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Washington Archive

Washington

NEW: Small issuer concerns remain despite FTC interchange report: CUNA

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WASHINGTON (12/28/12, UPDATED 12:30 P.M. ET)--Credit Union National Association (CUNA)  Deputy General Counsel Mary Dunn said Friday that the concerns of credit unions and other small issuers of debit cards remain despite a newly released Federal Trade Commission (FTC) report claiming small issuers have been unharmed by new interchange laws.

The FTC report was ordered by the U.S. Congress last year. The agency was charged with assessing the impact of the debit fee interchange cap set by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Although there is a carve-out for small issuers under $10 billion in assets, credit unions and other small issuers have been concerned that the big-issuers' interchange cap would have adverse impact on their own debit card services.  

"CUNA has repeatedly warned that merchants may collude with larger banks to steer payments through the lower-cost, fee-capped interchange systems," CUNA's Dunn said. "The FTC report does nothing to dispel that concern, or any other concern, long-term.

"You have only to look at the conflicting information in the September Government Accounting Office (GAO) report to see that the jury is still out on this and that small issuer concerns cannot be dismissed."

The GAO study showed that for credit unions and smaller community banks, supposedly "exempted" from the fallout of the legislation, interchange revenue dropped by 5% in just the first three months of implementation--even before the network exclusivity and routing provisions took effect in April 2012.

Those provisions require financial institutions to enable their debit cards with two unaffiliated payment card networks, which CUNA has said will likely cause even more substantial reductions in interchange fees to exempt issuers. The GAO study goes on to note that community banks and credit unions are struggling to maintain viable debit programs and that some have had to raise fees.

In fact, CUNA recently conducted a survey of credit unions offering debit card access.  The survey found that per-transaction interchange revenue has declined in five of the six quarters since implementation.  Because of these declining rates, total interchange revenue growth slowed considerably from pre-amendment rates right after implementation, and actually declined in the quarter ending in September 2012.  That's the first full quarter since implementation of the routing and network exclusivity provisions of the rule.  CUNA is concerned that as the routing provisions take hold, there could be further declines not only in per-transaction rates, but also total interchange revenue.  

CUNA'S Dunn said all aspects of the interchange cap law must continue to be monitored and assured credit unions that CUNA's work on these issues will continue.

She said it should not be forgotten that the GAO report also noted that while the interchange cap shifted $8 billion from financial institutions to the retailers, so far there is no evidence that consumers are seeing lower prices as a result--a stark contrast from what merchants claimed.

Gift card bill would increase consumer-friendliness

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WASHINGTON (12/28/12)--The continuing popularity of gift cards as a holiday present has spurred a number of news stories on a gift card bill that was introduced almost a month before Christmas.

Many publications ran holiday-season stories warning consumers of gift card fees, including purchase fees, while also informing them that the cards actually are more consumer-friendly now than they were a few years ago. As a result of the 2009 CARD Act, the articles note, there are now limits on such things as inactivity fees and expiration dates on cards.

However, these articles note, things could get a bit better for consumers under a bill introduced Nov. 23 by Sen. Richard Blumenthal (D-Conn.).

Blumenthal's Gift Card Consumer Protection Act (S. 3636) would, for instance, blow past the CARD Act restriction that prohibits a gift card's expiration sooner than five years from purchase date and would ban any expiration date.

The bill also would bar non-use fees--which currently are allowed after a year.

When he introduced his bill, Blumenthal said it would "assure that consumers get their money's worth, no matter when they use the gift card." The bill is co-sponsored by Sen. Robert Casey, Jr. (D-Pa.) and Sen. Bernard Sanders (I-Vt.).

The National Retail Federation predicted that about eight in 10 shoppers would buy at least one gift card during the 2012 winter holiday season. It also said that, on average, those consumers will spend a record high of $156.86 on their gift card purchases.

Go Direct offers PSAs on ID theft scams

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WASHINGTON (12/28/12)--In recent months, News Now and other news organizations have been covering a growing number of incidents involving financial scammers. The U.S. Treasury Department said recently that this growing news coverage, especially about scams that convince seniors and other vulnerable individuals to provide their personal financial information in response to phone solicitations, has inspired the department to create 30-second and 60-second public service announcements (PSA) to help educate the public on how to avoid becoming a victim of identity theft and fraud. 

In 2005 Treasury created it Go Direct program to promote direct deposit of federal benefits checks.  Using electronic delivery, the Go Direct campaign underscores, reduces the risk of identity theft and helps reduce stolen checks and forgeries, as well as decreases the cost to the government of dispersing the benefits. The Credit Union National Association is a national partner of Treasury's Go Direct program.

Treasury's new PSAs were developed in partnership with the Social Security Administration and Department of Veterans Affairs. The anti-fraud messages are directed at senior citizens but are applicable to any who might be easily persuaded to give out personal information to a scammer.

Use the resource links below to access the 30-second and 60-second PSAs via digital download or click on the embedded video below to view the 30-second version.

Inside Washington (12/28/2012)

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  • WASHINGTON (12/28/12)--House Republican leaders have announced, via Twitter and other means, that the House will return for a very late-year legislative session on Dec. 30--this Sunday (Politico, The Hill). House Majority Leader Eric Cantor (R-Va.) said that first votes on Sunday are expected to be at 6:30 p.m. (ET).  Federal lawmakers, of course, continue to work on forming a deal on tax rate increases and spending cuts to avoid allowing the country to fall over the "fiscal cliff." The Hill reported that Senate Majority Leader Harry Reid (D-Nev.), speaking from the Senate floor Thursday, expressed doubt that a solution will be agreed upon before the end-of-year deadline …
  • WASHINGTON (12/28/12)--The Federal Deposit Insurance Corp. (FDIC) filed just 16 lawsuits against individualdirectors and officers of failed community banks in 2011 and that number jumped to 23 lawsuits through early December of this year. An article in the Dec. 27 issue of American Banker predicts that the agency is  "poised to fatten its docket" of such lawsuits in the coming year. Kevin LaCroix, a lawyer who writes the "D&O Diary" blog, said that if one extracts historical lessons from the savings and loan crises, when federal agencies filed lawsuits associated with about one-quarter of the failed institutions,  the idea of more FDIC lawsuits is credible. So far, he notes, agencies have filed suit against directors and officers of only 9% of financial institutions that have failed during the country's recent crisis. The article notes a three-year statute of limitations set by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. LaCroix says that the bulk of bank closures occurred in the latter part of 2009 and early 2010--so regulators would be running up against the lawsuit limitation. In the article, the FDIC responds to speculation saying that the agency investigates reasons behind each bank failure and if former directors or officers played a part a professional liability lawsuit will be filed ...
  • WASHINGTON (12/28/12)-- The Consumer Financial Protection (CFPB) has okayed a design plan for the space it is taking over on 1700 G. St., N.W. here and the agency said in an e-mail to employees that the plan's open concept reflects the CFPB's own principles of openness and collaboration (American Banker Dec. 27). The G Street space was once occupied by the Office of Thrift Supervision and was known for its confusing labyrinthine layout. The new setup, as designed, features a lobby-to-learn where visitors can become educated financial consumers, an internal stairway connecting floors--and very few private offices.  Even CFPB executives will be provided with "open" work spaces, although there will be about 200 private conference rooms and work spaces in the seven-story building. The CFPB opened in 2010 without an office; its employees have worked the last couple of years from locations scattered about the federal city.  The e-mail to employees framed the open-concept design plan as forward-thinking and cost-effective. Although not noted in the article, other government-associated buildings are considering similar re-designs--such as the Export-Import Bank of the U.S. in the Lafayette Building on Vermont Ave., N.W. …

FHFA reports monthly mortgage interest rates

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WASHINGTON (12/28/12)--In its monthly report on the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some adjustable-rate mortgage (ARM) contracts, the Federal Housing Finance Agency (FHFA) revealed that rate for November was down to 3.36%. That was a slight decrease of 0.08% from the previous month.

There was also a slight dip--four basis points (bp)--in the average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less. That rate was 3.54% in November.

Although the rates reflect those on loans closed in November, the FHFA notes that a loan's interest rate is typically determined 30 to 45 days before the loan is closed and therefore the November report depict market conditions prevailing in mid- to late-October.

The FHFA report further noted:

  • The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was3.36% in November, down 8 bp from 3.44% in October; and
  • The effective interest rate, which reflects the amortization of initial fees and charges, was 3.49% in November, down 8 bp from 3.57% in October.
The agency makes note that the report data are based on a small monthly survey of mortgage lenders, which may not be representative. "The sample is not a statistical sample but is rather a convenience sample," it says in a technical note to the information's release.

Use the resource link to read more about the November report.

CFPB sets up two field hearings on mortgage policy

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WASHINGTON (12/27/12)--Remarks by Consumer Financial Protection Bureau (CFPB) Director Richard Cordray will kick off two upcoming field hearings on mortgage policy early in the new year.

The CFPB has posted a "save the date" notice on its website inviting stakeholders to a Thursday, Jan. 10 field hearing in Baltimore, Md., or a Thursday, Jan. 17 field hearing in Atlanta.

After Cordray's remarks, field hearing attendees will hear testimony of consumer groups, mortgage industry representatives, and members of the public.

The bureau promises more information as the field hearing dates get closer.

To attend, one must email cfpb.events@cfpb.gov with full name and organizational affiliation (if any applies).

More named to House Financial Services positions

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WASHINGTON (12/27/12)--House Financial Service Committee Chairman-elect Jeb Hensarling (R-Texas) has announced the names of those who will comprise the Republican leadership team for his panel and its subcommittees. Meanwhile, the House Democratic Caucus named the six new Democratic members it will send to the Financial Services Committee next year.

Hensarling also announced plans to combine two existing subcommittees--the Domestic Monetary Policy and Technology Subcommittee and the International Monetary Policy and Trade Subcommittee.

The parent financial services committee's leadership team for the 113th Congress, in addition to Henarling, is:

  • Rep. Gary Miller (Calif.), who will serve as vice chairman of the committee; and
  • Rep. Lynn Westmoreland (Ga.), who will serve in a newly created position as the Committee Whip.
Hensarling named the following to head the panel's subcommittees:

  • Rep. Randy Neugebauer (Texas), who will serve as chairman of the Insurance, Housing and Community Opportunity Subcommittee;
  • Rep. Shelley Moore Capito (W. Va.), who will serve as chairman of the Financial Institutions and Consumer Credit Subcommittee;
  • Rep. Scott Garrett (N.J.), who will serve as chairman of the Capital Markets and Government-Sponsored Enterprises Subcommittee;
  • Rep. Patrick McHenry (N.C.), who will serve as chairman of the Oversight and Investigations Subcommittee; and
  • Rep. John Campbell (Calif.), who will serve as chairman of the Domestic and International Monetary Policy Subcommittee.
House Minority Leader Nancy Pelosi (D-Calif.) announced the House Democratic Caucus' choice of the following new House Financial Services Committee Democrats:

  • Rep.-elect Bill Foster of Illinois;
  • Rep.-elect Dan Kildee of Michigan;
  • Rep.-elect Patrick Murphy of Florida;
  • Rep.-elect John Delaney of Maryland;
  • Rep.-elect Kyrsten Sinema of Arizona; and,
  • Rep.-elect Joyce Beatty of Ohio.
The Senate will re-convene today at 10 a.m. (ET) and begin consideration of a bill (H.R. 5949) that would extend the Foreign Intelligence Surveillance Act of 2008 for five years. House leaders have said they will give a 48-hour warning if that chamber will reconvene, so, at this writing, Friday would be the earliest time the House could come back into session. A stalemate over the fiscal cliff continues.

Inside Washington (12/27/2012)

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  • WASHINGTON (12/27/12)--The Consumer Financial Protection Bureau (CFPB) announced that the ceiling on allowable charges a consumer reporting agency may charge a consumer for making a disclosure will remain unchanged at $11.50 for 2013. Section 612(f)(1)(A) of the Fair Credit Reporting Act (FCRA) provides that a consumer reporting agency may charge a consumer a "reasonable amount" for making a report disclosure to the consumer and sets that amount at $8. However, Section 612(f)(2) of the FCRA states that the CFPB shall increase the $8 maximum amount on Jan. 1 of each year, based proportionally on changes in the Consumer Price Index for All Urban Consumers (CPI-U), with fractional changes rounded to the nearest 50 cents …
  • WASHINGTON (12/27/12)--Karen Solomon will begin a three-month term as acting chief counsel of the Office of the Comptroller of the Currency starting Jan. 1 while the agency continues its search for a successor to Julie Williams, who left the chief counsel position on Sept. 30. When Williams stepped down, Comptroller of the Currency Thomas Curry asked the agency's two deputy chief counsels, Dan Stipano and Solomon, to take turns serving in an acting capacity until a successor to Williams could be named …

NMLS announces extended call center hours

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WASHINGTON (12/27/12)--The Nationwide Mortgage Licensing System & Registry (NMLS) has extended its call center hours through the end of the year due to the approaching deadline for individual mortgage loan originators (MLOs) annual renewals.

If a renewal is not completed by Dec. 31 an additional processing fee of $30 will be imposed. The extended hours are (ET):
  • Today, 9 a.m.-8 p.m.;
  • Friday, Dec.  28, 9 a.m.-8p.m.; and,  
  • Monday, Dec. 31, 9 a.m.-8 p.m..
The call center is closed Tuesday, Jan.  1.

Use the top resource link below to access steps both institutions and MLOs should follow to successfully renew or reactivate a registration.  The NMLS recommends that an institution contact its primary federal regulator with questions regarding who is required to renew. The call center numbers are 240-386-4444 TTY/TDD and 800-877-8339.

For the first time, MLOs will receive a notification in 2013 from NMLS confirming that the renewal or reactivation process is complete.

CDFI Fund plans to offer $165M in 2013

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WASHINGTON (12/26/12)--The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund has issued a notice of funds availability, saying it expects to provide up to $165 million to eligible financial institutions in 2013.

The $165 million will be divided into:

  • $130 million for CDFI Program awards;
  • $12 million for Native American CDFI Assistance (NACA) Program awards; and
  • $23 million for Healthy Food Financing Initiative.
The Treasury's CDFI Fund helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community.

The NACA Program is designed to encourage the creation and strengthening of certified CDFIs that primarily serve Native American, Alaskan Native and Native Hawaiian communities. NACA funds may be used to finance capital or may be provided to financial institutions in the form of technical assistance grants.

The Healthy Food Financing Initiative is an interagency initiative involving the CDFI Fund, the U.S. Department of Health and Human Services, and the U.S. Department of Agriculture. The initiative is intended to increase the supply of and demand for nutritious foods in low-income urban and rural areas in the U.S.

The CDFI Fund noted that Congress has not yet appropriated funds for the 2013 program rounds. The Obama administration requested $221 million for the CDFI Fund in its suggested 2013 fiscal year budget.

A total of $186,853,456 was awarded to 210 organizations in 2012, representing the highest amount awarded in the CDFI Fund's history.

Twenty-two credit unions received funding through the 2012 CDFI Fund, and four credit unions received NACA Program grants.

CFPB, states order debt relief firm to repay customers

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WASHINGTON (12/26/12)--Debt relief firm Payday Loan Debt Solution Inc. (PLDS) has been ordered to repay up to $100,000 in fees charged to consumers as part of a joint enforcement action between the Consumer Financial Protection Bureau (CFPB) and five state authorities.

PLDS will also pay a $5,000 penalty to the CFPB Civil Penalty Fund as part of the enforcement order.

The CFPB in a release said an investigation of PLDS found the firm routinely charged advance fees to consumers before their debts were settled by the firm. Some of the consumers received no debt-settlement services from PLDS by the time their accounts were closed, the CFPB noted.

This business practice is a violation of Federal Trade Commission regulations, the Dodd-Frank Wall Street Reform Act, and state laws, said the bureau. PLDS ceased this practice once it was informed that it was under investigation, the CFPB said.

State Attorneys General in New Mexico, North Carolina, North Dakota, and Wisconsin and the State of Hawaii Office of Consumer Protection joined the CFPB in seeking the enforcement order, which was released by a federal court in Miami last week. The PLDS action was the first joint action the CFPB has taken with state authorities.

The enforcement order "will put money back in the pockets of consumers who were wrongfully charged for debt-relief services," CFPB Director Richard Cordray said.

CFPB proposes remittance changes, delayed effective date

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WASHINGTON (12/26/12)--The Consumer Financial Protection Bureau (CFPB) on Friday released proposed revisions to its pending international remittance regulations that agency director Richard Cordray said "will ensure consumers have continued access to remittance transfer services while making compliance easier for remittance transfer providers."

The CFPB also proposed extending the remittance rule implementation period until 90 days after the revised final rule is released. The rule was scheduled to go into effect on Feb. 7.

Under the CFPB's rule, remittance transfer providers would be required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate,  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.

The CFPB has provided a safe harbor exemption from the rule for remittance providers that transact 100 or fewer remittances per year.

According to the CFPB, the new remittance rule revision proposal would:

  • Provide increased flexibility and guidance with respect to the disclosure of taxes imposed by a foreign country's central government as well as fees imposed by a recipient's institution for receiving a remittance transfer in an account; and
  • Require disclosure of foreign taxes imposed by a country's central government, but eliminate a previous requirement to disclose taxes imposed by foreign regional, provincial, state, or other local governments.
The proposal would also limit remittance provider liability in certain situations. Under the proposal, when the provider can demonstrate that the consumer provided an incorrect account number and certain other conditions are satisfied, the provider would be required to attempt to recover the funds but would not bear the cost of funds that cannot be recovered, the CFPB said.

These changes were among the revisions urged by the Credit Union National Association (CUNA) in several meetings with the bureau held this year.

CUNA has been encouraging the agency to improve the rule so that credit unions will not have to stop offering international remittance services because of the rule's burdens. CUNA's International Remittances Working Group met with CFPB Director Richard Cordray and his senior staff in October and CUNA staff, including President/CEO Bill Cheney, General Counsel Eric Richard and Deputy General Counsel Mary Dunn, have had numerous meetings and telephone conversations with CFPB officials to advocate for a better outcome for credit unions  than the final rule approved previously would have achieved.

While CUNA will continue urging for a range of improvements, the association commended the agency for its willingness to open the comment process back up and to consider further changes.

For more on the remittance rule changes, use the resource link.

