Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

CFPB privacy improvements receive bipartisan support

 Permanent link
WASHINGTON (2/10/12)--Republican and Democratic lawmakers, including House Financial Services subcommittee on financial institutions Chairman Shelly Moore Capito (R-W.Va.) and ranking subcommittee member Carolyn Maloney (D-N.Y.), this week spoke in support of 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.

Capito during a Wednesday House Financial Services financial institutions subcommittee hearing noted that these sorts of privacy changes have been supported by CFPB Director Richard Cordray, and said Cordray has urged Congress to act legislatively to make the changes. She said the legislation should move forward without delay.

CUNA expressed support for HR. 3871 in a letter to the subcommittee earlier this week. CUNA President/CEO Bill Cheney in that letter 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.

The hearing also featured 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.

Support for these two bills split along party lines.

Inside Washington (02/09/2012)

 Permanent link
  • WASHINGTON (2/10/12)--The National Association of State Credit Union Supervisors (NASCUS) pledged its support for HR 3993, the Capital Access for Small Business Jobs Act Wednesday. The legislation would allow credit union access to supplemental capital. "NASCUS applauds the introduction of this bill and enthusiastically supports the ability of state and federal regulators to be provided with this regulatory parity enjoyed by other federal regulators," said NASCUS President/CEO Mary Martha Fortney. For more coverage of H.R. 3993, read "CUNA welcomes 'visionary' CU capital bill."
  • WASHINGTON (2/10/12)--Rep. Elijah E. Cummings (D-Md.), ranking member of the House Committee on Oversight and Government Reform, and committee member John F. Tierney (D-Mass.) Wednesday sent a letter to Edward DeMarco, the acting director of the Federal Housing Finance Agency (FHFA) raising questions about his recent response to Congress arguing that principal reduction programs do not serve the interests of American taxpayers. After months not responding to requests for data and analysis, and in the face of a subpoena request, DeMarco sent a response letter to Cummings and Tierney on Jan. 20, outlining his justification for refusing to approve any principal reduction programs for loans backed by Fannie Mae and Freddie Mac. "The single most significant revelation in your letter to Congress," wrote Cummings and Tierney, "is that, even based on your own questionable assumptions and data, principal reduction programs serve the taxpayer interests even when compared to your preferred alternative of forbearance ...
  • WASHINGTON (2/10/12)--The Federal Reserve Board on Wednesday postponed its closed meeting to discuss Capital One Financial Corp.'s proposed acquisition of ING Direct USA, the central bank said. The meeting has been rescheduled for 2:30 p.m. (ET) on Feb. 13. The postponement was made because of to a scheduling conflict, according to a Capital One spokesperson (American Banker Feb. 9). The Fed held three public hearings on the proposed deal under which Capital One would buy the U.S. online banking unit of ING Group. Community bankers and consumer advocates have criticized the deal, saying it will create another "too big to fail" institution. The Independent Community Bankers of American called for a moratorium on all acquisitions of institutions with assets of more than $100 billion until regulators finalize a new regulatory framework required by the Dodd-Frank Act for systemically important financial institutions. Capital One has said the deal would reduce systemic risk and create jobs ...
  • WASHINGTON (2/10/12)--The Consumer Financial Protection Bureau (CFPB) has received over 2,000 comments on student loan issues from consumer advocates, industry associations, banks, schools, and individual borrowers. The agency last year requested information on a series of issues impacting private student loans from origination to servicing to collection. The CFPB said many commenters were excited by the idea of a standard financial aid shopping sheet. Commenters said information on their estimated debt at graduation, estimated monthly payment after graduation, their likely ability to repay my loans, breakdowns of school costs, and historical information on how students of that school have repaid their own debts was most important. Students and others involved in education have also requested sections to review the key terms of student loans and additional information on federal work-study programs. Information on how average interest rates impact borrowing, how interest rates for federal loans compare to private loans, and when interest begins to accrue on different types of loans was also very important to commenters, the CFPB said. The CFPB is sharing these comments with the Department of Education, and that body will use the comments to publish its own financial aid information sheet. The agency is also set to deliver a comprehensive report on the private student lending market to Congress in the summer of 2012…

NCUA cancels Feb. meeting cites streamlining

 Permanent link
ALEXANDRIA, Va. (2/10/12)--The National Credit Union Administration (NCUA) has cancelled its previously scheduled Feb. 16 open board meeting, with NCUA Chairman Debbie Matz saying board members "concluded that there are no essential board action items to publicly consider at this time."

