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Senate Privacy Notice Bill Is Taking Form

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WASHINGTON (3/19/13)--A Senate version of legislation that would make significant improvements in privacy notices for consumers could be introduced in the near future, perhaps as early as this week, Credit Union National Association Senior Vice President for Legislative Affairs Ryan Donovan noted on Monday.

The bill is expected to be substantially similar to the Eliminate Privacy Notice Confusion Act (H.R. 749), which passed the U.S. House by voice vote last week. H.R. 749 would eliminate repetitive privacy notices by eliminating a requirement that the notices be sent annually. Under the terms of the bill, privacy notices would only to be sent when the privacy policy of a financial institution has changed. A similar bill passed the House in late 2012, but the Senate did not vote on the bill before the last session of Congress ended.

CUNA has consistently supported these privacy notification changes, and CUNA President/CEO Bill Cheney last week said the bill "will make privacy notifications more meaningful by removing a costly and duplicative paperwork requirement that has been no real help to consumers.

"More people are apt to pay attention to privacy notices that are made when their financial institution's policies change rather than when these notices are issued annually as a matter of routine," Cheney noted.

CUNA is also monitoring several hearings in the U.S. House and Senate this week, including the following hearings scheduled for Tuesday:
  • A House Judiciary crime, terrorism, homeland security and investigations subcommittee hearing on the Electronic Communications Privacy Act;
  • A House Ways and Means Committee hearing entitled "Tax Reform and Tax Provisions Affecting State and Local Governments.";
  • A House Financial Services Committee hearing on how government-sponsored enterprise conservatorships are being handled.
  • A Senate Banking Committee vote on the nomination of Consumer Financial Protection Bureau Director Richard Cordray;
  • A Senate Banking Committee housing reforms hearing; and
  • A Senate Banking securities subcommittee hearing on insurance regulations.
On Wednesday, the House Financial Services financial institutions and consumer credit subcommittee will discuss community banking regulations. The House Ways and Means select revenue measures subcommittee will also address financial products tax reforms on that day.

The House and Senate are expected to begin a two-week district work period at the end of the week.

NCUA, CFPB, Fed News Featured In CUNA Regulatory Advocacy Report

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WASHINGTON (3/19/13)--This week's edition of the Credit Union National Association's Regulatory Advocacy Report gives credit unions a snapshot of the latest regulatory developments inside and outside of the credit union system, from a recent CUNA executive committee meeting with National Credit Union Administration Chairman Debbie Matz to the status of a National Labor Relations Board Supreme Court case that has implications for the Consumer Financial Protection Bureau.

Credit Union National Association advocacy efforts continue on a number of fronts and the CUNA Regulatory Advocacy Report highlights a recent NCUA report on private student loan risks, provides an update on the agency's lawsuit against Goldman Sachs & Co and includes the latest CUNA chart on current rulemakings.

The Report also features:
  • New information related to the CFPB's escrow rule;
  • News on Federal Deposit Insurance Corporation premiums;
  • Details from a Federal Trade Commission report on mobile payments;
  • Electronic Payments Association (NACHA) bulletins on international automated clearinghouse warranties and high risk originators;
  • Details on the Federal Reserve Bank expansion of same-day FedACH service; and
  • New class action ATM litigation.
Employees or volunteers of CUNA/state credit union league-affiliated credit unions can sign up to receive the Regulatory Advocacy Report.

"We want to make sure the Report provides regulatory advocacy information that is useful to credit unions and leagues," CUNA Deputy General Counsel Mary Dunn said. "We invite credit unions to let us know if there are additional regulatory issues they want to read more about and want us to cover more frequently," she added.

The Regulatory Advocacy Report is archived on cuna.org.

Don't Stifle CU Student Lending: CUNA to CFPB

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WASHINGTON (3/19/13)--Noting that credit unions are natural partners for higher education institutions seeking to provide the most cost effective, student focused financial services to their students, the Credit Union National Association urged the Consumer Financial Protection Bureau to avoid imposing any new student lending regulations on credit unions.

CUNA Assistant General Counsel Lance Noggle in a Monday comment letter noted there are several cases in which financial institutions partner with an institution of higher learning. However, Noggle wrote, "Financial institution partners may be chosen more for the financial benefits provided to the school rather than their willingness to provide low cost financial services to students.

"Fees paid by financial institutions to colleges and universities may be used to subsidize services and products such as financial aid disbursement accounts and student ID cards that act as debit cards; however, this arrangement comes at a cost to students that is often hidden and opaque," he added.

"The more that a financial institution is willing to pay for access and marketing to students, the more likely it is to design products that generate cash flows funded by students…Unlike for-profit institutions, credit unions exist to serve their members, including students, and not to extract profits from them," Noggle said.

CUNA in the comment letter also answered basic CFPB questions about student lending, including:

  • How cards or other products are offered to students;
  • What are the features of the different types of financial products and services that banks and credit unions offer to students;
  • What kind of campus affinity products are being offered to students;
  • How campus-affiliated products are marketed to students; and
  • What information about students is provided by institutions of higher education to financial institutions.
The CFPB is working to address a number of student loan issues, and is currently accepting comment from students, parents, lenders and educators on financial services specifically marketed to higher education students. The agency last week also released a proposed rule that would place any nonbank student loan servicer that handles more than 1 million borrower accounts under CFPB supervisory authority.

For CUNA comment letters, use the resource link.

NEW: NCUA Releases FCU Fair Lending Letter

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ALEXANDRIA, Va. (UPDATED: 3/19/13, 1:30 P.M. ET)--The National Credit Union Administration's criteria for conducting a fair lending exam or off-site supervision contact are addressed in a new letter to credit unions (13-FCU-02) released today.

The letter also covers recent additions to the agency's fair lending examination program, including new fair lending educational and compliance tools for federal credit unions. The letter also states that selected credit unions will receive advance written notice prior to further contact from NCUA on fair lending.

A guide attached to the letter provides:

  • An overview of fair lending law and regulations; 
  • Credit union operational requirements; 
  • Issues to consider when developing fair lending compliance policies; and
  • Checklists for testing compliance with laws and regulations, or developing a fair lending policy for compliance.
Credit Union National Association President/CEO Bill Cheney said that CUNA recognizes credit unions must obey the law. "But we have urged NCUA to refrain from directives and sanctions unless, based on measurable factors, the agency can demonstrate material compliance issues exist. We will continue to press this view."

Cheney said CUNA will follow up with the agency on this issue to provide more information to the credit union system on fair lending issues.

The NCUA also announced an April 4 webinar on fair lending.

For the letter, and more on the webinar, use the resource links.

NEW: Senate Banking Committee Approves Cordray CFPB Nomination

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WASHINGTON (UPDATED: 3/19/13, 10:30 A.M. ET)--The Senate Banking Committee has approved Richard Cordray's nomination to head the Consumer Financial Protection Bureau by a 12 to 10 vote.

Cordray's nomination will now move on to the full U.S. Senate.

President Barack Obama appointed Cordray to the CFPB director position during a brief congressional recess in 2012, and Cordray's term as director would end this year if he is not confirmed.

Obama has nominated Cordray to maintain the CFPB director position, but Senate Republicans have consistently said they would block any CFPB nominee if certain structural changes were not made to the agency.

House and Senate Republicans have supported replacing the CFPB director's position with a five-member panel of leadership. Legislation that would create such a panel (S. 205) has been introduced in the Senate. CUNA backs such a multi-member panel of directors if it includes seats statutorily designated for credit union system representatives, including a state or federal credit union regulator, and possibly a state consumer agency representative.