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NEW: McWatters pledges 'straightforward' regulatory approach

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WASHINGTON (3/13/14, UPDATED: 10:45 a.m. ET)--If confirmed, National Credit Union Administration board nominee J. Mark McWatters said he will "work diligently to ensure the continued integrity and safety and soundness of our nation's credit union system in an ever-evolving marketplace."
McWatters made his remarks at this morning's Senate Banking Committee nomination hearing that started at 10 a.m. (ET).
Committee Chairman Tim Johnson (D-S.D.) said McWatters will hit the ground running with an eagerness to learn more about credit unions. He called for all nominees at today's hearing to be confirmed quickly.
The NCUA nominee briefly previewed his approach to regulation in his opening statement, saying his focus as a regulator "will remain straightforward: Don't neglect the fundamentals of capital, liquidity, and transparency, and always remember that the greatest threat to a financial system may reside where you least expect it--hidden within plain view."
McWatters said he intends to work with NCUA board members, agency staff and external stakeholders "in an open and respectful manner, with the goal of finding a common ground and working cooperatively through any differences." This approach has worked for him in past positions, he said. McWatters has served on the TARP Congressional Oversight Panel, as counsel for Rep. Jeb Hensarling (R-Texas), and as dean for graduate programs at Southern Methodist University's School of Law.
If confirmed, McWatters would replace board member Michael Fryzel, whose term ended Aug. 2. Fryzel will continue to serve until McWatters is confirmed.
The committee is also reviewing the qualifications for Stanley Fischer, as a member and vice chairman of the Federal Reserve Board; Jerome Powell, as Federal Reserve Board governor; Lael Brainard, as a Fed governor; and Gustavo Aguilar, to be an assistant secretary for the U.S. Department of Housing and Urban Development.
The hearing is ongoing. Watch @ NewsNowLiveWire and News Now for further coverage.

Introduction of Royce MBL-related bill expected today

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WASHINGTON (3/13/14)--As he pledged to 4,400 credit union advocates at the Credit Union National Association's 2014 Governmental Affairs Conference less than two weeks ago, Rep. Ed Royce (R-Calif.) is ready to introduce a bill to exempt loans for one- to four-unit non-occupied dwellings from the credit union member business lending cap.
CUNA expects the bill to be introduced today. Its primary co-sponsor is Rep. Jared Huffman (D-Calif.).
In a letter to his House colleagues Wednesday describing the bill and seeking support, Royce wrote: "When a bank makes a loan to finance the purchase of a small apartment building it is called a residential real estate loan.  When a credit union makes the same loan it is call a business loan" and thereby falls under the low 12.25%-of-assets MBL cap.
Royce told House lawmakers that his common-sense credit union reform bill, called the "Credit Union Residential Loan Parity Act," would fix that disparity.
He added that, if enacted, the bill would allow credit unions to lend an estimated additional $11 billion to small businesses, freeing up "much needed private sector financing for commercial businesses and rental housing without costing taxpayers a dime."
The bill also authorizes the National Credit Union Administration to apply strict underwriting and servicing requirements for the loans.
Welcoming Royce's bill, CUNA Executive Vice President of Government Affairs John Magill said, "Credit unions can do so much more to help small business grow and add jobs to the economy--and this bill will go a long way toward doing that, by making available an additional $11 billion while maintaining stringent underwriting and serving requirements.
"Credit unions are grateful for the efforts of Reps. Royce and Huffman to move forward on this bill, which makes sense for small business and the credit union members who own them."
CUNA and the state credit union leagues also support legislation to increase the MBL limit to 27.5% of assets. CUNA estimates that credit unions could lend an additional $13 billion to small businesses and help them create over 146,000 new jobs in the first year after enactment of the increase, again at no cost to taxpayers.

Senate confirms Bloom Raskin for Treasury deputy secretary

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WASHINGTON (3/13/14)--The U.S. Senate confirmed Sarah Bloom Raskin to become deputy secretary to the U.S. Treasury Department, making her the second in command there and the highest-ranking woman ever in a Treasury post.

