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Washington

NCUA Update Of Legacy Asset Information Suggests Expected Losses Will Be Lower: CUNA

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ALEXANDRIA, Va. (3/29/13)--The National Credit Union Administration Thursday announced it has updated its websites showing both realized losses for the Temporary Corporate CU Stabilization Fund through December 2012 and expected remaining assessments.

In its announcement release, the NCUA included a "Questions and Answers" document containing the latest information about costs incurred to date and projected future assessment ranges over the life of the stabilization fund. Use the resource link below to access this important information.

The website update followed a Wednesday release of the agency's audited financial statements for the stabilization fund.

Total projected assessments declined $900 million at the upper end between July 2012 and December 2012, the NCUA said, adding that total future remaining assessments are now projected to range between $1.6 billion and $3.9 billion. In comparison, six months ago the total range was $1.9 billion to $4.8 billion. 

On the downside, although not unexpected, the cumulative realized losses and implied writedowns now amount to $6.1 billion, exceeding the combined capital of the five failed corporates at the time of their conservatorships.

On the plus side, the midpoint of the range of remaining assessments dropped by $600 million, from $3.35 billion to $2.75 billion.  

Credit Union National Association Chief Economist Bill Hampel noted that with the revised estimates, the $2.75 billion midpoint could be fully paid with just over three assessments at last year's rate of 9.5 basis points (bp) of insured shares.  If spread over nine years, the annual assessment would only be about 2.5 basis points.

CFPB Launches Database Making 90K Consumer Complaints Available

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WASHINGTON (3/29/13)--Details on more than 90,000 consumer complaints regarding financial products and services are now publicly available, courtesy of a new database launched Thursday by the Consumer Financial Protection Bureau.

"The database is good for consumers and it is also good for honest businesses. We believe the marketplace of ideas can do great things with this data," CFPB Director Richard Cordray said at the unveiling. The bureau said its new consumer database is the nation's largest for such complaints.

The CFPB encouraged citizens to analyze, augment, and build on the database information, and find ways to make the information more useful to consumers. One suggestion offered in a CFPB release was mixing the data with other public data sets to reveal potential trends.

"By sharing these complaints with the public, we are creating greater transparency in consumer financial products and services," Cordray added.

The database features consumer complaints on a wide range of financial products, including mortgages, student loans, bank accounts and services, other consumer loans, credit cards, and sub-categories of many products. Company responses to the consumer complaints are also included, and the database will be updated daily, the CFPB noted.

In total, the bureau  has received 130,000 consumer complaints as of March 1--90,000 of which have already been entered into the database.  CFPB's review of all 130,000 complaints show that:

  • The majority of the complaints involve mortgage loans: Consumers reported 63,700 mortgage issues to the CFPB;
  • Credit card issues accounted for 30,600 of the complaints filed;
  • 19,800 were account and services complaints;
  • 4,600 were private student loan complaints;
  • 4,100 were consumer loan complaints; and
  • 6,700 were credit reporting complaints.
More than 83% of the complaints have been sent on to companies for review and response, and companies have already responded to 95% of these forwarded complaints, the CFPB said.

While credit unions will not likely be the subject of a sizable number of consumer complaints, the Credit Union National Association said the database could have unintended consequences. CUNA has warned that sensitive or confidential business or consumer information could be inadvertently disclosed when consumer complaints are filed in the database. "The bureau should take steps to minimize privacy risks and other unintended consequences," CUNA has said in a series of comment letters.

For more, use the resource link.

NCUA's OSCUI Reports On 2012 Achievements

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ALEXANDRIA, Va. (3/29/13)--In a first, the National Credit Union Administration's Office of Small Credit Union Initiatives (OSCUI) has released its Annual Report to the masses.

Previously, the report was circulated inside the agency. Releasing the report to the general public is part of OSCUI's new communication initiatives, NCUA OSCUI Director Bill Myers noted.

The report notes that OSCUI in 2012:

  • Substantially changed its consulting program, moving to semi-annual enrollments in June and December;
  • Increasingly used electronic media to deliver live and on-demand credit union training;
  • Accepted grant and loan program applications online; and
  • Expanded outreach and partnership efforts.
On-site training was also offered by OSCUI in 2012: In total, 2,129 individuals from 967 credit unions attended one of their 32 workshops held throughout the country.

For the full report, use the resource link.

Security One FCU's Stephens Is CUNA Reg Burden Witness

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WASHINGTON (3/29/13)--Pamela Stephens, president/CEO of Security One FCU, Arlington, Texas, and former Texas Credit Union League board chairman, will testify on behalf of credit unions and the Credit Union National Association at an April 10 hearing on credit union regulatory relief.

In her testimony, Stephens will provide detailed suggestions how federal lawmakers can ease the regulatory burden on credit unions. She will be testifying before the House Financial Services subcommittee on financial institutions and consumer credit.

The hearing is part of a 2013 series to study, in part, the impact of the Dodd-Frank Act, and will take place one week before an April 16 hearing on bank regulatory issues.

"After dozens of hearings in the last Congress on regulatory burden, the House Financial Services Committee is sending a message through this regulatory relief hearing that they've heard the concerns and they want to hear about solutions. We're ready to put some solutions on the table, and we're hopeful that the committee and Congress will embrace them and enact them," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

Similar regulatory burden discussions took place in 2012, and CUNA testified on how the growth of financial services regulations has negatively impacted how credit unions lend to and serve their members.

The upcoming regulatory burden hearings are expected to be a precursor to a legislative package to address what CUNA has called a "crisis of creeping complexity" in financial institution regulation.

FASB Extends Credit Loss Comment Deadline To May 31

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WASHINGTON (3/29/13)--The Financial Accounting Standards Board (FASB) has pushed back the deadline for comments on its credit loss reporting proposal until May 31. The previous deadline was April 30.

FASB's credit loss reporting proposal would utilize a single "expected loss" measurement for the recognition of credit losses; this would replace the multiple existing impairment models in U.S. generally accepted accounting principles that primarily use an "incurred loss" approach.

"The delay is a good development, but we are very concerned about this proposal," Credit Union National Association Deputy General Counsel Mary Dunn said Thursday. If adopted, the proposal would likely result in credit unions and other creditors having to initially boost their allowance for loan and lease loss accounts by significant amounts and to estimate cash flows that they do not anticipate will be collected over the life of the loan based on all available information, including forecasts of future events, CUNA has noted.

CUNA continues to develop a comment letter on this accounting issue, and will release that letter in the coming weeks.

Compliance Oversight Lax At FHFA, Fannie, Freddie, OIG Says

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WASHINGTON (3/28/13)--The Federal Housing Finance Administration (FHFA) does not thoroughly oversee how Fannie Mae and Freddie Mac monitor their sellers' and servicers' compliance with consumer laws and regulations, the FHFA Office of the Inspector General (OIG) said in a report.

Specifically, the FHFA does not examine how those government sponsored entities (GSEs) monitor seller and servicer compliance with consumer protection laws, and Fannie and Freddie do not ensure that these counterparties' business practices follow all federal and state laws and regulations designed to protect consumers from unlawful activities such as discrimination, the OIG report noted. The FHFA instead relies on federal regulatory agencies that are responsible for enforcing laws that protect mortgage borrowers. Fannie and Freddie expect institutions they are involved with to comply with all laws, but rely mainly on self-certification by these institutions to determine their compliance, the report said.

Failing to adequately oversee consumer law compliance can subject Fannie and Freddie to increased economic risk, the OIG report warned.

The OIG recommended that the FHFA develop a risk-based plan to monitor the GSEs oversight of their counterparties' compliance with contractual representations and warranties, including those related to federal consumer protection laws. The FHFA said it is committed to the fair treatment of consumers, and agreed to develop a plan to address the issue cited in the report.

Credit Union National Association Deputy General Counsel Mary Dunn said CUNA will be weighing in with the FHFA on this issue. Noting that credit unions thoroughly comply with legal requirements, including consumer protection laws, Dunn said CUNA wants to "ensure that additional regulatory burdens are not imposed on credit unions in order to demonstrate compliance, since they are already subject to more than sufficient requirements in that regard.

"We will urge FHFA to coordinate with other regulators to avoid making the mortgage lending process even more cumbersome for consumers and creditors alike," she said.

For the FHFA OIG release, use the resource link.

CUNA To Testify At April 10 Hearing Focusing On CU Reg Burden

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WASHINGTON (3/28/13)--Credit Union National Association Executive Vice President of Government Affairs John Magill Wednesday underscored the importance that for the first time at a congressional hearing, credit unions will have the stage all to themselves: The House Financial Services financial institutions and consumer credit subcommittee has scheduled a hearing on credit union regulatory burden on April 10.

CUNA is scheduled to testify at the hearing. "We're breaking new ground here. Years ago, we would have been a side dish," Magill said. Even at a member business lending hearing in the last Congress, credit unions shared the day with banks. "Not so this time," he noted.

The credit union hearing is part of a 2013 series to study, in part, the impact of the Dodd-Frank Act, and will take place one week before an April 16 hearing on bank regulatory issues.

