNA and others noted that guarantee fees (g-fees) are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans. Increasing guarantee fees for other purposes effectively taxes potential homebuyers and consumers wishing to refinance their mortgages, the letter added.

"Though we are seeing signs of improvement in the real estate sector, we must avoid taking any steps that could keep housing consumers on the sidelines and hinder that recovery. Moreover, adopting another g-fee increase will further tie policymakers' hands just as Congress is beginning to consider broader housing finance reform legislation and a resolution to the conservatorship of Fannie Mae and Freddie Mac," the letter said.

The letter was cosigned by the American Bankers Association, American Land Title Association, Community Mortgage Lenders of America, Housing Policy Council, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Home Builders and the National Association of REALTORS®.
 
For the full letter, use the resource link.
 
Other hearings held on Wednesday included:
  • A Joint Economic Committee hearing on the current economic outlook; and
  • A House Financial Services monetary policy subcommittee hearing on international central bank models.

NEW: CUNA-Supported IOLTA Fix Passes House Committee

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WASHINGTON (11/14/13, UPDATED: 10:55 A.M. ET)--The House Financial Services Committee has just approved legislation that would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts. The bill, known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468), was approved by voice vote.

Credit Union National Association President/CEO Bill Cheney this week thanked committee chairman, Rep. Jeb Hensarling (R-Texas) and ranking Democrat Rep. Maxine Waters (Calif.) for their support of the measure. "We hope that H.R. 3468 is the first of many regulatory relief bills to move through this committee," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said following the vote.

The bill would provide National Credit Union Share Insurance Fund coverage for accounts such as Interest on Lawyers Trust Accounts (IOLTAs) so they are treated for deposit insurance purposes on the same basis as similar accounts insured by the Federal Deposit Insurance Corporation.

CUNA supports the bill, which would correct a National Credit Union Administration interpretation of the Federal Credit Union Act that puts credit unions at a disadvantage. The NCUA has said that for full insurance coverage, all the clients must be members, rather than just the attorney establishing the account.

CUs, League Bring QM Concerns To CFPB Hill Roundtable

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WASHINGTON (11/14/13)--Qualified mortgages, exemption authority and secondary mortgage markets were among the items discussed when representatives from the Pennsylvania Credit Union Association (PCUA) and local credit unions met members of the U.S. Congress for a roundtable on Consumer Financial Protection Bureau mortgage regulations.

The Pittsburgh roundtable was hosted by House Financial Services financial institutions and consumer credit subcommittee Chairman Shelly Moore Capito (R-W.Va.) and Rep. Keith Rothfus (R-Pa.). WEST-AIRCOMM FCU, Beaver, Pa., CEO Ray Brunner, Clearview FCU, Moon Township, Pa., Associate Vice President of Real Estate Lending Sharon Sweeney, PCUA Vice President of Governmental Affairs Christina Mihalik and PCUA Senior Account Executive Monika Edlis shared credit union concerns during the roundtable. The meeting was also attended by representatives from community banks, mortgage banks, title insurance companies, and community development corporations.

Several concerns regarding the CFPB's qualified mortgage rule were addressed. Comments on the QM rule included:
  • The total debt to total monthly income ratio of 43% should be expanded;
  • The 3% limitation on points and fees for a qualified mortgage loan may be problematic for some credit unions; and
  • Credit unions should not have to face retribution from examiners when writing non-qualified mortgage loans.
Greater use of the CFPBs exemption authority was also encouraged by the credit union roundtable participants.

The credit union advocates also noted the need for a secondary market to accept non-QM loans, and urged congressional support for the Consumer Mortgage Choice Act. That bill would address some credit union concerns regarding point and fee definitions in the Consumer Financial Protection Bureau's amended final "Ability to Repay" rule.

The CFPB should delay the effective dates of the upcoming mortgage rules, and protect credit unions and other mortgage originators from litigation, they said. The Credit Union National Association has called on the CFPB and Congress to delay until September 2014 possible sanctions and legal liability under QM and other mortgage rules. CUNA has also sought a one-year mortgage regulation implementation delay.

NEW: CU Share Insurance Parity Bill Introduced

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WASHINGTON (11/13/13, UPDATED: 5:14 p.m. ET)--Legislation that would extend share insurance coverage to trust accounts held in the name of nonmembers has just been introduced in the U.S. House.
 
The bill, supported by the Credit Union National Association, is known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468) and was introduced by Reps. Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo.), as expected. (News Now Nov. 12)
 
Specifically, the bill would provide National Credit Union Share Insurance Fund coverage for accounts such as Interest on Lawyers Trust Accounts (IOLTAs) so they are treated for deposit insurance purposes on the same basis as similar accounts insured by the Federal Deposit Insurance Corporation.
 
Upon the bill's introduction, CUNA sent a letter of support saying the credit union relief legislation is needed to correct a National Credit Union Administration interpretation of the Federal Credit Union Act that puts credit unions at a disadvantage. The NCUA has said that for a credit union to attract IOLTA accounts, all the clients must be members, rather than just the attorney establishing the account.
 
The inability of federally insured credit unions to extend share insurance coverage to IOLTAs means that despite the wishes of members to hold these accounts at credit unions, they must use a bank or thrift in order to receive the maximum deposit insurance coverage for all owners of the funds held in such an account, the CUNA letter to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) said. That committee has scheduled a Thursday markup on the bill.

Interchange Oral Arguments Set For Jan. 17

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WASHINGTON (11/13/13)--The next round in an ongoing interchange legal battle between the Federal Reserve and merchants has been set: Oral arguments for both sides are set for 9:30 a.m.  (ET) on Jan. 17. The arguments will be heard by a three-judge panel in the U.S. Court of Appeals for the District of Columbia Circuit.

Circuit Judges David Tatel, Harry Edwards, and Stephen Williams will hear the appeal.

The oral arguments follow U.S. District Judge Richard Leon's July decision in favor of a merchant request to strike down the Fed's price caps on debit card interchange fees. He said that the Fed did not follow narrow congressional intent when it implemented the cap. The Fed has appealed that decision.

The Fed on Oct. 20 filed a brief in support of its rule implementing the debit card interchange cap required by the Dodd-Frank Act. The Credit Union National Association and financial services partners also filed an amicus brief on that date.

Merchant briefs in the case will be filed on Nov. 20.

The current Fed interchange fee cap rule limits debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allows an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards.

The interchange regulations will remain in effect as the court case moves forward.

Credit unions under $10 billion are exempt from the interchange fee cap rule, but not the network exclusivity provisions. CUNA maintains all credit unions, including those under $10 billion in assets, are negatively affected by these price controls in the marketplace.

CUs Told What Examiners Look For On Risk Management

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ALEXANDRIA, Va. (11/13/13/)--The National Credit Union Administration took action Tuesday to clarify its supervisory expectations regarding credit unions' risk management systems.
 
In a Letter to Federally Insured Credit Union (13-CU-12), the agency noted that sound enterprise risk management (ERM) is crucial to the success of any credit union, but effective management can take different approaches at different organizations.
 
Natural person credit unions are not required to implement a formal ERM, said the letter signed by Director Larry Fazio of NCUA's Office of Examination and Insurance, and that is because most do not "possess the size, depth of resources, or range and level of risk exposure to warrant the significant investment necessary" to implement such a program.  
 
However, these credit unions are expected to have processes "sufficient to manage the risk associated with their business model and strategies," the letter reminded.
 
In large and complex natural person credit unions, however, examiners "should ensure the credit union employs a comprehensive risk management approach, which may or may not include a formal ERM program."
 
In all cases, the letter continued, examiners are expected to evaluate a credit union by considering:
  • The credit union's risk exposure, risk appetite, and risk-management strategies;
  • The depth and breadth of potential exposures, including the types of products and services offered by the credit union;
  • The strategic objectives and operational policies, procedures, and controls in relation to potential exposures;
  • Concentration of risk;
  • Risk-mitigating factors;
  • Capability and resources of management;
  • Current and historical performance of management; and,
  • The financial strength of the credit union in relation to assets and activities.
When the letter is posted to the NCUA website, it can be accessed using the resource link below.

Cordray Clarifies QM Compliance Leeway To Congress

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WASHINGTON (11/13/13)--Consumer Financial Protection Bureau Director Richard Cordray on Tuesday described what agency examiners will consider "good faith efforts" at qualified mortgage (QM) regulation compliance.

Cordray made the remarks as he presented his agency's semiannual report before the Senate Banking Committee.

Examiners will give institutions some leeway in the early months after the QM regulation is implemented in January, Cordray reiterated on Tuesday. Examiners, he said, will be looking for financial institutions to have taken the responsibilities seriously and have compliance monitoring in place. It doesn't mean that every detail will be perfect, but that they have made real efforts, he said.

The bureau is not looking to play "gotcha" with institutions that are still implementing the changes needed to comply with the regulations, Cordray emphasized. The CFPB director said he could not give an official cutoff date for when this leeway would end, but said the leeway would be granted for several months.

The Credit Union National Association has called on the CFPB and Congress to delay until September 2014 possible sanctions and legal liability under QM and other mortgage rules. CUNA has also sought a one-year mortgage regulation implementation delay. More than 100 U.S. House members last week also urged the bureau to defer implementation of pending mortgage rules until Jan. 1, 2015 to ensure financial institutions are able to transition their systems into full compliance with the rules.

The CFPB's data collection and market monitoring practices were also addressed during the hearing. Cordray, in an exchange with Sen. Mike Crapo (Idaho), who is the ranking Republican member of the committee, said that the bureau is not monitoring individual consumer credit card accounts. The agency's intent when it collects consumer data is to monitor trends and the practices of large institutions, Cordray said. The CFPB does not have any different data than the institutions themselves or other regulators have, he added.

Cordray, in response to a questions, told Sen. Sherrod Brown (D-Ohio) that the CFPB plans to move forward to address privacy notice issues soon. He said he has not fully defined what the bureau's approach will be, but he believes the agency and Congress are moving in the same direction.

Brown is a leading cosponsor of legislation that would eliminate a requirement that privacy notices be sent on an annual basis. It would instead allow the notices to be sent only when the privacy policy of a financial institution has changed. The Credit Union National Association supports the legislation.

If Congress acts in the area, the CFPB will implement what Congress approves, Cordray said.

NCUA Security Office Plan Noted In CUNA Reg Advocacy Report

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WASHINGTON (11/13/13)--In this week's Regulatory Advocacy Report, the Credit Union National Association details the National Credit Union Administration's plans for a new security department.

The new office will focus on agency security and the continuity of operations, which includes natural disasters and other emergency events.

According to NCUA, this office is meant to consolidate the agency's various security functions under one office instead of the current decentralized model.

CUNA noted the office is unlikely to directly impact the operations of credit unions. "We agree security is important, but we have concerns about agency costs and urge the agency to minimize them whenever possible," CUNA Deputy General Counsel Mary Dunn said.

Other items addressed in this week's Regulatory Advocacy Report include:
  • CUNA's continued mortgage regulation advocacy efforts;
  • A Consumer Financial Protection Bureau Advance Notice of Proposed Rulemaking on debt collection;
  • Proposed interagency diversity assessment standards;
  • The NCUA's posting of comment letters on its charitable donation account proposal; and
  • An update on payment card industry data security standards.
A resource chart with information on current CUNA comment calls is also provided in the Report.

For this week's Regulatory Advocacy Report, CUNA members can use the resource link.

