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Inside Washington (02/24/2012)

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  • WASHINGTON (2/27/12)--Since it began accepting complaints about mortgage servicers online in December, the Consumer Financial Protection Bureau (CFPB) has fielded 2,300 complaints from consumers, Christopher C. Haspel, a senior adviser for securitization and servicing at the agency, said Thursday (American Banker Feb. 24). The most common complaint is that servicers repeatedly request documentation, although borrowers have already provided the information, said Haspel, speaking at a mortgage servicing conference sponsored by the Mortgage Bankers Association. Reforming the mortgage markets is one of the CFPB's primary responsibilities under the Dodd-Frank Act, and among its top priorities. The agency's goal is to form a single set of standards with input from other regulators, Haspel said …
  • WASHINGTON (2/27/12)--The Federal Deposit Insurance Corp. (FDIC) said it hopes a new study will help it build a better definition of community banks beyond asset size. Banks generally below $1 billion are considered "community" financial institutions. Richard Brown, the FDIC's chief economist, said the study will help the agency look at other attributes such as lending, core deposits and geographic service areas (American Banker Feb. 24). Banks with as much as $20 billion assets could be considered community financial institutions if they focus on serving their communities, said Randy Dennis, a banking consultant in Little Rock, Ark. The study indicated that non-community banks are on average 64 times larger than community banks--$17 billion compared with $280 million. The large banks were only 12 times larger in 1985 …

FinCEN may grant temporary e-filing extension

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WASHINGTON (2/27/12)--Small credit unions that lack internet access, and other institutions that meet certain criteria, could be given a temporary extension for complying with the Financial Crimes Enforcement Network's (FinCEN) new Bank Secrecy Act (BSA) electronic filing requirements, FinCEN announced late last week.

FinCEN will make electronic filing of all Bank Secrecy Act (BSA) reports mandatory on July 1. However, FinCEN said, small credit unions that do not have internet connectivity within their financial institution and file few BSA reports may submit a hardship exemption request for additional accommodation to arrange for the electronic submission of reports to FinCEN. FinCEN said any temportary exemptions that are granted to these institutions would not be extended beyond March 31, 2013.

Credit unions and other financial institutions that have the technical ability to e-file BSA Currency Transaction Reports (CTR) but are using aggregation systems that are currently incompatible with the BSA E-Filing System's batch and computer-to-computer reporting capabilities could also be granted an exemption, and given the time needed to update their computer systems. However, this reprieve would only last until December 31, FinCEN said.

The agency said it would also consider requests for temporary hardship exemptions, but noted that few of those exemptions would be granted. Any hardship exemptions that are granted would likely not be extended beyond March 31, 2013, FinCEN said.

Exemption requests must be filed with FinCEN by March 26.

FinCEN has said the switch to all-electronic BSA filing would improve efficiency, reduce costs for the financial industry, and enhance the ability of investigators, analysts, and examiners to gain better and more timely access to important financial information. Increased BSA E-Filing would also help FinCEN provide information relevant to money laundering and terrorist financing investigations to law enforcement in the quickest manner possible, shortening the lag time between when BSA reports are filed and when they can be accessed by authorities to two days, the agency added.

The Credit Union National Association (CUNA) has said it supports FinCEN's work to provide law enforcement with more useful and timely BSA data, and has encouraged credit unions to use electronic filing features, but also noted there are compliance and implementation cost concerns for credit unions.

CUNA in a comment letter urged FinCEN to work with the National Credit Union Administration (NCUA), state regulators, and third-party vendors "to minimize compliance costs related to the proposal," and suggested that FinCEN exempt credit unions with less than $50 million in assets from the e-filing requirements. CUNA also suggested that FinCEN provide a waiver for credit unions that demonstrate substantial core processing or system costs.

For a FinCEN release, a CUNA Comp Blog post on the issue and a comment letter on FinCEN's BSA changes, use the resource link.

House could soon vote on CFPB privacy bill

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WASHINGTON (2/27/12)--A House bill that would ensure that groups or individuals that supply information to the Consumer Financial Protection Bureau (CFPB) would not waive their right to privacy protections could soon see action in Congress, with a full House vote possible later this week.

Similar House and Senate bills, H.R. 4014 and S. 2099, would make technical amendments to the Federal Deposit Insurance Act. H.R. 4014 is notably cosponsored by House Financial Services Committee Chairman Spencer Bachus (R-Ala.), and S. 2099 is backed by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking committee minority member Richard Shelby (R-Ala.).

The types of privacy improvements contained in the bills have also been endorsed by CFPB Director Richard Cordray.

Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said CUNA appreciates the intent of both of these bills, and has worked closely with legislators and the National Credit Union Administration to ensure that both bills sufficiently protect credit unions. "We have received assurances that credit unions will be protected," Donovan added.

Pa. CU Assn. seeks support for capital bills

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WASHINGTON (2/27/12)--The Pennsylvania Credit Union Association (PCUA) has reached out to federal legislators, urging them to cosponsor the Capital Access for Small Business and Jobs Act (H.R. 3993), which would allow credit unions to obtain supplemental capital.

The PCUA board of directors and Governmental Affairs Committee signed a resolution supporting H.R. 3993 earlier this month (See News Now, Feb. 17), and last week circulated that resolution, with an attached letter, to Pennsylvania's U.S. House and Senate delegation.

Current law restricts credit unions to building their capital levels through retained earnings. Under the bill, supplemental capital would have to be uninsured and subordinate to other claims against a credit union. The bill also authorizes the National Credit Union Administration to set maturity limits on this capital and restrict the ability to raise supplemental capital to credit unions that are sufficiently capitalized and well-managed.

PCUA Chairman Michael Kaczenski in a release said that while "supplemental capital might not be for every credit union… the value of the credit union charter and the overall viability of the credit union movement would be improved if [credit unions gained] access to alternative sources of capital."

H.R. 3993 was introduced in early February by Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.), and currently has 8 additional cosponsors.

The Credit Union National Association (CUNA) in a recent letter to King and Sherman said the "visionary" legislation "would provide credit unions with appropriate ability to raise capital from sources other than retained earning without putting in jeopardy the 'one member, one vote' principle that is the bedrock of the credit union ownership structure.

"As credit unions emerge from the financial crisis, this legislation would improve the safety and soundness of credit unions by allowing them to develop a supplement cushion to reduce risk to the National Credit Union Share Insurance Fund (NCUSIF)," the letter added.

CUNA Chief Economist Bill Hampel in the most recent edition of CUNA's Credit Union NewsWatch said H.R. 3993 has been "carefully drafted to avoid raising issues that could jeopardize the federal credit union tax status." Hampel said the supplemental capital bill, if enacted, would help credit unions whose capital ratios have been reduced by the recent financial crisis and recession to much more rapidly rebuild their capital ratios. Credit unions would also benefit from the greater protection afforded the NCUSIF by greater capital ratios at those credit unions that choose to use supplemental capital, he added.

For more from the most recent edition of Credit Union NewsWatch, use the resource link.