CUNA is working to select a witness for the credit union regulatory burden hearing. Additionally, CUNA has communicated routinely with financial services committee staff, providing specific and detailed suggestions for ways to ease the regulatory burden on credit unions. "We expect to elaborate on these ideas when we testify," Magill said.

The hearings are expected to be a precursor to a legislative package on regulatory relief with elements addressing the concerns of credit unions and community banks.

'Unite for Good' Prompting Discussion And Ideas

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WASHINGTON (3/28/13)--More in the credit union community are commenting and offering suggestions on "Unite for Good," the new initiative to rally credit unions around a shared vision for growth and success. It's a development welcomed by Credit Union National Association President/CEO Bill Cheney, who debuted the initiative at CUNA's Governmental Affairs Conference last month.

This week, credit union consultant Scott Butterfield, principal with Your Credit Union Partner, discussed the Unite for Good initiative in a column appearing on the CU Insight news and opinion aggregation site. He agreed Unite for Good's service component must go beyond consumer satisfaction surveys and pricing advantages for credit unions to truly gain measurable market share.

"Seek out opportunities with the greatest potential impact, activities that improve the quality of life for consumers and communities," Butterfield advises credit unions, citing activities such as micro-enterprise lending, financial counseling for low- and moderate-income consumers, alternatives to predatory financial products, and programs that help members build financial assets.

"Unite for Good is spot on," Butterfield adds, "and I believe it represents the best opportunity to leverage our collective brand for advocacy, differentiation and growth. If we do this right, we have the opportunity to demonstrate in a very big way that the credit union brand is clearly different and better."

The Unite for Good initiative calls on credit unions to rally in support of a common vision where "Americans choose credit unions as their best financial partner." Achieving the vision requires working toward three key objectives: removing legislative and regulatory barriers that obstruct credit union progress; raising consumer awareness and understanding of credit unions; and fostering movement-wide service excellence.

CUNA's Cheney said ideas such as Butterfield's will add to and further enhance Unite for Good's list of specific actions that credit unions can pursue to advance the vision's three primary goals of removing barriers, raising awareness and fostering service excellence.

"Our list of actions for credit unions presents a range of important steps, but it's by no means all-inclusive," Cheney said. "In fact we hope our list prompts planning and discussions that result in new ideas coming forward for credit unions to consider. It is great to see that this is starting to happen."

For the list of Unite for Good action steps or to read Butterfield's full column, use the resource links.

Another 'Clean' Audit for NCUA Corporate Stabilization Fund

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ALEXANDRIA, Va. (3/28/13)--The National Credit Union Administration's Temporary Corporate Credit Union Stabilization Fund (TCCUSF) has again received a clean audit, the agency announced on Wednesday.

The audit, which was performed by KPMG LLP, covered the TCCUSF's 2012 financial statements. The NCUA in a release said the TCCUSF's financial condition remained stable, maintaining sufficient liquidity to meet its obligations, and its deficit net position continued to decline.

NCUA Chairman Debbie Matz said the clean audit is confirmation that the agency is fulfilling its financial reporting responsibilities. "We are operating the fund prudently and providing high-quality reporting that satisfies our need to maintain transparency as we manage the resolution of the corporate credit union crisis," she added.

"An independent auditor has given NCUA a clean financial statement audit opinion for the Stabilization Fund each year since Congress established it in 2009," Matz noted.

The NCUA said it would update the loss and remaining assessment estimate data on its website within a few days. Credit Union National Association Chief Economist Bill Hampel made an early reading of where these remaining assessments could end up. "Based on information included with the audit report it appears the remaining TCCUSF assessment range has dropped to between $1.6 billion and $3.9 billion, with a midpoint of $2.75 billion," he said.

This is a decline from the previous range of remaining assessments, which stood at $1.9 billion to $4.8 billion, with a midpoint of $3.35 billion, he noted.

"That's welcome news. The expected final losses continue to fall," Hampel said. "With these loss estimates, the midpoint could be fully paid with just over three assessments at last year's rate of 9.5 basis points. Or, if the assessments were spread evenly over the full nine remaining possible years of the fund, it would require annual assessments of about 2.5 basis points to collect the midpoint amount of $2.75 billion," he added.

For the NCUA release, and an NCUA Office of Inspector General review of the independence of the NCUA auditors, use the resource links.

Fed Launches Three-Year Study Of Consumer Finances

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WASHINGTON (3/29/13)--The Federal Reserve Board is about to launch its triennial investigation into consumer finances, an exercise that yields important information that credit unions and other financial services providers can plumb to identify consumers' needs.

The survey has been undertaken every three years since 1983 and results of this current effort will not be available until 2015.  It is being conducted for the Fed by NORC, a social science research organization at the University of Chicago, through December of this year.

The survey results unveiled in 2012, for instance, were a harbinger of student debt issues.

The 2007-2010 "Survey of Consumer Finances" revealed that nearly one in five U.S. households had college debt in 2010, double the debt in 1989 and up 15% from 2007.  Recently, the National Credit Union Administration, in its "NCUA Monthly Report," noted that most credit unions that offer private student loans have done so for "less than five years," thereby tracking the trend of consumers' need. On the other hand, some banks have taken a different track. For instance, it has been reported thatJPMorgan Chase stopped extending student loans to non-customers in July 2012 and that US Bank stopped almost a year ago.

The last Fed consumer report also exposed that in 2010 the typical middle-class family had financial assets of $27,300--including retirement savings but not pensions--which was 28% less than the $37,800 held in 2007.

Two-thirds of middle-class Americans acknowledged having made financial mistakes--often at a steep price.

Because they are not-for-profit financial cooperatives owned by their members, credit unions help consumers in many ways: with better savings rates, lower interest rates on loans, short-term loan alternatives to payday lending, special programs such as savings lotteries, contests, affordable mortgages, and providing business loans to new entrepreneurs, to name a few.  They also stand out in member-centric financial education.

For the new study, the Fed will choose participants at random from 127 areas, including metropolitan areas and rural counties across the U.S.  A representative of NORC will contacts each of the 13,000 potential participants personally to explain the study and request time for an interview.

eBanking Letter To CUs Is Coming: NCUA

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WASHINGTON (3/28/13)--During a National Credit Union Administration webinar Wednesday that, in part, focused on concerns about the operational risks triggered by new technology, the agency's deputy director of the Office of Examination and Insurance said credit unions can expect a Letter to Credit Unions within the next few months that will address "eBanking."

The agency's Tim Segerson also said the NCUA is training its examiners in coming weeks on an "eBanking area work program," and that credit unions should expect examiners to integrate this into their examinations starting in the second half of 2013.

In response to a question at the end of the program,  Segerson said that credit unions that have their exams before examiners receive training on the developing topic will not have a special supervisory contact; the eBanking questionnaire will be used during regular examinations.

Another operational risk Segerson focused on involved fraud.  He said that the vast majority of National Credit Union Share Insurance Fund losses in relationship to the size of a credit union have to do with fraud losses through traditional lines of businesses of the credit union.  He cited the following "fraud hot spots":

  • Poor accounting controls/un-reconciled books;
  • Fictitious and fraudulent loans;
  • Un-cleared overdrafts;
  • Dormant/inactive share accounts;
  • Unrecorded shares (money "deposited," but never recorded); and
  • False expenditures.
On another exam topic, the NCUA OEI deputy director warned credit unions to expect examiners this year to more closely scrutinize the credit union's audit process to make sure that there is a "quality audit."

He noted that when the NCUA moved to a risk-focused exam program about 10 years ago, the agency decided to rely on the outside audits.  Now the agency will be taking a closer look to assure a credit union is relying on, and that management is responding to, points raised in the audit, especially with any findings and comments on the credit union's internal controls.

For more on the NCUA webinar, CUNA-member credit unions can use the resource link below to access a report on CompBlog.

NCUA Alert Warns Of Phishing Scam

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ALEXANDRIA, Va. (3/28/13)--The National Credit Union Administration has warned of a new phishing scam using the agency's name in an attempt to obtain consumer debit card account numbers.

The scammers have set up an automated message, claiming to be from the NCUA, which erroneously informs consumers that their debit card has been deactivated. The consumer is then instructed to press 1 on their phone, and enter their 16 digit account number, to reactivate their card.

Consumers should be aware this is not a call from NCUA, and if they receive it, should notify NCUA's Fraud Hotline, toll-free, at 800-827-9650 or 703-518-6550 in the Washington, D.C., area, the agency said.

The NCUA provides fraud alerts, and avoidance and detection resources, on the ncua.gov fraud information center.

For more, use the resource link.

Big Jump In Phone Banking, Fed Says

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WASHINGTON (3/28/13)--In case anyone wasn't sure whether people are using their phones for everything, the Federal Reserve Board yesterday released a report on the use of mobile financial services that showed 28% of all mobile phone users and 48% of smartphone users had used mobile banking in the past 12 months.

This is up significantly from the Fed's last report in December 2011 that showed 21% of mobile phone users and 42% of smartphone users engaged in mobile banking.

