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Target breach hit 10% of all FIs' cards, CUNA and partners tell Senate committee

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WASHINGTON (2/4/14)--The Target data breach has affected 10% of the credit and debit card customers of every credit union and bank in the country, the Credit Union National Association and other financial services representatives said in a Monday letter to the U.S. Senate.

The letter was submitted for the record of a hearing conducted Monday by the Senate Banking subcommittee on national security and international trade and finance entitled "Safeguarding Consumers' Financial Data."

"The financial services industry stands ready to assist policymakers in ensuring that robust security requirements apply to all participants in the payments system," CUNA and the cosigners said.

"Our payments system is made up of a wide variety of players: financial institutions, card networks, retailers, processors, and new entrants. Protecting this eco-system is a shared responsibility of all parties involved and all must invest the necessary resources to combat increasingly sophisticated breach threats to the payments system," the letter added.

One hearing witness, Federal Trade Commission Bureau of Consumer Protection Director Jessica Rich, told the assembled senators that the FTC supports federal standards for data security and breach notification. She highlighted that there are state standards and yet no federal standard.

Subcommittee member Robert Menedez (D-N.J.) asked the assembled panelists if they could have a flexible standard like chip and PIN that could evolve when that technology was outdated. However,  legislators also noted that Chip and PIN won't solve all financial data security issues, and said there should be more standards and technology adopted to address broader issues.

CUNA in the letter again urged legislators to follow three basic principles as they consider data security fixes:
  • All participants in the payments system should be responsible and be held to comparable levels of data security requirements;
  • Those responsible for the data breach should be responsible for the costs of helping consumers; and
  • Consumers should know where their information was breached.
The letter was cosigned by the American Bankers Association, The Clearing House, Consumer Bankers Association, Financial Services Information Sharing and Analysis Center, The Financial Services Roundtable, Independent Community Bankers of America and the National Association of Federal Credit Unions.

These principles were highlighted in a CUNA letter submitted for the record of Monday's hearing, and CUNA will provide similar statements as hearings are held later this week. The other data security hearings are:
  • A Tuesday Senate Judiciary Committee hearing entitled "Privacy in the Digital Age: Preventing Data Breaches and Combating Cybercrime.";
  • A Wednesday House Energy and Commerce manufacturing and trade subcommittee entitled "Protecting Consumer Information: Can Data Breaches Be Prevented?"; and
  • A Thursday Senate Banking Committee hearing entitled "Oversight of Financial Stability and Data Security." Several federal banking regulators will testify, but the National Credit Union Administration is not on the list of regulators invited to testify.

New NCUA booklet gives member share insurance details

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ALEXANDRIA, Va. (2/4/14)--Insurance coverage for the many types of member accounts offered at credit unions is outlined in the latest edition of the National Credit Union Administration's Your Insured Funds booklet.

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"It's important that credit union members understand what their federal insurance coverage is for the various types of accounts offered at our nation's credit unions," NCUA Consumer Protection Director Gail Laster said. "Using the information in this updated booklet, consumers will be able to make better decisions about their money and learn more about how their checking, share, trust and retirement accounts are insured," she added.

The agency in a release reminded that the National Credit Union Share Insurance Fund insures member accounts up to $250,000. "No member of a federally insured credit union has ever lost a penny of shares insured by NCUA," the NCUA said.

Printed and pdf versions of the booklet are available. The NCUA in the booklet said credit union members can contact their federally insured credit unions or the agency's Office of Consumer Protection for further share insurance coverage details about situations not addressed in the booklet.

For the booklet, use the resource link.

CUs must not fall under CFPB debt collection regs, CUNA urges

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WASHINGTON (2/4/14)--The Credit Union National Association is encouraging credit unions and state leagues to provide their comments on a 162-question debt collection advance notice of proposed rulemaking (ANPR) released by the Consumer Financial Protection Bureau.

Credit unions that collect their own debts have never been subject to the Fair Debt Collection Protection Act (FDCPA), but credit unions that collect debts for others--and credit union service organizations that offer debt collection services--are subject to the FDCPA. The Dodd-Frank Act authorized the CFPB to create rules prohibiting "unfair, deceptive, or abusive" acts or practices (UDAAPs). To implement regulations, the CFPB is proposing to rely not only on its FDCPA and UDAAP authority, but also on its more general Dodd-Frank rulemaking authority.

"The CFPB does not currently have authorization to regulate credit unions in the debt collection area, but CUNA is concerned that the CFPB's far-reaching authority could eventually sweep credit unions under the purview of future rules and regulations," CUNA Deputy General Counsel Mary Dunn said.

  • Provides an overview of debt collection, consumer protection problems in debt collection, and government authority and activities to address these problems;
  • Requests information on transfer of and access to information upon sale of debts;
  • Seeks information regarding validation notices, disputes, and investigations;
  • Requests information about certain collector communications;
  • Asks for information about unfair, deceptive, and abusive acts and practices;
  • Addresses issues relating to collection of debts beyond the statute of limitations;
  • Requests information about debt collection litigation;
  • Raises questions about exemptions under federal law for state debt collection systems under the FDCPA; and
  • Solicits information concerning recordkeeping, monitoring, and compliance.
CUNA has requested that credit unions and leagues send their comments by Feb. 14.

The CUNA request for comment, and much more, is discussed in this week's CUNA Regulatory Advocacy Report. For the full Report, use the resource link.

CUNA watches UDSA loan developments in Farm Bill

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WASHINGTON (2/4/14)--The Senate is expected to vote on the Federal Agriculture Reform and Risk Management Act of 2013 (H.R. 2642) this week, and the Credit Union National Association is watching the bill's progress as potential changes to U.S. Department of Agriculture Farm Service Agency (FSA) Guaranteed Loan Programs and crop insurance could impact credit unions.

H.R. 2642 was passed by the U.S. House by a 251-166 vote last week.

Credit unions participate in USDA guaranteed farm loans, and the House version of the Farm Bill contains language that would repeal borrower term limits in the program. According to the USDA, FSA guaranteed loans provide credit unions and other lenders with a guarantee of up to 95% of the loss of principal and interest on a loan. The government provides about $12 billion in credit through the program.

Farmers and ranchers apply to an agricultural lender, which then arranges for the guarantee. The FSA guarantee permits lenders to make agricultural credit available to farmers who do not meet the lender's normal underwriting criteria, and a certain number of the loans are targeted to beginning farmers and ranchers and minority applicants.

The guaranteed loans can be used for both Farm Ownership and Farm Operating purposes. Repayment terms vary according to the type of loan made, the collateral securing the loan, and the producer's ability to repay.

Under the program, some types of loans are repaid within 7 years, and the terms of others cannot exceed 40 years.

If these terms are not eliminated, thousands of farmers and ranchers could be forced out of the program, potentially making it more difficult for them to secure credit in the future.

The House version of the Farm Bill also eliminates almost $5 billion a year in direct payments to farmers whether they farm their land or not. Under the bill, farmers and ranchers in the new crop insurance program would be guaranteed that their revenue doesn't fall below 86% from the previous year, protecting farmers and ranchers from crop yield variations and commodity price fluctuations.

Crop insurance is important for credit union loans to farmers and ranchers for the same reason that flood insurance is important for credit union loans to properties in flood-prone areas. Both programs protect the underlying assets that collateralize the loans. Both types of insurance are not always affordable or even available in the private market, making the two programs vital to credit unions and their members, according to CUNA.