CFPB Instructs Lenders On Providing Housing Counseling Lists

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WASHINGTON (11/13/14)--The Consumer Financial Protection Bureau (CFPB) recently released an interpretive rule that provides instructions for generating lists of housing counseling agencies.
 
Credit unions and other lenders can use a CFPB-generated consumer list tool to meet 2013 HOEPA requirements that lenders provide mortgage borrowers with a written list of housing counseling agencies approved by the U.S. Department of Housing and Urban Development. There is a Jan. 10, 2014 effective date for generating housing counseling lists for those using the CFPB tool.
 
The CFPB launched the online list to help consumers find local housing counseling agencies. The tool uses a search box and mapping function to show borrowers the ten closest counseling agencies to their zip code. When counselors are listed, the tool shows the borrower which type of services are available from pre-purchase counseling to default resolution counseling, as well as the languages, other than English, each agency offers.
 
As an alternative to using the CFPB list tool, lenders can comply with the counseling rule by generating their own lists using the same HUD data that CFPB uses--as long as the data is used in accordance with the instructions provided with the data. The CFPB is allowing for an interim procedure for lenders choosing to generate their own lists and who will not be ready by the Jan. 10 effective date.
 
Use the resource link for more on the counseling rule.

CU Reg Relief Bill Set For Markup

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WASHINGTON (11/12/13)--The House Financial Services Committee announced that it will mark up a bill Thursday on a credit union regulatory relief measure supported by the Credit Union National Association, one that would extend share insurance coverage to trust accounts held in the name of nonmembers.

The bill, expected to be introduced by Reps. Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo.), would rectify the disparate treatment given such accounts at credit unions. In 2008, the National Credit Union Administration issued an opinion letter on insurance coverage on Interest on Lawyers' Trust Accounts (IOLTA). The accounts are those set up by lawyers at a credit union or bank to hold funds for their clients. Often, the interest accrued is paid to the state or the state bar association to fund legal services.

CUNA has noted that the situation puts credit unions at a disadvantage to attract this type of account if all the clients must be members, rather than just the attorney establishing the account. CUNA has discussed the issue both on the regulatory and legislative fronts.

Also to be considered at the Thursday markup is H.R. 3329, a bill introduced by Rep. Blaine Luetkemeyer (R-Mo.) to increase from $500 million to $1 billion the cap on the application of the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors.

"We hope that the legislation considered on Thursday will be the first of several regulatory relief bills to move through the committee, and we are very appreciative of Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) for their leadership in this process," noted CUNA Senior Vice President of Legislative Affairs Ryan Donovan Friday.

Other hearings on the schedule this week include:
  • A Tuesday Senate Banking Committee hearing on the Consumer Financial Protection Bureau's semi-annual report to congress. CFPB Director Richard Cordray will testify (See News Now story: Senate Panel Hears CFPB Six-month Report Today.);
  • A Wednesday House-Senate conference committee meeting on S.Con.Res.8, which would revise fiscal 2013 budget levels, set the congressional budget for fiscal 2014, and set budgetary levels for the 2015-2023 fiscal years;
  • A Wednesday Joint Economic Committee hearing on the current economic outlook;
  • A Wednesday House Financial Services monetary policy subcommittee hearing on international central bank models; and
  • A Thursday Senate Banking Committee hearing on Janet Yellen's nomination to serve as Federal Reserve Board chair.

Cheney Report Details CU Fin Ed Efforts

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WASHINGTON (11/12/13)--The financial education efforts of TopLine FCU, Maple Grove, Minn., received top billing in this week's edition of The Cheney Report.

The $340-million-in-assets credit union held personal money management educational sessions at last month's Minnesota Student Leadership Summit. TopLine's session, "The Real World of Personal Money Management," was attended by more than 300 students and built on the themes of the event by helping students better understand how to manage finances.

TopLine FCU's story is one of several that CUNA has featured in recent editions of The Cheney Report. CUNA is collecting these stories to showcase how credit unions are joining forces to Unite for Good. Cheney has encouraged credit unions to visit UniteforGood.org and share how they are helping reach CUNA's shared, strategic vision in which Americans choose credit unions as their best financial partner.

Back in Washington, Cheney noted, "signs and hints that tax reform is gearing up continue to accumulate." A tax reform discussion draft outlining the thinking of the committee's leadership on a particular issue could be released in the coming weeks. CUNA is focused on keeping the credit union tax exemption intact in discussion drafts, and needs credit union supporters nationwide to stay engaged in the Don't Tax My Credit Union campaign to achieve that goal, Cheney emphasized.

This week's Cheney Report also includes:
  • Details on CUNA Chief Economist Bill Hampel's testimony before the Senate Banking Committee;
  • Highlights from the second part of a two-part Inside Exchange interview with National Credit Union Administration Chairman Debbie Matz; and
  • An update on Senate privacy legislation.
Use the resource link to read the latest in The Cheney Report.

Dakotas, New York CU Reps Finish Off Fall Hike Schedule

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WASHINGTON (11/12/13)--A strong fall season of Hike the Hill credit union advocacy was wrapped up last week as a twelve-member delegation from North and South Dakota brought the credit union message to Capitol Hill. This fall's Hike the Hill schedule included visits from credit union representatives from 32 states.

The North and South Dakota credit union delegation poses in front of CPB headquarters in Washington. The group, in no particular order, included Robbie Thompson, Credit Union Association of the Dakotas (CUAD); Roger Heacock, Black Hills FCU; Floyd Rummel III, Northern Hills FCU; Amy Klienshcmit, CUAD; Steve Schmitz, First Community CU; Janet Mount, Vermillion FCU; Marty Willms, Minute Man Community FCU; Mary Connick, Minute Man Community FCU; Tyler Neether, Town & Country CU; Julie Thompson, Ft. Randall FCU; Melanie Stillwell, Western Cooperative CU, and Jeff Olson, CUAD.           (CUAD Photo)
The Credit Union Association of the Dakotas met with Sens. John Hoeven (R-N.D.), Heidi Heitkamp (D-N.D.) and John Thune (R-S.D.) and the credit union advocates focused on three vital issues: Preserving the credit union tax status, reforming privacy notification regulations, and maintaining credit union access to the secondary mortgage markets as policymakers work for housing finance system reforms.

CUAD reported that credit unions' 'Don't Tax My Credit Union" efforts have had an impact, according to those lawmakers they met with: Many referenced the volume of credit union contacts their district offices continue to receive from Dakota credit union members.

The Dakotas group also were present when Credit Union National Association Chief Economist Bill Hampel testified before the Senate Banking Committee hearing on housing finance reform, and also later visited that committee's chairman, Sen. Tim Johnson (D-S.D.).

Click to view larger image The Credit Union Association of New York (CUANY) poses with Rep. Chris Collins (R-N.Y.) (second from right) in front of his office on Capitol Hill. The New York group included Allison Barna, Michael Lanotte, and RJ Tamburri, all of CUANY; Stephanie Carl, Corning FCU; Cara Carlevatti, Great Erie FCU; Kate Czarnecki, FocalPoint FCU; Angela Hitchcock, Sidney FCU; Aimee Johnson, Oswego County FCU; Meghan McGee-Pelkey, UFirst FCU; Cristina Morrissiey, AmeriCU Credit Union; David Roy, Buffalo Metropolitan FCU; and Christin Vincent, The Summit FCU.
The Credit Union Association of New York (CUANY) also came to Washington for one of CUNA's and the state leagues' final Hike the Hill events of the year. That group took a novel approach to their advocacy efforts: CUANY representatives were accompanied by ten young credit union professionals, many of whom were attending their first meetings on Capitol Hill.

The young credit union employees, who are members of CUANY's Young Professional Commission (YPC), helped deliver more than 13,000 Don't Tax My Credit Union postcards to the offices of Sens. Charles Schumer (D-N.Y.) and Kirsten Gillibrand (D-N.Y.).

"I think the senators' staff members were really surprised with our proactive approach," Angela Hitchcock, loan officer at Sidney FCU, Bainbridge, N.Y., told CUANY's The Point. "They weren't expecting all those postcards, and they seemed pleased with how we were bringing awareness to our members," she added.

Member business lending and supplemental capital were also addressed during meetings with legislators and their staff. YPC Chair Aimee Johnson, who is vice president of lending at Oswego County FCU, Oswego, N.Y., said the credit union group "explained it in clear terms and gave real examples of how not having additional capital has hindered our credit unions."

The New York advocates met with representatives or staff from one-third of their congressional delegation, and the CUANY said many lawmakers expressed support for the credit union tax status.

"These visits created new personal relationships between our young credit union professionals and our federal legislators," Mike Lanotte, CUANY senior vice president/general counsel, said. "It also gave us the opportunity to discuss our legislative priorities and thank our cosponsors while strengthening our case with those yet to take that step."

The key credit union issues were also brought to lawmakers attention by credit union advocates from Arizona, Colorado, Indiana, Massachusetts, New Hampshire, Rhode Island, and Wyoming in the final weeks of this year's Hike the Hill schedule.

Senate Subcommittee Investigates Patent Abuses(1)

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WASHINGTON, D.C. (11/12/13)--The Senate Commerce consumer protection subcommittee conducted a hearing on the impact of demand letters--sent by patent assertion entities (PAEs) or "patent trolls"--on small businesses, consumers, and innovators. The hearing considered whether legislation is needed to provide increased protections from patent abuses.

The volume of lawsuits against credit unions related to patents is steadily increasing, and the Credit Union National Association has called on Congress to act to address this abusive litigation. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones, among other examples.

These suits, which involve so-called "patent trolls" using low-quality patents in an effort to extract settlements from credit unions, are an abuse of the patent system, CUNA has said. 

Credit unions and others have settled out of court to avoid the cost of litigation.

Other examples of alleged patent infringement that were touched on in the Thursday hearing include credit, debit, and gift card magnetic stripe technology, as well as image scanning to email technology.

In the Thursday hearing, Nebraska Attorney General John Bruning called the practices of patent trolls silent extortion. "Attorney general after attorney general is realizing that we have to band together to combat patent trolls," he added. Bruning urged the U.S. Congress to "use its subpoena powers to bring patent trolls forward to answer for their abusive practices."

Bruning explained that larger entities having earlier experience with demand letters know that once they meet the patent troll's financial demands, the trolls will "come back again and again." He argued this is why smaller companies and organizations have seen an uptick in the number of the demand letters. Patent trolls, he said, have "reached the end of their rope" and they "know the big guys have the resources to and most likely will fight, but the small guys lack the resources to fight, so they often settle."

Another witness, BrandsMartUSA Executive Vice President Larry Sinewitz, said his business has troubled demonstrating how many demand letters that it receives. "We have trouble bringing you demand letters we've settled on, because they usually include non-disclosure agreements. So if I showed you all of them it would literally open me right back up to the risk of litigation," he said.

The Innovation Act of 2013 (H.R. 3309), which was introduced by Rep. Bob Goodlatte (R-Va.) late last month, would remove some of the financial incentives sought by firms that assert low-quality patents in the hope of quick settlements. CUNA supports this bill. (See Oct. 29 News Now story: CUNA, Trades Back Goodlatte Patent Improvement Bill.)

Final TILA/RESPA Rule Could Be Revealed Nov. 20

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WASHINGTON (11/12/13)--A final rule on the integration of Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures may be released at the Consumer Financial Protection Bureau's Nov. 20 mortgage field hearing.

