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CFPBs Cordray joins GAC lineup

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WASHINGTON (2/21/12)--Consumer Financial Protection Bureau (CFPB) Director Richard Cordray has remained busy since he took on his post early this year, appearing on behalf of his agency at several Capitol Hill hearings and other events, and he can now add another engagement to his packed speaking schedule: The Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC).



The CFPB has been extremely active since it officially began its work last year, taking on rulewriting authority for many existing consumer financial protection laws, revising mortgage disclosures and closing forms, and beginning the process of supervising many nonbank financial entities. The agency is also accepting public comment on how consumer related financial regulations can be streamlined, and CUNA staff have met with the agency many times to discuss credit unions' regulatory burden and other priorities.

Key Capitol Hill lawmakers will also speak at the GAC, including House Minority Whip Steny Hoyer (D-Md.), House Financial Services Committee Chairman Spencer Bachus (R-Ala.), House Majority Whip and House Financial Services Committee member Kevin McCarthy (R-Calif.), and Assistant House Democratic Leader James Clyburn (D-S.C.).

Sens. Jon Tester (D-Mont.), Mark Udall (D-Colo.) and Rand Paul (R-Ky.), and Reps. Jeb Hensarling (R-Texas), Ed Royce (R-Calif.), Barney Frank (D-Mass.), Carolyn Maloney (D-N.Y.) and Carolyn McCarthy (D-N.Y.), are also scheduled to speak. Former Secretary of State Condoleezza Rice, premier, non-partisan political analyst Charlie Cook, journalistic duo Bob Woodward and Carl Bernstein are also among the notable speakers on the 2012 GAC schedule.

The 2012 GAC, which will take place March 18-22 at the Washington Convention Center in Washington, D.C., will provide more than 4,000 credit union representatives an opportunity to hear from influential leaders from Congress and the federal regulatory agencies during the meeting's sessions, as well discuss pressing credit union issues with federal lawmakers and regulators in private meetings.

Recognized as the premier conference to attend for political impact, credit union networking and industry updates, the GAC also offers a wide array of educational breakout sessions, the industry's largest exhibitor showcase, guest/family programs to tour Washington's sights, and special entertainment including an opening concert and the closing Gala Reception and Dance. And this year, the whole event will be kicked off by American Idol star Taylor Hicks, who will perform at the opening concert, sponsored by the CUNA Councils.

Additional speakers and session topics will be announced in the weeks to come.

Registration, housing information, and other information can be found using the resource link below.

CUNA term on BSAAG extended into 2015

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WASHINGTON (2/21/12)--The Financial Crimes Enforcement  Network (FinCEN)  has selected the Credit Union National Association (CUNA) to continue to fill the Credit Union Industry Trade Group position on the FinCEN  Bank Secrecy Act Advisory Group (BSAAG).

CUNA's new term extends through February 2015. 

The BSAAG is comprised of representatives from federal regulatory and law enforcement agencies, financial institutions, and trade associations.

CUNA has been a member of BSAAG since 2003 and currently also participates on the parent group and its working subgroups, including the Banking, Law Enforcement, Prepaid Access, and Suspicious Activity Report (SAR) Review subcommittees. 

CUNA Regulatory Counsel Dennis Tsang will be the group's BSAAG representative.

Loan participation proposal should be withdrawn CUNA

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WASHINGTON (2/21/12)--Recently proposed revisions to loan participation rules should be withdrawn, the Credit Union National Association (CUNA) urged in a comment letter sent to the National Credit Union Administration (NCUA) late last week.

Under loan participation revisions that were proposed at the agency's December Board meeting, all federally insured credit unions that are originators would need to retain a 10% interest in the loan or pool of loans participated. Federal credit unions are currently required to comply with this requirement, but the NCUA proposal would extend this requirement to state chartered federally insured credit unions as well.

All federally insured credit unions that purchase loan participations would be limited to 25% of their net worth for participations involving one originator. There would be no waiver allowed from this provision.

In addition, the proposal would set a 15% of net worth limit on purchasing credit unions on loans involving one borrower. The rule would allow this requirement to be waived in certain cases, but state chartered credit unions would have to apply to their NCUA Regional Director for approval.

"In today's overregulated environment, this proposal would add to the regulatory burden of affected credit unions in a manner that is wholly disproportionate to the risks associated with loan participations," CUNA's Deputy General Counsel Mary Dunn said. While the letter urges NCUA to drop its proposal, it offers recommendations on how concerns about loan participations could be addressed without a new regulation.

