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FTC issues how-to guidelines on protecting consumers data

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WASHINGTON (3/27/12)--A Federal Trade Commission (FTC) final report on data security released Monday said companies using and storing consumer information to innovate and deliver better products and services to consumers should not do so at the expense of consumer privacy.

"Protecting Consumer Privacy in an Era of Rapid Change" lays out a framework for businesses to follow in protecting consumers' personal data.

The report's executive summary notes that with the use in "today's world of smart phones, smart grids, and smart cars," there is more information sharing than ever before. The 72-page document then goes on to describe a framework for businesses to follow in protecting consumers' personal data.

The final report expands on a preliminary staff report the FTC issued in December 2010.

It calls on companies handling consumer data to implement recommendations for protecting privacy, including:

Privacy by Design: Companies should build in consumers' privacy protections at every stage in developing their products. These include reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy;

Simplified Choice for Businesses and Consumers: Companies should give consumers the option to decide what information is shared about them, and with whom. This should include a Do-Not-Track mechanism that would provide a simple, easy way for consumers to control the tracking of their online activities; and

Greater Transparency: Companies should disclose details about their collection and use of consumers' information, and provide consumers access to the data collected about them.

The FTC report also notes that, over the course of the next year, the commission staff will promote the framework's implementation by focusing its policymaking efforts on five main action items: Do not track; mobile; data brokers; large platform providers; and, promoting enforceable self-regulatory codes.

The commissioners voted 3-1 to approve the report, with Commissioner J. Thomas Rosch dissenting. 

Use the resource link to access the report and to read the dissenting opinion.

HouseSenate hearings lead before April recess

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WASHINGTON (3/27/12)--House and Senate hearings will likely be the highest profile items for credit unions as the U.S. Congress spends it last week in Washington before the two-week April district work period.

Tuesday House Financial Services Committee markups of the FHA Emergency Fiscal Solvency Act of 2012, the RESPA Home Warranty Clarification Act of 2011 (H.R. 2446), the Jurisdiction Certainty Act (H.R. 3283), and the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2012 (H.R. 4325) will lead the week.

The House Financial Services capital markets subcommittee will also be active this week, with a hearing on accounting and auditing oversight scheduled for Wednesday. The House Appropriations financial institutions subcommittee has also scheduled a Wednesday hearing on the U.S. Treasury Department's budget, with Treasury Secretary Tom Geithner scheduled to testify.

Discussion of mobile payments, which took place last week, will continue this week, with a Thursday Senate Banking Committee hearing entitled "Developing the Framework for Safe and Efficient Mobile Payments" on the schedule. Federal Reserve Consumer and Community Affairs Director Sandra Braunstein and Assistant Housing and Urban Development Secretary/Federal Housing Commissioner Brian Montgomery are scheduled to testify during the hearing. A  hearing on the Small Business Administration's budget has also been set for Thursday.

The House also this week is scheduled to consider the Republican budget resolution for fiscal 2013 and other budget proposals, as well as the Senate-passed Jumpstart Our Business Startups (JOBS) Act (H.R. 3606) and the Federal Communications Commission Process Reform Act of 2012 (H.R. 3309).

The Repeal Big Oil Subsidies Act (S. 2204) and the Postal Reform Bill (S. 1789) may be considered by the Senate this week.

A full Senate vote on credit union member business lending legislation will likely have to wait until after the upcoming recess. (See March 26 story: Senate MBL vote likely soon)

CUNA supports HUD seller concession changes

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WASHINGTON (3/27/12)--The Credit Union National Association (CUNA) in a recent comment letter said it supports the Department of Housing and Urban Development's (HUD) revisions to seller concession language.

The HUD proposal would limit the amount of closing costs a seller may pay on behalf of a homebuyer purchasing a home with financing insured by the Federal Housing Administration (FHA). HUD has proposed implementing a cap of $6,000 or 3%, whichever is greater, on the concessions a seller may pay on behalf of a homebuyer in purchasing a home insured by FHA, and CUNA said it supports this cap.

HUD also proposed narrowing of the definition of acceptable concessions to:
  • The borrower's actual costs to close on the loan;
  • The up-front mortgage insurance premium due on the loan; and
  • An interest rate buydown.
CUNA in the comment letter noted that higher seller-paid closing costs, or seller-paid concessions like advance payment of association fees or mortgage interest, generally results in a higher sales price, in which case the borrower will ultimately end up absorbing the cost of the seller-paid concessions.

Narrowing the definition of acceptable concessions to up-front costs could help prevent future delinquencies by preventing borrowers from experiencing payment shock once longer-term concession payments, such as advance payment of homeowner association fees or mortgage interest, become the borrower's responsibility, CUNA added.

