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CUs Should Plan For CFPB Changes, Panelists Say

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WASHINGTON (2/27/13)--Credit unions are facing a barrage of new Consumer Financial Protection Bureau mortgage regulations, and the first step in dealing with these regulations should be credit union staff education, panelists at a Tuesday Credit Union National Association Governmental Affairs Conference session said.

The GAC breakout session, entitled "Managing the Change in Lending Rules," was moderated by CUNA Associate General Counsel Jared Ihrig. The panel also featured commentary from:
  • CFPB Deputy Assistant Director, Regulations, Ben Olson;
  • SchoolsFirst FCU, Santa Ana, Calif., Chief Operations Officer Erin Mendez; and
  • PolicyWorks LLC Vice President Andrea Stritzke.
The session provided a brief overview of three new CFPB releases, the agency's new ability-to-repay, mortgage loan originator compensation and mortgage servicing rules. These rules are scheduled to go into effect in January 2014, and Stritzke said credit unions should not wait long to begin to analyze the rules and implement needed changes.

"Someone has to start to learn these rules to help train others in your credit union," she said. There are a lot of details, she noted. There are a lot of little exceptions in the rules that will impact credit unions, and a lot of little exceptions that will help credit unions, she said. Credit unions without a full education in the rules may start compliance processes when they do not need to, Stritzke stressed.

She also emphasized that interpretations of the rules can vary, and elements of the rules could change before January.

Mendez said her credit union has brought together real estate, lending and compliance staff to form a task force to take on the CFPB mortgage regulations. The task force members review the regulations and hold meetings to discuss what the rules are and what they mean for credit unions and membership.

Mendez also advised credit unions not to get so focused on the rules that they forget the members they are trying to serve. Credit unions should also try to be as thoughtful as possible when they look for ways to adapt current processes or current notices to meet the new requirements.

Olson said the CFPB is trying to make the new regulations as digestible as possible, and will work to help credit unions and others impacted by the rules prepare for compliance with guidance, webinars and other outreach efforts. He noted that the CFPB regulations do not aim to be overly restrictive. "There are good loans to be made across the board," he said.

GAC: Wasserman Schultz Praises CUs For MBL Efforts

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WASHINGTON (2/27/13)--Rep. Debbie Wasserman Schultz (D-Fla.) praised credit unions for their efforts in providing small businesses with capital to create jobs and help the economy at the Credit Union National Association's Governmental Affairs Conference in Washington Tuesday.

She noted that Florida credit union member business lending (MBL) created 7,000 jobs in the state in fiscal 2012.

"Credit unions have effectively been filling the lending gap for small businesses," Wasserman Shultz said. "We would not be where we are in the recovery without credit unions."

Rep. Ed Royce (R-Calif.) in February reintroduced legislation (H.R. 688) that would increase MBL cap to 27.5% of assets, from the current 12.25%-of-assets level.

The bill, if enacted, would help credit unions lend an additional $14.5 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create over 158,000 new jobs.

Wasserman Schultz called for a balanced approach to regulation, one that protects consumers and clears red tape for financial institutions. "I don't think you have to choose between one and the other," she said.

She acknowledged that the complexity of regulations that credit unions face is unsustainable. "We must reduce the burden and increase the consistency of regulation," Wasserman Schultz said. Along with Rep. Shelly Moore Capito (R-W. Va.), Wasserman Schultz sponsored the Financial Institutions Examination Fairness and Reform Act, which would require more timely examination reports and more timely exam decisions.

Wasserman Schultz also praised credit unions for their grassroots efforts and ability to work together.

"There is no better example of grassroots efforts in the financial services industry than credit unions, and when the leaders here today speak with one voice, you can and will make progress," she said.

CUNA's 2013 GAC runs through Thursday.

Treasury Nominee Lew To Face Full Senate Vote

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WASHINGTON (2/27/13)--Jack Lew moved one step closer toward becoming U.S. Treasury secretary when his nomination was approved by the Senate Finance Committee by a 19-5 vote on Tuesday.

The Hill reported a full Senate vote on Lew's nomination could be held today.

President Barack Obama nominated Lew, currently White House chief of staff, in January for the Treasury post. Earlier this year, the committee quizzed Lew on topics ranging from the complexity of the nation's tax code, to the qualified mortgage definition issued by the Consumer Financial Protection Bureau, to the Treasury's March 1 deadline to eliminate paper delivery of federal benefits checks.

The committee also approved Christopher Meade's nomination for Treasury general counsel.

NEW: Cordray Calls on CUs To Help CFPB Aid Consumers

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WASHINGTON (2/27/13, UPDATED: 9:55 a.m. ET)--Consumer Financial Protection Bureau Director Richard Cordray today called on credit unions to work with the agency "to address the consumer financial issues central to the lives of people all across this country.

"The people we jointly work for, your members, and american consumers, are eager to discover a new and improved consumer financial marketplace. And they deserve it," he added.

In his remarks before the Credit Union National Association's 2013 Governmental Affairs Conference, Cordray noted that it was not the traditional lending practices of credit unions that created the financial crisis. In fact, he said credit unions were the original consumer protectors, and were sounding the alarm bell long before the financial crisis.

"In short, we believe that credit unions and the consumer bureau see the world in the same way: Consumers who understand their options, weigh choices appropriately and make sound decisions are good for responsible businesses and the economy as a whole," Cordray said.

For more on Cordray's speech, see the Thursday edition of CUNA News Now.

NEW: Sen Warren: CU 'Reliable' Model a Bright Spot In Economy

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WASHINGTON (2/27/13, UPDATED 10:30 a.m. ET)-Sen. Elizabeth Warren (D-Mass.), speaking to the Credit Union National Association's Governmental Affairs Conference here this morning, directed the spotlight to shine brightly on the credit union difference.

Across her state of Massachusetts--and all around the country--member-owned credit unions are looking out for people, she said. "That's what credit unions do-they work for their members."

Remembering the unfolding of the country's recent financial crisis, the senator said that as one Wall Street banking scandal after another unfolded, credit unions remained a bright spot in the financial industry.

"Credit unions did not break this economy. They did not build business models around tricking their customers. When the economy faltered, they did not turn their backs on the families and small businesses that needed them.

"On the contrary, credit unions worked hard to lead our economic recovery, responsibly and reliably providing credit to their members that need it. The credit union motto says it all: 'not for profit, not for charity, but for service,'" Warren, who was instrumental in setting up the Consumer Financial Protection Bureau before she won election to become Massachusetts new senator, said.

See News Now Thursday for more on Warren's remarks.

Luetkemeyer Praises CUs For Finding Common Ground

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WASHINGTON (2/26/13)--Rep. Blaine Luetkemeyer (R-Mo.), speaking at the Credit Union National Association's Governmental Affairs Conference Tuesday, praised credit union leaders for their ability to find common ground and work with lawmakers on both sides of the aisle.

"We in this country, being the entrepreneurs that we are, have the opportunity to grow our industries and work with members and clients to make a difference in their lives," he said. "I think by being here today you want to make a difference."

Luetkemeyer said given the partisan political climate that pervades Washington today, making a difference is more challenging than ever. Even bills supported by both parties are subject to hang ups, he said.

"It's a lot like Murphy's Law: if something can go wrong it always will," Leutkemeyer said. "As a result we have to work past issues and find ways to work together even on small issues. But there always seem to be problem that can't be resolved."

In February, Luetkemeyer and Rep. Brad Sherman (D-Calif.) introduced "The Eliminate Privacy Notice Confusion Act." CUNA supports the bill, which it says would eliminate repetitive privacy notices that are often ignored by consumers (News Now Feb. 19). By eliminating a requirement that the notices be sent annually, and requiring them only to be sent when the privacy policy of a financial institution has changed, the notices become more meaningful for consumers, CUNA has stated.

The U.S. House unanimously passed an identical bill before the 112th Congress adjourned, but the Senate had not acted on the legislation. Therefore, the bill must be re-introduced for consideration in both chambers this year.

CU 'Common Purpose' Is Powerful Legacy, Fryzel Tells GAC

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WASHINGTON (2/27/13)--National Credit Union Administration board member Michael Fryzel told a crowd of more than 4,200

Click to view larger image Addressing the CUNA 2013 GAC, NCUA board member Michael Fryzel applauds credit unions for continuing to lend to their members and members' families to help them through difficult times. (CUNA photo)

credit union officials that their joint vision and values rescued the industry from the recent recession and honored what their predecessors had created.

He was addressing the Credit Union National Association's 2013 Governmental Affairs Conference held here through Thursday.

Fryzel said that during the country's recent financial crisis, the "people who made up the credit union system held together, and because of that, the system held together."

"We all rolled up our sleeves. All of us hauled new timbers. We rebuilt the system ourselves, a system that is going to last," he said.

The NCUA board member also applauded credit unions for continuing to lend to their members and members' families to help them through difficult times. The credit union audience got a pat on the back for being part of a system that accepts challenges together and can take pride in their accomplishments.

Fryzel, who was chairman of the NCUA board when it conserved U.S. Central FCU and Western Corporate FCU in March 2009, recounted some of the initiatives that the agency took to stabilize the industry. These included the Credit Union System Investment Program and the Credit Union Homeowners Affordability Relief Program.

Fryzel, who joined the board in 2008 after being appointed by President George W. Bush to a term that expires in August, encouraged the credit union representatives to continue to live out their vision.

He told the credit union leaders that you "wrestled with current problems and tamed them with your vision of the future.'' And he encouraged attendees to ensure that members of Congress "understand what cooperative credit unions are, the work cooperative credit unions do, and the great potential cooperative credit unions have for the people and the economy of this country.''

"Vision" is a powerful theme of this year's GAC. During the Monday morning session, CUNA President/CEO Bill Cheney presented a bold new, overarching strategic vision for the credit union movement: A vision in which "Americans choose credit unions as their best financial partner."



He outlined this strategic vision, and how credit unions can "Unite for Good" to achieve it was the focus of the CUNA leader's remarks to the 4,200 participants at the opening general session of CUNA's 2013 Governmental Affairs Conference.

Cheney stressed that developing a vision where Americans choose credit unions as their best financial partner stemmed from more than one year of discussions with credit union and league leaders, credit union system partners, and CUNA's own leadership.

 
 

New CUNA Chair: CUs Must Boost Advocacy Efforts

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WASHINGTON (2/27/13)--Credit unions are well-known in Washington for their grassroots involvement, and they will need to get politically engaged on even a larger scale if they hope to advance their legislative goals, new Credit Union National Association Chairman Pat Wesenberg said on Tuesday.

Wesenberg, who is also president/CEO of Central City CU in Marshfield, Wis., spoke after she received the ceremonial leadership gavel from exiting CUNA Chairman Mike Mercer at CUNA's 2013 Governmental Affairs Conference here.

Wesenberg, who has been involved with credit unions since she took on a "summer job" at age five, said she has learned the importance of advocacy in her life's work with credit unions.

When she first started working with credit unions as an adult, she was more concerned with day-to-day operations. "But in time, I came to learn that political advocacy is critically important. There's a real value to knowing who your legislators are, and interacting with them on a regular basis, not just in Washington, but back at home," she said.

Despite the intensity of bank attacks on credit union priorities, credit unions can overtake them, she said. She noted that CUNA, the Wisconsin Credit Union League and credit unions in that state pulled together to repel attempted bank attacks on the credit union tax status, and said credit unions and cooperatives can work together and lobby together to achieve shared goals.

"The opportunities for credit unions have never been greater. People today are making a beeline to the personal service, the value, and the sense of trust we offer." These claims are backed up by increased membership and lending numbers, she noted. At the same time, banks "have never been held in such low regard in the public eye," she said.

However, community banks can also work with credit unions and find common ground. "They know we've got enormous public support and trust, and they know how wonderful credit unions can be when we all work together behind a shared political agenda.

"Our moment is now, working together we can advance our political agenda. That is why we're here, and that will be one of my top goals as your new CUNA board chairman," Wesenberg said.

Bachus To GAC: Lawmakers May Revisit Interchange Cap This Year

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WASHINGTON (2/27/13)--Federal lawmakers may revisit the topic of interchange fee cap legislation this year, Rep. Spencer Bachus (R-Ala.) said in a Tuesday speech before the Credit Union National Association's 2013 Governmental Affairs Conference in Washington.



Bachus, who is the the immediate past chairman and still a senior member of the House Financial Services Committee, said the interchange fee cap affected local institutions and basically didn't affect larger financial institutions. "It affected debit cards and things that you market, and not so much the credit card," he said.

Earlier on Tuesday, committee chairman Rep. Jeb Hensarling (R-Texas) said he "will not rest" until Congress repeals interchange fee cap provisions. "Federal price controls were wrong yesterday, federal price controls are wrong today, federal price controls will be wrong tomorrow," Hensarling said of the interchange fee cap.

The Dodd-Frank Wall Street Reform Act, which Bachus said was a result of "the behavior of a few and not Main Street institutions," punishes credit unions and small financial institutions that were innocent victims. "We're going to look very hard [at Dodd-Frank]," and credit unions could see bipartisan support for taking off some unnecessary, needed, uncalled-for parts of Dodd-Frank that impact credit unions and other small financial institutions, he added.

The structure of the Consumer Financial Protection Bureau is another topic that could soon be addressed in a bipartisan manner, Bachus said. He noted that House and Senate members are in serious talks to form a bipartisan commission to govern the bureau. "I think that you will find that approach much fairer and less dictatorial," he said.

Click to view larger image Rep. Spencer Bachus (R-Ala.) says the Dodd-Frank Wall Street Reform Act was a result of "the behavior of a few and not Main Street institutions" and punishes credit unions and small financial institutions that were innocent victims. (CUNA photo)

Boehner Zeroes In On Tax Reform At CUNA GAC

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WASHINGTON (2/27/13)--One of the most prominent Republican policymakers on Capitol Hill today discussed one of the hottest, most debated topics ripped out of the headlines to a packed house of credit union representatives in town for the system's premiere governmental affairs conference.

Speaker of the House John Boehner (R-Ohio) Tuesday took to the stage at the Credit Union National Association's 2013 Governmental Affairs Conference and discussed reform of the country's tax code before an audience of 4,200 credit union representatives, and press organizations that included Politico, American Banker, Reuters, Fox News Channel and the trade press.

The House speaker was introduced by Ohio Credit Union League President/CEO Paul Mercer, who said Boehner "has long been aware" of what credit unions in Ohio do for the state.

Boehner opened his remarks by telling his audience that his Washington focus is much the same as theirs--"to get government out of the way" and "let hard-working Americans" be successful in their businesses.

Boehner said the country is moving toward a renaissance and a time of energy independence. He named three things he said are necessary to do to build on the renaissance:

Click for slide show House Speaker John Boehner addresses CUNA's Governmental Affairs Conference for the second time in three years. His topic in 2013: tax reform and education as tools to help the country grow. (CUNA photo)
  • Fix a broken tax code: Lower the tax rate for all and clean out loopholes and "the other nonsense that is there."
  • Do something about the large debt that "hangs over" the nation; and
  • Ensure American kids get a "chance at a decent education."

"If we are serious about economic development, we must do those three things," he said.

"What's made America the country it is, is that you can grow up to be anything you want to be."

This is the second time the House speaker has addressed the CUNA GAC.  In 2011, Boehner discussed topics related to the then-new Dodd-Frank Wall Street Reform Act.

Hensarling Vows To Stand With CUs In Preserving Tax-Exempt Status

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WASHINGTON (2/27/13)--House Financial Services Committee Chairman Jeb Hensarling (R-Texas), speaking Tuesday at the Credit Union National Association's Governmental Affairs Conference in Washington, D.C., said he will help credit unions preserve their tax-exempt status.

Hensarling blamed bad policy, specifically excessive taxation, as among the key reasons for feelings of doubt that many American feel toward their economic prospects.

"But if I have anything to do with it, it will not be taxation on our credit unions," Hensarling declared to the credit union audience.  More than 4,200 credit union representatives are attending this year's GAC.

Hensarling also said that he "will not rest" until the U.S. Congress repeals a provision of the 2010 Dodd-Frank Act that caps the fees financial institutions and card networks can charge retailers when a customer uses a debit card.

"Federal price controls were wrong yesterday, federal price controls are wrong today, federal price controls will be wrong tomorrow," Hensarling said of the interchange fee cap.

New rules that allow retailers to assess "check out" fees or surcharges on credit card purchases took effect in many states on Jan. 27, and CUNA is watching to assess how these rules could impact credit unions. The surcharge rule change is one result of a 2012 interchange fee class action lawsuit settlement (News Now Jan. 29).  CUNA has explained that the surcharging aspect of the settlement--as well as the provision that consumer-owned credit unions would see a reduction in interchange revenue--are signs that the settlement does nothing for consumers.

Hensarling also attacked the regulatory complexity created by Dodd-Frank. He said Dodd-Frank was based on the premise that regulators lacked the authority to prevent Wall Street from taking outsized risk, but that diagnosis, he said, was wrong.

"You can find very few instances of lack of regulatory authority contributing to the financial crisis," Hensarling said. "Instead at the epicenter of the crisis is a Federal Reserve that kept money too cheap too long because of the housing bubble and federal policy, particularly the affordable housing goals of the [government sponsored enterprises] that promoted and incented financial institutions that were lending to people to buy homes they could not afford."

Hensarling put Dodd-Frank regulations into two categories: "Those that create uncertainty and those that create certain economic harm."

Among the chief risks facing financial institutions today is federal regulatory risk, Hensarling said. "And ladies and gentlemen, with your support, I plan to end that," he added.

Hensarling, a critic of the authority that Dodd-Frank granted the Consumer Financial Protection Bureau, said the regulatory burden inflicted by the bureau will stifle innovation and curtail lending.  "The way to protect consumers is through competitive, transparent innovative markets that vigorously police for fraud, and it's time to empower credit union members, not bureaucrats in Washington."

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said taxing credit unions is "bad policy." Hensarling spoke at the Credit Union National Association's Governmental Affairs Conference in Washington, D.C. (CUNA photo)

Reg Relief For CUs On Majority Whip's Mind

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WASHINGTON (2/27/13)--House Majority Whip Kevin McCarthy (R-Calif.) praised credit unions for helping him start his business

Click to view larger image House Majority Whip Kevin McCarthy (R-Calif.) says that the way to solve the current financial problems is for both political parties to work together and cut spending.  (CUNA photo)

and promised to work hard to provide regulatory relief for the industry.

McCarthy, who once owned a delicatessen in Bakersfield, Calif., said he would use his influence to fight the growth of regulations that prevent credit unions from doing what they need to do, such as making more business loans.

He made his remarks during a speech at the Credit Union National Association's 2013 Governmental Affairs Conference.

McCarthy, the No. 3 member of the GOP leadership and a fourth-term lawmaker, reiterated his support for legislation that would improve the process for appealing decisions made by examiners for the National Credit Union Administration and other financial regulatory agencies.

He also urged GAC attendees to be vigilant in making their cases when meeting with lawmakers. Capitol Hill visits are a vital and integral part of the CUNA conference.

"Don't assume that members understand the history (of credit unions)--especially why you have your tax-exempt status,'' he said. CUNA and the state credit union associations recently unveiled an important members-only toolkit: It is designed to help credit unions connect with their members and educate the public about credit unions as banks intensify their state-level attacks against the credit union tax status. Use the link to access the resource.

McCarthy also said that the way to solve the current financial problems is for both political parties to work together and cut spending. He opined that Washington "doesn't have a revenue problem, but a spending problem.''

Rep Meeks To CUNA GAC: I Will Fight For CUs

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WASHINGTON (2/27/13)--House Financial Services Committee member Rep. Gregory Meeks (D-N.Y.) Tuesday said he "will fight to ensure that credit unions remain the cornerstone of Main Street America."

One way to do this, he told the crowd at the Credit Union National Association's 2013 Governmental Affairs Conference Tuesday, is to support member business lending (MBL) legislation.

Meeks, who is the ranking minority member on the committee's Financial Institutions and Consumer Credit Subcommittee, is a co-sponsor of H.R. 688. That bill would increase the credit union MBL cap to 27.5% of assets, from the current 12.25% of assets.

The bill, if enacted, would help credit unions lend an additional $14.5 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create more than 158,000 new jobs.

Meeks noted the positive impact that the MBL bill could have in communities across the country, and said the bill needs to be moved through Congress. "Seems like a no-brainer to me," he said.

Meeks called credit unions "the backbones of communities."

"When entrepreneurs have difficulty obtaining capital from other lending sources, they know where they can go and sustain themselves and get a loan and help businesses and help create jobs...they go to their credit union," he said.

Meeks noted that credit union lending remained strong in recent years, allowing countless businesses and consumers to remain afloat and have access to vital capital. And, he said, credit unions have been able to provide this critical support without the advantages many other institutions maintain.

CUNA's GAC runs through Thursday.

House Democratic Whip: Sequester Could Be 'Disaster' For CUs

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WASHINGTON (2/27/13)--House Democratic Whip Steny Hoyer (Md.) warned credit union executives that the prospective sequester transition facing Congress could be a disaster for the credit union sector.

"The sequester, quite simply is shorthand for a reduction in the opportunities that grow and sustain your membership base," he said in a speech before the Credit Union National Association's Governmental Affairs Conference here. "It will have serious, negative consequences for businesses--large and small--and the middle-class families you serve."

He urged credit unions to use their political influence during congressional visits, which are an integral part of the CUNA GAC, to stress the depth of the crisis. "We need you to add your influence," he added.

Hoyer said the mission should appeal to the credit union leaders because "you are the folks who go to your office and figure how to help people."

He said the sequester is not inevitable. "Congress created the problem, and Congress can solve it."

Hoyer said Congress can do so by replacing the sequester's cuts with a balanced approach to deficits that achieves the $1.2 trillion in savings that must be found under the Budget Control Act.

The alternative, he told the meeting, was "devastating consequences to the American dream your credit unions have worked so hard to help build."

Hoyer added: "In a city where seemingly nothing gets done if the clock isn't about to strike 12, it's not too late to avoid the sequester, and spare our people, our businesses, our markets, and all of you, from its serious consequences."

Royce: Economic Tensions Call For Greater MBL Authority

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WASHINGTON (2/27/13)--Rep. Ed Royce said current economic tensions are proving more than ever the need for expanding credit union member business lending (MBL) authority. The California Republican urged attendees at the Credit Union National Association's Governmental Affairs Conference to stress this issue during planned visits to congressional offices this week.

Royce is the author and prime sponsor of the Credit Union Regulatory Improvement Act to increase the credit union MBL cap. He told the conference the legislation now has 40 co-sponsors, and includes members of both political parties.

He also reported success in soliciting Senate co-sponsors, despite bank opposition. "The more we focus on the legislation, the more we capture members of the Senate," he said.     

Royce said banker opposition to the bill will be less of a factor if credit unions can represent the issue as an important move to broaden consumer options at a time when they are badly needed. He suggested opponents would like to define it so that members of Congress will see it as simply a conflict for market share between credit unions and banks.

"You are the boots on the ground," he told the GAC session. "Each of us in our credit unions have stories to tell.  I want you to share them so we can raise this lending cap."  He said it makes no sense to be subject to certain artificial lending caps in this kind of an economy.

"You are the most effective group in doing this that I know," he added. He said credit unions are noted for representing the interests of their members but also promoting economic advantages that will improve the economy and create jobs.

Rep Heck Pledges To Work For CU Issues

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WASHINGTON (2/27/13)--Rep. Denny Heck (D-Wash.), a former marketing director of Columbia CU,  Vancouver, Wash., praised the efforts of credit unions to help people and businesses and promised to work for their interests as a new member of the on the House Financial Services Committee.

"Credit  unions are about helping small businesses and helping people get what they want in life,'' Heck  told the Tuesday crowd of more than 4,200 credit union officials at the Credit Union National Association's 2013 Governmental Affairs Conference held here through Tuesday.

Heck, a freshman lawmaker, thanked credit unions for the help they gave him in his campaign last year. CUNA and the Northwest Credit Union Association (NWCUA) supported Heck with a $10,000 maximum contribution from the Credit Union Legislative Action Council and organized events on his behalf.

CUNA's and the NWCUA's support was based not only on Heck's past employment at a credit union, but on his in-depth knowledge and stated support of credit unions and their issues, CUNA has said.

Heck praised credit unions for lending him money to launch several small businesses and said he would co-sponsor legislation, recently re-introduced in the U.S. House, to raise the cap on member business loans from 12.25% of assets to 27.5% of assets. He also said he learned a great deal about non-financial issues while a credit union employee.

"All I ever needed to know I learned at the teller window at Columbia Credit Union,'' he said.

NEW: Bachus to GAC: Congress May Revisit Interchange Cap This Year

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WASHINGTON (2/27/13, UPDATED: 12:45 p.m. ET)--Federal lawmakers may revisit the topic of interchange fee cap legislation this year, Rep. Spencer Bachus (R-Ala.) said in a Tuesday speech before the Credit Union National Association's 2013 Governmental Affairs Conference in Washington.

Bachus, who is the the immediate past chairman and still a senior member of the House Financial Services Committee, said the interchange fee cap affected local institutions, and basically didn't affect larger financial institutions. "It affected debit cards and things that you market, and not so much the credit card," he said. Earlier today, committee chairman Rep. Jeb Hensarling (R-Texas) said he "will not rest" until Congress repeals interchange fee cap provisions. "Federal price controls were wrong yesterday, federal price controls are wrong today, federal price controls will be wrong tomorrow," Hensarling said of the interchange fee cap.

The Dodd-Frank Wall Street Reform Act, which Bachus said was a result of "the behavior of a few and not main street institutions," punishes credit unions and small financial institutions that were innocent victims. "We're going to look very hard [at Dodd-Frank]," and credit unions could see bipartisan support for taking off some unnecessary, needed, uncalled for parts of Dodd-Frank that impact credit unions and other small financial institutions, he added.

The structure of the Consumer Financial Protection Bureau is another topic that could soon be addressed in a bipartisan manner, Bachus said. He noted that House and Senate members are in serious talks to form a bipartisan commission to govern the bureau. "I think that you will find that approach much fairer and less dictatorial," he said.

NCUA Improves Consumer Outreach With New Sites, Video

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ALEXANDRIA, Va. (2/26/13)--The National Credit Union Administration Monday unveiled updated versions of its consumer websites MyCreditUnion.gov and Pocket Cents.

Consumers can now also keep up with the latest personal finance tips from the NCUA through a new agency Twitter feed, @MyCUgov. Matz was also featured in a new NCUA Consumer Report video that reminds viewers of the importance of developing and keeping good savings habits. "That's an important step towards building a solid financial future," Matz said.

The new resources and website changes were released to coincide with America Saves Week and Military Saves Week. For more on the NCUA resources, use the link.

NEW: Hensarling Vows To Stand With CUs in Preserving Tax Exempt Status

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WASHINGTON (2/26/13, UPDATED 10:55 a.m. ET)--House Financial Services Committee Chairman Jeb Hensarling (R-Texas), speaking Tuesday at the Credit Union National Association's Governmental Affairs Conference in Washington D.C. said he will help credit unions preserve their tax exempt status.

Hensarling blamed bad policy, specifically excessive taxation, as among the key reasons for feelings of doubt that many American feel toward their economic prospects.

"But if I have anything to do with it, it will not be taxation on our credit unions," Hensarling declared to the credit union audience.  More than 4,200 credit union representatives are attending this year's GAC.

Hensarling also said that he "will not rest" until the U.S. Congress repeals a provision of the 2010 Dodd-Frank Act that caps the fees financial institutions and card networks can charge retailers when a customer uses a debit card.

"Federal price controls were wrong yesterday, federal price controls are wrong today, federal price controls will be wrong tomorrow," Hensarling said of the interchange fee cap.

Hensarling also attacked the regulatory complexity created by Dodd-Frank.  He said Dodd-Frank was based on the premise that regulators lacked the authority to prevent Wall Street from taking outsized risk, but that diagnosis, he said, was wrong.

"You can find very few instances of lack of regulatory authority contributing to the financial crisis," Hensarling said. "Instead at the epicenter of the crisis is a Federal Reserve that kept money too cheap too long because of the housing bubble and federal policy, particularly the affordable housing goals of the [government sponsored enterprises] that promoted and incented financial institutions that were lending to people to buy homes they could not afford."

Hensarling put Dodd-Frank regulations into two categories: "Those that create uncertainty and those that create certain economic harm."

Among the chief risks facing financial institutions today is federal regulatory risk, Hensarling said. "And ladies and gentlemen, with your support, I plan to end that," he added.

Hensarling, a critic of the authority granted Dodd-Frank granted the Consumer Financial Protection Bureau, said the regulatory burden inflicted by the bureau will stifle innovation and curtail lending.  "The way to protect consumers is through competitive, transparent innovative markets that vigorously police for fraud, and it's time to empower credit union members not bureaucrats in Washington."

NEW: Fryzel: CU 'Common Purpose' Is Powerful Legacy

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WASHINGTON (2/26/13, UPDATED 11:11 a.m. ET)--National Credit Union Administration board member Michael Fryzel told a crowd of more than 4,200 credit union officials that their joint vision and values rescued the industry from the recent recession and honored what their predecessors had created.

He was addressing the Credit Union National Association's 2013 Governmental Affairs Conference held here through Thursday.

Fryzel said that during the country's recent financial crisis, the "people who made up the credit union system held together, and because of that, the system held together."

"We all rolled up our sleeves. All of us hauled new timbers. We rebuilt the system ourselves, a system that is going to last," he said.

The NCUA board member also applauded credit unions for continuing to lend to their members and members' families to help them through difficult times. The credit union audience got a pat on the back for being part of a system that accepts challenges together and can take pride in their accomplishments.

Fryzel encouraged the credit union representatives to continue to live out their vision.

