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NCUA launches two new sites for transparency

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ALEXANDRIA, Va. (12/29/11)--Just one day after making public the just-released clean audit report of the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), the National Credit Union Administration (NCUA) announced its unveiling of two new webs pages: One on the NCUA Guaranteed Notes (NGN) program, the other on corporate  credit union system resolution costs.
Click to view larger image Click for larger view


Featured information on the new NGN Program and Corporate System Resolution sites includes:

  • Background of the NGN Program;
  • Characteristics of each NGN transaction;
  • Profiles of the legacy assets;
  • Ongoing performance of the NGNs and legacy assets;
  • Recent guidance from the NCUA Board on projected 2012 Stabilization Fund assessments;
  • Current loss projection ranges on the legacy assets; and
  • A glossary of frequently used terms.
 

The NCUA said it considers the two new Web resources to be "works in progress," meaning that they will continue to be built and bolstered with new or additional information. Updates will occur regularly, the agency claims, and the sites are intended to add clarity to the complex subjects of the NGN program, as well as transparency for the resolution costs associated with the resolution of the corporate credit union system's problems.

"NCUA is committed to ensuring full transparency throughout the Corporate System Resolution," said NCUA Chairman Debbie Matz in a release. "These useful new website tools will assist stakeholders in understanding how NCUA's ongoing initiatives are mitigating losses from the legacy assets, spreading out loss ranges over time, and reducing assessments paid by credit unions."

Click to view larger image Click for larger view
Not long ago--at the Dec. 15 NCUA open board meeting, in fact--the agency approved the NGN Program's 2012 budget in the amount of $7,710,000. The budget will provide funding for the NGN Program's administrative costs such as security valuation, accounting, and reporting costs.

The guaranteed notes program was created in 2010, and was comprised of $50 billion of legacy assets gathered from the accounts of corporate credit unions under NCUA conservatorship. The NGNs are sold on the open market and are permissible investments for credit unions. They have a zero risk weight from the Securities and Exchange Commission.

The websites are available at www.NCUA.gov by clicking on the "Corporate System Resolution Costs" and "NGN Program Information" links under "Credit Union Resources and Information."

NCUA may gather monthly data on large CU financials

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WASHINGTON (12/29/11)--The National Credit Union Administration (NCUA) recently posted notice in the Federal Register that it will begin to gather information on large credit union financial statement, as well as their compensation and perks packages to board members.

The agency, in its Federal Register document, said that the request to monitor such trends among credit unions of $1 billion of more in assets is an extension of current authority. It added that the closer monitoring is necessary because problems at such large institutions would obviously mean a bigger hit to the National Credit Union Share Insurance Fund if trouble were to arise undetected.

The NCUA proposed that the large credit unions be tasked with reporting financials and board packages on a monthly basis so the agency can effectively monitor trends between onsite visits.

Comments will be accepted until Jan. 26.

See resource link for NCUA's Federal Register posting.

CUNA wants FHFA to improve mortgage servicing fee proposal

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WASHINGTON (12/29/11)--The Federal Housing Finance Authority (FHFA) has issued a discussion paper intended to find an alternative mortgage servicing compensation plan that would improve service for borrowers, reduce financial risk to servicers, and provide flexibility for guarantors to better manage non-performing loans while promoting liquidity in the mortgage securities market. However, the Credit Union National Association (CUNA), in a comment letter, warns that the plans put forth by the FHFA are too vague and could have the effect of consolidating the servicing industry into a few large players resulting in diminishing service levels to borrowers.

In its discussion paper, the FHFA outlined two alternative servicing compensation proposals for public consideration and comment.  They are:

  • A "reserve account" approach that would establish a reserve account within the current servicing compensation structure, in which case the minimum servicing fee would be reduced from today's 25 basis point (BP) minimum to a minimum of between 12.5 and 20 bps, with an additional reserve amount of between 3 and 5 bps set aside in a reserve account. This would be used to offset unexpectedly high servicing costs associated with servicing non-performing loans; or
  • A "fee for service," which would create a new compensation structure, under which the guarantor would pay a set dollar fee per loan for servicing, effectively tying the compensation to the number of loans being serviced rather than the size of the loans. This would be funded by a master servicing strip collected by the guarantor from interest payments paid by the borrowers.
CUNA told the FHFA that any change in the mortgage servicing compensation structure is unnecessary and inappropriate at this time, given all of the changes occurring relating to servicing standards and the unknown future of Fannie Mae and Freddie Mac, and voiced its concern that the proposed changes could have the ill effects on servicing such as consolidation of the servicing industry and declining service to borrowers.

"CUNA and its members urge FHFA to release further details on each proposal laid out in the Discussion Paper, and to refrain from making any changes to the servicing compensation structure until the future of the (government-sponsored housing enterprises) are determined and national servicing standards are developed," CUNA wrote.

"While we understand FHFA's objectives, it is impossible to understand at this point what the effects of either proposal will be on credit unions and on the industry as a whole," the letter added.

Use the resource link to read the comment letter in detail.

Fed should coordinate Reg J changes with CFPB CUNA says

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WASHINGTON (12/29/11)--The Credit Union National Association (CUNA) in a comment letter told the Federal Reserve that it generally agrees with proposed technical amendments to Regulation J, but CUNA also called on the Fed to work with the Consumer Financial Protection Bureau before the Reg J proposal is completed to address some outstanding remittance transfer issues.

Regulation J implements portions of the Federal Reserve Act and  the Expedited Funds Availability Act, as well as the Check Clearing for the 21st Century Act and other laws.