Inside Washington (12/26/2012)

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  • WASHINGTON (12/26/12)--Rep. Maxine Waters (D-Calif.), who will serve as ranking minority member of the House Financial Services Committee beginning in 2013, has asked the Commodity Futures Trading Commission (CFTC) to push back implementation of derivatives regulations that are set to become effective on Jan. 1 (American Banker Dec. 20). Waters said a phased-in compliance period and other delay measures would give the European Union time to complete similar regulations and would prevent some financial market issues ...
  • WASHINGTON (12/26/12)--The U.S. Department of Justice (DOJ) and other federal regulators should increase the number of criminal charges filed against financial industry workers that break the law, Rep. Barney Frank (D-Mass.) said in a recent letter (American Banker Dec. 20). Frank's letter to the DOJ and others came days after the DOJ settled a money laundering suit with HSBC, charging that institution $1.92 billion in fines. Frank in his letter noted that corporations cannot engage in wrongdoing without "the active decision of individual officers of that entity," and suggested that prosecuting individual offenders may be a more effective deterrent than prosecuting corporations for financial crimes. The HSBC settlement was referred to as a "get-out-of-jail-free card" by Sen. Chuck Grassley (R-Iowa). "As others have repeatedly warned, failing to prosecute individuals or banks when they have committed crimes will result in perverse incentives and ultimately undermine the integrity of the U.S. financial system and economy," Grassley wrote in a letter to U.S. Attorney General Eric Holder …

President signs ATM signage CFPB privacy bills

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WASHINGTON (12/21/12)--President Barack Obama Thursday afternoon signed a bill (H.R. 4367) into law that revises Regulation E to require that ATM fee disclosures only need to be presented on an ATM's screen. The new law eliminates a duplicative provision that required a physical notice also be posted on the ATM machine, a requirement that has created legal and financial issues for some credit unions and other financial institutions.

Following the signing, Credit Union National Association (CUNA) President/CEO Bill Cheney thanked Obama on behalf of credit unions nationwide for his part in relieving a frustrating regulatory burden.

Cheney noted, "No longer will credit union ATMs be required under federal law to display a physical disclosure notifying consumers of the potential imposition of fees for use of the machine--which is already required to be displayed on the screen of the machines. The physical signs were often battered by the weather, defaced by vandals--or even removed by unscrupulous mischief-makers.

"With the imposition of this change in the law, credit unions will no longer be subject to penalties under federal law for not having the physical sign, even though the screens of their ATMs prominently and clearly displayed any fees for use of the machine.

"This adjustment in the law brings regulatory relief to credit unions which own an ATM in that they are no longer required by federal law to maintain the signs on the outside of the machine. Importantly, however, it in no way diminishes consumers' awareness of the fees associated with using the machines. Overall, consumers and the financial institutions they own, credit unions, benefit."

The new ATM law came into being as the result of a CUNA/league-sponsored "Hike the Hill" event, in which a credit union CEO mentioned the issue to CUNA staff. CUNA and credit unions have noted that outside notices on ATMs were, in some cases, being intentionally removed or destroyed without the financial institution's knowledge. Perpetrators would then take pictures of the vandalized ATM, and file suit against the financial institution alleging it was not in compliance with disclosure rules.



Also signed by the president is another bill (H.R. 4014), which will ensure that groups or individuals that supply information to the Consumer Financial Protection Bureau (CFPB) would not waive their right to privacy protections.



The privacy improvements in the CFPB legislation were endorsed by CFPB Director Richard Cordray.

NEW President signs ATM signage bill CFPB privacy

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WASHINGTON (UPDATED 8:00 p.m. ET, 12/20/12)--President Barack Obama Thursday afternoon signed a bill (H.R. 4367) into law that revises Regulation E to require ATM fee disclosures only need to be presented on an ATM's screen. The new law eliminates a duplicative provision that required a physical notice also be posted on the ATM machine, a requirement that has created legal and financial issues for some credit unions and other financial institutions.

Following the signing, Credit Union National Association (CUNA) President/CEO Bill Cheney thanked Obama on behalf of credit unions nationwide for his part in relieving a frustrating regulatory burden.

Cheney noted, "No longer will credit union ATMs be required under federal law to display a physical disclosure notifying consumers of the potential imposition of fees for use of the machine--which is already required to be displayed on the screen of the machines. The physical signs were often battered by the weather, defaced by vandals--or even removed by unscrupulous mischief-makers.

"With the imposition of this change in the law, credit unions will no longer be subject to penalties under federal law for not having the physical sign, even though the screens of their ATMs prominently and clearly displayed any fees for use of the machine.

"This adjustment in the law brings regulatory relief to credit unions which own an ATM in that they are no longer required by federal law to maintain the signs on the outside of the machine. Importantly, however, it in no way diminishes consumers' awareness of the fees associated with using the machines. Overall, consumers and the financial institutions they own, credit unions, benefit."

The new ATM law came into being as the result of a CUNA/league-sponsored "Hike the Hill" event, in which a credit union CEO mentioned the issue to CUNA staff. CUNA and credit unions have noted that outside notices on ATMs were, in some cases, being intentionally removed or destroyed without the financial institution's knowledge. Perpetrators would then take pictures of the vandalized ATM, and file suit against the financial institution alleging it was not in compliance with disclosure rules.



Also signed by the president is another bill (H.R. 4014), which will ensure that groups or individuals that supply information to the Consumer Financial Protection Bureau (CFPB) would not waive their right to privacy protections.



The privacy improvements in the CFPB legislation were endorsed by CFPB Director Richard Cordray.

New NCUA video addresses Fed policys impact on CUs

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ALEXANDRIA, Va. (12/21/12)--The Federal Reserve's recent monetary policy guidance, and how it could impact credit unions, is addressed in the National Credit Union Administration's (NCUA) latest YouTube economic briefing.

NCUA Chief Economist John Worth also discusses interest rate risk in the video.



The video is the latest in a series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The videos can also be viewed on the NCUA's YouTube page by using the resource link below.

Child online privacy protections strengthened by FTC

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WASHINGTON (12/21/12)--The Federal Trade Commission (FTC) has adopted final amendments to Children's Online Privacy Protection Act (COPPA) requirements that address the collection, use, and/or disclosure of personal information for children under 13 years old by websites and other online services, including credit unions that have websites and/or mobile banking applications.

The changes aim to strengthen children's privacy protections and give parents greater control over the personal information that websites and online services may collect from children under 13. The FTC said the changes are an attempt to keep up with an ever-changing technological landscape.

FTC Chairman Jon Leibowitz said the agency takes seriously its mandate to protect children's online privacy, and added that he is "confident that the amendments to the COPPA Rule strike the right balance between protecting innovation that will provide rich and engaging content for children, and ensuring that parents are informed and involved in their children's online activities."

The FTC said the rule changes, which will become effective on July 1, 2013, will:
  • modify the list of "personal information" that cannot be collected without parental notice and consent, clarifying that this category includes geolocation information, photographs, and videos;
  • offer companies a streamlined, voluntary and transparent approval process for new ways of getting parental consent;
  • close a loophole that allowed kid-directed apps and websites to permit third parties to collect personal information from children through plug-ins without parental notice and consent;
  • extend coverage in some of those cases so that the third parties doing the additional collection also have to comply with COPPA;
  • extend the COPPA Rule to cover persistent identifiers that can recognize users over time and across different websites or online services, such as IP addresses and mobile device IDs;
  • strengthen data security protections by requiring that covered website operators and online service providers take reasonable steps to release children's personal information only to companies that are capable of keeping it secure and confidential;
  • require that covered website operators adopt reasonable procedures for data retention and deletion; and
  • strengthen the FTC's oversight of self-regulatory safe harbor programs.
For more on the FTC rule changes, use the resource link.

FHA acting chair details agency mortgage market reforms

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WASHINGTON (12/21/12)--Increasing underwriting requirements for borrowers who have been foreclosed upon within the last seven years is one of several structural mortgage market changes proposed this week by Acting Federal Housing Administration (FHA) Commissioner Carol Galante.

Galante outlined a number of underwriting reforms she would consider if confirmed as full-time FHA leader in a recent letter to Sen. Bob Corker (R-Tenn.).

Those reforms include:

  • Placing a moratorium on the full drawdown reverse mortgage program to assess its viability;
  • Increasing underwriting criteria for borrowers with credit scores between 580 and 620; and
  • Increasing the down payment requirement and the insurance pricing for loans between $625,000 and $729,000.
The down payment requirement and insurance pricing changes would protect the FHA against losses on high-balance loans that are outside Fannie Mae and Freddie Mac conforming  loan limits. This change will also help to scale back the government's footprint in the housing market, a Corker release noted.

Galante has served as acting director of the agency since April of 2011, and was nominated for the full-time post by President Barack Obama in October of 2011. She is still awaiting Senate confirmation.

Corker said he would now support Galante's nomination.

The FHFA, which provides mortgage insurance on loans made by FHA-approved lenders, is facing a projected shortfall of $16.3 billion due to mortgage loan defaults by borrowers. Corker, a Senate Banking Committee member, in recent weeks introduced legislation to reform the FHA and stabilize the agency's finances. Ranking Senate Banking Committee Member Richard Shelby (R-Ala.) has called for Congress to consider reductions in permissible risk layering, further underwriting reforms, and a re-examination of premium structures. "It is time for serious reform of the FHA before it needs a taxpayer bailout, if it isn't too late already," Shelby said.

Corker in a release said he is encouraged that Galante "has committed to structural reforms that we both believe put FHA in a much stronger position.

"Given the reforms she is committed to, I believe that having an accountable commissioner with her resolve and expertise will be in the best interest of the taxpayer," Corker added.

Cost-benefit analyses must be part of rulemaking GAO

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WASHINGTON (12/21/12)--The U.S. Government Accountability Office (GAO) recommended that federal financial regulators more fully incorporate comprehensive cost-benefit analyses into their Dodd-Frank Act rulemakings in a recent report on federal regulators' efforts to analyze and coordinate Dodd-Frank Act rules.

The report addresses how federal financial regulators, such as the National Credit Union Administration (NCUA ) and Consumer Financial Protection Bureau (CFPB), have coordinated with each other on Dodd-Frank rulemakings, and what is currently known about the impact of Dodd-Frank rules.

The GAO in the report identified 66 Dodd-Frank final rules that were issued between July 2011 and July 2012, including rules on debit interchange fees, risk-based pricing and systemically important financial institutions.

The GAO found that while federal agencies considered the benefits and costs in the majority of their rules, the agencies generally did not quantify the costs and impact for such rules. The report also notes that while some regulators identified the benefits and costs of their chosen regulatory approach in proposed rules, "they did not evaluate their chosen approach compared to the benefits and costs of alternative approaches."

The Credit Union National Association (CUNA) continues to carefully monitor Dodd-Frank act implementation, and urges regulators to reduce regulatory burdens on credit unions and to conduct more rigorous cost-benefit analyses during the rulemaking process.

CUNA also continues to have concerns regarding the impact that debit interchange regulations and other Dodd-Frank rules are having on credit unions, and the GAO report notes that small issuers are concerned that their interchange fee income may decline over the long term as a result of Dodd-Frank.

For the full GAO study, use the resource link.

NCUA files lawsuit against former CU CEO Addison

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ALEXANDRIA, Va. (12/21/12)--Former Texans CU CEO David Addison "breached his fiduciary duty to members and was 'grossly negligent' in his management of the credit union," the National Credit Union Administration (NCUA) has alleged in a suit filed Thursday in a U.S. District Court in Dallas.

Addison was hired to run the Richardson, Texas-based credit union, which is now in conservatorship, in 2003. The 130,000 member, $1.4 billion asset credit union was placed into conservatorship in 2011.

The NCUA alleges that Addison "pursued a high-risk business and investment strategy that included acquiring the financial services firm OBS Holdings, Inc. (OBS). The NCUA in its complaint claims this "gamble with [Texans CU's] funds in these high-risk, largely unstable businesses and investments is what caused TCU's ultimate downfall."

OBS was purchased for $15 million, but outside evaluators warned Addison during due diligence proceedings that OBS Holdings was only worth about half of that price tag.

The NCUA and the credit union moved to sell off OBS after Texans CU was taken under agency conservatorship, and OBS was eventually sold for $6 million. This total was $9 million less than the price Texans CU paid for the firm.

Altogether, the OBS purchase eventually cost TCU approximately $16 million in losses, according to the NCUA.

The NCUA complaint says Addison knew his actions could significantly injure the credit union and violated certain credit union laws, and ignored warnings from credit union counsel that the acquisition was extremely risky and was impermissible under Texas law. Addison also "concealed and misrepresented material information about his business dealings to TCU's board of directors in order to push through his agenda," the NCUA adds.

NCUA Chairman Debbie Matz in a release said the agency "is required by statute to take every action" to recover Texans CU's losses, "including legal action." She noted that any recoveries in this case will go directly to the credit union and will assist the agency's work in rehabilitating the troubled credit union. "Mr. Addison's actions were very costly to the credit union, and financial institution regulators have a responsibility to hold accountable those parties--institutions or individuals--when they undermine safety and soundness," she added.

For the full NCUA release, use the resource link.

Inside Washington (12/20/2012)

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  • WASHINGTON (12/21/12)--Corey Stone, Consumer Financial Protection Bureau (CFPB) assistant director for deposits, cash, collections and reporting markets, said the agency is deciding how to address some of the issues revealed in its recent report on the status and practices of the consumer credit reporting market. (American Banker Dec. 20) During a Wednesday Senate Banking subcommittee hearing, Sen. Sherrod Brown (D-Ohio) noted that the credit reporting industry is difficult to navigate for consumers but remains profitable for market participants. Brown also noted that the burden of proof is often higher for consumers reporting credit score issues than it is for the credit bureaus and card companies that hold their files. Stone also noted CFPB findings that indicate that consumer-provided information that may dispute a credit report finding is not always passed on to lenders by credit reporting agencies. However, Stone did not want to discuss the legality of such practices, noting that the recent CFPB report aims to be "descriptive, rather than prescriptive." The CFPB will look into these findings, he said. "We have many tools with which we can make determinations about whether the law is being violated and in this case that is what's going to happen," Stone added. Sen. Bob Corker (R-Tenn.) during the hearing noted that the information contained in credit scores is beneficial, and can help lenders better make key credit decisions …
  • WASHINGTON (12/21/12)--The U.S. Treasury this week said it plans in 2013 to sell off around two-thirds of the 218 banks it holds under the Trouble Asset Relief Program's Capital Purchase Program. (American Banker Dec. 19). The agency purchased roughly $205 billion in preferred stakes from 707 financial institutions under this purchase program …

CUNA urges NCUA to hear out CU appeals

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WASHINGTON (12/20/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney said the National Credit Union Administration (NCUA) should not only give full consideration to the evidence that Commodore Perry FCU, Port Clinton, Ohio, has given in its appeal of an NCUA examination determination, but also should "take every opportunity to demonstrate the fairness, objectivity, and transparency of its appeals process."

Cheney made the comment following news that NCUA's Region III director rebuffed the credit union's challenge to its examiner's conduct, a decision also questioned by the Ohio Credit Union League.

Commodore Perry FCU recently challenged an NCUA examination determination, claiming that an NCUA examiner moved to lower its CAMEL rating as an act of retribution.

Commodore Perry FCU President Thomas Renz told News Now his credit union reported an NCUA examiner's "extremely unprofessional" conduct to agency superiors, and asked for a new examiner.

However, the NCUA examiner that was the subject of the credit union complaint was allowed to

complete his examination, in spite of the credit union complaint. The final report resulted in the lowest examination ratings that the credit union has ever received, Renz said.

The findings were challenged by Commodore Perry FCU. NCUA Region III Director Herb Yolles, however, upheld the agency's decision and NCUA's Supervisory Review Committee (SRC) agreed.

Commodore Perry FCU's examiner misconduct claims were investigated by the NCUA Office of the Inspector General (OIG), but the OIG said it could not find evidence of detrimental conduct by its examiner.

Commodore Perry's Renz said the SRC's rejection of his credit union's appeal came as no surprise. "While we have not yet had time to completely analyze the results of our appeal we can see that a number of the findings are simply factually incorrect," he said, adding that the rejection of the credit union's appeal "has further demonstrated how broken the examination and appeals process is and how important it is for our industry to push for change."

Renz said his credit union will request clarification on several of the points in the results of the appeal, and will also appeal to the NCUA Board of Directors.

Cheney on Wednesday said "CUNA strongly supports the rights of credit unions to appeal examination issues but credit unions have long told us they have little faith in the impartiality or effectiveness of NCUA's appeals process. The infrequency with which appeals are filed reinforces those concerns."

Paul Mercer, Ohio Credit Union League (OCUL) President, said the overall effectiveness of the NCUA's examination appeal process "is a matter of perspective."

The appeals process functions well "if intended to affirm the infallibility of NCUA's work," but for credit unions seeking balance and fairness, "the process falls short," he said.

"Undoubtedly, there are greater concerns among credit unions about NCUA--a budget process lacking restraint, prescriptive supervision, undermining of the state system; however, the absence of a meaningful appeal process is a serious vulnerability for all. NCUA's promotion of the virtues of the current process will not cause change. Understanding this, the Ohio League will focus on gaining support for the Financial Institutions Examination Fairness Act," Mercer said.

The Examination Fairness and Reform Act (S. 2160) would improve the exam process for financial institutions. S. 2160 and a similar House bill, H.R. 3461, would make information gathered by financial regulatory examiners available to financial institutions, codify certain examination policy guidance, and establish an exam appeals process that would allow financial institutions to air grievances before an independent administrative law judge. Both bills have been referred to their respective financial institution committees.

Nevada CUs oversight returned to Region V office NCUA

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ALEXANDRIA, Va. (12/20/12)--Nevada's 12 federally insured credit unions, which are currently supervised by the National Credit Union Administration's (NCUA) Region I office, will return to Region V supervision on Jan. 1, the agency announced.

The NCUA passed on supervision of Nevada credit unions to its Region I office in 2009. Oversight responsibilities for credit unions in other western states were also moved from the Region V office to other regional offices at that time.

"During the Great Recession, NCUA had to take prudent steps to rebalance workload and enhance oversight to protect Nevada's federally insured credit unions and their nearly 192,000 members," NCUA Chairman Debbie Matz said in a Wednesday release. The agency noted that the recent recession hit Nevada particularly hard, and loan delinquencies increased as a result.

However, the recent delinquency ratio decline, to 2.47% as of September, indicates stability is returning to Nevada. The NCUA also noted that charge-offs dropped from a peak of 4.5% in March 2010 to 2.32% this past September.

"The return in supervision of Nevada's federally insured credit unions to Region V is a step toward normalizing" the agency's regional operations, will improve the agency's efficiency, and will cut travel costs, Matz added.

The NCUA Region V office is located in Tempe, Ariz. Region I is headquartered in Albany, N.Y.

For more on the NCUA supervisory transfer, use the resource link.

CFPB seeks public CARD Act comments

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WASHINGTON (12/20/12)--The Consumer Financial Protection Bureau (CFPB) is reaching out to the general public and financial services industry representatives to collect comments on how the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) has impacted the daily lives of consumers and the behavior of credit card issuers.

The CARD Act was enacted in 2009 to prohibit and restrict a number of credit card practices.

Some of the topics the CFPB is asking for information on include:

  • How the terms and conditions of credit card agreements may have changed since the CARD Act went into effect and how effective disclosures of rates, fees, and other cost terms of credit card accounts have been;
  • The extent to which unfair or deceptive acts and practices still exist in the credit card market and whether or not issuers have circumvented, or tried to circumvent, any CARD Act protections against unfair or deceptive acts or practices; and
  • Whether the CARD Act has altered the cost and availability of credit.
The CFPB also is seeking comment on the use of risk-based pricing in the credit card market, including the adoption of alternative practices in the wake of rules that restrict account repricing.

