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Comment Call asks for derivatives investment details

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WASHINGTON (3/5/12)--The National Credit Union Administration (NCUA) is considering allowing more credit unions to hedge interest rate risks (IRR) by using limited types of derivatives, and the Credit Union National Association (CUNA) is asking credit unions to comment on the issue in a new comment call.

The NCUA currently allows a limited number of federal credit unions to engage in derivatives through an investment pilot program, and the agency could permit more credit unions to independently use derivatives to hedge IRR. The agency in an advanced notice of proposed rulemaking has suggested that credit unions that demonstrate a relevant, material IRR exposure, have demonstrated the ability to manage derivatives, and have the net worth and financial health needed to manage derivatives could be allowed to invest in interest rate swaps and interest rate caps.

CUNA has asked if additional limits should be established to ensure that federal credit unions do not engage in derivatives that are greater than their IRR exposure

The comment call also asks for comment on how the NCUA could improve the process of hedging IRRs, and recommendations on how best to account for and report derivatives.

Comments on the ANPR are due to the NCUA by April 3. CUNA will accept comments until March 16.

For the full comment call, use the resource link.

NCUA releases CU Locator smartphone app

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ALEXANDRIA, Va. (3/5/12)--The National Credit Union Administration (NCUA) has released a new CU Locator app to help members on the go find their nearest credit union.

Click to view larger image Click for larger view

The app is available for Apple iPhones and Android phones, and can be downloaded in both the iTunes and Android online stores.

The app shows the nearest credit union locations and ATMs on a map or in a list, and app users can also map a route to their choice of credit unions using google maps. The app also provides basic contact information and branch hours, and access to the NCUA's homepage and the agency's social media sites. Users can also subscribe to the agency's email alert system, NCUA Express.

"More and more consumers, and especially younger people, are increasingly getting their information from social media outlets and demanding mobile banking services. The CU Locator app is just the latest example of how NCUA is connecting credit unions with younger audiences," NCUA Chairman Debbie Matz said. "I encourage all credit unions to link to NCUA's CU Locator to help consumers get access to credit union information when on the run," she added.

Countdown continues to iGo Directi deadline

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WASHINGTON (3/5/12)--U.S. Treasurer Rosie Rios began the official countdown to March 1, 2013, the date by which all federal benefit recipients must receive their Social Security and other federal benefit payments electronically through direct deposit, by starting a "countdown clock" last Thursday.

The U.S. Treasury Department in a release said about 90% of Social Security and Supplemental Security Income (SSI) payments are being made electronically at the moment, and Rios said the Treasury is "urging the remaining 10% of federal benefit recipients who still receive a paper check to make the switch to electronic payments as soon as possible."

The Treasury officially ended the use of paper checks for the payment of newly filed Social Security and other federal benefit payments on May 1, 2011.

Rios said the switch to electronic payments "is a win-win" for benefit recipients and taxpayers, and would save $1 billion over ten years. "The sooner everyone makes the switch, the sooner we'll realize those benefits," she added.

The Treasury is also promoting the benefits of direct deposit through the Go Direct program. The Treasury included an insert on the Go Direct program in its March social security checks, and Go Direct has also released sample news copy, fliers and posters for financial institutions and community organizations to inform citizens of the benefits of switching to direct deposit.

The Credit Union National Association is a Go Direct national partner and supports the check-safety and cost-savings goals for the program.

Credit Union Magazine has also advised readers on how best to prepare their members for the coming change.

For more information on the Go Direct program and the Credit Union Magazine article, use the resource links.

GAC will showcase CU strength Cheney interview

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WASHINGTON (3/5/12)--With more than 4,000 attendees expected at the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC), credit unions will have a valuable chance to drown out the banks' competing voices and show the strength of their movement to Washington, CUNA President/CEO Bill Cheney noted in an interview with CO-OP Financial Service's THINK magazine.

Cheney noted that bankers are also holding a conference at the same time as the GAC, and are expecting as many as 1,000 attendees. "Wouldn't it be great if credit unions outnumbered the banks by a margin of four to one — or more?"

The 2012 GAC will take place March 18-22 at the Washington Convention Center in Washington, D.C.

"As an industry, we face more and more regulation, with higher and higher costs for compliance. It's as important as ever to be heard," he said. CUNA is working to address these issues by developing coordinated advocacy strategies with state credit union leagues. "What we want is one approach to federal governmental affairs and a coordinated strategy for approaching advocacy at the state level… by giving credit unions a stronger, more unified voice with the government, we think we can be more effective as an industry," he said.

The CUNA CEO said that increasing the 12.25% of assets credit union member business lending cap, protecting the credit union difference, and pushing back against over-regulation will be key priorities in 2012.

Cheney also stressed the importance of ensuring legislators understand key differences between credit unions and banks.  "Our not for profit status is at risk.  Especially in the budget-cutting environment that we are facing, credit unions need to speak out about the importance of maintaining this difference," he said.  "Credit unions were created to give consumers a choice.  It's very clear—now more than ever—why credit unions are necessary."

That difference, as not-for-profit cooperatives, also helped credit unions weather the financial crisis with far fewer problems than banks, Cheney added.  "Credit unions have been through a lot, but if you look back at how everyone fared after the crisis hit, it's startling how much better credit unions did than banks," he said. "Credit unions are, by several orders of magnitude, better than banks."

For the full interview and more on the 2012 GAC, use the resource links.