Matz added the NCUA understands "that many credit union officials are feeling overwhelmed by a large number of proposed and final regulations, many of which are mandated by statute and issued by several different agencies." The NCUA is "carefully evaluating which NCUA rules need to be streamlined, eliminated or clarified in 2012," and may cancel additional meetings this year, if needed, she said.

Any additional meeting cancellations will be made the month of the meeting.

The NCUA on Thursday also announced the agenda for its Feb. 16 closed meeting, which will go forward as scheduled. A merger request and various supervisory issues will be discussed at that meeting, which is scheduled to begin at 10:00 a.m. ET.

ATM disclosure changes needed says CUNA joint letter

 Permanent link
WASHINGTON (2/10/12)--The Credit Union National Association (CUNA) has joined with the Electronic Funds Transfer Association (EFTA) and other groups to urge members of the U.S. Congress to eliminate an unneeded ATM fee disclosure requirement "that has encouraged a large and growing number of frivolous lawsuits across the nation."

The Electronic Fund Transfer Act requires credit unions and other financial institutions to display at each ATM location that fees will or may be charged. The act also requires that more detailed ATM fee information must also be provided before the transaction is completed, either by showing it on the ATM's screen or providing the ATM user with a small printed disclosure before the consumer is committed to paying the fee.

Credit unions and others have found that the outside notices on ATMs are, in some cases, being intentionally removed or destroyed, without the financial institution's knowledge, and that pictures are then taken of the ATM to show noncompliance. Some ATM users may then use this as evidence of apparent non-compliance and as grounds for lawsuits.

In a joint letter to Congress, CUNA and other banking and trade groups said that both the number and cost of these lawsuits have risen precipitously over the past 18 months. Without some regulatory changes, "the number of these baseless lawsuits will continue to rise as will the cost of this service to consumers," and the number of ATMs that are made available to consumers could ultimately decrease, the letter warned.

The letter added that while this dual disclosure ATM regulation may have been useful when it was first released, technological improvements have meant that the size of the ATM screen-based fee disclosures has grown, eliminating the need for a second disclosure on the body of the ATM.

Additionally, most consumers expect to pay a fee at an ATM unless they are using an ATM owned or operated by the bank or credit union where they have their account or their financial institution has agreed to pay for the use of the ATM, the letter said.

The American Bankers Association, American Gaming Association, ATM Industry Association, Independent Community Bankers Association, and the National Association of Convenience Stores also cosigned the letter.

CUNA continues to believe that the Consumer Financial Protection Bureau has authority under the act and Regulation E to eliminate the requirement for notices on the outside of the ATM. CUNA discussed this with the CFPB earlier this week and the CFPB is considering its authority regarding this issue. However, given the need to resolve ATM notice issues, Congress should look into this as well, CUNA Deputy General Counsel Mary Dunn said.

For the full letter, use the resource link.

CFPB-NCUA webinar addresses broad CU issues

 Permanent link
WASHINGTON (2/10/12)—In a joint Town Hall session with the National Credit Union Administration (NCUA), Consumer Financial Protection Bureau (CFPB) Director Richard Cordray said bank overdraft protection programs (ODP) are one of the areas on the bureau's radar screen.

Responding to a question from a credit union participant in the webinar who asked whether the bureau was going to review overdraft protection programs, Cordray said the bureau is looking at bank products, such as ODP, but that there is no news to report at this time regarding what the bureau will do.

Cordray added that there are area where the bureau might be willing to forego a formal regulatory process and just "talk through" problems.

For instance, the CFPB leader noted that he is seeing movement toward simplified and shortened credit card disclosures. He said that if there can be improvements for consumers without constraining financial institutions with more regulations, that could be a workable approach.