Comments will be accepted for 60 days after the request for comment is published in the Federal Register. The agency will then use the comments to compile a report on consumer credit for the U.S. Congress. The comments will help inform the agency as it makes future policy decisions.

Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn noted that CUNA has repeatedly discussed concerns about the CARD Act with the agency, and is pleased that the CFPB is looking into the act's impact. CUNA will reach out to member credit unions for further feedback, she added.

However, Dunn said, CUNA wants to ensure that this CFPB CARD Act review will not result in new rules for credit unions.

For the full CFPB release, use the resource link.

Inside Washington (12/19/2012)

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  • WASHINGTON (12/20/12)--Regulators Wednesday released the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations. Credit unions do not fall under CRA's regulations. Financial institutions are evaluated under different CRA examination procedures based upon their asset-size. Those meeting the small and intermediate small asset-size threshold are not subject to the reporting requirements applicable to large banks.  Annual adjustments to these asset-size thresholds are based on the change in the average of the Consumer Price Index (CPI) for urban wage earners and clerical workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million. As a result of the 2.23% increase in the CPI index for the period ending in November for CRA examinations small bank" or "small savings association" means an institution that, as of Dec. 31 of either of the prior two calendar years, had assets of less than $ 1.186 billion. "Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $296 million as of Dec. 31 in the prior two calendar years, and less than $ 1.186 billion as of Dec. 31 of either of the prior two calendar years …
  • WASHINGTON (12/20/12)--Fannie Mae and Freddie Mac lost an estimated $3 billion over banks' alleged manipulation of the benchmark LIBOR interest rate, according to an internal Federal Housing Finance Agency (FHFA) inspector general report, The Wall Street Journal (12/19/12) reported Wednesday. The losses came against the government-sponsored enterprises' (GSEs) holdings of more than $1 trillion in mortgage-linked securities, interest-rate swaps, floating-rate bonds and other assets tied to LIBOR from September 2008 through the second quarter of 2010 at the height of banks' alleged false reporting of the interest rate, according to the FHFA report. Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. government inSeptember 2008 as mortgage losses threatened to deplete the GSEs' capital reserves …

iThe Hilli lists CU TAG win as a top 2012 lobbying victory

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WASHINGTON (12/19/12)--Last week's credit union defeat of community bank-backed Transaction Account Guarantee (TAG) extension legislation in the U.S. Senate made waves in Washington. The credit union win and the Credit Union National Association's key role in it have been noted as one of the top 10 lobbying victories of 2012 by D.C.-based political publication The Hill.

The TAG bill, S. 3637, would have extended unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill was strongly favored by major bank trade associations.

CUNA, credit unions and state leagues across the country aggressively opposed this bank bailout program, and the bill last week failed to gain the 60 Senate votes needed to move forward for final consideration.

"This is the first time that credit unions have vigorously opposed bank-backed legislation; it won't be the last time," CUNA President/CEO Bill Cheney emphasized following the vote.

In singling out credit unions' TAG victory, The Hill wrote: "Credit unions lobbied hard against a standalone TAG extension, and demanded that it be paired with expanded lending capacity for credit unions. The failure to move a TAG bill through the Senate likely ends its chances this year, but credit union lobbyists are keeping their eyes peeled."

For the full article in The Hill, use the resource link.

CUNA Hawaii CUs praise the late Sen Inouye for his service

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WASHINGTON (12/19/12)--"Hawaii and the nation suffered a great loss" when credit union supporter U.S. Sen. Daniel Inouye died Monday, Dennis Tanimoto, Hawaii Credit Union League (HCUL) president/CEO, said after learning of the 88-year-old senator's death. Inouye had served in the Senate for 50 years.

"His significant influence on the Hawaiian economy was undeniable," the HCUL CEO said. "As U.S. congresswoman and Sen.-elect Mazie Hirono (D) put it: 'Hawaii has three pillars of the economy--tourism, defense, and Sen. Inouye,'" he added.

Inouye, a World War II hero who was elected to the U.S. House in 1959, became a senator in 1963. He was president pro tempore of the Senate, and chaired the Senate Appropriations Committee at the time of his death. That honor will now fall to Sen. Patrick Leahy (D-Vt.).

Both Tanimoto and Credit Union National Association (CUNA) President/CEO Bill Cheney noted Sen. Inouye was a strong supporter of credit unions, backing the credit union tax status, the proposed Credit Union Regulatory Improvements Act of 2008, and, more recently, the Small Business Lending Enhancement Act of 2012.

Tanimoto said Inouye's greatest display of support for the credit union movement was voting for passage of H.R. 1151, the Credit Union Membership Access Act of 1998, in spite of extremely strong opposition by the banking industry.

"His vote to allow federal credit unions to serve multiple groups of occupation and association was particularly noteworthy because Sen. Inouye was a founder and director of Central Pacific Bank in Honolulu, and his long-time campaign manager was Chairman/CEO of First Hawaiian Bank as well as immediate past president of  American Bankers Association. When thanked as to his vote on this landmark bill, he simply stated, 'It was the right thing to do,'" Tanimoto noted.

CUNA's Cheney said America's credit unions are grateful for all that Sen. Inouye did to support them, in Hawaii and nationwide, during his long and distinguished career on Capitol Hill, and are deeply saddened by his passing. "From the battle for H.R. 1151 to our member business lending bill, the senator had been in credit unions' corner. He understood well that consumers benefit from having the choice of a financial institution they own and control," Cheney added.

NCUA letter advises CUs on pending insurance changes

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ALEXANDRIA, Va. (12/19/12)--Insurance provided under the Temporary Corporate Credit Union Share Guarantee Program (TCCUSGP) and temporary unlimited Share Insurance Fund coverage for noninterest-bearing transactions accounts will both expire on Dec. 31.

The National Credit Union Administration (NCUA) in a letter to credit unions (12-CU-14) discusses what these expirations may mean for credit unions and their members.

The TCCUSGP currently backs up the National Credit Union Share Insurance Fund's (NCUSIF) coverage of all shares--excluding paid-in-capital and membership capital accounts--at corporate credit unions. This insurance extends beyond the customary $250,000 share insurance level. Once the TCCUSGP expires on Jan. 1, NCUA coverage on deposits in corporate credit unions will be limited to the standard maximum share insurance amount of $250,000, the agency said.

Noting that the expiration of the TCCUSGP "marks the successful conclusion of this phase of the corporate system resolution program," the agency encouraged credit unions conducting business with corporate credit unions to evaluate their uninsured corporate account holdings and perform appropriate due diligence.

The agency also reminded credit unions that the pending expiration of insurance coverage on noninterest-bearing transaction accounts means that noninterest-bearing transaction accounts will be subject to the same insurance coverage levels as all other share accounts in a credit union, starting Jan. 1.

To prepare for this change, the NCUA encouraged credit unions to review their investments in federally insured deposits of other financial institutions in the event the investments are currently subject to unlimited coverage. Credit unions that have unlimited but expiring coverage deposits in other institutions should update their due diligence for credit risk implications, the NCUA said.

The agency also encouraged credit unions to:
  • Evaluate whether they hold member accounts with the temporary unlimited insurance coverage;
  • Communicate to membership the potential changes in insurance coverage occurring on Jan. 1;
  • Ensure that member account disclosures properly disclose the level of insurance coverage; and
  • Make members aware of the NCUA's Share Insurance Tool Kit on the agency's web site, ncua.gov.
For the full NCUA letter to credit unions, use the resource link.

Closed meeting results in NCUA pilot program derivatives decisions

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ALEXANDRIA, Va. (12/19/12)--The National Credit Union Administration (NCUA) this week posted the results of its Dec. 6 closed board meeting on its homepage.

During the meeting, NCUA Chairman Debbie Matz and board member Michael Fryzel approved the formal termination of three pilot programs, including one that has authorized financial derivatives for a limited number of credit unions in order to hedge interest rate risks.

The NCUA board also voted to address the financial derivatives pilot at a later time, which Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said would likely mean a new proposal on derivatives authority for well-managed credit unions in coming months. In the meantime, the agency will allow credit unions that are already participating in the derivatives pilot to continue doing so but will not authorize any additional credit unions to participate in the pilot. 

CUNA earlier this year encouraged the NCUA to permit state and federal credit unions to manage their interest rate risk (IRR) through investments in simple derivatives. CUNA also told the agency it supports allowing well-managed credit unions to invest in derivatives through third-parties, and granting independent derivative investment authority for certain credit unions with adequate derivatives experience.

The agency currently allows only a select number of federal credit unions to engage in derivatives through an investment pilot program, but is considering allowing more credit unions to hedge IRR by using limited types of derivatives, and has released an advanced notice of proposed rulemaking on this subject. NCUA Board members have indicated that credit unions that demonstrate a relevant, material IRR exposure, have demonstrated the ability to manage derivatives, and have the net worth and financial health needed to manage derivatives could be allowed to invest in interest rate swaps and interest rate caps.

During the December closed board meeting, the agency also terminated an investment pilot involving the authority to short sell U.S. Treasury securities. The NCUA resolved not to add short sale authority as a general investment power to Part 703 of the NCUA Regulations.

The agency also unanimously approved the Asset Management and Assistance Center's decision to deny a creditor appeal that followed the liquidation of Constitution Corporate FCU.

Student lender exam procedures released by CFPB

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WASHINGTON (12/19/12)--Consumer disclosures and advertising practices will be two items Consumer Financial Protection Bureau (CFPB) staff scrutinize when that agency begins supervision of student lenders, the CFPB said in a release published this week.

The CFPB said its student lender examination process will be an ongoing process of pre-examination scoping and review of information, data analysis, onsite examinations, and regular communication with supervised entities, as well as follow-up monitoring.

Agency examiners will also work with CFPB enforcement staff to take appropriate enforcement actions to address harm to consumers, when appropriate, the CFPB said.

According to the CFPB, examiners will work to ensure that student lenders "have the appropriate processes in place to prevent harm to borrowers." These processes include providing borrowers with periodic statements that include information on monthly payment requirements, charges, fees and interest rate changes. Examiners will also try to determine whether lenders have the ability to properly receive customer questions and complaints, and whether these complaints are handled, tracked and resolved in an appropriate manner by the lender.

For the full CFPB release, use the resource link.

The Credit Union National Association (CUNA) estimates that about 300 credit unions currently offer student loans to their members. Credit unions also provide financial education and seminars relating to student lending generally, and encourage students to attend. The CUStudentLoans.org website also provides extensive financial education regarding student lending, through both written information and webinars. The site is powered by Fynanz, a CUNA Strategic Services provider.

Inside Washington (12/18/2012)

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  • WASHINGTON (12/19/12)--Banking Committee Chairman Sen. Tim Johnson ( D-S.D.) is pushing the Senate to expedite the approval of a bill that would allow the Federal Housing Administration (FHA) to raise its mortgage insurance premiums. The increase would allow the FHA to bolster its depleted capital reserves (American Banker Dec. 18). The FHA Emergency Fiscal Solvency Act would give the agency authority to raise the limit on fees it charges to insure mortgages. The House previously passed identical legislation. In a letter on Thursday to House Financial Services Chairman Spencer Bachus (R-Ala.), Johnson said he is urging colleagues to pass the bill by year-end …
  • WASHINGTON (12/19/12)--The Federal Deposit Insurance Corporation (FDIC) Tuesday released the results of a study on community banking in the U.S., and a series of supervisory and rulemaking measures relating to community banks--the outcome of its yearlong Community Banking Initiative (CBI). The FDIC announced the CBI in the fall of 2011 and said it would further the understanding of the evolution of community banks during the past 25 years. It was to devote comprehensive research and analysis to the current challenges and opportunities for community banks, and implications for the future of community banking. The effort was complemented by outreach and engagement with community bankers across the country. The agency launched the CBI in February 2012 with a national conference on community banking. Following the conference, the FDIC hosted roundtable meetings between community bankers and senior FDIC officials in each of its six regions. The FDIC's Divisions of Risk Management Supervision and Depositor and Consumer Protection also reviewed their examination and rulemaking processes …
  • WASHINGTON (12/19/12)--Federal Reserve Board Gov. Jeremy Stein on Monday called for changes in the way the U.S. Fed regulates foreign banks that rely on short-term trading. Stein's remarks were based on research he conducted about how shocks to foreign banks' ability to raise dollar funding might lead to changes in their lending. As a conceptual model, Stein, in remarks before the Global Research Forum, used a European bank that lends in euros to European firms and in dollars to U.S. firms. "To finance its euro-denominated lending, it funds itself by issuing insured euro deposits to its local retail deposit base," Stein said. "By contrast, to finance its dollar-denominated lending, it raises funds in the wholesale dollar market. Because the bank's dollar liabilities are uninsured, an adverse shock to the bank's perceived creditworthiness will result in a spike in its dollar funding costs. The cost to the bank of funding in euros is unchanged to the extent that its euro deposits are insured.  So we might expect such a shock to induce the bank to shift its funding away from the U.S. wholesale market and toward the European deposit market."  Foreign banks' reliance on less stable, short-term wholesale funding creates vulnerabilities in the U.S. market, Stein said ...
  • WASHINGTON (12/19/12)--The Consumer Financial Protection Bureau (CFPB) has reorganized its headquarters supervision office. Until now, the headquarters staff was organized into offices for nonbank and large bank supervision. Under the realignment, the staff will be organized into the supervision examinations team and the supervision policy team. The examinations team will focus on the processes and work vital both to the team at headquarters and to CFPB examiners. The team will oversee agencies' efforts to recruit, train and commission examiners; ensure policies and procedures are followed; and plan and execute examinations. The policy team will ensure that policy decisions for supervision are consistent with both the law and the bureau's mission, and that they are consistent across markets, charters and regions. The office will be organized by product or service market rather than by the type of financial institution …

MBL privacy bill work continues in Congress

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WASHINGTON (12/18/12)--The Credit Union National Association (CUNA) continues to seek ways to advance member business lending (MBL) legislation, and is working to advance a U.S. House-passed privacy notification bill through the Senate, as the U.S. Congress enters what could be the final week of the 2012 session.

Senate MBL legislation could be considered any day during this lame duck session.

The House privacy bill (H.R. 5817), which would eliminate repetitive privacy notices that are often ignored by consumers, passed the House by a voice vote last Wednesday and must be approved by the Senate before the president can sign the bill into law. The bill will specifically eliminate a requirement that credit unions and other financial institutions send privacy notifications to their members or customers annually even if those privacy policies have not changed.

Credit unions will also want to keep track of a trio of Senate Banking Committee hearings. The first of these hearings is set for today, as the Senate Banking securities, insurance and investment subcommittee discusses the "rules of the road" for computerized financial product trading venues.

Consumer Financial Protection Bureau (CFPB) official Corey Stone will be among the witnesses at a Wednesday Senate Banking financial institutions subcommittee hearing entitled "Making Sense of Consumer Credit Reports." The CFPB last week released a study of credit reporting bureau activities. (See Dec. 14 News Now story: Credit bureaus scrutinized by CFPB)

On Thursday, the Senate Banking housing, transportation and community development subcommittee will discuss rebuilding infrastructure after Superstorm Sandy.

The 2012 congressional calendar remains in flux. "I'd like to be able to tell you that this will be the last week of the 112th Congress; but, as we've been saying for several weeks, anything can happen in a lame duck session. House leadership has indicated they intend to keep the lower chamber in session until a resolution to the fiscal cliff is reached.  It is quite possible Congress will work through the weekend; it is also possible that the chambers will reconvene next week after Christmas," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

Bear Stearns securities sales subject of NCUA lawsuit

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ALEXANDRIA, Va. (12/18/12)--In the largest suit filed by the agency, the National Credit Union Administration (NCUA) has taken legal action against J.P. Morgan Securities and Bear, Stearns & Co., alleging federal and state securities law violations, over mortgage backed securities sold to four corporates.

The suit, which was filed late Friday in a U.S. District Court in Kansas, alleges that Bear, Stearns & Co., which was purchased by J.P. Morgan in 2008, violated federal and state securities laws when it sold $3.6 billion in mortgage-backed securities to U.S. Central FCU, Western Corporate FCU (WesCorp), Southwest Corporate FCU (Southwest) and Members United Corporate FCU.

All four corporate credit unions failed as a result of these purchases, the NCUA alleges.

"Bear, Stearns was one of several Wall Street firms that sold faulty securities to corporate credit unions, leading to their collapse and enormous losses across the industry," said NCUA Chairman Debbie Matz. "Firms like Bear, Stearns acted unfairly by ignoring the rules for underwriting. They packaged these securities and then told buyers the paper was sound. When the securities plunged in value, we learned the truth. NCUA is now working to hold these underwriters accountable and secure recoveries on behalf of federally insured credit unions."

The NCUA had already filed suit against Credit Suisse (USA), J.P. Morgan Securities, RBS Securities, Goldman Sachs, Barclays Capital and Wachovia, and each of these suits are progressing through the court system. The agency has settled with Citigroup, Deutsche Bank Securities, and HSBC, avoiding the cost of litigation and bringing in more than $170 million in funds that were lost due to the corporate credit union investments.

For the full NCUA release, use the resource link.

NCUA shutters Olean Tile Employees FCU

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ALEXANDRIA, Va. (12/18/12)--Olean Tile Employees FCU, Olean, N.Y., became the 13th federally insured credit union to be liquidated in 2012 after the National Credit Union Administration (NCUA) determined the credit union was insolvent and had no prospect for restoring viable operations.

The credit union, which was chartered in 1936 and served employees of the Olean Tile Company, held $778,139 in assets and served 550 members at the time of its closure.

Member deposits at the credit union are insured up to $250,000 by the National Credit Union Share Insurance Fund.

For the full NCUA release, use the resource link.

2013 NCUSIF TCCUSF assessments covered in new letter to CUs

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ALEXANDRIA, Va. (12/18/12)--While "there is most likely no need" for a National Credit Union Share Insurance Fund (NCUSIF) assessment in 2013, an assessment, if charged, will be between zero and five basis points (bp), the National Credit Union Administration (NCUA) said in a letter to credit unions (12-CU-13).

The letter also confirmed that the 2013 range of Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessments will be between eight and 11 bp. This assessment range, which is the same as for this year,  would generate between $705 million and $969 million in funds to cover corporate stabilization costs.

The NCUSIF and TCCUSF assessment ranges for 2013 were announced at the November NCUA board meeting.

The agency in Letter No. 12-CU-13 said the NCUSIF is projected to remain at or slightly above the 1.3% normal operating level at the end of 2012. Any equity in excess of 1.3% will be transferred to the TCCUSF, as required by statute, the NCUA said, adding that "the strong performance of the NCUSIF is consistent with a steady reduction in troubled credit unions and an improving economy."

Growth in insured shares, the cost and pace of credit union failures, and NCUSIF investment yields will drive the NCUSIF's equity ratio in 2013, the NCUA added. Credit union failures are expected to remain relatively low throughout 2013 and beyond. 