Bloom Raskin's nomination was confirmed by voice vote. Her exit from her current position on the Federal Reserve Board of Governors will make for three vacancies in the central bank's seven-member board. 

Bloom Raskin has served at the Fed since 2010.

Today, the Senate Banking Committee is expected to consider the nomination of J. Mark McWatters to become a member of the National Credit Union Administration board, as well as Stanley Fischer, as a member and vice chairman of the Federal Reserve Board; Jerome Powell, as Federal Reserve Board governor; Lael Brainard, as a Fed governor; and Gustavo Aguilar, to be an assistant secretary for the U.S. Department of Housing and Urban Development.

New CFPB consumer survey on debt collection industry announced

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WASHINGTON (3/13/14)--The Consumer Financial Protection Bureau has announced plans to conduct a mail survey of consumers to learn about their experiences interacting with the debt collection industry.
The CFPB has named debt collection as a major focus since 2012.
The new survey will ask consumers about:
  • Their experiences with debt collectors;
  • Whether they recognized the debt that was being collected; and,
  • The nature of their interactions with the debt collectors.
It will also ask about preferences for how consumers prefer to be contacted by debt collectors, consumer opinions about potential regulatory interventions in debt collection markets, and about their knowledge of their legal rights regarding debt collections.
Use the resource link to read a CFPB Notice and Request for Comment that was recently published in the Federal Register.  Written comments must be received by May 6.

Consideration of CFPB rural redefinition is welcome, says CUNA

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WASHINGTON (3/13/14)--The rural county designations determined by regulators can impact the types of products credit unions may offer their members in those areas, and the Credit Union National Association this week welcomed consideration of a bill that would alter the Consumer Financial Protection Bureau's approach to this definition.

In a letter sent to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Rep. Maxine Waters (D-Calif.), the committee's ranking Democrat, CUNA thanked the committee for its planned consideration of H.R. 2672 today. That bill would direct the CFPB to establish an application process determining whether a county should be designated as a rural area if the CFPB has not designated it as one.

The CFPB currently uses the U.S. Department of Agriculture Economic Research Services' urban influence codes to define a "rural" area. While the bureau is scheduled to reexamine the definition of "rural" over the next two years, CUNA welcomed Rep. Andy Barr's (R-Ky.) bill "because it would allow a person who lives in or does business in a state, to apply to the CFPB to have designated the county in which the business is located as a rural area for purposes of a federal consumer financial law."

The CUNA letter cited two examples of how rural area definitions impact credit union business practices:
  • Escrow requirements under the Truth in Lending Act require certain lenders to create an escrow account for at least five years for higher-priced mortgage loans. If those loans are made by small lenders that operate predominately in rural or underserved counties, they are exempt from this requirement; and
  • Ability to Repay and Qualified Mortgage (QM) Standards which generally exclude mortgage loans with balloon payments from the QM standard, but allow small lenders that operate predominately in rural areas to originate balloon payment QMs.
It is expected that an amendment may be offered during today's markup session that would allow part of a county to be given a "rural" designation even if the whole county did not qualify. 

The amendment is targeted to opponents of the Barr bill who think it does not go far enough to help people in rural areas get access to financial services.

For CUNA letters to Congress, use the resource link.

CUNA launches nationwide search for new president/CEO

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WASHINGTON (3/13/14)--A national search for a new president/CEO of the Credit Union National Association will be launched immediately, the association's chairman said, to find a successor to Bill Cheney, who is returning to California in June to be president/CEO of SchoolsFirst FCU in Santa Ana.

CUNA Chairman Dennis Pierce said the search would consider candidates from both inside and outside of the credit union movement.

"We will be looking for leadership that can bring to bear the talents of the exceptional team that we have on board at CUNA now, and leverage the strengths of the three-tiered system of CUNA, the state credit union leagues, and credit unions to achieve our goals and strengthen the movement," Pierce said.