The Federal Reserve Board completed its first Survey of Consumers' Use of Mobile Financial Services in December 2011, and released a summary report in March 2012. The board conducted a second survey in late November 2012 to monitor trends in the use of mobile financial services, and to understand how the rapidly expanding use of this technology affects consumer decision making and the overall economy.

For more on the insights of the Fed survey, tune in to Friday's News Now.

FHFA Plan Will Give Homeowners New Foreclosure Avoidance Option

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WASHINGTON (3/28/13)--Starting July 1, homeowners will have a new foreclosure prevention option through Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA) announced Wednesday.

To take part in the new program, known as the Streamlined Modification Initiative, the FHFA said homeowners must:

  • Be between nine and 24 months behind on their mortgage payments;
  • Have owned their home for at least one year, and
  • Have a mortgage loan-to-value ratio equal to or greater than 80%.
Loans that have been modified at least two times previously will not be eligible for the program, the FHFA added.

Under the program, many homeowners that are at least 90 days delinquent will be sent a streamlined modification solicitation offer by their mortgage servicer. The FHFA said this offer will include a trial period plan which:

  • Specifies the dollar amount of the new mortgage payment based upon a fixed interest rate;
  • Extends the mortgage payment terms to 40 years; and
  • Provides principal forbearance for certain underwater borrowers.
Mortgage holders that make three on-time payments during this trial period will then be able to permanently modify their mortgages. Borrowers will not be required to document their hardship or financial situations to take part in this modification program, the FHFA said.

The program is scheduled to run until August 1, 2015.

FHFA Acting Director Edward DeMarco said this program gives delinquent borrowers another path to avoid foreclosure. "We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings," he added.

Foreclosure starts in the fourth quarter of 2012 fell to the lowest level seen since the third quarter of 2008, the FHFA noted in a separate release. More than 130,300 foreclosure prevention actions were taken during the fourth quarter of 2012, and the FHFA reported the number of delinquent mortgages held by Fannie Mae and Freddie Mac declined 14% in 2012. Mortgage delinquencies dropped in nearly every state, excluding New Jersey and New York, the FHFA added.

For more on the FHFA program and the 2012 fourth quarter mortgage data use the resource links.

Compliance: CUNA Clarifies Credit Rating Question

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WASHINGTON (3/27/13)--Are credit unions still allowed to rely on credit ratings as they determine the acceptability of a given investment? Yes, Credit Union National Association Senior Vice President for Compliance Kathy Thompson said in a new CUNA CompBlog question and answer post.

In the post, Thompson clarified that credit unions are permitted to use credit ratings as one of many ways to determine the "investment grade" of a security.

As of June 11, the National Credit Union Administration will substitute "investment grade" wherever a specific credit rating appears in Section 703 of its regulations.

"This means that the credit union is required to analyze and be comfortable in concluding that the risk of default by the issuer is low and timely repayment of principal and interest is expected. The regulations suggest a list of eight factors a credit union may consider in its analysis. Although NCUA can't rely on a credit rating, there is nothing that prohibits a credit union from using credit ratings in its analysis," Thompson wrote.

The NCUA's Section 703 regulation on investments only applies to federal credit unions, Thompson noted. However, she added, if a federally insured state chartered credit union holds an investment not permissible for a federal credit union, it may be subject to special reserving on that investment.

"In Section 741.3, the NCUA points out that if a federally insured state chartered credit union relies upon a ratings-based investment permissible under state law, that credit union should go through the same 'investment grade' analysis that a federal credit union is now required to do," Thompson explained.

For more CUNA CompBlog compliance gems, use the resource link.

Evaluations, Outreach Are Keys To CFPB Financial Ed Efforts

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WASHINGTON (3/27/13)--Evaluating the effectiveness of current financial education efforts and reaching out to the public to hear about how current financial education approaches can be improved are two key components of the Consumer Financial Protection Bureau's financial literacy work, bureau officials wrote in a Tuesday blog post.

The CFPB noted it has conducted listening sessions and released public information requests to collect comments on financial education needs. As a result of its outreach endeavors, the CFPB said it has "heard loud and clear that a comprehensive approach to financial education is needed and in order to be effective, it has to be salient, well-timed, integrated, and comprehensive."

New financial education strategies that incorporate behavioral psychology research and developing projects that address the specific issues and challenges that consumers confront on a daily basis are also near-term CFPB projects, according to the post.

The benefits of financial coaching are also being examined by the CFPB, and the bureau said it is working with the Corporation for Enterprise Development to uncover which "combinations of knowledge, skills, behaviors, and attitudes help consumers succeed in achieving their own financial goals."

Financial education is a core credit union principle, and financial literacy improvement efforts will especially be on display during April's Financial Literacy Month. The Credit Union National Association is observing Financial Literacy Month by holding National Credit Union Youth Week April 21-27. During the week, credit unions nationwide teach the benefits of saving and goal setting, and invite youth to open savings accounts at their credit union and make deposits throughout the year.

CUNA also conducts the National Youth Saving Challenge throughout April. The challenge rewards 10 savers with $100 cash prizes. Last April, 241 credit unions joined the Saving Challenge and engaged 125,867 youth, who deposited a collective $21.3 million in their credit union savings accounts, including 7,300 new member accounts.

"It makes good business sense for credit unions to help members make the most of their financial resources. We believe that educated consumers choose credit unions as their best financial partner," said Susan Tiffany, CUNA director of consumer periodicals. "We also believe it's the right thing to do." (See March 25 News Now story: Financial Literacy Month an Opportunity For CUs to Shine)

Mandatory CDFI Recertification Deadline Extended

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WASHINGTON (3/27/13)--Community Development Financial Institutions (CDFIs) now have until noon EDT on April 8 to submit their mandatory recertification applications.

This is a one-week extension of the original April 1 deadline and it was granted because of accessibility issues over the past several days that prevented the public from visiting the CDFI Fund's website or the myCDFIFund database.

The recertification requirement involves CDFIs originally or most recently certified before Feb. 1, 2010.

The Treasury's CDFI Fund helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community.

Earlier this year the CDFI Fund said it expects to provide up to $165 million to eligible financial institutions in 2013.

For guidance on the mandatory recertification effort, use the resource link below.

ICANN Launches Domain Name Trademark Clearinghouse

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WASHINGTON (3/27/13)--A new trademark clearinghouse database is now being offered in a bid to help businesses register their trademarks before a raft of new domain names are approved, and that database was launched by the Internet Corporation for Assigned Names and Numbers (ICANN) on Tuesday.

According to ICANN, the clearinghouse will serve as a global repository for trademark data. The data held in the clearinghouse will help support future trademark claims and protect trademark rights.

ICANN last year accepted applications from individuals and groups interested in buying the rights to new "top level domain names." Domain names are the words to the right of the dot in an Internet address (URL). The domain name applications can encompass communities of businesses or services, such as ".creditunion" or ".news," and can also be used to market specific brands or products.

The Credit Union National Association has submitted an application for the ".creditunion" domain name. The ".creditunion" top level domain, if obtained, would be available to credit unions to supplement or replace their existing Web names at a roughly estimated cost of $100-$200 annually per credit union, according to CUNA. CUNA President/ CEO Bill Cheney has said the move to reserve a credit union-specific top-level domain "ensures this important identifier will stay in credit union hands and will allow the credit union movement to collectively take full advantage of the next stage of the Internet's development and growth."

ICANN last week approved 27 new domain name suffixes in non-English languages, including Arabic and Chinese.

Nearly 2000 domain name applications have been submitted, and ICANN is reviewing the domain names, approving them, classifying them as being eligible for extended evaluation, or classifying them as ineligible for further review.

ICANN is releasing these evaluations at an initial rate of 30 per week, and plans to increase that rate to 100 evaluations per week, with the ultimate goal of releasing all evaluations by August.

FHFA Proposes Force-placed Insurance Payment Changes

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WASHINGTON (3/27/13)--The Federal Housing Finance Agency (FHFA) on Tuesday proposed rule changes that would prevent mortgage sellers and servicers from collecting certain fees and payments from insurers that offer force-placed home insurance.

Force-placed insurance is a form of hazard coverage financial institutions 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.

Credit Union National Association Deputy General Counsel Mary Dunn said CUNA will weigh in on the FHFA proposal, "and will seek to minimize any negative impact on credit unions."

Some consumer advocates and insurance regulators have criticized financial institutions 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. Consumer abuse in the force-placed insurance market has also attracted the attention of the Consumer Financial Protection Bureau, CUNA General Counsel Eric Richard noted.

The FHFA noted these and other concerns in its policy notice, saying comments it has received from various government agencies have focused on excessive rates and costs that are sometimes passed onto borrowers, as well as commissions and other compensation paid to servicers by insurance carriers.

Public comment on this issue will be accepted for 60 days after the notice is published in the Federal Register, the FHFA said. Comments on how transparency and consumer and investor protections could be improved will also be accepted.

For the notice, use the resource link.

Earlier this year, the FHFA delayed implementation of a plan to cut some force-placed insurance costs. Under that plan, 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. Instead of moving forward with the plan, the FHFA announced it would develop a working group to study force-placed insurance issues and evaluate how force-placed insurance impacts Fannie Mae.