The letter also detailed the factors that the NCUA considers when it sets the yearly TCCUSF assessment levels. The agency said it considers:

  • The impact of the assessment on federally insured credit unions;
  • The cost associated with borrowed funds;
  • The adequacy of remaining borrowing authority;
  • Cash generated by liquidation of failed corporate credit unions; and
  • Performance of the NCUA Guaranteed Notes.
"Actual events and unforeseen changes in financial trends or the overall economy could cause the 2013 premium and assessment to fall outside of the range provided and could shift the timing of a premium or assessment," NCUA Chairman Debbie Matz added in the letter.

For the full letter to credit unions, use the resource link.

Inside Washington (12/17/2012)

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  • WASHINGTON (12/18/12)--The Federal Reserve Board on Friday proposed rules to strengthen the oversight of U.S. operations of foreign banks. The proposal would require foreign banking organizations with a significant U.S. presence to create an intermediate holding company over their U.S. subsidiaries. Foreign banks would also be required to maintain stronger capital and liquidity positions in the U.S., helping to increase the resiliency of their U.S. operations. Under the Fed's proposal, foreign banking organizations with both $50 billion or more in global consolidated assets and U.S. subsidiaries with $10 billion or more in total assets would be required to organize their U.S. subsidiaries under a single U.S. intermediate holding company (IHC).  IHCs of foreign banking organizations would be subject to the same risk-based and leverage capital standards applicable to U.S. bank holding companies. The U.S. operations of foreign banking organizations with combined U.S. assets of $50 billion or more would be required to meet enhanced liquidity risk-management standards, conduct liquidity stress tests and hold a 30-day buffer of highly liquid assets …
  • WASHINGTON (12/18/12)--The Federal Deposit Insurance Corp. (FDIC) has reached a settlement with former IndyMac Bank CEO Michael Perry over charges that Perry was negligent in leading the bank (American Banker Dec. 17). Under the terms of the $12 million settlement, the FDIC will recover $1 million in Perry's personal assets, with the remaining $11 million covered through insurance. Perry also agreed to a lifetime ban from the banking industry. The FDIC initially sought damages of $600 million against Perry. His attorney described the claims of negligence against Perry as "baseless." Two weeks ago, a jury found three former IndyMac executives guilty of contributing to more than $168 million in loan losses …

Inside Washington (12/14/2012)

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  • WASHINGTON (12/17/12)--Banks' initial deposit requirements are too high and they do too little to let consumers know that they offer small-dollar loans to be effective in serving underbanked consumers, said the Federal Deposit Insurance Corp. (FDIC) in a new report.  Banks should also do more to offer banking services to noncustomers, the FDIC said. Since 2005 the FDIC has been legally required to assess banks every two years to see what they are doing to reach consumers who generally avoid mainstream financial institutions. The report identified five opportunities for banks to increase access to basic financial services: expanding offerings of basic, low-cost checking and savings deposit accounts; enhancing small-dollar loan product marketing; and using partnerships with community organizations to promote checking and savings account ownership. In September, a separate report, the 2011 FDIC National Survey of Unbanked and Underbanked Households, indicated that 68 million adults are unbanked or underbanked in the U.S …
  • WASHINGTON (12/17/12)--The Federal Deposit Insurance Corp. (FDIC) announced Friday that it has published a collection of "simple, practical tips" for young adults and teens who want to do better with saving and managing money, and avoiding financial scams.  The special edition of the agency's quarterly "FDIC Consumer News" is entitled, "For Young Adults and Teens: Quick Tips for Managing Your Money."  It's geared toward parents and other caregivers, too--giving them suggestions for saving for a child's future and teaching youngsters about money. Most of the tips in the new guide, however, are intended for young adults …
  • WASHINGTON (12/17/12)--The Treasury Department said Friday it received payment from its final sale of American Insurance Group (AIG) common stock. With the proceeds, the Treasury and the Federal Reserve have fully recovered the combined $182.3 billion the agencies committed to stabilize AIG during the financial crisis--with an additional $22.7 billion positive return. On Tuesday, Treasury announced that it had agreed to sell its remaining 234 million shares of AIG common stock at $32.50 per share--the $7.6 billion in proceeds from which it received Friday. Over the last two years, Treasury has conducted six public offerings of AIG common stock through which it sold 1.655 billion shares at an average price of $31.18 per share …

CUANYs Mellin takes on banks in MBL editorial

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WASHINGTON (12/17/12)--Legislation that would increase the member business lending cap for credit unions "is a pro-growth, deficit-free measure that will help small businesses create jobs," Credit Union Association of New York (CUANY) President/CEO Bill Mellin wrote in a Star-Gazette guest editorial.

The Star-Gazette is a local newspaper in Elmira, N.Y.

In the editorial, Mellin took issue with recent bank claims that there is little demand for small business loans.

"How is it then that a recent poll commissioned by the American Sustainable Business Council, the Main Street Alliance and the Small Business Majority found that 90% of small business owners believe that the availability of small business loans is a problem, and 60% have faced difficulty trying to obtain loans that would grow their small business?" Mellin asked.

Credit unions are ready and willing to help small businesses, all they need is an increase in the 12.25%-of-assets credit union member business lending (MBL) cap, he said. House and Senate bills that would increase this cap to 27.5% of assets have been introduced, and the Credit Union National Association (CUNA) continues to work with members of Congress to pass credit union MBL legislation.

CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

Increasing the cap in this manner would not take loan business away from banks, Mellin noted. "These new loans are ones they are not willing to make today even though they have no cap preventing them from doing so," he said.

The only group opposed to MBL legislation is the banking industry, the same banking industry "that currently holds 95% market share and blames credit unions for an 'unfair' marketplace," Mellin wrote. "Banks are opposing credit unions' efforts to help small businesses access credit to help them grow and create much-needed jobs without offering alternatives to address the reduction of business credit by banks as a result of the recession," he added.

For the full editorial, use the resource link.

Help homeowners by extending Mortgage Forgiveness Act CUNA

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WASHINGTON (12/17/12)--The Credit Union National Association (CUNA) joined with the National Association of Realtors and other financial industry groups to urge members of the U.S. Congress to extend the Mortgage Forgiveness Debt Relief Act before it expires at the end of the year.

The act, signed into law in December 2007, is intended to provide temporary tax relief to borrowers who might lose their home to foreclosure or who have negotiated a loan-term modification. Previously under the country's tax code, if a lender--voluntarily or involuntarily--forgave a portion of a borrower's mortgage debt, the forgiven amount had to be treated as taxable income.

The Dec. 14 joint letter urged Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), Speaker of the House John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.) to "ensure renewal of the Act before the end of this year in order to help as many underwater homeowners as possible."

If Congress fails to extend the Mortgage Forgiveness Debt Relief Act, the threat of receiving a tax bill would make it more difficult and expensive for struggling homeowners to accept short sales, as well as many loan modification offers, the letter noted. "The current law makes it possible for current loss-mitigation efforts to be more successful," CUNA and others added.

The letter is also cosigned by the American Bankers Association, the American Financial Services Association, the American Land Title Association, the Consumer Bankers Association, The Housing Policy Council, the Mortgage Bankers Association and The Financial Services Roundtable.

For the full letter, use the resource link.

CUNA-opposed TAG bill defeated in Senate

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WASHINGTON (12/14/12)--Thursday's defeat of a Transaction Account Guarantee (TAG) extension on a budget point of order is a "death blow" to the legislation and a significant victory for the Credit Union National Association (CUNA), credit unions and state leagues across the country that aggressively opposed this bank bailout program, CUNA President/CEO Bill Cheney said.

The bill failed to gain the 60 Senate votes needed to move forward for final consideration. The final vote count was 42 to 50.

"This is the first time that credit unions have vigorously opposed bank-backed legislation; it won't be the last time," Cheney emphasized.

The TAG legislation (S. 3637) would have extended unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill has been strongly favored by major bank trade associations.

CUNA has criticized the TAG extension by noting the program already has cost the Federal Deposit Insurance Corp. almost $2.5 billion and has provided a guaranteed oasis to the banks of $1.4 trillion.

CUNA and the leagues have urged federal lawmaker not to "expose taxpayers to potentially $1.4 trillion in losses while the banks are making billions again."

"We will be alert for any attempt by banks to attempt to attach this bill to some other year-end legislative package--and will oppose any such effort just as energetically as long as there is no similar treatment for credit union business lending legislation in the same measure."

In the meantime, Cheney said, "credit unions will continue to look for, and seize, any opportunity to include our member business lending legislation in any appropriate end-of-year legislative package."

"Congress will be in session for at least another week and a half--this is not over until it's over," Cheney declared.

More time to tell CU exam stories Deadline now Jan 15

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WASHINGTON (12/14/12)--To ensure that all interested credit unions have a chance to respond about their examination experiences, Credit Union National Association (CUNA) and the state leagues have extended the deadline until Jan. 15 for the exam survey distributed to credit unions earlier this month.

Credit unions that received the survey will be getting an email notice later today about the deadline extension.

The previous deadline was today, Dec. 14.

The CUNA/league survey was released this month to collect and compile key credit union comments regarding their experiences with on-site regulatory examinations, how satisfied credit unions are with their exams and results, and with National Credit Union Administration (NCUA) and state examiner performance, among other issues.

Advocating on behalf of credit unions to improve the examination process is one of the highest priorities of both CUNA and credit union leagues, and a firm grasp of the current state of credit union examination process is needed to ensure that credit unions are effectively represented in discussions with the NCUA and state supervisory authorities.

Survey replies are confidential, and identifying information from individual credit union respondents will not be seen by individuals outside of CUNA's Market Research Department. Only summary results will be reported.

The information, which will be kept anonymous, will help CUNA and the leagues hone their exam issue advocacy efforts.

The CUNA/league exam survey was sent to all affiliated credit unions except those in NCUA Region II. Those credit unions already have already participated in a similar survey spearheaded by the New Jersey Credit Union League.

For the survey, use the resource link. The exam survey can also be accessed on cuna.org under "top initiatives" on the home page, on the regulatory advocacy page, and via the compliance page.

Credit bureaus scrutinized by CFPB

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WASHINGTON (10/14/12)--A study of credit reporting bureau activities has shown that less than 20% of consumers request their credit report files each year, the Consumer Financial Protection Bureau (CFPB) revealed this week.

The CFPB study, entitled "Key Dimensions and Processes in the U.S. Credit Reporting System: A review of how the nation's largest credit bureaus manage consumer data," focuses on how the nation's three largest credit reporting bureaus--Equifax Information Services LLC, TransUnion LLC and Experian Information Solutions Inc.--collect, compile, and report consumer credit information.

"Most decisions to grant credit--including mortgage loans, auto loans, credit cards, and private student loans-- include information contained in credit reports as part of the lending decision," the CFPB report notes. Credit reports are also used to determine rental housing eligibility, insurance premiums, and hiring decisions. "As the range and frequency of decisions that rely on credit reports have increased, so has the importance of assuring the accuracy of these reports," the agency report adds.

Credit card history dominates the information in these consumer credit reports, and debt collection items generate the highest rate of credit report disputes, the CFPB found.

The majority of information in credit reports comes from a small number of large banks and other financial institutions. Most consumer credit complaints are forwarded to the credit card companies, mortgage lenders and servicers and auto lenders that maintain consumer accounts, the CFPB added.

However, documentation that consumers mail in to support them in their credit disputes may not be passed on to credit issuers. This may prevent them from properly investigate and report back to the credit reporting company.

CFPB Director Richard Cordray said the release of the CFPB report "is another step toward bringing more clarity to the confusing world of credit reports.

"If consumers know how these companies handle their credit histories, they can make better decisions on how to handle their financial lives," he said.

Cordray's agency began supervision and examination of consumer credit reporting agencies with more than $7 million in annual receipts this fall. The CFPB's examination authority covers about 30 firms that account for 94% of total credit report industry receipts.

For the full CFPB credit bureau report, use the resource link.

Inside Washington (12/13/2012)

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  • WASHINGTON (12/14/12)--Dwight Fettig, who has served as the Senate Banking Committee's staff director since 2011, is expected to leave that position at the end of this year (American Banker Dec. 13)  Fettig was with the lobbying firm Porterfield & Lowenthal from 2009 to 2010, where he lobbied for banks and other industry groups. Before that, he worked for Senate Banking Committee Chairman Tim Johnson (D-S.D.).  By exiting his committee post at year-end, Fettig is fulfilling a two-year commitment he made to Johnson when hired. Fettig is returning to Porterfield & Lowenthal. His Senate Banking departure is causing a staff shakeup of sorts: Charles Yi, chief counsel and deputy staff director, has been promoted to staff director and chief counsel; Laura Swanson has been promoted to deputy staff director from policy director; Colin McGinnis will move into the policy director slot from his current position as a senior advisor and professional staff member; and Glen Sears, formerly a senior policy adviser, has been promoted to deputy policy director …
  • WASHINGTON (12/14/12)--Rep. Scott Garrett (R-N.J.) referred to the Commodity Futures Trading Commission's (CFTC) implementation of the derivatives provisions laid out in the Dodd-Frank reform law as a "train wreck" during a House Financial Services Committee subcommittee meeting Wednesday. CFTC Chairman Gary Gensler and Robert Cook, director of the division of trading and markets at the Securities and Exchange Commission (SEC), appeared before the subcommittee on capital markets and government-sponsored enterprises to discuss how their respective agencies are meeting the challenges facing the U.S. capital markets and implementing Dodd-Frank requirements (American Banker Dec. 13). Republicans questioned why CFTC issued interpretative guidance instead of regulations in some instances. They also pressed Gensler about his agency's work with foreign and domestic agencies, including the SEC. Democrats questioned how the CFTC managed cross-border risks in derivatives markets …
  • WASHINGTON (12/14/12)--Regulators have nearly finalized the so-called Volcker Rule, which would ban proprietary trading at U.S. financial companies, Federal Reserve Chairman Ben Bernanke said Wednesday. The final rule is likely to be released early next year, Bernanke told reporters at a press conference following a two-day Federal Open Market Committee meeting (American Banker Dec. 13). The rule is being jointly written by the Fed, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Securities and Exchange Commission, and the Commodity Futures Trading Commission. The agencies once indicated they would release the rule by the end of the year, but progress was delayed after 18,000 comment letters were received in response to an early proposal …

CFPB may let FIs float trial disclosures

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WASHINGTON (12/14/12)--The Consumer Financial Protection Bureau (CFPB) is considering whether to allow credit unions and other financial services companies to conduct trial consumer disclosure programs on a case-by-case basis.

In announcing the bureau's request for public comment on the proposed policy change, CFPB Director Richard Cordray said the innovation would allow companies to conduct "real-world trials of disclosure alternatives."

In turn, those trials would help the CFPB identify what works and does not work to provide consumers with "the clear information they need to make financial decisions in a marketplace of evolving programs and products," the director added.

If adopted, the policy would fall under the auspices of the CFPB's Project Catalyst, an initiative announced a month ago and intended to encourage consumer-friendly innovation in markets for consumer financial products and services.  The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, authorized the CFPB to facilitate innovation and to approve trial disclosure programs.

The proposal would enable the CFPB to approve individual companies, on a case-by-case basis, for limited-time exemptions from current federal disclosure laws in order for those companies to research and test informative, cost-effective disclosures. 

The companies involved would then share the results of their trial disclosure with the CFPB. The CFPB would use that information to improve its disclosure rules and model forms.

CFPB will accept public comment for 60 days after the proposed policy is published in the Federal Register, which likely will be within the next week or two.

Use the resource links below to read the CFPB's proposal.

G I C FCU of Ohio liquidated Thursday

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ALEXANDRIA, Va. (12/14/12)--G.I.C. FCU, of Euclid, Ohio, served 3,476 members and had assets of approximately $15.5 million before it was closed Thursday by the National Credit Union Administration (NCUA). The agency said it liquidated the credit union after determining it was insolvent and had no prospect for restoring viable operations.

The NCUA's Asset Management and Assistance Center will transfer certain share accounts to Steel Valley FCU of Cleveland, the NCUA noted in a release. Steel Valley is a full-service credit union with more than $37.2 million in assets. It serves more than 7,800 members. For accounts that cannot be transferred to the Cleveland credit union, the NCUA's Asset Management and Assistance Center will issue, within a week, checks to individuals who hold verified accounts.

G.I.C. FCU was a full-service financial institution chartered in 1936, originally to serve employees of Gould Inc. At the time of closure, G.I.C. was a multiple-common-bond credit union serving several select groups. Its closing represents the 12th federally insured credit union liquidation of 2012.

NEW TAG bill defeated in Senate

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WASHINGTON (UPDATED: 12:58 p.m. ET, 12/13/12)--Today's defeat of a Transaction Account Guarantee (TAG) extension on a budget point of order is a "death blow" to the legislation and a significant victory for the Credit Union National Association (CUNA), credit unions and state leagues across the country that aggressively opposed this bank bailout program, CUNA President/CEO Bill Cheney said.

Just minutes ago, the bill failed to gain the 60 Senate votes needed to move forward for final consideration. The final vote count was 42 to 50.

"This is the first time that credit unions have vigorously opposed bank-backed legislation; it won't be the last time," Cheney emphasized.

The TAG legislation (S. 3637) would have extended unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill has been  strongly favored by major bank trade associations.

CUNA has criticized the TAG extension by noting the program already has cost the Federal Deposit Insurance Corp. almost $2.5 billion and has provided a guaranteed oasis to the banks of $1.4 trillion.

CUNA and the leagues have urged federal lawmaker not to "expose taxpayers to potentially $1.4 trillion in losses while the banks are making billions again."

"We will be alert for any attempt by banks to attempt to attach this bill to some other year-end legislative package--and will oppose any such effort just as energetically as long as there is no similar treatment for credit union business lending legislation in the same measure."

In the meantime, Cheney said, "credit unions will continue to look for, and seize, any opportunity to include our member business lending legislation in any appropriate end-of-year legislative package."

"Congress will be in session for at least another week and a half--this is not over until it's over," Cheney declared.

Reduced FDIC budget an example for NCUA says CUNA

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WASHINGTON (12/13/12)--The Federal Deposit Insurance Corp. (FDIC) this week approved a 2013 operating budget that is 18.2% lower than the 2012 agency budget, and Credit Union National Association (CUNA) Senior Vice President and Deputy General Counsel Mary Dunn said the National Credit Union Administration (NCUA) would help credit unions if it followed a similar cost-cutting approach.

The total FDIC 2013 budget is $2.68 billion, and staffing at the FDIC for 2013 was decreased by 687 positions. FDIC Chairman Martin Gruenberg said the 2013 budget for the FDIC reflects the "slow but steady recovery in the U. S. banking industry over the past three years."

The FDIC is anticipating further reductions in 2014 and future years.

Dunn noted that the FDIC's budget approach contrasts with that of the NCUA, which at its meeting in November increased its 2013 budget by 6.21% over the agency's budget for 2012 to $254.4 million.

