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Survey CU satisfaction breaks all records

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WASHINGTON (12/14/11)--Credit unions have set an all-time American Customer Satisfaction Index (ACSI) record, with 87% of credit union members surveyed saying they are "more satisfied than ever before" with their credit unions.

The 87% score was the highest score reached in any of the ASCI's 47 industries that it surveys, and credit unions have consistently received high praise for their member service in this survey.

Credit Union National Association President/CEO Bill Cheney congratulated credit union boards, management and employees for the record-breaking survey results. "Given the enormous outpouring of consumer interest in credit unions over the past several weeks--and the apparent growing dissatisfaction among consumers with megabanks--it can be of little doubt that, the more consumers learn about credit unions, the more they see how credit unions can help them fulfill their financial needs and goals," he added.

The ASCI survey found that bank customer satisfaction stands at 75%, and that total decreased by 1.3% over the past year.

ACSI founder Claes Fornell noted that grassroots efforts like Bank Transfer Day, and recent consumer revolts over higher bank fees, are creating issues for banks. "While it is too early to quantify just how much business the big banks have lost to smaller competitors, the new ACSI data suggest credit unions and smaller banks now have become an even more attractive alternative for consumers," Fornell added.

Approval for the biggest banks was even lower, with 73% of Wells Fargo and Citigroup customers saying they were satisfied with the service at those institutions. A total of 70% of JPMorgan Chase customers said they were satisfied with that bank's service, and a mere 68% of Bank of America customers approved of that financial firm's customer service.

Hoenig takes next step toward FDIC

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WASHINGTON (12/14/11)--Thomas Hoenig took the next step toward becoming vice chairman of the board of directors of the Federal Deposit Insurance Corp. (FDIC) when his nomination was unanimously approved by the Senate Banking Committee on Tuesday.

Hoenig, who previously served as president of the Federal Reserve Bank of Kansas City, was nominated to join the FDIC by President Barack Obama in October. Hoenig's nomination will now move on to the full Senate.

Another Obama nominee, Carla León-Decker, is still awaiting a vote on her nomination to join the National Credit Union Administration. The nomination of the CEO of the $47 million District Government Employees FCU, Washington, D.C., could receive further consideration after the new year, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

IG says FHFA lagged in oversight supervision

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WASHINGTON (12/14/11)--The Federal Housing Finance Agency (FHFA) "was not proactive in oversight and enforcement" of government-sponsored entities (GSEs) Fannie Mae and Freddie Mac, and did not adequately process consumer complaints that may have "contained important information about alleged foreclosure processing abuses and fraud," FHFA inspector General Steve Linick said in his semi-annual report to Congress.

The FHFA failed to develop and maintain a system for receiving or processing consumer complaints. Linick said the agency also failed to:

  • Consistently follow up on complaints referred to the GSEs;
  • Prioritize complaints or assess the timeliness of responses to complaints;
  • Refer complaints to law enforcement for evaluation or possible investigation; and
  • Perform substantive analyses to identify overall trends in complaints.
"These deficiencies occurred because FHFA did not establish adequate internal controls and did not assign sufficient priority and resources to complaint processing," Linick said, adding that the FHFA did not feel it needed to address consumer complaints.

The FHFA was also slow to react to foreclosure related issues, Linick said, noting that the FHFA did not schedule comprehensive examination of foreclosure issues until reports of foreclosure abuses surfaced in mid-2010. "FHFA had not previously considered risks associated with foreclosure processing to be significant," the report said.

Linick also said the FHFA gave "undue deference" to the GSEs by relying on their opinions on mortgage repurchase claim issues, executive compensation, and various GSE transactions, "without independently testing and validating them."

He said the FHFA's Office of the Inspector General is currently assessing whether FHFA has an effective supervisory control structure and sufficient examination coverage to adequately and timely identify and mitigate mortgage servicing risks, and assessing the FHFA's oversight of Enterprise controls over real estate owned (REO) operations, including management and sales activities and contractor performance. 

Amid the criticism, the Inspector General's report did commend the FHFA for its progress in eliminating golden parachute compensation awards to terminated Fannie Mae and Freddie Mac executives, taking steps to mitigate its shortage of qualified examiners, increasing its underwriting standards and raised guarantee fees, and reducing its vulnerability to fraud, waste, and abuse.

MBL waivers 2011 highlights in iNCUA Reporti

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ALEXANDRIA, Va. (12/14/11)--National Credit Union Administration (NCUA) Chairman Debbie Matz in the latest edition of The NCUA Report said the past year has been productive for credit unions, with the corporates stabilizing, consumer credit unions recovering financially, and, overall, the credit union industry "turning a corner."

Credit unions can look forward to a future of increasing members and strengthening bottom lines, Matz added. The NCUA chairman also highlighted the agency's regulatory modernization initiative, adding that the agency will eliminate or streamline regulations that are "ineffective or overly burdensome" and modernize outdated or inefficient regulations.