Cordray mentioned in his prepared remarks that the CFPB is seeking comments to streamline the regulations that have been shifted to its jurisdiction "without losing value for consumers," and urged credit unions to comment.

On another topic, a credit union representative asked Cordray whether the bureau will come out with additional guidance on the issue of multi-featured, open-end lending (MFOEL), a Regulation Z issue.

The NCUA issued guidance (see resource link) in 2010 to help federal credit unions comply with certain Federal Reserve Board changes to the Official Staff Commentary to Reg Z, but confusion still abounds for credit unions concerning the concept of "occasionally or routinely" verifying certain credit information as well as the verification of credit information in connection with a consumer's request for certain advances under a multi-featured open-end lending plan.

Multi-featured, open-end lending has been used by credit unions as a tool to assist in establishing long-term borrowing relationships with their members for over 30 years, and has served as a convenient way for consumers to obtain advances at the point of a transaction.

Cordray acknowledged that he was unaware of the issue until it was raised with him by the Credit Union National Association. He said he has no immediate answers to the problems, but will have discussions with credit unions and the NCUA to determine what, if anything, should be done.

NCUA's Matz at the joint webinar Wednesday addressed a recent development where the North Carolina credit union regulator allowed State Employees CU to make its CAMEL rating public and said the NCUA had no choice but to end its joint examinations. (See News Now, Feb. 9: NCUA addresses N.C. exam situation.)

She also addressed new rules on credit union service organizations and trouble debt restructuring loans.  For more on these issues, use the resource link below to access the Credit Union National Association's CompBlog posting (members only).

CUNA welcomes visionary CU capital bill

 Permanent link
WASHINGTON (2/10/12)--In a bill the Credit Union National Association (CUNA) says will enhance the safety and soundness of the credit union system, Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.) have proposed to permit the National Credit Union Administration (NCUA) to allow credit unions to accept additional forms of capital, provided it does not alter the cooperative ownership structure of credit unions.

Three other members of Congress joined King and Sherman as original cosponsors: Reps. Ron Paul (R-Texas), Larry Kissell (D-N.C.) and Bob Filner (D-Calif.).

Current law restricts credit unions to building their capital levels through retained earnings. Under the newly introduced bill, supplemental capital would have to be uninsured and subordinate to other claims against a credit union.

Click to view larger image Rep. Peter King (R-N.Y.) (center), who, along with Rep. Brad Sherman (D-Calif.), introduced a supplemental capital bill for credit unions on Thursday, meets with New York credit union representatives and small business owners during CUNA's Small Business Hike the Hill. King and the hikers discussed the benefits of an increased member business lending cap, and supplemental capital for credit unions, during the meeting. Also pictured, standing behind King, from left to right, are: Melrose CU Director of Marketing and Public Affairs Rob Nemeroff; Actors FCU Lending Director Samuella Seisay; Bethpage FCU Senior Vice President of Corporate Development Linda Armyn; Actors FCU Marketing Director Steven Sobotta; Energy Fitness co-owners Trevor Tucci and Michael Tucci; Bethpage FCU Vice President of Commercial Lending Lawrence Jones; New York Credit Union Association President/CEO William Mellin; and New York Credit Union Association Senior Vice President/General Counsel Michael Lanotte. (CUNA photo)
The new bill (H.R. 3993) would also authorize the NCUA 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.

In a letter to colleagues this week seeking support for the bill, King said it will provide the NCUA with "the same authority and flexibility to adjust capital requirements in response to changes in economic conditions as Congress has provided to federal banking regulators."  They said it also will:

  • Rectify a flaw in a 1998 law that is discouraging manageable asset growth by financially healthy credit unions;
 

  • Ensure credit unions can continue to accept new deposit shares--even during tough economic times when demand for loans and other income-generating services are low; and
 

  • Allow credits unions to help keep private sector credit flowing at affordable rates even in recessionary times.
 

The National Credit Union Administration has backed an idea to permit a combination of supplemental and risk-related capital for credit unions.