The total amount of 2013 NCUA funding increase is $14.5 million, and $12.8 million of this increase would go to possible staff pay increases, employee benefits, locality pay, and full funding for full-time employees that were only partially funded in 2012.

CUNA has strongly criticized this increase and continues to press NCUA to contain its budget.

However, CUNA has also noted two positive steps the agency has taken: the establishment of a new agency budget webpage, accessible from NCUA, which CUNA has strongly supported, and a reduction in the budget for the agency's Temporary Corporate Credit Union Stabilization Fund (TCCUSF).

The 2013 TCCUSF budget will be $6.15 million, a 20% reduction from 2012's TCCUSF budget of $7.71 million.

House Senate financial institution committee rosters grow

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WASHINGTON (12/13/12)--Financial services committee spots for next year's session of the U.S. Congress continue to be filled by House and Senate leadership.

Senate Democrats on Wednesday confirmed a long-anticipated addition will be made to the Senate Banking Committee in 2013: First-time senator and Consumer Financial Protection Bureau architect Elizabeth Warren will join next year.

Sens. Joe Manchin (D-W. Va.) and Heidi Heitkamp (D-N.D.) will also serve on the committee for the first time. Committee Chairman Tim Johnson (D-S.D.) on Wednesday said he looks forward to working with the new members next year.

Current House Financial Services Committee Chairman Spencer Bachus (R-Ala.) on Wednesday also welcomed new members.

In addition to the six names reported by News Now earlier this month, congressional newcomers Reps. Andy Barr (R-Ky.) and Tom Cotton (R-Ark.) are set to join the committee next year.

The other new committee members are Reps. Ann Wagner (R-Mo.), Robert Pittenger (R-N.C.), Randy Hultgren (R-Ill.), Marlin Stutzman (R-Ind.), Dennis Ross (R-Fla.) and Mick Mulvaney (R-S.C.).

"These new members, combined with the expertise of the committee's returning Republicans, give us an outstanding team that will promote solutions for a stronger economy, an end to too big to fail, and smarter regulations that protect consumers without killing jobs," Bachus (R-Ala.) said in a Wednesday committee release naming Republican members. Incoming committee chairman Jeb Hensarling (R-Texas) added that he looks forward to working closely with members as the committee tackles the important challenges that face the economy.

The House Democratic Caucus earlier this month unanimously elected Rep. Maxine Waters (D-Calif.) to serve as ranking member of the U.S. House Financial Services Committee. There could be as many as six open Democratic committee spots, and new Democratic committee members have not been named. They are not expected to be named until early next year.

House and Senate committee assignments will be made official when the 113th Congress convenes in January.

The Credit Union National Association (CUNA) "looks forward to working with all of the members of these important committees in the new Congress," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

Senate OK of House privacy bill urged CUNA

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WASHINGTON (12/13/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney on Wednesday urged Senate Banking Committee leadership to approve The Eliminate Privacy Notice Confusion Act (H.R. 5817), which would eliminate repetitive privacy notices that are often ignored by consumers.

H.R. 5817 passed the U.S. House by a voice vote Wednesday and must be approved by the Senate before the president can sign the bill into law. Cheney, in a letter to Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Richard Shelby (R-Ala.), said CUNA strongly supports this legislation and looks forward to its enactment.

The bill will specifically eliminate a requirement that credit unions and other financial institutions send privacy notifications to their members or customers on an annual basis even if those privacy policies have not changed.

Overall, CUNA has said, the bill is good for credit unions because it will reduce regulatory burden and compliance costs. It also will enhance consumer protection, CUNA has noted, by ensuring that when a consumer receives a privacy notification, it has significance and is not redundant.

Treasury unveils final foreclosure-help PSA

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WASHINGTON (12/13/12)--The third and final phase of a joint agency foreclosure prevention assistance public service advertising (PSA) campaign was unveiled on Wednesday, with the U.S. Treasury Department, Department of Housing and Urban Development and Ad Council teaming up to raise awareness of the Making Home Affordable (MHA) Program.

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"While communities across the country are beginning to recover from an unprecedented housing crisis, too many families are still struggling with their mortgage payments and are unsure of where to turn for help," Treasury Undersecretary for Domestic Finance Mary Miller said. "Millions of homeowners have gotten help to avoid foreclosure since 2009. We want to make sure struggling homeowners know today that there are free government resources available to help homeowners avoid foreclosure," she added.

The MHA has been extended through December 2013 and the eligibility criteria for the program have been broadened, the agencies noted in a release. The new advertisements seek to encourage homeowners not to give up hope, remind them that there are free resources available to help, and direct them to call 888-995-HOPE (4673) to access HUD-approved housing issue assistants.

For more on the ads, use the resource link.

CUNA seeks presidents signature on ATM bill

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WASHINGTON (12/13/12)--The Credit Union National Association (CUNA) is urging President Obama to sign legislation that has been strongly supported by CUNA and which would "protect credit unions and other ATM operators from vexatious lawsuits while at the same time maintaining important consumer protections."

The legislation, H.R. 4367, was approved by the Senate just yesterday by unanimous consent and  was unanimously endorsed by the House in July. The bill needs only to be signed by the president to become law.

In his letter to the White House, CUNA President/CEO Bill Cheney underscored that this legislation would eliminate the requirement that a physical disclosure be placed on the ATM, while preserving the requirement that consumers are notified of potential fees associated with an ATM transaction through an electronic disclosure, to which they must make an affirmative opt-in to accept such fees.   

Working together, CUNA, the state credit union leagues and credit unions drafted the legislation and strategized to get the bill through the legislative process. After the Senate vote, CUNA's Cheney stated the teamwork among credit unions, leagues and CUNA is what "made this significant piece of regulatory relief a reality."

Under current law as proscribed in Regulation E, if a physical placard is not attached to an ATM, the law dictates that in a successful class action, plaintiffs are entitled to recover "the lesser of $500,000 or 1 per centum of the net worth of the [ATM operator]", plus attorneys' fees and costs.  This has led unscrupulous individuals to remove the physical placard and sue the ATM operator for noncompliance, costing financial institutions hundreds of thousands of dollars.

The threat of lawsuits has forced many credit unions to go to extraordinary steps to document compliance, increasing the cost of operating ATMs to the detriment of credit unions' member-owners.

"On behalf of America's credit unions and their 95 million members, we strongly support this legislation and respectfully request your signature for enactment into law.  Thank you for your consideration," Cheney wrote to the president.

CUNA General Counsel Eric Richard notes that the legislation as drafted affects only future claims and cases, and that credit unions should continue to comply with the existing law at least until the president signs the legislation into law.

NEW Privacy notice bill approved by House

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WASHINGTON (UPDATED 2:45 p.m. ET, 12/12/12)--The Eliminate Privacy Notice Confusion Act (H.R. 5817), which would eliminate repetitive privacy notices that are often ignored by consumers, has passed the U.S. House and will move on to the Senate for approval.

Credit Union National Association (CUNA) President/CEO Bill Cheney thanked House members for taking this action. "Credit unions and their members will benefit by the enactment of this legislation; we will be engaging with the Senate to urge the legislation's consideration," he said.

CUNA supported H.R. 5817, which will specifically eliminate a requirement that credit unions and other financial institutions send privacy notifications to their members or customers on an annual basis even if those privacy policies have not changed. Overall, CUNA has said, the bill is good for credit unions because it will reduce regulatory burden and compliance costs. It also will enhance consumer protection, CUNA has noted, by ensuring that when a consumer receives a privacy notification, it has significance and is not redundant.

NEW CUNA seeks presidents signature on ATM bill

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WASHINGTON (12/13/12 UPDATED 1:30 a.m. ET)--The Credit Union National Association (CUNA) is urging President Obama to sign legislation that has been strongly supported by CUNA and which would "protect credit unions and other ATM operators from vexatious lawsuits while at the same time maintaining important consumer protections."

The legislation, H.R. 4367, was approved by the Senate just yesterday by unanimous consent and  was unanimously endorsed by the House in July. The bill needs only to be signed by the president to become law.

In his letter to the White House, CUNA President/CEO Bill Cheney underscored that this legislation would eliminate the requirement that a physical disclosure be placed on an ATM, while preserving the requirement that consumers are notified of potential fees associated with an ATM transaction through an electronic disclosure, to which they must make an affirmative opt-in to accept such fees.   

Working together, CUNA, the state credit union leagues and credit unions drafted the legislation and strategized to get the bill through the legislative process. After the Senate vote, CUNA's Cheney stated that teamwork among credit unions, leagues and CUNA is what "made this significant piece of regulatory relief a reality."

Under current law, as prescribed in Regulation E, if a physical placard is not attached to an ATM, the law dictates that plaintiffs in a successful class action suit are entitled to recover "the lesser of $500,000 or 1 per centum of the net worth of the [ATM operator]", plus attorneys' fees and costs. This has led unscrupulous individuals to remove the physical placard and sue the ATM operator for noncompliance, costing financial institutions hundreds of thousands of dollars.

The threat of lawsuits has forced many credit unions to go to extraordinary steps to document compliance, increasing the cost of operating ATMs to the detriment of credit unions' member/owners.

"On behalf of America's credit unions and their 95 million members, we strongly support this legislation and respectfully request your signature for enactment into law. Thank you for your consideration," Cheney wrote to the president.

CUNA urges CUs Continue to oppose stand-alone TAG bill

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WASHINGTON (12/12/12)--The Credit Union National Association (CUNA) urged credit unions to continue to oppose S. 3637, the bill that would extend the Transaction Account Guarantee (TAG) program, unless that bill is married with provisions that would increase the credit union member business lending (MBL) cap.

S. 3637 would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill is strongly favored by major bank trade associations. The Senate on Tuesday approved a motion to proceed to consider this TAG legislation by a 76-20 vote.

That vote, CUNA lobbyists emphasized, was a "show" vote and the tally is not likely to be an indicator of how a final vote will turn out.

"Today's vote had a number of factors in play unrelated to the substance of the bill," said CUNA Executive Vice President of Governmental Affairs John Magill. "It  has much more to do with senators jockeying over filibuster rules on a procedural vote. The reality is TAG still has an uphill climb in the Senate, and strong opposition from credit unions will make the climb even steeper. An upcoming cloture vote and other objections can still stop TAG--with credit union help."

Following the vote, CUNA President/CEO Bill Cheney said CUNA intends to continue opposition to TAG "as the extension of the program is risky, unnecessary and has not proven to inspire additional bank business lending."

In the meantime, he said, CUNA "will continue to advocate for our business lending legislation as a way of truly stimulating additional lending."

He said CUNA would be more than happy to seize any opportunity to move the MBL legislation forward, including pairing it with TAG.

There are two more chances for credit unions to fight the standalone version of the TAG bill. One opportunity is an expected vote on a point of order against the legislation. This point of order would be filed because the TAG bill would result in increased government spending, and violates pay-as-you-go budget rules.

CUNA renewed its grassroots Call to Action urging credit unions to tell senators to vote "no" on a stand-alone TAG extension. CUNA members can use the resource link to access the CUNA action center.

Passage of CUNA-backed ATM bill means relief for CUs

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WASHINGTON (12/12/12)--Tuesday's unanimous consent passage of a bill removing duplicative ATM disclosure requirements "represents a substantial realization of regulatory relief that will have an impact on every credit union that owns an ATM--while having no adverse effect on consumers," Credit Union National Association (CUNA) President/CEO Bill Cheney said. CUNA strongly backed the bill.

The ATM bill, H.R. 4367, came into being as the result of a CUNA/league-sponsored "Hike the Hill" event, in which a credit union CEO mentioned the issue to CUNA staff. CUNA and credit unions have noted that outside notices on ATMs were, in some cases, being intentionally removed or destroyed without the financial institution's knowledge. Perpetrators would then take pictures of the vandalized ATM, and allege the financial institution was not in compliance with disclosure rules.

The bill will revise Regulation E to only require ATM fee disclosures to be presented on an ATM's screen, easing the burdensome ATM fee disclosure regulations that have created legal and financial issues for many credit unions.

Working together, CUNA, leagues and credit unions drafted this legislation, plotted a strategy to get the bill through the legislative process, and went to work. "This teamwork among credit unions, leagues and CUNA made this significant piece of regulatory relief a reality," Cheney said.

The Tuesday vote ensures that credit unions will soon be relieved of a frustrating regulatory burden, Cheney noted. "With Tuesday's Senate action, the way is clear for credit union ATMs to no longer have to carry a physical disclosure notifying consumers of the potential imposition of fees for use of the machine," he said.

Another piece of regulatory legislation was also passed by the Senate last night: H.R. 4014, which will ensure that groups or individuals that supply information to the CFPB would not waive their right to privacy protections.

The types of privacy improvements contained in the CFPB-addressing portion of the bill have been endorsed by CFPB Director Richard Cordray.

The ATM and CFPB bills now need President Barack Obama's signature to become law.

Mortgage loan mod scams busted by CFPB

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WASHINGTON (12/12/12)--The Consumer Financial Protection Bureau (CFPB) on Tuesday announced that U.S. District Court judges in the State of California have joined the agency to take action against the Gordon Law Firm and the National Legal Help Center, ordering those businesses to halt operations, and freezing their assets, while alleged mortgage loan modification scams are investigated.

In a Tuesday release, the CFPB said it believes the Gordon Law Firm and the National Legal Help Center, which offered mortgage modification services to customers, violated federal law by:

  • Illegally charging large upfront fees;
  • Deceptively claiming to be affiliated with government agencies and/or programs;
  • Misrepresenting that they would secure loan modifications for consumers; and
  • Instructing consumers to stop paying their mortgages and stop contacting their lenders.
Both firms allegedly reached out to potential victims using deceptive language and mailings that included government logos, and promised potential customers that they would reduce their mortgage payments or identify legal violations by consumers' banks or mortgage companies to use as leverage in loan modification negotiations, the CFPB said. The bureau also said defendants collected fees of $1,000 to $4,500 from distressed homeowners for services that were rarely provided. The firms also instructed their new customers to avoid interacting with their lenders, and to cease paying their mortgage, the CFPB release claimed.

Consumers that later tried to contact these firms were often ignored, and many of the alleged scam victims eventually learned that their mortgage lenders had never been contacted by the defendants, the agency said. "Ultimately, homeowners across the country lost thousands of dollars each and suffered significant economic injury, including losing their homes," and the mortgage relief scammers may have pocketed more than $10 million in ill-gotten proceeds, the CFPB said in the release.

"We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure," CFPB Director Richard Cordray said, noting that the agency is "especially concerned with those who misrepresent government programs or websites to divert distressed homeowners from needed assistance."

The CFPB has also released a series of tips to help consumers avoid mortgage scams.

For the full CFPB release, and information on how to avoid mortgage scammers, use the resource links.

NCUA launches new website for small CUs

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ALEXANDRIA, Va. (12/12/12)--Small credit unions will have quicker, easier access to the key information they need through the National Credit Union Administration's reorganized Office of Small Credit Union Initiatives (OSCUI) site, the agency said Tuesday.

OSCUI's four program areas, Consulting, Grants and Loans, Training, and Partnerships and Outreach, are each given separate sections under the new site design.

The newly redesigned site also features:
  • Updated grant and loan information;
  • Consulting program request forms;
  • Updated partner profiles;
  • Training and informational videos;
  • Archived webinars; and
  • Back issues of OSCUI's monthly FOCUS e-newsletter.
"We're adding new information and making existing information easier to find," OSCUI Director William Myers said. "Our goal is to provide a better, more user-friendly tool for all small credit unions to quickly get what they need online," he added.

For more on the new OSCUI site, use the resource link.

Treasury announces landmark BSA settlement with HSBC

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WASHINGTON (12/12/12)--The U.S. Treasury Department Tuesday announced a landmark settlement for alleged Bank Secrecy Act (BSA) violations. The settlement amounts to $875 million--the largest collective settlement in the department's history--with HSBC Holdings plc, together with its affiliates, HSBC. 

Treasury said its collective settlement, reached by the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), and the Office of Foreign Assets Control (OFAC),  is part of the combined federal, local, and international government action that amounted to the largest bank settlement in U.S. history. In total, Treasury said, "more than $1.9 billion were assessed in penalties for HSBC's conduct in violation of the Bank Secrecy Act (BSA) and U.S. sanctions."

In announcing the settlement, Treasury said the bank's breakdowns in anti-money laundering (AML) compliance were "particularly egregious because these failures allowed hundreds of millions of dollars from Mexican drug trafficking organizations to flow through accounts in the United States."

"Despite HSBC's extensive global operations and the substantial resources it had available to manage transnational risk, it failed to help secure the United States financial borders and left dangerous gaps that international drug dealers and other criminals readily abused. The penalties reflect the damage to the integrity of the U.S. financial system inflicted by HSBC, and the federal government's intolerance of behavior and business practices that disregard BSA requirements and U.S. sanctions regimes," the announcement said.

"These settlements implicate willful and dangerous practices by one of the world's biggest banks," said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. "HSBC absolutely knew the risks of the business it pursued, yet it ignored specific, obvious warnings. Its failures allowed hundreds of millions of dollars in drug money to pass through its unattended gates."

Use the resource link to access the Treasury announcement.  Also, CUNA members can read more on this and another high-profile money laundering incidents using the Credit Union Magazine link.

Inside Washington (12/11/2012)

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  • WASHINGTON (12/12/12)--The Federal Deposit Insurance Corp. (FDIC) and the Bank of England released a paper Monday outlining how the two countries would cooperate in the event of a cross-border resolution. The paper indicates that both regulators advocate a "single point of entry" in winding down giant financial companies (American Banker Dec. 11). Under that strategy, one resolution agency winds down the parent company in its country of domain, preserving the firm's financially healthy subsidiaries domestically and internationally. "A top-down resolution by definition focuses on assigning losses and establishing new capital structures at the top of the group," the paper said. That approach keeps the rest of the group, potentially comprised of hundreds or thousands of legal entities, intact" …
  • WASHINGTON (12/12/12)--The Consumer Financial Protection Bureau (CFPB) is now sharing consumer complaints tied to credit cards, mortgages, student loans, checking accounts, savings accounts, credit reporting, bank services, and other consumer loans with state regulatory agencies. This information sharing will help multiple government agencies to work on the consumer's behalf without requiring consumers to file complaints with multiple agencies at different levels of government. "By providing real-time access to our growing database of consumer complaints, state government agencies will have a more complete picture of the markets for consumer financial product or services and be able to help more consumers in their state," the CFPB said in a release ...