"Vision" is a powerful theme of this year's GAC. During the Monday morning session, CUNA President/CEO Bill Cheney presented a bold new, overarching strategic vision for the credit union movement: A vision in which "Americans choose credit unions as their best financial partner."

 
 



He outlined this strategic vision, and how credit unions can "Unite for Good" to achieve it, was the focus of the CUNA leader's remarks to the 4,200 participants at the opening general session of CUNA's 2013 Governmental Affairs Conference.

Cheney stressed that developing a vision where Americans choose credit unions as their best financial partner stemmed from more than one year of discussions with credit union and league leaders, credit union system partners, and CUNA's own leadership.

At GAC, Cheney Calls On CU System To 'Unite For Good'

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WASHINGTON (2/26/13)--Credit Union National Association President/CEO Bill Cheney on Monday presented a bold new, overarching strategic vision for the credit union movement: A vision in which "Americans choose credit unions as their best financial partner."

Click for slide show Community outreach is a key part of CUNA's new vision for the credit union system, says President/CEO Bill Cheney. \"Credit unions aren't just from the community, or in the community that they serve, credit unions are of the community. We quite literally were formed by the community. Whether your community is a parish, or a city, or a county, or a state, or a company, or an association, you are part of that fabric of that community, and that is an important fabric,\" he tells his GAC audience. (CUNA photo)



Outlining this strategic vision, and how credit unions can "Unite for Good" to achieve it, was the focus of the CUNA leader's remarks to the 4,200 participants at the opening general session of CUNA's 2013 Governmental Affairs Conference.

Cheney stressed that developing a vision where Americans choose credit unions as their best financial partner stemmed from more than one year of discussions with credit union and league leaders, credit union system partners, and CUNA's own leadership.

All agreed a new vision must be rooted in credit unions' shared values, including collaboration, a focus on members, community involvement, and a dedication to financial well-being. Cheney told a packed GAC audience that he is presenting a broad vision for the movement now because the time for credit unions has never been better.

Cheney explained that a cultural shift is happening in America that aligns perfectly with the credit union movement. "People want to do business with people who have their best interests at heart...This cultural shift is right in our wheelhouse." People are interested in more values-based decision making and there is a move away from big corporations and big banks, he said.

The CUNA CEO cited Nationwide Insurance, which now touts "doing what's right for our members" in ads, as one prominent example of this cultural shift toward values-based businesses. Bank Transfer Day in late 2011 was another example, one that grew out of consumer frustration with new fees from big banks and prompted consumers by the thousands to discover credit unions through aSmarterChoice.org, the new CUNA/league consumer website.

"Our advantage is a values-based business model of credit unions…People over profit, banking with a conscience, focusing on members, an organization that's built around your needs," Cheney added.

To realize a vision where Americans choose credit unions as their best financial partner, the credit union system will need to work collaboratively to advance three broad goals:

  • Remove barriers: This will require actively participating in credit union grassroots activities and the political process. The CUNA/League "Plan to Win," which offers detailed involvement prescriptions and accountability measures for credit unions, leagues and CUNA, can help provide a roadmap for success.
  • Raise awareness: Credit unions can achieve this by expanding their outreach and image in their community, taking greater advantage of social media, becoming a trusted resource with their local media, and participating in state and regional co-operative advertising campaigns. These avenues can lead to success. Credit unions can use tools, programs and channels that already exist to share their stories in local communities.
  • Foster service excellence: Cheney stressed that the system must work together so that credit unions across the board can offer a complete set of forward-looking and constantly improving financial services to members of all backgrounds and life stages.

Cheney said these efforts can create a major accomplishment for the credit union system over the next decade.

Two key measures of success, he offered, would be to:

  • Increase PFIs: He suggests the movement aim for raising the number of members who consider their credit union to be their primary financial institution (PFI) from today's 40 million up to 50 million by 2023. Another 10 million in 10 years is achievable, and would be clear evidence that more Americans are choosing credit unions as their best financial partner, Cheney explained. The credit union movement will gain immeasurably from all the attendant benefits--in advocacy, growth, and strength--that emanate from PFI relationships, he noted.
  • Provide more member value: He offered a goal for member value--what consumers save in better rates and lower fees by using credit unions rather than banks--of $20 billion annually by 2023. Today, that figure is about $6 billion. But Cheney noted the second goal compliments the first: The more PFI members we have, the more value we return. And the more value they see, the more people are attracted to credit unions, he said.

CUNA will be working with leagues and credit unions in the coming weeks and months to advance this common vision. And Cheney announced that a new web page, uniteforgood.org, has already been launched with an overview of the initiative and a video on why the time is so right for credit unions to unite for good, with more resources and key information still to come.

"We need to unite for good. We need to unite for the good that credit unions do. Unite for good, so that Americans will choose credit unions as their best financial partner," Cheney told the GAC audience.

For the new website, use the resource link. 

Brokaw at GAC: Nation Needs 'Unity' For 'Prosperity'

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WASHINGTON (2/26/13)--World-renowned journalist and author Tom Brokaw said the nation badly needs a return to the spirit that helped us win a world war, and inspired an era of unprecedented prosperity, and world leadership. He said the unity and progress of those years becomes even more enviable at a time when political progress is measured by such phrases as "kicking the can down the road."

Brokaw, in a speech Monday before the 4,200 credit union attendees at the Credit Union National Association's 2013 Governmental Affairs Conference, was referring to a currently popular phrase that has become part of the lexicon during the present partisan deadlock over spending and tax issues. "I've been doing this for a long time," he told the audience about his observations of the country's political affairs, "but I have never seen the nation in such a state of disrepair."

He received a standing ovation after his a speech, in which he discussed his impressions stemming from 50 years of journalism and politics. Brokaw proposed creating a new educational system built around institutions committed to training leaders in all aspects of public service.

"There is a longing," he told the audience, "to find an idea that will pull us all together." Brokaw said he was especially concerned today by the partisanship that currently exists in Congress. "You can't even be seen with your arm around a member of the other party member," he said.

During a question-and-answer session, Brokaw said the surge of technology in recent years has been boon for the news organizations and consumers.

"The state of the news outlets in some ways was never better because of access to the Internet, the iPad and the other technology.

"You can no longer be a couch potato, and get up and sit around drinking a cup of coffee while getting the news from daily newspaper."

CUNA Chair Mercer Bids Farewell, Cheney Highlights CUNA Priorities

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WASHINGTON (2/26/13)--Outgoing Credit Union National Association Chairman Mike Mercer urged credit union leaders to continue fighting for legislative issues critical to credit unions, while CUNA President/CEO Bill Cheney highlighted CUNA's priorities for 2013 at CUNA's 79th Annual General Meeting.

Outgoing CUNA Chairman Mike Mercer, who is president/CEO of Georgia Credit Union Affiliates, called for more collaboration among credit unions during CUNA's 79th Annual General Meeting. (CUNA photo)

The AGM was held at CUNA's Governmental Affair's Conference, which runs through Thursday in Washington, D.C.

Credit unions must be willing to cooperate with each other, said Mercer, who is president/CEO Georgia Credit Union Affiliates.

One initiative on which they can collaborate is CUNA's "Unite for Good," a strategic vision unveiled by CUNA's Cheney earlier in the morning. (See related story this issue.)

In Cheney's address to the AGM, the CUNA leader reiterated that CUNA's No. 1 priority for 2013 is preserving credit unions' tax exemption. That emphasis reflects the Obama administration's focus on tax issues, he said. Cheney urged GAC attendees to take up that cause with their Congress members in the Capitol Hill visits while in Washington this week.  "We have a great story to tell we just need to be prepared to tell it," Cheney said.

Reducing regulatory burden is also a priority for CUNA. The association has worked with the National Credit Union Administration, The Consumer Financial Protection Bureau and Department of Treasury to express concerns on behalf of credit unions. CUNA's enhanced weekly Regulatory Advocacy Report summarizes key issues and is available free to CUNA members.

Cheney said enhancing the credit union charter remains a top priority for the association. He noted that the 113th Congress will address capital reform. "We want those reforms to include capital access options as well as risk-based options," Cheney said.

CUNA's goal is to push MBL legislation "beyond the five-yard line" in 2013. In February, Rep. Ed Royce (R-Calif.) reintroduced legislation that would increase the credit union MBL cap to 27.5% from the current 12.25% of assets. The bill, if enacted, would help credit unions lend an additional $14.5 billion to small business in the first year, and help small businesses created more than 158,000 new jobs.

Under the direction of new CUNA Executive Vice President of Strategic Communications and Engagement Paul Gentile, CUNA will focus on strengthening communications in 2013. CUNA has launched The Cheney Report, which offers the CUNA president's latest thoughts on three to four key events and policy developments affecting credit unions into the e-mail inboxes of credit union CEOs each Friday.

CUNA is also working with the American Association of Credit Union Leagues to improve credit unions' political effectiveness, Cheney said. "We need you get out of the stands and on field to help us win for credit unions," he said. "We need you involved with your local officials in every way possible."

NBC's Chatzky: CUs Can Help With Fin Lit Problem

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WASHINGTON (2/26/13)--Award-winning journalist and best-selling author Jean Chatzky said there is a pressing need for financial literacy among consumers, and that credit unions are in a position to do something about it.

Chatzky, who is the Personal Financial Editor on the NBC's TODAY Show, said studies suggest about half of all Americans are "financially fragile." She said the test is that a sudden $2,000 debt for consumers would most likely result in a financial crises for nearly half of those involved.

She made the observation during a speech before the Credit Union National Association's Governmental Affairs Conference, which runs through Thursday.

"Financial literacy is the big problem," Chatzky added.

She said financial education programs help raise the awareness of basic financial services and helps both the institutions and consumers. "There is a need to give people a better knowledge of basic financial services," she told the meeting. She said credit unions do a great service when they help.

Chatzky said lenders must be aware that there are deep-seated emotional and psychological factors involved when consumers approach them for a loan.

She said that lenders who become sensitive to this can do a better job for the consumer when a person walks into the office and begins discussing a loan. She suggested that each potential borrower reacts differently--some even illogically--and lenders should be aware of this so they can best serve the consumer.

"You don't want to treat everybody like your grandmother," she told the audience. Chatzky said that both financial advisors, like herself, and credit unions are "in the business of granting requests without being intimidating.

"All of you are in a tremendous position to help," Chatzky said, adding there is no doubt that credit union have a reputation for helping the consumer. "But much more needs to be done," she concluded.

Matz Outlines 'New' NCUA At GAC

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WASHINGTON (2/26/13)--Saying that the agency has to modernize to keep up with the growth of the credit union industry, National Credit Union Administration Chairman Debbie Matz announced plans for "modernizing and revitalizing'' the agency in areas such as examinations and allowing more innovative products and services.

"We're modernizing and revitalizing NCUA for an industry that is newly vibrant, increasingly complex and rapidly changing," Matz said at Monday's session of the Credit Union National Association's Governmental Affairs Conference. "NCUA is reassessing and retooling our business model. The rules of the road that guided credit unions in earlier decades may not meet your needs or your members' needs today. We must stay ahead of the curve."

She noted that the agency has streamlined examinations for smaller credit unions and

Click to view larger image NCUA Chairman Matz unveils a major initiative at the CUNA GAC, telling her credit union audience that they will see a "new" NCUA--modernized and revitalized. (CUNA Photo)
created an Office of National Examinations and Supervision to improve the way it supervises larger credit unions. In addition, the agency plans to continue its efforts to provide more consistency in the examination process.

Matz, who was named chairman by President Obama in 2009, said the agency needs to be especially vigilant, even though the financial crisis is over. She said the industry faces several key challenges, including:
  • Interest-rate risk from long-term, fixed-rate loans;
  • Interest-sensitive deposits;
  • New technologies like mobile banking; and
  • Concentration of assets in the largest credit unions.
She reminded attendees that in the past year the agency had made key changes, supported by CUNA, such as fixing the rules on Troubled Debt Restructuring, streamlining the rules for Low Income Credit Union designation and raising the threshold for small credit unions from $10 million in assets to $50 million in assets.

"Sometimes U.S. regulatory bodies put the brakes on change until the regulators can catch up. But that's not the choice NCUA is making--not on my watch," Matz added. "We can either try to slow it down, or we can do everything in our power to move forward ourselves."

Matz noted that the industry is financially strong and said that return on average assets is 86 basis points, up from 18 basis points in 2009. Net worth is 10.4%. Loans have grown for seven consecutive quarters and charge-offs have fallen for four consecutive quarters.

She added that the growth, combined with the added services that many credit unions offer, has forced the agency to deal with new kinds of risks.

"Some risks are always there. Others arise with new realities. But either way, being the best of a time that's passed is not good enough,'' she noted.

Matz compared the challenge that forced the NCUA to modernize with challenges facing auto manufacturers in trying to modernize cars, such as the 1965 Aston Martin featured in many James Bond films. That car didn't have seatbelts, air bags and anti-lock brakes.

She noted that "just plain cool as those cars were, you probably wouldn't choose to buy a car without those safety features today.'' And added that the "rules of the road that guided your credit unions in earlier decades may not meet your needs or your members' needs today."

Congress This Week: Housing, Monetary Policy On the Agenda

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WASHINGTON (2/26/13)--As the Credit Union National Association's 2013 Governmental Affairs Conference got started here Monday, members of the U.S. Senate and House were returning to Washington after a ten-day recess for the Presidents' Day holiday.

The Senate calendar will be dominated by consideration of a sequester replacement bill and a vote on the nomination of former Sen. Chuck Hagel to be Secretary of Defense. The sequester will take effect on March 1 unless Congress and the president are able to reach a deal this week.

Committee meetings of most note for credit unions this week include:

  • The Federal Reserve's Humphrey-Hawkins semi-annual reports in both Senate and House on monetary policy. Fed Chairman Ben Bernanke will address the Senate Banking Committee Tuesday and the House Financial Services Committee on Wednesday; and
  • On Thursday, the Senate Banking, Housing and Urban Affairs Committee will hold a hearing on "Addressing FHA's Financial Condition and Program Challenges, Part II."
Many of the 4,200 credit union representatives attending CUNA's GAC will be making trips to Capitol Hill to speak with their federal lawmakers about key credit union issues, such as charter enhancements and the public policy reasons that support the credit union tax status.

Financials Show a Healthy CUNA: Strong Projections For 2013

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WASHINGTON (2/26/13)--The improved finances of credit unions in 2012 gave them more money to spend on the Credit Union National Association's products and services, which triggered an increase in revenues for the association last year, CUNA Treasurer Susan Streifel said at the Annual General Meeting at yesterday's opening session of the CUNA Governmental Affairs Conference. CUNA offers members a comprehensive array of resources and training options.

Streifel noted that the association's unaudited results indicated that it had $52.4 million in revenues last year, compared with $49.8 million in 2011 Last year's expenses were $49.9 million, compared with $48.2 million in 2011. The operating margin was $2.5 million in 2012 and $1.6 million in 2011.

In 2012, the association had $31.3 million in assets, $22.5 million in cash, cash equivalents and investments, $14.5 million in working capital, and net assets of $13.7 million.

Streifel, the president/CEO of Woodstone CU of Federal Way, Wash., said CUNA projects its finances will be strong again this year.

She said CUNA projects net revenues will be $53.8 million. Of that, $25.4 million will come from dues, $24.1 million from fees based services and $4.3 million will come from other sources. Expenses are projected to be $52.9 million and the operating margin is projected to be $900,000.

Member Benefits Awards Demonstrate CU Difference At CUNA GAC

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WASHINGTON (2/26/13)--The credit union difference was front and center as Credit Union National Association Chief Economist Bill Hampel presented this year's CUNA Member Benefits Awards on Monday.

The awards, which went to the credit unions that provide members with the best bang for their buck, were presented during the afternoon session of CUNA's 2013 Governmental Affairs Conference.

To determine the award winners, CUNA asked GAC-registered credit unions for their rates on various loans and deposit accounts. CUNA then examined that information, along with call report data on the amounts of credit unions'loans and deposits. The credit union information was then compared with third party info on bank rates to calculate how much members from given credit unions saved as a result of using their credit union instead of local banks.

From first to third place, the credit unions with $75 million in assets and less that provided maximum benefits per member household were:

  • United Health CU, Burlingame, Calif.;
  • Valley CU, Salem, Ore.; and
  • First Class American CU, Fort Worth, Texas.

The award winners for credit unions with between $75 million and $250 million in assets were:

  • Boston Firefighters CU, Dorchester, Mass.;
  • St. Louis Community CU, St. Louis, Mo.; and
  • Community Financial CU, Broomfield, Colo.

Award winners with more than $250 million in assets were:

  • Melrose CU, Briarwood, N.Y.;
  • Southwest Airlines FCU, Dallas, Texas;
  • Alliant CU, Chicago, Ill.

The benefits offered by these and other credit unions are the types of benefits that helped members nationwide save $6 billion last year, Hampel said. The benefits were offered by credit unions in a low interest rate environment--and the difference between credit union and bank interest rates will become more pronounced as base interest rates increase in the future, he added.

Fostering service excellence is a key pillar of CUNA's new strategic vision for the credit union system, which was unveiled on Monday. CUNA President/CEO Bill Cheney stressed that the system must work together so that credit unions across the board can offer a complete set of forward-looking and constantly improving financial services to members of all backgrounds and life stages. These changes will help the credit union system reach the goal of $20 billion in member benefits, and 50 million members that consider credit unions their primary financial institutions, by 2023. (See News Now story: Cheney Calls On CUs To 'Unite For Good')

CFPB Student Lending Work Is One Topic of CUNA Regulatory Advocacy Report

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WASHINGTON (2/26/12)--This week's edition of the Credit Union National Association's Regulatory Advocacy Report draws attention to the always-active Consumer Financial Protection Bureau's work to address student lending issues, and a CUNA comment call on those issues.

The CFPB is accepting comment from students, parents, lenders and educators on financial services specifically marketed to higher education students. CUNA is collecting information from credit unions on the questions asked by the CFPB most directed at credit union activities. This information will also give CUNA a clearer picture of the types of products and services credit unions are offering to students. For the comment call, use the resource link.

This month's Regulatory Advocacy Report also outlines CUNA's recent comments on the CFPB's ability to repay rule, and recaps the CFPB Consumer Advisor Board meeting that was held last week. Cyber security issues and the National Credit Union Administration's guidance for credit unions facing such issues, National Credit Union Administration /National Association of State Credit Union Supervisors recent low income credit union work, and Financial Crimes Enforcement Network news is also covered in the report.

The Regulatory Advocacy Report includes the in-depth content readers expect from CUNA, and updates credit unions on where they stand on key credit union issues and what CUNA has done to advocate for them.

Employees or volunteers of CUNA/state credit union league-affiliated credit unions can sign up to receive the report.

The Regulatory Advocacy Report is archived on cuna.org.

CUNA to Deliver Extensive On-Site Coverage Of Action-Packed GAC

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WASHINGTON (2/25/13)--Nothing compares to personal attendance at the sessions of the credit union system's premiere conference-the Credit Union National Association's Governmental Affairs Conference, which starts here today--notes CUNA Senior Vice President of Communications Mark Wolff. The program is so power-packed that CUNA helps on-site attendees, as well as those who could not attend, get the most out of all the sessions via electronic news, print media, and a coordinated array of social media uses.

"The CUNA GAC program provides so much value. We recognize that no one can make it to everything we offer, but we are often told by attendees that they sure want to," Wolff acknowledges.

CUNA's free, daily online news service, News Now, provides full coverage of the speakers and key break-out sessions and shares slideshows of the action. And for news junkies, the News Now team shares quick news bites all day long via its Twitter-based NewsNowLiveWire. Get your Twitter account now to follow the best news tweets.

CUNA's Credit Union Magazine team provides the renowned, print-based GAC Daily onsite, and this provides a colorful and photo-filled digest of speakers and events each day.

aSmarterChoice.org, the consumer website developed two years ago by CUNA and the state credit union leagues, will be onsite at the CUNA booth in the grand exhibit hall. It will be sharing printed talking points for the leagues and credit unions to use when talking to the media and that can also be used as a handout at conferences to drive consumers to join credit unions.

aSmarterChoice QR barcode.


Even better, aSmarterChoice has developed a QR barcode--Quick Response Code--so attendees can swipe their phones and get the material electronically.

The site is a growing resource for consumers to learn more about credit unions and find a credit union that they can join and reported nearly 385,000 visits in 2012.

CUNA will not be the only organization trying to keep credit unions abreast of conference events with the #GAC hashtag. CUNA has thought of that too and will again feature a "Twitterfall" at the CUNA exhibit booth to coordinate message delivery and to let conference attendees catch all the buzz in one glance.

There's more. CUNAVerse, CUNA's blog, will be focusing on Twitter for the CUNAVerse platform. CUNAVerse will focus its on-site coverage on the GAC "crashers"--the younger side of the credit union universe--and their experiences at the conference. After the conference, the CUNA blog will share top "take-aways" from the conference and other wrap ups.

CU Charter Enhancement Gets NCBA Support

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WASHINGTON (2/25/13)--The National Cooperative Business Association last week stepped up to back credit union priorities, announcing its support for a trio of bills that would enhance the credit union charter and ease regulatory issues.

NCBA President/CEO Mike Beall wrote U.S. House leaders to support:
  • The Credit Union Small Business Job Creation Act (H.R. 688);
  • The Capital Access for Small Businesses and Jobs Act (H.R. 719); and
  • The Eliminate Privacy Notice Confusion Act (H.R. 749).
Credit Union National Association President/CEO Bill Cheney has noted that H.R. 688 and 719 "represent tools that will give credit unions greater options for serving their growing memberships--including small business owners in search of credit to keep their businesses and their communities thriving."

H.R. 688 would increase the credit union member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level. The bill, if enacted, would help credit unions lend an additional $14.5 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 158,000 new jobs. The bill was introduced by Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) earlier this month, and has 41 co-sponsors.

H.R. 719, which was also introduced earlier this month by Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.), would permit the National Credit Union Administration to allow credit unions to raise capital from sources other than retained earnings. That bill has 14 co-sponsors

.

Sherman also teamed with Rep. Blaine Luetkemeyer (R-Mo.) to introduce H.R. 749. CUNA also supports this bill, which would eliminate repetitive privacy notices that are often ignored by consumers. This privacy bill has 18 co-sponsors.

In another development, the NCBA last week announced a new online program to help credit union staff gain financial counselor certifications. The NCBA said the online program will train credit union staff to recognize signs of financial distress and educate them on how to work directly with members to avoid financial catastrophe.

For more on the program, which was created with the help of CU Strategic Planning, use the resource link.

CUs Merit Release From Rule Burden, CUNA Tells CFPB

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WASHINGTON (2/25/13)-As the Consumer Financial Protection Bureau (CFPB) considers exempting some lenders from its newly adopted ability-to-repay mortgage rule, the Credit Union National Association encouraged the bureau to exempt all credit unions.

The CFPB is considering amendments for two final actions it took recently; something the bureau has done before, but highly unusual for a federal agency.

In addition to looking at ability-to-pay rule exemptions, the bureau is considering a change to the associated Qualified Mortgage (QM) definition to permit more loans, under certain conditions, to qualify as QMs.

The CFPB is studying the amendments to its new rules hoping to ensure the continued flow of available housing credit, while minimizing some of the compliance burdens, for certain institutions, created by the ability-to-repay standards.

"Given the mission and nature of credit unions, their distinctions from other institutions as financial cooperatives, their history of serving their members, their low mortgage delinquency and default rates, their focus on financial education and their traditional efforts to ensure mortgage loans granted to consumers can be repaid, we urge the CFPB to allow many more, if not all, credit union mortgage lenders to be exempt from the ability- to-repay provisions," wrote CUNA Deputy General Counsel Mary Dunn in a comment letter due today.

The ability-to-repay rule, with its associated QM definition, were ordered by the Dodd-Frank Act and are intended to curb abusive lending practices, like those that lead to the nation's housing market crash, and to allow responsible lending practices to "flourish."

Arguing for the all-out exemption of credit unions, CUNA highlighted that "there is no demonstrated history of abuse in terms of credit unions making mortgages without appropriate analyses of the borrower's ability to repay."

"As a result, there is no demonstrated pattern of abuse to correct regarding credit unions as there is in other sectors of the financial services industry. In fact, credit union lower default and delinquency rates regarding mortgages provide a strong indication that credit unions have historically underwritten loans with the long-term interest of the member and consumer in mind," the CUNA letter reminded.

If not a total exemption for credit unions, CUNA recommends these other burden-reducing changes:

  • All credit union that are either Community Development Financial Institutuions or Low-Income credit unions should qualify for the exemption; and
  • If the agency concludes it cannot expand the exemptions to include all credit union mortgage lenders, then it should fully consider exempting credit unions and similarly situated mortgage lenders from a 43% debt-to-income ratio provision and the requirements that points and fees include mortgage loan originator compensation.
Additionally, CUNA urged the agency to establish a process under which all not-for-profit institutions, including credit unions, could be considered on a case-by-case basis for additional time beyond the January 2014 deadline to comply.

NCUA Releases MBL Waiver Guidance

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ALEXANDRIA, Va. (2/25/13)--The National Credit Union Administration has clarified the what, when and how of member business loan (MBL) waivers in a new letter to credit unions (13-CU-02), an attached supervisory letter, and supervisory guidance.

The guidance will help credit unions understand the MBL waiver process, and aid them as they work to maintain safe and sound MBL portfolios, NCUA Chairman Debbie Matz said.

This is the first time the agency has released these types of MBL waiver documents. Matz noted that the release of the documents was prompted in part by discussions at agency listening sessions held throughout the country.

The agency guidance details what must be included in a waiver application and how the agency reviews that application.

The guidance also addresses:
  • What types of MBL waivers are available;
  • When and how credit unions can obtain MBL "blanket" waivers;
  • When waivers are not needed for actions related to maintaining existing loans;
  • Which of the borrower's principals are required to provide a personal guarantee and the type of guarantee required based on different business ownership structures;
  • What constitutes an associated borrower;
  • Waiver documentation requirements; and
  • New NCUA procedures meant to streamline the process for obtaining waiver for credit unions buying a participation interest in an MBL.
For the NCUA MBL waiver documents, use the resource links.

CUNA Launches GAC, CU 'Vision' Today

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WASHINGTON (2/25/13)--The Credit Union National Association's 2013 Governmental Affairs Conference officially kicks off today and more than 4,200 credit union representatives in attendance will hear CUNA President/CEO Bill Cheney unveil a new strategic vision for the credit union movement this morning.

For more than a year, CUNA has been reaching out to credit unions, leagues, system partners and its leadership to develop and present a strategic vision to guide and inspire the movement's advocacy, communications and planning.

Presentation of this new initiative and what it will mean for CUNA, leagues and credit unions going forward will be the thrust of Cheney's remarks to the GAC audience this morning.

Also during the 2013 GAC, credit union representatives from across the nation will hear presentations by high-profile, Washington, D.C., policymakers and get the latest information on top credit union issues.

GAC speakers this year include House Speaker John Boehner (R-Ohio), House Minority Leader Steny Hoyer (D-Md.), House Financial Service Committee Chairman Jeb Hensarling (R-Texas), National Credit Union Administration Chairman Debbie Matz, Rep. Peter King (R-N.Y.), Rep. Maxine Waters (D-Calif.), Consumer Financial Protection Bureau Director Richard Cordray, House Majority Leader Eric Cantor (R-Va.), Sen. Elizabeth Warren (D-Mass.), Rep. Spencer Bachus (R-Ala.) and many more.

The three-day lineup also features addresses by Jean Chatzky, the Today Show personal finance editor, and award-winning NBC News journalist Tom Brokaw. There will be a political point-counterpoint with Haley Barbour, former Republican National Committee chairman, and Terry McAuliffe, the former Democratic National Committee chairman who is currently in the race for governor of Virginia.

Also sure to attract a lot of attention this year: CUNA's conference will feature breakout sessions on state- and federal-level tax discussions, hot exam issues for 2013, building powerful alliances across co-op sectors, managing changes in lending rules, and many other sessions taken from the front pages of credit union news.

CUNA will also hold its 79th Annual General Meeting, the association's yearly business meeting, on Monday.

The 2013 GAC runs Feb. 24-28 at the Walter E. Washington Convention Center. A key feature of the CUNA conference is Hill visits, when thousands of credit union representatives flood Capitol Hill and regulatory offices to advocate for credit union issues.

As lawmakers move toward March 1 federal debt and tax discussion deadlines, CUNA President/CEO Bill Cheney has said he can't "think of a better time for credit union supporters to be in Washington, in force." Preserving the tax status of credit unions is a top CUNA priority and will be a key discussion item during the GAC.

This year's GAC theme, "Powerful Cause, Positive Effect," reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

Use the resource link below for more GAC information.

NEW: Matz Tells GAC: A 'New' NCUA Is Coming

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WASHINGTON (2/25/13, UPDATED 10:30 a.m. ET)--National Credit Union Administration Chairman Debbie Matz Monday announced her plan for a "new" NCUA, one that will be more responsive to emerging risks, industry challenges and credit unions' needs. She delivered her message in a keynote address today at the Credit Union National Association's 2013 Governmental Affairs Conference.

"We're modernizing and revitalizing NCUA for an industry that is newly vibrant, increasingly complex and rapidly changing," Matz said. "NCUA is reassessing and retooling our business model. The rules of the road that guided credit unions in earlier decades may not meet your needs or your members' needs today. We must stay ahead of the curve."

Regulators, she said, have both a responsibility to protect the industry and to help it grow.

Matz told the audience of more than 4,200 credit union representatives some of the emerging challenges for credit unions include:
  • Interest-rate risk from long-term, fixed-rate loans;
  • Interest-sensitive deposits;
  • New technologies like mobile banking; and
  • Concentration of assets in the largest credit unions.
 