The field hearing, entitled "Know Before You Owe: Mortgages," will be held in Boston, Mass., and is scheduled to begin at 11 a.m. (ET). Bernie Winne, CEO at Boston Firefighters CU, will take part in a roundtable discussion at the hearing. Winne is a member of the Credit Union National Association's Government Affairs Committee.  Also, Cordray is scheduled to meet with Massachusetts Credit Union League representatives after the hearing.

The CFPB has also set a Nov. 14 auto finance forum event. The event will be held in Washington and is scheduled to begin at 8:45 a.m. (ET) at bureau headquarters.

Both events will be streamed live on the CFPB homepage.

For more on the events, use the resource links.

CFPB Releases Housing Counselor Tool For Consumers

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WASHINGTON (11/12/13)--The Consumer Financial Protection Bureau on Friday released a new tool to help consumers access advice on buying a home, renting, defaults, foreclosures, and credit issues through local housing counselors.

"Consumers need and deserve the best guidance when making the decision to purchase a home," CFPB Director Richard Cordray said. "Buying a home may easily be the largest investment a consumer makes, and we want to make it easier for them to find a housing counselor that is a good fit for them," he added.

The housing counselor locator:
  • Shows consumers the 10 closest U.S. Department of Housing and Urban Development-approved counselors near their zip code;
  • Tells consumers which services a give counselor provides, such as rental housing counseling, pre-purchase counseling, or default resolution counseling; and
  • Lists the languages offered by each counselor.
Pending mortgage regulations require lenders to provide borrowers with a list of homeownership counseling organizations. The CFPB on Friday said lenders that have not developed their own lists by Jan. 10 can provide borrowers with a link to the agency's new mortgage counselor tool.

"If lenders take these steps in good faith while building their systems or are working with vendors to build systems, the CFPB would not raise supervisory or enforcement concerns," the bureau said in a release.

The CFPB also provided an interpretive rule to guide lenders that are building their own mortgage counselor list.

For the CFPB release, use the resource link.

CUNA Contacts FFIEC To Urge Delay Of Mortgage Reg Legal Liability, Sanctions

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WASHINGTON (11/12/13)--Federal financial regulators should work with the Consumer Financial Protection Bureau to provide a short-term reprieve, until September, from examiner sanctions for noncompliance that might be imposed on regulated financial institutions that are in making good faith efforts to comply with upcoming mortgage regulations, the Credit Union National Association's CEO Bill Cheney urged in a letter to the Federal Financial Institutions Examination Council (FFIEC).

CUNA has called for a delay in possible sanctions and legal liability under the mortgage rules in several forums in recent days: For instance, Chief Economist Bill Hampel sought short-term reprieves or an outright delay of the mortgage regulations in Senate Banking Committee testimony delivered last week. CUNA's Bill Cheney also argued for a delay in an American Banker op-ed piece published Thursday.

In a letter to the leaders of the FFIEC, CUNA urged the regulators to work with Congress to delay legal liability under the new rules, again until September. The FFIEC was formed in 1978 to promote uniformity in financial institution regulation. It includes the heads of the Federal Reserve Board, the National Credit Union Administration, and the Federal Deposit Insurance Corp., as well as the Comptroller of the Currency and the director of the  Consumer Financial Protection Bureau.

"We believe these requests are reasonable and if implemented, would be enormously useful to smaller creditors as they work to meet their responsibilities under these rules," CUNA wrote in the letter. "This approach, to delay examiner sanctions and legal liability only for a short but reasonable time, will ultimately support full compliance--in the best interests of consumers, creditors, servicers, and regulators," CUNA added.

Delaying compliance with upcoming mortgage rules would also "provide welcome, although temporary, relief particularly for smaller creditors and servicers, such as credit unions," CUNA wrote. However, CUNA in the letter recognized that the CFPB has said a full delay is not be possible because of the implementation directive in the Dodd-Frank Act.

The letter also calls on the regulators to do more to address concerns about the risk of disparate impact discrimination that could result because of the focus on "qualified mortgages." The concern is that examiners and the secondary market could favor QMs, which require the borrower to have no more than a 43% debt to income ratio.

Other borrowers that have higher ratios that still could be good mortgage credit risks might not be able to obtain a mortgage or have to pay more for one.

NEW: Bill To Extend Share Insurance To Trust Accounts To Be Marked Up

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WASHINGTON (11/11/13, UPDATED, 5:04 a.m ET)--The House Financial Services Committee announced that it will mark up a bill Thursday on a credit union regulatory relief measure supported by the Credit Union National Association, one that would extend share insurance coverage to trust accounts held in the name of nonmembers.
 
The bill, expected to be introduced next week by Rep. Ed Royce (R-Calif.), would rectify the disparate treatment given such accounts at credit unions.  In 2008, the National Credit Union Administration issued an opinion letter on insurance coverage on Interest on Lawyers' Trust Accounts (IOLTA). The accounts are those set up by lawyers at a credit union or bank to hold funds for their clients. Often, the interest accrued is paid to the state or the state bar association to fund legal services.
 
CUNA has noted that the situation puts credit unions at a disadvantage to attract this type of account if all the clients must be members, rather than just the attorney establishing the account. CUNA has discussed the issue both on the regulatory and legislative fronts.
 
Also to be considered at the Thursday markup is H.R. 3329, a bill introduced by Rep. Blaine Luetkemeyer (R-Mo.) to increase from $500 million to $1 billion the cap on the application of the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors.
 
"We hope that the legislation considered on Thursday will be the first of several regulatory relief bills to move through the committee, and we are very appreciative of Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) for their leadership in this process," noted CUNA Senior Vice President of Legislative Affairs Ryan Donovan Friday.

Senate Subcommittee Investigates Patent Abuses

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WASHINGTON, D.C. (11/8/13)--The Senate Commerce consumer protection subcommittee conducted a hearing on the impact of demand letters--sent by patent assertion entities (PAEs) or "patent trolls"--on small businesses, consumers, and innovators. The hearing considered whether legislation is needed to provide increased protections from patent abuses.
 
The volume of lawsuits against credit unions related to patents is steadily increasing, and the Credit Union National Association has called on the U.S. Congress to act to address abusive litigation. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones, among other examples.
 
These suits, which involve so-called "patent trolls" using low-quality patents in an effort to extract settlements from credit unions or others, are an abuse of the patent system, CUNA has said. 
 
Patent troll targets have settled out of court to avoid the cost of litigation.
 
Other examples of alleged patent infringement that were touched on in the Thursday hearing include credit, debit, and gift card magnetic stripe technology, as well as image scanning to email technology.
 
In the Thursday hearing, Nebraska Attorney General John Bruning called the practices of patent trolls "silent extortion."
 
"Attorney general after attorney general is realizing that we have to band together to combat patent trolls," he added. Bruning urged Congress to "use its subpoena powers to bring patent trolls forward to answer for their abusive practices."
 
Bruning explained that larger entities having earlier experience with demand letters know that once they meet the patent troll's financial demands, the trolls will "come back again and again." He argued this is why smaller companies and organizations have seen an uptick in the number of the demand letters. Patent trolls, he said, have "reached the end of their rope" and they "know the big guys have the resources to and most likely will fight, but the small guys lack the resources to fight, so they often settle."
 
Another witness, BrandsMartUSA Executive Vice President Larry Sinewitz, said his business has trouble demonstrating how many demand letters that it receives. "We have trouble bringing you demand letters we've settled on, because they usually include non-disclosure agreements. So if I showed you all of them it would literally open me right back up to the risk of litigation," he said.
 
The Innovation Act of 2013 (H.R. 3309), which was introduced by Rep. Bob Goodlatte (R-Va.) late last month, would remove some of the financial incentives sought by firms that assert low-quality patents in the hope of quick settlements. CUNA supports this bill. (See Oct. 29 News Now story: CUNA, Trades Back Goodlatte Patent Improvement Bill.)

NCUA Offers Compliance Webinars On New Remittance, Mortgage Rules

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ALEXANDRIA, VA (11/8/13)--The National Credit Union Administration (NCUA) will host two free webinars on the Dodd-Frank remittances and mortgage lending rules on Nov. 18 and Dec.18 beginning at 2 p.m. (ET).
 
NCUA's Office of Consumer Protection will host the webinars and will provide credit unions with two high-level overviews on the new Dodd-Frank rules and how they will affect credit unions.
 
The topics for the Nov. 18 webinar include:
  • Remittance transfers;
  • Higher-priced mortgage loan appraisals;
  • Mortgage servicing; and,
  • Higher-priced mortgage loan escrows.
The topics for the Dec. 18 webinar include:
  • Ability-to-Repay and Qualified Mortgage rules;
  • High-cost mortgage and home-ownership counseling;
  • Loan originator compensation; and,
  • Equal Credit Opportunity Act appraisals and valuations.
Credit unions can register for each webinar by using the resource links below. Credit unions will use the same links to view the webinars on Nov. 18 and Dec. 18.

Credit unions are asked to submit their questions prior to each webinar by emailing WebinarQuestions@ncua.gov with the subject line, "Remittance and Mortgage Lending Rules Webinar."
 
The NCUA has also created regulatory alerts and videos for the new regulations, which summarize the new rules, highlight key issues for credit unions and provide information on additional compliance resources for credit unions to use. You can find NCUA's videos on the agency's YouTube channel  and its alerts under the 'Regulations, Publications and Reports' tab on the NCUA website.

CFPB Announces Proposed Steering Settlement

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WASHINGTON (11/8/13)--A multi-million-dollar action is being sought against a Utah-based mortgage company for allegedly steering consumers into costlier mortgages, the Consumer Financial Protection Bureau (CFPB) announced Thursday.
 
In January, the bureau announced rules designed to prevent unscrupulous mortgage loan originators from generating higher compensation for themselves by steering borrowers into risky and high-cost loans.
 
According the CFPB, it has asked a federal court to approve a consent order that would provide more than $9 million restitution for consumers from Castle & Cooke Mortgage, LLC, of Salt Lake City. Another $4 million would be obtained in civil money penalties against Castle & Cooke and two of its officers for allegedly paying loan officers illegal bonuses.
 
The CFPB also said, in a release, that the mortgage company maintains 45 branches and does business in 22 states, including Arizona, California, Colorado, Florida, Hawaii, Iowa, Idaho, Nebraska, New Mexico, Nevada, Texas, and Utah.
 

CUNA Calls On FFIEC To Delay Mortgage Reg Sanctions, Legal Liability

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WASHINGTON (11/8/13)--Federal financial regulators should work with the Consumer Financial Protection Bureau to provide a short-term reprieve, until September, from examiner sanctions for noncompliance that might be imposed on regulated financial institutions that are making good faith efforts to comply with upcoming mortgage regulations, Credit Union National Association President/CEO Bill Cheney urged today in a letter to the Federal Financial Institutions Examination Council (FFIEC).

CUNA has called for a delay in possible sanctions and legal liability under the mortgage rules in several forums in recent days: For instance, Chief Economist Bill Hampel sought short-term reprieves or an outright delay of the mortgage regulations in Senate Banking Committee testimony delivered this week. Cheney also argued for a delay in an American Banker op-ed piece published Thursday.

