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NCUA addresses N.C. exam situation

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WASHINGTON (2/9/12)--National Credit Union Administration (NCUA) Chairman Debbie Matz said Wednesday that her agency supports the dual-chartering system and works closely with state regulators. However, when a state regulator "violated the trust of confidentiality of CAMEL ratings," the NCUA had no choice but to end its joint examinations.

The NCUA chairman was referring to a recent development where the North Carolina credit union regulator allowed State Employees CU to make its CAMEL rating public.

The CAMEL rating system is NCUA's method of evaluating the health of credit unions. The rating, adopted by the NCUA in 1987, is based upon five critical elements of a credit union's operations: (C) Capital, (A) Asset quality, (M) Management, (E) Earnings and (L) Asset liability management.

"We take confidentiality very seriously," Matz said, adding that if such confidentiality regarding examinations and CAMEL ratings is breached, it will cause problems for the credit union system.

NCUA Executive Director David Marquis added that a lack of confidentiality would affect how the agency's examinations are conducted. He also expressed concern that releasing CAMEL codes could create liquidity pressures, make it difficult to resolve problems, and increase losses in the National Credit Union Share Insurance Fund (NCUSIF).

Matz said the NCUA's decision to examine North Carolina state-chartered credit unions was not meant to be burdensome to credit unions, and that the agency wants to be "in and out" as quickly as possible.

The state regulator has only to end the "pilot program," and SECU to take its CAMEL rating off its website, and the issue will be resolved, Matz emphasized.

The NCUA officials made their remarks during a joint Town Hall session conducted with the Consumer Financial Protection Bureau.

A credit union participant of the joint session asked if credit unions will see an increased NCUSIF assessment because of the North Carolina situation, to cover the cost of the additional examinations.

NCUA's Marquis responded that these examinations only require "a very minor cost outlay" by NCUA. He said that it's only taking 1.5 full-time equivalent (FTE) employees to conduct these examinations, and the agency will be able to absorb that expense without an increased assessment.

The Credit Union National Association urged the NCUA this week to resolve differences regarding disclosure of a credit union's CAMEL rating and the use of dual exams as soon as possible.

For more on the Town Hall session, read Friday's News Now.

CFPB bill would ensure privacy CUNA (02/08/2012)

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WASHINGTON (2/8/12)--The Credit Union National Association (CUNA) Wednesday thanked Rep. Bill Huizenga (R-Mich.) for introducing H.R. 3871, which would ensure that groups or individuals that supply information to the Consumer Financial Protection Bureau (CFPB) would not waive their right to privacy protections.

HR. 3871 will be considered during a Wednesday House Financial Services financial institutions subcommittee hearing.

The hearing will also feature discussion on bills that would make the CFPB's yearly funding subject to the congressional appropriations process and remove the CFPB's director from their current slot on the Board of Directors of the Federal Deposit Insurance Corporation.

CUNA President/CEO Bill Cheney noted that while section 205(j) of the Federal Credit Union Act protects privileged information submitted by credit unions to the National Credit Union Administration, state credit union supervisors, and foreign banking authorities, that section does not cover submissions to the CFPB.

Cheney said Huizenga's bill "will ensure that when credit unions or other persons submit information to the CFPB, doing so will not be construed as waiving, destroying or otherwise affecting any privilege associated with the submission."

Cheney said he hopes Congress acts quickly on this legislation.

Small biz bring credit need message to Hill

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WASHINGTON (2/9/12)--Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.), chief sponsors of a House bill to increase the credit union member business lending (MBL) cap, stood with small business owners and credit union representatives Wednesday to conduct a press conference to spotlight small businesses' unmet need for capital--to grow and increase hiring capacity.

Royce said of the small business owners who came to Capitol Hill to support an increased MBL cap, "They are trying to put democracy in action." Royce said the business owners are asking for Congress' help with their capital needs, and said an increase in the MBL cap is a way Congress can help without having to increase the government's borrowing.

He cited the experience with the $30 billion Small Business Lending Fund, intended to encourage banks to lend more to small businesses. More than half the recipients of the taxpayer-funded SBLF money used it to repay their TARP borrowings, he noted.

"The point is there is a better way to go to help small businesses access capital…and that is the Small Business Lending Act," Royce said referring to his MBL bill.  That bill would increase the MBL cap to 27.5% of a credit union's total assets, up from the current 12.25% cap.

McCarthy, addressing the business owners and credit union representatives in the room, encouraged them to continue to meet with their federal lawmakers in Washington and at home to advocate for increased MBLs.

"With this Congress, if there are not enough voices, no one is going to do anything about it," McCarthy said, adding, "We can't do it alone.  We introduced (the bill).  You have to fight for it.  It's the people back home--all of you--that have to do the heavy lifting."

Click for slide showCUNA President/CEO Cheney (third from left) welcomes some of the small business representatives that gathered Tuesday and Wednesday in Washington, D.C. to urge federal lawmakers to support legislation that would increase the MBL cap. The small businesses represented the gamut of entrepreneurial opportunities--from a pet kennel owner to a construction contractor to an interior contractor to fitness business owners and more. (CUNA photo)
Credit Union National Association (CUNA) President/CEO Bill Cheney, addressing the gathering,  underscored that credit unions have small businesses all across the country supporting credit unions in their attempt to provide more credit through increase small business lending authority.

He noted that bankers are the only group to oppose credit union efforts to provide more credit to the nation's small businesses.

"This is not a bank versus credit union issue. This is straight forward," Cheney said and underscored an MBL increase would infuse $13 billion in new credit, and create 140,000 new jobs--all at no cost to taxpayers.