Rep. Maxine Waters (D-Calif.), the ranking Democratic member of the House Financial Services Committee, criticized the FHFA's decision to delay the force-placed insurance changes, saying the plan could have created savings for taxpayers and borrowers alike.

CFPB To Expand Debt Collection Supervision: Report To Congress

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WASHINGTON (3/27/13)--Debt collection will remain a major Consumer Financial Protection Bureau (CFPB) focus in 2013 and the agency will keep expanding the reach of its supervisory authority in this area, according to the CFPB's second annual report to the U.S. Congress on enforcement of the Fair Debt Collection Practices Act (FDCPA).

The report, released Tuesday, noted that although the CFPB expects to expand its complaint system to include debt collection in the first half of this year, since it has not yet done so the data discussed in the report is based on complaints submitted to the Federal Trade Commission through its Consumer Sentinel database in 2012.

The report states that the FTC continues to receive more complaints about the debt collection industry than any other specific industry.

The report notes that first-party creditors are not generally subject to the FDCPA. However, the FDCPA applies to credit unions and others that regularly collect debts for other unrelated institutions, including under reciprocal service agreements. A credit union that uses a name other than its own in its collection efforts would also be covered.

The CFPB noted these other highlights of the report:
  • For the first time in five years, the most common category of FDCPA complaint received by the FTC was "demanding an amount other than is permitted by law or contract." This category includes complaints claiming a debt collector was attempting to collect a debt the consumer did not owe, including a debt discharged in bankruptcy, or a larger debt than what the consumer owed;
  • Among the practices targeted by the FTC was "phantom debt collection," meaning attempts by debt collectors "to collect on debts--often related to payday loans--that either did not exist or were not owed" to them; and
  • Another target was misleading practices in connection with attempts to collect time-barred debts.
Credit unions are not addressed in the report but CUNA will be monitoring developments in this area closely and meeting with the CFPB.

NEW: CUNA To Testify At April 10 CU Burden House Hearing

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WASHINGTON (UPDATED: 3/27/13, 11:50 a.m. ET)--The Credit Union National Association is scheduled to testify at an April 10 House Financial Services financial institutions and consumer credit subcommittee hearing on the regulatory burdens facing credit unions.

The credit union hearing, which is part of a 2013 series to study, in part, the impact of the Dodd-Frank Act, will take place one week before an April 16 hearing on bank regulatory issues.

John Magill, CUNA Executive Vice President of Government Affairs, on Wednesday said a hearing focused on credit union issues is highly significant. "We're breaking new ground here. Years ago, we would have been a side dish," he said. Even at a member business lending hearing in the last Congress, credit unions shared the day with banks. "Not so this time," he noted.

CUNA is working to select a witness for the credit union regulatory burden hearing. Additionally, CUNA has communicated routinely with financial services committee staff, providing specific and detailed suggestions for ways to ease the regulatory burden on credit unions. "We expect to elaborate on these ideas when we testify," Magill said.

The hearings are expected to be a precursor to a legislative package on regulatory relief with elements addressing the concerns of credit unions and community banks.

CUNA: FFIEC Social Media Guidance Must Not Stifle Innovation

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WASHINGTON (3/26/13)--Developing social media guidance should not add additional burdens that could stifle credit union innovation and cause undue hardships. Instead, it should offer a framework to make the implementation of social media programs easier for financial institutions, the Credit Union National Association said in a comment letter to the Federal Financial Institutions Examination Council (FFIEC).

Social media has the potential to improve market efficiency by more broadly distributing information to users of financial services, and, "as social media matures, more financial institutions will use them to interact with members and customers," CUNA Deputy General Counsel Mary Dunn wrote. CUNA encourages any media platform that makes communication with members more effective and efficient, she added.

The CUNA comment letter addresses FFIEC proposed guidance, released in January, on how consumer protection and compliance laws, regulations, and policies could be applied to the use of online social media platforms by credit unions and other financial institutions. Poor due diligence, oversight, or control of social media platforms can create increased risks for financial institutions and their members or customers, and the guidance outlines expectations for managing those risks.

Credit unions and other financial institutions are moving more of their main marketing efforts toward social media and other online channels, according to a 2013 State of Bank & Credit Union Marketing study by The Financial Brand, a website for financial services marketers. The study found that seven in 10 bank and credit union marketers said online advertising and social media would be the most important outreach platforms in 2013.

Credit union respondents to a separate Financial Brand survey said their twitter accounts averaged about 400 followers, and added, on average, about 100 new followers in 2012.

CUNA is active on the social media front, informing consumers on how they can find a credit union to call their own through aSmarterChoice.org. Social media outreach is also a key component of CUNA's Tax Toolkit, which helps credit unions inform their members on the importance of the credit union tax status, and what this tax status means for them financially.

Insight from CUNA experts is also delivered through CUNA's official blog site, CUNAVerse. NewsNow Live Wire (@NewsNowLiveWire) uses 140 characters at a time to transmit breaking credit union news, and interesting articles from outside sources, to the masses through microblogging site Twitter. CUNA also maintains Facebook pages for member business lending and other advocacy efforts, Credit Union House, among other things.

For the CUNA comment letter, and more on aSmarterChoice.org, CUNA's Tax Toolkit and other CUNA social media efforts, use the resource links.

Hiring Increases Reflect CU Confidence, Says CUNA

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WASHINGTON (3/26/13)--The total number of credit union employees increased by 2.8% in 2012, the largest credit union employment increase reported since the Great Recession began in 2007. This uptick in staffing numbers "means that credit union leadership is more positive about the future of the economy and their credit unions," Credit Union National Association Chief Economist Bill Hampel said.

The 2012 growth brought the total number of credit union employees nationwide to 265,201. The number of full-time and part-time employees on credit union payrolls increased by 3.1% and 1.3%, respectively, in 2012, CUNA reported. There were 257,872, credit union employees in 2011, according to CUNA.

This credit union employment level increase follows several years of flat staffing numbers following the 2007 economic crisis, which included declines in full-time employee totals in 2009 and 2010. Net interest margin declined, provisions for loan losses skyrocketed, and costs related to corporate stabilization increased during those years, and "credit unions were doing everything they could to protect their capital and their bottom line, including postponing hiring and cutting back discretionary expenses as much as they could," Hampel said.

CUNA gathered the results from an analysis of the National Credit Union Administration's 2012 year-end call report data. The numbers cover credit union in all 50 states, include federally insured credit unions, privately insured credit unions and credit unions in Puerto Rico.

CU MBL Questions Answered In Regulatory Advocacy Report

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WASHINGTON (3/26/13)--The Credit Union National Association continues to receive questions following the February release of member business lending (MBL) waiver clarifications, and CUNA addresses some of those questions for its members in the latest edition of the Regulatory Advocacy Report.

To answer the credit union queries, CUNA consulted the National Credit Union Administration's supervisory letter on MBLs. In the report, CUNA details the basics of the MBL waiver process, including:

  • How to request an MBL waiver;
  • What information should be included in a waiver request;
  • How those waiver requests are evaluated; and
  • How waivers for loan participations are obtained.
"CUNA has urged the agency to allow waivers as much as possible absent safety and soundness concerns," Deputy General Counsel Mary Dunn said on Monday.

Issues impacting the banking sector are also addressed, as the Regulatory Advocacy Report discusses final guidance on leveraged lending from the Federal Reserve Board, the Office of the Comp­troller of the Currency, and the Federal Deposit Insur­ance Corporation. A U.S. Government Accountability Office report on community bank failures is also examined in the report.

Other topics covered this week include:

  • Consumer Financial Protection Bureau (CFPB) Regulation E amendments;
  • An NCUA Office of Inspector General report on the failure of Telesis Community Credit Union;
  • The U.S. Treasury Financial Crimes Enforcement Network's work on customer due diligence issues;
  • Washington discussions regarding mortgage market reforms; and
  • CFPB indirect lending oversight developments.
Employees or volunteers of CUNA/state credit union league-affiliated credit unions can sign up to receive the Regulatory Advocacy Report using the link below. The publication is archived on cuna.org.

Reports Say Johnson Won't Seek Re-election

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WASHINGTON (3/26/13)--Sen. Tim Johnson (D-S.D.) is expected to announce later today that he will not seek re-election and will retire when his term ends in 2014. Johnson is the chairman of the Senate Banking Committee, as well as a member of that chamber's Appropriations Committee, Energy and Resources Committee, and Indian Affairs Committee.

Johnson is 66 and has served in the Senate for more than 15 years. Johnson is expected to make his announcement at a press conference he has called for 4 p.m. (ET) at the University of South Dakota, his alma mater.

Credit Loss Proposal Covered In FASB FAQ Doc

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WASHINGTON (3/26/13)--In a new frequently asked questions (FAQ) document, the Financial Accounting Standards Board seeks to tackle common questions regarding its proposed accounting standards update on financial instrument credit losses.

The FAQ document addresses common questions posed by stakeholders about the credit loss accounting exposure draft, which is scheduled to remain open for public comment until April 30.