In a letter to the leaders of the FFIEC, CUNA urged the regulators to work with Congress to delay legal liability under the new rules, again until September. The FFIEC was formed in 1978 to promote uniformity in financial institution regulation. It includes the heads of the Federal Reserve Board, the National Credit Union Administration, and the Federal Deposit Insurance Corp., as well as the Comptroller of the Currency and the director of the Consumer Financial Protection Bureau.

"We believe these requests are reasonable and if implemented, would be enormously useful to smaller creditors as they work to meet their responsibilities under these rules," CUNA wrote in the letter. "This approach, to delay examiner sanctions and legal liability only for a short but reasonable time, will ultimately support full compliance--in the best interests of consumers, creditors, servicers, and regulators," CUNA added.

Delaying compliance with upcoming mortgage rules would also "provide welcome, although temporary, relief particularly for smaller creditors and servicers, such as credit unions," CUNA wrote. However, CUNA in the letter recognized that the CFPB has said a full delay is not be possible because of the implementation directive in the Dodd-Frank Act.

The letter also calls on the regulators to do more to address concerns about the risk of disparate impact discrimination that could result because of the focus on qualified mortgages (QMs). The concern is that examiners and the secondary market could favor QMs, which require the borrower to have no more than a 43% debt to income ratio. Other borrowers that have higher ratios that still could be good mortgage credit risks might not be able to obtain a mortgage or have to pay more for one.

Cordray Seems Firm On Mortgage Rule Compliance Dates

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WASHINGTON (11/8/13)--While he said he would consider recent congressional calls for a one-year mortgage regulation delay, Consumer Financial Protection Bureau Director Richard Cordray seemed resolute that those rules would become effective in January, as planned.

The CFPB Director made his remarks during a Thursday Morning Money Breakfast Briefing presented by Politico.

More than 100 U.S. House members this week urged the bureau to "defer implementation" of pending mortgage rules until Jan. 1, 2015 "in order to ensure financial institutions are able to transition their systems to be in full compliance with the rules." (See News Now Nov. 7: CUNA QM Concerns Reflected In Congressional CFPB Letter.)

The Credit Union National Association is urging the CFPB and prudential regulators, such as the National Credit Union Administration, to issue a joint statement that examiners will give covered financial institutions working in good faith to comply generally until September before they cite them for violations under these rules. CUNA is also urging the agencies to work with Congress to support a statutory delay, also until September, in the ability of consumers to sue covered institutions for alleged violations.
 
CUNA Deputy General Counsel Mary Dunn said this approach is reasonable, and will aid credit unions and others as they continue their efforts to be ready for the rules. "Also, it will not require the agency to move the compliance dates. This is important since a delay in the effective dates does not seem likely given the fact that the Dodd-Frank Act sets the time frame for compliance," Dunn added.
 
Cordray on Thursday said the CFPB's qualified mortgage (QM) regulation has already been delayed by one year beyond the Dodd-Frank Act's mandated due date, and the vast majority of institutions are ready to comply with the regulations. The longer the QM regulation is delayed, the longer other related rules such as qualified residential mortgage regulations will also be delayed, he said.

Examiners will give institutions some leeway in the early days after the QM regulation is implemented, he said. The bureau will not be looking for compliance perfection, but for a good faith effort from lenders, Cordray added.

Institutions that are making good loans should continue to make those loans whether they are QM or not, Cordray said. He noted that the pending mortgage regulations simply codify good common sense principles that many lenders have already followed for years, and that the risk difference between a QM loan and a non-QM loan is typically small.

Cordray said there is no question the mortgage market will work better once the new rules take effect. However, he said, the CFPB does not want to rest on its laurels once a rule is issued. He said the CFPB encourages the industry and individuals to provide details on how new regulations are actually impacting markets.

If rules do not work as intended the CFPB will reexamine them and attempt to fix what is wrong, he emphasized. The object is not to write a rule and defend it because the agency wrote it…The goal is to help the markets function correctly, he said.

Access to credit is an emerging issue in mortgage and other markets and access to credit will inform the way the CFPB writes rules. Overall, he said, regulations are good, but the CFPB will need to strike a balance to ensure they are not going to dry up sources of available credit.

NCUA Offers Compliance Webinars On New Remittance, Mortgage Rules

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ALEXANDRIA, VA (11/8/13)--The National Credit Union Administration (NCUA) will host two free webinars on the Dodd-Frank remittances and mortgage lending rules on Nov. 18 and Dec.18 beginning at 2 p.m. (ET).
 
NCUA's Office of Consumer Protection will host the webinars and will provide credit unions with two high-level overviews on the new Dodd-Frank rules and how they will affect credit unions.
 
The topics for the Nov. 18 webinar include:
  • Remittance transfers;
  • Higher-priced mortgage loan appraisals;
  • Mortgage servicing; and,
  • Higher-priced mortgage loan escrows.
The topics for the Dec. 18 webinar include:
  • Ability-to-Repay and Qualified Mortgage rules;
  • High-cost mortgage and home-ownership counseling;
  • Loan originator compensation; and,
  • Equal Credit Opportunity Act appraisals and valuations.
Credit unions can register for each webinar by using the resource links below. Credit unions will use the same links to view the webinars on Nov. 18 and Dec. 18.

Credit unions are asked to submit their questions prior to each webinar by emailing WebinarQuestions@ncua.gov with the subject line, "Remittance and Mortgage Lending Rules Webinar."
 
The NCUA has also created regulatory alerts and videos for the new regulations, which summarize the new rules, highlight key issues for credit unions and provide information on additional compliance resources for credit unions to use. You can find NCUA's videos on the agency's YouTube channel  and its alerts under the 'Regulations, Publications and Reports' tab on the NCUA website.

CFPB Announces Proposed 'Steering' Settlement

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WASHINGTON (11/8/13)--A multi-million-dollar action is being sought against a Utah-based mortgage company for allegedly steering consumers into costlier mortgages, the Consumer Financial Protection Bureau (CFPB) announced Thursday.
 
In January, the bureau announced rules designed to prevent unscrupulous mortgage loan originators from generating higher compensation for themselves by steering borrowers into risky and high-cost loans.
 
According the CFPB, it has asked a federal court to approve a consent order that would provide more than $9 million restitution for consumers from Castle & Cooke Mortgage, LLC, of Salt Lake City. Another $4 million would be obtained in civil money penalties against Castle & Cooke and two of its officers for allegedly paying loan officers illegal bonuses.
 
The CFPB also said, in a release, that the mortgage company maintains 45 branches and does business in 22 states, including Arizona, California, Colorado, Florida, Hawaii, Iowa, Idaho, Nebraska, New Mexico, Nevada, Texas, and Utah.
 

Yellen Fed Nomination Hearing Set For Nov. 14

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WASHINGTON (11/8/13)--A Senate Banking Committee hearing on Janet Yellen's nomination to lead the Federal Reserve has been set: The hearing will be held on Nov. 14.

Committee members met with Yellen late last month, and Senate Banking Committee Chairman Tim Johnson (D-S.D.) said their conversation with her "reaffirmed that President Obama has picked an outstanding nominee to serve as the next Federal Reserve Chairman."

If confirmed, Yellen would replace outgoing Fed Chairman Ben Bernanke when his term ends on Jan. 31. She would become the first woman to head the Fed, or any other central bank.

Yellen has served as vice chair of the Board of Governors of the Federal Reserve System since Oct. 4, 2010. Her term ends on Jan. 31, 2024. She also has served as president/CEO of the Twelfth District Federal Reserve Bank, at San Francisco.

Auto Lending, Mortgage Discussions Slated By CFPB

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WASHINGTON (11/8/13)--Two items high on the Consumer Financial Protection Bureau's agenda, auto lending and mortgages, will be addressed in a pair of upcoming public events.

The CFPB's auto finance forum event will be held Nov. 14 at 8:45 a.m. (ET) at bureau headquarters in Washington.

A field hearing, entitled "Know Before You Owe: Mortgages," has been scheduled for the following week. The hearing is scheduled to be held on Nov. 20 at 11 a.m. (ET). The bureau plans to release more information on this hearing soon.

CFPB Director Richard Cordray, consumer groups, industry representatives, and members of the public are scheduled to speak during both events.

Both events will be streamed live on the CFPB homepage.

For more on the events, use the resource links.

Sen. Banking Considers Affordable Housing In Finance Reform Hearing

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WASHINGTON (11/8/13)--The Senate Banking Committee Thursday continued its series of hearings on housing finance reform, this time focusing on "Essential Elements to Provide Affordable Options for Housing."
 
The witness panel featured Hilary O. Shelton, Washington bureau director and senior vice president for policy and advocacy of the NAACP; Rick Judson, chairman, National Association of Home Builders; Dr. Sheila Crowley, president/CEO, National Low Income Housing Coalition; Dr. Douglas Holtz-Eakin, president, American Action Forum; and Ethan Handelman, vice president for policy and advocacy, National Housing Conference.
 
In broad terms, the witnesses added their voices to the call for necessary reforms to the current housing finance system to ensure equitable access to mortgages in an affordable, safe, and sound way. For instance, Holtz-Eakin of the American Action Forum, called reform "long overdue" and encouraged federal lawmakers to "push (reforms) over the finish line" and enact legislation.
 
The hearing followed by two days the committee's study of how best to protect small lender access to the secondary mortgage market, at which the Credit Union National Association testified.
 
Witness Bill Hampel, CUNA chief economist, told the Senate panel that qualifying credit union members need to be able to buy or finance their homes in a stable mortgage market and emphasized that standardization at all steps in the mortgage process is important to credit unions. He also shared CUNA's recommendations for the development of a mutual organization to protect secondary market access. (Use the resource link to read CUNA's complete testimony.)
 
CUNA also testified in July at the Senate's first hearing of the year on housing finance reform held by the Senate Banking subcommittee on securities, insurance and investment.
 

American Banker Features CUNA Arguments For Delay In CU Liability Under Mortgage Rules

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WASHINGTON (11/8/13)--A short, reasonable delay in enforcement and legal liability of new mortgage rules required under the Dodd-Frank Act would prove enormously useful to creditors as they work to meet their responsibilities, wrote Credit Union National Association President/CEO Bill Cheney in an op-ed piece in American Banker Thursday.

Importantly, he added, consumers would not be measurably affected by these delays, particularly if institutions establish benchmarks toward full compliance.

The Credit Union National Association has been taking every opportunity to articulate to members of the U.S. Congress and to federal regulators credit unions' compliance concerns related to Consumer Financial Protection Bureau's new mortgage rules.

In the op-ed, Cheney wrote that while there are a number of exemptions from the rules, lenders that originate or service loans above the exemption levels are "feeling the pain of the compliance countdown, particularly in light of concerns about their vendors' readiness."

Cheney acknowledged that the CFPB has made it clear compliance deadlines will not be moved given its mandate from Congress. (See related story: Cordray Seems Firm On Mortgage Rule Compliance Dates.) But, he said, that does not mean relief is "off the table" if federal regulators and lawmakers act quickly to make it happen.

The op-ed noted two significant, recent events: CFPB Director Richard Cordray has indicated that good faith efforts of financial institutions to comply should be recognized, and: a letter circulating Capitol Hill letter urging a one-year delay of these new mortgage rules has already attracted 118 lawmakers.

"That is why we believe the prudential regulators should issue a public statement very soon indicating that examiners will generally not write creditors up or subject them to sanctions for violations until, say, September 2014," Cheney recommended.