Inside Washington (03/02/2012)

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  • WASHINGTON (3/5/12)--Sen. Richard Durbin (D-Ill.) Thursday criticized Bank of America after a Wall Street Journal article reported that BofA is considering new checking account fees. BofA would charge checking account holders who do not bank online, maintain a certain minimum balance or buy other products, according to the article (American Banker March 2). In 2011, BofA considered charging a $5 monthly fee on checking account holders who did not maintain a specified balance. That plan was shelved following consumer outcry, including the grassroots creation of Bank Transfer Day Nov. 5. "I call on Bank of America--and all of the nation's banks--to immediately adopt a clear, simple and upfront checking account fee disclosure form so consumers know exactly what fees are associated with each account," Durbin said in a press release. "With effective transparency and competition, we can ensure that consumers on Main Street do not get nickled and dimed while trying to access their own money" …
  • WASHINGTON (3/5/12)--Federal Reserve Board Chairman Ben Bernanke said Thursday that U.S. regulators are carefully considering criticism from foreign banks and governments on how their sovereign debt will be handled in a proposed ban on proprietary trading by banks (American Banker March 2). The plan, also known as the Volcker Rule, also would limit bank investments in private-equity and hedge funds. The plan exempts U.S. Treasury securities, but not the sovereign debt of governments in other countries, such as those belonging to European Union, Canada and Japan. The governments of those countries have questioned the fairness of the proposal. In testimony before the Senate Banking Committee Thursday, Bernanke said U.S. regulators are taking comments from foreign governments "very seriously" and are in discussions with them …
  • WESTBROOK, Maine (3/5/12)--Maine Credit Union League President John Murphy offered his appreciation for the service to credit unions provided by Sen. Olympia Snowe (R-Maine), who announced last week she has decided to not seek re-election to the Senate (Weekly Update March 2). "During her more than three decades of serving the people of Maine, Sen. Snowe has proven to be a great friend of credit unions," Murphy said. "Sen. Snowe was a true public servant and we will miss her leadership and support to the people of Maine on many of our important issues" …

FinCEN confidentiality advisory reminds of penalties

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VIENNA, Va. (3/5/12)--The Financial Crimes Enforcement Network (FinCEN) expressed concern that an increasing number of private parties, who are not authorized to know of the existence of filed Suspicious Activity Report (SARs), are seeking SARs from financial institutions for use in civil litigation and other matters.

FinCEN issued an advisory Friday to financial institutions, and "in particular, the lawyers that advise them," that Bank Secrecy Act rules require confidentiality of SARs.

"Financial institutions, and their current and former directors, officers, employees, agents, and contractors, are prohibited from disclosing SARs, or any information that would reveal the existence of a SAR," FinCEN reminded.

"This is especially true when external counsel is unfamiliar with the regulations covering SAR confidentiality. Financial institutions, and their current and former directors, officers, employees, agents, and contractors could be subject to civil and criminal penalties for the unauthorized disclosure of a SAR," FinCEN warned.

The unauthorized disclosure of a SAR is a violation of federal law. The agency noted that both civil and criminal penalties may be imposed for SAR disclosure violations:  Violations may be enforced through civil penalties of up to $100,000 for each violation and criminal penalties of up to $250,000 and/or imprisonment not to exceed five years.

For more on the FinCEN advisory, including associated penalties, use the resource link below.

CUNA meets with top White House advisor

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WASHINGTON (3/5/12)--As part of an ongoing legislative and regulatory advocacy efforts and wasting no time following the release of the president's corporate tax reform proposal, Credit Union National Association (CUNA) President/CEO  Bill Cheney and senior staff met with White House Deputy Chief of Staff for Policy Nancy-Ann DeParle.

The discussion focused on reaffirming the importance of credit unions' tax exempt status, the need for regulatory relief for credit unions, and enhancing the administration's support for credit union initiatives, such as member business lending.

Click to view larger image CUNA President/CEO Bill Cheney (center, under the White House seal) with (from left) General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Executive Vice President John Magill, and Legislative Affairs Senior Vice President Ryan Donovan prepare to meet with White House Deputy Chief of Staff Nancy-Ann DeParle. (CUNA photo)
"I was pleased I was able to meet with Deputy Chief of Staff DeParle and that she is so conversant on credit union issues.  I felt the meeting was productive, and she was receptive to hearing about our concerns," Cheney said.  He was accompanied by CUNA Senior Staff John Magill, Eric Richard, Mary Dunn and Ryan Donovan.

Cheney added, "At a time when policy makers are scrutinizing every aspect of the tax code for revenue, we are reassured the credit union tax exemption is not a target in the president's package."   

During the meeting, CUNA emphasized the importance of the nation's 7,300 credit unions to their more-than 94 million members, consumers and small businesses alike and how the tax exemption for credit unions benefits credit union members, their communities and the nation's economy.

CUNA also highlighted credit unions' anxieties about regulatory burdens and, as requested, will be following up with White House staff on these concerns.

In addition, CUNA urged the White House to be more vocal of its support for credit unions' role in meeting their members' financial needs and the legislation endorsed by the U.S. Treasury Department to raise the member business lending cap to 27.5% of assets, up from the current 12/25% restriction.  CUNA estimates the increase would create the availability of  $13 billion of new credit for small businesses and create as many as 140,000 new jobs--all at no cost to the U.S. taxpayer and all within the first year of enactment.