Also at the press conference were small business owners, representatives from small business trade groups and business think-tanks, and credit union representatives--all joining this week to show the link between small business' needs for credit and credit unions' desire to help fill that need.

Credit union and small business representatives from Alabama, California, Minnesota, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Tennessee, and Texas met with their congressional representatives following the press conference.

Brothers Michael and Trevor Tucci, who co-own St. John's, N.Y.-based Energy Fitness, told Rep. Peter King (R-N.Y.) that Long Island, N.Y.'s Bethpage FCU was there for them when they were working to open their first gym, and they want to be able to continue to work with the credit union as they continue to expand their small business.

New York Credit Union Association (NYCUA) President/CEO William Mellin said Energy Fitness is a great example of the many small businesses that are "busting at the seams and looking to expand," and said increasing the MBL cap would allow credit unions to help these businesses grow.

In a later meeting with Rep. Nan Hayworth (R-N.Y.), Samuella Seisay, lending director with Actors FCU, New York, N.Y., said the MBL cap is forcing her credit union to turn away eligible borrowers. NYCUA Senior Vice President/General Counsel Michael Lanotte added the MBL debate should be about how best to help small businesses.

This sentiment was mirrored in a Missouri Credit Union Association meeting with members of Rep. William Lacy Clay's (D-Mo.) staff.  Gary Hinrichs, CEO of O'Fallon, Mo.-based West Community CU said an MBL cap increase is not about banks versus credit unions… "it's about constituents." One such constituent, Becker Contracting Co. President Robert Becker, said he turned to West Community CU after his small bank decided to abruptly end their lending relationship, and added that he has been helped immensely by the credit union's much lower business loan rate.

Another credit union, Winston Salem, N.C.'s Truliant FCU, helped Permatech, Inc. CEO Joe Trettel expand his manufacturing business by taking on a new project in Saudi Arabia. Trettel told Rep. Brad Miller (D-N.C.) that the credit union loan allowed him to sustain his employee base, and, eventually, to grow the total number of employees at his business back to pre-recession levels.

Other small businesses and credit union representatives will conduct their own state and district level advocacy activities, with a total of 75 small business and credit union representatives from 15 states speaking up for an MBL cap lift.

The House (H.R. 1418) and Senate (S. 509) MBL bills have broad bi-partisan support. The House bill has 117 cosponsors and the Senate bill has 22 co-sponsors.

Cordray-CUNA meeting covers a range of CU issues

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WASHINGTON (2/9/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney on Wednesday told Consumer Financial Protection Bureau (CFPB) Director Richard Cordray that "credit union members do not need to be protected from their credit unions," but, rather, need increased regulatory relief.

Cheney and CUNA Senior Vice President and Deputy General Counsel Mary Dunn met with Cordray, CFPB Director of External Affairs Elizabeth Vale, and CFPB Public Affairs Specialist Leandra English.
CUNA President/CEO Bill Cheney and Senior Vice President/Deputy General Counsel Mary Dunn (both center) addressed regulatory relief, remittances, and other credit union issues in a Wednesday meeting with CFPB Director Richard Cordray (right) and CFPB Director of External Affairs Elizabeth Vale. (CUNA photo)

Cheney during the meeting added that credit unions should not be subject to additional rules, and reinforced that credit unions are democratically owned and controlled. He and Dunn also addressed other credit union issues, including the need for more flexible guidance on multi-featured open ended lending, duplicative and unnecessary ATM fee disclosure provisions that have created legal issues for some credit unions, and the CFPB's recent remittance final rule.

Cheney and Dunn called on the CFPB to coordinate with the National Credit Union Administration (NCUA) to ensure that regulations that impact credit unions are consistently interpreted by both entities, and also again raised concerns regarding annual privacy notices, overdraft protection issues, the need to improve the mortgage regulatory process and other issues.

CUNA also urged the CFPB to ensure that credit unions are represented as it develops its Consumer Advisory Board, Credit Union Advisory Council and the Small Business Regulatory Enforcement Fairness Act panel.

Cordray assured CUNA that the agency would fully consider credit unions' concerns and will look into issues CUNA raised, such as multi-featured open end lending. He also said that he wants to encourage credit union representation on these groups.

Inside Washington (02/08/2012)

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  • WASHINGTON (2/9/12)--Federal Reserve Board Chairman Ben Bernanke on Tuesday said that while U.S. banks are minimizing their exposure to European debt, increased problems overseas could have a negative impact here. "Risks remain that developments in Europe or elsewhere may unfold unfavorably and could worsen economic prospects here at home," Bernanke said in testimony before the Senate Budget Committee (American Banker Feb. 8). About 58% of U.S. banks tightened exposure to European firms and their subsidiaries in the fourth quarter, according to the Fed's most recent Senior Loan Officer Opinion Survey. European banks also have begun rebalancing their balance sheets, creating an increase in demand for U.S. banks. The Fed has kept an eye on the quality of the hedges that domestic banks are making to protect themselves from the European debt crisis, Bernanke said …
  • WASHINGTON (2/9/12)--President Barack Obama's nomination of a Republican to the board of the Federal Deposit Insurance Corp. (FDIC) could pave the way for the Senate confirmation of other nominees, including leadership roles within Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency, according to observers. The GOP is widely believed to be intent on blocking any nominations because of the president's controversial recess appointment Richard Cordray as director of the Consumer Financial Protection Bureau (American Banker Feb. 8). But Obama's nomination of Jeremiah Norton, a JPMorgan Chase & Co. executive and former Treasury official in the Bush administration, to the fifth FDIC board seat, could open the doors for some deal making, observers said …