She vowed to continue her Regulatory Modernization Initiative and reviewed several major accomplishments, supported by CUNA, in the past year, including:

  • Addressing the agency's Troubled Debt Restructuring rule to keep more credit union members in their homes and ease credit union reporting burdens;
  • Removing red tape from the process of designating a low-income credit union, which she said has added more than 800 designations and encouraged more small business lending; and
  • Exempting more than two-thirds of all credit unions from certain NCUA rules by raising the asset threshold for small credit unions from $10 million to $50 million.
 Watch News Now Tuesday for more.

CUNA Exam Survey Nets Impressive Turnout

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WASHINGTON (2/25/13)--The Credit Union National Association received an impressive 1,500 responses to its recent examination issues survey. The majority of respondents said the examination process is working reasonably well, but credit union CEOs also overwhelmingly reported that regulatory and exam requirements are putting increasing pressure on credit unions.

"These findings will be very useful to CUNA and the leagues advocating on your behalf. This survey isn't to point fingers, it's to have quantifiable data we can use to work constructively with regulators," CUNA President/CEO Bill Cheney said when he released the results.

"The strong response from credit unions will make this survey a powerful tool in national and state credit union advocacy efforts," said CUNA Chief Economist Bill Hampel.  "We also believe the responses are very candid, because we ensured respondents anonymity," he added

The CUNA survey asked credit unions to detail their experiences with on-site National Credit Union Administration and state regulatory examinations, and to describe their satisfaction level with both the federal and state examinations process. Credit unions also described the strengths and weaknesses of the examination system.

NCUA examiners scored high marks in several areas, including being well-informed about safety and soundness issues and regulations. Respondents credited NCUA regional offices and state supervisory offices with being responsive when issues arose. More often than not, CEOs said that overall the exam was helpful to the credit union.

"There were a lot of good results to build on, but we also have a lot of work to do to improve the exam process," Cheney said.

Exam concerns cited by survey respondents included:
  • Examiners applying "best practices" and general guidance as if they were enforceable regulations;
  • Overuse of  Documents of Resolution; and
  • Generally lower ratings for joint NCUA/state regulatory exams when compared to independent exams by either of those regulators.
Overall, 25% of survey respondents said they were not satisfied with their examinations. "That's too high and we'll be discussing this with NCUA," Cheney said.

CUNA has shared the summary survey results with NCUA and NASCUS officials. CUNA plans to repeat the survey next year.

For the complete survey results, use the resource link.

CU Reps At the GAC: What's the Best Thing You Do For Members?

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Click for slide showWillie Best

Board Vice Chairman

Local Government FCU

Raleigh, N.C.Local government employees is our field of membership, and government employees, at least on the local level, don't make a lot of money. The best thing probably about our credit union is they are able to access, I don't want to say easy money, but based on their salary and the jobs they perform, like public works, trash collector, police officers, that kind of thing…we offer them the same services, probably more service than other financial institutions, at better rates. No matter whether you're a CEO or the guy that's pushing the broom, the rates are the same.
WASHINGTON (2/25/13)--"What is the best thing you do for your members?  What is the best reason for someone to belong to your credit union?"  The questions were posed by News Now to credit union representatives as they registered Sunday for the Credit Union National Association's 2013 Governmental Affairs Conference. Their answers gave a clear picture of the credit union difference, and the difference credit unions make in people's lives. (Click through the slideshow to read what people say about the credit union they represent.)

Consumers point out in survey after survey that credit unions are the most trustworthy of financial institutions. In 2012 alone, more than half a dozen surveys about customer satisfaction and trustworthiness all gave credit unions higher marks for both than they did banks, especially big ones. The surveys include those conducted by Prudential, ath Power Consulting, the American Customer Satisfaction Index, Prime Performance's reputation study, Temkin Group's customer service ratings, CUNA's National Voter Survey and others.

Also, credit unions have the best savings account interest rates in the nation. In 2012, according to a study of savings accounts at more than 4,000 credit unions and banks, eight of the top 10 U.S. savings account rates were held by credit unions. As Mike Schenk, CUNA vice president of economics and statistics, said of these results: "Credit unions are owned by their member-depositors so credit union profits go directly back to those members in the form of higher deposit yields, lower loan interest rates, and fewer and lower fees."

And as National Credit Union Administration Chairman Debbie Matz said earlier this year in a LEADERS magazine interview, Americans are becoming more aware of how critical credit unions are, and this increased interest "explains why credit unions have added nearly three million members since 2010."

"Members know that they can usually get a better deal at a credit union," Matz said. She noted with the average business loan only $220,000, credit unions often make loans that banks turn away. In fact, while other institutions cut back lending during the financial crisis, credit unions gained further recognition as the only insured institutions to increase lending,  she said.

Exam Survey, NCUA Results Covered In Cheney Report

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WASHINGTON (2/25/13)--The results of a comprehensive Credit Union National Association examination survey, recent regulatory actions, and what lies ahead at this week's CUNA 2013 Governmental Affairs Conference are all covered in the latest edition of The Cheney Report.

The exam results are also covered in more detail in today's edition of News Now. (See News Now story: CUNA Exam Survey Nets Impressive, Useful Results)

The Cheney Report delivers CUNA President/CEO Bill Cheney's latest thoughts on three to four key events and policy developments affecting credit unions into the email inboxes of credit union CEOs each Friday.

The report also provides a valuable window into CUNA's actions on behalf of member credit unions, and reinforces the value of CUNA membership, CUNA Executive Vice President of Strategic Communications and Engagement Paul Gentile notes.

Other topics tackled in this week's edition of The Cheney Report include:
  • Recent NCUA/National Association of State Credit Union Supervisors work to streamline the application process for state-chartered credit unions considering low-income credit union status; and
  • The NCUA's February board meeting actions.
The report also previews CUNA's new, overarching strategic vision for the credit union movement. That vision will be unveiled today at the GAC.

Past issues of The Cheney Report are archived on cuna.org.

NEW: Cheney Calls On CUs To 'Unite For Good'

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WASHINGTON (2/25/13, UPDATED 10:45 a.m. ET)--Credit Union National Association President/CEO Bill Cheney today presented a bold new, overarching strategic vision for the credit union movement: A vision in which "Americans choose credit unions as their best financial partner."

Outlining this strategic vision, and how credit unions can "Unite for Good" to achieve it, was the focus of the CUNA leader's remarks this morning to the 4,200 participants at the opening general session of CUNA's 2013 Governmental Affairs Conference.

Cheney stressed that developing a vision where Americans choose credit unions as their best financial partner stemmed from more than one year of discussions with credit union and league leaders, credit union system partners, and CUNA's own leadership.

All agreed a new vision must be rooted in credit unions' shared values, including collaboration, a focus on members, community involvement, and a dedication to financial well-being. Cheney told a packed GAC audience that he is presenting a broad vision for the movement now because the time for credit unions has never been better.

Cheney explained that a cultural shift is happening in America that aligns perfectly with the credit union movement. "People want to do business with people who have their best interests at heart...This cultural shift is right in our wheelhouse." People are interested in more values-based decision-making and there is a move away from big corporations and big banks, he said.

The CUNA CEO cited Nationwide Insurance, which now touts "doing what's right for our members" in ads, as one prominent example of this cultural shift toward values-based businesses. Bank Transfer Day in late 2011 was another example, one that grew out of consumer frustration with new fees from big banks and prompted consumers by the thousands to discover credit unions through aSmarterChoice.org, the new CUNA/league consumer web site.

"Our advantage is a values-based business model of credit unions…People over profit, banking with a conscience, focusing on members, an organization that's built around your needs," Cheney added.

To realize a vision where Americans choose credit unions as their best financial partner, the credit union system will need to work collaboratively to advance three broad goals:

  • Remove barriers: This will requireactively participating in credit union grassroots activities and the political process. The CUNA/League "Plan to Win," which offers detailed involvement prescriptions and accountability measures for credit unions, leagues and CUNA, can help provide a roadmap for success.
  • Raise awareness: Credit unions can achieve this by expanding their outreach and image in their community, taking greater advantage of social media, becoming a trusted resource with their local media, and participating in state and regional co-operative advertising campaigns. These avenues can lead to success. Credit unions can use tools, programs and channels that already exist to share their stories in local communities.
  • Foster service excellence: Cheney stressed that the system must work together so that credit unions across the board can offer a complete set of forward-looking and constantly improving financial services to members of all backgrounds and life stages.

Cheney said these efforts can create a major accomplishment for the credit union system over the next decade.

Two key measures of success, he offered would be to:

  • Increase PFIs: He suggests the movement aim for raising the number of members who consider their credit union to be their primary financial institution (PFI) from today's 40 million up to 50 million by 2023. Another 10 million in 10 years is achievable, and would be clear evidence that more Americans are choosing credit unions as their best financial partner, Cheney explained. The credit union movement will gain immeasurably from all the attendant benefits-in advocacy, growth, and  strength-that emanate from PFI relationships, he noted.
  • Provide more member value: He offered a goal for member value-what consumers save in better rates and lower fees by using credit unions rather than banks-of $20 billion annually by 2023. Today, that figure is about $6 billion. But Cheney noted the second goal compliments the first: The more PFI members we have, the more value we return. And the more value they see, the more people are attracted to credit unions, he said.

CUNA will be working with leagues and credit unions in the coming weeks and months to advance this common vision. And Cheney announced that a new web page, uniteforgood.org, has already been launched with an overview of the initiative and a video on why the time is so right for credit unions to unite for good, with more resources and key information still to come.

"We need to unite for good. We need to unite for the good that credit unions do. Unite for good, so that Americans will choose credit unions as their best financial partner," Cheney told the GAC audience.

For the new web site, use the resource link.

Auto Loan Practices Attract CFPB Scrutiny

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WASHINGTON (2/22/13)--The Consumer Financial Protection Bureau is mulling legal action against at least four banks for their auto lending practices, Bloomberg reported on Thursday.

The CFPB last week reportedly gave the unnamed banks 15 days to explain the lending practices in question. Sources told Bloomberg the auto loan policies and practices identified by the CFPB may violate the Equal Credit Opportunity Act (ECOA). ECOA bans creditors from discriminating against credit applicants based on their race, color, religion, national origin, sex, marital status, and other select factors.

The Credit Union National Association in recent years has urged the Federal Trade Commission to apply consistent consumer protection rules for motor vehicle dealers offering motor vehicle financing. CUNA has noted that auto dealers, who are often the single point of contact for consumers during an auto purchase, are not always concerned with consumer protection. CUNA emphasized that auto dealers provide a significant portion of all motor vehicle loans and should not have a special exemption to inflate rates, charge hidden fees, or engage in other harmful practices. Providing consistent consumer protection rules would ensure a level playing field for all financial entities that provide motor vehicle lending or lease arrangements, CUNA has said.

Credit unions provide both direct and indirect loans to prospective motor vehicle purchasers, and 95% of credit unions nationwide are involved in the auto loan business. Consumers that use credit union loans instead of bank-originated loans to purchase a new vehicle worth $30,000 would save an average of $1,300 over the span of a five year loan, according to CUNA estimates.

NCUA Actions Expand Rural District FOM, Allow CU TIPS Investment

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ALEXANDRIA, Va. (2/22/13)--The National Credit Union Administration on Thursday approved separate final rules that expand the definition of "rural district" for field of membership purposes, and grant new investment authority to credit unions.

Credit Union National Association President/CEO Bill Cheney said he was pleased that the February NCUA meeting focused on items that are positive, such as rule changes that will help credit unions going forward, and the reduction in CAMEL Code 3, 4 and 5 credit unions. "We will continue to push NCUA to take more steps that will give all federally insured credit unions more flexibility in their operations, particularly in light of the fact that credit unions' financial performance is doing so well," he said. (See News Now story: Strong NCUSIF, TCCUSF Performance Decrease Premium Chances).

The NCUA's "rural district" rule sets the definition at the greater of no more than 250,000 persons or 3% of the population of the state in which the majority of the district's persons are located. The NCUA noted that the rule does not change the other elements required to designate an area a rural district: Federal credit unions serving rural districts will still need to develop business and marketing plans to show how they will serve their surrounding communities.

NCUA Chairman Debbie Matz said, "This is really a move in the right direction and is responsive to be the needs of credit union members." She added that she looks forward to having the rule in effect to provide "federal credit unions serving rural areas greater flexibility to improve access to consumers who otherwise might not have access to affordable financial services."

The rural district changes are similar to those advocated by CUNA in meetings and a comment letter on the NCUA proposal. CUNA Board Member Roger Heacock presented data to NCUA to support making the changes.

CUNA Deputy General Counsel Mary Dunn urged the NCUA to allow as much authority as legally permissible to federal credit unions to facilitate their presence in these areas of the country that are often are in serious need of financial institution services. Dunn suggested that the NCUA, in the long-term, should allow credit unions that serve rural areas to determine for themselves the size of their fields of membership, governed by the credit union's resources to serve the area sufficiently and its ability to manage safety and soundness concerns.

The agency also moved to grant credit unions new investment authority by adding Treasury Inflation Protected Securities (TIPS) to the list of permissible investments in NCUA's Investment and Deposit Activities rule. "NCUA's research and analysis showed these securities could be a valuable tool for federal credit unions if properly managed, so we've acted to prudently provide greater regulatory flexibility," Matz said. Allowing such investments will help credit unions protect against inflation and manage interest-rate risk, Dunn has noted.

However, NCUA staff said credit unions should not just dive into TIPS investments. Due diligence will be needed, and investing in TIPS may not be appropriate for every federal credit union. Credit unions should also take care to ensure that TIPS remain a small part of their investment portfolio, the NCUA said.

Both rules will go into effect 30 days after they are published in the Federal Register.

For more on the NCUA meeting, use the resource links.

CFPB Takes New Step In Private Student Loan Project

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WASHINGTON (2/22/13)--Credit unions and other lenders, educators and borrowers can now help the Consumer Financial Protection Bureau develop recommendations on how the student lending market can be improved.

The CFPB said it is gathering information from the public to develop options for policymakers to make repayment of private student loans more manageable for struggling borrowers. The CFPB in a release noted that private student loan borrowers who wish to pay their loans, but face high payments, lack alternative repayment and refinance options.

"Too many private student loan borrowers are struggling with unwieldy debt that prevents them from climbing the economic ladder… We will be analyzing plans for policymakers to consider that might help avoid a repeat of the mortgage meltdown for today's student loan borrowers," CFPB Director Richard Cordray said.

The CFPB suggested commenters could discuss:

  • How student loan burdens might impact the broader economy and hinder access to mortgage credit and automobile loans;
  • How distressed borrowers manage their student loan obligations;
  • What options currently exist for borrowers to lower their monthly payments on private student loans; and
  • The most effective mechanisms for communicating with distressed borrowers.
Commenters could also provide examples of successful alternate payment programs in other markets, and address how those examples can be tailored to treat student lending issues, the CFPB said.

The CFPB plans to accept comments until April 8. For more on the CFPB project, use the resource link.

The CFPB has noted that student loan debt, which surpassed $1 trillion in 2012, has exceeded credit card debt as the largest source of consumer debt in the U.S. More than $150 billion of this $1 trillion total is comprised of private student loans, and at least $8 billion of these private student loans are in default, the CFPB said.

CUNA estimates that around 300 credit unions currently offer student loans to their members. Credit unions also provide financial education and seminars relating to student lending generally, and encourage students to attend. The CUStudentLoans.org website also provides extensive financial education regarding student lending, through both written information and webinars.

The site is powered by Fynanz, a CUNA Strategic Services provider.

Strong NCUSIF, TCCUSF Performances Decrease Premium Chances

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ALEXANDRIA, VA. (2/22/13)--The strong performances in 2012 of the National Credit Union Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund, reported by the National Credit Union Administration Thursday, decrease chances for a premium assessment this year.

NCUA Chairman Debbie Matz, (center)  receives the quarterly insurance fund reports from NCUA Chief Financial Officer Mary Ann Woodson. Matz during the meeting noted that NCUSIF performance statistics "continue to trend in the right direction." (CUNA Photo)
The number of federal credit unions with CAMEL codes 3, 4 and 5 dropped significantly during 2012, according to the NCUA. The declining number of lower-rated credit unions, of course, reduces the exposure of the NCUSIF to potential losses.

The agency reported the NCUSIF ended 2012 with a 1.30% equity ratio, after transferring $88 million in "excess equity" to the Temporary Corporate Stabilization Fund. The NCUA said it calculated the ratio on an insured share base of $839.4 billion, compared to $795.3 billion at the end of 2011, indicating growth of 5.5%.

The NCUA also reported good 2012 results for the TCCUSF. Based on "preliminary and unaudited" information, for 2012 the total net position of the fund improved nearly $1.8 billion.

The agency staff noted that when the stabilization fund has outstanding borrowings from the U.S. Treasury, the Federal Credit Union Act requires the NCUA to make a distribution from the NCUSIF if the share insurance fund has an equity ratio above the normal operating level of 1.30% at year's end.

"Had the stabilization fund not existed, the $88 million would have been paid as a dividend to credit unions on their NCUSIF deposits. Instead, it will serve to lower future assessments," Credit Union National Association Chief Economist Bill Hampel points out.

Of the improved CAMEL ratings, NCUA Chairman Debbie Matz said, "Protecting the Share Insurance Fund is a top priority for NCUA, and the 2012 year-end results show that NCUA's prudent management and effective regulatory policies are working well."

At the February open board meeting the NCUA's chief financial officer also related that:

  • The total number of CAMEL code 3, 4 and 5 credit unions dropped 9.8%, to 1,940 at year-end 2012 from 2,150 in 2011;
  • Assets of CAMEL code 3 credit unions decreased to $119.3 billion at the end of the fourth quarter of 2012, a 16.3% drop from $142.5 billion on Dec. 31, 2011; and
  • For lowest ranked CAMEL code 4 and 5 credit unions, assets fell 35.4%, to $19 billion at the end of 2012, down from $29.4 billion for 2011.
As a result of the improving condition of stressed credit unions, the percent of total insured shares in CAMEL 4 and 5 credit unions declined from 3.3% to 2.0% during 2012. At the same time, shares in CAMEL 3 credit unions have fallen from 15.9% to 12.6% of insured shares. Therefore, shares in CAMEL 3, 4 and 5 credit unions are down from 19.2% of insured shares as of December 2011, to 14.6% as of December 2012.

Overall, the amount of assets in CAMEL Code 3, 4 and 5 credit unions have decreased 32.7% since reaching a high in September 2010.

There was no NCUSIF premium assessed in 2012 and the agency has projected a premium range between zero and 5 basis points for 2013.

CUNA, League Toolkit Helps CUs Connect With Members On Tax Issue

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WASHINGTON (2/21/13)--The Credit Union National Association Thursday unveiled an important members-only toolkit--designed to help credit unions connect with their members and educate the public about credit unions as banks intensify their state-level attacks against the credit union tax status.

"CUNA and the leagues are empowering credit unions with the tools they need to ensure their members understand the value of membership," CUNA President/CEO Bill Cheney said, announcing the new Credit Union Tax Status Advocacy Toolkit webpage.

"Our research shows that when members understand the value of membership, they will stand with us to defend the exemption," he emphasized.

The new webpage features free materials in the form of radio ads, print ads, newsletter articles, state-level updates, materials to use in advocacy efforts with federal and state lawmakers, and much more.

Cheney encouraged credit unions to work with their members and to be prepared on the tax issue. " Whether federal tax reform happens in a week, two months or 10 months from now, we need not only an educated Congress, but also an educated membership," he said.

CUNA members can use the link below to access the host of advocacy materials.

Cheney Talks CU Priorities Ahead Of GAC

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WASHINGTON (2/22/13)--As the 2013 Governmental Affairs Conference approaches, the Credit Union National Association and 4,200 credit union representatives are preparing to "send a strong message" to Congress, CUNA President/CEO Bill Cheney said in a new CUbroadcast.com interview.

"Our goal is to send a strong message… we need to meet with every congressional office, every House office, every Senate office," with protecting the credit union tax exemption at the top of the agenda, Cheney said.  "We also need to talk about reducing regulatory burden, we also need to talk about enhancing the charter… there's a lot that we need to cover," he added.

"Credit unions do a great job serving their members… and we've got a great story to tell." Cheney noted that many new members have joined the U.S. Congress following November's elections, and these new members need to be educated about the importance of credit unions in their communities. "It's important for us to talk to them here in Washington, but it's more important for the constituents to get out and see them, and that's a big part of what the GAC is about."

He noted that GAC attendees will also have the chance to hear from and meet with the National Credit Union Administration Board members and key agency staff and to hear from the Consumer Financial Protection Bureau Director and CFPB staff.

The CUNA CEO also previewed CUNA's new strategic vision for the credit union system. For more than a year, CUNA has been reaching out to credit unions, leagues, system partners and its leadership to develop and present a strategic vision to guide and inspire the movement's advocacy, communications and planning. Presentation of this new initiative and what it will mean for CUNA, leagues and credit unions going forward will be the thrust of Cheney's remarks to the GAC audience on Monday.

Cheney also touched on how credit unions communicate with their communities. He said credit unions need to continue to emphasize that they are "a better deal," and offer themselves up as a community of members that is self-governing, and has its members' best interests at heart. "That is so different from a bank," Cheney said. "We should highlight our differences… our differences are what make us a better deal for consumers, our differences are the reason we have a tax preference to begin with… people are waking up to the value of doing business with organizations that share their values," he emphasized.

CUNA Nominates CUs To BSA Advisory Group

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WASHINGTON (2/21/13)--The Credit Union National Association has nominated a trio of credit unions to serve on the Financial Crimes Enforcement Network's (FinCEN) Bank Secrecy Act Advisory Group (BSAAG).

"As not-for-profit financial cooperatives, credit unions will be in an excellent position to make a substantial contribution to the activities of the BSAAG, and will provide diversity among the financial institutions that are members of the BSAAG," CUNA Deputy General Counsel Mary Dunn said.

The CUNA-nominated credit unions are:

  • United Nations FCU, Long Island City, N.Y., which boasts more than 100,000 members living in more than 205 countries and territories and $3.7 billion in assets;
  • First Commerce CU, Tallahassee, Fl., which holds $350 million in assets and has more than 37,000 members; and
  • CP FCU, Jackson, Mich., which holds $360 million in assets and has 46,000 members.
Dunn noted these credit unions have been very active in BSA and payments issues and have provided substantial assistance to CUNA and others regarding BSA, payments, and regulatory issues that affect credit unions.

Assistant General Counsel for Regulatory Research Dennis Tsang is CUNA's BSAAG representative.

The BSAAG is comprised of representatives from federal regulatory and law enforcement agencies, financial institutions, and trade associations. The group makes BSA policy recommendations to the U.S. Treasury Secretary.

CUNA has been a member of BSAAG since 2003, and is scheduled to fill the Credit Union Industry Trade Group position on the advisory group through February 2015. CUNA also participates on the parent group and its working subgroups, including the Banking, Law Enforcement, Prepaid Access, and Suspicious Activity Report (SAR) Review subcommittees.

For more on the nominees, use the resource link.

'Rural' Definition, TIPS On NCUA Agenda Today

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ALEXANDRIA, Va. (2/21/13)--The National Credit Union Administration meets this morning to address final rules addressing Treasury Inflation Protected Securities (TIPS) and the definition of a "rural district" for field of membership purposes.

In September, the NCUA proposed to extend the "rural district" definition to include geographic areas with 200,000 or fewer inhabitants or less than 3% of a given state's population. The Credit Union National Association has urged the agency to take the definition further and allow as much authority as legally permissible to federal credit unions to facilitate their presence in these areas of the country that are often are in serious need of financial institution services.

Also on today's agenda, the NCUA will decide whether to allow federal credit unions to purchase TIPS as a permissible investment. Currently, they are not a permissible investment because TIPS re-price their value based on changes in the consumer price index, which is currently a prohibited index for variable rate instruments. However, the agency believes that TIPS will provide an additional investment portfolio risk management tool.

CUNA supports the plan, saying it will allow credit unions to protect against inflation and manage interest-rate risk.

The meeting is expected to be brief as only these permissive rules and a quarterly report on the National Credit Union Share Fund are on the agenda.

Risk Alert Features NCUA DDoS Guidance

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ALEXANDRIA, Va. (2/21/13)--The National Credit Union Administration has stepped into Washington's cybersecurity discussion, identifying appropriate policies and procedures to guard against distributed denial-of-service (DDoS) attacks in a new credit union risk alert (13-Risk-01).

"The increasing frequency of cyber-terror attacks on depository institutions heightens the need for credit unions to maintain strong information security protocols," the notice said.

DDoS attacks are attempts to disrupt or suspend online service by saturating the target's network with external communication requests to overload its server. The NCUA letter noted that such attacks are sophisticated, requiring the vigilance of credit unions offering Internet-based financial services. "As the goal of DDoS attacks is causing service outages rather than stealing funds or data, typical network security controls--such as firewalls and intrusion detection and prevention systems--may offer inadequate protection," the risk alert said.

To mitigate the issues presented by DDoS attacks, the NCUA suggested that credit unions:
  • Perform risk assessments to identify risks associated with DDoS attacks;
  • Ensure incident response programs include a DDoS attack scenario during testing and address activities before, during, and after an attack; and
  • Perform ongoing third-party due diligence, in particular on Internet and web-hosting service providers, to identify risks and implement appropriate traffic management policies and controls.
The agency also noted that DDoS attacks may also be paired with attempts to steal member funds or data. The letter suggested that credit unions voluntarily file Suspicious Activity Reports if DDoS attacks impact Internet service delivery, enable fraud, or compromise member information.

For the full NCUA risk alert, use the resource link.

NEW: NCUA Passes Expanded Rural District FOM, Amends Investment Rule to Allow TIPs

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ALEXANDRIA, Va. (2/21/13, UPDATED 10:12 a.m. ET)--The National Credit Union Administration has approved a final rule that expands the definition of "rural district" for field of membership purposes. The new rule sets the definition at the greater of "no more than 250,000 persons or 3%" of the population of the state in which the majority of the district's persons are located.

NCUA Chairman Debbie Matz said, ""This is really a move in the right direction and is responsive to be the needs of credit union members." She added that she looks forward to having the rule in effect to help credit unions serve more people in rural areas.

The rule will go into effect 30 days after it is published in the Federal Register.

The rural district changes are similar to those advocated by the Credit Union National Association in meetings and a comment letter on the NCUA proposal. CUNA Board Member Roger Heacock presented data to NCUA to support making the changes.

CUNA Deputy General Counsel Mary Dunn urged the NCUA to allow as much authority as legally permissible to federal credit unions to facilitate their presence in these areas of the country that are often are in serious need of financial institution services. Dunn suggested that the NCUA, in the long-term, should allow credit unions that serve rural areas to determine for themselves the size of their fields of membership, governed by the credit union's resources to serve the area sufficiently and its ability to manage safety and soundness concerns.

The agency also approved a final rule that will allow federal credit unions to purchase Treasury Inflation Protected Securities (TIPS) as a permissible investment. The agency believes that TIPS will provide an additional investment portfolio risk management tool. Allowing such investments will help credit unions protect against inflation and manage interest-rate risk, Dunn has noted.

The quarterly insurance fund report was also presented by NCUA staff at today's open meeting.

A final rule addressing NCUA employee policy issues is the lone item on the closed meeting agenda. That closed meeting is scheduled to begin at 11:15 a.m.

NEW: Strong NCUSIF, TCCUSF Performance Decrease Premium Chances

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ALEXANDRIA, VA. (2/21/13, UPDATED 12:35 p.m. ET)--The strong performance in 2012 of the National Credit Union Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund, reported by the National Credit Union Administration today, decrease chances for a premium assessment this year.

The number of federal credit unions with CAMEL codes 3, 4 and 5 dropped significantly during 2012, according to the NCUA. The declining number of lower-rated credit unions, of course, reduces the exposure of the NCUSIF to potential losses.

The agency reported the NCUSIF ended 2012 with a 1.30% equity ratio, after transferring $88 million in "excess equity" to the Temporary Corporate Stabilization Fund. The NCUA said it calculated the ratio on an insured share base of $839.4 billion, compared to $795.3 billion at the end of 2011, indicating growth of 5.5%.

Also today, the NCUA reported good 2012 results for the TCCUSF. Based on "preliminary and unaudited" information, for 2012 the total net position of the fund improved nearly $1.8 billion.

The agency staff noted that when the stabilization fund has outstanding borrowings from the U.S. Treasury, the Federal Credit Union Act requires the NCUA to make a distribution from the NCUSIF if the share insurance fund has an equity ratio above the normal operating level of 1.30% at year's end.

"Had the stabilization fund not existed, the $88 million would have been paid as a dividend to credit unions on their NCUSIF deposits. Instead, it will serve to lower future assessments," Credit Union National Association Chief Economist Bill Hampel points out.  

Of the improved CAMEL ratings, NCUA Chairman Debbie Matz said, "Protecting the Share Insurance Fund is a top priority for NCUA, and the 2012 year-end results show that NCUA's prudent management and effective regulatory policies are working well."

At today's meeting the NCUA's chief financial officer also related that:

The total number of CAMEL code 3, 4 and 5 credit unions dropped 9.8%, to 1,940 at year-end 2012 from 2,150 in 2011;

Assets of CAMEL code 3 credit unions decreased to $119.3 billion at the end of the fourth quarter of 2012, a 16.3% drop from $142.5 billion on Dec. 31, 2011; and

For lowest ranked CAMEL code 4 and 5 credit unions, assets fell 35.4%, to $19 billion at the end of 2012, down from $29.4 billion for 2011.

As a result of the improving condition of stressed credit unions, the percent of total insured shares in CAMEL 4 and 5 credit unions declined from 3.3% to 2.0% during 2012. At the same time, shares in CAMEL 3 credit unions have fallen from 15.9% to 12.6% of insured shares. Therefore, shares in CAMEL 3, 4 and 5 credit unions are down from 19.2% of insured shares as of December 2011, to 14.6% as of December 2012.   