He added that while enforcement relief is critical, a short delay before private rights of action may accrue could be very helpful to creditors as they work to meet their responsibilities under the rules. 
"No one knows for sure the extent to which creditors will or will not be sued for noncompliance, but the uncertainty is unnerving, given the possibility that trial lawyers are trolling for cases," Cheney said.

Senate May Be Poised To Release Tax Reform Drafts

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WASHINGTON (11/7/13)--Sen. Max Baucus (D-Mont.), who heads the Senate Finance Committee and is a key figure in the country's current tax policy debates, said he is planning to release the first in a series of tax reform discussion drafts very soon, Politico recently reported.

"Tax policy writers on Capitol Hill have made it clear since the summer that they intend to be ready to tackle a tax reform vote early this fall," Ryan Donovan said about the news. "This is the start on the Senate side."

Two Baucus aides told the publication that the first discussion draft could address reform of the international tax system. Baucus, along with the U.S. House's key tax policy figure, House Ways and Means Chairman Dave Camp (R-Mich.), have taken a "blank slate" approach to reform legislation. That approach removes all tax expenditures from the code and would add back in those that make the grade.

In the midst of this tax reform effort, credit unions and their members are using Credit Union National Association and state credit union leagues' resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

Credit union and member tax advocacy efforts have remained strong. Almost 1.2 million separate congressional contacts have been made since mid-May to support credit unions in the tax talks.

"Credit unions, credit union members--all credit union supporters--must continue to advocate for the current credit union federal tax status, which exempts them only from federal income tax," Donovan said. Credit unions are assigned that tax status because they are not-for-profit, member-owned cooperatives.

"Congress must continue to hear--so lawmakers truly understand--that a new tax on credit unions would be a tax on their 97 million members," Donovan said.

CUNA research indicates that credit unions generally offer higher returns on savings, lower rates on loans, and most importantly, low or no fees--and that these benefits combine to result in more than $8 billion in direct financial benefits each year to American consumers.

CFPB Considering Collection Protections That Could Include FIs

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WASHINGTON (11/7/13)--The Consumer Financial Protection Bureau has asked the public for help as it considers developing consumer protection rules for the debt collection market.

The Credit Union National Association has been weighing in with the CFPB to minimize the direct or indirect impact on credit unions or credit union service organizations of any rules or guidance that the agency develops and we will continue to urge the agency to focus on problem cases rather than create broad new rules that affect good and bad actors, CUNA Deputy General Counsel Mary Dunn said.

In an Advance Notice of Proposed Rulemaking (ANPR) released Wednesday, the bureau asked for data on:
  • The accuracy of information used by debt collectors;
  • How to ensure consumers know their rights; and
  • The communication tactics collectors employ to recover debts.
"Collection of consumer debts serves an important role in the proper functioning of consumer credit markets. But certain debt collection practices have long been a source of frustration for many consumers, generating a heavy volume of consumer complaints at all levels of government--including at the Consumer Bureau," CFPB Director Richard Cordray said. "Today's action will allow us to hear from the public as we consider what rules are needed…We want to ensure that all players in the industry are working with correct information, that consumers are fully informed, and that consumers are treated fairly and with dignity," he added.

The ANPR will be published soon in the Federal Register, and the bureau will accept comments for 90 days.

The bureau in a release said it has not decided whether it will release regulations to address debt collection issues. However, it said it has the authority to craft regulations under The Fair Debt Collection Practices Act and the Dodd-Frank Act. Dodd-Frank gives the CFPB the authority to issue regulations concerning unfair, deceptive, and abusive acts or practices and to establish disclosures to assist consumers in understanding the costs, benefits, and risks associated with consumer financial products and services, the CFPB said.

The bureau is looking at all debt collection practices, even by creditors for their own loans, Dunn said.

Credit unions that collect their own debts have never been subject to the Fair Debt Collection Practices Act, CUNA Senior Vice President for Compliance Kathy Thompson explained Wednesday. However, she said, credit unions that collect debts for others--and credit union service organizations that offer debt collection services--are subject to the FDCPA. And, she noted, the FDCPA does not have any implementing regulations.

"If the CFPB decides to apply any debt collection restrictions directly to credit unions, it would have to do so either by having Congress amend the FDCPA or act through its authority to regulate unfair, deceptive or abusive practices," Thompson clarified.

The CFPB started collecting consumer debt collection complaints earlier this year, and the bureau said companies have responded to more than 5,000 debt collection complaints that were forwarded on to them by the CFPB. These consumer complaints will be added to the CFPB's public Consumer Complaint Database.

For more, use the resource links.

Payday Loan Complaints Now Accepted By CFPB

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WASHINGTON (11/7/13)--Consumers can now submit complaints about unexpected fees or interest, unauthorized or incorrect charges and other issues related to payday loans to the Consumer Financial Protection Bureau.

The CFPB said consumer payday loan complaints can also address:
  • Payments that are not being credited to a taken out loan;
  • Problems contacting the lender;
  • Receiving a loan that was not applied for; or
  • Not receiving money after a loan application is filed and accepted.
The complaints will be forwarded to the offending party in an attempt to resolve the issue. The complaints, CFPB said, will also help the bureau identify business practices that may pose risks to consumers. The CFPB will use the information provided in the complaints as it works to supervise companies, enforce federal consumer finance laws, and write rules and regulations.

The CFPB on Wednesday also reminded servicemembers and their families that the Military Lending Act prevents lenders from charging an annual percentage rate of 36% or higher on payday loans, auto title loans, tax-refund anticipation loans and other types of consumer loans.

New materials addressing payday loan issues have also been posted on the AskCFPB portion of the bureau's homepage.

A CFPB study found that most payday loans are for several hundred dollars and have finance charges of $15 or $20 for each $100 borrowed. A typical two-week term can equate to an annual percentage rate ranging from 391% to 521%, the CFPB noted.

The Credit Union National Association has commended the CFPB's efforts to ensure payday lenders will be subject to appropriate standards and accountability, but said these efforts must focus on unregulated abusers. CUNA has also called on the CFPB to avoid crafting one-size-fits-all regulations that would harm credit unions as it addresses payday loan issues.

Some credit unions offer members payday loan alternatives. Under federal rules, credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small amount loan program.

That program permits federal credit unions to charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. Currently, this amounts to an interest rate ceiling of 28%.

Most credit unions offering payday loan alternatives also limit fees, provide member financial counseling and encourage members to open savings accounts.

CUNA QM Concerns Reflected In Congressional CFPB Letter

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WASHINGTON (11/7/13)--The Credit Union National Association has clearly articulated to members of the U.S. Congress credit unions' compliance concerns related to new mortgage rules, and those concerns were reflected this week in a letter cosigned by 118 U.S. House members.

The letter addresses the Consumer Financial Protection Bureau's six rules for mortgage products and services, required by the Dodd-Frank Act, set to go into effect in January 2014. The rules include the bureau's Ability-to-Repay and Qualified Mortgage standards.

In their letter to the CFPB, the lawmakers urged the bureau to "defer implementation" of pending mortgage rules until Jan. 1, 2015 "in order to ensure financial institutions are able to transition their systems to be in full compliance with the rules."

"We have heard concerns from many community financial institutions that they simply will not be able to meet the January 2014 deadline to have their systems online and in place," the letter stated, noting that the rule presents more than 4,000 pages of directives.

"This task is especially difficult for community financial institutions that may only have one or two compliance officers," and are still working to update their mortgage lending software, the lawmakers wrote.

An inability by financial institutions to comply by the January deadline, however, could result in "significant distortions in the mortgage market affecting the availability of credit for consumers," the letter warned.

CUNA most recently called for a delayed effective date, or other regulatory remedies, in a Tuesday Senate Banking Committee hearing entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market."

During that hearing, CUNA Chief Economist Bill Hampel suggested that Congress grant a one-year extension of compliance deadlines for the pending CFPB mortgage rules. If such a delay cannot be created, Congress should provide credit unions with a buffer of at least six months as they work to come into compliance with qualified mortgage standards, he said.

A similar six-month delay should also be applied to legal liability provisions of mortgage regulations, Hampel added.

CDFI Announces 2014 Trainings For Minority Depository Institutions

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WASHINGTON (11/7/13)--The Community Development Financial Institutions (CDFI) Fund Wednesday released the 2014 training schedule for its Preserving and Expanding CDFI Minority Depository Institutions program. The program provides advanced training and technical assistance for CDFI MDIs, and MDIs working toward becoming certified as a CDFI.
 
From January through September 2014, the CDFI Fund's series will offer two, free training sessions, five webinars, and individual technical assistance to CDFI MDIs across the country.
 
The in-person training sessions will focus on topics such as:
  • Addressing asset quality;
  • Optimizing portfolios;
  • Improving revenue strategies;
  • Accessing capital market solutions;
  • Telling the story of an organization's impact;
  • Enhancing operational performance; and,
  • Developing a strategic plan. 
The sessions are intended to have two-fold benefit serving both as an organizational development experience, as well as providing an opportunity for CDFI MDIs to convene with their peer group to discuss strategies to strengthen and expand their institutions, and to explore cutting-edge tools, business models, and market innovations. 
 
The sessions are slated for Atlanta, Ga. on Jan. 22-23 and New York City on Feb. 4-5. Use the resource link for registration information.
 
Deloitte Financial Advisory Services LLP and its partners will deliver the trainings. Training attendees will be eligible to receive free, direct, technical assistance provided by professionals within Deloitte FAS and its partners. The technical assistance is intended to provide support for the implementation of the concepts explored at the training.
 
Also, the five, free 2014 webinars will be developed based on commentary from the participants of the live trainings. More information on the webinar topics and dates will be provided when available on the CDFI Fund's website.

Matz Discusses Budget, CUSO Rule, Risk-based Cap With Gentile: Inside Exchange, Part II

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WASHINGTON (11/6/13)--The future of the National Credit Union Administration's budget, risk-based capital and proposed credit union service organization rules are some of the issues covered in part two of NCUA Chairman Debbie Matz's Inside Exchange interview with the Credit Union National Association's Paul Gentile.

Matz said the 2014 budget will contain some increases to address long-awaited pay raises for some employees. Funds will also be raised to retrain staff to implement new rules, regulations and benefits for credit unions. The agency, Matz noted, needs to be able to supervise credit unions and cope with complex issues like cybersecurity, derivatives and commercial real estate loans.

"We need to have the staff on hand that are adequately trained, and that involves additional resources," she said. "I don't see anytime soon that our budget will go down, but we try to keep the increases reasonable."

One area marked for additional upcoming oversight is credit union service organization (CUSO) regulations, Matz reminded in the interview. The agency is developing a CUSO registry so the NCUA will know "who they are, who their principles are, who their members are, and what they do."

On risk-based capital, Matz noted that an upcoming rule is unlikely to impact many credit unions. The rule, she said, is being drafted in a way that will require credit unions with a high amount of risk to hold more capital. "I think most people would think that's a prudent thing to do," she added.

Overall, Matz said, the NCUA's regulatory modernization initiatives are working well. Matz said she is "very confident that the agency has made significant changes to make it easier for credit unions to comply with rules. "And we're going to keep doing it," she said.

In part one of the Inside Exchange interview with the NCUA chairman, CUNA's Gentile and Matz discussed corporate assessments, relations with the Consumer Financial Protection Bureau, examinations, Wall Street lawsuits and other top issues.

