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NEW: Legislators, CUNA Witness Agree On Need For Reg Relief

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WASHINGTON (12/4/13, UPDATED: 1:45 P.M. ET)--Rose Bartolomucci, president/CEO of privately insured Towpath CU, Akron, Ohio, highlighted how regulatory compliance issues have hampered her credit unions' attempts to serve its 21,000 members at today's House Financial Services subcommittee on financial institutions and consumer credit hearing.

Bartolomucci testified on behalf of her credit union and the Credit Union National Association at the hearing, entitled "Examining Regulatory Relief Proposals for Community Financial Institutions."

Legislators at the hearing agreed there is bipartisan desire to address regulatory issues faced by credit unions and other small financial institutions, with ranking subcommittee member Gregory Meeks (D-N.Y.) noting that small financial institutions are facing severe regulatory problems.

The hearing focused on three bills: A bill to require the National Credit Union Administration and other federal financial regulators to assess and address regulatory duplication or inconsistency; legislation that would allow privately insured credit unions to join a Federal Home Loan Bank (FHLB); and a bill that would adjust the Consumer Financial Protection Bureau's rural designation to align with the definition used by the U.S. Department of Agriculture.

Bartolomucci, who is also a former Ohio state credit union regulator, noted her credit union has 47 employees, with one full time compliance officer and a shared compliance officer that also works with two other credit unions. The cost of compliance can make it more difficult for her credit union to offer new products to members, she said. Compliance costs and regulatory burdens "will take the lives of some of our credit unions," she noted. Some credit unions cannot afford the cost of compliance, and thus seek out strategic mergers, she added.

The credit union CEO also commented on allowing privately insured credit unions to join FHLB. Doing so would not put taxpayers at risk, Bartolomucci said. FHLB members have to fully collateralize their advances, and "how you are insured does not come into play," she added.

One subcommittee member, Rep. Ruben Hinojosa (D-Texas), said it is important to listen to credit unions and other small institutions, because their communities rely on them for access to credit. Smart regulatory relief is an area that is ripe for bipartisan collaboration, he added.

Another subcommittee member, Maxine Waters (D-Calif.), noted the strong support that credit unions enjoy from members of both parties.

Shelley Moore Capito (R-W. Va.), who chairs the subcommittee, noted that reducing regulation does not mean getting rid of all regulation. Moore Capito said she is trying to help create smarter, more forward thinking regulations.

Rep. Sean Duffy (R-Wisc.) said the Wednesday hearing was a good example of members of both parties working together early to get bipartisan bills moving in the right direction. He also said he hopes that credit unions and community banks will be able to focus less on regulators and more on making loans.

CUNA Witness Will Testify On Reg Burden Today

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WASHINGTON (12/4/13)--Credit union concerns regarding regulatory burden will be heard when Rose Bartolomucci, president/CEO of Towpath CU, a state-chartered, privately insured credit union in Akron, Ohio, testifies before the House Financial Services subcommittee on financial institutions and consumer credit today.

Bartolomucci is testifying on behalf of her credit union and the Credit Union National Association during the hearing, which is scheduled to begin at 10 A.M. (ET).

The hearing will focus on:
  • A bill to require federal financial regulators, including the National Credit Union Administration and Consumer Financial Protection Bureau, to assess whether proposed rules are duplicative or inconsistent with other federal rules, to take steps to address the duplication or inconsistency, and report to Congress within 60 days of issuing the rules;
  • A CUNA-supported bill that would permit privately insured credit unions to join a Federal Home Loan Bank; and
  • A bill that would adjust the CFPB's rural designation to align with the definition used by the U.S. Department of Agriculture.
Watch News Now for live coverage of today's hearing.

CU Activists Discuss 'Don't Tax' Campaign Involvement On Inside Exchange

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WASHINGTON (12/4/13)--With Congress entering its final weeks before the end of its first session, and talk of tax reform becoming more prevalent, credit union activism is more important than ever. In the latest edition of the Credit Union National Association's Inside Exchange, credit union activists tell CUNA's Paul Gentile how and why they became engaged with the "Don't Tax My Credit Union" campaign.

The Inside Exchange episode features executives and volunteers from credit unions discussing how they have encouraged their staffs and members in supporting the "Don't Tax" campaign. In particular, the credit union activists discuss with Gentile what's at stake for credit unions, how members are receiving the message, and some of the results they have seen.