The document is divided into three sections: Project objectives, measuring expected credit losses, and other alternatives considered.

Questions addressed in the FAQ include:

  • What is FASB's objective as it relates to the recognition of credit losses and interest income;
  • Why does FASB believe that the effective interest rate is the best rate for recognizing interest income;
  • What is the allowance for expected credit losses under FASB's proposed model; and
  • Why didn't FASB propose a model that delays recognition of all expected credit losses until there has been a significant deterioration in the credit quality of the asset.
FASB's proposed model would utilize a single "expected loss" measurement for the recognition of credit losses. This would replace the multiple existing impairment models in U.S. generally accepted accounting principles (GAAP) that primarily use an "incurred loss" approach. Under the proposal, a credit union would estimate the cash flows that it does not expect to collect, using all available information, including historical experience and forecasts about the future. The proposed approach--referred to as the current expected credit loss model--considers more forward-looking information than is currently permitted under U.S. generally accepted accounting principles.

CUNA is developing a comment letter on this issue and will circulate that letter in the coming weeks.

FASB in a release said it will discuss feedback it receives on the credit loss issue this summer with the International Accounting Standards Board, which also has a proposal pending on this issue.

For the FAQ, use the resource link.

NEW: Reports Say Johnson Won't Seek Re-election

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WASHINGTON (3/25/13, UPDATED 3:30 p.m. ET)--Sen. Tim Johnson (D-S.D.) will make an announcement tomorrow that he will not seek re-election, according reports, including an early one today from Reuters, which cited unnamed sources.

The report said Johnson, who is 66 and has served in the Senate for more than 15 years, has been expected to retire after his current term that will end in 2014.

Other reports say Johnson will make his announcement at 4 p.m. (ET) tomorrow at a press conference at the University of South Dakota, his alma mater.

CUNA Backs GSE Credit Risk Guarantee Amendment

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WASHINGTON (3/25/13)--The Credit Union National Association on Friday joined several financial services and real estate industry partners to support an amendment that would ensure that Fannie Mae and Freddie Mac credit risk guarantee fees are no longer used to offset the costs associated with unrelated policies that increase the deficit.

The amendment was introduced by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Committee Member Mike Crapo (R-Idaho) last week.

In a letter to the two legislators, CUNA and others noted that guarantee fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans, and should be used only to manage the companies' credit risk. Increasing guarantee fees for other purposes effectively taxes potential homebuyers and consumers wishing to refinance their mortgages, the letter added. Fee increases unrelated to housing could also act to hinder the necessary reforms required of the housing finance system in the years ahead, the letter said.

Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco earlier this month said that agency will begin to build a new securitization infrastructure, including a joint venture to handle mortgage securitization, and contract Fannie Mae and Freddie Mac's dominant presence in the marketplace while simplifying and shrinking some of those firms' operations.

As requested by the FHFA, Freddie Mac last week released single-family loan-level credit performance data on 30-year fixed-rate mortgages. Freddie Mac said the dataset covers approximately 15.7 million fully amortizing fixed-rate single-family mortgages originated between January 1, 1999, and December 31, 2011, representing 53% of total mortgage acquisitions made during that period.

Freddie Mac in a release said the data will help to increase transparency, which helps investors build more accurate credit performance models in support of potential future single-family credit risk-sharing initiatives.

A range of mortgage market reforms have been discussed in Washington, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages.

CUNA has repeatedly encouraged the FHFA to ensure that any changes to secondary mortgage market structure allow credit unions and other small issuers to maintain full and unrestricted access to that market. CUNA has also highlighted the importance of preserving 30-year, fixed-rate mortgages and ensuring that the secondary market is strong enough to weather economic adversity.

Bill Proposes Federal Student Loan Rate Cap

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WASHINGTON (3/25/13)--Rep. Karen Bass (D-Calif.) introduced a bill on Friday that would cap federal student loan interest rates at 3.4%, and also allow some borrowers to refinance their student loan debt to improve their rate.

Federally guaranteed loans make up 85% of total outstanding student loan debt, with private student loans comprising 15% of student loan debt. 

The bill, introduced Friday and known as the Student Loan Fairness Act, would also:

  • Require federal student loan holders to make 10 years of payments at 10% of their discretionary income, after which their student loan debt would be forgiven;
  • Allow borrowers whose student loan debt exceeds their income to convert their private loan debt into federal Direct Loans, and make those new federal loans subject to the 10/10 standard outlined above; and
  • Reward students who enter public service professions and work in underserved communities with a reduced loan forgiveness timeline.
Interest-free deferments would also be extended to student loan borrowers that have fallen on hard times under the terms of the bill. The legislation also aims to address tuition costs. For more on the bill, use the resource link.

Credit unions are starting to become more involved in private student lending, although the National Credit Union Administration noted in the month's edition of The NCUA Report that, for the most part, credit unions have been in this market for a relatively short time—most have offered private student loans for less than five years.

The agency said it expects credit unions to establish reasonable concentration limits for a private student loan portfolio to protect against risk.

Just one example of credit unions student loan growth is the case of Michigan credit unions in 2012. A strong lending performance propelled Michigan credit unions to record-setting results for 2012, according to the Michigan Credit Union League's analysis of data from the NCUA. One part of that loan growth was a 42% jump in student lending--with total student loans nearing $100 million.

For more of the NCUA report, use the resource link.

CFPB Issues Rule Implementing ATM Disclosure Law

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WASHINGTON (3/25/13)--ATM fee disclosure requirements are now simpler under a new rule issued by the Consumer Financial Protection Bureau. The rule implements a 2012 statutory revision to the Electronic Fund Transfer Act, Regulation E, to eliminate redundant ATM disclosures.

The Credit Union National Assocaiton and state credit union leagues advocated strongly for the amendment and CUNA worked closely with key members of the U.S. Congress and the CFPB on the legislation.    

The CFPB has amended Reg E by eliminating the requirement that a fee notice be posted "on or at" an ATM, and by deleting companion Regulation E Official Commentary.

An ATM operator must still provide an on-screen or paper disclosure which

includes the amount of the fee to be charged by the operator, before the consumer is committed to paying the fee.

This amendment will go into effect upon publication in the Federal Register. It implements legislation signed into law on December 20, 2012 (Pub.L. 112-216) .

Tools Added To CUNA Tax Advocacy Arsenal

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WASHINGTON (3/25/13)--New resources continue to be added to the Credit Union National Association's tax toolkit arsenal designed to provide materials to help credit unions talk to their members about the value of credit union membership and to fight back against banks that are targeting credit unions in tax status attacks.

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CUNA research has shown that when credit union members understand the value of membership, they will work with credit unions to defend their tax status.

National ads detailing how credit unions help save their members money, Oregon-specific ads that take a head-on approach to repelling bankers' tax status attacks, and online materials that fight back against bailed-out banks that are targeting credit unions are among the new items added to the tax toolkit arsenal.

CUNA's members-only toolkit 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. The tax toolkit 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.



The new ads take several forms: Radio, digital and print. The latest series of ads integrated into the toolkit:
  • Note that the credit union tax status helps credit unions make sure that members pay lower interest rates for loans, lower fees for financial services and, most importantly, receive higher returns on their savings, benefits that saved members nearly $5.8 billion in 2012;
  • Urge readers to tell legislators to oppose Wall Street efforts to cripple credit unions; and
  • Ask why the biggest banks in the country are attacking local Oregon credit unions, and encourage Oregonians to stop Wall Street banks from taking away their right to choose a local, trusted credit union.
Preserving the credit union tax status remains CUNA's top legislative priority, and CUNA Executive Vice President of Strategic Communications and Engagement Paul Gentile has emphasized that credit unions must work collaboratively to communicate the importance of that status to their members.

For more on CUNA's tax toolkit, use the resource link.

CDFI Fund To Expand Funding For Community Health Centers

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WASHINGTON (3/25/13)--The development of community health centers in underserved communities will get a boost under an expanded initiative by the Treasury Department's Community Development Financial Institutions Fund (CDFI Fund).

The CDFI Fund announced Friday that its Capacity Building Initiative, designed to support new, innovative sectors of community development financing, will now feature a new "Financing Community Health Centers" series to finance and support those centers.

The series is a dedicated two-year effort to provide structured, specialized technical assistance and training services to CDFIs engaged in or planning to provide assistance to community health centers. The training will provide best practices on successful financing from experts in the field, as well as tools for interpreting the changing operating environment over the course of the next 24 months.

The CDFI Fund maintains that the training and technical assistance provided as part of the series holds the promise of simultaneously producing jobs, addressing the needs of vital community facilities, and developing the economies of the nation's low-income communities. Opportunity Finance Network has been selected as the training provider.

Use the resource link for more.

News In CU Hiring Is Positive, Says Cheney Report

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WASHINGTON (3/25/13)--This week's edition of The Cheney Report starts off with some positive economic news: Credit unions in 2012 hired at the highest rate since the Great Recession began in 2007.