NCUA Opens 2014 Consulting Nomination Process

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ALEXANDRIA, Va. (11/6/13)--Nominations for the first 2014 round of the National Credit Union Administration's small credit union consulting program are now being accepted.

"Often small and low-income credit unions don't have the resources to hire consultants to improve their operations, but NCUA can help," NCUA Chairman Debbie Matz said. The program, she added, "demonstrates NCUA's commitment to ensuring that [small] credit unions remain viable in the long run."

Through the consulting program, the NCUA's Office of Small Credit Union Initiatives (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 $50 million in total assets, charters that have been approved within the past 10 years, or low-income designations may be approved for the consulting program.

Nominations may be submitted by NCUA examiners or other agency staff, state credit union regulators, or by credit unions themselves. Nominations will be accepted until Nov. 30 at 5 p.m. (ET). Selected credit unions will receive assistance for a six-month period, the NCUA said.

A total of 319 credit unions applied in the 2013 first round of the program. For more information and a nomination form, use the resource link.

Senate Banking Members Keen On Moving Housing Finance Reforms Forward

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WASHINGTON (11/6/13)--At a Thursday Senate Banking Committee hearing on housing finance reform, some panel members indicated they were eager to get things moving to achieve legislative fixes to what many see as a broken system.

Click to view larger image CUNA Chief Economist Bill Hampel, left, speaks with Senate Banking Committee Chairman Tim Johnson (D-S.D.) following Tuesday's hearing. (CUNA Photo)
The hearing was entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market." The Credit Union National Association testified. (See related story: CUNA: Stable, Reformed Secondary Mortgage Market Vital For CUs And Members.)

During the hearing's early minutes, Sen. Mike Crapo (Idaho), who is the ranking Republican member of the committee, noted that he and his panel colleagues are "working hard to get a markup ready...in near future" for a housing finance reform bill.

He asked the panel of witnesses, representing credit unions, community banks and Federal Home Loan Banks (FHLB), whether they were ready and willing to work together and to work with the committee to hammer out details of a new housing finance system. CUNA witness Bill Hampel assured that credit unions were willing and ready. Hampel is a CUNA senior vice president and its chief economist.

Another committee member, Sen. Elizabeth Warren (D-Mass.), said committee members clearly agreed that small lenders need access to the secondary market so they can write more mortgages and get FHLB advances.

Also, the head of the committee, Sen. Tim Johnson (D-S.D.), called on the U.S. Congress to work together to move forward on reforms. Hampel was the recipient of the chairman's first follow-up question after all prepared testimony was delivered. Hampel responded to Johnson that it is "absolutely essential" that Congress get it right as they rework the mortgage financing market.

Credit unions do need access to secondary market, and that access needs to be done right, Hampel said. The previous system did not work, and contributed to the financial crisis, but there are pieces of the previous system that need to be maintained and brought into the new system, fixing the design flaws as we do so, Hampel added. (Use resource link for CUNA's complete testimony.)

The hearing also focused on the Housing Finance Reform and Taxpayer Protection Act (S. 1217). That bill, introduced by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor.

In a discussion of the bill with Warner, Hampel noted that such a transition of housing finance functions to new entities needs to be "gradual" and "seamless." Warner remarked that he would appreciate seeing more comments on that.

Warner, during Tuesday's hearing, noted there are ways to improve S. 1217, and encouraged Hampel and others that testified to provide specific guidance to committee staff on how the bill could be bettered.

CUNA: Stable, Reformed Secondary Mortgage Market Vital For CUs And Members

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WASHINGTON (11/6/13)--Qualifying credit union members need to be able to buy or finance their homes in a stable mortgage market, Credit Union National Association Chief Economist Bill Hampel emphasized as he delivered credit union views and their members' needs in Tuesday Senate testimony on housing finance reform.

Click to view larger image CUNA Chief Economist Bill Hampel testifies before the Senate Banking Committee on Tuesday. (CUNA Photo)
Hampel was testifying before the Senate Banking Committee hearing entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market."

"As long as credit unions produce one or more eligible mortgages, they should be able to sell them to an issuer of government-backed securities, directly or through an aggregator, at market prices, for cash, without volume penalties, and with the option to retain servicing," Hampel told the Senate panel.

Hampel called on the U.S. Congress to ensure that credit unions "continue to be afforded the opportunity to provide mortgage servicing services to their members in a cost-effective and member-service oriented manner, in order to ensure a completely integrated mortgage experience for credit union members/borrowers."

Standardization at all steps in the mortgage process is important to credit unions, he emphasized.

One topic of Tuesday's hearing was the development of a mutual organization to protect access. In his testimony, Hampel shared some CUNA suggested improvements for this platform, including:
  • Making the mutual securitization platform accessible to lenders of all sizes;
  • Governing the mutual organization cooperatively, with a board elected by members; and
  • Granting the mutual platform a small but limited balance sheet to pool mortgages before sale and to hold some mortgages.
Credit unions may need additional investment authority in order to capitalize their share of the mutual, Hampel said. He also encouraged the committee to amend the federal credit union act to consider all loans made on 1 to 4 residential properties as residential loans, as is currently the case for banks.

He also suggested that Congress grant a one-year extension of compliance deadlines for pending Consumer Financial Protection Bureau mortgage rules. If such a delay cannot be created, Congress should provide credit unions with a buffer of at least six months as they work to come into compliance with qualified mortgage standards. A similar six-month delay should also be applied to legal liability provisions of mortgage regulations, Hampel said.

Written CUNA testimony also outlined some of the principles that should be followed as Congress revamps the housing finance system:
  • There must be a neutral third party in the secondary market, with its sole role as a conduit to the secondary market;
  • The secondary market must be open to lenders of all sizes on an equitable basis;
  • The entities providing secondary market services must be subject to appropriate regulatory and supervisory oversight to ensure safety and soundness;
  • The new system must ensure mortgage loans will continue to be made to qualified borrowers even in troubled economic times;
  • The new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • The new system must include consumer access to products that provide for predictable, affordable mortgage payments to qualified borrowers; and
  • The new housing finance system should apply a reasonable conforming loan limit that adequately takes into consideration local real estate costs in higher cost areas.

Remittance, Mortgage Rule Consumer Resources Offered By NCUA

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ALEXANDRIA, Va. (11/6/13)--New remittance and mortgage lending rules are explained for consumers in a new National Credit Union Administration Consumer Protection Update video and other online content.

"These videos and webpages provide useful information about complying with the new mortgage lending and remittance transfer rules. Anyone at a credit union with responsibility for underwriting or servicing mortgages or making international wire transfers would benefit from watching these videos and reviewing the related material on our the consumer protection website," NCUA Chairman Debbie Matz said.

In the videos, NCUA Office of Consumer Protection Director Gail Laster outlines NCUA's plan for implementing the new rules and explains how these new regulations will better protect consumers.

Similar information has been posted on the NCUA's MyCreditUnion.gov page.

For more, use the resource link.

NEW: CUNA's Hampel Presents CU, Member Housing Reform Views

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WASHINGTON (11/5/13, UPDATED: 11:10 A.M. ET)--Qualifying credit union members need to be able to buy or finance their homes in a stable mortgage market, Credit Union National Association Chief Economist Bill Hampel emphasized as he delivered credit union views and their members' needs in his in just-delivered Senate testimony on housing finance reform.

Hampel was testifying before the Senate Banking Committee hearing entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market,"  which started around 10 a.m. (ET).

"As long as credit unions produce one or more eligible mortgages, they should be able to sell them to an issuer of government-backed securities, directly or through an aggregator, at market prices, for cash, without volume penalties, and with the option to retain servicing," Hampel told the Senate panel.

Hampel called on the U.S. Congress to ensure that credit unions "continue to be afforded the opportunity to provide mortgage servicing services to their members in a cost-effective and member-service oriented manner, in order to ensure a completely integrated mortgage experience for credit union members/borrowers."

Standardization at all steps in the mortgage process is important to credit unions, he emphasized.

One topic of today's hearing is the development of a mutual organization to protect access. In his testimony, Hampel shared some CUNA suggested improvements for this platform, including:
  • Making the mutual securitization platform accessible to lenders of all sizes;
  • Governing the mutual organization cooperatively, with a board elected by members; and
  • Granting the mutual platform a small but limited balance sheet to pool mortgages before sale and to hold some mortgages.
Credit unions may need additional investment authority in order to capitalize their share of the mutual, Hampel said. He also encouraged the committee to amend the federal credit union act to consider all loans made on 1 to 4 residential properties as residential loans, as is currently the case for banks.

He also suggested that Congress grant a one-year extension of compliance deadlines for pending Consumer Financial Protection Bureau mortgage rules. If such a delay cannot be created, Congress should provide credit unions with a buffer of at least six months as they work to come into compliance with qualified mortgage standards. A similar six-month delay should also be applied to legal liability provisions of mortgage regulations, Hampel said.

Today's hearing is ongoing. Watch News Now for more coverage.

CUNA To CFPB: Delay CU Compliance Deadline For QM Rule

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WASHINGTON (11/5/13)--Continuous communication with the Consumer Financial Protection Bureau is one way the Credit Union National Association is working to minimize the regulatory burdens faced by credit unions, and CUNA in recent meetings has suggested steps that could ease qualified mortgage (QM) regulation compliance issues, CUNA Deputy General Counsel Mary Dunn said Monday.

The CFPB cannot, by statute, delay the compliance date of pending QM regulations. However, CUNA has called on regulators to give credit unions a buffer of at least six months as they work to come into compliance with the QM standards once the rule goes into effect. CUNA has also urged a similar six-month delay be applied to legal liability provisions of the regulation.

The QM regulations go into effect in January. The rule amends Regulation Z, which implements the Truth in Lending Act, to require creditors to make a reasonable, good faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling--excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan. They also establish certain protections from liability under this requirement for "qualified mortgages."

The NCUA and other federal financial regulators late last month said offering only QMs "would not, absent other factors, elevate a supervised institution's fair lending risk." The statement came in response to creditor questions to the agencies.

Creditors, the regulators said, "should continue to evaluate fair lending risk as they would for other types of product selections, including by carefully monitoring policies and practices and implementing effective compliance management systems." (News Now, Oct. 23.)

CFPB Answers Lawmakers' Auto Lending Queries

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WASHINGTON (11/5/13)--The Consumer Financial Protection Bureau detailed how it screens for potential fair lending violations by indirect auto lenders in a Monday blog post and separate letter to members of the U.S. Congress.

To examine fair lending compliance by auto lenders, the CFPB said it uses a proxy method which "integrates two common approaches by combining the respective probabilities generated by the last name and geographical proxies." This method can be more accurate than relying only on the borrower's last name or geographic location, the CFPB blog post said.

"Statistical methods are often refined over time. We are committed to staying in dialogue with our sister agencies, lenders and researchers to refine our proxy methods over time, so that we can stop the silent pickpocket of discrimination in various consumer finance markets," the bureau blog post added.

The CFPB releases follow information requests sent by House and Senate members last week. In those letters, the legislators urged the CFPB to explain the principles behind policy guidance it issued for indirect auto lending earlier this year.

The CFPB in a March 21 release said it has the authority to pursue auto lenders whose policies can, at times, be used to harm consumers through unlawful discrimination. The CFPB also recommended that indirect auto lenders impose dealer markup controls or revise dealer markup policies to ensure they are in compliance with fair lending regulations. Indirect lenders should also eliminate dealer discretion to markup buy rates, and fairly compensating dealers using a different mechanism that does not result in discrimination, such as flat fees per transaction, the CFPB said.

