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Teachers FCU rep to discuss overdraft issues at CFPB meeting

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NEW YORK, N.Y. (2/22/12)--Robert Allen, president/CEO of Long Island, N.Y.'s Teachers FCU, will discuss his credit union's approach to overdraft fees, checking account disclosures, and other membership issues at a Wednesday meeting with the Consumer Financial Protection Bureau (CFPB) in New York City.

Allen will appear on behalf of his credit union, the Credit Union Association of New York, and the Credit Union National Association (CUNA).  While he is the only credit union representative on the agenda, Allen and will be joined by other financial industry and consumer panelists.

CUNA staff, CFPB Deputy Director Raj Date and other agency staff will also attend the meeting.

Cordray earlier this month said bank overdraft protection programs were one of the areas on the bureau's radar screen, but did not give details on how the CFPB plans to address overdraft issues.

CUNA in a recent meeting with Cordray and CFPB staff raised concerns regarding overdraft protection issues, and said that "credit union members do not need to be protected from their credit unions." However, credit unions do need increased regulatory relief, they said.

According to CUNA estimates, 56% of credit unions that offer checking accounts offer overdraft protection, and 11% of those that offer overdraft protection do not charge a fee for the service. The median overdraft fee is $25, and 95% of those that assess the fee do so on a per-item basis.

Survey shows CU recognition trust growing

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WASHINGTON (2/22/12)--Credit unions continue to outshine banks in the eyes of consumers when it comes to everyday financial services and important values such as safety and soundness, according to a new Credit Union National Association (CUNA) survey.

A CUNA survey taken early this month found that 43% of respondents felt credit unions were the best place for consumers to keep their day to day savings and checking accounts, tying the number of respondents that preferred banks. This represents the first time credit unions have pulled even with banks on this question. Ten percent of respondents said they would use both institutions.

For years banks held the advantage. In 2004, 59% of the consumers surveyed said they preferred to use banks for their everyday transactions, compared to 30% for credit unions. Sixty-one percent of respondents to a similar 2008 survey said they preferred banks, compared to 40% that preferred credit unions.

The improvement shown in the 2012 survey results is a reflection of the consumer awareness gains credit unions have made in recent years, CUNA Senior Vice President of Political Affairs Richard Gose said.

This year's survey also found that credit unions continued to represent safety and soundness to consumers, with 40% of respondents saying credit unions were a safer place to keep their money. Thirty four percent said they preferred banks, and 19% said they felt that both types of institutions were safe places to store their funds.

Credit unions have eclipsed banks in this safety and soundness category since 2009, and this Improvement seems to be a result of the financial crisis, as a 2008 CUNA survey showed that 72% of respondents felt secure with their funds in a bank. Forty-five percent said they felt credit unions were safer at that time.

Bank favorability fell to 75% in the recent survey, while 80% of respondents said they viewed their credit unions favorably.

"From a consumer perspective, credit unions are trending in the right direction," Gose added. The survey drew responses from 1000 randomly selected registered voters in locations throughout the country.

Look for more coverage of CUNA's National Voter Survey results in future editions of NewsNow.

Inside Washington (02/21/2012)

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  • WASHINGTON (2/22/12)--The Federal Housing Finance Agency (FHFA) in a report to Congress outlined a strategic plan for the next phase of the conservatorships of Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac. FHFA Acting Director Edward DeMarco said the FHFA "is contemplating next steps to build an infrastructure for the secondary mortgage market that is consistent with existing policy proposals and will support any outcome of the leading legislative proposals." The FHFA document, entitled "A Strategic Plan for Enterprise Conservatorships: The Next Chapter in a Story that Needs an Ending," suggests that the government gradually contract the GSEs' dominant presence in the marketplace while simplifying and shrinking their operations, and maintain foreclosure prevention activities and credit availability for new and refinanced mortgages. …
  • WASHINGTON (2/22/12)--The Securities and Exchange Commission (SEC) could soon present a model that would bring U.S. accounting rules, known as U.S. Generally Accepted Accounting Principles (GAAP), in line with the International Accounting Standards Board's (IASB) rules. SEC chief accountant James Kroeker told Reuters (Feb. 21) that the agency is "optimistic" it can find a framework. The project has been delayed by other domestic issues, including the development of the Dodd-Frank Act. The SEC and IASB have also been busy aligning their own standards with one another to ease the possible U.S. market transition. The SEC model would likely apply to all sizes of U.S. firms. "Having a model that works for everyone, even if there is a delay in timing, is important, otherwise you ingrain the idea that the smaller companies will never have to change and you end up with a two GAAP system permanently in the U.S.," he said. …
  • WASHINGTON (2/22/12)--As the Federal Reserve pushes for greater transparency in interest-rate policies and emergency-lending programs, that body is itself making many decisions, and taking on vast new regulatory responsibilities, behind closed doors, The Wall Street Journal reported (Feb. 21). The Fed has held 47 votes on financial regulations since the Dodd-Frank Act became law in mid-2010, and 45 of those votes were made by email, not in person. The votes were not publicly disclosed until the Journal obtained them last week. While the closed meetings, and concealed votes, are not illegal, they do represent a change from prior practice. The Fed routinely held open meetings in the past, with as many as 31 public meetings, per year, being held in the 1980s and 1990s. However, the number of open meetings began to decrease in the 1990s and they now rarely occur. The delayed publication of regulatory opinions and, at times, dissents could have an impact on the financial market and Congress, the Journal noted. Fed representatives have said they provide plenty of disclosure on their regulatory work, and noted that open meetings, which are at times scripted, can be inefficient and add little value. "You can have a scripted meeting that does not show any engagement at all," Fed Governor Daniel Tarullo said. However, Tarullo noted he has asked for open meetings on many Fed rules. Former Federal Deposit Insurance Corporation Chairwoman Sheila Bair said "people have a right to know and hear the discussion and hear the presentations and the reasoning for these rules. All of the other agencies which are governed by boards or commissions propose and approve these rules in public meetings… I think it would be in the Fed's interest to do so as well." 