  • WASHINGTON (12/12/12)--A jury Friday sided with the Federal Deposit Insurance Corp. (FDIC) in a lawsuit that charges three former IndyMac executives with more than $168 million in loan losses (American Banker Dec. 11). In the suit, filed in U.S. District Court for the Central District of California, the FDIC alleged three IndyMac executives used smaller, less-price-competitive builders when lender competition for blue-chip residential construction loans was driving down margins. The verdict may help the FDIC recover some of the more than $12 billion of losses it suffered in the wake of the IndyMac's bankruptcy. The liability of the three executives allows the FDIC to pursue insurance claims involving policies protecting them against findings of negligence …
  • WASHINGTON (12/12/12)--Mortgage lenders can expect less refinancing in 2013, Freddie Mac Chief Economist Frank E. Nothaft predicted on the government-sponsored enterprise's "Executive Perspective's" blog Monday. "Refinance activity accounted for the bulk of residential lending in 2012 and will account for the bulk of it in 2013, too," Nothaft wrote. "But, simply put, we've seen the peak in refinancing." Mortgage rates will remain low, while home values will rise, Nothaft predicted …
  • WASHINGTON (12/12/12)--The Department of the Treasury Monday said it will sell several preferred stock and subordinated debt investments as part of its efforts to wind down and recover its remaining Capital Purchase Program investments under the Troubled Asset Relief Program. Treasury intends to conduct auctions for all of its preferred stock and subordinated debt positions in: Bank Financial Services Inc., Eden Prairie, Minn.; Bank of Southern California N.A., San Diego; Century Financial Services Corp., Santa Fe, N.M.; Community Investors Bancorp Inc., Bucyrus, Ohio; First Alliance Bancshare Inc., Cordova, Tenn; First Independence Corp., Detroit; and Hyperion Bank, Philadelphia. The auction was held Tuesday …

Inside Washington (12/10/2012)

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  • WASHINGTON (12/11/12)--Financial industry players have raised concerns over Federal Reserve Board plans to revise the way U.S. regulators supervise foreign bank operations. The Fed will supervise those operations by imposing the same set of requirements that U.S. bank holding companies face, according to Fed Gov. Daniel Tarullo, who outlined the plan last month (American Banker Dec. 10). The move would be a significant change in how the Fed regulates foreign banks, said Kim Olson, a principal at Deloitte & Touche LLP. Previously, the central bank has overseen foreign banks individually. Industry observers fear the new approach would not take into account the differing structures among the foreign banks operating in the U.S, according to the Banker
  • WASHINGTON (12/11/12)--The Office of Comptroller of Currency (OCC) is making efforts to improve its internal communications, the agency's head said Friday. A staff survey has compelled the agency to address communication concerns, with internal communication by senior management as the top priority, Comptroller of the Currency Thomas J. Curry said in prepared remarks before the New England Council in Boston. Additional issues are related to the merging of the Office of Thrift Supervision into the OCC as required by the Dodd-Frank Act. "As some of you may know first-hand, blending together two agencies with distinctive cultures is always challenging, and we're working hard to ensure that nothing about this integration distracts our people from their responsibility for the safety and soundness of the federal banking system," Curry said …
  • WASHINGTON (12/11/12)--Joseph A. Smith, the former North Carolina banking commissioner who now heads the Office of Mortgage Settlement Oversight, is fielding complaints from homeowners and housing counselors about difficulties over loan modifications during. The complaints arose while Smith was on a West Coast tour. Borrowers continue to be denied modifications without explanation, principal reductions have been rare and servicers are still dual tracking--moving foreclosures as borrowers simultaneously pursue loan modifications, according to borrowers and housing advocates (American Banker Dec. 10). The $25 billion settlement, finalized in March, was designed to address such abuses. The top five mortgage servicers--Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo--say they have provided roughly $26 billion of relief to 309,400 borrowers. But a gap exists between the relief borrowers are getting on the ground and what the five servicers agreed to do as part of the settlement …
  • WASHINGTON (12/11/12)--The mission of the National Credit Union Administration (NCUA), and the agency's role in ensuring the credit union system remains safe and sound for members, are covered by NCUA Chairman Debbie Matz in the Fall/Winter 2012 edition of The Business of Government magazine. The profile, which is part of the magazine's "Conversations with Leaders" series, is an edited transcript of an October interview between Matz and on The IBM Center for The Business of Government's Business of Government Hour. Matz in the interview also discussed the future of the credit union system, regulatory challenges, and her leadership philosophy …

Privacy notice ATM bills could see vote this week

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WASHINGTON (12/11/12)--Two bills of great interest to credit unions could be considered this week: The Eliminate Privacy Notice Confusion Act (H.R. 5817), and legislation that would end duplicative ATM disclosure requirements and alter Consumer Financial Protection Bureau (CFPB) privacy rules (S. 3394).

A vote on H.R. 5817, which would eliminate repetitive privacy notices that are often ignored by consumers, and enhance consumer protection by ensuring that when a consumer receives a privacy notification, it has significance and is not redundant, was expected last week. However, that vote was delayed when members of Congress had issues with some language in a revised version of the bill.

Specifically, some members objected to language in the bill that was not in the version of the bill that the House passed in the 112th Congress. This language was unrelated to credit unions.

The Credit Union National Association (CUNA) has been working with the sponsors of the legislation to make the necessary changes to the bill, and fully supports the amended version of the bill, CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

S. 3394, which would address ATM disclosure and CFPB privacy issues, could also see action this week. The bill's progress has been held up for many weeks due to procedural issues.

Specifically, the ATM and CFPB bill would:

  • Revise Regulation E to only require ATM fee disclosures to be presented on an ATM's screen, easing the burdensome ATM fee disclosure regulations that have created legal and financial issues for many credit unions; and
  • Ensure that groups or individuals that supply information to the CFPB would not waive their right to privacy protections.
CUNA has repeatedly noted that current ATM disclosures are creating issues for credit unions and other financial institutions. In some cases, outside notices on ATMs are being intentionally removed or destroyed, without the financial institution's knowledge, and then pictures are taken of the ATM to show noncompliance with disclosure rules. The privacy improvements contained in the CFPB-addressing portion of the bill have been endorsed by CFPB Director Richard Cordray.

Another bill of interest to credit unions, S.3637, a bill to extend the transaction account guarantee program (TAG) for two years, may also see a Senate procedural vote today. (See related story: TAG procedural vote delayed until Tuesday)

Credit unions will also want to watch for three hearings on the Dodd-Frank Wall Street Reform Act this week.

The first hearing is scheduled for Wednesday. During that hearing, the House Financial Services capital markets subcommittee will discuss the economic impact of Dodd-Frank derivatives provisions.

On Thursday, the House Agriculture general farm commodities and risk management subcommittee will discuss how Dodd-Frank derivatives provisions impact U.S. and international commodities markets.

Also on Thursday, the House Financial Services Committee will address the so-called Volcker Rule, which is intended to ban banks from making certain speculative investments. That rule is a provision of the Dodd-Frank Act.

TAG procedural vote delayed until Tuesday

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WASHINGTON (12/11/12)--A planned Monday afternoon procedural vote on S. 3637, the bill that would extend the Transaction Account Guarantee (TAG) program, was delayed and could be held later today.

The vote was delayed after foggy conditions in the Washington, D.C. area pushed back and canceled some flights.

A TAG bill vote would end debate on the bill and set the stage for the offering of amendments and a final vote on the measure.

S. 3637 would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill is strongly favored by major bank trade associations.

Noting that approval of TAG extension legislation would give bankers another government handout, the Credit Union National Association (CUNA) continues to encourage credit unions to contact federal lawmakers to urge them to block the motion to proceed to a vote.

CUNA and credit unions early this week are using Washington radio, Capitol Hill publications and social media outlets to urge opposition to TAG and to take on banks' opposition to credit union business lending legislation. In recent communications with Capitol Hill staff, CUNA has emphasized that TAG was created at the height of the 2008 banking crisis to promote stability in banks and the time for TAG has passed.

If the TAG bill wins the 60 votes needed to proceed to a final vote, debate on the bill would begin immediately. CUNA is working to ensure that member business lending legislation is considered as a potential amendment to the TAG bill.

CUNA joins NCUAs OSCUI for Friday merger webinar

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ALEXANDRIA, Va. (12/11/12)--The "facts and realities" of credit union mergers will be addressed by a Dec. 14 webinar presented by the National Credit Union Administration's (NCUA) Office of Small Credit Union Initiatives (OSCUI), Credit Union National Association (CUNA) Vice President of Economics and Statistics Mike Schenk, and experts from the Filene Research Institute.

The free webinar is scheduled to start at 2 p.m. ET. Ways to avoid mergers, details on why mergers happen, and management/director roles during mergers are among the topics set to be discussed.

The NCUA said the webinar will also cover:

  • Whether merger scenarios should be a part of strategic planning;
  • Who is responsible for protecting the interests of members during a merger; and
  • How to find merger partners.
The NCUA is accepting questions ahead of the webinar. Questions can be submitted to WebinarQuestions@ncua.gov. The agency asks that participants use "OSCUI Merger Webinar" in the subject line of their submitted questions.

To register for the webinar, use the resource link.

NEW TAG procedural vote delayed until Tuesday

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WASHINGTON (UPDATED: 2:30 P.M. ET, 12/10/12)--A planned Monday afternoon procedural vote on S. 3637, the bill that could extend the Transaction Account Guarantee (TAG) program, has been delayed until tomorrow.

The vote has been delayed after foggy conditions in the Washington, D.C. area pushed back and canceled some flights.

The TAG bill vote would end debate on the bill and set the stage for the offering of amendments and a final vote on the measure.

S. 3637 would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill is strongly favored by major bank trade associations.

Noting that approval of TAG extension legislation would give bankers another government handout, the Credit Union National Association (CUNA) continues to encourage credit unions to contact federal lawmakers to urge them to block a motion to proceed to a vote.

CFPB DOJ team up to fight credit discrimination

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WASHINGTON (12/10/12)--The U.S. Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) last week agreed to coordinate their efforts to enforce fair lending regulations.

The memorandum of understanding (MOU) that was signed by both agencies represents "a critical step to better protecting consumers from illegal and discriminatory lending practices," CFPB Director Richard Cordray said.

Both agencies were given the ability to enforce the fair lending principles outlined in Regulation B, which implements the Equal Credit Opportunity Act (ECOA). ECOA bans creditors from discriminating against credit applicants based on their race, color, religion, national origin, sex, marital status, and other select factors.

The MOU will help the agencies avoid duplication of their respective federal law enforcement efforts, the CFPB noted in a release. DOJ Assistant Attorney General for the Civil Rights Division Thomas Perez said his agency "welcomes the new tools and resources the CFPB can bring to the fight against lending discrimination… Cooperation between our two agencies promotes strong and effective civil rights enforcement, and today's agreement will further our ongoing collaborative efforts."

The MOU outlines how the two agencies plan to:
  • Share information and preserve confidentiality;
  • Conduct joint investigations; and
  • Notify each other at key stages of their enforcement activities.
The CFPB release said both agencies will periodically assess the implementation of this agreement and are committed to finding ways to further strengthen their coordination efforts.

Senate 2013 calendar is out

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WASHINGTON (12/10/12)--The Senate has released a tentative schedule for its 2013 legislative session, which will convene on Thursday, Jan. 3.

That initial work period will last until Feb. 15, when the Senate leaves for its Presidents Day recess. The Spring/Easter recess will begin on March 23 and continue through April 7, with the Senate then returning for a three week period, ending on April 26. A weeklong recess will span the end of April and first few days of May, with the Senate returning to Washington from May 6 until May 24.

The Senate will be in session for all weekdays in June, with a brief recess scheduled for the days around July 4. The pre-August recess session will be held between July 8 and August 2.

The summer recess will continue until September 8. While the Senate has not determined its target date for adjournment at this time, it will be in session for the majority of the fall. October 12 through 20, November 11 and November 28 will be the only days the Senate is out of session in the fall, according to the calendar.

The House released its calendar for 2013 in recent weeks. (See related story: 2013 House schedule released)

Blankenberger to become NCUA Region I director

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ALEXANDRIA, Va. (12/10/12)--Larry Blankenberger will take on the role of Region I Director on Jan. 7., the National Credit Union Administration (NCUA) announced last week.

Blankenberger, who is the current associate regional director for programs at the NCUA's Region IV office, will succeed incoming NCUA Executive Director Mark Treichel as Region I director.

NCUA Chairman Debbie Matz said she is pleased the agency has "someone of Larry's caliber to lead our Region I office." Blankenberger, she said, "has an impressive depth of experience" and "possesses the professional judgment, institutional knowledge, regulatory expertise and managerial skills that are so important to succeeding in this critical enforcement position."

As Region I Director, Blankenberger will be responsible for managing NCUAs supervision and examination program for federal credit unions in Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.

Blankenberger, who holds an accounting degree from Indiana State University, Evansville, joined the NCUA as an examiner in 1987. He has served as Region I associate regional director for operations, problem case officer, supervisory examiner and director of supervision during his time with the agency. Blankenberger also has practical credit union experience.

He helped manage credit union affairs in Arkansas, Illinois, Iowa, Kansas, Louisiana, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, South Dakota, Texas, and Wisconsin during his time in the NCUA's Region IV office.

For the full NCUA release, use the resource link.

CU reps talk Basel III requirements

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BASEL, Switzerland (12/10/12)--Representatives from the Credit Union National Association (CUNA) and the World Council of Credit Unions last week discussed the implications of Basel III capital requirements for credit unions in meetings with representatives from the Secretariat of the Basel Committee on Banking Supervision at the Bank for International Settlements.

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As proposed by federal banking regulators, Basel III standards for banks in the United States will require banks to hold common equity of 4.5% by 2015. In addition, banks must hold a 2.5% conservation buffer, which will be gradually introduced by 2019, and increase Tier 1 levels from 4% to 6% by 2015.

These international bank rules, which will require banks to hold more capital as a buffer against future financial shocks, do not apply to credit unions in the United States.  In general, the Basel III standards are intended to apply to "internationally active" banks, but some jurisdictions choose to apply Basel III to a wider range of banking institutions and/or credit unions.  Australia, several Canadian provinces, and some Latin American countries apply Basel-based standards to credit unions.

WOCCU President/CEO Brian Branch during the meetings said "how mutual financial capital instruments fit in the Basel III framework is a common and pressing issue for many credit union systems around the world today." CUNA Chief Economist Bill Hampel and WOCCU Chief Counsel Michael Edwards joined Branch during the meetings with Basel Committee Deputy Secretary General Karl Cordewener and Secretariat Member Noel Reynolds last week.

Basel III recognizes that cooperative institutions such as credit unions can issue Basel III-compliant capital instruments, such as shares or subordinated debt, so long as those instruments are "equivalent" in most--but not all--respects with joint-stock company capital instruments such as common stock. WOCCU in August issued a white paper addressing when credit union shares and similar capital instruments should qualify as regulatory capital under Basel III. The paper endorsed the European Union's approach to Basel III implementation.

The credit union and Basel Committee representatives discussed issues such as when credit union shares have terms and conditions which make them "equivalent" to joint-stock company common shares, impairment of cooperative capital instrument because of losses, share redemptions when members leave a credit union's membership, and secondary capital at U.S. credit unions.  Also discussed were concerns the Basel Committee raised in an October report regarding the European Union's approach to capital share redemptions under national laws, and how those concerns should be best addressed by the credit union movement.

"Even though the United States does not apply Basel capital standards to credit unions, the position the Secretariat takes on what constitutes capital for cooperative financial institutions could have a significant impact on the debate in Congress about supplemental capital for U.S. credit unions," Hampel said. "Crafting forms of supplemental capital that are consistent with the Basel approach should go a long way to securing Congressional approval" he further noted.

CUNA runs ads to urge no TAG as vote approaches

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WASHINGTON (12/10/12)--Ads on Washington radio and in Capitol Hill publications--as well as messages across social media--are taking on banks' opposition to credit union business lending legislation, and attacking banks' support for legislation providing unlimited deposit insurance coverage for deposits in noninterest bearing accounts. The ads were placed by the Credit Union National Association (CUNA) as a procedural vote on a bank-backed bill that would extend the Transaction Account Guarantee (TAG) program looms this afternoon in the Senate-- and as CUNA and the Leagues fight to keep the credit union member business legislation alive for consideration by the Senate.

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S. 3637, the deposit insurance legislation, would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill is strongly favored by major bank trade associations.

The environment on Capitol Hill continues to be volatile as the very partisan fight over automatic tax hikes and spending cuts drags on and congressional calendars are subject to continuous change. Within that very fluid legislative environment, CUNA and credit unions continue to work to find the best strategy to win a vote on an MBL cap increase.

"Our best chance for MBL passage this year is if it is part of the right package," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said Friday. "And for that to happen credit unions must come out full force to block a vote that would clear a TAG extension for a vote without MBL language."

In a print ad running in Politico on today and Tuesday, CUNA urges legislators not to give bankers another government handout by approving the TAG extension.

Support credit union business lending; call/write your senator NOW! from CUNA on Vimeo.

"TAG has already cost the FDIC almost $2.5 Billion and provides a guaranteed oasis to the Banks of $1.4 Trillion. Don't expose taxpayers to potentially $1.4 Trillion in losses while the Banks are making Billions again. Don't give the Banks another TARP hand out," the CUNA print ad says.

CUNA is also seeking further support for credit union legislation that would increase the MBL cap to 27.5% of assets, up from 12.25%. In an ad running on Washington news radio station WTOP today, CUNA calls on citizens to "tell Congress to get in the game and stand up to banks" by backing U.S. House (H.R. 1418) and Senate (S. 2231) MBL bills. A video version of this audio ad is also being distributed through Facebook, Twitter and other social media outlets.

Inside Washington (12/07/2012)

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  • WASHINGTON (12/10/12)--The Federal Housing Administration (FHA) is taking steps to avoid a bailout, but Housing and Urban Development Secretary Shaun Donovan would not offer assurances the agency would not need additional funds (American Banker Dec. 7). Donovan was pressed by both Republican and Democrat senators about the agency's financial health during a Senate Banking Committee hearing Thursday. Donovan said he was "highly concerned" FHA would be required to draw funds to continue operations, but he would not assign a specific probability. Sen. Bob Corker (R-Tenn.) questioned if the FHA's reverse mortgage program, which has lost money, should continue. Donovan said the program has helped seniors during difficult economic times, but with the approval of Congress the FHA could change the structure of the program. He also expressed support for legislative action to lower FHA's loan limits …
  • WASHINGTON (12/10/12)--One month after Hurricane Sandy devastated the East Coast, the U.S. Small Business Administration (SBA) has approved more than $150 million in low-interest disaster loans to about 2,500 homeowners, renters and businesses in New York, New Jersey, Connecticut and Rhode Island, the agency said in a release. The disaster loan filing deadline for physical property damage is Dec. 31 for New York, New Jersey and Connecticut. The economic injury disaster loan application deadline is July 31, 2013. The physical property damage deadline for Rhode Island is Jan. 15, 2013; the economic injury disaster loan deadline is Aug. 14, 2013. Parties can apply online or have an application mailed by emailing request to disastercustomerservice@sba.gov or calling 1-800-659-2955 (800-877-8339 for the deaf and hard-of-hearing) …

Inside Washington (12/06/2012)

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  • WASHINGTON (12/7/12)--Sen. Jim DeMint (R-S.C.) announced Thursday he will leave the Senate at the beginning of January to become the next president of The Heritage Foundation, a conservative think tank. DeMint was elected to the U.S. House of Representatives in 1998 after owning an advertising and market research company for 20 years. DeMint left the House after limiting himself to three terms and then was elected to the U.S. Senate in 2004 and re-elected in 2010 …
  • WASHINGTON (12/7/12)--Chicago will be the first U.S. city to agree to share information directly with the Consumer Financial Protection Bureau (CFPB) about consumer fraud and financial activity. CFPB Director Richard Cordray and Chicago Mayor Rahm Emmanuel made the announcement in a joint press conference Wednesday. "We want to know what you are seeing and how that informs what we should be doing--where our supervision and enforcement teams should focus their attention, and what problems our policymakers should undertake to fix," Cordray said at the press conference. The city will provide information such as increases in financial activity from payday lenders, debt collectors, student loans and banks, Emanuel said. Chicago will propose three ordinances to regulate and license debt collectors and create new zoning to reduce the concentration of payday lenders in certain markets, Emanuel said …
  • WASHINGTON (12/7/12)--The Office of Financial Research (OFR) Wednesday held its inaugural advisory committee meeting. OFR  is an arm of the Financial Stability Council, created after the financial crisis made it clear that data necessary to monitor the system were not available when regulators were in need of it in 2008 to avert a financial crisis (American Banker Dec. 7). Its role, in part, is to help regulators avoid any future systemic crisis by risk measurement and research on how the financial system is evolving. In its initial meeting, the committee asked financial industry players how it can improve collection and analysis of financial data to detect systemic threats. Questions identified by the OFR include: "How is the financial system performing its task? Where is risk accumulating? Do policymakers and companies have sufficient data and information?" …

2013 TCCUSF budget drops by 20

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ALEXANDRIA, Va. (12/7/12)--The 2013 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) budget will be $6.15 million, a 20% reduction from 2012's TCCUSF budget of $7.71 million, the National Credit Union Administration (NCUA) said on Thursday.