Sens. Rob Portman (R-Ohio), Jeanne Shaheen (D-N.H.) and a coalition of 20 senators wrote on Oct. 30, "Although the CFPB has alleged that 'disparate impact' discrimination is present in the indirect auto financing market, the bureau has yet to explain its basis for this assertion.

"Nor has the bureau released the complete statistical methodology it employs for determining whether disparate impact is present in an auto lender's portfolio and the extent to which it has considered how the practical effect of its guidance will affect competition in the auto loan marketplace."

House In Recess: Senate Hearings On Tap This Week

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WASHINGTON (11/5/13)--Members of the U.S. House are working in their home districts until Nov. 12, but the Senate is in session.

One item on the Senate agenda is today's Senate Banking Committee hearing entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market." Credit Union National Association Chief Economist Bill Hampel is set to testify at the hearing, which is scheduled to begin at 10 a.m. (ET). (See related story: CUNA Frames CU Housing Finance Reform Priorities For Senate Panel Today.)  The committee has set another housing hearing for Thursday: "Housing Finance Reform: Essential Elements to Provide Affordable Options for Housing."

CUNA Senior Vice President of Legislative Affairs Ryan Donovan said CUNA expects committee leaders to introduce a new housing finance reform bill in the coming weeks, with a mark up possible as soon as December.

The Senate Commerce, Science and Transportation subcommittee on consumer protection will also hold a Thursday hearing entitled "Demand Letters and Consumer Protection: Examining Deceptive Practices by Patent Assertion Entities."

Consideration of the Privacy Notice Modernization Act (S. 635), which would provide relief to credit unions who are currently expected to send annual privacy notifications to members, could also happen soon, Donovan said.

In other House news, Majority Leader Eric Cantor (R-Va.) last week released the 2014 calendar for that body.

The second session of the 113th U.S. Congress will begin on Jan. 7, and House members will remain in Washington until Jan. 16. No House votes are scheduled on Jan 17, and members are scheduled to remain in their districts through the following Martin Luther King Jr. Federal Holiday. They are set to return on Jan. 27, and the three-day House Republican Issues Conference is scheduled to begin on Wednesday, Jan. 29.

For the full calendar, use the resource link.

CUNA Frames CU Housing Finance Reform Priorities For Senate Panel Today

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WASHINGTON (11/5/13)--Credit Union National Association Chief Economist Bill Hampel today will drive home the credit union position on housing financial reform at a Senate Banking Committee hearing entitled "Housing Finance Reform: Protecting Small Lender Access to the Secondary Mortgage Market."  It is scheduled to begin at 10 a.m. (ET).

"As long as credit unions produce one or more eligible mortgages, they should be able to sell them to an issuer of government-backed securities, directly or through an aggregator, at market prices, for cash, without volume penalties, and with the option to retain servicing," Hampel says in his testimony.

Hampel will also call on the U.S. Congress to ensure that credit unions "continue to be afforded the opportunity to provide mortgage servicing services to their members in a cost-effective and member-service oriented manner, in order to ensure a completely integrated mortgage experience for credit union members/borrowers."

The CUNA testimony also outlines principles that should be followed as the U.S. Congress revamps the housing finance system, discusses in detail the need for small lender access to the secondary mortgage market, assesses a Senate bill (S. 1217) that would wind down Fannie Mae and Freddie Mac and replace the Federal Housing Finance Agency with an new entity, and more.

Watch News Now today for more on the hearing, as it happens.

Hampel also testified on housing issues before a July Senate subcommittee hearing, and participated in a June housing finance market reform policy discussion session hosted by Rep. Maxine Waters' (D-Calif.).

Interagency TDR Guidance Featured In This Week's Reg Report

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WASHINGTON (11/5/13)--In this week's Regulatory Advocacy Report, the Credit Union National Association follows up on recent interagency guidance addressing accounting treatment and regulatory credit risk grading or classification of commercial and residential real estate loans that have undergone troubled debt restructurings (TDRs).

The guidance notes that financial institutions are expected to develop and apply an internal loan grading system consistent with supervisory guidance. Banks and savings associations are to maintain documentation that translates their system, if different, into the uniform regulatory classifications of substandard, doubtful, and loss. The National Credit Union Administration does not require credit unions to adopt a uniform regulatory credit grading system. A credit union should apply an internal loan grade based on its evaluation of credit risk.

The new guidance, Interagency Supervisory Guidance Addressing Certain Issues Related to Troubled Debt Restructurings, reiterates key aspects of previously issued regulatory guidance and discusses the definition of collateral-dependent loans and the circumstances under which a charge-off is required for TDRs. It was released jointly by the NCUA, the Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency.

"The agencies encourage financial institutions to work constructively with borrowers and view prudent modifications as positive actions when they mitigate credit risk. The agencies generally will not criticize financial institutions for engaging in prudent workout arrangements, even if the modified loans result in adverse credit classifications or constitute TDRs," according to the guidance.

This week's edition of the Report also features:
  • CUNA concerns regarding qualified mortgages (QM) and disparate impact;
  • Details on the NCUA's final rule on emergency liquidity and contingency funding plans;
  • The NCUA Office of Inspector General's report on that agency's process for documenting credit union failures;
  • CUNA's comment letter on the U.S. Department of Housing and Urban Development's proposed QM rule;
  • Projections on how far mortgage originations could decline in 2014; and
  • Details from a PEW report on payday lending.
A resource chart with information on current CUNA comment calls is also provided in the Report.

For this week's Regulatory Advocacy Report, CUNA members can use the resource link.

Madeleine Albright Is First Guest Booked For 2014 GAC

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WASHINGTON (11/4/13)--The first speaker booked for the Credit Union National Association's 2014 Governmental Affairs Conference will be one of the highest profile speakers ever hosted by the event: Madeleine Albright, one of the highest ranking women in U.S. government history, will present the keynote address at this year's GAC.

"Albright has made countless contributions to the nation's international presence as Secretary of State and in her other roles. Her remarkable story and experience will make an impact on the GAC stage," CUNA President/CEO Bill Cheney said. "It's a tremendous honor to welcome Dr. Albright to this year's GAC speaker lineup," he added.

Albright currently chairs Albright Stonebridge Group and Albright Capital Management LLC. She is a professor in the Practice of Diplomacy at the Georgetown University School of Foreign Service. Her storied career includes:
  • Serving as U.S. Secretary of State and as a cabinet member under President Bill Clinton;
  • Serving as the U.S. Permanent Representative to the United Nations;
  • Receiving the U.S. Medal of Freedom, the nation's highest civilian honor, from President Barack Obama; and
  • Authoring five New York Times best-sellers, including her most recent book, Prague Winter: A Personal Story of Remembrance andWar, 1937-1948.
The 2014 GAC, set for Feb. 23 through 27 in Washington, D.C., is the credit union movement's premiere political event. The GAC gathers more than 4,000 credit union decision-makers in the nation's capital to hear from influential leaders and guide the credit union movement in building and maintaining America's trust.

This year, the GAC will embrace the shared strategic vision of credit unions nationwide, Unite for Good, and bring the credit union message directly to the legislators and policymakers on Capitol Hill.

To register for the 2014 GAC, use the resource link.

Senate Banking Chair: Yellen Fed Nomination Will Move Quickly

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WASHINGTON (11/4/13)--Senate Banking Committee Chairman Tim Johnson (D-S.D.) last week pledged to move Janet Yellen's nomination to lead the Federal Reserve Board quickly through his committee.

Committee members met with Yellen last week, and Johnson said his conversation with her "reaffirmed that President Obama has picked an outstanding nominee to serve as the next Federal Reserve Chairman.

"I commend her for her dedication to bringing down unemployment and putting Americans back to work," Johnson added, saying he is excited to cast his confirmation vote.

A Senate Banking Committee hearing on Yellen's nomination could reportedly be held on Nov. 14. (News Now, Oct. 29.)

Tax, Housing Updates Featured In This Week's Cheney Report

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WASHINGTON (11/4/13)--Congressional efforts at tax reform and housing finance reform continue to gain steam. In this week's edition of The Cheney Report, Credit Union National Association President/CEO Bill Cheney updates credit unions on what they can expect and what CUNA is doing to address these issues.

On the tax front, Senate and House leaders have indicated that tax reform discussion drafts could be released soon. In the Senate's case, Cheney noted some drafts could be out as soon as this week. "These are further signs that Congress is shifting its gaze to tax reform as an integral part of tackling federal financial issues. Remember: We must continue telling Congress 'Don't Tax My Credit Union,'" Cheney wrote.

Credit union voices will also be heard this week when CUNA Senior Vice President and Chief Economist Bill Hampel discusses housing finance reform before the Senate Banking Committee. "The focus of the hearing--"Essentials of a Functioning Housing Finance System for Community Based Lenders"--is squarely on lenders such as credit unions," Cheney emphasized.

This week's Cheney Report also highlighted what credit unions are doing in their own community to Unite for Good and demonstrate the credit union difference. Cook Area CU, Cook, Minn., was visited recently by Minnesota Department of Commerce Commissioner Mike Rothman. Rothman during his visit commended the credit union's successful student financial education programs, saying, "Credit unions have an opportunity to be leaders and help communities grow jobs."

CUNA is collecting these stories to showcase how credit unions are joining forces to Unite for Good, and similar stories will be featured each week in The Cheney Report. Cheney encouraged credit unions to visit UniteforGood.org and share how they are helping reach CUNA's shared, strategic vision in which Americans choose credit unions as their best financial partner.

This week's Cheney Report also includes:
  • The results of CUNA's mobile payments survey;
  • Details on National Credit Union Administration Chairman Debbie Matz's appearance on CUNA's "Inside Exchange" video interview series; and
  • News on CUNA's recent regulatory burden and mortgage advocacy efforts.
Use the resource link to read the latest in The Cheney Report.

OIG Recommends NCUA Strengthen Insurance Fund Loss Documentation

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ALEXANDRIA, Va. (11/4/13)--The National Credit Union Administration could strengthen its documenting of National Credit Union Share Insurance Fund (NCUSIF) estimated losses for specific credit union failures, according to a new report from the NCUA Office of the Inspector General (OIG).

OIG initiated the review to determine the agency's methodology for identifying and tracking credit union failures and losses to the NCUSIF. OIG analyzed losses and failures at the time of occurrence, at year-end, and for the period ending July 31, 2012. The scope of the review covered all failures occurring during calendar year 2011 and from Jan. 1  through July 31, 2012.  

According to the report, the NCUA's offices of Examination and Insurance, Chief Financial Officer and Asset Management and Assistance Center each documented different estimated NCUSIF loss amounts throughout the year. OIG, however, determined these differences are mostly attributable to timing differences and new information that is continually received, which causes the estimated NCUSIF loss amounts to frequently change.

OIG also found that various NCUA offices do not always document NCUSIF loss activity in a timely manner. Regional and central offices document losses into independent, nonintegrated systems. Ultimately, the various offices ensure that the estimated NCUSIF loss amounts agree at year-end for financial statement reporting, OIG said.

The OIG made several suggestions, including strengthening the NCUA's ability to capture basic credit union failure data. This should help eliminate discrepancies between NCUA's regional and central offices, OIG said.

