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Washington Archive

Washington

Final Charitable Donation Rule Leads Dec. NCUA Agenda

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ALEXANDRIA, Va. (12/6/13)--A final rule on charitable donation accounts will lead the day when the National Credit Union Administration holds its final open meeting of 2013 on Dec. 12.

The agency in September released a proposed rule that would permit credit unions to invest in hybrid charitable and investment vehicles known as charitable donation accounts (CDAs). These CDAs will allow federal credit unions to make investments that are otherwise prohibited, provided that the proceeds are primarily for charitable purposes.

The proposed rule would limit total investment in CDAs to 3% of the credit union's net worth for the duration of the accounts. A minimum of 51% of the total return from such an account would have to be distributed to one or more qualified charities. Distributions could be made to qualified charities no less frequently than every five years.

The Credit Union National Association approved of the NCUA proposal, which would "allow federal credit unions to do well by doing good." However, CUNA suggested some improvements that would facilitate credit union participation without raising safety and soundness concerns. Suggested changes included:
  • Making CDA disbursements on an annual basis;
  • Allowing corporate credit union to take part in CDAs; and
  • Allowing credit unions to recover their costs so that these do not impact the total investment return.
Other items on the December open board meeting agenda include:
  • A board briefing on a supplemental interagency rule on appraisals for higher-priced mortgage loans;
  • A final rule that will make technical amendments to the corporate credit union rating system;
  • The 2014 Temporary Corporate Credit Union Stabilization Fund oversight budget; and
  • A proposed rule addressing requirements for federal credit union examination sites.
The Thursday open meeting is scheduled to begin at 10 a.m. (ET).

Supervisory activities, personnel issues and an appeal under Part 701.14(e) and Part 747, Subpart J of the NCUA's Rules and Regulations are on the closed board meeting agenda.

Parts 701.14 and 747 of NCUA regulations address senior executive officer changes.

For the full agenda, use the resource link.

House Approves CUNA-Supported Patent Improvement Bill

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WASHINGTON (12/6/13)--The U.S. House's Thursday approval of The Innovation Act of 2013 (H.R. 3309) "is welcome news for credit unions who have become a target of patent trolls, particularly with regard to ATM and check processing technology," Credit Union National Association President/CEO Bill Cheney said.

The bill was approved by a 325 to 91 vote and will now move on to the Senate.

H.R. 3309, which was introduced by Rep. Bob Goodlatte (R-Va.) in late October, would remove some of the financial incentives sought by firms that assert low-quality patents in the hope of quick settlements. So-called "patent trolls" continue to use low-quality patents to try to extract settlements from credit unions and others. 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.

The Thursday bill included several provisions important to credit unions, including language that gives the Patent and Trademark Office Director discretion to waive filing fees for Section 18 appeals. A CUNA-supported amendment that would require patent trolls to identify their parent entity when making a patent infringement claim was also included in the passed legislation.

Cheney said CUNA and credit unions appreciate the strong bipartisan vote. "This is welcome news for credit unions who have become a target of patent trolls, particularly with regard to ATM and check processing technology. The legislation is a strong step in the right direction, and we look forward to working with the Senate as they consider this issue," Cheney added.

CUNA and coalition partners on Wednesday supported H.R. 3309 in a letter sent to all House members. (See Dec. 5 News Now story: CUNA to House Leaders: Patent Bill Goes in 'Right Direction'.)

Inbound Paypal Transfers Will Not Count Toward Remittance Rule Cap

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WASHINGTON (12/6/13)--Do credit unions need to add inbound PayPal transactions to the tally as they determine whether or not they will meet the 100 transfer threshold for coverage under new remittance regulations? No, the Credit Union National Association compliance team noted in a recent CUNA's Compliance Myths blog post on CompBlog.

A credit union does not have to count international automated clearinghouse transactions when it is the receiving depository institution, the CUNA post clarified.

One example highlighted in the blog post is an inbound PayPal transaction that debits a member's account. "Remember that the remittance transfer provider must be 'directly engaged with the sender to send a transfer of funds to a person in a foreign country," CUNA wrote. In this case, PayPal, not the credit union, is directly engaged with the sender as the originator of the ACH.

The Consumer Financial Protection Bureau has confirmed that this is a correct interpretation.

The CFPB's remittance rules, which became effective on Oct. 28, require financial institutions to provide consumers with prepayment and receipt disclosures 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.

Credit unions will not be considered remittance transfer providers under the rule if:
  • They provided 100 or fewer remittance transfers in the previous calendar year; and
  • If they provide 100 or fewer remittance transfers in the current calendar year.
When tallying the 100, credit unions must count all the various types of remittance transfers covered by the rule together. However, transactions that do not count toward this 100 transfer total include:
  • Domestic wire/ACH transactions;
  • Transfers where the credit union is the recipient institution of the wire/ACH;
  • Debit card purchases from a merchant located in another country;
  • International transfers sent by businesses;
  • Prepaid cards purchased in the U.S. that are not delivered to a recipient abroad; and
  • Online bill payments to recipients located in another country where the agreement states that payments will be made solely by check, draft or similar instrument.
For more CompBlog compliance gems, use the resource link.

Senate Banking Leaders Urge G-fees Stay Out of Budget Reconcilations

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WASHINGTON (12/6/13)--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 leadership of the Senate Banking Committee urged the leaders of both the House and Senate Budget Committees Thursday.
 
"The guarantee fees are charged to cover losses in incurred by Fannie Mae and Freddie Mac," wrote Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho), of the banking committee.
 
"Each time they are increased and diverted for unrelated spending, homeowners are charged more for their mortgages and taxpayers are exposed to additional risk," the senators wrote Thursday.They added that each of the offsets makes reforming Fannie and Freddie more difficult because it increases the price tag of any legislation.
 
The Credit Union National Association also strongly opposes the use of the fees as a revenue source and has communicated that opposition in letters to federal lawmakers.CUNA has argued that guarantee 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, CUNA has warned.
 
In the senators' letter, Johnson and Crapo noted that earlier this year an amendment, cosponsored by every member of the Senate banking panel, was included in the Senate Budget Resolution by unanimous consent.
 
"As you continue to negotiate an agreement on a budget, we urge you to uphold the intent of our bipartisan amendment and refrain from using guarantee fees as an offset," they concluded.
 
The letter was sent to Sens. Patty Murray (D-Wash.) and Jeff Sessions (R-Ala.) and to Reps. Paul Ryan (R-Wis.) and Chris Van Hollen (D-Md.).