Overall, the amount of assets in CAMEL Code 3, 4 and 5 credit unions have decreased 32.7% since reaching a high in September 2010.

There was no NCUSIF premium assessed in 2012 and the agency has projected a premium range between zero and 5 basis points for 2013.

CFPB Consumer Group Meeting Spotlights Payday Lenders

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WASHINGTON (2/21/13)--Consumer Advisory Board (CAB) members on Wednesday called on the Consumer Financial Protection Bureau to create and implement tighter regulations for payday lenders and short-term small-dollar credit products.

In remarks delivered before the first CAB meeting of 2013, CFPB Director Richard Cordray identified short-term loans as one of four "classes of problems" that his agency will focus on going forward.

The Credit Union National Association has also urged the bureau to focus more attention in 2013 on regulating entities in the financial marketplace that engage in abusive practices, such as payday lenders, that have been unregulated or under-regulated to date.

To address existing short-term loan issues, CAB members suggested the CFPB could:
  • Require longer repayment periods for payday loans;
  • Limit the number of times a borrower may roll over a payday loan; and
  • Force lenders to verify that a borrower can repay a given loan before it is taken out.
Debt traps such as short-term loans "can cause consumers to veer off the pathway to opportunity," Cordray noted. "There is an obvious demand for short-term credit products, which can be helpful for consumers who use them responsibly and which are structured to facilitate repayment. We want to make sure that consumers can get the credit they need without jeopardizing or undermining their finances. Debt traps should not be part of their financial futures," he added.

Credit unions and CUNA are committed to providing safe and affordable alternatives to predatory payday lenders, and credit unions across the country have implemented various programs in order to provide individuals in their communities an alternative to high-priced payday lenders.

CUNA supports the ability of credit unions to provide beneficial short-term, small-dollar loans as alternatives to predatory payday lending, which have "no place in the financial marketplace." CUNA has also urged the bureau to focus more attention in 2013 on regulating entities in the financial marketplace that engage in abusive practices, such as payday lenders, that have been unregulated or under-regulated to date.

Wednesday's CAB session was the first day of a two-day board meeting.

During today's meeting, the board is scheduled to discuss:
  • CAB governance;
  • Remittance policies;
  • Overdraft fee issues;
  • Mobile payments; and
  • Credit reporting and debt collection.
Two credit union representatives are among the 25 CAB members. Bill Bynum, CEO of Hope Enterprise Corp. and Hope Community CU, Jackson, Miss., serves as vice chair of the CAB. Laura Castro de Cortes, vice president of alternative financial services for Centris FCU, Omaha, Neb., is a CAB member.

The board advises CFPB leadership on consumer financial issues and emerging market trends.

For Cordray's remarks and more on this week's CAB meetings, use the resource links.

CARD Act Changes Threaten To Divert Resources From Member Service: CUNA

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WASHINGTON (2/21/13)--When it revisits some provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Consumer Financial Protection Bureau must recognize that certain CARD Act requirements "have the potential to divert credit unions' resources and attention away from their primary mission, which is to meet their members' financial needs," the Credit Union National Association said in a comment letter.

In the letter, CUNA Senior Assistant General Counsel for Regulatory Advocacy Luke Martone noted CUNA's longstanding support of the CARD Act's objective, which is to eliminate predatory credit card practices. "However, credit unions remain concerned that regulatory requirements not become any more cumbersome for credit cards than they are now," he wrote.

The letter noted that CARD Act implementation has changed many of the substantive terms and conditions of credit card agreements, and has resulted in numerous direct changes to card issuers' practices.

The credit card application review process has become lengthier, and the forms themselves have become more complex, the letter adds. Credit limits have also been lowered for some borrowers as an indirect result of the Act.

Many creditors have also increased their underwriting as a result of the CARD Act, the letter noted.

Overall, the increased cost of compliance associated with these and other CARD Act changes has made it more expensive for credit unions and other issuers to operate card programs. "While the Act was implemented to better manage and enforce industry practices related to certain high-risk borrowers, higher credit costs for all borrowers and credit card issuers has resulted," the letter said.

If and when the CFPB turns its attention to its rules implemented under the CARD Act, CUNA encourages the agency to provide meaningful regulatory relief from various provisions of the Act.

For the full CUNA comment letter, use the resource link.

Federal, State Regulators Streamline LICU Process For State-Chartereds

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ALEXANDRIA, Va. (2/21/13)--Federal and state regulators announced a joint plan Wednesday to streamline the process for state-chartered credit unions to determine if they are eligible for designation as low-income credit unions. (LICU).

Under a cooperative effort by the National Credit Union Administration and the National Association of State Credit Union Supervisors (NASCUS), state regulators can now provide limited geographic and income data to NCUA's AIRES system when they upload their examinations. AIRES stands for Automated Integrated Regulatory Examination Software.

The NCUA said it will use that data to determine if there are state-chartered credit unions eligible for the low-income designation and provide a list to state regulators on a quarterly basis of those credit unions. State regulators have the sole authority to make the LICU designation for state-chartered credit unions.

To qualify as a LICU, a majority of a credit union's membership must meet a low-income thresholds based on 2010 U.S. Census data. LICU designation has some regulatory benefits for credit unions.

For qualifying state-chartered credit unions, under certain circumstances and when state law permits, benefits can include: 
  • Eligibility for Community Development Revolving Loan Fund grants and low-interest loans;
  • Ability to obtain supplemental capital;
  • Exemption from the 12.25 percent statutory cap on member business loans; and
  • Ability to accept non-member deposits from any source.
"Consistency and cooperation are fundamental to effective regulation, and so is creating opportunities," NCUA Chairman Debbie Matz said in a release. "This is a great example of how state and federal regulators can work together to help state-chartered credit unions that qualify obtain a low-income designation. NCUA will provide state regulators with lists of credit unions that could qualify, and the states take it from there."

"Streamlining the process for federally insured, state-chartered credit unions that might seek the low-income credit union designation is a tangible benefit to the state system," NASCUS President/CEO Mary Martha Fortney added.

Waters Requests More Details From Regulators On IFR's End

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WASHINGTON (2/20/13)--Rep. Maxine Waters, the top Democrat of the House Financial Services Committee, continues to press bank regulators for details about their termination of the Independent Foreclosure Review (IFR).

Waters released a letter Tuesday to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry seeking additional information from the regulators about the termination of the IFR. It is a follow up to an inquiry earlier this month.

Also, earlier this month Waters (D-Calif.), who has been an advocate for foreclosure prevention, asked Chairman Jeb Hensarling (R-Texas) of House Financial Services for a hearing into a Jan. 7 tentative $9.3 billion settlement between the Fed and OCC and mortgage servicing companies which Waters said is intended to resolve claims of wrongdoing by the servicers against an estimated 4.4 million borrowers.  It effectively ended the IFR.

Information requested by Waters includes: Policies and Procedures documents created by independent consultants outlining how loan files were to be reviewed by analysts; information on error rates of reviewed loan files; guidelines issued by the regulators to independent consultants relating to the foreclosure notice process; and other pertinent information.

Small Detroit CU Closed By Regulators

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ALEXANDRIA, Va. (2/20/13)--Amez United CU, a Detroit, Mich., credit union with 158 members and $168,865 in assets, has been liquidated by the Michigan Office of Financial and Insurance Regulation.

The state regulator then appointed the National Credit Union Administration to serve as liquidating agent. As liquidating agent, the NCUA has the authority to take on other rights and responsibilities of the credit union. The NCUA said its Asset Management and Assistance Center will issue checks to individuals holding verified share accounts in the credit union within one week.

The agency on Tuesday reported that the Michigan regulator moved to close the credit union after it determined the credit union was insolvent and had no prospect for restoring viable operations.

Amez is the second federally insured credit union liquidation of the year. The credit union was chartered in 1961 and served registered members of the churches in the Detroit district of the Michigan Conference of the African Methodist Episcopal Zion Church.

There were 13 federally insured credit union liquidations in 2012.

For the full NCUA release, use the resource link.

NCUA Receives Clean Audits For Permanent Funds

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ALEXANDRIA, Va. (2/19/13)--The National Credit Union Administration announced that all four of its permanent funds received unqualified, or "clean," audit opinions for 2012. The report covers the NCUA's National Credit Union Share Insurance Fund, the Operating Fund, the Central Liquidity Facility and the Community Development Revolving Loan Fund.

KPMG LLP completed the audits of all four permanent funds and expects to issue an opinion on the 2012 financial statements for the Temporary Corporate Credit Union Stabilization Fund in the coming months. The Stabilization Fund earned a clean audit opinion for 2011.

"Diligent stewardship of our funds and public transparency are both top priorities for the agency," NCUA Chairman Debbie Matz said when releasing the report results.  She added that the independent auditor's clean opinions "lead me to say with full confidence that we have fully lived up to our commitments to credit unions, credit union members and their communities."

Use the resource link to access the financial reports.

Government Cybersecurity Prep Must Be Improved: GAO

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WASHINGTON (2/20/13)--A new Government Accountability Office (GAO) report hones in on the hot topic of cybersecurity, and the study finds that federal agencies and the executive branch need to step up their cybersecurity practices and that a comprehensive, executive branch-level strategy is needed to address online security issues.

The GAO said that the goal of a federal cybersecurity strategy should be to "better ensure that federal departments and agencies are held accountable for making significant improvements in cybersecurity challenge areas, including designing and implementing risk-based programs; detecting, responding to, and mitigating cyber incidents; promoting education, awareness, and workforce planning; promoting [research and development]; and addressing international cybersecurity challenges."

The report noted that credit unions and other financial institutions are already well regulated in this area. The GAO also found that the U.S. Department of Treasury had neither departmental workforce plans nor workforce plans that specially addressed cybersecurity workforce needs.

The Obama administration and the U.S. Congress have both moved to address cybersecurity issues in recent weeks.

An executive order released earlier this month provides a broad, general framework intended to improve "critical infrastructure" cybersecurity coordination and information sharing among government agencies and the private sector. The order does not provide new legal authority. "Critical infrastructure" is not defined in the order, but could potentially include the power grid, financial market exchanges, and telecommunications networks, the Credit Union National Association has noted.

Legislation to improve public/private cybersecurity cooperation was also introduced by House Intelligence Committee Chairman Mike Rogers (R-Mich.) and Ranking Member C.A. Dutch Ruppersberger (D-Md.) last week. The bill, H.R. 624, provides positive authority to the government to provide classified cyber threat information to the private sector, and knocks down the barriers that impede cyber threat information sharing among private sector companies, and between private sector companies and the government, Rogers noted. (See Feb. 14 News Now story: Cybersecurity Order Offers Public/Private Coordination Chances: CUNA)

CUNA continues to work with the National Credit Union Administration, the Financial Services Sector Coordinating Council, BITS, the Treasury and other entities to coordinate on cybersecurity issues, and to ensure that credit unions are not unduly impacted from the cybersecurity framework for critical infrastructure entities. CUNA is also engaged with Congress on any cybersecurity legislation.

For the full GAO report, use the resource link.

Short And Simple, CFPB Blogs On 'QM'

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WASHINGTON (2/20/13)--The Consumer Financial Protection Bureau posted a recent blog entry intended to explain the "qualified mortgage" rule in a single page.

"Qualified mortgages explained," by Peter Carroll, CFPB assistant director of mortgage markets, notes that the bureau recently released the Ability-to-Repay rule intended to protect consumers from irresponsible mortgage lending.

The post goes on to explain that as part of that rule, and at the direction of the U.S. Congress, the CFPB also defined a category of loans that carry more protections for borrowers--called "Qualified Mortgages."

The blog post briefly discusses the bureau's considerations when making the rule,  a transitional provision included to allow time to adjust to the new rule, and the CFPB's expectation that, over time,  the rule will help "responsible lending practices flourish" for all residential mortgage loans.

Use the link below to read the post.

NCUA Net Worth Webinar Is Today

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ALEXANDRIA, Va. (2/20/13)--Interested in the common causes of net worth declines, and how credit unions can restore their net worth? There is still time to sign up for this afternoon's National Credit Union Administration webinar, "Net Worth Restoration Plans: A Path to Recovery."

The free webinar will be presented by NCUA Office of Small Credit Union Initiatives (OSCUI) Director William Myers. It is scheduled to begin at 2 p.m. ET.

The webinar will feature:
  • A review NCUA's capital requirements for credit unions and the net worth restoration plan process;
  • Discussion of the minimum regulatory requirements for net worth under Prompt and Corrective Action and Part 702 of NCUA's Rules and Regulations;
  • Information on restoration plan timelines; and
  • Details on assistance available for credit unions that are developing a net worth restoration plan.
To sign up for the webinar, use resource link.

NEW: Federal, State Regulators Offer Easier LICU Process for State-Chartereds

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ALEXANDRIA, Va. (2/20/13, UPDATED 5:35 p.m. ET)--Federal and state regulators have worked together to devise a plan to help state-chartered credit unions find it easier to to determine if they are eligible for designation as low-income credit unions (LICU).

Under a cooperative effort by the National Credit Union Administration and the National Association of State Credit Union Supervisors (NASCUS), state regulators can now provide limited geographic and income data to NCUA's AIRES system when they upload their examinations.

The NCUA said in a release it will use that data to determine if there are state-chartered credit unions eligible for the low-income designation and provide a list to state regulators on a quarterly basis of those credit unions. State regulators have the sole authority to make the LICU designation for state-chartered credit unions. (Watch News Now Thursday for more.)

NEW: NCUA Provides CUs With Cybersecurity Guidance

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ALEXANDRIA, Va. (UPDATED: 1 p.m. ET, 2/20/13)--The National Credit Union Administration has stepped into Washington's cybersecurity discussion, identifying appropriate policies and procedures to guard against distributed denial-of-service (DDoS) attacks in a new credit union risk alert (13-Risk-01).

"The increasing frequency of cyber-terror attacks on depository institutions heightens the need for credit unions to maintain strong information security protocols," the notice said.

DDoS attacks are attempts to disrupt or suspend online service by saturating the target's network with external communication requests to overload its server. The NCUA letter noted that such attacks are sophisticated, requiring the vigilance of credit unions offering Internet-based financial services. "As the goal of DDoS attacks is causing service outages rather than stealing funds or data, typical network security controls--such as firewalls and intrusion detection and prevention systems--may offer inadequate protection," the risk alert said.

To mitigate the issues presented by DDoS attacks, the NCUA suggested that credit unions:

  • Perform risk assessments to identify risks associated with DDoS attacks;
  • Ensure incident response programs include a DDoS attack scenario during testing and address activities before, during, and after an attack; and
  • Perform ongoing third-party due diligence, in particular on Internet and web-hosting service providers, to identify risks and implement appropriate traffic management policies and controls.
The agency also noted that DDoS attacks may also be paired with attempts to steal member funds or data. The letter suggested that credit unions voluntarily file Suspicious Activity Reports if DDoS attacks impact Internet service delivery, enable fraud, or compromise member information.

For the full NCUA risk alert, use the resource link.

Latino Network Luncheon At GAC Features US Reps Norton, Gallego

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MADISON, Wis. (2/19/13)--The Network of Latino Credit Unions and Professionals (NLCUP) will hold its annual Networking Luncheon Feb. 26 during the Credit Union National Association's Governmental Affairs Conference, with U.S. Reps. Eleanor Holmes Norton (D-D.C.) and Pete P. Gallego (D-Texas) as guest speakers.

The luncheon also will feature awards and recognition.  CUNA President/CEO Bill Cheney will be presented NLCUP's 2013 Leadership and Vision Award. Murray Williams, chief operating officer of the Iowa Credit Union League, will receive the group's 2013 Leadership and Support Award.

Norton, a credit union supporter who has praised credit unions for being responsible lenders during the financial crisis, is in her 12th term as congresswoman. She is the ranking member of the house subcommittee on economic development, public buildings and emergency management.

She serves on two committees: the Committee on Oversight and Government Reform and the Committee on Transportation and Infrastructure.  Norton was the first woman to chair the U.S. Equal Employment Opportunity Commission.

Gallego, representing the 23rd congressional district of Texas, serves on the House Armed Service Committee, which has jurisdiction over defense policy, ongoing military operations, the organization and reform of the Department of Defense and Department of Energy, among others.

In the Texas House of Representatives, Gallego served on the joint House/Senate conference committee on the state budget from 1993 to 2001. He also served as chair of the Mexican-American Legislative Caucus, a group of 43 House members of Mexican-American descent or who serve a significant Mexican-American constituency.

The luncheon, sponsored by CUNA Hispanic Outreach Committee and Coopera Consulting, will be from 11:30 a.m. to 2 p.m. ET at the Organization of American States (OAS) Hall of the Americas in Washington, D.C.

Events include an 11 a.m. private tour of the historic OAS building, the keynote speech by Holmes Norton, and presentation of awards and recognition. Transportation will be provided by NLCUP to and from The Washington Convention Center beginning at 10:45 a.m.  RSVPs should be sent to Dorothy Steffens at dsteffens@cuna.coop.

CUNA's GAC meets at the Washington Convention Center Feb. 24-28.  For more information, use the links.

Privacy Notice Bill Would Cut Consumer Confusion: CUNA

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WASHINGTON (2/19/13)--A bill that would make significant improvements in privacy notices for consumers was just reintroduced in the House. Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) introduced "The Eliminate Privacy Notice Confusion Act."

The Credit Union National Association supports the bill, which it says would eliminate repetitive privacy notices that are often ignored by consumers. By eliminating a requirement that the notices be sent annually, and requiring them only to be sent when the privacy policy of a financial institution has changed, the notices become more meaningful for consumers, CUNA has stated.

The House unanimously passed an identical bill before the 112th Congress adjourned, but the Senate had not acted on the legislation. Therefore, the bill must be re-introduced for consideration in both chambers this year.

In a letter of support for the privacy notice change, CUNA President/CEO Bill Cheney noted to the bill's co-sponsors that consumers are rightfully concerned about the protection of their personal financial information, and it is important for them to understand how their financial institutions handle this information.

However, Cheney warned, under current rules, credit unions alone have sent an estimated one billion annual privacy notifications to members since 2001.

"A recent voter survey indicated that fewer than one-quarter of consumers read the privacy notifications they receive, and over three-quarters of consumers would be more likely to read them if they were only sent when the financial institution changed its policy.

"This suggests that the public policy goal of privacy notifications would be better achieved if the notices had more meaning to consumers. We believe your bill achieves this end," wrote Cheney.

Thursday,  two key pieces of legislation that would enhance the credit union charter were introduced in the House: One bill that would address the credit union member business lending cap, and another to improve credit unions' access to secondary capital. (See Friday's News Now for more on that development.)

Partnerships Could Help CUs Participate In Disclosure Pilot: CUNA

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WASHINGTON (2/19/13)--The Consumer Financial Protection Bureau's decision to allow credit unions and other financial services companies to conduct trial consumer disclosure programs is a good move, but credit unions that wish to participate may have operational concerns, the Credit Union National Association said.

Under the program, companies will be able to conduct real-world trials of disclosure alternatives. The CFPB will approve individual companies, on a case-by-case basis, for limited-time exemptions from current federal disclosure laws in order for those companies to research and test informative, cost-effective disclosures.

The companies involved will then share the results of their trial disclosure with the CFPB. The CFPB will use that information to improve its disclosure rules and model forms.

In a CFPB comment letter, CUNA Associate General Counsel Jared Ihrig said CUNA supports the concept of the proposed trial disclosure policy, but maintains concerns as to its operational feasibility for credit unions.

"Given the recent volume of newly finalized mortgage regulations issued by the bureau, many credit unions are understandably overwhelmed by the implementation burdens that lie ahead. Over the coming months, these requirements will cause credit unions to necessarily divert valuable resources to the compliance efforts associated with these new rules, which may also leave fewer resources available to explore and pursue programs such as those under the proposed policy," Ihrig wrote.

CUNA urged the CFPB to allow credit unions to partner with major financial service provider vendors, such as compliance program vendors, in order to provide added resources and collaboration in participating in the trial disclosure program. "These partnerships will allow credit unions and other financial service providers to continue serving their members, while allowing for shared additional resources that could prove extremely beneficial in allowing institutions to fully participate in a trial disclosure program. Without the use of such partnerships, many credit unions will simply not have the resources to allow their full and active participation in any trial disclosure program under the bureau's proposed policy," the comment letter said.

CUNA also encouraged the CFPB monitor the impact of this program to ensure that it does not produce a two-tier system that unduly advantages larger financial service providers, and to avoid developing programs that would favor certain classes of institutions over another.

For the full comment letter, use the resource link.

NEW: NCUA Receives Clean Audits for Permanent Funds

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ALEXANDRIA, Va. (UPDATED: 1:30 p.m. ET, 2/19/13)--The National Credit Union Administration announced that all four of its permanent funds received unqualified, or "clean," audit opinions for 2012.

The report covers the NCUA's National Credit union Share Insurance Fund, the Operating Fund, the Central Liquidity Facility and the Community Development Revolving Loan Fund.

KPMG LLP completed the audits of all four permanent funds and expects to issue an opinion on the 2012 financial statements for the Temporary Corporate Credit Union Stabilization Fund in the coming months. The Stabilization Fund earned a clean audit opinion for 2011.

"Diligent stewardship of our funds and public transparency are both top priorities for the agency," NCUA Chairman Debbie Matz said when releasing the report results. She added that the independent auditor's clean opinions "lead me to say with full confidence that we have fully lived up to our commitments to credit unions, credit union members and their communities."

Use the resource link to access the financial reports.

CDFI Changes, Future Will Be Addressed At GAC Roundtable

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WASHINGTON (2/19/13)--New Community Development Financial Institution (CDFI) Fund programs and long-term investment prospects will be among the items addressed at an upcoming Credit Union National Association 2013 Governmental Affairs Conference roundtable.

CUNA and the National Federation of Community Development Credit Unions will host the roundtable, which is scheduled to begin at 12 p.m. ET on Feb. 25. Representatives from the CDFI Fund, the U.S. Treasury Department and the federation will speak during the roundtable. The discussion will cover:

  • The long term prospects for the CDFI industry;
  • The newly released regulations for the CDFI Bond Guarantee Program; and
  • Opportunities to demonstrate community development outcomes.
Credit union CEOs will also share best practices and sustainable approaches to leveraging CDFI certification.

"The session is open to all current and potential low-income-designated credit union leaders that have an interest in exploring how to make CDFI Fund investment opportunities work for their credit union," the federation noted in a release.

Ways & Means Committee Names Republican Subcommittee Members

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WASHINGTON (2/19/13)--House Ways and Means Committee Chairman Dave Camp (R-Mich.) has announced Republican subcommittee assignments for his panel for the 113th U.S. Congress.

The oversight subcommittee and the select revenue measures subcommittee will be of most interest to credit unions. The the oversight subcommittee investigates the tax exempt sector, and the select revenue measures subcommittee is in charge of tax reform. Preserving the tax status of credit unions is a top Credit Union National Association priority.

Rep. Charles Boustany (R-La.) will lead the subcommittee on oversight, and Rep. John Lewis (D-Ga.) will serve as ranking member. The remaining Republican members of that subcommittee are:

  • Rep. Diane Black (Tenn.);
  • Rep. Lynn Jenkins (Kan.);
  • Rep. Kenny Marchant (Texas);
  • Rep. Tom Reed (N.Y.);
  • Rep. Erik Paulsen (Minn.); and
  • Rep. Mike Kelly (Pa.).
Rep. Pat Tiberi (R-Ohio) will lead the subcommittee on select revenue measures, with Rep. Richard E. Neal (D-Mass.) serving as ranking member. Marchant, Paulsen and Reed will also serve on that committee. The remaining Republican members of the subcommittee are:

  • Rep. Jim Gerlach (Pa.);
  • Rep. Aaron Schock (Ill.); and
  • Rep. Todd Young (Ind.).
Republican members for the trade, health, human resources and social security subcommittees were also named in the release. Subcommittee leadership and Democratic subcommittee rosters were announced in mid-January.

Camp congratulated the new and returning subcommittee members, adding that his committee "faces a very busy Congress as [it works] to make our economy stronger and healthier so families can find good-paying jobs and afford to save and invest for the future."

For the full release, use the resource link.

The committee last week also announced membership of 11 bipartisan groups that will craft separate areas of a tax code overhaul. The groups will focus on charitable and exempt organizations; debt, equity and capital; education and family benefits; energy; financial services; income and tax distribution; international tax issues; manufacturing; pensions/retirement; real estate; and small business and pass throughs.

Ryan Donovan, CUNA senior vice president of legislative affairs, said these groups include lawmakers with a good understanding of credit union issues and the credit union difference. "Those who understand credit unions and understand the public policy reasons for the credit union tax-exemption also know that it is something to protect for the sake of consumers," he added. (See Feb. 15 News Now story: Ways And Means Groups Include CU-friendly Members, Says CUNA)

House Minority Whip Hoyer Joins GAC Lineup

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WASHINGTON (2/19/13)--House Minority Whip Steny Hoyer (D-Md.) will join Speaker of the House John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va.) on a high-powered 2013 Credit Union National Association Governmental Affairs Conference lineup.

Hoyer, the second-ranking member of the Democratic leadership, served as House Majority Leader from 2007 until 2011, and has been a member of the House since 1980. He told 2012 GAC attendees he has always been a supporter of the credit union movement, and he praised credit unions for the "remarkable'' role they have played in helping make the middle class's "lives and dreams possible.'' Hoyer's mother was a credit union employee, so the legislator said he learned the importance of credit unions at a young age.

"People live in a more stable and prosperous country because of the work you do,'' he said.

Hoyer will speak in the late morning session on Tuesday, Feb. 26.

Other legislators on the GAC speaking schedule include: Democratic National Committee Chairman and credit union supporter Rep. Debbie Wasserman Schultz (D-Fla.), and credit union champions Sen. Mark Udall (D-Colo.), Rep. Ed Royce (R-Calif.) and Rep. Brad Sherman (D-Calif.). House Financial Services Committee Chairman Jeb Hensarling (R-Texas), House Financial Services Committee Ranking Member Maxine Waters (D-Calif.), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee senior member Spencer Bachus (R-Ala.), Rep. Gregory Meeks (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), Sen. Jon Tester (D-Mont.), Rep. Peter King (R-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.) are also slated to speak at the 2013 GAC.

CUNA's 2013 GAC will take place Feb. 24-28 at the Washington Convention Center in Washington, D.C. This year's GAC theme, "Powerful Cause, Positive Effect," reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC. Use the resource link to register for the GAC.

Public/Private Cybersecurity Partnerships Discussed at Hearing

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WASHINGTON (2/15/13)--President Barack Obama's recent cybersecurity executive order and cybersecurity legislation introduced this week were both discussed during a Thursday House Intelligence Committee hearing.

The hearing focused on the state of cyber threat information sharing between the U.S. government and private sector, and cyber information sharing within the private sector.

Committee chairman Mike Rogers (R-Mich.) in prepared remarks said his cybersecurity bill, H.R. 624, "provides positive authority to the government to provide classified cyber threat information to the private sector, and knocks down the barriers that impede cyber threat information sharing among private sector companies, and between private sector companies and the government. It does all this with strong restrictions and safeguards to protect the privacy and civil liberties of Americans."

The bill, also known as the Intelligence and Sharing Protection Act, is cosponsored by ranking committee member C.A. Dutch Ruppersberger (D-Md.). Similar legislation was supported by the Credit Union National Association last year and passed the House last spring.

Hearing witnesses included:

  • Former Michigan Governor and current Business Roundtable President John Engler;
  • Baltimore Gas & Electric President/CEO Ken DeFontes;
  • BITS President Paul Smocer; and
  • Kevin Mandia, CEO of MANDIANT Corporation.
For more on the hearing use the resource link.

Lautenberg Won't Run For Senate Seat Again

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WASHINGTON (2/15/13)--Sen. Frank Lautenberg (D-N.J.), who at 89 is the Senate's oldest member, announced Thursday that he has decided not to run for re-election next year, it was widely reported.

Lautenberg, a World War II veteran, is expected to make his formal announcement in Paterson, his New Jersey hometown.

Lautenberg first served in the Senate for 19 years from 1982 to 2001. He retired briefly but was re-elected when he decided to run again in 2003.

He will retire when his current term ends in January 2015.

Cordray, Congress Talk Fin Lit At Senate Banking Hearing

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WASHINGTON (2/15/13)--Noting that "there is a very scattered and disparate approach" to financial literacy education right now, Consumer Financial Protection Bureau Director Richard Cordray said his agency wants to work with the U.S. Congress, other federal agencies and states to address the issue.

The CFPB director spoke during a Thursday Senate Banking Committee hearing entitled "Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections." Cordray was one of seven regulators that discussed Wall Street reform implementation during the hearing.

Basic Financial literacy "is something that we've lost… and something we need to focus on," Cordray said. The CFPB Director said the agency is working with 15 or 20 other federal agencies to address financial literacy issues.

Sen. Tom Coburn (R-Okla.) noted there are 56 different federal financial literacy programs, and he asked Cordray to analyze the programs and make a recommendation to congress on which programs could be eliminated. "With 56, if we start another one or another two or three and don't change those, we're throwing money out the door," the senator said. Cordray said he would follow up on the issue and work with Coburn.

Sen. Elizabeth Warren (D-Mass.) also spoke during the first banking committee hearing of 2013, asking witnesses why their agencies had not pursued more court cases against Wall Street banks. Many of the witnesses said banks had reached financial settlements with the government, but were not taken to trial. "I'm really concerned that too big to fail has become too big for trial," Warren said.

Warren also joined 53 Democratic and Independent senators to sign a letter commending President Barack Obama's decision to re-nominate Cordray for the CFPB Director position. The letter cosignors said they would support Cordray's nomination, and they oppose and structural changes to the CFPB.

A group of 44 Republican senators have said they will oppose Cordray's nomination unless structural changes are made to the CFPB.