CUNA and the leagues have set forth a revitalized push to engage credit unions in the campaign, including maintaining nearly constant contact with lawmakers. Since the campaign began in late May, more than 1.2 million contacts with lawmakers have already been made.

For more on Inside Exchange and Don't Tax My Credit Union advocacy efforts, use the resource links.

FinCEN Amends Funds Transfer, Transmittal of Funds Definitions

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WASHINGTON (12/4/13)--Technical amendments to the definitions of "funds transfer" and "transmittal of funds" under regulations implementing the Bank Secrecy Act (BSA) were approved by the Federal Reserve and the Financial Crimes Enforcement Network (FinCEN) this week.
The final rule adopts the amendments as proposed in November 2012, the Fed and FinCEN said. The changes maintain the current scope of funds transfers and transmittals of funds subject to BSA, are necessary in light of amendments to the Electronic Fund Transfer Act (EFTA) made by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the agencies added.
Credit Union National Association Senior Director of Compliance Analysis Valerie Moss said that the BSA funds transfer regulations have always excluded from coverage funds transfers governed by the EFTA.

The Consumer Financial Protection Bureau's Regulation E remittance transfer regulation covers transactions that have traditionally been outside the scope of EFTA and Reg E, including consumer-initiated international wire transfers that were covered by BSA regulations.

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

For more on the amended definitions, use the resource link.

CFPB Expands Student Loan Oversight Authority

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WASHINGTON (12/4/13)--Oversight of student loan servicers will be expanded under a new Consumer Financial Protection Bureau-issued rule released Tuesday.

The bureau currently oversees student loan servicing at large banks. Under the new rule, CFPB oversight authority will be expanded to nonbank student loan servicers that manage more than one million federal or private loans. The CFPB will oversee these firms to ensure compliance with federal consumer financial laws.

Nonbank servicers who are not considered "larger participants" may still be subject to the bureau's supervisory authority if the bureau has reasonable cause to determine the servicer poses risk to consumers, CFPB added.

"Student loan borrowers should be able to rest assured that when they make a payment toward their loans, the company that takes their money is playing by the rules," CFPB Director Richard Cordray said. "This rule brings new oversight to those large student loan servicers that touch tens of millions of borrowers."

The CFPB said this new oversight regime will grant it the authority to oversee the seven largest student loan servicers and more than 49 million borrower accounts. The bureau noted this represents most of the activity in the student loan servicing market.
The CFPB has frequently noted the impact that student loan debt has on housing, small business ownership, retirement savings and rural communities. A comprehensive CFPB student debt report released this spring found that Americans hold approximately $1.1 trillion in outstanding student loan debt. One-in-five U.S. households have at least one resident that has taken out a student loan. The average outstanding student loan balance is $26,682. One-in-eight student loan borrowers owe more than $50,000, and 30% of all student loan borrowers are delinquent.

The Credit Union National Association has said credit unions could do more to help debt-saddled grads if the maximum credit union student loan maturity of 15 years was increased. CUNA has also formed a student loan working group to explore current issues related to credit unions' offering private student loans to members. The group is working to develop best practices for credit union student loans and to monitor CFPB and National Credit Union Administration student loan activities.

Exam Issues Will Be Emphasized In 2014, CFPB Ombudsman Says

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WASHINGTON (12/4/13)--The Consumer Financial Protection Bureau's Office of the Ombudsman in 2014 plans to shadow a bureau examination, and to visit a financial entity during work hours, to enhance its "ability to assist consumers and financial entities that contact the Ombudsman in the coming year."

In the CFPB Ombudsman's second annual report, the office of the ombudsman noted that financial institutions and related trade groups have brought exam concerns to the agency this year. Items highlighted include how a financial entity may elevate concerns about the examination and what may be expected during the examination lifecycle, at the end of the onsite, and at the end of the entire examination, the CFPB said.

The bureau is working to address these and other exam related issues, the ombudsman report noted.

Mortgage complaints and credit product complaints accounted for 55% and 21% of the complaints received by the ombudsman, respectively. Many consumers also had questions about what happened after they brought an issue with a given financial institution to the bureau. Others did not understand how the complaint process could assist on an individual consumer complaint, the ombudsman report said.