For the full comment letter, use the resource link.

Info privacy bill voted by House

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WASHINGTON (3/27/12)--H.R. 4014, a House bill that would ensure that credit unions and other entities or individuals that provide information to the Consumer Financial Protection Bureau (CFPB) would not waive their right to privacy protections, passed the U.S. House by a voice vote yesterday, and similar legislation could soon be considered in the Senate.

The bill would make technical amendments to the Federal Deposit Insurance Act. Rep. Bill Huzienga (R-Mich.) spoke in support of his bill before the voice vote, saying it adds needed oversight to the CFPB and would create more peace of mind for financial institutions while also protecting consumers.

Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said CUNA has been supportive of a legislative fix to clarify that information submitted by credit unions to the CFPB retains any privileged status that it may have. "Because the language of H.R. 4014 amends the Federal Deposit Insurance Act, we have worked closely with the sponsors of the legislation and the committee leadership in both the House and the Senate to ensure that credit union information is protected," Donovan added.

HR 4014 would protect information submitted to the Bureau by "any person". In the Committee Report accompanying H.R. 4014, the Financial Services Committee indicated that they intend for the term "any person" to "include any individual, partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, firm, society, joint stock company, or other entity."

Similar legislation, S. 2099, is backed by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking committee minority member Richard Shelby (R-Ala.).

The types of privacy improvements contained in the bills have also been endorsed by CFPB Director Richard Cordray.

NCUA closes young tiny Shepherds FCU

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ALEXANDRIA, Va. (3/26/12)--Charlotte, N.C.-based Sheperd's FCU has been liquidated, the National Credit Union Administration (NCUA) announced Monday.

The agency said it decided to liquidate the credit union after finding it was insolvent and had no prospect for restoring viable operations.

The NCUA will return funds to current members via check within one week, it said.

Sheperd's FCU served 1,397 members and held $379,000 in assets. The credit union was chartered in 2010 to serve members and employees of Unity, the Way of Holiness Christian Church, based in Charlotte and Clarkton, N.C.

It is the fourth credit union to be liquidated in 2012.

The NCUA was named liquidating agent of Saguache County CU of Moffat, Colo., late last week, and was apppointed by California regulators as conservator for Chatsworth, Calif.-based Telesis Community CU. (See March 26 story: One liquidation, one conservatorship announced by regulators.)

Inside Washington (03/26/2012)

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  • WASHINGTON (3/27/12)--In a recent interview with American Banker (March 26), Consumer Financial Protection Bureau Director Richard Cordray discussed topics of interest to credit unions and all financial institutions. Cordray said he did not anticipate the bureau writing a law or issuing guidance specific to unfair, deceptive or abusive acts or practices. Regarding the creation of a level playing field between small and large institutions, Cordray said the bureau will take a "nuanced" approach. For example, on the CFPB's work to govern remittances, Cordray said the agency is trying to write the rule in a way that considers how many smaller institutions may only do remittance transactions on an irregular basis. The bureau anticipates releasing a qualified-mortgage rule in the first half of the year, Cordray added …
  • WASHINGTON (3/27/12)--Jim Yong Kim, the president of Dartmouth College and a global health expert, has been nominated by President Barack Obama to lead the World Bank. The bank's current president, Robert B. Zoellick, will step down June 30, at the conclusion of his five-year term (The New York Times March 26). Traditionally, the U.S. president selects the head of the World Bank, and Europe chooses the leader of its sister institution, the International Monetary Fund. Kim is an anthropologist and a physician. He co-founded Partners in Health, a nonprofit organization that provides health care for the poor. He also is a former director of the department of HIV/AIDS at the World Health Organization …

NCUA opens second listening session enrollment

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ALEXANDRIA, Va. (3/27/12)--The National Credit Union Administration (NCUA) has opened registration for its May 9 "listening session," which will be held near the agency's offices in Alexandria, Va.

The session is scheduled to be held between 1 and 4 p.m. ET. Registration will be limited to the first 150 reservations.

"We want to hear directly from credit union officials and volunteers about how we can improve our examination process and reduce or streamline our regulations," NCUA Chairman Debbie Matz said. "We're also open to hearing about any other actions we could take to achieve our shared goal of a safe and sound credit union industry," she added.

The NCUA listening sessions will begin on May 2 in Boston, Mass., and are also scheduled for:
  • June 5 in St. Louis, Mo.;
  • June 12 in Orlando, Fla.;
  • July 10 in San Diego, Calif.; and
  • July 31 in Denver, Colo.
For more on the sessions, use the resource link.