For more on the hearing and the Senate CFPB letter, use the resource links.

CU Charter Enhancements Are Unveiled For 113th Congress

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WASHINGTON (2/15/13)--Two key pieces of legislation that would enhance the credit union charter were introduced in the U.S. House Thursday: One bill that would address the credit union member business lending (MBL) cap, and another to improve credit unions' access to secondary capital.

"Credit union membership grew by at least 2.4 million in 2012--the greatest membership growth in 15 years," said CUNA President/CEO Bill Cheney. "These two key pieces of legislation represent tools that will give credit unions greater options for serving their growing memberships--including small business owners in search of credit to keep their businesses and their communities thriving."

Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) introduced the MBL legislation, H.R. 688, which would increase the credit union MBL cap to 27.5% of assets, from the current 12.25%-of-assets level. The bill, if enacted, would help credit unions lend an additional $14.5 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 158,000 new jobs.

"Small businesses are the backbone of our economy and it is critical that Congress look at proposals that help them to grow, thrive and hire," Royce said in a release. McCarthy added: "We must support America's small businesses as we continue to grow our economy.  This bipartisan bill will help small businesses grow and hire new workers at zero cost to taxpayers."

The supplemental capital bill was introduced by Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.). That bill would permit the National Credit Union Administration to allow credit unions to raise capital from sources other than retained earnings 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 supplemental cushion to reduce risk to the National Credit Union Share Insurance Fund," Cheney added.

"Our thanks to Reps. Royce and McCarthy, as well as Reps. King and Sherman for bringing these important measures forward," Cheney said. "More than 4,000 credit union representatives will be in Washington the week of Feb. 25 for the CUNA Governmental Affairs Conference, and these bills will be at the top of the lists for many as they discuss legislation for credit unions in the 113th Congress."

For CUNA letters to Congress on both bills, use the resource links.

Ways And Means Groups Include CU-friendly Members, Says CUNA

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WASHINGTON (2/15/13)--The membership of the 11 bipartisan groups set up by the House Ways and Means Committee to craft separate areas of a tax code overhaul includes lawmakers with a good understanding of credit union issues and the credit union difference, Ryan Donovan, senior vice president of legislative affairs for the Credit Union National Association, observed Thursday.

"Those who understand credit unions and understand the public policy reasons for the credit union tax-exemption also know that it is something to protect for the sake of consumers.

"Credit unions are the best option for consumers to conduct their financial services, but taxing credit unions would eliminate this option entirely," Donovan said.

Preserving the tax status of credit unions is a top CUNA priority. Under the Federal Credit Union Act, federal and state-chartered credit unions are exempt from federal income tax because they are cooperatives operated for and by their members, and because credit union shares are essentially members' deposits. The tax status has been re-affirmed periodically by the U.S. Congress and is supported by many lawmakers.

The Ways and Means working groups each will be led by a Republican House member with a Democrat as vice chair. They will focus on the following areas:

  • Charitable and exempt organizations;
  • Debt, equity and capital;
  • Education and family benefits;
  • Energy;
  • Financial services;
  • Income and tax distribution;
  • International;
  • Manufacturing;
  • Pensions/retirement;
  • Real estate; and
  • Small business and pass throughs.
The groups on financial services and on exempt organizations are the two most likely to study the credit union tax status.  The financial services group will be led by Rep. Adrian Smith (R-Neb.) and vice chaired by Rep. John Larson (D-Conn.) The charitable and exempt organizations group is headed by Rep. David Reichert (R-Wash.) with Rep. John Lewis (D-Ga.) as vice chair.

Rural Districts, TIPS Lead NCUA Agenda

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ALEXANDRIA, Va. (2/15/13)--Final rules addressing Treasury Inflation Protected Securities (TIPS) and rural districts will lead the day when the National Credit Union Administration holds its next open meeting on Feb. 21.

The NCUA in September 2012 released a proposed rule to allow federal credit unions to purchase TIPS as a permissible investment. Currently, TIPS are not a permissible investment because TIPS reprice their value based on changes in the consumer price index, which is currently a prohibited index for variable rate instruments. However, the agency believes that TIPS will provide an additional investment portfolio risk management tool.

Allowing such investments, as proposed by the NCUA, will allow credit unions to protect against inflation and manage interest-rate risk, Credit Union National Association Deputy General Counsel Mary Dunn has noted.

The rural district final rule follows a September NCUA proposal that would provide more flexibility to federal credit unions serving rural areas by expanding the rural district definition to geographic areas with 200,000 or fewer inhabitants or less than 3% of a given state's population.

Dunn last fall said the NCUA proposal does not go far enough to provide meaningful relief to those credit unions that provide services to rural communities. She urged the NCUA to allow as much authority as legally permissible to federal credit unions to facilitate their presence in these areas of the country that are often are in serious need of financial institution services.

The quarterly insurance fund report will also be presented by NCUA staff.

The open meeting is scheduled to begin at 10 a.m. ET.

A final rule addressing NCUA employee conduct is the lone item on the closed meeting agenda. The closed meeting is scheduled to begin at 11:15 a.m.

For the full NCUA agenda, use the resource link.

NEW: Privacy Notice Bill Would Cut Consumer Confusion: CUNA

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WASHINGTON (UPDATED: 12/15/13, 10 a.m. ET)--A bill that would make significant improvements in privacy notices for consumers was just reintroduced in the House. Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) introduced "The Eliminate Privacy Notice Confusion Act."

The Credit Union National Association supports the bill, which it says would eliminate repetitive privacy notices that are often ignored by consumers. By eliminating a requirement that the notices be sent annually, and requiring them only to be sent when the privacy policy of a financial institution has changed, the notices become more meaningful for consumers, CUNA has stated.

The House unanimously passed an identical bill before the 112th Congress adjourned, but the Senate had not acted on the legislation. Therefore, the bill must be re-introduced for consideration in both chambers this year.

In a letter of support for the privacy notice change, CUNA President/CEO Bill Cheney noted to the bill's co-sponsors that consumers are rightfully concerned about the protection of their personal financial information, and it is important for them to understand how their financial institutions handle this information.

However, Cheney warned, under current rules, credit unions alone have sent an estimated 1 billion annual privacy notifications to members since 2001.

"A recent voter survey indicated that fewer than one-quarter of consumers read the privacy notifications they receive, and over three-quarters of consumers would be more likely to read them if they were only sent when the financial institution changed its policy

"This suggests that the public policy goal of privacy notifications would be better achieved if the notices had more meaning to consumers. We believe your bill achieves this end," wrote Cheney.

Yesterday, two key pieces of legislation that would enhance the credit union charter were introduced in the House: One bill that would address the credit union member business lending (MBL) cap, and another to improve credit unions' access to secondary capital. (See today's News Now for more on that development.)

NCUA Raises Awareness of the Earned Income Tax Credit

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ALEXANDRIA, Va. (2/15/13)--Credit unions providing tax assistance services should be mindful of the Earned Income Tax Credit (EITC) for certain, qualified taxpayers, the National Credit Union Administration reminded Thursday.

For the 2012 tax year, the EITC can return up $5,891 to eligible taxpayers, helping to improve the financial situation of low- to moderate-income families, the agency said in a release.

The EITC was created in 1975 as a means to offset the burden of Social Security taxes. The tax credit is intended to help low- and moderate-income families cover living expenses, rebuild their savings or invest it in their local communities.

NCUA Chairman Debbie Matz said, "We hope credit unions that have members who qualify for the credit will carry this message, especially those credit unions that participate in NCUA's Volunteer Income Tax Assistance (VITA) Initiative."

Under the VITA Initiative, NCUA has provided 2012 grants up to $25,000 to credit unions starting or expanding their tax assistance programs. The funds are used to offset the administrative and operational costs associated with these services.

The NCUA reported that during the 2011 tax session, credit unions that participated in the VITA program completed 23,979 tax returns and returned $13,961,738 in EITC to their members.

Use the resource link for more information on the EITC.

Better Delivery, Same Great News Source: News Now

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WASHINGTON (2/15/13)--This morning you see a new look for the News Now headlines e-mail. It has been re-designed to improve delivery of the top credit union news in an easier-to-read format.

The updated layout is just part of the changes that the Credit Union National Association has made recently to its free, daily online news service.

"CUNA has always been at the top with the depth and breadth of coverage of credit union news. Now our delivery system better organizes and prioritizes how we get that news to readers," said Paul Gentile, CUNA executive vice president of strategic engagement and communications, announcing the change.

"News Now readers let us know that they value what we deliver, but that they can be crunched for time. With the new headlines design, readers can better determine at a glance what stories most impact their work lives," added Lisa McCue, CUNA vice president of editorial communications and News Now editor.

CUNA also recently expanded the scope of its delivery, broadening its reach to 50,000 readers. News Now will continue to provide the latest on legislative, regulatory, policy and compliance developments, the top news of the credit union system, as well as key issues in the markets and innovations in products and services.

NEW: House Minority Whip Hoyer Joins GAC Lineup

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WASHINGTON (UPDATED: 2/15/13, 1:30 p.m. ET)--House Minority Whip Steny Hoyer (D-Md.) will join Speaker of the House John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va.) on a high-powered 2013 Credit Union National Association Governmental Affairs Conference lineup.

Hoyer, the second-ranking member of the Democratic leadership, served as House Majority Leader from 2007 until 2011, and has been a member of the House since 1980. He told 2012 GAC attendees he has always been a supporter of the credit union movement, and he praised credit unions for the "remarkable'' role they have played in helping make the middle class's "lives and dreams possible.'' Hoyer's mother was a credit union employee, so the legislator said he learned the importance of credit unions at a young age.

"People live in a more stable and prosperous country because of the work you do,'' he said.

Hoyer will speak in the late morning session on Tuesday, Feb. 26.

Other legislators on the GAC speaking schedule include: Democratic National Committee Chairman and credit union supporter Rep. Debbie Wasserman Schultz (D-Fla.), and credit union champions Sen. Mark Udall (D-Colo.), Rep. Ed Royce (R-Calif.) and Rep. Brad Sherman (D-Calif.). House Financial Services Committee Chairman Jeb Hensarling (R-Texas), House Financial Services Committee Ranking Member Maxine Waters (D-Calif.), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee senior member Spencer Bachus (R-Ala.), Rep. Gregory Meeks (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), Sen. Jon Tester (D-Mont.), Rep. Peter King (R-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.) are also slated to speak at the 2013 GAC.

CUNA's 2013 GAC will take place Feb. 24-28 at the Washington Convention Center in Washington, D.C. This year's GAC theme, "Powerful Cause, Positive Effect," reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC. Use the resource link to register for the GAC.

Sen Finance Questions Lew About Treasury Post Potential

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WASHINGTON (2/14/13)--The Senate Finance Committee met for more than three hours yesterday to conduct the confirmation hearing of Treasury secretary nominee Jack Lew.

President Obama nominated Lew, currently White House chief of staff, in January for the Treasury post. During the hearing, the finance panel quizzed Lew on topics ranging from the complexity of the nation's tax code, to the qualified mortgage definition issued by the Consumer Financial Protection Bureau, to the Treasury's March 1 deadline to eliminate paper delivery of federal benefits checks.

Senate Finance Chairman Max Baucus (D-Mont.) asked Lew to speak to why he would be a great Treasury secretary, not just a good one. Lew said that since his young professional days he has not hesitated to speak his mind on tough issues even if his differs from his boss's.

"I do it with respect, without 'breaking the China,'" he said, but added he never hesitates to deliver a tough message that must be heard.

The committee must now decide whether to forward Lew's name to the Senate floor for a confirmation vote.

NCBA: Cooperatives Help US Recovery

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WASHINGTON (12/14/13)--Just after the president's State of the Union address Tuesday night, the National Cooperative Business Association (NCBA) sent a message to its members underscoring the importance of the cooperative business community to economic recovery.

The NCBA's membership is comprised of cooperatives ranging from credit unions for financial services, to food and housing co-ops,  to farm co-ops, and more.

"This year, as the president and Congress focus on growing small businesses and creating jobs, NCBA will seek to ensure they understand and recognize the success the cooperative structure can have in the economic recovery of our great nation," NCBA President/CEO Mike Beall wrote.

He cited credit unions as one example of how cooperatives fared better during the recession than many for-profit businesses because cooperatives focus on meeting the needs of their member owners: "Credit unions have seen tremendous growth as consumers seek institutions that value their members and offer better services."

Beall also noted that there are more than 29,000 cooperatives operating in every sector of the U.S. economy, sustaining two million jobs each year, contributing $652 billion in annual sales and possessing $3 trillion in assets.

Senate Banking To Look at Dodd-Frank Rules Today

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WASHINGTON (2/14/13)--The Senate Banking Committee conducts its first hearing of the year today and the panel is expecting a large cast of bank regulators--along with the heads of the Consumer Financial Protection Bureau (CFPB), the Securities and Exchange Commission (SEC), and the Treasury Department's under secretary for domestic finance--to take stock of implementation efforts surrounding the 2010 Dodd-Frank Wall Street Reform Act.

The hearing title is "Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections" and it is scheduled to start at 10:30 a.m. ET.  

In addition to CFPB Director Richard Cordray, SEC Chairman Elisse Walter, and Treasury's Mary J. Miller, slated witnesses are:

  • Federal Deposit Insurance Corp. Chairman Martin Gruenberg;
  • Federal Reserve Governor Daniel Tarullo;
  • Comptroller of the Currency Thomas Curry; and
  • Commodities Future Trading Commissioner Gary Gensler.
The hearing will be live streamed via the resource link below.

CFPB Readies Resources To Ease Mortgage Reg Implementation

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WASHINGTON (2/14/13)--The Consumer Financial Protection Bureau assured Wednesday that it has plans to publish plain language guidance, work with other federal regulators and increase consumer outreach efforts as new mortgage regulations are implemented over the coming year.

The agency last month released a slew of final mortgage rules, many of which are scheduled to go into effect in January 2014. The CFPB regulations address mortgage servicing, mortgage loan originator compensation, high-risk-mortgage appraisals, ability to repay requirements, escrow accounts and "high-cost" mortgages.

"Our plan is to work with the mortgage industry to ensure that the CFPB's new rules are implemented accurately and expeditiously," CFPB Director Richard Cordray said in a release. "Both consumers and industry will win when the new rules are understood, applied, and carried out evenly and effectively. Mortgage borrowers, who have dealt with much heartache since the financial crisis, deserve this level of attentiveness," he added.

To ease implementation of the new regulations, the CFPB said it would:

  • Coordinate with other federal government regulators that also conduct examinations of mortgage companies to ensure all regulators have a shared understanding of the new rules;
  • Release easy-to-understand summaries of the regulations in both written and video form this spring;
  • Publish updates of "official interpretations" of the rules. The interpretations will provide guidance on how to comply with the rules and allow the agency to address industry, consumer and regulatory questions regarding the regulations;
  • Provide mortgage originators and servicers with a checklist of implementation, training and policy revision plans; and
  • Inform consumers about the new mortgage rules through a broad-reaching education campaign.
The Credit Union National Association has produced charts covering the CFPB mortgage rules and their key components. For the charts, use the resource links.

NEW: Credit Union MBL Bill Is Reintroduced

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WASHINGTON (UPDATED: 2/14/13, 12:15 p.m. ET)--Rep. Ed Royce (R-Calif.) today reintroduced legislation (H.R. 688) that would increase the credit union member business lending (MBL) cap to 27.5% of assets, from the current 12.25%-of-assets level, and the Credit Union National Association in a letter thanked Royce and co-sponsor Carolyn McCarthy (D-N.Y.) for their action.

The bill, if enacted, would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create over 140,000 new jobs.

"Credit unions understand that in order for the economy to fully recover, small businesses need access to credit, which will help their businesses grow. Credit unions have capital to lend, a history of prudent and safe small business lending, and a mission to help provide access to credit to their members-including their small business-owning members. They just need Congress to enact your legislation," CUNA President/CEO Bill Cheney wrote in a letter of support for the bill.

"We encourage all representatives to cosponsor this legislation, and hope the House will act quickly to pass your bill," he added in his letter to Royce and McCarthy.

Bankers provide the only true opposition to MBL bill progress, Cheney noted. "The bank lobby opposes this bill because they oppose credit unions; their arguments are without merit. The bill will not endanger the small banks in your community; the bill will not alter the nature or focus of credit unions; the bill is not inconsistent with the credit union mission or the purpose of their tax status. This legislation recognizes that credit unions are working in their communities to help small businesses, and it is important to enact even though the bank lobbyists oppose it," Cheney said.

Last year, MBL legislation had strong bipartisan support with 144 co-sponsors in the House and 21 in the Senate.

NEW: Reps King, Sherman Introduce Supplemental Capital Bill

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WASHINGTON (UPDATED: 2/14/13, 3:45 p.m. ET)--Rep. Pete King (R-N.Y.) and Brad Sherman (D-Calif.) today reintroduced legislation that would permit the National Credit Union Administration to allow credit unions to accept additional forms of capital.

Credit Union National Association President/CEO Bill Cheney thanked King and Sherman for introducing the bill. "Your legislation would provide credit unions with the appropriate ability to raise capital from sources other than retained earnings without putting in jeopardy the 'one member, one vote' principle that is the bedrock of the credit union ownership structure," he wrote in a letter to the legislators. "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 supplemental cushion to reduce risk to the National Credit Union Share Insurance Fund," he added.

The capital access bill recognizes that "capital is king" at financial institutions, and allows well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--currently the only type of capital that counts at a credit union. It is substantially similar to H.R. 3993, which was introduced in the 112th Congress and gained 45 cosponsors.

The bill is the second piece of credit union charter improving legislation to be unveiled today: It follows the earlier release of legislation that would increase the credit union member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level. (See related News Now story: Credit Union MBL Bill Is Reintroduced)

Cybersecurity Order Offers Public/Private Coordination Chances: CUNA

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WASHINGTON (2/14/13)--The Credit Union National Association is encouraged that President Barack Obama's cybersecurity executive order, which was signed this week, offers opportunities for additional coordination between the public and private sectors on cybersecurity and critical infrastructure issues.

"CUNA believes the cybersecurity framework should recognize existing, robust data security standards that are applicable to financial institutions and credit unions," CUNA President/CEO Bill Cheney said.

The executive order includes a broad, general framework intended to improve "critical infrastructure" cybersecurity coordination and information sharing among government agencies and the private sector. The order is consistent with existing, applicable law--it does not provide new legal authority or "provide an agency with authority for regulating the security of critical infrastructure in addition to or to a greater extent than the authority the agency has under existing law."

"Critical infrastructure" is not defined in the order, but could potentially include the power grid, financial market exchanges, and telecommunications networks, CUNA noted.

Under the order, the U.S. Department of Homeland Security will work with sector-specific agencies to identify critical infrastructure and assess cybersecurity requirements. The U.S. Treasury is the sector-specific agency that would oversee the financial sector on cybersecurity, and will work with federal financial regulators including the National Credit Union Administration, CUNA said.

The National Institute for Standards and Technology will coordinate a cybersecurity standards framework.

CUNA continues to assess the impact of the cybersecurity order, and is working with the NCUA, the Financial Services Sector Coordinating Council, BITS, the Treasury and other entities to coordinate on cybersecurity issues, and to ensure that credit unions are not unduly impacted from the cybersecurity framework for critical infrastructure entities. CUNA is also engaged with Congress on any cybersecurity legislation that would provide new legal authority and requirements, such as with liability provisions on information sharing.

For more on the executive order, use the resource link.

Bipartisan cyber threat information sharing legislation was also reintroduced by House Intelligence Committee Chairman Mike Rogers (R-Mich.) and Ranking Member C.A. Dutch Ruppersberger (D-Md.) on Wednesday. The bill, known as the Cyber Intelligence and Sharing Protection Act (H.R. 624), was supported by CUNA last year and passed the House last spring.

CUNA Analyzing HUD 'Discriminatory Effect' Rule

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WASHINGTON (2/14/13)--The U.S. Department of Housing and Urban Development issued a final rule on "discriminatory effect" related to fair housing practices and the Credit Union National Association is analyzing it to determine how the rule could impact credit unions.

The HUD final rule formalizes the national standard for determining whether a housing practice violates the Fair Housing Act as the result of discriminatory effect. HUD anticipates the rule will make it easier for individuals and organizations covered by the law to understand their responsibilities and comply with the law.

"Through the issuance of this rule, HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner," HUD Secretary Shaun Donovan said. "This will ensure the continued strength of one of the most important tools for exposing and ending housing discrimination."

The rule will become effective 30 days after it is published in the Federal Register.

CUNA will release a Final Rule Analysis on the HUD rule in the coming weeks.

CNBC: Banks Don't Make Good Valentines

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WASHINGTON (2/14/13)--CNBC is offering free break up tips for consumers just itching for a break up this Valentine's Day--especially if that break up means telling your bank to take a hike.

After all, what is there to love, the article asks, citing a recent McGraw-Hill FCU survey that reveals that more than two-thirds (71%) of consumers surveyed said they would break up with their bank if offered a better alternative.

CNBC said respondents compared dealing with their banks with these other notable horrors:
  • 36% said dealing with their bank was like interacting with their in-laws;
  • 30% likened it to dealing with the cable guy;
  • 25 % said it was a lot like time spent with the IRS; and
  • 23% likened dealing with their bank with going to the dentist.
As Shawn Gilfedder, president/CEO of McGraw-Hill FCU told News Now, "How can you feel loved when you are just a number?

"Trust is established when financial institutions show they are accountable to their customers by the way they treat them. It's about time consumers give themselves a chance to achieve financial wellness and feel the love and trust opportunities provided by credit unions."

So, what's pushing consumers to move on from their bank? "'High or hidden fees' was the strongest repellent, followed by a lack of relevant products and services and that age-old relationship killer-'you never listen to me,'" the article noted.

What's more, those among the most coveted financial services customers--those ages 18 to 29--were the one most interested in hearing about bank alternatives.

So start the conversation this way, CNBC recommended: "Dear bank, I want to say 'it's not you, it's me' but the truth is, it IS you. I'm sorry it had to be on Valentine's Day but when I arrived at your window and saw that heart-shaped doily taped to the window, I knew I couldn't bear to live this lie another day."

Use the resource link to read the article.

CU Issues Are Part Of Financial Services Oversight Plan

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WASHINGTON (2/14/13)--Credit unions' regulatory treatment, and the safety and soundness of the credit union industry are among the items the House Financial Services Committee plans to address during the 113th session of the U.S. Congress.

"The committee's oversight plan reflects that the committee is listening--and wants to continue to listen--to our concerns about the crisis of creeping complexity. We look forward to continuing this discussion and addressing this critical credit union issue," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

The committee's draft oversight plan also lists National Credit Union Administration activities and National Credit Union Share Insurance Fund solvency as two oversight objectives. "The committee will continue to review the current regulatory burden on banks, thrifts, and credit unions with the goal of reducing unnecessary, duplicative, or overly burdensome regulations, consistent with consumer protection and safe and sound banking practices," the oversight plan adds.

Ensuring that regulators carefully and transparently assess the costs and benefits of regulations called for by the Dodd-Frank Act to strike an appropriate balance between prudent regulation and economic growth will be another goal of the committee.

The Consumer Financial Protection Bureau will also receive close attention, as the committee seeks to "ensure that the CFPB's regulatory, supervisory and enforcement initiatives protect consumers against unfair and deceptive practices without stifling economic growth, job creation, or reasonable access to credit." CFPB enforcement actions, the agency's work with other federal regulators, and how CFPB actions impact small businesses and financial institutions of all sizes, particularly "those with fewer than $10 billion of assets," will also be areas of emphasis, according to the plan.

Other oversight priorities addressed in the plan include:
  • Global financial reform coordination;
  • International accounting standards;
  • The U.S. Treasury's Troubled Asset Relief Program; and
  • Capital Standards and Basel III.
The document "is not intended to be an exhaustive list," and the committee may take on issues that are not covered in the list.

The draft oversight plan will be marked up today at 10 a.m. ET.

For the full draft committee plan, use the resource link.

New LinkedIn Page Features NCUA Info

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ALEXANDRIA, Va. (2/13/13)--The National Credit Union Administration will provide up-to-the-minute news, job postings and exclusive information on upcoming recruitment events through a new page on the social network website LinkedIn.

The monthly NCUA Report newsletter, the FOCUS newsletter from NCUA's Office of Small Credit Union Initiatives, and the credit union locator app will all be posted on the LinkedIn page.


LinkedIn is the world's largest professional network on the Internet, with more than 200 million members in more than 200 countries and territories. 

For the NCUA LinkedIn page, use the resource link.

Senate Banking Eyes Mortgages, Appraisals, Exams And More

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WASHINGTON (2/13/13)--Mortgage origination, appraisals, examinations, interactions with the Consumer Financial Protection Bureau and risk management will be among the issues of interest to credit unions that will be examined by the Senate Banking Committee in the 113th U.S. Congress, Committee Chairman Tim Johnson (D-S.D.) said in a Tuesday release.

The release said the committee would also continue to review the examination policies of federal financial regulators, ensuring that examinations are balanced in a manner that does not discourage prudent lending while promoting consumer protection and safety and soundness. Financial data security, Wall Street reform oversight and housing finance and consumer protection issues will also be high on the committee's list of priorities.

"The committee has important work to do in the 113th Congress, and I intend to work across the aisle to build consensus and find solutions to strengthen and sustain our economic recovery," Johnson said. He noted the committee has a proud history of bipartisanship. "From protecting consumers and taxpayers from Wall Street abuses, to providing the Federal Housing Administration with additional tools to manage its finances while continuing to serve American families, I believe we can and must find common ground," he added.

Johnson said the committee plans to monitor and potentially address consumer financial services, including:

  • Credit cards;
  • Private student loans;  
  • Prepaid cards;
  • Mobile payments;
  • Consumer credit reporting and scoring;
  • Payday loans;
  • Overdraft coverage programs; and
  • Deposit advance programs.
Financial protection issues that impact the military community will also be discussed. Reauthorizing certain expiring programs and quickly considering President Barack Obama's nominees will also be priorities, Johnson said.

The Native American Housing and Self-Determination Act, the Defense Production Act, Export Import Bank authorization, public transportation and roadway spending authorizations and terrorism risk insurance provisions are among the items that will expire in 2013 or 2014, the release noted.

The committee will hold the first hearing of 2013 when federal banking regulators testify on Wall Street reforms, financial stability oversight and consumer and investor protections on Feb. 14.

For more on the committee's priorities for the 113th Congress, use the resource link.

State Of the Union Highlights CUNA/CU Priorities

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WASHINGTON (2/13/13)--President Barack Obama's Tuesday night State of the Union address helped to shine the spotlight on two key credit union issues and reflected two of the Credit Union National Association's action priorities for 2013.

Among his wide-ranging topics, the president detailed areas of economic recovery and underscored the continuing need for job growth.

"A growing economy that creates good, middle-class jobs--that must be the North Star that guides our efforts. Every day, we should ask ourselves three questions as a nation: How do we attract more jobs to our shores? How do we equip our people with the skills needed to do those jobs? And how do we make sure that hard work leads to a decent living?" the president said in his remarks.

Just this week the U.S. Small Business Administration (SBA) issued a report, which it said demonstrates that small businesses have been at the core of our economy's growth over the past few years. 2011 represented the second full year of economic expansion since the peak of the recession in 2009, with small businesses representing half of the private-sector output, according to the SBA.

Furthermore, the SBA report said small firms with fewer than 500 workers outperformed large firms in net job creation in three of the four quarters of 2011, similar to a pattern that has existed since 1992 in periods when private-sector employment rose.

"Small businesses need access to credit to help their businesses grow--to keep driving the economy on. Credit unions are there to help them with their credit needs and stand ready to do even more," CUNA President/CEO Bill Cheney noted Tuesday night.

"Congress needs to help credit unions help small businesses by increasing our member business lending cap now," Cheney said.

CUNA, the state credit union leagues, credit unions and small business representatives support bi-partisan legislation that will increase the MBL cap to 27.5% of assets, up from 12.25%. Increasing the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment--and at no cost to taxpayers, according to CUNA estimates.

Also during his address, Obama noted extensive policy talks to address tax laws. Preserving the credit union tax status is a top CUNA priority.

"Credit unions were not mentioned in the president's tax policy remarks, nor did we expect they would be. However, the country's focus on tax issues and deficit reduction make it clear that CUNA must remain primed and vigilant on this issue," Cheney said.

CUNA and the leagues are monitoring tax policy issues on both the federal and state levels. (See related story: CUNA Provides Ads For CU Tax Fight Counterpunch)

CUNA Provides Ads For CU Tax Fight Counterpunch

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WASHINGTON (2/13/13)--As bankers intensify their state-level attacks against the credit union tax status, the Credit Union National Association is developing a toolkit to help credit unions connect with their members and educate the public on credit unions.

"Banks are trying to take advantage of state governments search for new sources of revenue by pushing for credit union tax status changes. It's time to remind credit union members of the benefits they receive by being a member: the trust they have in their credit unions, the ownership structure, and the fact that they are locally controlled," CUNA Senior Vice President of Political Affairs Richard Gose said.



CUNA's reminder to members and the general public will come in the form of radio ads, print ads, newsletter articles and social media outreach efforts. The CUNA-produced materials are available to all state credit union leagues, free of charge.

One of the minute-long radio ads highlights the credit union difference, noting that credit unions "provide members with services they want, not products that going to generate a tidy profit for a few investors.

"Loan decisions are made locally, not by bureaucrats and computer models from across the country," the ad states. The radio ad also encourages listeners to learn more about credit unions and find their own local credit union through aSmarterchoice.org.

The pro-credit union radio spots have already been sent to the leagues where state banker associations are actively trying to challenge the credit union tax exemption.

To access the resources, use the link.