The TCCUSF staffing level will not change in 2013, the NCUA said. The budget will pay for the work of the NCUA Guaranteed Notes Securities Management and Oversight Committee, and expenses related to corporate resolution efforts, which include paying external valuation experts, tax consultants, financial specialists, attorneys and accountants.

The NCUA said it needs these experts to assist the agency by:

  • Valuing securities, which includes modeling forecasts of cash flows and credit losses;
  • Processing complex accounting transactions and developing related policies and procedures;
  • Preparing financial reports; and
  • Supporting the TCCUSF financial statement audit.
NCUA Chairman Debbie Matz during the meeting emphasized that the TCCUSF budget is not part of the agency's larger general budget. The TCCUSF expenses are paid for with money from the fund, she said.

Matz in a statement noted that the credit union system "has regained its stability since the failure of five corporate credit unions in 2009 and 2010, as a result of NCUA's actions and the decisions of credit unions… [the NCUA] will continue to exercise the same prudent management of the Stabilization Fund that brought us this far."

The agency indicated that a large decline in residential mortgage credit markets could significantly increase the cost of performing security valuations, and if additional funds are required, a supplemental request would be submitted to the NCUA board. However, if actual expenses are lower than the amount budgeted, funds would be returned to the TCCUSF, the agency said.

For more on the NCUA board meeting, use the resource link.

Fidelity bond deductible finalized by NCUA

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ALEXANDRIA, Va. (12/7/12)--Federal credit unions with more than $1 million in assets will now have the ability to increase their fidelity bond deductibles under a final rule approved during the National Credit Union Administration's (NCUA) December open board meeting.

In addition to the $1 million asset threshold, eligible credit unions must have composite CAMEL code ratings of one or two during the two most recent examination cycles. They must also be well capitalized.

Eligible credit unions will be permitted to increase maximum fidelity bond deductible to $1 million.

The NCUA previously capped maximum fidelity bond deductibles at $200,000. However, credit unions with more than $1 million in assets and an NCUA regulatory flexibility (RegFlex) designation were permitted to increase their maximum deductibles to $1 million.

The fidelity bond changes make permanent an interim final rule issued in May 2012. The changes are effective immediately, the agency said.

Credit unions that take advantage of the new deductible authority will be examined each year to ensure they still meet the CAMEL rating and capitalization standards, the NCUA said.

The increased fidelity bond deductible freedom is one of many enhanced management and investment rights the agency has given to credit unions under the recently expanded regulatory flexibility (RegFlex) program. The NCUA in May extended RegFlex to the 1,770 credit unions that were not covered under the RegFlex designation.

"While [the Credit Union National Association (CUNA)] opposed the agency's actions to eliminate the RegFlex program, we did not oppose the interim final rule on the fidelity bond deductible standard," CUNA Senior Vice President and Deputy General Counsel Mary Dunn said following the meeting.

For more on the NCU board meeting, use the resource link.

Credit rating changes approved by NCUA

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ALEXANDRIA, Va. (12/7/12)--The National Credit Union Administration (NCUA) on Thursday unanimously approved a final rule that will replace the ordinal credit rating scale used by credit unions with a pair of new standards: "investment-grade" and "minimal amount of credit risk."

Click to view larger image Credit rating changes were one of five items on the NCUA's agenda. The agenda for the final NCUA board meeting of 2012 also included discussions of community charter applications, the corporate stabilization fund budget, and fidelity bond coverage. (CUNA Photo)
The Dodd-Frank Wall Street Reform Act requires federal financial agencies to review their regulations for any use of credit ratings to assess the creditworthiness of a security or money-market instrument, to remove those references, and replace them with appropriate substitute standards.

The final rule complies with this request.

The NCUA said an "investment-grade" security, under the new rules, will be a security in which the credit union determines the issuer has adequate capacity to meet the financial commitments under the security for the projected life of the asset or exposure even under adverse economic conditions. A security with "a minimal amount of credit risk" is one in which the issuer has a very strong capacity to meet the financial commitments under the security, the agency added.

NCUA Chairman Debbie Matz said the agency's goal in developing the new standards "was to make sure credit unions have the evaluation standards necessary to maintain their safety and soundness in today's investment environment. Within the limits set by Congress, this final rule strikes the right balance," she said.

Matz added that credit unions must "understand that the need for thorough investment analysis and due diligence has not changed."

The credit rating changes will become effective 180 days after they are published in the Federal Register. This delayed effective date will give credit unions more time to adapt, and the agency more time to train examiners, NCUA staff said.

Matz said the ratings changes represent "a new road" for the agency and credit unions alike. "We will have to walk down this road together," she added.

NCUA staff during the meeting said that credit-risk examination processes will not change. However, staff added, examiners will not take a rigid, "bright-line" approach when looking over credit union investment portfolios. Examiners will look at a credit union's investment process, pre-investment research, and what is done after an investment is made, NCUA staff said.

Supervisory guidance on the credit rating changes will be released, and the NCUA will also hold a webinar and conduct other outreach activities before the rules become effective.

For more on the NCUA meeting, use the resource link.

Community charter change requests get NCUA backing

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ALEXANDRIA, Va. (12/7/12)--The community charter requests of two credit unions, The Atlantic FCU, Kenilworth, N.J., and Focus FCU, Oklahoma City, were approved by the National Credit Union Administration (NCUA) on Thursday.

The Atlantic FCU, which has 18,411 members and holds more than $274 million in assets, will soon be able to draw a broader membership from residents of Union and Essex counties in New Jersey. The credit union could take on up to 1.3 million new members.

Focus FCU has 10,369 members and holds $91 million in assets. This credit union will reach out to around 1.2 million potential members in the metropolitan Oklahoma City area. This area includes Canadian, Cleveland, Grady, Lincoln, Logan, McClain and Oklahoma counties.

The credit unions are currently incorporated under multiple common bond charters.

Both credit unions said the charter expansions would allow them to reach out to underserved families and younger potential members in their respective areas. Focus said it also plans to reach out to Hispanic- and Asian-Americans in nearby counties, and to market its business lending services to small businesses with less than $1 million in annual receipts.

NCUA Chairman Debbie Matz and board member Michael Fryzel asked for progress reports on both credit unions in the near future.

For more on the NCUA meeting, use the resource link.

CUNA urges CUs to block looming TAG vote

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WASHINGTON (12/7/12)--Senate Majority Leader Harry Reid of Nevada Thursday cleared the way for a possible vote early next week on S. 3637, the bill that could extend the Transaction Account Guarantee (TAG) program, and the Credit Union National Association (CUNA) said credit unions must "light up the phones" in opposition.

The Credit Union National Association (CUNA) urged credit unions to contact federal lawmakers to urge them to block a motion to proceed to a vote--which could happen as early as Monday or Tuesday.

S. 3637 would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill is strongly favored by major bank trade associations.

As part of the credit union effort to defeat the TAG bill, CUNA sent a communication to Senate legislative directors and financial services legislative assistants that underscored that TAG was created at the height of the 2008 banking crisis to promote stability in banks and the time for TAG has passed.

"(T)he crisis is now over and TAG should be allowed to expire," CUNA wrote, and highlighted Federal Deposit Insurance Corp. third-quarter figures released this week that show:

  • Banks made a $37.6 billion profit in the third quarter, $2.3 billion more than the industry's $35.2 billion profit a year ago;
  • Fifty-seven percent of banks reported higher profits over last year;
  • Bank loan losses were $14.8 billion, 20% less than 2011;
  • Loan charge-offs were $22.3 billion, 17% less than 2011;
  • Banks that did have net losses fell to 10.5%, down from 14.6% from 2011; and
  • The average return on assets (ROA) rose to 1.06%, up from 1.03% in 2011.
"It looks like banks are doing quite well!  Why do they continue to insist that they need a taxpayer backstop in the form of TAG? 

"TAG is a relic of TARP --it has served its purpose and it's time for it to end.  Vote NO on S. 3637," the CUNA communication said.

CUNA launched a call to action earlier this week that urges credit unions to tell senators to end bank bailouts and handouts. TAG has served its purpose and is now nothing more than another giveaway to banks, providing more than $1 trillion of taxpayer-backed guarantees, the CUNA call to action notes.

CUNA members can use the resource link to access the call to action.

CUNA action call urges CUs to oppose TAG bill

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WASHINGTON (12/5/12)--In a new call to action, the Credit Union National Association (CUNA) is encouraging its member credit unions and leagues across the country to contact and urge their senators to oppose legislation that would extend for banks the Transaction Account Guarantee (TAG) program.

The TAG bill, S. 3637, would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill is strongly favored by major bank trade associations.

Earlier this week, CUNA notified Senate leaders of its opposition to the TAG bill. Now CUNA is taking the next step by issuing a "call to action" mobilizing CUs and leagues. CUNA is emphasizing that a TAG extension is "risky and unnecessary," and noted that the program "has not proven to inspire additional bank business lending." CUNA suggested that there are better policy options available to Congress for igniting lending to small businesses--namely the Credit Union Small Business Jobs Act (S.2231).

In seeking a "no" on S. 3637, should it come to the Senate floor for a vote, CUNA has encouraged credit unions to tell senators to end bank bailouts and handouts. TAG has served its purpose but is now nothing more than another giveaway to banks, providing more than $1 trillion of taxpayer-backed guarantees, the CUNA call to action notes.

Banks are flush with liquidity, but still are not lending, the call to action added, noting that small banks' small business lending during the financial crisis contracted 15% while credit union small business lending expanded 45%. TAG was not successful in encouraging banks to lend to small businesses, CUNA noted.

"Congress has done so much to help the banks over the last several years--billions of taxpayer dollars have been given to banks to help them survive and encourage them to lend. The results have been unspectacular at the most," said CUNA President/CEO Bill Cheney. "The health of the banking sector is improving and the pockets of bank shareholders are once again filling with bank profits. There is no need for this legislation; senators should vote 'no' if it comes to a vote," he added.

For the TAG call to action, use the resource link.

Instead of continuing TAG, CUNA has suggested that legislators would better help the economy by giving credit unions greater business lending authority. "Credit unions are willing and able to lend to their small business members, but the most successful business lending credit unions have hit or are approaching the statutory cap on credit union business lending," Cheney wrote in a Monday letter to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.).

Bills that would increase the credit union member business lending (MBL) cap to 27.5% of assets, up from the current 12.25% cap, have been introduced in the U.S. House (H.R. 1418) and Senate (S.2231). CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

CUNA continues to work with members of Congress to pass credit union MBL legislation this year.

Heads up CUNA examination survey coming today

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WASHINGTON (12/6/12)--Credit unions should check their email inboxes today for a survey that will give them the chance to provide feedback to the Credit Union National Association (CUNA) and state leagues on their most recent examinations by the National Credit Union Administration (NCUA) and/or state regulators.

The information, which will be kept anonymous, will help CUNA and the leagues hone their advocacy efforts on exam-related issues.

Survey replies are confidential, and identifying information from individual credit union respondents will not be seen by individuals outside of CUNA's Market Research Department. Only summary results will be reported.

Advocating on behalf of credit unions to improve the examination process is one of the highest priorities of both CUNA and the leagues, and a firm grasp of the current state of credit union examination process is needed to ensure that credit unions are effectively represented in discussions with the NCUA and state supervisory authorities.

The survey covers such topics as length of on-site exam, how satisfied the credit union was with the exam and results, and which problem areas if any were noted by the examiner. It also includes a series of questions to gauge how the credit union felt about the examiner's performance and the exam process, and asks what are the biggest issues credit unions would like CUNA and their leagues to focus on to reduce regulatory compliance burdens.

In addition to being emailed to credit unions, the examination survey will also be posted in the "top initiatives" section of CUNA's home page, the "hot topics" section of the CUNA Regulatory Advocacy home page, and the "regulations and compliance" section of the CUNA homepage.  The survey is being sent to all CUNA-affiliated CUs except those in NCUA Region II states. Those states, which are California, the District of Columbia, Delaware, Maryland, New Jersey, Pennsylvania, Virginia and West Virginia have already been surveyed as part of a process coordinated by the New Jersey Credit Union League.

For more on the survey, use the resource link.

Waters to take Fin Services ranking member spot

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WASHINGTON (12/6/12)--The House Democratic Caucus this week unanimously elected Rep. Maxine Waters (D-Calif.) to serve as ranking member of the U.S. House Financial Services Committee.

Waters is part of "an outstanding group of committee leaders that reflects the talent and diversity in America," House Democrats said on their Facebook page. She will take the place held by the retiring Rep. Barney Frank (D-Mass.) when the 113th Congress convenes next month.

In a statement, Waters said she looks forward to working with her House colleagues "to protect, defend and implement" provisions of the Dodd-Frank Wall Street Reform Act. "I understand that regulatory certainty is an important aspect of growing our economy, and remain committed to ensuring clear and transparent regulation which creates the space for innovation, safety and soundness," she added. Waters noted that housing finance reform will be one crucial issue that Congress must take on. "I believe we need a financial system that facilitates economic opportunity and wealth creation for all, and I stand ready to work with my colleagues towards that goal," the congresswoman said.

Waters at this year's Credit Union National Association Governmental Affairs Conference promised to be "the best friend credit unions ever had" in her committee role. She is a co-sponsor of the Small Business Lending Enhancement Act (H.R. 1418) and has said she is "very much involved" in the credit union member business lending cap issue.

The new ranking member said she welcomes the chance to work with new Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas).

Republican leadership has shuffled some positions in the Financial Services Committee, with Reps. David Schweikert (R-Ariz.) and Walter Jones (R-N.C.) on their way out. Reps. Randy Hultgren (R-Ill.), Marlin Stutzman (R-Ind.), Dennis Ross (R-Fla.), Mick Mulvaney (R-S.C.) and Reps.-elect Ann Wagner (R-Mo.) and Robert Pittenger (R-N.C.) will join the committee next year.

There are five open Democratic committee spots at this point. New Democratic committee members have not been named, and may not be named until later this month or early next year.

These House and Senate committee assignments will not be made official until the 113th Congress convenes in January.

Sen Gillibrand promotes MBL increase

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WASHINGTON (12/6/12)--In a Tuesday press teleconference, Sen. Kirsten Gillibrand (D-N.Y.) promoted credit union member business lending (MBL) legislation, saying that increasing the MBL cap would create economic growth without burdening taxpayers.

Gillibrand is a co-sponsor of Senate MBL legislation (S. 2231). During the call, she noted that S. 2231, which would increase the MBL cap to 27.5% of assets from the current 12.25% level, would allow credit unions in her state to lend $1 billion in funds to small businesses. This lending would, in turn, create around 11,000 new jobs in New York.

The Credit Union National Association (CUNA) has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

Gillibrand noted that many credit unions have plenty of cash to lend, and are not trying to profit, but to extend credit to their members. She said many business owners have come to credit unions after being rejected by banks.

The pro-business MBL message was picked up in many publications after the teleconference, including the Watertown Daily News, Long Island Newsday, The Buffalo News and a group of New York public media outlets. Local credit unions, and the Credit Union Association of New York, were featured in some of these stories.

Inside Washington (12/05/2012)

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  • WASHINGTON (12/6/12)--Federal Reserve Board Gov. Daniel Tarullo expressed doubt about the possible reinstatement of Glass-Steagall--the law that separated investment and commercial banking and was repealed during the Clinton administration. Recreating the division would limit the types of services that banks currently offer, at a substantial cost for financial institutions, Tarullo said. "The reinstatement of Glass-Steagall would mean that bank clients could no longer retain one financial firm that would have the capacity to offer the whole range of financing options--from lines of credit to public equity offerings--depending on a client's needs and market conditions," Tarullo said in prepared comments at a Brookings Institution conference. "Moreover, many banks that are far too small ever to be considered too big to fail do provide some capital market services to their clients--often smaller businesses--a convenience and possible cost savings that would be lost under Glass-Steagall prohibitions," he added …
  • WASHINGTON (12/6/12)--The U.S. Senate Tuesday approved an amendment to the 2012 Defense Authorization bill to crack down on unscrupulous lenders and help prevent them from charging excessive fees to soldiers and their families. In 2006, Congress passed the Military Lending Act (MLA) to help protect active-duty service members and their families from high-cost loans and unfair credit practices. But since the MLA was passed, some lenders have circumvented the law by offering troops payday loan-style products with interest exceeding the 36 % annual limits set for military members. The amendment, sponsored by Sen. Jack Reed (D-R.I.), will allow all federal agencies to enforce the 36% interest rate cap applied to certain financial products and services for service members and their families
  • WASHINGTON (12/6/12)--The inaugural meeting of the Financial Accounting Foundation's (FAF) Private Company Council (PCC) is scheduled for today. The council will review existing U.S. generally accepted accounting principles (GAAP) and determine how those standards could be improved to better serve the needs of private companies. The group could then make recommendations to the Financial Accounting Standards Board (FASB), as needed. The PCC will also advise FASB on how certain agenda items that FASB is considering could impact private companies. Discussions of going concerns, a revenue recognition project, and the private company decision making framework are on the agenda for today's meeting, which will be broadcast live on the FAF homepage. The Credit Union National Association has repeatedly emphasized that financial accounting standards for credit unions and other private companies need to be improved, and has called for the challenges that many credit unions and others face due to the complexity of existing accounting standards to be addressed …

Final NCUA open meeting of 2012 is today

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ALEXANDRIA, Va. (12/6/12)--The agenda for today's open National Credit Union Administration (NCUA) board meeting, the final open meeting of 2012, includes discussion of the agency's Temporary Corporate Credit Union Stabilization Fund budget and a pair of community charter conversions.