White House may unveil corporate tax plan today

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WASHINGTON (2/22/12)--As national press outlets last night reported that the Obama administration would release its corporate tax reform plan today, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said CUNA will be on the watch for how the plan could affect credit unions.

"Preserving the credit union tax status is a top CUNA priority," Donovan said. "That is why we have engaged Congress and the administration on the value credit unions bring to consumers and small businesses. We will be monitoring developments very closely."

Early press accounts offered no details of what the administration might unveil.

Treasury to stop paying savings bond fees in April

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WASHINGTON (2/22/12)--Having discontinued over-the-counter sales of U.S. savings bonds earlier this year, the U.S. Treasury Department now has announced it will discontinue paying fees to credit unions, banks and all U.S. Savings Bond agents for redeeming savings bonds as of April 11.

Savings Bond agents are currently paid 30 cents for each redeemed savings bond they submit.

The Treasury is shifting redeemed bond processing from the EZ Clear Program to image-enabled bond processing on April 16, and the EZ Clear Program will be decommissioned following the transition, Treasury said.

Series EE and I savings bonds are currently available for purchase through the Treasury's online purchase platform, Consumers can also use the Treasury's online platform to convert existing paper bonds into electronic bonds and to purchase savings bonds via a payroll savings plan.

Treasury estimates that the move from paper to electronic bonds will save $70 million in taxpayer funds over five years.

The Treasury estimated that 679 million paper bonds worth $180 billion remain in circulation, and paper savings bonds will still be accepted, Treasury said.

For the full Treasury release, use the resource link.

Final CFPB mortgage form releases inching along

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WASHINGTON (2/22/12)--The Consumer Financial Protection Bureau's (CFPB) Know Before You Owe mortgage form revision project is nearing its end, and the agency is collecting comments on its latest version of loan application and loan closing documents ahead of the final stage of revisions.

The CFPB's Know Before You Owe project, which began last year, asked for comment on several drafts of a sample mortgage form that combines certain consumer disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into one document. A separate mortgage closing form is also being developed. The CFPB is required to publish rules and model disclosures by July.

The agency this week announced it is testing its latest application and closing form revisions with consumers and finance industry representatives in the Austin, Texas area, and is also accepting comments on the two forms online. The latest prototype forms use similar terminology and a similar closing cost format, a change the CFPB said helps the forms work well together.

The CFPB encouraged commenters to consider how easy or difficult it is to find key loan terms or to identify changes to loan terms or costs as they review the forms. The agency also asks if the disclosures are generally easy to use and explain.

Representatives from credit unions and other small businesses that make mortgage loans and conduct mortgage closings will also have their chance to comment on the CFPB's revised application and closing forms in an upcoming meeting, the agency announced. The meeting, which will take the form of a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel, "is another step in the CFPB's wide-ranging efforts to gather the input of the people who will be affected by our rules," CFPB Director Richard Cordray said.

SBREFA panels, which are comprised of representatives from the CFPB, the Office of Management and Budget, and the U.S. Small Business Administration's Office of Advocacy, are required by the Dodd-Frank Act to solicit input from small entity stakeholders prior to the issuance of a CFPB proposed rule that would impact a significant number of credit unions and community banks. The panels are charged with making recommendation to CFPB on how to reduce regulatory burden on small entities.

In announcing the meeting, the CFPB noted it is also considering additional changes to mortgage rules, such as:
  • Requiring delivery of mortgage settlement disclosures at least three business days before closing;
  • Adding new, cautionary language to mortgage cost-estimate disclosures; and
  • Writing rules that would prevent third parties that are also involved in the mortgage process from increasing mortgage-related fees above the limits presented in their pre-closing cost estimates.
These proposals will also be discussed during the SBREFA panel, according to the agency.

Cordray, in the meeting release, said all feedback provided during the meeting will be considered. "The CFPB is dedicated to issuing thoughtful, research-based rules that take into account not only the benefits to consumers but also how businesses of all sizes will be affected," he added.

Once this comment round is complete, the CFPB will make final revisions to the form. The agency said it would also begin work on writing the rules that govern these disclosures.

For more on the CFPB's Know Before You Owe project, use the resource link.

Annual disclosures burden consumers FIs CUNA

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WASHINGTON (2/22/12)--Sending an annual privacy notice to every consumer with whom a financial institution has a continuing relationship is confusing to the consumer and costly and burdensome to the financial institution, the Credit Union National Association CUNA) told the Consumer Financial Protection Bureau (CFPB).

Commenting on a CFPB interim final rule on Regulation P, which requires the annual disclosures, CUNA wrote that when credit union members or bank customers receive the same, unchanged information from their institution on an annual basis, they may forego reading an actual notice of change when it arrives in the mail.  They could be lulled into an assumption that the change notice is just another routine disclosure.

CUNA asked the CFPB to remove the annual requirement from Reg P, instead replacing it with a requirement that a new notice be sent only when there is a change in the institution's privacy policy. This would not affect a financial institution's existing responsibility to provide a privacy notice at the time the member/customer relationship is commenced.

An equally important reason to remove the requirement, CUNA underscored in its letter, is to "help to relieve the regulatory burden on financial institutions."

CUNA stated, "This is particularly true for small institutions for which mailing an annual privacy notice is often costly, posing a significant regulatory burden."

CUNA encouraged the CFPB to seek, if needed, statutory authority to remove the annual disclosure requirement.
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