Three specific recommendation made by the report are:
  • Revise internal procedures;
  • Conduct a feasibility study; and
  • Develop an agency-wide definition for credit union failure.
"Although the report does not contain any egregious problems in NCUA's accounting and reporting for failures, we urge the agency to adopt the measures outlined in the report," CUNA Deputy General Counsel Mary Dunn said. "We do remain concerned whenever the agency uses different standards and definitions for any process or requirement," she added.

For the full NCUA OIG report, use the resource link.

Mayfair FCU Placed Under NCUA Conservatorship

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ALEXANDRIA, Va. (11/4/13)--Mayfair FCU, Philadelphia, Pa., was placed under National Credit Union Administration conservatorship on Friday.

The agency will work to resolve safety and soundness issues at the 1,527 member, $14.3 million asset credit union during the conservatorship. Normal member services at the main office at 2844 St. Vincent St. in Philadelphia will continue uninterrupted, but the credit union's branch at 2645 Orthodox St. in Bridesberg, Pa., will be closed, the NCUA said.

Chartered in 1936, Mayfair FCU serves a low-income community in Philadelphia. It is the fourth federally insured credit union placed into conservatorship this year.

For the full NCUA release, use the resource link.

Treasury, IRS To Allow $500 FSA Plan Carryovers

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WASHINGTON (11/2/13)--Health flexible spending arrangement (FSA) plan participants will soon be able to carry over up to $500 of their unused health FSA balances from year to year, the U.S. Department of the Treasury and the Internal Revenue Service said this week.

The decision follows comments from individuals, employers and others who requested that the use-or-lose rule for health FSAs be modified, the Treasury said in a release. Currently, FSA plan holders are forced to forfeit any unused funds at the end of the year. Some employers Treasury permit grace periods of up to two-and-a-half months.

In requesting the policy change, commenters noted it can be difficult to predict future medical spending needs. They also said the change would make FSA plans more accessible for employees of all income levels.

"Across the administration, we are always looking for ways to provide added flexibility and common-sense solutions to how people pay for their healthcare," Treasury Secretary Jacob Lew said.

The new carryover conditions could be made available to employees as soon as this year. However, employers will need to decide whether they want to offer a grace period or a carryover to their employees. They will not be permitted to do both.

For more, use the resource link.

NCUA Names Radway As Metsger Senior Policy Advisor

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ALEXANDRIA, Va. (11/4/13)--Michael Radway will serve as senior policy advisor to National Credit Union Administration board member Richard Metsger, starting in January.

"Michael comes to us with an impressive legislative and policy background, and a deep knowledge of the credit union model," Metsger said. "His commitment to public service includes work in finance, affordable housing, community development and education. He has the kind of broad experience in policy development, legislation, strategic planning and outreach that makes him an excellent fit for the role of Senior Policy Advisor. I am looking forward to working with him, and I am sure that NCUA will benefit from his energy and judgment."

Radway, who holds a political science degree from Yale University and has been a member of a credit union since college, currently serves as senior director, government relations, for early education and after-school education provider Knowledge Universe.

The incoming NCUA staff member has served as professional staff for the House Financial Services Committee and played a key role in the passage of the Credit Union Membership Access Act in 1998, the NCUA said. He has also served as:
  • Chairman and public interest director for the Federal Home Loan Bank of Seattle;
  • Chairman of the Council of Federal Home Loan Banks; and
  • President of the Early Care and Education Consortium, a national alliance of early education providers.
Credit Union National Association Deputy General Counsel Mary Dunn said Radway has an outstanding background, and noted that CUNA staff worked well with him during his time on the financial services committee. "We look forward to catching up and discussing credit union issues and concerns with him," she added.

FinCEN Provides Fact Sheet On FI Info Sharing

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VIENNA, Va. (11/1/13)--The Financial Crimes Enforcement Network (FinCEN) Thursday issued a fact sheet on a section of the USA PATRIOT Act that allows credit unions and other financial institutions to share information with one another.

The information sharing is permitted as a way to help identify and report suspected terrorism and money laundering activities. Financial institutions must notify FinCEN of their intent to share information and ensure adequate steps to maintain confidentiality.

The fact sheet explores such topics as the benefits of information sharing under FinCEn's 314 (b) program, who is eligible to participate in the program, what information can be shared, and more.

Use the resource link to access the fact sheet.

CUNA's Cheney Named a 2013 Top Lobbyist In The Hill

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WASHINGTON (11/01/13)--The Credit Union National Association and its president/CEO, Bill Cheney, were again featured in The Hill's annual list of top lobbyists--this year for "fighting tooth and nail" to preserve the credit union tax status "amid fierce opposition from the banking sector."

The Hill says of its prestigious list: "While not every advocate on the list fits the traditional K Street mold, they all have one thing in common: a proven ability to make things happen in Washington." It is Cheney's third consecutive year on the top lobbying list; he became head of CUNA in 2010.

"This recognition reflects the ongoing efforts of CUNA, the state leagues and credit unions--throughout the past year and every year--to be the strong voice advocating for the best interests of credit unions and their 98 million members across America," said Paul Gentile, CUNA executive vice president of strategic communications and engagement.
 
Gentile added that in both legislative and regulatory advocacy, CUNA's goals are to minimize restrictions and maximize flexibility for credit unions to best serve their members.
 
CUNA was one of just 69 associations named to The Hill's 2012 list of nonprofit lobbyists. The Hill also lists leaders in grassroots, corporate and "hired gun" categories.
 
The Hill noted that it uses the term "lobbyist" broadly "to encompass the people who are working day in and day out" to help shape federal policy.  Not all of those listed are registered lobbyists, The Hill added.

For the full story, use the resource link.

Inside Exchange: Matz Goes On Record With Gentile On Key Regulatory Issues Facing CUs

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WASHINGTON (11/1/13)--From the anticipated range of corporate assessments, to a new stress testing proposal, National Credit Union Administration Chair Debbie Matz covers a wide spectrum of issues in the most recent edition of Inside Exchange with the Credit Union National Association's Paul Gentile.

This is Part I of a two-part "Inside Exchange" with the NCUA chair. One of the key issues covered in Part 1 is NCUA's approach with new regulations and its approach to regulating the evolving credit union system.

"We are reallocating resources to the credit unions where there's risk and those tend to be the larger credit unions. I don't see us decreasing our work force, but I see a reallocation.

"We will have more examiners focused on those credit unions and also more specialists that have expertise in capital markets and member business lending. But for the smaller credit unions they will probably have examiners in their shops for fewer hours because we're doing a reduced scope in smaller credit unions that don't have significant issues."



Matz is the only NCUA board member to serve two terms: her first back in 2002 and her most recent starting in 2009. She reflected on how NCUA has changed from her first term to today.

"The staff is so different. Eighty percent of our office directors and regional directors are in different positions...and 40% of our examiners have been with us less than five years. So the good news is we have a lot of fresh faces and fresh eyes and new perspectives," she said.

In terms of the NCUA's new proposal on stress testing for credit unions with $10 billion or more in assets, Matz said, "We are reallocating resources to the credit unions where there's risk and those tend to be the larger."

Other topics addressed in the Part I interview include stress testing, how NCUA interacts with the CFPB, examiner hours and focus, corporate assessments, NCUA's use of credit union feedback and more. Part II will concentrate on the 2014 NCUA Budget, the agency's CUSO proposal, Matz's outlook for regulatory relief and more.

NCUA Bans Four From CU Work(1)

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ALEXANDRIA, Va. (11/1/13)--The National Credit Union Administration has banned four former credit union employees from participating in the affairs of any federally insured financial institution.

The NCUA said the orders involve the following individuals:
  • A former Mountain America FCU, West Jordan, Utah, employee, Monica Guzman, who was sentenced to one year in prison and three years of probation, and ordered to pay restitution after pleading guilty to theft charges;
  • Another former Mountain America FCU employee, Travis Jenkins, who was sentenced to one year in prison and ordered to pay $27,251.90 in restitution after pleading guilty to wrongful appropriation charges;
  • A former Remington FCU, Richfield Springs, N.Y., employee Michael Swanka, who was sentenced to a three-year conditional discharge and ordered to pay $12,258 in restitution after pleading guilty to grand larceny charges; and
  • A former Credit Union of Leavenworth County, Lansing, Kans., employee Carla Welborn, who was sentenced to 21 months in prison and five years of supervised release, and ordered to pay $329,702.55 in restitution, after pleading guilty to embezzlement charges.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link to access all NCUA enforcement orders.

Watt FHFA Nomination Not Approved In Senate Vote

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WASHINGTON (11/1/13)--Rep. Mel Watt's (D-N.C.) bid to head the Federal Housing Finance Agency was blocked in the U.S. Senate Thursday after a motion to end debate on his nomination failed with a vote of 56 to 42, mostly along party lines.

Senate Majority Leader Harry Reid (D-Nev.) filed a cloture motion on Watt's nomination on Monday. Sixty "yes" votes would have ended debate and allowed Watt's nomination to proceed for a final Senate vote.

Senate Banking Committee Chairman Tim Johnson (D-S.D.), after the Thursday vote, said "this is not the end for Congressman Watt's nomination," and added that he would continue to fight to see that Watt is confirmed. The nomination could be brought up again if Senate leadership feels they have the votes needed to pass it, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

Watt was nominated by President Barack Obama in May. Watt has served in the U.S. Congress since 1992, and is a veteran member of the House Financial Services Committee. If confirmed by the Senate, he would replace FHFA Acting Director Edward DeMarco, who has led that agency since Sept. 1, 2009.

Obama in 2011 nominated former North Carolina bank commissioner Joseph Smith to serve as full-time director, but that nomination was not confirmed.

Fed To Host Town Halls On Payment System Improvements

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WASHINGTON (11/1/13)--Payment industry stakeholders can learn more about the Federal Reserve Bank's thoughts on the future of the system, and bring their own views to Fed leadership, in a series of upcoming payment system town halls.
 
The Fed Banks are working to address potential gaps and opportunities in the payments system, including payment speed, closed payment communities, and international, mobile, and traditional payment channels. The Fed is also exploring where it fits in the payment system going forward, and has released a paper on potential payments system changes and improvements to help collect public comment.
 
"Success in achieving improvements will require collaboration across the industry," Federal Reserve Bank of Cleveland President/CEO and Federal Reserve Banks' Financial Services Policy Committee Chair Sandra Pianalto said.
 
The town halls are currently scheduled to be held on:
  • Nov. 12 at 1 p.m. (ET) at the Federal Reserve Bank of Atlanta;
  • Nov. 13 at 1 p.m. (ET) at the Federal Reserve Bank of Cleveland;
  • Nov. 14 at 8:30 p.m. (CT) at the Federal Reserve Bank of Chicago;
  • Nov. 15 at 8:30 p.m. (PT) at the Federal Reserve Bank of San Francisco;
  • Nov. 18 at 8:30 p.m. (ET) at the Federal Reserve Bank of Boston; and
  • Nov. 20 at 8:30 p.m. (CT) at the Federal Reserve Bank of Dallas.
Each session is planned to last around  three hours.

Interested parties can register for the events at FedPaymentsImprovement.org.

The Credit Union National Association and its Payments Policy Subcommittee met and recently discussed payment system issues with senior Fed Bank staff, and CUNA continues to encourage credit unions to share their views on payments and submit responses to the Fed's payment system improvement initiative by Dec. 13. CUNA has also released a comment call on payment system issues. Comment is due to CUNA by Nov. 18.