The positive hiring news is "just another sign of increasing confidence by credit unions for their futures," Credit Union National Association President/CEO Bill Cheney wrote.

CUNA analysis of the National Credit Union Administration's 2012 year-end call report data showed that full-time employees at credit unions totaled nearly 234,000. This is an increase of more than 3% from 2011's total, when hiring was nearly flat, and a reversal of contractions in full-time employees in both 2009 and 2010, the CUNA CEO noted.

Other topics tackled in this week's Cheney Report include:

  • CUNA airing credit loss proposal concerns with the Financial Accounting Standards Board;
  • The NCUA's recent work to address fair lending compliance;
  • The Senate introduction on privacy notification legislation;
  • Housing reform news; and
  • Upcoming hearings on the regulatory burdens faced by small financial institutions.
Each Friday, The Cheney Report delivers Cheney's insights on three to four key events and policy developments affecting credit unions into the e-mail inboxes of credit union CEOs.

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 Paul Gentile notes.

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

CRL Report Blasts Big Banks On Payday Loans

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WASHINGTON (3/22/13)--A report by the Center for Responsible Lending condemned some big banks' payday lending practices, and suggested changes to the payday loan industry that would move lenders toward the higher standards and practices already followed by credit unions.

The report, released last week, slams the products provided by six large firms and says regulators should take immediate supervisory and/or enforcement action to stop them. They are Wells Fargo Bank, U.S. Bank, Regions Bank, Fifth Third Bank, Bank of Oklahoma and its affiliate banks, and Guaranty Bank.  CRL found that these payday loans carry an average annual percentage rate (APR) of 225% to 300%.

The report recommended that regulators:

  • Require that any small loan product be affordable without leading to a cycle of repeat loans;
  • Carry an effective APR of 36% or less;
  • Be underwritten based on an ability to repay the loan without taking out another loan shortly thereafter; and
  • Not require mandatory automatic repayment from the consumer's checking account.
The National Credit Union Administration currently allows federal credit unions to offer short-term small amount loans to their members as an alternative to predatory payday loans that are offered by other financial service providers. Federal credit unions may charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. For now, this amounts to an interest rate ceiling of 28%.

A $20 application fee may also be charged. The loans may total as high as $1,000 and may last for as long as six months, and the loans cannot be rolled over.

Most credit unions offering payday loan alternatives also limit fees, provide member financial counseling, and encourage members to open savings accounts. They also in some cases provide incentives for members that switch to longer-term and lower-cost lending products.

The NCUA also is reviewing its small-amount, short-term loan rules to find ways to increase flexibility and enable more credit unions to engage in this form of lending.

Indirect Auto Lenders Put On Notice By CFPB

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WASHINGTON (3/22/13)--The Consumer Financial Protection Bureau on Thursday reminded indirect auto lenders of their compliance responsibilities under the Equal Credit Opportunity Act (ECOA).

The Thursday bulletin was meant, in part, to clarify the CFPB's authority to pursue auto lenders whose policies can, at times, be used to harm consumers through unlawful discrimination.

ECOA makes it illegal for a creditor to discriminate in any aspect of a credit transaction on prohibited bases including race, color, religion, national origin, sex, marital status, and age. The CFPB has authority to examine large banks, and credit unions--and their affiliates--with more than $10 billion in assets.

Indirect auto lenders often allow auto dealers to mark up the interest rates that are offered to consumers, and lenders may then share part of the revenue from that increased interest rate with the dealer, the CFPB explained. These markups can generate compensation for dealers, and give dealers the discretion to charge different rates to different consumers, without taking their creditworthiness into account. Lender policies that provide dealers with this type of discretion increase the risk of pricing disparities among consumers based on race, national origin, and potentially other prohibited bases, the CFPB said.

"Consumers should not have to pay more for a car loan simply based on their race," CFPB Director Richard Cordray added.

To ensure they are in compliance with fair lending regulations, the CFPB recommended that indirect lenders:
  • Impose dealer markup controls or revise dealer markup policies;
  • Monitor and address the effects of markup policies as part of a robust fair lending compliance program; and
  • Eliminate dealer discretion to markup buy rates, and fairly compensating dealers using a different mechanism that does not result in discrimination, such as flat fees per transaction.
Other steps are also addressed in the bulletin. The CFPB said it "will continue to closely review the operations of both depository and non-depository indirect auto lenders, utilizing all appropriate regulatory tools to assess whether supervisory, enforcement, or other actions may be necessary to ensure that the market for auto lending provides fair, equitable, and nondiscriminatory access to credit for consumers."

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.

For more on the CFPB bulletin, use the resource link.

CUs Should Be Aware Of Upcoming Overdraft Actions: CUNA

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WASHINGTON (3/22/13)--TD Bank's account manipulation settlement, which was approved by a Florida judge this week, calls attention to the need for financial institutions to be aware of chaninging rules and regulations addressing overdraft practices.

The $62 million settlement follows a multi-district legal action that was brought by customers of TD Bank. The customers alleged that TD Bank re-ordered some of their debit card transactions to extract maximum overdraft account fees. Plaintiffs claimed the bank brought in hundreds of millions of dollars as a result of this practice.

The Consumer Financial Protection Bureau has been examining overdraft issues, and the order in which institutions pay items from a consumer's checking account. The Credit Union National Association reminds policymakers to consider that reasonable overdraft protection plans help assure consumers will have access to funds when they need them.

CUNA in a comment letter sent last year underscored that because of their cooperative structure, credit unions do not have financial incentives to charge members the high fees that banks frequently do in order to maximize profits for shareholders. CUNA encourages the CFPB to note this difference as it proceeds to write regulations governing overdraft protection programs.

CUNA Senior Vice President for Compliance Kathy Thompson said the bureau has certainly taken a look at a 2012 checking study by the Pew Charitable Trusts.

That study, which has been referenced publicly by CFPB officials, found in 2011 the median fee charged by credit unions when the credit union covered the item was less than three-quarters of that charged by banks. The median fee charged by credit unions when transferring funds from an account of the member to cover the overdraft was $5, compared to $12 charged by banks.

The Pew study called for:
  • A disclosure box for checking accounts;
  • Better disclosures on overdraft options;
  • Certain overdraft fee limits; and
  • Deposits and withdrawal postings that do not maximize overdraft fees.
Overdraft fees have also been addressed on the legislative front in recent days. Reps. Carolyn Maloney (D-N.Y.) and Maxine Waters (D-Calif.) on Wednesday introduced the Overdraft Protection Act of 2013, which would cap overdraft fees, impose a limit on the number of overdrafts that a member could use per year, and require financial institutions to post credits and debits in a particular order. CUNA said the bill "seems to address a problem that doesn't exist in the credit union system." (See March 21 News Now story: CUNA: Overdraft Bill Addresses Problems That Don't Exist At CUs.)

Very Large Banks Get Leveraged-Loan Guidance

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WASHINGTON (3/22/13)--Federal bank regulators released updated supervisory guidance Thursday on leveraged lending, which they say has been increasing since 2009 after declining during the financial crisis. It is important that banks provide leveraged financing to creditworthy borrowers in a safe and sound manner, the guidance says.

The guidance is targeted to large banks. It applies to all financial institutions supervised by the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corp. that engage in leveraged lending activities. The guidance does not apply to credit unions.

However, as the directive itself notes, the number of community banks with substantial involvement in leveraged lending is "small," and the agencies expect community banks to be largely unaffected by this guidance. In fact, it says, given that most leveraged lending transactions exceed $50 million, leveraged loans are held primarily by "very large or global institutions."

The regulatory guidance outlines:
  • High-level principles related to safe–and–sound leveraged lending activities, including underwriting considerations;
  • Assessing and documenting enterprise value;
  • Risk management expectations for credits awaiting distribution;
  • Stress-testing expectations;
  • Pipeline portfolio management; and
  • Risk management expectations for exposures held by the institution.
 

The regulators defined leverage loans as those that involve:

  • Loans whose proceeds used for buyouts, acquisitions, or capital distributions;
  • Transactions where the borrower's Total Debt divided by EBITDA (earnings before interest, taxes, depreciation, and amortization) or Senior Debt divided by EBITDA exceed 4.0X EBITDA or 3.0X EBITDA, respectively, or other defined levels appropriate to the industry or sector;
  • A borrower recognized in the debt markets as a highly leveraged firm, which is characterized by a high debt-to-net-worth ratio; or
  • Transactions when the borrower's post-financing leverage, as measured by its leverage ratios (for example, debt-to-assets, debt-to-net-worth, debt-to-cash flow, or other similar standards common to particular industries or sectors), significantly exceeds industry norms or historical levels.
 Use the resource link to access the bank guidance.

Small FI Reg Burden Is On House Financial Services' April Agenda

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WASHINGTON (3/22/13)--The regulatory burden faced by small financial institutions, like credit unions, is on the U.S. House Financial Services Committee agenda twice in April.

The April hearing schedule is in its early planning stages and few details are available. Credit unions are not named on the hearing schedule. However, a committee spokesman on Wednesday told News Now that the panel does intend to hold a hearing to study the regulatory burden of credit unions. That session will be part of a 2013 series to study, in part, the impact of the Dodd-Frank Act.