The report also contains ombudsman recommendations for the CFPB on how the bureau shares information and caller experiences with the CFPB contact center.

For the full CFPB ombudsman report, use the resource link.

CUNA Examines CFPB Study On Bank Compliance Efforts

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WASHINGTON (12/4/13)--Credit unions may be interested in the results of a new regulatory burden study, despite the fact that they were not among the survey respondents. The Consumer Financial Protection Bureau study, which was released last week, is examined in this week's Credit Union National Association Regulatory Advocacy Report.

The CFPB study examined the operations of certain regulations for banks, in order to understand the day-to-day activities they perform to comply with regulations. The study focused on seven banks, with asset sizes from less than $1 billion to more than $100 billion. No credit unions were included in this study.

The study specifically focused on regulations that apply to retail checking accounts, savings accounts, debit cards, and overdraft services. More than 200 bank employees and executives were interviewed by the CFPB.

Through completion of the study, the CFPB said it hoped to:
  • Build knowledge about the extent and sources of compliance costs that may be associated with regulations that the bureau inherited;
  • Improve the bureau's and the public's abilities to describe and measure costs to comply with existing or potential new regulations; and
  • Refine the bureau's and the public's abilities to identify meaningful opportunities to reduce or avoid imposing unnecessary operational costs.
CUNA has urged the agency to consider the regulatory burdens and costs associated with each regulation that the bureau promulgates and that impacts credit unions. CUNA hopes the CFPB will consider cost implications for credit unions as part of such studies going forward, CUNA Deputy General Counsel Mary Dunn said.

Other issues addressed in the Regulatory Advocacy Report include:
  • The National Credit Union Administration's letter to credit unions on the new credit union service organization rule;
  • A CFPB action against a payday lender; and
  • The Federal Housing Finance Agency's announcement of 2014 loan limits.
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: Reg Burden A Real Threat For CUs, CUNA Tells Congress

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WASHINGTON (12/4/13, UPDATED: 10:25 A.M. ET)--"The crisis of creeping complexity with respect to regulatory burden is very real" for credit unions and other community-based financial institutions, Rose Bartolomucci, president/CEO of Towpath CU, a state-chartered, privately insured credit union in Akron, Ohio, said in testimony before members of the House Financial Services subcommittee on financial institutions and consumer credit at a just-started hearing this morning.

Bartolomucci is testifying on behalf of the Credit Union National Association and her credit union at a hearing entitled "Examining Regulatory Relief Proposals for Community Financial Institutions."

"Small credit unions are expected to comply as quickly and efficiently as large financial institutions with hoards of compliance officers. While the elimination of one duplicative rule or regulation may not seem like much, to a compliance officer in a credit union, it is. Without one more rule to comply with that employee can now spend time with a credit union member, helping to serve their financial needs," Bartolomucci said in written testimony.

A bill that would require the National Credit Union Administration, Consumer Financial Protection Bureau and other federal financial regulators to assess whether proposed rules are duplicative or inconsistent with other federal rules is one of today's agenda items.

The credit union CEO's testimony also commented on CUNA-supported legislation that would permit privately insured credit unions to join a Federal Home Loan Bank. "It has never seemed fair to our small institutions that some of the largest banks in the world, or insurance companies (which are not federally insured), or a foreign bank's U.S. subsidiary can borrow billions of dollars from the Federal Home Loan Bank System, but teachers in Ohio and Texas, firefighters in California, postal and county workers in Illinois and farmers in Indiana cannot...Can these privately insured credit unions engage in riskier activities than federally insured institutions? No. Is there a risk to the Federal Home Loan Bank System from this legislation? No...Will this change cause a significant number of credit unions to switch from federal to private insurance?  No," Bartolomucci said.

Bartolomucci also opined on a CUNA-supported bill that would adjust the Consumer Financial Protection Bureau's rural designation to align with the definition used by the U.S. Department of Agriculture. "The concern CUNA has with the definition in the current rule is that many credit unions make loans to those in rural communities, but the credit union itself may not be based in those communities. If the definition of "rural" does not change, these institutions will be limited in the types of products they can offer their members in these areas," she said.

Watch News Now for more on the hearing.