Regulation was also a focus of NCUA Board Member Gigi Hyland's contribution to this month's NCUA Report, as Hyland noted that federally insured credit unions may apply for blanket waivers from member business loan (MBL) personal guarantee requirements. Hyland said the agency "strongly believes that obtaining a personal guarantee is a prudent practice and solidifies the personal commitment of the principal to the business enterprise." However, she said, credit unions may waive this personal guarantee requirement in instances where the credit union is not taking on undue risk.

NCUA regional director waivers may also be granted for a variety of limits, including appraisal requirements, aggregate construction and development loan limits, and loan-to-value ratio requirements for business loans, Hyland said.

Credit unions that wish to obtain a waiver should submit a request, and their business lending policy, supporting documents that show the credit unions' past MBL account management, to their regional NCUA director. Documentation addressing the credit union's history of loan losses and delinquencies, portfolio diversification, underwriting standards and practices, and other information should be provided as well.

Hyland said any information that would "demonstrate that [the credit union] can safely engage in the activity with a waiver in place" should also be included. She said a lack of sufficient documentation is the most common reason that waivers are denied, and added that "waivers are not likely to be approved if the documentation package as a whole does not demonstrate a well-constructed plan for the activity proposed."

The report also featured coverage of the NCUA's Office of Consumer Protection's work with the Consumer Financial Protection Bureau, recent NCUA actions, and other issues. For more of the December NCUA Report, use the resource link.

CUNA Exiting CUs should recognize liability to TCCUSF

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WASHINGTON (12/13/11)--The Credit Union National Association (CUNA) is recommending to the National Credit Union Administration (NCUA) that a credit union leaving the system should be required to provide its share of future temporary corporate credit union stabilization fund assessments to recognize liabilities incurred as a federally insured credit union.

CUNA's analysis reviewed the issues surrounding how requirements to obtain such assessments would work and determined that the NCUA has the legal authority under the federal credit union act to adopt such requirements.

Some credit unions have raised concerns about the basic issue that remaining credit unions should not be left to cover the assessments that a credit union exiting the system would avoid.

The NCUA is on record as having advised the National Association of State Credit Union Supervisors--NASCUS--and others that a converting credit union cannot be assessed for all future assessments in a single payment prior to conversion.

However, CUNA's approach to the issue would not require a single payment. Instead, CUNA's recommendations would require a credit union leaving the system to set up an escrow account as part of its conversion, one that is comprised of funds representing a general estimate of that credit union's future assessments.

The account would be managed by the NCUA and future payments would be made out of the account as they are assessed on all federally insured credit unions.

CUNA has noted that this structure for future payments is intended to avoid triggering an accounting event that would make all federally insured credit unions recognize all remaining assessments immediately as an expense. CUNA also has identified several other accounting issues associated with the plan and is pursuing those with credit union certified public accountants.

CUNA has initiated early meetings with federal financial regulators on this TCCUSF issue, including NCUA, as well as the Federal Deposit Insurance Corp. (FDIC). The FDIC coordinates with the NCUA regarding a conversion to a federally insured bank or thrift.

CUNA will follow up with the FDIC as discussions with the NCUA proceed. CUNA also is pursuing meetings with other policymakers including the Office of the Comptroller of the Currency.

CUNA members can use the resource links below for more information.

Inside Washington (12/13/2011)

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  • WASHINGTON (12/14/11)--The Federal Deposit Insurance Corp.'s (FDIC)  new Office of Corporate Risk Management is less concerned with the risk assessment of the financial system and more focused on providing information on unseen risks to the agency internally and from the financial system, according to Stephen A. Quick, FDIC's first chief risk officer. Regulators are behind the banking industry in risk management expertise, Quick said (American Banker Dec. 13). The new office will likely improve that culture, Quick added. FDIC essentially functions as an insurance company, and should manage risk with the same diligence practiced by private-sector insurance companies, said Robert Litan, a senior fellow at the Brookings Institution and research chief at the Kauffman Foundation. The FDIC is unique from other financial regulators because its Deposit Insurance Fund is exposed to financial risk in the event of bank failures, Quick said. The agency also owns a large portfolio of assets that were taken over from failed institutions …
  • WASHINGTON (12/14/11)--Morris Morgan has been named the Office of the Comptroller of the Currency's (OCC) large bank deputy comptroller. Morgan, who currently serves as examiner-in-charge at PNC, will lead the examination and data analytics teams for a portfolio of large banks and thrifts. Morgan joined OCC's large bank supervision division in March 1999 and was assigned to the Bank of America examination team, where he served in general supervision duties before progressing to team leader roles covering capital markets, asset management, and then commercial credit. He has been with the OCC since 1985, examining banks in the Southwest District …