"We welcome the upcoming hearings on the regulatory burdens facing community-based financial institutions," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said Thursday.

"We testified several times in the last Congress regarding what we've called the crisis of creeping complexity with respect to regulatory burden, and this has been the subject of several of our recent meetings with Committee members and staff. Sadly, this problem is not going away--in fact, it is getting worse.

"These hearings will give us the opportunity to shed more light on this problem and hopefully represent the beginning of the process in this Congress to move legislation to provide relief to America's credit unions," he added.

The first of these scheduled small financial institution hearings is set for April 10, before the financial institutions and consumer credit subcommittee. That subcommittee has set a second hearing on the same topic for April 16.

Other items on the committee agenda include:

  • An April 5 oversight and investigations subcommittee hearing on reports of waste, fraud and abuse at the U.S. Department of Housing and Urban Development;
  • An April 10 housing and insurance subcommittee hearing on the future of the Federal Housing Administration;
  • An April 11 monetary policy and trade subcommittee hearing on the U.S. role in the International Monetary Fund;
  • An April 11 capital markets and government sponsored enterprises subcommittee hearing to review legislation to reform derivatives provisions of the Dodd-Frank Act;
  • An April 5 oversight and investigations subcommittee hearing on "too big to fail" institutions;
  • An April 17 full committee hearing on impediments to private capital in the housing finance system;
  • An April 24 capital markets and government sponsored enterprises subcommittee hearing to review how Sallie Mae was successfully wound down; and
  • An April 24 monetary policy and trade subcommittee hearing which will, again, focus on the U.S. role in the IMF.
For a committee release on the schedule, use the resource link.

CUNA Urges Senate To Pass Privacy Notice Relief Bill

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WASHINGTON (3/22/13)--In a joint letter with other financial trade groups, CUNA urged the Senate to vote on bipartisan legislation (S. 635) to end the redundancy of privacy notices "without further delay and amendment."

The bill, which was introduced by Senate Banking subcommittee on financial institutions Chairman Sherrod Brown (D-Ohio) and committee member Sen. Jerry Moran (R-Kan.) on Thursday, would eliminate a requirement that privacy notices be sent on an annual basis. It would instead allow the notices to be sent only when the privacy policy of a financial institution has changed.

The bill is similar to legislation that passed the U.S. House (H.R. 749) last week by voice vote and with broad bipartisan co-sponsorship. However, the Senate bill has some key differences: For instance, the Senate bill would require credit unions and other financial institutions to make their privacy policy always accessible in some form in order to qualify for the bill's exemption from sending annual privacy notices.

"Credit unions make every effort to provide the most effective and efficient services to their members, which includes ensuring their members are aware of their privacy rights. This legislation safeguards member awareness of those rights, but eliminates repetitive notices that are often ignored by consumers," CUNA President/CEO Bill Cheney said of the Senate bill.

He noted that the bill, and its companion in the House, "streamline the regulatory burden on credit unions by reducing the amount of diverted time and resources that a credit union's staff could be using for more important services to its members."

"Above all, the bill enhances consumer protection by ensuring that when a consumer receives a privacy notification, it has significance and is not redundant," Cheney said.

NEW: Brown, Moran Introduce Privacy Notice Bill In Senate

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WASHINGTON (UPDATED: 3/21/13, 12:30 p.m. ET)--Legislation to end the redundancy of privacy notices was just introduced in the Senate. The bill (S. 635) diverges slightly from the language of a similar bill passed recently in the House. For instance, the Senate bill would require credit unions and other financial institutions to make their privacy policy always accessible in some form in order to qualify for the bill's exemption from sending annual privacy notices.

Both the House and Senate bills would eliminate a requirement that privacy notices be sent on an annual basis. They would instead allow the notices to be sent only when the privacy policy of a financial institution has changed.

"Credit unions make every effort to provide the most effective and efficient services to their members, which includes ensuring their members are aware of their privacy rights. This legislation safeguards member awareness of those rights, but eliminates repetitive notices that are often ignored by consumers," Credit Union National Association President/CEO Bill Cheney said. He noted that the bill "streamlines the regulatory burden on credit unions by reducing the amount of diverted time and resources that a credit union's staff could be using for more important services to its members.

"Above all, the bill enhances consumer protection by ensuring that when a consumer receives a privacy notification, it has significance and is not redundant," Cheney said.

The House version of privacy notice reform (H.R. 749) recently passed by voice vote and with broad bipartisan co-sponsorship.

The Senate bill was introduced by Senate Banking subcommittee on financial institutions Chairman Sherrod Brown (D-Ohio) and committee member Sen. Jerry Moran (R-Kan.).

Immediately upon introduction of the Senate bill, CUNA and other financial trade groups sent a joint letter to urge a Senate vote on the bipartisan legislation "without further delay and amendment."

CFPB To Study Regulatory Compliance Costs

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WASHINGTON (3/21/13)--The Consumer Financial Protection Bureau is planning to reach out to financial institutions to study the extent and nature of compliance costs, and, ultimately, to increase public understanding of those costs.

"Regulations can have many benefits for consumers, but the benefits sometimes come at a cost," CFPB Division of Research, Markets & Regulation Deputy Associate Director Dan Sokolov wrote in a Wednesday blog post. "Banks, credit unions, and other financial services providers are concerned with compliance costs--how much it costs to comply with financial regulations--and we're interested as well," Sokolov added.

The Credit Union National Association has reached out to CFPB on this issue. CUNA's recent exam survey included questions on credit unions' top regulatory concerns, and the Filene Research Institute is conducting its own study of U.S. and Canadian credit union regulatory burdens, CUNA Deputy General Counsel Mary Dunn noted.

Sokolov said the CFPB's Research, Markets, and Regulations team is studying the costs related to rules the bureau took on from other regulators, and plans to speak with financial institutions to detail the costs institutions incur to comply with consumer regulations for deposit products and services.

The bureau will examine costs related to checking accounts, debit cards and other products. "Through our research, we hope to become better and smarter regulators," Sokolov wrote.

Debt collectors are one group that has recently been added to the list of financial market participants that are subject to CFPB oversight.

The CFPB on Jan. 2 began supervising debt collection agencies with more than $10 million in annual receipts, and the agency on Wednesday delivered an annual report to Congress on the Fair Debt Collection Practices Act (FDCPA).

The CFPB report addresses consumer complaints about debt collectors, and the bureau's response to those complaints, as well as the CFPB's supervision of debt collection activities. Enforcement activities, education, outreach, research and policy initiatives, and the cooperative efforts of the CFPB and the Federal Trade Commission are also covered in the report.

For the full CFPB report, use the resource link.

Fixed-asset Plan Comments Due May 20

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WASHINGTON (3/20/13)--Comments are due May 20 on the National Credit Union Administration's proposal that clarifies and reorganizes portions of its rule addressing federal credit union ownership of fixed assets, according to the Wednesday issue of the Federal Register.

When the agency proposed the clarifications for comment at its March open board meeting, staff noted that the proposed amendments do not make any substantive changes to regulatory requirements. Rather, they are intended to clarify the rule by improving its organization, structure, and "ease of use."

Use the resource link to see the Federal Register document.

Kinecta Purchases ICE FCU

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ALEXANDRIA, Va. (3/21/13)--Kinecta FCU, Manhattan Beach, Calif., will take on the assets, shares and members of I.C.E. FCU, Inglewood, Calif., after the National Credit Union Administration announced an approved purchase and assumption agreement Wednesday.

The NCUA assumed control of I.C.E. FCU last week after it determined the credit union was insolvent and had no prospects for restoring viable operations. The credit union held $3.4 million-in-assets and had 942 members.

The agency said the new Kinecta members should experience no further interruption in services, and noted that their accounts will continue to be covered by the National Credit Union Share Insurance Fund up to $250,000.

Kinecta holds $3.2 billion in assets and has more than 242,000 members. The credit union was chartered in 1940 and serves individuals who live, work, worship or attend school in the central Los Angeles area, select employer groups, and members of the Consumers Cooperative Society of Santa Monica.

For the full NCUA release, use the resource link.

House Hearing Looks At Bank Failures: CUs To Have Reg Burden Hearing

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WASHINGTON (3/21/13)--The House Financial Services subcommittee on financial institutions and consumer credit Wednesday conducted a "state of the community banking industry" hearing that looked into the causes of the 414 bank failures that occurred from 2008 through 2011.

The hearing was ordered by a bill enacted into law last year (P.L. 112-182) that required the Government Accountability Office (GAO) to issue a study on community banks and for the U.S. Congress to conduct a hearing within 150 days of the issuance of the study, which came out in January.

The single panel of witnesses Wednesday featured four staff representatives from the Federal Deposit Insurance Corporation and one from the GAO.

Congress has not required any similar study of credit union performance during the financial crisis. However, a committee spokesman told News Now that the panel does intend to hold a hearing to study the regulatory burden of credit unions. That session will be part of a 2013 series to study, in part, the impact of the Dodd-Frank Act.  A date will be announced in the near future.