The Fed's proposed Reg J changes would clarify that subpart B would continue to apply to a Fedwire funds transfer even if the funds transfer also meets the definition of a "remittance transfer" under Section 919 of the Electronic Funds Transfer Act (EFTA), and Section 919 would prevail if there is an inconsistency between Reg J and Section 919. Changes to Section 919 are expected to be finalized by the CFPB in the near future.

The Fed proposal also incorporates proposed changes to Regulation D, which governs reserve requirements of depository institutions. The Reg D plan, addressed in a separate CUNA comment letter, would simplify the administration of reserve requirements by discontinuing as-of adjustments related to deposit revisions, replacing all other as-of adjustments with direct compensation, and establishing a penalty-free band around reserve balance requirements in place of carryover and routine penalty waivers.  (See related Dec. 20 story: CUNA asks for more time for Reg D changes.)

The Reg J proposal harmonizes that regulation with the Reg D changes by removing any references to a Reserve Bank's use of as-of adjustments in connection with a Fedwire funds transfer from Reg J.

The Fed has also proposed amending subpart A of Reg J to clarify that when an institution sends a check or other item for collection to a Reserve Bank, the institution's Administrative Reserve Bank is deemed to have accepted deposit of the item even if the item was sent directly to another Reserve Bank. CUNA said this clarification is "useful," as Reserve Banks currently permit institutions to send checks and other items directly to a Reserve Bank that is not the Administrative Reserve Bank.

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

CFPB wants comment Should EFTA rules change

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WASHINGTON (12/29/11)--Should Regulation E, which implements the Electronic Funds Transfer Act (EFTA), be revised, and, if so, in what ways?  That is the latest topic for which the Consumer Financial Protection Board (CFPB) is seeking comment.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, oversight and enforcement of EFTA was transferred to the CFPB, as was authority over a number of other rules that were formerly under the purview of the other federal financial regulators.

The CFBP issued an EFTA interim final rule, substantially similar to existing rules, and seeks comment until Feb. 27, 2012. The interim rule becomes effective Dec. 30.

Other rules that are newly under CFPB oversight include:

  • Truth in Savings (regulation DD);
  • Fair Credit Reporting (Regulation V);
  • Privacy of Consumer Financial Information (Regulation P);
  • Equal Credit Opportunity (Regulation B); and
  • Interstate Land Sales Registration Program (Regulations J, K, and L).
Use the resource link to access the CFPB's request for Reg E comment.

Inside Washington (12/28/2011)

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  • WASHINGTON (12/29/11)--Proceedings in the Securities and Exchange Commission's (SEC) lawsuit case against Citigroup, charging that Citigroup defrauded stakeholders in a $1 billion fund invested in mortgage-related securities, came to a temporary halt when a federal appeals court granted an emergency ruling this week (The New York Times Dec. 27). The decision will allow the court to consider an appeal of a lower court's decision to throw out a $285 million fraud settlement between the SEC and Citigroup. The fund in question was sold by Citigroup in 2007, just as the housing market and mortgage securities were showing signs of distress, the article noted. According to the SEC suit, Citigroup sold the securities but did not inform investors the portfolio was being loaded with mortgage investments that Citigroup thought would fail and was betting against. The article further notes that a motions panel of the appeals court will consider a further stay of the proceedings beginning Jan. 17. …

NEW New corporate resolution NGN sites available at NCUA

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ALEXANDRIA, Va. (12/28/11 UPDATE 1:24 ET p.m.)--Just one day after making public the just-released clean audit report of the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), the National Credit Union Administration (NCUA) announced its unveiling of two new webs pages: One on the NCUA Guaranteed Notes (NGN) program, the other on corporate  credit union system resolution costs.
Click to view larger image Click for larger view


Featured information on the new NGN Program and Corporate System Resolution sites includes:

  • Background of the NGN Program;
  • Characteristics of each NGN transaction;
  • Profiles of the legacy assets;
  • Ongoing performance of the NGNs and legacy assets;
  • Recent guidance from the NCUA Board on projected 2012 Stabilization Fund assessments;
  • Current loss projection ranges on the legacy assets; and
  • A glossary of frequently used terms.
 

The NCUA said they consider the two new web resources to be "works in progress," meaning that they will continue to be built and bolstered with new or additional information. Updates will occur regularly, the agency claims, and the sites are intended to add clarity to the complex subjects of the NGN program, as well as transparency for the resolution costs associated with the resolution of the corporate credit union system's problems.

"NCUA is committed to ensuring full transparency throughout the Corporate System Resolution," said NCUA Chairman Debbie Matz in a release. "These useful new website tools will assist stakeholders in understanding how NCUA's ongoing initiatives are mitigating losses from the legacy assets, spreading out loss ranges over time, and reducing assessments paid by credit unions."

Click to view larger image Click for larger view
Not long ago--at the Dec. 15 NCUA open board meeting, in fact--the agency approved the NGN Program's 2012 budget in the amount of $7,710,000. The budget will provide funding for the NGN Program's administrative costs such as security valuation, accounting, and reporting costs.

The guaranteed notes program was created in 2010, and was comprised of $50 billion of legacy assets gathered from the accounts of corporate credit unions under NCUA conservatorship. The NGNs are sold on the open market and are permissible investments for credit unions. They have a zero risk weight from the Securities and Exchange Commission.

The websites are available at www.NCUA.gov by clicking on the "Corporate System Resolution Costs" and "NGN Program Information" links under "Credit Union Resources and Information."