NCUA Chairman Debbie Matz, in letters to the top members of the Senate Banking Committee and the House Financial Services Committee last year, urged statutory changes that would correct the disincentive she said is impacting even strong, well-capitalized credit unions.

She said that, to the detriment of consumers, current credit union prompt corrective action (PCA) rules discourage some credit unions from marketing their desirable products and services out of concern that attracting increased share deposits could deflate net worth positions.

CUNA, in its letter of support for the legislation sent to King and Sherman, said, "The lesson of the most recent financial crisis for financial institutions is that capital is king."

CUNA President/CEO Bill Cheney wrote, "This visionary legislation is all about ensuring that consumers and their communities will continue to receive support from their credit unions as they grow. The measure would provide credit unions with appropriate ability to raise capital from sources other than retained earnings while maintaining the 'one member, one vote' principle that is the bedrock of the credit union ownership structure.

"Further, it would improve the safety and soundness of credit unions by allowing them to develop a supplemental cushion to reduce risk to the National Credit Union Share Insurance Fund. Reps. King and Sherman are to be commended for introducing this bill, and we look forward to working with them toward passage by the House, and ultimately enactment."

NEW King and Sherman introduce CU capital bill

 Permanent link
WASHINGTON (2/9/12, UPDATED 12:04 p.m. ET)--In a bill the Credit Union National Association (CUNA) says will enhance the safety and soundness of the credit union system, Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.) have proposed to permit the National Credit Union Administration (NCUA) to allow credit unions to accept additional forms of capital, provided it does not alter the cooperative ownership structure of credit unions.

Current law restricts credit unions to building their capital levels through retained earnings. Under the newly introduced bill, supplemental capital would have to be uninsured and subordinate to other claims against a credit union.

The bill (H.R. 3993) also authorizes the NCUA 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.

In a letter to colleagues seeking support for the bill, King said it will provide the NCUA with "the same authority and flexibility to adjust capital requirements in response to changes in economic conditions as Congress has provided to federal banking regulators."  They said it also will:

  • Rectify a flaw in a 1998 law that is discouraging manageable asset growth by financially healthy credit unions;
  • Ensure credit unions can continue to accept new deposit shares--even during tough economic times when demand for loans and other income-generating services are low; and
  • Allow credits unions to help keep private sector credit flowing at affordable rates even in recessionary times.
The NCUA has backed an idea to permit a combination of supplemental and risk-related capital for credit unions.

NCUA Chairman Debbie Matz, in letters to the top members of the Senate Banking Committee and the House Financial Services Committee last year, urged statutory changes that would correct the disincentive she said is impacting even strong, well-capitalized credit unions.

She said that, to the detriment of consumers, current credit union prompt corrective action (PCA) rules discourage some credit unions from marketing their desirable products and services out of concern that attracting increased share deposits could deflate net worth positions.

CUNA, in its letter of support for the legislation sent to King and Sherman, said, "The lesson of the most recent financial crisis for financial institutions is that capital is king."

"Capital is also the first line of defense in protecting taxpayers from deposit insurance losses. It is in everyone's best interest to have financial institutions that are well capitalized and able to weather whatever difficulties may occur," CUNA President/CEO Bill Cheney wrote.

"We believe your 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."

NEW NCUA cancels Feb. open board meeting

 Permanent link
ALEXANDRIA, Va. (UPDATED: 10:15 a.m. ET, 2/9/12)--The National Credit Union Administration (NCUA) has cancelled its previously scheduled Feb. 16 open board meeting, with NCUA Chairman Debbie Matz saying board members "concluded that there are no essential Board action items to publicly consider at this time."

Matz added the NCUA understands "that many credit union officials are feeling overwhelmed by a large number of proposed and final regulations, many of which are mandated by statute and issued by several different agencies." The NCUA is "carefully evaluating which NCUA rules need to be streamlined, eliminated or clarified in 2012," and may cancel additional meetings this year, if needed, she said.

Any additional meeting cancellations will be made the month of the meeting.

The NCUA said it would still move forward with its scheduled Feb. 16 closed meeting.