Preserving the tax status of credit unions is CUNA's top priority. Under the Federal Credit Union Act, federal and state-chartered credit unions are exempt from federal income tax because they are cooperatives operated for and by their members, and because credit union shares are essentially members' deposits. The tax status has been re-affirmed periodically by the U.S. Congress and is supported by many lawmakers.

NCUA Offers Feb 20 Net Worth Webinar

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ALEXANDRIA, Va. (2/13/13)--Common causes of net worth declines and net worth restoration plan basics are among the issues that will be covered during a Feb. 20 National Credit Union Administration webinar.

The free webinar will be presented by the NCUA's Office of Small Credit Union Initiatives (OSCUI). It is scheduled to begin at 2 p.m. ET.

OSCUI staff during the webinar will:

  • Review NCUA's capital requirements for credit unions and the net worth restoration plan process;
  • Discuss the minimum regulatory requirements for net worth under Prompt and Corrective Action and Part 702 of NCUA's Rules and Regulations;
  • Address restoration plan timelines; and
  • Discuss assistance available for credit unions that are developing a net worth restoration plan.
The NCUA said webinar participants will also have the opportunity to gain insight from a staff member of a credit union that has gone through the net worth restoration plan process.

For the full NCUA release, use the resource link.

FHFA Abandons Force-Placed Plans

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WASHINGTON (2/13/13)--The Federal Housing Finance Agency (FHFA) has reportedly abandoned a plan to lower force-placed insurance premiums for homeowners, instead opting to study the issue.

The agency will develop a working group to study the force-placed insurance issue and evaluate how force-placed insurance impacts Fannie Mae.

"FHFA's objective is consistent with what Fannie Mae was working to accomplish--to reduce costs--but to do so with all the pertinent information and in a manner that will work for both [government sponsored enterprises (GSEs)]. This is a responsible and measured approach to put policy in place that is beneficial for both GSEs, consumers, and the industry at large," FHFA Office of Housing and Regulatory Policy Senior Associate Director Meg Burns said.

Under a plan submitted to the Federal Housing Agency last October, Fannie Mae would require banks and other mortgage servicers to replace existing force-placed policies on loans it guarantees with insurance provided by a consortium of carriers offering 30% to 40% discounts.

Force-placed insurance is a form of hazard coverage banks buy to protect the properties of buyers who have let their homeowners' insurance lapse. Under standard mortgage terms, borrowers are contractually obligated to maintain hazard insurance. In the event that homeowners fail to maintain such coverage, mortgage servicers are entitled to buy force-placed coverage on their behalf and bill the homeowners.

Some consumer advocates and insurance regulators have criticized banks for reinsuring or collecting commissions on the force-placed insurance policies they buy, saying the policies amount to kickbacks and inflate the price of coverage. Credit Union National Association General Counsel Eric Richard noted that consumer abuse in the forced placement market has attracted the attention of the Consumer Financial Protection Bureau.

CFPB Clarifies CUNA Small Servicer Concerns

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WASHINGTON (2/13/13)--The Consumer Financial Protection Bureau's exemption for "small" mortgage servicers will not apply to a third party subservicer if a credit union contracts with a third-party that services more than 5,000 mortgages, the agency has clarified.

Credit unions recently asked the Credit Union National Association to clarify how the CFPB's "small servicer" exemptions would impact their work with mortgage subservicers.

Under a final mortgage servicing rule released last month, mortgage servicers will need to meet new periodic statement requirements, provide additional notices of rate changes on adjustable-rate mortgage loans to borrowers and help ensure that consumers know their options to prevent foreclosures. The regulations are set to come into effect in Jan. 2014. The servicing rule contains a number of exemptions for credit unions and other financial institutions that meet the bureau's "small servicer" definition.

Subservicers that service more than 5,000 mortgages will need to comply with all of the regulation's requirements, CUNA Federal Compliance Counsel Colleen Kelly said. "Of course, a credit union needs to make sure that its contract with the subservicer assures compliance," she added.

CUNA Associate General Counsel Jared Ihrig said more questions may arise as credit unions implement the new CFPB regulations. "CUNA will maintain an open dialogue with the CFPB on this and other regulatory issues," he added.

Consumer advisory meeting set for Feb 27, CDFI Fund says

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WASHINGTON (2/12/13)--The Community Development Advisory Board of the U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund will hold its first meeting of 2013 on Feb. 27 at U.S. Treasury offices in Washington.

The meeting is scheduled to take place between 9:00 a.m. and 3:30 p.m. (ET).

Fifty members of the public can register to attend by emailing to AdvisoryBoard@cdfi.treas.gov. However, the CDFI Fund in its release noted that discussions at the meeting would be limited to advisory board members, Treasury staff, and certain invited guests.

The advisory board makes broad policy recommendations to CDFI Fund Director Donna Gambrell. The CDFI Fund notes that the granting or denial of any particular application for monetary or non-monetary awards is not discussed during the meetings.

The CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. The fund expects to provide up to $165 million to eligible financial institutions in 2013.

A total of $186,853,456 was awarded to 210 organizations in 2012, representing the highest amount awarded in the CDFI Fund's history.

Twenty-two credit unions received funding through the 2012 CDFI Fund, and four credit unions received funds through another CDFI project, the Native American CDFI Assistance (NACA) Program. The NACA Program encourages the creation and strengthening of certified CDFIs that primarily serve Native American, Alaskan Native and Native Hawaiian communities.

For more on the meeting and the CDFI Fund, use the resource link.

Fed System offers free March 5 UDAP compliance webinar

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WASHINGTON (2/12/13)--The Federal Reserve System is offering a free March 5 webinar on compliance issues related to financial institution unfair and deceptive practices (UDAP).

The webinar is part of an ongoing series focused specifically on consumer compliance issues. The March 5 session will cover UDAP topics, including:

  • UDAP legal analysis and examination procedures;
  • UDAP and bank holding company risk;
  • Case studies and emerging areas of risk; and
  • Recommendations for implementing an effective UDAP compliance program.
The webinar will also cover the legal authority of the Fed under the Federal Trade Commission Act to enforce UDAP. The FTC Act charges the Fed, along with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the National Credit Union Administration, to enforce UDAP, issue rules and regulations and receive consumer complaints.

In 2010, the Dodd-Frank Act generally maintained the FTC Act's definitions of "unfair" and "deceptive," while also adding a third element, "abusive."  It assigned the Consumer Financial Protection Bureau with UDAAP enforcement authority for institutions with over $10 billion in assets.

Use the resource link for registration information.

New CFPB notice covers mortgage servicer obligations

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WASHINGTON (2/12/13)--In guidance released Monday, the Consumer Financial Protection Bureau reminded mortgage servicers and subservicers of potential risks associated with mortgage transfers, and of their obligations to homeowners.

"This guidance directs all mortgage servicers, both banks and nonbanks, to follow the laws protecting borrowers from the risks of [mortgage] transfers, and makes clear that we will be monitoring them for compliance… Consumers should not be collateral damage in the mortgage servicing transfer process," CFPB Director Richard Cordray said in an agency release.

"The CFPB's concern in this area is heightened due to the number and size of recent servicing transfers that have been made by some of the biggest banks," Credit Union National Association Associate General Counsel Jared Ihrig noted.

CUNA is pushing the CFPB for more guidance regarding the exemption for small servicers and its impact on credit unions, he added.

The CFPB in the guidance emphasizes that mortgage servicers are subject to the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act and other laws that prohibit unfair, deceptive, or abusive acts or practices.

The agency also warned servicers that it will monitor:

  • How they have prepared for the transfer of servicing rights or responsibilities;
  • How they plan to treat homeowners;
  • How a homeowner's paperwork is treated;
  • How any loss mitigation efforts that have already begun are addressed; and
  • What policies the servicers have to prevent borrower harm for loans with loss mitigations in process.
In the release, the CFPB noted that mortgage servicing transfers can at times be positive for consumers, "especially when investors require nonperforming servicers to transfer rights to specialty companies that offer better service."

However, a mortgage servicing transfer can also mean new bill paying arrangements, paperwork, servicer mailing addresses and staff. "If the transfer process is not handled properly, consumers may find that their servicer lost important loss mitigation documents or that the servicer did not credit their payments on time," the CFPB warned.

For the full CFPB release, use the resource link.

The CFPB's final mortgage servicing rule, issued last month, requires mortgage servicers to meet new periodic statement requirements, provide additional notice of rate changes to borrowers and help ensure that consumers know their options to prevent foreclosures. The new regulations will become effective in Jan. 2014.

CUNA will watch State of the Union for CU impact

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WASHINGTON (2/12/13)--Job creation and aiding the middle class are expected to be two major themes of President Barack Obama's State of the Union address, and the Credit Union National Association will be watching tonight to gauge what Obama's policy objectives could mean for credit unions going forward.

According to USA Today, Obama has told House Democrats he will "[talk] about making sure that we're focused on job creation here in the United States of America." The budget disputes that have gripped the U.S. Congress in recent weeks will also be a central focus of the President's remarks, several outlets have reported.

Also in Washington, both the House and the Senate are in session this week.

The House Financial Services Committee's examination of the Federal Housing Agency's role in mortgage markets will continue on Wednesday, when that committee holds a hearing entitled "Bailout, Bust, or Much Ado About Nothing?: A Look at the Federal Housing Administration's 2012 Actuarial Report." (News Now Feb. 7)

The hearing will examine the FHA's financial status and HUD's Nov. 16, 2012 actuarial review of the fiscal 2012 FHA Mutual Mortgage Insurance Fund. FHA Commissioner Carol Galante will be the sole hearing witness.

The Congressional Budget Office's budget and economic outlook will be examined by the Senate Budget Committee and House Budget Committee on Tuesday and Wednesday, respectively. The House Small Business Committee will examine the state of the small business economy on Wednesday.

Jack Lew's nomination to the position of U.S. Treasury Secretary will be addressed in a Wednesday Senate Finance Committee hearing.

Itemized deductions for charitable contributions will be examined in a Thursday House Ways and Means Committee hearing. Ryan Donovan, CUNA senior vice president of legislative affairs, said CUNA does not expect the credit union tax status to be any part of the focus at this hearing. "However, we will be watching this closely, as it could shed light on how the committee intends to evaluate tax provisions going forward," he said.

Federal banking regulators have been invited to testify before a Thursday Senate Banking Committee hearing on Wall Street reforms, financial stability oversight and consumer and investor protections.

NCUA answers lawmaker: Agency has authority to proceed with Wall St suits

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ALEXANDRIA, Va. (2/12/13)--The National Credit Union Administration's use of law firms that operate on a "contingency basis" to sue banks does not violate an executive order that prohibits such arrangements, the NCUA's Office of the Inspector General wrote in a recent letter to a house member.

NCUA Inspector General William DeSarno was responding to an October letter from Rep. Darrell Issa (R-Calif.). Issa last year asked the NCUA OIG whether the agency's payment arrangements with outside counsel violates a 2007 executive order signed by then-President George W. Bush.

DeSarno said the executive order does not apply when the NCUA is serving as the conservator or liquidating agent of a federally insured credit union. The NCUA as conservator "steps into the shoes'" of the credit union and is no longer functioning as a government agency," DeSarno wrote. "The conservator, therefore, has the same authority to hire outside counsel on a contingency fee basis that the credit union possessed before the NCUA was appointed conservator," he added.

Credit Union National Association Deputy General Counsel Mary Dunn said CUNA agrees with the OIG's basic analysis.

The NCUA has paid two firms, Kellogg Huber Hansen Todd Evans & Figel PLLC and Korein Tillery LLC, on a contingency arrangement basis to pursue legal action against several Wall Street firms. The agency alleges the firms violated federal and state securities laws when they sold securities to now-defunct corporate credit unions.  J.P. Morgan Securities, RBS Securities, Goldman Sachs and Wachovia are among the firms the agency has taken to court. The agency has settled with Citigroup, Deutsche Bank Securities, and HSBC, avoiding the cost of litigation and bringing in more than $170 million in funds that were lost due to the corporate credit union investments.

Funds recovered through these legal actions will be used to help reduce the amount of future corporate stabilization assessments on credit unions, according to the NCUA.

The NCUA payment arrangement with the outside firms would provide the firms with one-fourth of any judgment they secure for the agency, and the total payment could be hundreds of millions of dollars, The Wall Street Journal (Oct . 24) reported.

Issa claimed the payment arrangement could harm credit union members by diverting funds that should go to paying off corporate credit union stabilization costs. However, the NCUA in an October statement noted that these suits benefit credit unions by reducing costs of pursuing the recoveries.

For the full NCUA letter, use the resource link.

Senate tax loophole bill would help avoid sequester

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WASHINGTON (2/12/13)--Sens. Carl Levin (D-Mich.) and Sheldon Whitehouse (D-R.I.) introduced legislation Monday that would close tax loopholes and produce more than $189 billion in deficit reduction--an amount the senators say is sufficient to significantly help avoid sequestration. The bill sticks to tax loopholes and does not address the tax status of credit unions.

The Cut Unjustified Tax Loopholes Act would close corporate and individual tax loopholes. It would, for instance, remove loopholes that allow multinational corporations to avoid taxes by transferring U.S. profits offshore; that subsidize corporations for the expense of moving U.S. jobs overseas; that subsidize stock-option grants to corporate executives; and would close the "carried interest" loophole that allows hedge fund managers to pay a lower tax rate on their income, and a loophole that subsidizes speculative trading in certain financial derivatives, the lawmakers noted in a release.

The Credit Union National Association is monitoring tax policy discussions in Washington, D.C. and meeting with lawmakers to describe the public policy reasons behind the credit union tax exemption.

Under the Federal Credit Union Act, federal and state-chartered credit unions are exempt from federal income tax because they are cooperatives operated for and by their members, and because credit union shares are essentially members' deposits. The tax status has been re-affirmed periodically by the U.S. Congress and is supported by many lawmakers.

Levin and Whitehouse were among the more than 20 recent meetings CUNA President/CEO Bill Cheney has had recently with federal lawmakers to discuss the need to protect the credit union tax status.

"CUNA has had very positive discussions about the need to protect the credit union tax status," Cheney has reported. No legislator CUNA has spoken with has suggested that the credit union tax status is currently on the table as a tax reform or spending issue. However, Cheney has emphasized, none have suggested that CUNA should be anything but vigilant on this key issue as tax reform talks move forward and all sorts of ideas are thrown into the discussions.

SBA Administrator Mills won't stay for second term

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WASHINGTON (2/12/13)--Karen Mills said Monday that she will not stay on for a second term as administrator for the U.S. Small Business Administration (SBA).

"Karen Mills has been a strong advocate for small business throughout the financial crisis and now as the economy begins to improve," said Credit Union National Association Deputy General Counsel Mary Dunn. "In light of the important role that credit unions play in serving small business, we applaud the SBA's efforts during her tenure to support small business interests."

Mills announced her resignation in a letter to SBA employees, which was posted to the agency website. She told her staff that she intends to stay on as head of the agency until a successor is confirmed to "ensure a smooth and seamless transition."

"Four years ago, when I arrived at the SBA, America's small businesses and entrepreneurs were struggling in the face of the worst economic environment since the Great Depression - and a banking sector that was frozen.

"Together, we rolled up our sleeves and went to work. And from day one, each of you stepped up and fulfilled the mission of what the Agency was created to do. And you should be proud because our accomplishments are significant."

During Mills' tenure, SBA administrator has been raised to a Cabinet-level position.

Mills said in her staff communication that over the last four years, SBA supported more than $106 billion in lending to more than 193,000 small businesses and entrepreneurs. That, she said, included two record years of delivering over $30 billion annually in loan guarantees.

Lee named NCUA's ombudsman

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ALEXANDRIA, Va. (2/12/13)--National Credit Union Administration Chairman Debbie Matz announced Monday that Joy Lee will assume the duties as ombudsman for the agency, effective immediately. Lee has been senior Federal Financial Institutions Examination Council advisor to the chairman.

Lee will succeed Moisette I. Sweat, who has been NCUA's Ombudsman since 2010.

"The ombudsman's role is to be the public's voice to NCUA leadership, and Joy will speak clearly and effectively," said Matz, announcing the change. "Joy has the skills and the knowledge of consumer protection issues and NCUA operations that will serve credit unions and the public well."

NCUA has elevated the position so the ombudsman will now be supervised by the executive director's office and report directly to the board. Until now, the ombudsman's duties were assigned to the Division of Consumer Compliance & Outreach, and reported to the Director of the Office of Consumer Protection.

Lee served in several senior staff positions at NCUA since first joining the agency in 1987 as an examiner. She was Region II associate Regional Director, Operations and Programs, and Director of Supervision for the Office of Examination and Insurance.

Lee has also filled the post of acting Director of the Office of Small Credit Union Initiatives.

Johnson announces Senate Banking subcommittee assignments

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WASHINGTON (2/12/13)--Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Sen. Mike Crapo (R-Idaho) Monday confirmed the panel's membership and announced its subcommittee assignments for the 113th Congress.

Both Johnson and Crapo, in making the announcement, spoke of "working across the aisle" to achieve bi-partisan "areas of agreement" to achieve the committee's work this session.

The committee will be comprised of:

  • Tim Johnson, S.D., chairman; and
  • Mike Crapo, Idaho, ranking Republican member
Democrats:

  • Jack Reed, R.I.;
  • Charles E. Schumer, N.Y.;
  • Robert Menendez, N.J.;
  • Sherrod Brown, Ohio;
  • Jon Tester, Mont.;
  • Mark Warner, Va.;
  • Jeff Merkley, Ore.;
  • Kay Hagan, N.C.;
  • Joe Manchin III, W. Va.;
  • Elizabeth Warren, Mass.; and
  • Heidi Heitkamp, N.D.
Republicans:
  • Richard C. Shelby, Ala.;
  • Bob Corker, Tenn.;
  • David Vitter, La.;
  • Mike Johanns, Neb.;
  • Patrick J. Toomey, Penn.;
  • Mark Kirk, Ill.;
  • Jerry Moran, Kan.;
  • Tom Coburn, Okla.; and
  • Dean Heller, Nev.
For the subcommittee on financial institutions and consumer protection, the members are:

  • Sherrod Brown, Ohio, chairman; and
  • Patrick J. Toomey, PA, ranking Republican member
Democrats:

  • Jack Reed, R.I.;
  • Charles E. Schumer, N.Y.;
  • Robert Menendez, N.J.;
  • Jon Tester, Mont.;
  • Jeff Merkley, Ore.;
  • Kay Hagan, N.C.; and
  • Elizabeth Warren, Mass.
 

Republicans:

  • Richard C. Shelby, Ala.;
  • David Vitter, La.;
  • Mike Johanns, Neb.;
  • Jerry Moran, Kan.;
  • Dean Heller, Nev.; and
  • Bob Corker, Tenn.
 

Use the resource link for information on other subcommittee assignments.

Bart Shapiro to leave CFPB

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WASHINGTON (2/11/13)--Bart Shapiro, who served as senior adviser for the Consumer Financial Protection Bureau's Office of Community Banks & Credit Unions, left the agency on Friday.

Shapiro joined the CFPB in August 2011. Before that, he served as director of the U.S. Department of Housing and Urban Development's Office of Real Estate Settlement and Procedures Act & Interstate Land Sales.

The Credit Union National Association has discussed how the CFPB's mortgage changes could impact credit unions, remittance rule changes, and other issues during meetings with Shapiro.

The agency is in the process of filling the position.

Cooperation, communication were key in Sandy response: NCUA's Matz

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ALEXANDRIA, Va. (2/11/13)--Communication, collaboration and collective effort were key as credit unions prepared for and reacted to Superstorm Sandy, National Credit Union Administration Chairman Debbie Matz said last week.

"Credit unions often cite the philosophy of 'People Helping People,' and after Hurricane Sandy, the philosophy came to life," she said. "We can be proud of our collective efforts in the face of adversity."

Matz made her remarks at a Credit Union Association of New York (CUANY) event held last week on Long Island.

CUANY President/CEO William Mellin and CUANY Long Island Chapter President/Nassau Financial FCU COO Chris Penna were among the nearly 100 credit union leaders that attended the event.

Matz commended the credit union representatives for their efforts after the storm, outlined NCUA actions, and discussed the many lessons the agency learned, including the need:

  • For frequent communication with members before and after a disaster;
  • To prepare cash contingencies to ensure members have access to paper funds immediately before and after a disaster;
  • To test and re-test generators, data backup files, business continuity plans and other critical systems; and
  • To partner with credit unions, including those in other regions or states, to provide emergency facilities and alternate back-office sites.
John DeIeso, chief information officer for NEFCU, Westbury, N.Y., said it was a proud moment to witness the cooperation between credit unions that followed the storm.

Mellin noted that the New York Credit Union Foundation's statewide Disaster Relief Fund has provided nearly $150,000 in grants to impacted credit unions and credit union employees, volunteer leaders and members. CUANY has also held multiple meetings with NCUA staff to promote communication and collaboration. "NCUA has been incredibly supportive and accessible in the months since Hurricane Sandy. When we have this level of cooperation between our credit unions and our regulators, everyone benefits," he said.

However, Penna emphasized that the regional response to Sandy is not yet over. "Our members and our communities still need us," he said.

The Credit Union National Association offers comprehensive disaster preparedness materials. A CUNA disaster preparedness page also links to CUNA Strategic Services (CSS), which offers key products and services to assist credit unions in the event a disaster. CSS partner Agility Recovery provides disaster recovery services to credit unions across the country. Agility and the U.S. Small Business Administration (SBA) have collaborated to develop a disaster preparedness website, preparemybusiness.org.

For more on CUNA's disaster preparedness resources, click the link.

NCUA to stop separate exams in NC

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WASHINGTON (2/11/13)--The National Credit Union Administration and the North Carolina Credit Union Division (NCCUD) have agreed to resume a joint examination schedule going forward. The NCUA discontinued its coordinated examinations with the NCCUD last year after the state regular allowed Raleigh, N.C.-based State Employees' CU to disclose its state-issued CAMEL score.

NCUA Chairman Debbie Matz said Friday that after meeting in-person with NCCUD Acting Administrator Rose Conner, NCUA and NCCUD have agreed to re-establish a joint examination program in 2013.

"Administrator Conner has given me her word that NCCUD's affirmative policy moving forward will not authorize any public release of confidential examination information, especially CAMEL ratings," said Matz. "With this new commitment and policy from the state regulator, we look forward to resuming joint examinations, training, and open communications with NCCUD."

NCCUD and NCUA will begin working out the details of their joint arrangement on Monday. Ordinarily, the NCUA routinely conducts joint safety and soundness examinations with state regulators.

The NCUA said the dual exams in North Carolina after the release of the CAMEL ratings information were necessary to protect the National Credit Union Share Insurance Fund and the credit union system.

North Carolina Credit Union League President John Radebaugh welcomed the regulators' decidion and said, "The league welcomes today's announcement. The dual examinations of state-chartered credit unions represented an unwelcome and unnecessary burden in an already complex regulatory environment.

"We are grateful to both agencies for working through their differences in an effort to best serve the interests of credit unions and their members."

The Credit Union National Association also had urged the NCUA and NCCUD to work quickly to resolve differences regarding disclosure of a credit union's CAMEL rating and the use of dual exams.

CUNA Deputy General Counsel Mary Dunn commended the regulators' action and said, "This is a positive development that reflects a willingness from both sides to reach an agreement that will be better for credit unions." CUNA also thanked the North Carolina Credit Union League for its efforts in pursuing a favorable outcome.

NEW: Lee named NCUA's ombudsman

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ALEXANDRIA, Va. (2/11/13, Updated 11:12 a.m. ET)--National Credit Union Administration (NCUA) Chairman Debbie Matz just announced that Joy Lee will assume the duties as ombudsman for the agency, effective today. Lee has been senior Federal Financial Institutions Examination Council advisor to the chairman.

Lee will succeed Moisette I. Sweat, who has been NCUA's Ombudsman since 2010.

"The ombudsman's role is to be the public's voice to NCUA leadership, and Joy will speak clearly and effectively," said Matz, announcing the change. "Joy has the skills and the knowledge of consumer protection issues and NCUA operations that will serve credit unions and the public well."

NCUA has elevated the position so the ombudsman will now be supervised by the executive director's office and report directly to the board. Until now, the ombudsman's duties were assigned to the Division of Consumer Compliance & Outreach,  and reported to the Director of the Office of Consumer Protection.

Va CDCU is assumed by NCUA

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ALEXANDRIA, Va. (2/11/13)--The National Credit Union Administration announced that it will continue normal member services while it works to address service and operational concerns at NCP Community Development FCU, of Norfolk, Va.

The NCUA assumed control of the small, $2 million-asset credit union Friday. The National Credit Union Share Insurance Fund insures individual accounts at NCP Community Development FCU up to $250,000.

NCP, currently with 709 member, has served a low-income community in the Hampton Roads area for 14 years. Members can continue to conduct financial transactions, including deposit and access funds, make loan payments and use shares.

The Federal Credit Union Act authorizes the NCUA to appoint itself conservator when necessary to conserve the assets of a federally insured credit union, protect members' interests, or protect the Share Insurance Fund.

NCP Community Development FCU is the first federally insured credit union placed into conservatorship in 2013.

New, improved Regulatory Advocacy Report released today

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WASHINGTON (2/11/13)--To better assist member credit unions with the ever-growing challenge of staying apprised of regulatory developments, the Credit Union National Association has enhanced its weekly Regulatory Advocacy Report to deliver even more value.

The report now features improved search capabilities, improved delivery, and enhanced access for CUNA members.

"The report has been redesigned with a whole new look, but with the same in-depth content you have come to expect and rely on from us," CUNA Deputy General Counsel Mary Dunn said. "It will continue to give you the best and most updated information available to credit unions on where they stand on key credit union issues and what CUNA has done to advocate for them," she added.

The report is now delivered on a new date: Mondays instead of Fridays. National Credit Union Administration board meeting summaries will continue to be released on the day of the meeting.

Employees or volunteers of a CUNA/state credit union league affiliated credit union will be able to sign up to receive the report.

The Regulatory Advocacy Report will be archived on cuna.org.

CompBlog Wrap-Up asks: Are regulators listening?

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WASHINGTON (2/11/13)--As Credit Union National Association compliance staff looked back through January's regulatory results, they detected a rarity-something credit unions will hope will form a new trend. The National Credit Union Administration and the Consumer Financial Protection Bureau both appeared not only to think about how their actions might burden the regulated, they also took steps to do something about it.

January was a busy month for new rules to say the least,. The NCUA addressed the small credit union definition, its 2013 annual performance plan, and low-income designations. The CFPB released a barrage of mortgage regulations.

In the January edition of CUNA's CompBlog Wrap-Up, Senior Vice President for Compliance Kathy Thompson notes that the NCUA and CFPB regulatory actions, which incorporated suggestions made by CUNA and credit unions, show that regulators may be beginning to "get" the message--consistently sent by CUNA and crtedit unions--that they need to assess and adjust for regulatory burden.

Thompson's lead story in this month's wrap-up shares some insights on the NCUA's new definition of "small credit union" and a key thing credit unions under $50 million need to know about that definition.

That story also addresses:
  • CFPB small servicer exemptions;
  • The CFPB's mortgage servicing regulations; and
  • The CFPB's "ability-to-repay" regulations.
The Wrap-Up details recent NCUA grant program and National Flood Insurance Plan developments, and provides the latest news on the NCUA's examination priorities for this year.

And, as it does every month, this issue of CompBlog Wrap-Up lists the upcoming effective dates of new regulations, important compliance articles and reports to read, as well as CUNA training programs.

For more of the CUNA CompBlog Wrap-Up, and other compliance gems, use the resource link.

'Fuzzy logic' improves OFAC search tool

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WASHINGTON (2/8/13)--The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) has released an improved search tool for its Specially Designated National (SDN) list.

The new tool employs "fuzzy logic" so a user's search terms can be approximate rather than fixed or exact.  In addition to returning exact matches, the SDN Search can also provide a broader set of results using fuzzy logic.

The tool is in a beta test phase and will run in parallel with the older exact-character-match SDN search tool for approximately 30 days. It will then replace the older search tool.

Use the resource link for more information.  Feedback and suggestions about OFAC's new fuzzy logic tool can be sent to O_F_A_C@do.treas.gov.

Senate Banking announces Wall Street reform review

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WASHINGTON (2/8/13)--"Wall Street Reform:  Oversight of Financial Stability and Consumer and Investor Protections" is the subject of a Feb. 14 hearing scheduled by the Senate Banking Committee.

The committee will hear testimony from:

  • Federal Reserve Board Governor Daniel Tarullo;
  • Consumer Financial Protection Bureau Director Richard Cordray;
  • Treasury Under Secretary for Domestic Finance Mary Miller;
  • Federal Deposit Insurance Corp. Chairman Martin Gruenberg;
  • Comptroller of the Currency Tom Curry;
  • Securities and Exchange Commission Chairman Elisse Walter; and
  • Commodity Futures Trading Commission Chairman Gary Gensler.
The witnesses have been invited to discuss the state of implementation of 2010 Wall Street reform laws.

The hearing will be webcast live and testimony and an archived video will be available after the hearing on the committee website.

CFPB starts consumer hotline pilot program

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WASHINGTON (2/8/13)--Thanks to a new pilot program, consumers in the Newark, N.J., area need only to dial 4311 on their phones to have their financial product questions or complaints answered by the Consumer Financial Protection Bureau's Office of Consumer Response. Newark residents already could access certain non-emergency city services by calling 4311.

"Through this coordination, we will be able to reach and to help consumers who may not have found us otherwise," CFPB Director Richard Cordray said Thursday.

The CFPB said that citizens living outside of Newark can reach the consumer response office by:
  • Visiting consumerfinance.gov/Complaint;
  • Calling the toll-free phone number at (855) 411-CFPB (2372) or TTY/TDD phone number at (855) 729-CFPB (2372);
  • Faxing the CFPB at (855) 237-2392; or
  • Mailing a letter to P.O. Box 4503, Iowa City, Iowa 52244.
The Office of Consumer Response screens consumer financial complaints, and in some cases sends the complaints on to the applicable financial institutions. The agency said it has received more than 130,000 consumer complaints since it began accepting them in 2012.  Companies are required to respond to the complaints within 15 days and in many cases must address the issues outline in the complaints within 60 days.