Final rules addressing credit rating use alternatives and fidelity bond and insurance coverage for federally insured credit unions are also on the open meeting agenda.

The NCUA open board meeting is scheduled to begin at 10:00 a.m. ET.

Termination of investment pilot programs, personnel matters and a creditor claim appeal will be covered during the closed NCUA board meeting.

For the full NCUA agenda, use the resource link.

NEW CUNA action call urges CUs to oppose TAG bill

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WASHINGTON (UPDATED: 4:00 P.M. ET, 12/6/12)--In a new call to action, the Credit Union National Association (CUNA) is encouraging its member credit unions and leagues across the country to contact and urge their senators to oppose legislation that would extend for banks the Transaction Account Guarantee (TAG) program.

The TAG bill, S. 3637, would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end without congressional action. The bill is strongly favored by major bank trade associations.

Earlier this week, CUNA notified Senate leaders of its opposition to the TAG bill.  Now CUNA is taking the next step by issuing a "call to action" mobilizing CUs and leagues.  CUNA is emphasizing that a TAG extension is "risky and unnecessary," and noted that the program "has not proven to inspire additional bank business lending." CUNA suggested that there are better policy options available to Congress for igniting lending to small businesses--namely the Credit Union Small Business Jobs Act (S.2231).

In seeking a "no" on S. 3637, should it come to the Senate floor for a vote, CUNA has encouraged credit unions to tell senators to end bank bailouts and handouts. TAG has served its purpose but is now nothing more than another giveaway to banks, providing more than $1 trillion of taxpayer-backed guarantees, the CUNA call to action notes.

Banks are flush with liquidity, but still are not lending, the call to action added, noting that small banks' small business lending during the financial crisis contracted 15% while credit union small business lending expanded 45%. TAG was not successful in encouraging banks to lend to small businesses, CUNA noted.

"Congress has done so much to help the banks over the last several years--billions of taxpayer dollars have been given to banks to help them survive and encourage them to lend. The results have been unspectacular at the most," said CUNA President/CEO Bill Cheney. "The health of the banking sector is improving and the pockets of bank shareholders are once again filling with bank profits. There is no need for this legislation; senators should vote 'no' if it comes to a vote," he added.

For the TAG call to action, use the resource link.

Instead of continuing TAG, CUNA has suggested that legislators would better help the economy by giving credit unions greater business lending authority. "Credit unions are willing and able to lend to their small business members, but the most successful business lending credit unions have hit or are approaching the statutory cap on credit union business lending," Cheney wrote in a Monday letter to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.).

Bills that would increase the credit union member business lending (MBL) cap to 27.5% of assets, up from the current 12.25% cap, have been introduced in the U.S. House (H.R. 1418) and Senate (S.2231). CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

CUNA continues to work with members of Congress to pass credit union MBL legislation this year.

Housing reforms must account for CUs CUNA says

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WASHINGTON (12/5/12)--The Credit Union National Association (CUNA) in a comment letter has again encouraged the Federal Home Finance Agency (FHFA) to ensure that upcoming changes to secondary mortgage market structure allow credit unions and other small issuers to maintain access to that market.

The agency must also make sure that the impact of any new mortgage market infrastructure on small lenders such as credit unions is positive for them and their members, CUNA Senior Assistant General Counsel Jared Ihrig wrote.

The comment letter is in response to a white paper released by the FHFA this fall. The white paper seeks to identify the core components of mortgage securitization that will be needed in the housing finance system going forward. It also discusses model pooling and servicing agreements (PSAs).

The paper is part of a larger Obama administration mortgage market reform project. The administration is considering a range of options for mortgage market reform, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages.

Administration officials have said that each proposal would shrink the government's role in the mortgage market.

CUNA in the comment letter said that the FHFA, as it reforms mortgage markets and develops a new PSA, must:

  • Ensure that the secondary mortgage market remains open to lenders of all sizes on an equitable basis;
  • Provide appropriate regulatory oversight to ensure safety and soundness, including strong capital requirements;
  • Ensure that mortgage loans will continue to be made to qualified borrowers even in troubled economic times;
  • Preserve the 30-year fixed rate mortgage;
  • Foster affordable housing; and
  • Provide the time needed for a reasonable and orderly transition to the new housing finance system.
For the full CUNA comment letter, use the resource link.

IFRS for SMEs will help CUs serve members WOCCU

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WASHINGTON (12/5/12)--Giving jurisdictions the option to allow credit unions to follow International Financial Reporting Standards for small- and medium-sized entities (IFRS for SMEs) will not present safety and soundness concerns and will help credit unions be better able to serve their members and promote financial inclusion, the World Council of Credit Unions (WOCCU) said in a letter to the International Accounting Standards Board (IASB).

The IFRS for SMEs accounting standard is less complex than full IFRSs and many national generally accepted accounting principles, IASB noted. Topics that are not suitable for small institutions, such as earnings per share, segment reporting and interim financial reporting, are not addressed in the standard. The standard also requires fewer disclosures, and offers principles for recognizing and measuring assets, liabilities, income and expenses that are presented in a simplified fashion.

IASB noted that the IFRS for SME standards are available for any jurisdiction to adopt, whether or not it has adopted full IFRSs. "Each jurisdiction must determine which entities should use the standard. The IASB's only restriction is that listed companies and financial institutions should not use it," IASB said on its homepage.

The WOCCU comment letter is in response to IASB's comprehensive review of IFRS for SMEs. The agency said it is considering whether there is a need for any amendments to the standard.

Credit unions in Great Britain and Ireland of any asset size will follow IFRS for SMEs beginning in 2015, and federally insured credit unions in the U.S. with less than US$10 million in assets are permitted to follow less stringent Regulatory Accounting Principles (RAP), WOCCU Chief Counsel/Vice President for Advocacy and Government Affairs Michael Edwards noted.

In the comment letter, Edwards suggested that IASB amend IFRS for SMEs to recognize expressly that each jurisdiction should have authority to decide which standards should apply to which types and sizes of entities, and how relevant legislation impacts the standard. He noted that many smaller credit unions do not have the technical capacity to implement full IFRS. Not allowing financial institutions to use IFRS for SMEs could result in some credit unions using less stringent standards than IFRS, he added.

The WOCCU letter also suggested that IFRS for SMEs, as well as full IFRS, should include specific guidance on mutual business combinations which reflects that mutual combinations result in a pooling of resources. "IFRS for SMEs should not attempt to make credit union mergers and amalgamations fit in all respects into 'purchase' or 'acquisition' molds designed for joint-stock company business combinations," Edwards added.

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

CUNA poised to work with new committee members

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WASHINGTON (12/5/12)--The Credit Union National Association (CUNA) congratulates new U.S. House Financial Services and Senate Banking Committee members on their appointments, "and looks forward to working with all of the members of these important committees in the new Congress," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said on Tuesday.

Incoming Massachusetts Sen. Elizabeth Warren (D) may be the most high-profile incoming committee member. Several sources on Tuesday reported that she will join the Senate Banking Committee when she is sworn in to Congress early next year. Warren, a Harvard Law School professor who conceived and helped set up the Consumer Financial Protection Bureau (CFPB), is a credit union member and credit union supporter. She was endorsed during her Senate campaign by the Massachusetts Credit Union League, and thanked credit unions for their support in her post-election victory speech made last month.

Sen. Mike Crapo (Idaho) is expected to replace Sen. Richard Shelby (Ala.) as that committee's top-ranked Republican next year. Shelby is moving on due to term limits. Sen. Joe Manchin (D-W. Va.) is also likely to join the committee next year.

In the House Financial Services Committee, Reps. David Schweikert (R-Ariz.) and Walter Jones (R-N.C.) will be leaving. Reps. Randy Hultgren (R-Ill.), Marlin Stutzman (R-Ind.), Dennis Ross (R-Fla.), Mick Mulvaney (R-S.C.) and Rep.-elect Ann Wagner (R-Mo.) will join the committee next year.

These House and Senate committee assignments will not be made official until the 113th Congress convenes in January.

Inside Washington (12/04/2012)

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  • WASHINGTON (12/5/12)--Stiffer mortgage requirements have improved credit risk, but some borrowers are in danger of being left out of the market, Comptroller of the Currency Thomas Curry warned Monday. "Mortgage interest rates are at historic lows," Curry said in prepared remarks before the Massachusetts Affordable Housing Alliance in Boston. "While those trends are encouraging, it's clear that we have a long ways to go to ensure that aspiring homeowners, particularly in minority and underserved communities, have access to financing." Borrowers are also subject to higher credit scores and bigger down-payment requirements, Curry noted. The median credit score for home buyers has increased by 40 points since 2006 with credit scores now averaging around 700 for Federal Housing Administration mortgages and more than 760 for government-sponsored enterprise mortgages. Most mortgages are being denied because of collateral-related issues and debt-to-income requirements, he said …
  • WASHINGTON (12/5/12)--The U.S. House on Tuesday postponed a vote on the Eliminate Privacy Notice Confusion Act (H.R. 5817), but that vote is set to take place today. The bill would eliminate repetitive privacy notices that are often ignored by consumers, and enhance consumer protection by ensuring that when a consumer receives a privacy notification, it has significance and is not redundant. The legislation also reduces future compliance burden for credit unions and other financial institutions. The Credit Union National Association (CUNA) supports the bill …
  • WASHINGTON (12/5/12)—A Wednesday House Financial Services Committee hearing on the economic impact of the derivatives provisions contained in Title VII of the Dodd-Frank Wall Street Reform Act has been cancelled. The hearing had not been rescheduled at press time …

NCBA backs MBL cap-increase bills

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WASHINGTON (12/4/12)--Passing and enacting legislation to increase credit union member business lending (MBL) would allow credit unions to "strengthen our economy through their ability to lend to more small businesses," National Cooperative Business Association (NCBA) President/CEO Michael Beall said in a letter sent to all members of the U.S. Congress.

The letter was sent Monday on behalf of the more than 29,000 cooperative businesses in the U.S.

Bills that would increase the credit union MBL cap to 27.5% of assets, up from the current 12.25% cap, have been introduced in the U.S. House (H.R. 1418) and Senate (S.2231).

The Senate MBL legislation could be considered any day during the lame duck session. The Credit Union National Association (CUNA) has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

These measures could bolster America's economy, put Americans back to work and give consumers more options, Beall wrote. "America's small businesses deserve more, not fewer, choices for capital to create and sustain their enterprises… As financial cooperatives, credit unions offer fairly priced, reliable credit that small businesses and consumers need," he added.

Privacy notice vote set for today

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WASHINGTON (12/4/12)--U.S. House debate on the Eliminate Privacy Notice Confusion Act (H.R. 5817) ended yesterday and a recorded vote on the bill is expected today.

The bill, which has 41 co-sponsors, states that financial institutions that provide nonpublic personal information only in accordance with the provisions of the Graham Leach Bliley Act, that do not share it with affiliates, and that have not changed their policy and practice since disclosing the policy, shall not be required to send annual privacy notifications to their members or customers.

State-licensed credit unions and other financial institutions would also be shielded from Graham Leach Bliley disclosure requirements, provided their respective states have their own privacy regulations on the books, under the terms of the bill.

In a letter sent to Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) last week, Credit Union National Association (CUNA) President/CEO Bill Cheney noted that the bill would eliminate a costly and unnecessary compliance burden for credit unions. "The bill eliminates repetitive notices that are often ignored by consumers, and enhances consumer protection by ensuring that when a consumer receives a privacy notification, it has significance and is not redundant. The legislation also reduces future compliance burden for credit unions and other financial institutions," Cheney wrote.

CUNA's support of H.R. 5817 keeps with the association's persistent efforts to reduce the regulatory burden on credit unions, Cheney added.

Other bills are expected to be considered by the U.S. House and Senate this week, but the House is not likely to conduct votes on Thursday or Friday.

The House Financial Services Committee is scheduled to hold a Wednesday hearing on the economic impact of the derivatives provisions contained in Title VII of the Dodd-Frank Wall Street Reform Act. Federal Housing Agency oversight will be addressed in a Thursday Senate Banking Committee hearing. That hearing will examine the U.S. Department of Housing and Urban Development's response to fiscal challenges.

Thursday will also feature a fiscal cliff hearing before the Joint Economic Committee.

State-by-state NCUA review maps member growth

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ALEXANDRIA, Va. (12/4/12)--Explosive membership growth has been a central story for credit unions over the past year, and the National Credit Union Administration's (NCUA) latest quarterly state-by-state review of the financial performance of federally insured credit unions shows that credit unions in five states have seen growth rates of above 5% for that period: Alaska, Idaho, New Hampshire, Virginia and Washington.

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Thirteen states, including Florida, New York, Oregon and Texas, saw credit union membership growth rates of between 3% and 5%,  while most  states saw their credit union membership grow by at least 1%.

The membership information is part of the agency's quarterly state-by-state breakdown of key financial indicators. This month's data feature information on Return on Average Assets (ROA), delinquency rates, annualized net charge-off rates, and asset, share, deposit and loan growth at the nation's credit unions.

State employment rates and state home price indices tables are also included in the NCUA data release.

The agency noted that balances on outstanding loans increased by 4.3% for the year ending in the third quarter. This growth was strongest in New York, Iowa, Tennessee, North Dakota and New Hampshire. Nevada, Montana and New Jersey were the only states to experience credit union lending declines in the last 12 months, the agency added.

"Consumer credit drives the economy, and credit unions provide consumers with access to the credit needed to buy homes, purchase cars, and pay for groceries at the store," NCUA Chairman Debbie Matz said. "Credit unions kept credit available during the recession. That commitment to members and to local economies is now, literally, paying off in the form of growing loan balances. What's more, these loans are a prudent investment for credit unions.

Delinquency rates have stayed low, and charge-offs have declined in most states," she added.

For the full NCUA release, use the resource link.

2013 House schedule released

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WASHINGTON (12/4/12)--The 113th U.S. Congress is scheduled to convene at noon on Jan. 3, and the first weeklong constituent work period of the year will begin shortly thereafter, on Jan. 7.

The U.S. House calendar was released last week by House Majority Leader Eric Cantor (R-Va.).

A second constituent work period is scheduled for the final week of January. The Passover/Easter district work period will begin on March 25 and last until April 9, and the lengthy summer district work period will take place between Aug. 5 and Sept. 6.

The official 2013 Senate calendar has not been released. However, for the most part, the House and the Senate are expected to be in session at the same time throughout the year, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

TAG too risky MBLs a better option CUNA to Congress

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WASHINGTON (12/4/12)--The Credit Union National Association (CUNA) opposes legislation that would extend for banks the Transaction Account Guarantee (TAG) program, because "it is no longer necessary, is risky, has not proven to enhance bank business lending, and there are better options available to help small business"--such as giving credit unions greater business lending authority, the trade group said in a Monday letter to Senate leaders.

"If Congress wants to enhance and expand access to credit for small businesses, there are a number of other policy options it should pursue, including S. 2231, the Small Business Lending Enhancement Act," CUNA President/CEO Bill Cheney wrote. "Credit unions are willing and able to lend to their small business members; but the most successful business lending credit unions have hit or are approaching the statutory cap on credit union business lending," he wrote.

The letter was sent to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) on Monday.

The TAG program would extend unlimited deposit insurance coverage granted during the financial crisis for noninterest bearing transaction accounts. Coverage is set to revert back to $250,000 at year's end. Community banks and their lobby groups, which are opposing legislation to raise the cap on credit union member business lending (MBL), are in favor of extending the TAG program. U.S. Treasury Secretary Timothy Geithner, U.S. House Majority Leader Eric Cantor (R-Va.), the Financial Services Roundtable and the editorial page of The Wall Street Journal are among those that have called the TAG extension unwarranted.

In his letter to Congress, Cheney noted small banks argue incorrectly that TAG provides liquidity to banks so that they, in turn, can make loans that will stimulate the economy. "The truth," Cheney said, "is that the banking industry's average loan-to-deposit ratio is much lower than its historic averages. In fact, this loan ratio is nearly 20 percentage points lower than it was in 2002. More than $500 billion in new deposits have entered banks since the 2008 banking crisis, and yet bank small business lending is down."

Cheney argued passing the legislation alone would be a poor policy decision. "The TAG program may provide security for very large depositors; but the banks are not lending the money. Credit unions see demand for small business lending in their markets and the most experienced credit unions face a statutory cap on how much they can help. Perhaps if Congress allowed these credit unions to do more business lending, banks would be inspired to lend more as well? They certainly have the liquidity to do so," he said.

Bills that would increase the credit union MBL cap to 27.5% of assets, up from the current 12.25% cap, have been introduced in the U.S. House (H.R. 1418) and Senate (S.2231). CUNA has estimated that the proposed MBL cap increase could inject $13 billion in funds into the economy, creating as many as 140,000 new jobs in the first year following enactment.

CUNA continues to work with members of Congress to pass credit union MBL legislation this year.

For the full CUNA letter, use the resource link.

Inside Washington (12/03/2012)

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  •  WASHINGTON (12/4/12)--Rep. Jeb Hensarling (R-Texas) voiced concern over a provision of an immigration bill that would increase guarantee fees at Fannie Mae and Freddie Mac (American Banker Dec. 3). The House-approved bill, largely supported by Republicans, would grant more visas to foreign students at U.S. graduate schools. To pay for the legislation, loan guarantee fees charged by Fannie Mae and Freddie Mac would be extended an additional year. Though he said he would support the bill, directing the guarantee fees to unrelated spending is bad policy, Hensarling said in a statement …
  • WASHINGTON (12/4/12)--Policymakers do not appear to be rushing to take on housing finance reform in the wake of the general election. Home prices are slowly and steadily improving and Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco is taking sufficient steps to remake the future of housing finance, Isaac Boltansky, analyst at Compass Point Research & Trading (American Banker Dec. 4). The FHFA has instituted a joint servicing compensation initiative and began employing a securitization platform. But Fannie Mae and Freddie Mac were not intended to be long-term solutions, DeMarco said in a speech Wednesday before the Exchequer Club. "They were primarily meant as a 'time out' for the rapidly eroding mortgage market--an opportunity to provide some stability while Congress and the administration decided on how best to rebuild our housing finance system," he said …
  • WASHINGTON (12/4/12)--Rep. Jo Ann Emerson (R-Mo.) will retire from Congress in February to become the president/CEO of National Rural Electric Cooperative Association, an organization that represents private, not-for-profit electric utilities (POLITICO Dec. 3). Emerson sits on the House Committee on Appropriations and serves as chair of the financial services and general government subcommittee. Emerson was re-elected to her 10th term in November.
  • The Federal Reserve Board Monday announced the designation of the chairs and deputy chairs of the 12 Federal Reserve Banks for 2013. Each Reserve Bank has a nine-member board of directors. The board of governors appoints three directors and each year designates one of its appointees as chair and a second as deputy chair …