Pierce thanked Cheney for his service, and praised his accomplishments as president/CEO since 2010. Among them, the CUNA chairman said, were:
  • Successfully protecting the credit union tax exemption, ensuring that the recent tax reform draft from the House Ways and Means Committee made no changes to the tax status of credit unions. Pierce pointed to the award-winning "Don't Tax My Credit Union Campaign," which Cheney launched, as a key reason for the "big win" for credit unions in the tax reform proposal. The campaign generated 1.3 million contacts with Congress from credit union supporters in less than nine months' time--a record for such efforts--urging lawmakers "don't tax my credit union."
  • Establishing the first-ever shared, strategic vision for the credit union movement: "Americans choose credit unions as their best financial partner." The initiative is aimed at guiding, uniting and helping credit unions achieve a shared agenda of removing barriers, creating awareness and fostering service excellence, with the ultimate goals of increasing credit union membership and delivering to members more value.
  • Developing an approach to communicate credit union concerns and interests to Congress with a "535-seat strategy," designed to reach every single member of Congress on behalf of credit unions.
"In addition, Bill and his team this year planned and executed the most successful CUNA Governmental Affairs Conference ever, which drew more than 4,400 credit union supporters to rally and then deliver the credit union message to Capitol Hill," Pierce said. The CUNA chairman also noted the association's continued financial health during Cheney's tenure, as well as its strengthened communications program as hallmarks of his leadership.

Cheney expressed his thanks to the movement for its support during his nearly four years of leading the national trade association.

"I take on this new role at SchoolsFirst knowing that, with the backing of the CUNA board, the state leagues, and CUNA staff, we have accomplished much. However, the work will continue without interruption.

"Protection of our tax exemption, pursuit of regulatory relief, enhancing the charter and working toward achievement of a shared strategic vision--among other key issues--must proceed, with guidance from our board, partnership with the leagues and efforts of our talented, professional staff," Cheney said.

Pierce noted that Cheney will take a consulting role in the leadership search for the association during his remaining tenure at CUNA.

Current SchoolsFirst FCU president/CEO, Rudy Hanley, announced earlier this year that he would retire from the credit union after 31 years of service. Although he was originally scheduled to retire in March, Hanley has said he will stay on at the $9.7 billion-asset credit union until Cheney comes aboard.

More CU access to FHLBs a boon to members, communities: CUNA to Congress

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WASHINGTON (3/13/14)--Allowing privately insured credit unions to apply for Federal Home Loan Bank system membership "will provide a valuable source of liquidity and enhance their lending operations to the benefit of the members and the communities in which they reside," the Credit Union National Association stressed in a letter sent Wednesday to key lawmakers.

The CUNA letter was submitted prior to a scheduled markup today of Rep. Steve Stivers' (R-Ohio) bill, H.R. 3584. The bill is expected to be considered by the House Financial Services Committee, and the letters were sent to the committee chairman, Rep. Jeb Hensarling (R-Texas), and its ranking Democrat, Rep. Maxine Waters (D-Calif.).

The bill would create no additional risk of loss to any FHLB or to taxpayers, CUNA President/CEO Bill Cheney assured in his letter.

Although the National Credit Union Administration historically has raised concerns with private share insurance, CUNA's letter suggested tweaks to the Stivers bill that should address the agency's concern.

CUNA suggested modifying the underlying bill to clarify that the "NCUA has no legal authority, no regulatory power and no supervisory jurisdiction over either privately insured credit unions or commercial insurance companies."

Privately insured credit unions would not be the first type of non-federally insured institution to be eligible for FHLB System membership, Cheney reminded. "Under current law, insurance companies, which are not federally insured, may join the FHLB System. And, in fact, insurance companies borrow more from the FHLB System than all credit unions," Cheney said.

In a separate letter, CUNA also joined with the state credit union leagues of states most affected by the bill to show support.

CUNA cosigned a letter with the California & Nevada Credit Union Leagues, the Cornerstone Credit Union League, the Idaho Credit Union League, the Illinois Credit Union League, the Indiana Credit Union League, the League of Southeastern Credit Unions & Affiliates and the Maryland & D.C. Credit Union Association.