Consumers can monitor the status of their complaint to the conumser response team on the CFPB's homepage. Complaints received outside of the CFPB's direct examination and supervision authority are transferred to the appropriate prudential regulators for processing.

For the full CFPB release, use the resource link.

CFPB: Financial institutions must be able to make non-QM loans

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WASHINGTON (2/8/13)--Financial institutions should be allowed to make mortgages that don't meet qualified mortgage (QM) standards under the new ability-to-repay rules. That is what Consumer Financial Protection Bureau Director Richard Cordray said Thursday in response to a Credit Union National Association question during a financial industry briefing on mortgage rules.

Cordray said it was never the intention of the CFPB that all mortgages should have to meet the QM standards. He added that the agency will be working with prudential regulators to encourage responsible lending for non-QM loans in addition to loans that do meet the QM requirements. Under the ability-to-repay/QM rule, mortgage loans that meet the criteria for a QM will be afforded a higher degree of legal protection than other mortgages, should a lender be sued by a consumer for noncompliance with the ability-to-repay provisions.

Cordray stressed that some borrowers who are in good financial standing but may not meet the parameters of a QM should nonetheless be allowed to obtain a mortgage.

The CFPB plans to issue plain language guides in written and video format and will being fielding questions on implementing the new rules now to assist in meet the rules' requirements. The CFPB will also offer suggestions for implementation planning purposes of financial institutions and will publish materials to help lenders understand the supervisory process that will be undertaken by them and the prudential regulators.

Consumers will also be informed of their rights under these regulations, which include private rights of action under certain provisions.

Johnson announces Senate Banking subcommittee chairs

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WASHINGTON (2/8/13)--Senate Banking Committee Chairman Tim Johnson (D-S.D.) Thursday announced the leadership lineup for his panel's subcommittees.

Johnson in a release said the subcommittee chairs have his complete confidence "and they will surely make significant contributions to sustaining and strengthening our economic recovery."

The subcommittee heads are:
  • Robert Menendez (D-N.J.), who will lead the housing, transportation, and community development subcommittee;
  • Jon Tester (D-Mont.), who will lead the securities, insurance, and investment subcommittee;
  • Sherrod Brown (D-Ohio), who will lead the financial institutions and consumer protection subcommittee;
  • Mark Warner (D-Va.), who will lead the national security and international trade and finance subcommittee; and
  • Jeff Merkley (D-Ore.), who will lead the economic policy subcommittee.
Menendez, Brown and Warner led their respective subcommittees in the last Congress.

The full committee is expected to vote on these subcommittee choices next week.

CUNA adds escrow compliance chart as a CFPB resource

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WASHINGTON (2/8/13)--The Credit Union National Association has added an escrow account compliance chart to its list of resources developed to help its member credit unions comply with new Consumer Financial Protection Bureau mortgage rules.

The chart format is designed to help credit unions find the specific information they are looking for quickly. The chart covers the basics of the new rule and more detailed information, including:

  • Effective dates;
  • Exemptions and exceptions;
  • Significant definitions; and
  • What the new rule will change.
More comprehensive compliance summaries with interpretive explanations of the escrow changes are in the works, CUNA added.

CUNA late last month also released a chart covering many new CFPB mortgage regulations and detailing aspects of the CFPB's proposed Truth in Lending Act/Real Estate Settlement Procedures Act mortgage loan integration rule.

The chart, entitled "Mortgage Lending Rules--New CFPB rules finalized in 2013," is divided into three columns:
  • The first column summarizes key requirements in each of the CFPB's mortgage loan final rules;
  • The second column defines the type of mortgage loans covered by each of the final rules; and
  • The third column provides links to the CFPB's final rules and summaries of the rules and will link to CUNA's Final Rule Analyses as they become available.
For the members-only compliance charts, use the resource links.

45 House members call for new FHFA leader

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WASHINGTON (2/8/13)--House Oversight and Government Reform Committee Ranking Member Elijah Cummings (D-Md.) and 44 other U.S. House members have called on President Barack Obama to nominate a permanent Federal Housing Finance Agency (FHFA) director to replace FHFA Acting Director Edward DeMarco.

"Ensuring that FHFA implements congressional directives to support the most liquid, efficient, competitive, and resilient housing finance markets is a matter of national urgency," the members wrote in a Thursday letter. "We strongly urge you to nominate an FHFA director who is ready to fulfill this mission and address the many challenges still facing the nation's housing finance markets," the letter added.

All 45 cosignors are Democrats.

DeMarco has been FHFA acting director since Sept. 1, 2009. Obama in 2011 nominated former N.C. bank commissioner Joseph Smith to serve as full-time director, but that nomination was not confirmed by the Senate.

The FHFA has been directed by Congress to maximize assistance for homeowners and minimize foreclosures. The agency has also been granted explicit authority to modify mortgage loans through loan principal reductions, the letter said.

The letter charged that DeMarco has failed to authorize a loan modification pilot program that would test whether a principal reduction program could save taxpayers money while helping borrowers keep their homes.

DeMarco last year said he objected to allowing Fannie Mae and Freddie Mac to pursue a broad principal forgiveness program for troubled homeowners. He said the debate over this type of relief is "about which tools, at the margin, better balance two goals: maximizing assistance to several hundred thousand homeowners while minimizing further cost to all other homeowners and taxpayers."

For the full letter, use the resource link.

NCUA schedules special closed meeting for today

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ALEXANDRIA, Va. (2/8/13)--The National Credit Union Administration has announced a special closed meeting for 12 p.m. ET today.

The agenda refers only to "supervisory activities." News Now will report if the agency makes details public after the meeting.

Later this month, the NCUA's February open meeting is scheduled for 10 a.m. ET on Feb. 21. The agency is expected to release the agenda for that meeting next week. The agency in its semiannual unified agenda indicated that rules addressing Treasury Inflation Protected Securities and rural districts could be finalized this month.

NCUA Chairman Debbie Matz and agency staff this week said a proposed rule on derivatives could be released in the first half of 2013.

  • Also on the 2013 long-range agenda, the agency plans to address clarity in member business lending waivers, and is also developing:
  • A letter that addresses blanket waivers, guarantees and when a waiver is required for a structured or balloon loans;
  • Credit ratings guidance;
  • Troubled debt restructuring guidance; and
  • Guidance that clarifies the agency's expectations for enterprise risk management.
For more on the NCUA closed meeting, use the resource link.

NEW: NCUA to stop separate exams in NC

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WASHINGTON (2/8/13, UPDATED 4:55 p.m. ET)--The National Credit Union Administration and the North Carolina Credit Union Division (NCCUD) have agreed to resume a joint examination schedule going forward. The NCUA discontinued its coordinated examinations with the NCCUD last year after the state regular allowed Raleigh, N.C.-based State Employees' CU to disclose its state-issued CAMEL score.

NCUA Chairman Debbie Matz said today that after meeting in-person with NCCUD Acting Administrator Rose Conner, NCUA and NCCUD have agreed to re-establish a joint examination program in 2013.

"Administrator Conner has given me her word that NCCUD's affirmative policy moving forward will not authorize any public release of confidential examination information, especially CAMEL ratings," said Matz. "With this new commitment and policy from the state regulator, we look forward to resuming joint examinations, training, and open communications with NCCUD."

NCCUD and NCUA will begin working out the details of their joint arrangement on Monday. Ordinarily, the NCUA routinely conducts joint safety and soundness examinations with state regulators.

The NCUA said the dual exams in North Carolina after the release of the CAMEL ratings information were necessary to protect the National Credit Union Share Insurance Fund and the credit union system.

North Carolina Credit Union League President John Radebaugh welcomed the regulators' decidion and said, "The league welcomes today's announcement. The dual examinations of state-chartered credit unions represented an unwelcome and unnecessary burden in an already complex regulatory environment.

"We are grateful to both agencies for working through their differences in an effort to best serve the interests of credit unions and their members."

The Credit Union National Association also had urged the NCUA and NCCUD to work quickly to resolve differences regarding disclosure of a credit union's CAMEL rating and the use of dual exams.

CUNA Deputy General Counsel Mary Dunn commended the regulators' action and said, "This is a positive development that reflects a willingness from both sides to reach an agreement that will be better for credit unions." CUNA also thanked the North Carolina Credit Union League for its efforts in pursuing a favorable outcome.

Ways and Means launches look at tax reforms with charitable deductions hearing (02/07/2013)

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WASHINGTON (2/7/13)--The tax policy-writing House Ways and Means Committee has scheduled a hearing next week on itemized charitable deductions. The hearing is part of what will be a broader look by the committee at the subject of comprehensive tax reform.

"We do not expect the credit union tax status to be any part of the focus at this upcoming hearing," said Ryan Donovan, Credit Union National Association senior vice president of legislative affairs, Wednesday.

"However," he added, "we will be watching this closely, as it could shed light on how the committee intends to evaluate tax provisions going forward."

Preserving the credit union tax status is always a top CUNA priority. CUNA's 2013 four-pillar legislative agenda focuses on: preserving the credit union tax status; reducing regulatory burden; engaging in housing finance reform; and advancing credit union charter enhancements, such as increased member business lending authority and supplemental capital.

House Ways and Means Chairman Dave Camp (R-Mich.) announced the hearing will take place on Thursday, Feb.  14,  in room 1100 of the Longworth House Office Building, beginning at 9:30 a.m. (ET).

Obama nominates REI co-op CEO for cabinet position

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WASHINGTON (2/7/13)--Sally Jewell, president/CEO of the nation's largest consumer cooperative, REI, has been nominated to serve as Secretary of the Interior by President Barack Obama.

National Cooperative Business Association (NCBA) President/CEO Michael Beall said the association and its members are energized by the selection. "We are proud that the president turned to the cooperative sector to select the newest member of his cabinet… Sally Jewell leads an extraordinary organization that represents the best of the cooperative business community," he added.

Jewell has also worked in the energy and banking industries. If confirmed, she will replace outgoing Secretary of the interior Ken Salazar.

Obama called Jewell "an expert on the energy and climate issues that are going to shape our future," and said "she knows the link between conservation and good jobs... She knows that there is no contradiction between being good stewards of the land and our economic progress; that in fact those two things need to go hand in hand." The Secretary of the Interior oversees 500 million acres of government owned public land.

The National Cooperative Bank (NCB) ranked REI as the 27th largest cooperative business in the nation on its 2012 NCB Co-op 100 List. REI's 2011 sales totaled $1.8 billion, and the business welcomed more than 840,000 new members during that year. The company returned $137.2 million to its members and invested $4.48 million in national and community-based conservation organizations.

REI is the nation's largest consumer cooperative, but there are cooperatives in virtually every sector of the economy, the NCBA noted.  The nation's 29,000 cooperatives generate 2 million jobs each year, contribute $652 billion in annual sales, and possess $3 trillion in assets, according to the NCBA.

"Whether it's providing affordable housing through a housing cooperative, providing affordable financial services through a credit union, providing affordable and reliable utility services to rural residents, providing farmers and small businesses with access to markets, cooperative business enterprises are major players in the U.S. economy," Beall said.

House Majority Leader Cantor to address 2013 GAC

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WASHINGTON (2/7/13)--Another high-profile political name has been added to the Credit Union National Association's 2013 Governmental Affairs Conference (GAC): House Majority Leader Eric Cantor (R-Va.).

The majority leader has made headlines in recent days as he has outlined a new vision to move the Republican party forward following the 2012 elections. Part of that vision includes reforming the country's tax laws, a goal others in Congress share as well.

Preserving the tax status of credit unions is a top CUNA priority and will be a key discussion item during the GAC. As lawmakers move toward March 1 federal debt and tax discussion deadlines, CUNA President/CEO Bill Cheney has said he can't "think of a better time for credit union supporters to be in Washington, in force."

Cantor spoke at the GAC in 2009 and 2010, and in 2010 he noted the importance of expanding credit unions roles in helping their communities. More than 600,000 businesses are started each year--about one per minute--and those individuals need credit unions, Cantor said.

Cantor will speak during the morning general session on Feb. 27.

Other legislators on the GAC speaking schedule include: Speaker of the House Rep. John Boehner (R-Ohio), Democratic National Committee Chairman and credit union supporter Rep. Debbie Wasserman Schultz (D-Fla.), and credit union champions Sen. Mark Udall (D-Colo.), Rep. Ed Royce (R-Calif.) and Rep. Brad Sherman (D-Calif.). House Financial Services Committee Chairman Jeb Hensarling (R-Texas), House Financial Services Committee Ranking Member Maxine Waters (D-Calif.), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee senior member Spencer Bachus (R-Ala.), Rep. Gregory Meeks (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), Sen. Jon Tester (D-Mont.), Rep. Peter King (R-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.) are also slated to speak at the 2013 GAC.

CUNA's 2013 GAC will take place Feb. 24-28 at the Washington Convention Center in Washington, D.C. This year's GAC theme, "Powerful Cause, Positive Effect," reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC. Use the resource link to register for the GAC.

Housing reform a committee priority, Hensarling says

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WASHINGTON (2/7/13)--Forging a sustainable housing finance system will be a House Financial Services Committee priority going forward, committee chairman Jeb Hensarling (R-Texas) said during a Wednesday hearing on the state of the Federal Housing Administration (FHA).

"Hardworking Americans demand a healthy economy, and we cannot have a healthy economy until we have a housing finance system that is both sustainable and competitive," Hensarling said.

The FHA's single-family insurance fund is facing a projected shortfall of $16.3 billion due to mortgage loan defaults by borrowers, and Hensarling and others have called for serious reforms to the agency.

In his opening hearing statement, Hensarling noted that the FHA controls 56% of the total mortgage insurance market. "Instead of complimenting a robust private mortgage market, the FHA's high cost loan limits and extremely low down payment requirements put it in direct competition with the private sector," he added.

Witness Anthony Sanders of the Mercatus Center at George Mason University said the FHA's current policies encourage risk taking by low-income households that should not be buying properties.

Increasing the FHA's FICO score floor to 660, imposing a minimum down payment requirement of 5%, lowering loan limits to $625,000 and eventually to $350,000, or less, and reducing government loan insurance to 80% of the total loan amount would "reduce the FHA's substantial, high-risk footprint in the mortgage market," he said.

Center for American Progress Housing Finance and Policy Director Julia Gordon, however, noted that the FHA's risk profile is improving. FHA loans taken on since 2010 are performing well, she said. Gordon acknowledged that the FHA's share of the mortgage market "should and will return to its historical norms," and suggested that the FHA could improve its risk estimate and loss mitigation efforts. She also cautioned against quickly reforming the agency. "To the extent we move, we need to move very slowly and very carefully," she said.

The FHA late last month announced it would increase some premiums and alter some underwriting requirements in a bid to improve its financial condition, manage and protect its single-family insurance programs and encourage the return of private capital to the housing market.

Wednesday's hearing was the first in a series of hearings that will be held throughout the year. FHA Commissioner Carol Galante will testify before the committee on Feb. 13, and more hearings will be held at the full committee and subcommittee levels.

For more on the Wednesday hearing, use the resource link.

Senate bill would crack down on e-payday loans

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WASHINGTON (2/7/13)--A bill has been introduced in the Senate intended to crack down on the worst practices of the online payday lending industry and give states more power to protect consumers from predatory loans.

Stopping Abuse and Fraud in Electronic (SAFE) Lending Act (S. 172) was introduced by Democratic Sens. Jeff Merkley (Ore.), Tom Udall (N.M.),  Richard Durbin (Ill.) and Richard Blumenthal (Conn.).

"We threw the payday lenders, who prey on families when they're at their most vulnerable, out of Oregon back in 2007," said Merkley when the bill was introduced. "Technology has taken a lot of these scams online, and it's time to crack down. Families deserve a fair shake when they're looking to borrow money, not predatory loans that trap them in a vortex of debt."

Credit unions and the Credit Union National Association are committed to providing a safe and affordable alternatives to predatory payday lenders, and credit unions across the country have implemented various programs in order to provide individuals in their communities an alternative to high-priced payday lenders.

CUNA supports the ability of credit unions to provide beneficial short-term, small amount loans as alternatives to predatory payday lending, which have "no place in the financial marketplace."

Payday loans from federal credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small amount loan program.

The Senate's SAFE Lending Act has four main provisions to:

  • Ensure that consumers have control of their accounts so that a third party doesn't gain control through remotely created checks (RCC). Consumers would be able to preauthorize may create an RCC on his/her behalf;
  • Allow consumers to cancel a debit, as they can a check,  in connection with a payday, thereby preventing an Internet payday lender from stripping a checking account without a consumer being able to stop it;
  • Require all lenders to abide by state rules for the small-dollar, payday-like loans they may offer customers in a state loans. Merkley's release notes that only states, not the federal government, have laws to prevent 400% annual percentage rate loans; and
  • Ban websites from describing themselves as payday lenders when they are actually "lead generators" that collect applications and auction them to payday lenders and others.
The bill, introduced Jan. 29, also would give the Consumer Financial Protection Bureau authority on its own behalf and upon petition by state Attorneys General or other local regulators to shut down payment processing for lenders that are violating state and other consumer lending laws through the Internet.

Derivatives plan could be out 'soon,' Matz says

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ALEXANDRIA, Va. (2/6/13)--National Credit Union Administration staffers continue to examine credit union derivatives issues, and a proposed rule on derivatives could be released in the first half of 2013, NCUA Chairman Debbie Matz said in a Tuesday webinar with Consumer Financial Protection Bureau Director Richard Cordray.

Matz noted that the agency is considering allowing well-run credit unions with the necessary expertise to use simple derivatives to hedge against interest rate risk (IRR). She said managing interest rate risk is a key concern for the agency and the proposal would be issued "soon."

The agency will also address clarity in member business lending waivers, she said. An agency letter that addresses blanket waivers, guarantees and when a waiver is required for a structured or balloon loans is in the works. The NCUA will also release credit ratings and troubled debt restructuring guidance, Matz added. Guidance that clarifies the agency's expectations for enterprise risk management practices will also be released by mid-2013, NCUA Director of Examinations and Insurance Larry Fazio said.

Cordray also previewed some of his agency's future plans during the webinar. A final version of proposed remittance transfer regulations will be released in February or March, and will become effective 90 days after it is released, he said. The CFPB has provided a safe harbor exemption from the rule for remittance providers that transact 100 or fewer remittances per year, and the final exemption threshold will remain at this level, he added.

The CFPB director said his agency is also considering giving credit unions that hold $2 billion or less in assets, and make more than 500 mortgage loans per year, safe harbor from portions of qualified mortgage/ability-to-repay regulations.

Rules addressing prepaid cards will also be released this year, but how far reaching those will be is still under consideration by the bureau, Cordray said. The CFPB is also developing plain language guides to aid smaller institutions with compliance with the new mortgage final rules. "The CFPB has reached out to CUNA for our input as they work to develop these and other resources for credit unions and we expect more details to be unveiled in the coming weeks," Credit Union National Association Senior Assistant General Counsel Jared Ihrig said.

Matz also discussed the state of the credit union system during the webinar. The credit union system's overall health is "very encouraging" with a solid average capital level of 10%, and declining delinquencies and chargeoffs, she said.

However, Matz added that some of the smallest credit unions, those with $10 million or less in assets, are struggling with a return-on-assets of zero, which in fact is an improvement over recent negative numbers. She said the pressures on these smallest credit unions are spurring a number of mergers.

"The NCUA is concerned about the health and survival of some small credit unions," Matz told the webinar audience. She added that the agency has come up with a number of plans and tools to support their operations, such as:

  • Reducing the number of examinations hours to around 40;
  • Providing more services through the agency's Office of Small Credit Union Inititiatives, such as consulting and helping with net worth restructuring plans; and
  • Increasing the use and availability of web tutorials.
She also noted the recent significant change, advocated by CUNA, that increased the threshold that defines a small credit union to $50 million in assets, up from $10 million.

The NCUA will post an archived version of the webinar in the next two weeks.

Ways and Means launches look at tax reforms with charitable deductions hearing

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WASHINGTON (2/7/13)--The tax policy-writing House Ways and Means Committee has scheduled a hearing next week on itemized charitable deductions. The hearing is part of what will be a broader look by the committee at the subject of comprehensive tax reform.

"We do not expect the credit union tax status to be any part of the focus at this upcoming hearing," said Ryan Donovan, Credit Union National Association senior vice president of legislative affairs, Wednesday.

"However," he added, "we will be watching this closely, as it could shed light on how the committee intends to evaluate tax provisions going forward."

Preserving the credit union tax status is always a top CUNA priority. CUNA's 2013 four-pillar legislative agenda focuses on: preserving the credit union tax status; reducing regulatory burden; engaging in housing finance reform; and advancing credit union charter enhancements, such as increased member business lending authority and supplemental capital.

House Ways and Means Chairman Dave Camp (R-Mich.) announced the hearing will take place on Thursday, Feb.  14,  in room 1100 of the Longworth House Office Building, beginning at 9:30 a.m. (ET).

Compliance: Direct Express March 1 deadline brings issues

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WASHINGTON (2/6/13)--Federal benefits payments will be made only by direct deposit or the Direct Express debit MasterCard after March 1, and the Credit Union National Association has answered one key credit union compliance question ahead of this deadline.

CUNA Senior Vice President for Compliance Kathy Thompson in a recent CUNA Comp Blog post reminded credit unions that federal benefits recipients with the Direct Express MasterCard will be able to make no-fee cash withdrawals from any bank or credit union through a teller where the institution displays the MasterCard acceptance mark.

Therefore, Thompson said, credit unions that display the MasterCard acceptance mark will be required to provide cash to Direct Express cardholders, with no fee attached, whether the cardholder is a member or not. "If your credit union has an agreement with MasterCard that requires you to honor these cards, that trumps any field of membership issue," she said.

CUNA has recommended that any credit union with an agreement with MasterCard read its agreement to ascertain the credit union's contractual responsibilities in honoring the Direct Express debit card. MasterCard representatives can also help address any compliance concerns, Thompson noted.

For more on this issue, use the resource link.

FEMA rescinds flood insurance program guidance

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WASHINGTON (2/6/13)--The Federal Emergency Management Agency (FEMA) has rescinded its Mandatory Purchase of Flood Insurance Guidelines booklet (F-083) saying the guide hadn't been updated since 2007 and was obsolete.

The guide booklet was originally produced to help lenders comply with National Flood Insurance Program (NFIP) requirements. However, the current version was made obsolete by recent legislation, "The Biggert-Waters Flood Insurance Reform Act of 2012."

The guidance is no longer available in hard copy format nor from the FEMA website as of Feb. 4. 

FEMA suggested "lenders should consult their respective regulatory agency for information regarding compliance with the mandatory purchase requirements."

The agency said it will continue to provide assistance on NFIP-related questions regarding underwriting, rating, and claims processing.

For the full FEMA release, use the resource link.

Congress last year approved a five-year extension of the NFIP, and the extension legislation contained some reforms to the program. However, the NFIP has had issues in recent years, and House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) has committed his panel to taking up the issue of flood insurance with a look at ways to privatize the flood insurance market.

Treasury blocks money transfer firms linked to drug cartel

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WASHINGTON (2/6/13)--Prodira S.A. de C.V., Prodira, Inc. and Internacional & Nacional Exchange Services Inc., have been designated as blocked properties by the U.S. Treasury due to their alleged connections to a Mexican money laundering network.

The money transfer businesses are owned by Filemon Garcia Ayala, a Mexican citizen who has been tied to Los Zetas, a massive Mexican drug cartel, according to the Treasury release. Filemon Garcia Ayala leads a money laundering network that makes large international transfers on behalf of Los Zetas, the Treasuy said. Mexican authorities have sought his arrest since June 2012, and he is currently a fugitive.

The Treasury has also designated Prodira Casa de Cambio S.A. de C.V. and Trastreva S.A. de C.V., as blocked properties.

U.S. persons are forbidden from conducting financial or commercial transactions with these designees. Any assets held by the companies that are held under U.S. jurisdiction have also been frozen, the Treasury added.

"By exposing another key money operation tied to Los Zetas, Treasury is depriving the Zetas of an important avenue to launder their narco-dollars," Treasury Office of Foreign Assets Control Director Adam Szubin said. "We will continue to target individuals and businesses linked to Los Zetas and take any action necessary to protect the U.S. financial system from their illicit financial dealings," he added.

Tuesday's action was part of an ongoing effort under the Kingpin Act to apply financial measures against significant foreign narcotics traffickers and their organizations worldwide. The Treasury Department reports that it has designated more than 1,200 individuals and entities pursuant to the Kingpin Act since June 2000. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties.

For the full Treasury release, use the resource link

Waters asks for hearing on Independent Foreclosure Review demise

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WASHINGTON (2/6/13)--The top Democrat of the House Financial Services Committee Tuesday asked that panel's chairman to conduct a hearing about "the abrupt end of the Independent Foreclosure Review (IFR) process."

Rep. Maxine Waters (D-Calif.), who has been an advocate for foreclosure prevention, noted in her request to Chairman Jeb Hensarling (R-Texas) that on Jan. 7, the Office of the Comptroller of the Currency and the Federal Reserve Board announced a settlement with 14 mortgage servicing companies, in which it was agreed to replace the process with an $8.5 billion settlement, effectively terminating the IFR.

Waters identified concerns regarding the settlement. She said it lacked:
  • Identification of a minimum amount for principal reductions,
  • An escalation process for homeowners, and,
  • The prevention of foreclosures for the 4.4 million borrowers still in their homes.
House Financial Services has its first hearing scheduled for today. The topic is "Examining the Proper Role of the Federal Housing Administration in our Mortgage Insurance Market."

Scheduled witnesses are:
  • Edward Pinto, resident fellow, American Enterprise Institute;
  • Anthony B. Sanders, distinguished professor of real estate finance, senior scholar, Mercatus Center at George Mason University;
  • Basil Petrou, managing partner, Federal Financial Analytics, Inc.; and,
  • Julia Gordon, director, Housing Finance and Policy, Center for American Progress.

NEW: NCUA derivatives proposal could be released 'soon,' Matz says

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ALEXANDRIA, Va. (UPDATED: 3:35 p.m. ET, 2/5/13)--National Credit Union Administration staffers continue to examine credit union derivatives issues, and a proposed rule on derivatives could be released in the first half of 2013, NCUA Chairman Debbie Matz said in a joint NCUA/Consumer Financial Protection Bureau webinar today.

She noted that the agency is considering allowing well-run credit unions with the necessary expertise to use simple derivatives to hedge against interest rate risk (IRR).

She said managing interest rate risk is a key concern for the agency and the proposal would be issued "soon."

The agency will also address clarity in member business lending waivers, she said. An agency letter that addresses blanket waivers, guarantees and when a waiver is required for a structured or balloon loans is in the works. The NCUA will also release credit ratings and troubled debt restructuring guidance, Matz added.

The NCUA chairman launched her joint webinar with CFPB Director Richard Cordray by noting the challenges of "the smallest" credit unions, and noting agency tools available to those credit unions.

Matz, after reviewing trends in the general economy said that credit union health overall is "very encouraging" with a solid average capital level of 10%. She noted that delinquencies and chargeoffs continue to decline.

However, Matz added that some of the smallest credit unions, those with $10 million or less in assets, are struggling with a return-on-assets of zero, which in fact is an improvement over recent negative numbers. She said the pressures on these smallest credit unions are spurring a number of mergers.

"The NCUA is concerned about the health and survival of some small credit unions," Matz told the webinar audience. She added that the agency has come up with a number of plans and tools to support their operations, such as:
  • Reducing the number of examinations hours to around 40;
  • Providing more services through the agency's Office of Small Credit Union Inititiatives, such as consulting and helping with net worth restructuring plans; and
  • Increasing the use and availability of web tutorials.
She also noted the recent significant change, advocated by the Credit Union National Association, that increased the threshold that defines a small credit union to $50 million in assets, up from $10 million.

CFPB Director Cordray is now addressing the webinar participants.

Charter enhancement bills on the horizon

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WASHINGTON (2/5/13)--Credit union charter enhancement legislation, such as member business lending and supplemental capital bills, are expected to be unveiled in the coming weeks, and the Credit Union National Association is setting the table for these bills by seeking congressional support now.

CUNA has discussed the upcoming bills in recent meetings with Senate Banking Committee members, and the bipartisan appeal of both bills has been a consistent point of emphasis during those meetings, CUNA Senior Vice President of Legislative Affairs Ryan Donovan said. CUNA is asking senators how the appeal of the bills could be maximized through additional tweaks, he noted.

Both bills met banker opposition last year, but "CUNA anticipates the merits of the bills will be considered, and that those merits will win the day," Donovan said.

Rep. Ed Royce (R-Calif.) is preparing the MBL legislation, and Rep. Peter King (R-N.Y.) is readying the supplementary capital bill. Both pieces of legislation will be virtually identical to bills that were introduced last year, Donovan noted. There may be some changes to portions of the supplemental capital bill that address transparency and disclosures, he said.

Last year's House and Senate MBL bills, H.R. 1418 and S. 509, sought to increase credit unions' current 12.25%-of-assets MBL cap to 27.5% of assets. The bills, if enacted, would help credit unions lend an additional $13 billion to small businesses. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create over 140,000 new jobs in the first year after enactment.

The 2012 supplemental capital legislation (H.R. 3993) would have permitted the National Credit Union Administration to allow credit unions to accept additional forms of capital, provided it does not alter the cooperative ownership structure of credit unions.

"The point we make when discussing MBL legislation is this: There are credit unions that served business-owning members before and during the financial crisis. Now that the crisis is over, they want to keep working with those members," Donovan said.

