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CUNA makes ATM disclosure advice available

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WASHINGTON (1/3/12)--The Credit Union National Association (CUNA) has alerted credit unions, as well as the Consumer Financial Protection Bureau, of increasing instances of lawsuits being brought against credit unions and other financial institutions when ATM notices have been removed, damaged or destroyed. CUNA's Center for Professional Development (CPD)  also has re-released a spring audio conference on ATM fee disclosures to assist credit unions with issues.

The audio conference features commentary from CUNA Mutual Group Senior Risk Management Specialist Ken Otsuka and PolicyWorks LLC Vice President of Compliance Andrea Stritzke.

The Electronic Fund Transfer Act requires credit unions and other financial institutions to display at each ATM location that fees will or may be charged.  More detailed ATM fee information must also be provided before the transaction is completed, either  by  projecting it onto the ATM's screen or providing the ATM user with a small printed disclosure. 

Credit unions and others have found that the outside notices on ATMs are, in some cases, being intentionally removed or destroyed, without the financial institution's knowledge, and that pictures are then taken of the ATM to show noncompliance. Some ATM users may then using this as evidence of apparent non-compliance and as grounds for lawsuits.

The audio conference addresses:

  • Noncompliance issues giving rise to lawsuits;
  • Best practices credit unions should implement to avoid this type of lawsuit;
  • The requirements of Regulation E; and
  • Answers to implementation questions, such as "What must be included in the disclosure?" and "Where do we put the sign?"
CUNA has also advised credit unions on how to mitigate the risk of ATM fee lawsuits.

In a release sent to credit union league presidents, CUNA said credit unions should develop and maintain written procedures for inspecting all of their ATMs on a regular basis to ensure the ATM fee signs are intact. ATMs should be inspected at least weekly or when the ATM is serviced--whichever provides for more frequent inspections. Credit unions could photograph the ATM each time it is inspected and log the inspections, CUNA added.

Any missing signage should be replaced immediately, and credit unions can ensure that this can be done in a quick fashion by maintaining a supply of signs and stickers to replace any that have been defaced or removed from ATMs, CUNA said.

The ATM screen and paper disclosures should also be tested, CUNA added.

For more on the CPD audio conference and CUNA's efforts to help credit unions avoid these types of suits use the resource links.

NCUA will rescind its big CU data request

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WASHINGTON (1/3/12)--The National Credit Union Administration (NCUA) said it would rescind its request that the Office of Management and Budget (OMB) allow the NCUA to collect monthly financial data and monthly executive and board compensation data from credit unions with at least $1 billion in assets.

The request was published in the Federal Register on Dec. 28 and reported by CUNA's News Now on Dec. 29.  (See NCUA may gather monthly data on large CU financials)

The NCUA told CUNA that, after seeing CUNA's News Now story, the agency decided to rescind its request after further discussion that focused in part on the fact that the Dodd-Frank Wall Street Reform and Consumer Protection Act only requires executive compensation data for credit unions with $1 billion or more in assets to be collected annually.

The NCUA added that it is the agency's belief that the rescission is more in conformance with President Barack Obama's Executive Order to reduce regulatory reporting burdens where reasonable and appropriate.

The NCUA's withdrawal of its Federal Register request will be posted on OMB's website, and subsequently will be published in the Federal Register, likely within a week or two.

The Federal Register notice is expected to note that the request was withdrawn to reduce regulatory reporting burdens on credit unions subject to the information collection and that the agency has existing authority through supervisory action to require any high-risk credit unions to report the information on a monthly basis if deemed necessary and appropriate.

CUs urged to comment on loan participation investment rules CUNA

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WASHINGTON (1/3/12)--The National Credit Union Administration's (NCUA) proposed revisions to loan participation investment rules, which were released at the December monthly open board meeting, are now out for public comment, and the Credit Union National Association (CUNA) is encouraging credit unions to weigh in on the proposal.

The NCUA proposal would impact all federally insured state credit unions (FISCUs) that purchase participations in loans originated by other credit unions. Specifically, under the proposal, loan originators would need to retain 10% of the original loan, and loan participations involving a single originator would be limited to 25% of the FISCU's net worth. The NCUA proposal also sets a 15% of net worth limit on loans to one borrower.

While a waiver is permitted from the limit on participations involving the same borrower, the state chartered credit unions would have to apply to the NCUA Regional Director for approval.

Just over 1,400 federally insured credit unions held over $12.4 billion in outstanding loan participations this year, and loan participation balances have grown by 28% since 2007, the NCUA noted. NCUA Chairman Debbie Matz said "large volumes of participated loans tied to a single originator, borrower, or industry--or serviced by a single entity--have the potential to impact multiple credit unions if problems occur."

CUNA in the comment call said that some are concerned that the NCUA is expanding its regulatory reach to encompass state-chartered credit unions, and said the NCUA loan participation proposal could have a negative impact on dual-chartered credit unions. "If the proposal is adopted, state regulators will have no leeway to develop their own regulatory approach to loan participations, even though NCUA has not provided sufficient justification for the expansion," CUNA said.

In the comment call, CUNA asks if there is a need for these new loan participation rules, and whether or not the NCUA has provided sufficient justification for this proposal. CUNA also asks credit unions if the proposal should be applied to state chartered credit unions. Credit unions can also comment on the proposed loan participation limits, and the NCUA's waiver process, among other items.

Interested parties, including credit union officials and leagues, may file a comment letter with the NCUA for up to sixty days from when it is published in the Federal Register. The proposal has not yet been published; the CUNA  Comment Call (see resource link below) will include the comment deadline as soon as it is available.

Comments may be filed with NCUA at regcoments@ncua.gov.

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

Inside Washington (12/30/2011)

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  • ALEXANDRIA, Va (1/3/12)--The National Credit Union Administration (NCUA)  has scheduled a closed board meeting for Friday, Jan. 6, at 10 a.m. (ET) to consider a supervisory matter.The agenda for the meeting: Consideration of Supervisory Activities. Closed pursuant to some or all of the following: exemptions (5), (7), (8), (9)(i)(B), and 9(ii) ...

     
  • WASHINGTON (1/3/12)--Freddie Mac and Fannie Mae will begin to increase their loan guarantee fees on April 1 under direction by the Federal Housing Finance Agency, which is charged with implementing a congressionally mandated increase. A bill passed in December by the U.S. Congress requires at least a 10 basis point increase in the average guarantee fee in 2012. The payroll tax cut extension bill targeted a 10-year increase in Fannie and Freddie guarantee fees to cover most costs of the legislation that extended the payroll tax reduction and unemployment benefits for two months. The bill also mandates that adjustments be made to the guarantee fees so all lenders pay the same fee (American Banker Dec. 30). …