If the NCUA determines that it must go forward with a rule, the letter urges the agency to allow credit unions to establish their own loan participation limits as part of their board policies. These limits would be subject to routine review in the examination process, CUNA suggested.

Just over 1,400 federally insured credit unions held over $12.4 billion in outstanding loan participations in 2011, according to the NCUA. Loan participation balances have grown by 28% since 2007, the NCUA added.  NCUA Chairman Debbie Matz last year said large volumes of participated loans tied to a single originator, borrower, or industry--or serviced by a single entity—can impact multiple credit unions if issues arise.

CUNA research has shown that credit union participation loans account for only 2.3% of total credit union loans, and just 1.3% of total credit union assets. "As a practical matter, credit union loan participations have a zero percent probability of bringing the financial system down and an imperceptibly higher risk of causing a collapse in the depository sector or even just the credit union sector," CUNA Chief Economist Bill Hampel said.

"While the proposal seeks to address concentration risks and other issues the agency has identified concerning loan participations, it would do so at the price of severely limiting, if not eliminating, sound participation programs that serve credit unions, their members, and other credit unions well" and would "seriously undermine lending programs and even earnings for some credit unions," CUNA said.

The concentration and underwriting limitations proposed would likely "minimize the ability of credit unions to mitigate risk through diversifying sources and types of loan participations," CUNA added.

CUNA has already discussed these and other concerns regarding the proposal with the NCUA, and will follow up with the agency in the coming days and weeks. Comments on the proposal are due to NCUA by February 21, and CUNA President/CEO Bill Cheney encouraged credit unions and leagues to weigh in on the NCUA proposal.

For the loan participation comment letter, use the resource link.

The regulatory burden faced by credit unions has also been addressed in a series of comment letters that CUNA filed with the Consumer Financial Protection Bureau last week. CUNA in those letters strongly urged the CFPB to thoroughly analyze new rules as well as existing rules transferred to the agency and consider how they could be amended to ease the regulatory burden faced by credit unions. (See related Feb. 15 story: Reg burden a concern as CFPB adds rules: CUNA)

Inside Washington (02/17/2012)

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  • WASHINGTON (2/21/12)--A report released Wednesday found at least one irregularity in 99% of California foreclosures examined, an indication of how endemic foreclosure abuse had become. The report, conducted by Aequitas Compliance Solutions Inc. for San Francisco's Office of the Assessor-Recorder, examined 382 foreclosures in California between January 2009 and October 2011. One or more clear violations of law were found in 84% of the loans, and 82% of the loans had evidence of at least one suspicious activity. The report said California's mortgage industry has undergone "remarkable innovation" since its real estate laws were written. "If there is one lesson to take away from this report, it is that, with so many homes being foreclosed and with so little oversight, California's foreclosure process appears utterly broken," the report said …
  • WASHINGTON (2/21/12)--Because of a bipartisan deal in Congress, government benefits will not be paid for from an increase in guarantee fees on Fannie Mae and Freddie Mac mortgages. The government-sponsored enterprises' fees were raised in December to pay for a two-month extension of the payroll tax cuts, and there was discussion that an extension of payroll tax cuts, extended unemployment insurance benefits and higher Medicare reimbursement rates could be financed with another increase (American Banker Feb. 17). The Mortgage Bankers Association, a trade group that represents lenders, had pressed lawmakers not to raise fees again. The deal reached by Congress Thursday will generate an estimated $15 billion in revenue by authorizing the Federal Communications Commission to auction television airwave licenses to wireless firms …
  • WASHINGTON (2/21/12)--Federal Reserve Chairman Ben Bernanke said the Fed would make an effort to prevent new rules from hurting the competitiveness of community banks. "Community banks make a critical contribution to the prosperity of both their localities and the nation as a whole, which is why we at the Federal Reserve and the other banking agencies are acutely interested in their long-term strength and viability," Bernanke said at conference on the future of community banking. Bernanke said small banks are particularly concerned with the implementation of the Dodd-Frank Act. He said the Fed will work to ensure that the more stringent requirements intended for larger institutions will not find their way to small banks …
  • WASHINGTON (2/21/12)--Among the candidates to replace Fannie Mae Chief Executive Michael Williams are the government-sponsored enterprise's own general counsel and the head of a banking industry trade group. Fannie's general counsel, Timothy Mayopoulos, is a leading internal candidate to replace Williams, who announced in January that he would step down when his successor is found, according to a Wall Street Journal (Feb. 17) report. Among external candidates, David Stevens, the CEO of the Mortgage Bankers Association, and Shekar Narasimhan, a mortgage industry consultant, have emerged as contenders …