CUNA Senior Vice President of Political Affairs Richard Gose noted that a coalition of small business groups continue to support increasing the MBL cap for credit unions.

Banker groups strongly objected to both bills last year, and CUNA pushed back, successfully opposing legislation that would have extended the Transaction Account Guarantee (TAG) for banks. Bankers have also harmed their own bills to prevent credit union legislation from moving forward. "Banks may realize that they need to abandon this scorched-earth policy if they want to get their own legislation passed through Congress," CUNA Executive Vice President of Legislative Affairs John Magill pointed out.

ABA writes NCUA on Thrivent FOM

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WASHINGTON (2/5/13)--The National Credit Union Administration noted Monday that if an association's membership changes subsequent to the effective date stated in the federal credit union's charter, the credit union must submit revised bylaws for NCUA approval prior to serving any additional members that might result from the change.

The NCUA was responding to a letter from the American Bankers Association. The ABA contacted the federal credit union regulator earlier in the day to express concerns that the parent company of Thrivent FCU, Thrivent Financial for Lutherans, may expand its membership beyond Lutherans to include all Christians.

Thrivent FCU, chartered late last year, was the fourth newly chartered credit union of 2012 and the second bank-to-credit union charter conversion in U.S. history.

ABA Senior Economist Keith Leggett wrote that the ABA is concerned that if Thrivent Financial for Lutherans' members were to vote to expand the common bond, it "would be a considerable and problematic expansion of the credit union's membership." He said that, "while Christians may share reasonably similar beliefs, the different and sometimes conflicting doctrinal variations among different denominations suggest that all Christians do not share a meaningful affinity or interaction."

In her response to the ABA, NCUA Office of Consumer Protection Director Gail Laster said that as of the time of her letter, the agency has not received "any indication" from Thrivent FCU that the scope of its sponsor's membership is in the process of change.

In the event a change occurs, she wrote, Thrivent FCU would be required to submit the sponsor's revised bylaws to her office for review to "ensure the sponsor continues to meet NCUA's associational common bond requirements."

Thrivent FCU has approximately $500 million in assets.

MLO rule impact on CUs detailed by CUNA

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WASHINGTON (2/5/13)--The impact of Consumer Financial Protection Bureau Mortgage Loan Originator (MLO) rule changes of course will vary depending on a credit union's own unique circumstances, Credit Union National Association Deputy General Counsel Mary Dunn wrote in a final rule analysis.

The new rule is intended to prevent unscrupulous MLOs from generating higher compensation for themselves by steering borrowers into risky and high-cost loans.

The CFPB's final rules:

  • Broaden the application of prohibitions on compensation that varies with the loan terms. For instance, an MLO should not be paid more if the consumer takes a loan with a higher interest rate, a prepayment penalty, or higher fees;
  • Prohibit "dual compensation": Under the CFPB's rules, the loan originator cannot get paid by both the consumer and another person such as the creditor; and
  • Set qualification and screening standards: An MLO must meet character, fitness, and financial responsibility reviews, pass a criminal background check, be screened for felony convictions; and undertake training to ensure they have the knowledge about the rules governing the types of loans they originate.
The final rule also implements Dodd-Frank provisions that, for mortgage and home equity loans, generally prohibit mandatory arbitration of disputes related to mortgage loans and the practice of increasing loan amounts to cover single premium insurance premiums.

The provisions on mandatory arbitration and credit insurance premium financing will take effect in June 2013. The remaining provisions are effective in Jan. 2014.

Credit unions and other residential mortgage lenders are required to be in compliance with the rule, but a number of the provisions are already required for financial institutions, CUNA notes. The impact on credit unions will generally be confined to areas such as training for mortgage loan originators, and to the extent credit unions engage in such practices, provisions regarding mandatory arbitration and the financing of credit insurance premiums.

Credit unions will also need to make sure they establish compliance procedures and recordkeeping requirements addressed in the rule, Dunn wrote.

For the full final rule analysis, use the resource link.

Homeland Security may get greater cybersecurity role

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WASHINGTON (2/5/13)--The Obama administration is developing an executive order that will give the U.S. Department of Homeland Security (DHS) and the Department of Commerce increased authority to address distributed denial of service (DDoS) attacks and other cybersecurity issues.

"The executive order will not address financial institutions specifically, but credit unions will want to watch out because the order will have an impact on the financial institution sector," Credit Union National Association Deputy General Counsel Mary Dunn said. The administration has reached out to the National Credit Union Administration as it works to finalize the executive order, she noted.

CUNA has met with the U.S. Treasury's Financial Services Sector Coordinating Council (FSSCC) for Critical Infrastructure Protection and DHS to ensure credit unions' interests are represented in the federal government's efforts to help deal with any future attacks. The FSSCC was formed to prepare for such issues, and the financial services sector is more prepared than most to deal with cybersecurity issues as a result of Y2K preparations, Dunn noted.

CUNA continues to work with credit unions, the FSSCC, BITS and other entities on cybersecurity issues.

At least two credit unions have been victims of recent DDoS attacks. The attacks took down the websites of $3.8 billion asset Patelco CU, Pleasanton, Calif., and $1.6 billion asset University CU, Austin Texas, for hours. The credit unions emphasized that no member data was compromised during the attacks.

Bank of America, Wells Fargo & Co., Capital One, Citibank and JPMorgan Chase are among the larger institutions that were subject to similar attacks by the same group, Izz ad-Din Al Qassam. The group last week said it suspended the attacks after YouTube removed a trailer advertising an anti-Muslim film, "The Innocence of Muslims."

Credit unions have been advised to monitor and be vigilant on their cyber security and risk management systems to cope with DDoS attacks and other cybersecurity threats. Financial institutions should also follow federal financial regulations on Internet and data security, as well as Federal Financial Institution Examination Council (FFIEC) guidance on Internet authentication methods, risk assessment, and customer verification.

For more information about cyber security, please visit the CUNA members-only website.

Tester joins list of 2013 GAC speakers

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WASHINGTON (2/5/13)--Credit union friend and past Credit Union National Association Governmental Affairs Conference guest Sen. Jon Tester (D-Mont.) has joined the list of star speakers at this year's conference.

At last year's GAC, Tester said credit unions and small businesses are "the backbone of America," and declared his commitment to serve the needs of rural Americans--and credit unions' role within that vision.

Tester has worked closely with CUNA, the Montana Credit Union Network and Montana credit unions to address interchange issues and other credit union concerns. He also successfully defended his senate seat in November with the help of credit unions, CUNA and the league. CUNA President/CEO Bill Cheney just after the November elections noted "there are a lot of people in Washington that said it was impossible for Tester to be reelected in one of the reddest of red states." However, he said, credit union efforts helped push Tester over the top.

Tester will speak during the morning general session on Feb. 27.

Other legislators on the GAC speaking schedule include: Speaker of the House Rep. John Boehner (R-Ohio), Democratic National Committee Chairman and credit union supporter Rep. Debbie Wasserman Schultz (D-Fla.), and credit union champions Sen. Mark Udall (D-Colo.), Rep. Ed Royce (R-Calif.) and Rep. Brad Sherman (D-Calif.). House Financial Services Committee Chairman Jeb Hensarling (R-Texas), House Financial Services Committee Ranking Member Maxine Waters (D-Calif.), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee senior member Spencer Bachus (R-Ala.), Rep. Gregory Meeks (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), Rep. Peter King (R-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.) are also slated to speak at the 2013 GAC.

CUNA's 2013 GAC will take place Feb. 24-28 at the Washington Convention Center in Washington, D.C. This year's GAC theme, "Powerful Cause, Positive Effect," reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC. Use the resource link to register for the GAC.

CFPB's Cordray, Financial Service's Waters to speak at 2013 GAC

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WASHINGTON (2/4/13)--Two more Washington heavy hitters have been added to the lineup for the Credit Union National Association's 2013 Governmental Affairs Conference (GAC): Consumer Financial Protection Bureau Director Richard Cordray and House Financial Services Committee Ranking Member Maxine Waters (D-Calif.).

"Director Cordray has been accessible and open to listening to the views of CUNA and credit unions on CFPB's agenda and proposed regulations," CUNA President/CEO Bill Cheney noted. "We are excited to have him speak at this year's GAC," he added.

President Barack Obama appointed Cordray to serve as agency director in early 2012, and he was recently nominated to continue in this role for a five-year term.

Cordray will speak during the morning general session on Feb. 27.

Waters, who has served in the U.S. Congress since 1993, is a frequent GAC guest. She has identified herself as a member of Congressional FCU, believes strongly in credit unions' ability to improve people's financial lives, and last year told GAC attendees she would be "the best friend credit unions ever had" in her time with the Financial Services Committee. Waters was a cosponsor of the Small Business Lending Enhancement Act (H.R. 1418) during the 112th Congress, and has said she is "very much involved" in the credit union member business lending cap issue.

Also on the GAC speaking schedule: Speaker of the House Rep. John Boehner (R-Ohio), Democratic National Committee Chairman and credit union supporter Rep. Debbie Wasserman Schultz (D-Fla.), and credit union champions Sen. Mark Udall (D-Colo.), Rep. Ed Royce (R-Calif.) and Rep. Brad Sherman (D-Calif.). House Financial Services Committee Chairman Jeb Hensarling (R-Texas), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee senior member Spencer Bachus (R-Ala.), Rep. Gregory Meeks (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), Rep. Peter King (R-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.) are also slated to speak at the 2013 GAC.

CUNA's 2013 GAC will take place Feb. 24-28 at the Washington Convention Center in Washington, D.C. This year's GAC theme, "Powerful Cause, Positive Effect," reflects the credit union commitment to the 95 million working Americans who rely on credit unions every day.

For more information, follow the @CUNAverse twitter hashtag #CUNAGAC. Use the resource link to register for the GAC.

Sandy foreclosure relief extended

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WASHINGTON (2/4/13)--The Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac will extend expiring protections against foreclosure actions against homeowners whose properties were damaged or destroyed due to Hurricane Sandy.

The 90-day extension of the foreclosure moratorium applies to homeowners with properties in states declared major disasters by the president after the storm and it applies to the initiation of foreclosures and foreclosures already in process.

"Given the magnitude of this disaster, extending the moratorium on foreclosures and evictions will allow homeowners in the affected areas, and their servicers, the time needed to assess individual circumstances and options," said Federal Housing Finance Agency acting Director Edward DeMarco when announcing the extension late last week.

FHA is also suspending evictions of persons from properties secured by FHA mortgages in the affected counties through April 30.

CUNA punches back at bank attacks

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WASHINGTON (2/4/13)--The Credit Union National Association continues its one-two punch against bank attacks targeting the credit union tax status.

As reported, CUNA President/CEO Bill Cheney has had at least 20 recent meetings with federal lawmakers underscoring the public policy reasons for the credit union tax-exemption mandated by the Federal Credit Union Act of 1934.

And last week, CUNA Executive Vice President of Legislative Affairs John Magill refuted bank attempts to tie together the issue of increased member business lending for credit unions with the separate issue of tax status.

In a recent article in Politico titled "The never-ending feud: Banks vs. credit unions," which focused primarily on bank rhetoric against increased MBLS, Magill said, "When they start talking about our tax exemption, they're changing the subject. They've run out of arguments opposed to the member business lending."

"They know they can't defeat us on the policy argument so they talk about tax exemption, trying to put us in a position to defend that."

He added, "The fact of the matter is, we don't believe Congress has an appetite to tax 95 million Americans, which is exactly what would happen if Congress were to tax credit unions. It's simply a tax on Americans."

As CUNA President/CEO Bill Cheney noted in last week's "Cheney Report," CUNA will be emphasizing repeatedly on Capitol Hill in the months to come, including during CUNA's Governmental Affairs Conference Hill visits in February, how it is the credit union member who would be harmed most by the banks' push to increase taxes on credit unions.

Under the Federal Credit Union Act, federal and state-chartered credit unions are exempt from federal income tax because they are cooperatives operated for and by their members, and because credit union shares are essentially members' deposits. The tax status has been re-affirmed periodically by the U.S. Congress and is supported by many lawmakers.

A closer look: Tax status, grassroots at heart of CUNA advocacy in 2013

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WASHINGTON (2/4/13)--Preserving the tax status of credit unions is the Credit Union National Association's top priority, and CUNA Vice President of Political Affairs Trey Hawkins said maintaining that status will be the main goal of credit union grassroots and political advocacy efforts in 2013.

"CUNA's Political Affairs team is prepared to back up tax status advocacy efforts at both the federal and state levels," Hawkins said.

Hawkins noted that the member-owned, member-directed credit union model has offered working families a more affordable and trusted alternative to traditional banking for over a century. "Credit union members who understand and appreciate that difference are ready and willing to oppose any threat to their credit union's cooperative structure and the value it provides," he said.

"The best defense is a good offense, and we encourage credit unions to remind their members of the credit union difference at every opportunity," Hawkins added.

In addition to issue advocacy aimed at countering federal tax threats in Congress, Political Affairs staff will also provide strategic assistance to credit union leagues facing tax status attacks in state legislatures. Political Affairs will also expand their advocacy outreach efforts in social media channels, Hawkins added.

"CUNA Political Affairs will also continue its work to promote general grassroots and political involvement by credit unions, from increased Action Alert responses, promoting Hike the Hill attendance and Project Zip Code use," Hawkins said.

The Credit Union Legislative Action Council (CULAC) had a record setting year in 2012, raising more than $2 million to support credit union-friendly candidates, and CULAC aims to maintain its growth momentum going into the next electoral cycle. CULAC's goal is to have more resources for its independent expenditures and candidate contributions going forward, Hawkins added.

"Credit union supporters nationwide are still fired up and ready to support credit union candidates," he said.

New bill re-introduces five-member CFPB leadership plan

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WASHINGTON (2/4/13)--Sen. Jerry Moran (R-Kansas) introduced a bill (S. 205) Friday that would replace the director's position at the Consumer Financial Protection Bureau with a five-person panel. The bill mirrors one Moran offered in the last Congress.

The Credit Union National Association backs the concept of a multi-member directors panel but maintains it should go beyond the five-member model. CUNA believes a CFPB board should include seats statutorily designated for industry representatives, including a state or federal credit union regulator, and possibly a state consumer agency representative.

CUNA maintains that industry representation would enhance the quality of regulation promulgated by the CFPB by ensuring both the consumer perspective as well as the industry perspective is represented in the decision-making process.

The Moran bill also would bring the CFPB under the regular appropriations process; currently the bureau receives around $400 million in funding directly from the Federal Reserve. 

Many proponents of the changes carried in Moran's bill argue that they would make the CFPB more accountable and provide additional checks and balances.

A number of GOP lawmakers vowed last year to block confirmation of a director unless those changes were made. In fact, 43 Senate Republicans sent a letter to President Obama Friday and re-committed to their vow.

That opposition, in large part, led to President Obama's recess appointment last year of Richard Cordray as CFPB director.

FHLBs ask to be named a CU emergency liquidity provider

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WASHINGTON (2/4/13)--As the National Credit Union Administration considers its emergency liquidity proposal for credit unions, the 12 Federal Home Loan Bank (FHLB) presidents have sent a joint letter asking the agency to name their system specifically within the plan as a source of backup liquidity.

The NCUA proposal, issued last summer, would require federally insured credit unions with assets of $10 million or more to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations. The Credit Union National Association opposes the plan as written and urged the agency last September not to go forward with a final rule without changes.

In its proposal, the NCUA said credit unions can ensure access to backup liquidity by:

  • Becoming a member of the Central Liquidity Facility (CLF);
  • Becoming a CLF member through a CLF agent; or
  • Establishing direct borrowing access to the Federal Reserve's Discount Window.
CUNA noted in a comment letter to the agency that a major issue of concern for a number of credit unions is the exclusion of the Federal Home Loan Banks as a permissible source of emergency liquidity and CUNA has strongly advocated this position.

In their Jan. 31 letter to NCUA Chairman Debbie Matz and board member Michael Fryzel, the FHLB presidents wrote, "The FHLBanks serve as a reliable source of liquidity for all of their members during all economic cycles, and we urge the NCUA to include the FHLBanks among the eligible sources of emergency liquidity.

"Such action would encourage and facilitate a stable source of funding to assist credit unions of all sizes in meeting their business, community, and member needs."  The letter was a follow up to earlier comments to the agency on the issue.

The FHLB president wrote that they appreciate that the NCUA recognized in its notice of proposed rulemaking the importance of the FHLBanks in providing liquidity and other services to credit unions.

"We also agree with your recommendation that credit unions of all sizes should consider the merits of membership in their local FHLBank, but we believe that the FHLBanks are and should be included as a reliable source of emergency liquidity."

The FHLBs were created by Congress in 1932 to provide liquidity support to the nation's mortgage lenders. Credit unions and other financial institutions can access the FHLB liquidity system by becoming FHLB members.

Hampel views job numbers, economy on Bloomberg TV

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WASHINGTON (2/4/13)--Credit Union National Association Chief Economist Bill Hampel addressed recent job numbers, and what they mean for the overall economy, in a Friday appearance on Bloomberg Television's Bottom Line with Mark Crumpton.

Hampel noted that recent revisions and January job numbers added around 800,000 employees to government employment estimates. "That suggests there is quite a bit more momentum in the economy than we thought," he said.



The U.S. Department of Labor on Friday reported that employers added 157,000 jobs in January. The unemployment rate remained essentially unchanged at 7.9%, the department added. Hampel said these monthly numbers were close to what was expected. January's growth, combined with a 650,000 job revision to previous estimates, produced the 800,000 additional worker result.

The unemployment rate should gradually improve if the U.S. economy adds more than 200,000 jobs per month, resulting in an unemployment rate of 7.5% or less by the end of 2013, he noted.

"What's going on in the economy right now is that the private sector is actually establishing some momentum." Household sector and corporate balance sheets are improving, and business investment is improving. While looming public sector cuts would not be good for the overall economy, this private sector improvement could help make up for "any significant reduction in employment caused by any federal cuts," he added.

Low income communities were disproportionately hurt by the economic slowdown, and "it's only now that many of the lower income communities are beginning to see gains in employment and gains in income. "They typically lag the rest of the economy, that's one of the reasons it's so important to get the economy going," Hampel said.

NEW: FHLBs ask NCUA to name them as an emergency liquidity provider

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WASHINGTON (2/1/13, UPDATE 2 p.m. ET)--As the National Credit Union Administration considers its emergency liquidity proposal for credit unions, the twelve Federal Home Loan Bank (FHLB) presidents have sent a joint letter asking the agency to name their system specifically within the plan as a source of backup liquidity.

The NCUA proposal, issued last summer, would require federally insured credit unions with assets of $10 million or more to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations. The Credit Union National Association opposes the plan as written and urged the agency last September not to go forward with a final rule without changes.

In its proposal, the NCUA said credit unions can ensure access to backup liquidity by:

  • Becoming a member of the Central Liquidity Facility (CLF);
  • Becoming a CLF member through a CLF agent; or
  • Establishing direct borrowing access to the Federal Reserve's Discount Window.
CUNA noted in a comment letter to the agency that a major issue of concern for a number of credit unions is the exclusion of the Federal Home Loan Banks as a permissible source of emergency liquidity.

In their Jan. 31 letter to NCUA Chairman Debbie Matz and board member Michael Fryzel, the FHLB presidents wrote, "The FHLBanks serve as a reliable source of liquidity for all of their members during all economic cycles, and we urge the NCUA to include the FHLBanks among the eligible sources of emergency liquidity.

"Such action would encourage and facilitate a stable source of funding to assist credit unions of all sizes in meeting their business, community, and member needs."  The letter was a follow up to earlier comments to the agency on the issue.

The FHLB presidents wrote that they appreciate that the NCUA recognized in its notice of proposed rulemaking the importance of the FHLBanks in providing liquidity and other services to credit unions.

"We also agree with your recommendation that credit unions of all sizes should consider the merits of membership in their local FHLBank, but we believe that the FHLBanks are and should be included as a reliable source of emergency liquidity."

The FHLBs were created by Congress in 1932 f to provide liquidity support to the nation's mortgage lenders. Credit unions and other financial institutions can access the FHLB liquidity system by becoming FHLB members.

Student financial services are a new CFPB focus

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WASHINGTON (2/1/13)--Students, families, educators and financial institutions can help the Consumer Financial Protection Bureau gather information for its latest project: Examining the impact of financial products that are marketed to students through their colleges and universities.

"We have seen many colleges establish relationships with financial institutions to offer banking services to their students," CFPB Director Richard Cordray said. "The [CFPB] wants to find out whether students using college-endorsed banking products are getting a good deal," he added.

The CFPB is asking for details on:

  • What information schools share with financial institutions when they establish these relationships;
  • How campus financial products are marketed to students;
  • What fees students are being charged to use these products;
  • How schools set up marketing agreements with financial institutions; and
  • Student experiences using campus financial products in their day to day lives.
Student identification cards with debit card features, cards tied to scholarship and student loan funds, and school-affiliated bank accounts are among the items the CFPB is researching.

Credit unions in many states offer the benefits of credit union membership to students through on-campus branches or college- or university-affiliated credit unions that serve students and employees of the school.

One credit union, Orlando-based Fairwinds CU, became the official campus financial institution of the University of Central Florida (UCF) late last year. The credit union replaced SunTrust Bank, and university officials said it was clear that the credit union sought to be more than a business partner and recognized it would be investing in students who are future community leaders. Fairwinds offers university ID debit cards, free checking accounts, free money orders and financial education resources to UCF students.

Current law prevents card issuers from opening new credit card accounts for students under age 21, unless they can prove sufficient income to repay the card balance or have a co-signer over the age of 21 who has sufficient income to repay the debt. Certain marketing practices, including mail solicitations and gift offers on or near a college campus, are also prohibited. Credit card companies can still contact students and offer gifts in exchange for signing up for credit cards so long as it is done electronically, and students can open checking accounts, which may lead to taking out a credit card.

For more on the CFPB's latest endeavor, use the resource link.

NCUA letter to CUs cites 2013 exam goals

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ALEXANDRIA, Va. (2/1/13)--Increased clarity in its guidance to its examiners and more consistency in its examination practices are a key supervisory focus of the National Credit Union Administration this year, said NCUA Chairman Debbie Matz in a Letter to Federally Insured Credit Unions released Thursday.

"As a regulator and insurer, NCUA's goal is a strong, safe credit union system. To that end, NCUA continues to incorporate lessons learned and feedback from credit unions into our

examination approach," Matz said to open her letter to credit union directors and CEOs.

The Credit Union National Association often has encouraged the NCUA to provide this "increased clarity" on its examination process and called the NCUA supervisory focus a positive development.

Areas in which NCUA will strive to enhance the clarity of examiners include member business lending (MBL), credit rating, and troubled debt restructurings (TDRs).

Matz said credit unions can expect a supervisory letter to add clarity to the process and expectations for MBL rule waiver requests. The letter will address, in particular, waivers for personal guarantees and blanket waivers versus individual loan waivers for aspects of the MBL rule. The guidance will also focus on appropriate underwriting and credit monitoring systems for MBLs, Matz said.

The agency also will issue follow-on guidance for examiners and credit unions on complying with the final rule, required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, replacing the use of credit ratings with alternative standards to assess the creditworthiness of securities and money-market instruments.

Also, based on the final NCUA rule on TDRs, the NCUA will provide additional guidance for examiners on examining for compliance with the rule's requirements and the credit union's accounting practices related to TDRs.

Matz indicated that examiners will combine an awareness that federally insured credit unions continue to exhibit positive trends in most key while also continuing to evolve and face various economic and operational challenges.

The letter said examiners will evaluate a credit union's capacity to manage risk in the following areas:

  • Operational risk involving technology and internal controls; and,
  • Balance sheet management, including interest rate and liquidity risk, concentration risk--where a credit union might offer "too much of a good thing," and risk that can be associated with offering less established or complex products.
Use the resource link below to read the NCUA letter.

CUNA also is honing in on exam issues this year. In fact, 1,300 respondents took the time to detail their experiences--good, bad and in-between--on this key topic in a recent CUNA survey.

The CUNA survey asked credit unions to detail their experiences with on-site NCUA and state regulatory examinations, and to describe their satisfaction level with both the federal and state examinations process. Credit unions also described the strengths and weaknesses of the examination system.

Later this month, CUNA will provide summaries of the information garnered; one with nationwide information, and a second that breaks the results down on a state-by-state basis.

Results of the survey will be released in time for this year's CUNA Governmental Affairs Conference. The conference is scheduled for Feb. 24-28 in Washington, D.C.

CUNA releases high-priced mortgage rule analysis

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WASHINGTON (2/1/13)--New regulations that will require lenders offering higher-priced mortgages to use licensed or certified appraisers are the subject of a Credit Union National Association final rule analysis.

The regulations were approved by the National Credit Union Administration and other federal financial regulators this month. Under the terms of the new regulations, mortgage lenders will need to hire licensed appraisers to perform a physical inspection of a home's interior before making a loan that falls within the definition of a higher-priced mortgage loan. Lenders will need to provide homebuyers with a free copy of the resulting home appraisal report.

High-priced mortgages will be considered non-qualified residential mortgages that are secured by a principal dwelling with annual percentage rates that exceed the average prime offer rate by 1.5% for first-lien loans, 2.5% for first-lien jumbo loans, and 3.5% for junior lien loans.

The rule provides a safe harbor for compliance purposes, as well as exemptions for several types of transactions, including "qualified mortgages" and reverse mortgages. The higher-risk mortgage appraisal requirements will go into effect on Jan. 18, 2014. The CUNA analysis notes that the final rule narrows from the proposal the scope of a requirement for obtaining a second appraisal for certain "flipped" properties. Under the final rule, creditors are required to obtain a second written appraisal, at no cost to the borrower, if the property is being resold within a 180-day period, and:
  • For a property being resold within 90 days of acquisition, the sale price exceeds the price the property was acquired for by more than 10%; or
  • For a property being resold within 91 to 180 days of acquisition, the sale price exceeds the price the property was acquired for by more than 20%.
For the final rule analysis, use the resource link.

CUNA also plans to report on the details of other mortgage issues addressed by recent CFPB regulatory releases, including:
  • Mortgage servicing;
  • Mortgage loan originator compensation;
  • Ability-to-repay requirements;
  • Escrow accounts; and
  • "High-cost" mortgages.

Antonakes named to CFPB acting deputy director spot

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WASHINGTON (2/1/13)--Steve Antonakes is now the Consumer Financial Protection Bureau's acting deputy director, replacing Raj Date, who left the agency on Thursday.

In past meetings with the Credit Union National Association, Antonakes noted that credit unions did not cause the financial crisis, and said credit unions served as a source of strength for their members during the economic recovery.

CUNA Deputy General Counsel Mary Dunn said CUNA plans soon to meet Antonakes again on credit union topics.

Antonakes will serve as deputy director while the agency searches for a permanent replacement for Date. He will also maintain his role as associate director for supervision, enforcement, and fair lending at the CFPB, a position he has held since June 2012. Antonakes first joined the CFPB in November 2010, taking on the role of assistant director of large bank supervision.

"Steve's knowledge, expertise, and judgment will continue to be invaluable as we move forward with our important work--making markets work for consumers and responsible businesses," CFPB Director Richard Cordray said. Cordray also thanked Date "for his tremendous work to protect American consumers."

Date was the first CFPB deputy director, and helped build the agency over his two-year stint. He also served as special advisor to the secretary of the U.S. Treasury Department and as the CFPB's associate director for research, markets, and regulations.

Former AEA exec among those prohibited from future CU work

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ALEXANDRIA, Va. (2/1/13)--William Liddle, the former vice president of business lending at AEA FCU who was charged with taking part in a $50 million fraudulent business loan scheme, is one of nine individuals banned from future credit union work by the National Credit Union Administration.

The former AEA executive last February was convicted on 54 counts of fraud, conspiracy and money laundering in connection with accepting more than $1 million in bribes in exchange for approving business loans. The loan scheme nearly collapsed the Yuma, Ariz. credit union.

Liddle in June was sentenced to 15 years in prison, plus five years of supervised release, for his role in the scheme. The NCUA said he will also be ordered to pay $25,389,425 in restitution.

Others named in the NCUA prohibition order include:

  • Former Medical Area FCU, Brookline, Mass., vice president of finance Paul Amato. Amato consented to the issuance of a prohibition order to avoid the time, cost and expense of administrative litigation;
  • Former Credit Union of America, Wichita, Kan., employee Aimee Lyn Bailey. Bailey was sentenced to 24 months of probation, one year of supervised release and ordered to pay $51,773.14 in restitution following a theft conviction;
  • Former Alliance Blackstone Valley FCU, Pawtucket, R.I., CEO Joseph Cicione, III, who consented to the issuance of a prohibition order to avoid the time, cost and expense of administrative litigation;
  • Former Envision CU, Tallahassee, Fla., employee Raymond Cordero, who pleaded no contest to bank fraud and other related charges. He was sentenced to 45 days in prison and four years of probation, and ordered to pay $11,887 in restitution;
  • Former Russell Country FCU, Great Falls, Mont., employee Kristi Lynn Hunter, who was convicted of embezzlement;
  • Former SAFE FCU, Sumter, S.C., employee Teresa Johnson, who pleaded guilty to embezzlement charges. She was sentenced to 21 months in prison and five years of supervised release, and ordered to pay $241,272.90 in restitution;
  • Former Clara Barton FCU, Washington, D.C., employee Tiffany Samuells, who pleaded guilty to the charge of conspiracy to commit bank fraud. She was sentenced to 15 months in prison and five years of supervised release, and ordered to pay $497,150 in restitution;
  • Former East Kentucky Employees FCU, Winchester, Ky., employee Brian Tyler, who was convicted of embezzlement. He was sentenced to one year in prison and five years of supervised release, and ordered to pay $104,684.81 in restitution.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. For the full NCUA release, use the resource link.