Stivers' bill addresses one of the more than 30 regulatory relief proposals CUNA submitted to the committee at a hearing last year. A vote on the bill could be held as soon as Friday morning. Federally insured credit unions already have the ability to apply for FHLB system membership.

For both letters, use the resource links.

What CUNA will look for in new GSE bill

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WASHINGTON (3/13/14)--The Credit Union National Association has identified key areas it will scrutinize in an anticipated housing finance reform bill announced yesterday and expected to be unveiled this week or early next week.

An agreement to move ahead with the bill, which has bipartisan support in the Senate and a strongly positive reaction from stakeholders, was announced Tuesday by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and the committee's top Republican member, Sen. Mike Crapo (Idaho).

CUNA Senior Vice President of Legislative Affairs Ryan Donovan said CUNA is keen to analyze such areas as:
  • Whether there are provisions in place to assure a smooth transition from the current system based on government sponsorship to a private-market approach;
  • Whether there is an appropriate government guarantee, paid for by borrowers, that would assure the continued availability of essential 30-year, fixed-rate mortgage; and,
  • Whether the secondary market must be open to all lenders on an equitable basis.
CUNA also will be scrutinizing whether the proposed underwriting standards and private capital requirements are not so strict as to exclude qualified borrowers from access to mortgage credit.
The bill is expected to wind down government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor, the Federal Mortgage Insurance Corporation (FMIC).
The winding down of Fannie and Freddie, and the Federal Housing Finance Agency, would be accomplished within five years of the bill's potential passage. GSE assets would be sold off, and their charters would be revoked once the FMIC is established.

"As CUNA stated when the senators announced their accord yesterday, we look forward to reviewing the legislative text when it is made available and we are hopeful this will be a bill that credit unions can strongly support," Donovan said Wednesday.
He added that with the broad early support surrounding this recent announcement about GSE reform parties can be hopeful that good public policy will be the result. 
"Credit unions and banks--primarily smaller banks--are on the same page on this. When that happens--even on a complicated issue like this--good public policy tends to be produced," he said.

CFPB fills key senior positions

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WASHINGTON (3/13/14)--Three senior posts have been filled at the Consumer Financial Protection Bureau, including one in the Office of Financial Empowerment, which has worked with credit unions and other financial institutions to gather information on available financial coaching services for economically vulnerable consumers, including veterans in transition, people with disabilities, and those who are transitioning back into the workforce.
The CFPB announced Wednesday that:
  • Daniel Dodd-Ramirez is now CFPB assistant director of Financial Empowerment in the bureau's Consumer Education and Engagement Division. Dodd-Ramirez has previously served as the executive director of Step Up Savannah Inc. in Savannah, Ga., from 2005 to 2014, and as education project director and community organizer for People Acting for Community Together in Miami. From 1998 to 2000, he was the human resources director for Families First, a social services agency in southern Vermont.
  • Christopher D. Carroll is CFPB assistant director and chief economist for the Office of Research in the bureau's Research, Markets, and Regulations Division. Carroll is a professor of economics at Johns Hopkins University, from which he has taken a leave of absence to serve at CFPB. He also is a member of the board of directors of the National Bureau of Economic Research, and the co-chair of the NBER Research Group on Consumption. Carroll has served as a senior economist for the Council of Economic Advisors on two separate occasions, and as an economist for the Board of Governors of the Federal Reserve System.
  • Jeffrey Langer has joined the CFPB as the assistant director of Installment and Liquidity Lending Markets in the bureau's Research, Markets, and Regulations Division.  Langer most recently served as senior counsel at Macy's, Inc. in Mason, Ohio.  He also has served as a partner in several law firms, including Jones Day and Dreher Langer & Tomkies. He is a founding fellow and treasurer of the American College of Consumer Financial Services Lawyers and is a former chair of the Consumer Financial Services Committee of the American Bar Association Business Law Section.