In fact, the series is a continuation of regulatory burden hearings conducted in 2012, in which the Credit Union National Association repeatedly testified on how the growth of financial services regulations has impacted his credit union's ability to lend to and serve its members.

"We have held several meetings since the beginning of the year with committee members and staff on both sides of the aisle to discuss the importance of regulatory relief legislation," said Ryan Donovan, CUNA senior vice president for legislative affairs.  "It is apparent from those meetings that there is an understanding and appreciation for the crisis of creeping regulatory complexity facing America's credit unions and a willingness to examine how to address that from a statutory perspective.

"We look forward to continuing to work with the members of the House Financial Services Committee and the Senate Banking Committee on these issues."

Reducing credit unions' regulatory burden is one of CUNA's top priorities and CUNA is working aggressively on that issue on Capitol Hill and when dealing with the regulatory agencies that have jurisdiction over credit unions.

NCUA Encourages CU Member Outreach Ahead Of Fin Lit Month

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ALEXANDRIA, Va. (3/21/13)--National Financial Literacy Month in April provides an excellent opportunity for credit unions to talk with their members about saving, building wealth and making smarter financial decisions, the National Credit Union Administration noted in a Wednesday release.

These discussions not only help members make better-informed financial decisions, but also strengthen a credit union's relationship with its members, and ultimately contribute to a credit union's bottom-line, NCUA Chairman Debbie Matz said.

To help spark these conversations, the NCUA has provided a host of personal finance resources on its consumer website MyCreditUnion.gov, and the agency's financial literacy microsite, Pocket Cents. Credit unions and their members can also watch the NCUA's consumer Twitter feed, @MyCUgov, which features timely personal finance tips to help individuals make smarter financial decisions, the NCUA added.

For more on the NCUA efforts, use the resource link.

Credit unions across the country will encourage their members to budget, save, manage credit, and pay down debt during this year's Financial Literacy Month.

The Credit Union National Association is observing the month by holding National Credit Union Youth Week between April 21 and 27. CUNA and credit unions will offer art, articles, celebration materials and promotional products for the week. This year's theme, "Savings Sleuth--Solve the Mystery," challenges credit unions to help the nation's youth solve the mystery of how to save money for meaningful purchases.

Campaign materials offered by CUNA include financial education content, items to reward young members and apparel for credit union staff.

Last year, credit unions and state credit union leagues nationwide observed Financial Literacy Month by developing programs to raise awareness of credit unions' financial education activities and the importance of financial education, sponsoring financially fit days, working with state legislators at youth financial education events, and providing other resources.

CUNA: Overdraft Bill Addresses Problems That Don't Exist At CUs

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WASHINGTON (3/21/13)--A bill introduced this week that would cap overdraft fees is "legislation that seems to address a problem that doesn't exist in the credit union system," according to the Credit Union National Association.

CUNA Senior Vice President of Legislative Affairs Ryan Donovan made that point in a story posted on the NBC "Today Show" website that takes a look at the overdraft bill. The story noted credit unions are concerned about their growing regulatory burden.

CUNA President/CEO Bill Cheney also noted overdraft protection plans that are reasonably structured can help ensure consumers will have access to funds when needed. "CUNA supports the ability of credit unions to offer these plans as a means to help their members resolve short-term financial problems," Cheney said Wednesday.

Just a day earlier, Reps. Carolyn Maloney (D-N.Y.) and Maxine Waters (D-Calif.) introduced the Overdraft Protection Act of 2013, which would amend the Truth in Lending Act. In addition to capping overdraft fees, the bill proposes to impose a limit on the number of overdrafts that a member could use per year, and require financial institutions to post credits and debits in a particular order.

Cheney added that CUNA historically has had concerns with legislative and regulatory proposals that make it more difficult for credit unions to offer these services to their members: "We believe these decisions are best made by the democratically elected boards of directors of credit unions, not by Congress or the regulator."

CDFI Fund Updates Web Resources

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WASHINGTON (3/21/13)--The U.S. Treasury's  Community Development Financial Institutions Fund (CDFI Fund) has added new online resources to support CDFI Fund recertification applicants.

The materials include archived versions of six recertification conference calls that were held in February and March of this year. The calls are divided by institution type, and feature question and answer sessions with CDFI Fund representatives.

The Fund also released a document detailing frequently asked questions on CDFI Fund certification.

For more on the CDFI Fund resources, use the link.

CDFIs that were originally or most recently certified before Feb. 1, 2010, must apply for recertification no later than April 1. The recertification requirement includes but is not limited to CDFIs currently in the process of submitting an application under the fiscal year 2013 rounds of the CDFI Program or Native American CDFI Assistance (NACA) Program, the CDFI Fund has said. CDFIs that were originally certified after February 1, 2010, will need to apply for recertification no later than 60 days after their three-year certifications expire.

The Treasury's CDFI Fund helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community.

Exam Criteria Addressed By NCUA Fair Lending Letter

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WASHINGTON (3/20/13)--In a new letter to federal credit unions (13-FCU-02), the National Credit Union Administration said it will select a number of federal credit unions to undergo a fair lending examination this year, and outlined the factors that agency examiners will use to determine whether a federal credit union should be subject to further fair lending reviews.

Credit Union National Association President/CEO Bill Cheney said CUNA will follow up with the agency on fair lending issues to provide more information to the credit union system. "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," he added.

Federal credit unions that are selected for a fair lending exam or off-site supervision contact "will have demonstrated the potential for a higher fair lending risk" based on certain criteria discussed in the letter, including fair lending violations and general compliance risks, the letter noted.

Credit unions' whose Home Mortgage Disclosure Act report results fall outside the normal range for pricing, denials, withdrawals, or lending terms when compared to other financial institutions may also be subject to these examinations, the agency said.

Selected federal credit unions that fit the exam criteria will receive advance written notification of the exam or off-site supervision contact from NCUA's Office of Consumer Protection, according to the letter.

Off-site fair lending supervision contacts will also be made in certain situations, the agency said.

The NCUA's new fair lending educational and compliance tools, and off-site supervision contacts to help federal credit unions comply with fair lending laws, are also highlighted in the letter. The agency has also provided credit unions with a guide describing 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.

The NCUA will provide an overview of its 2013 fair lending examination program and detail fair lending best practices during an April 4 webinar. (See related story: Fair Lending Is Topic Of NCUA April 4 Webinar.)

For the letter, use the resource link.

The NCUA also announced an April 4 webinar on fair lending. (See News Now story: Fair Lending Is Topic Of NCUA April 4 Webinar)

GSE Reform Must Move Forward, Hensarling, FHFA Head Agree

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WASHINGTON (3/20/13)--The U.S. Congress should get to work and develop a plan for the future of the U.S. mortgage market, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Federal Housing Finance Agency Acting Director Edward DeMarco each said during a Tuesday committee hearing.

DeMarco was the sole witness at Tuesday's hearing, entitled "Sustainable Housing Finance: An Update from the Federal Housing Finance Agency on the GSE Conservatorships."

In his opening remarks, Hensarling said he is determined that the hearing would be the last time that DeMarco or another FHFA leader testified before the committee before true government-sponsored enterprise (GSE) legislation is marked up. "This I define as legislation to once and for all abolish Fannie Mae and Freddie Mac as government-sponsored enterprises. And two, one that would truly create a sustainable housing policy," Hensarling said.

In his own remarks, DeMarco noted that the conservatorships of Fannie Mae and Freddie Mac, which began in late 2008, "were never intended to be a long-term solution," but rather "were meant primarily as a 'time out' for the rapidly eroding mortgage market--an opportunity to provide some stability while Congress and the Administration could figure out how best to address future reforms to the housing finance system.

"The U.S. housing finance system cannot really get going again until we remove this cloud of uncertainty and it will take legislation to do it," DeMarco said. He noted that only Congress can abolish or modify the GSE charters "and set forth a vision for a new secondary market structure."

U.S. House and Senate members last week introduced separate bills addressing the government's role in that market. Overall, a range of mortgage market reforms have been discussed, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages.

The Credit Union National Association has repeatedly said that any changes to secondary mortgage market structure must allow credit unions and other small issuers to maintain full and unrestricted access to that market. CUNA has also highlighted the importance of preserving 30-year, fixed-rate mortgages and ensuring that the secondary market is strong enough to weather economic adversity.

For more on the hearing, use the resource link.

Cordray Nomination To Move Forward In Senate

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WASHINGTON (3/20/13)--Richard Cordray's nomination to continue as the head of the Consumer Financial Protection Bureau now moves on for a full U.S. Senate vote, after the Senate Banking Committee Tuesday approved the nomination in a 12 to 10 vote.

Senate Majority Leader Harry Reid (D-Nev.) had not set a date for Cordray's Senate vote as of late Tuesday.  Because of controversy surrounding the CFPB's makeup, Cordray's CFPB future is not entirely clear at this time. Many Senate Republicans have consistently said they would block any CFPB nominee if certain structural changes were not made to the agency makeup.

Cordray's nomination passed the committee in 2011, but ultimately failed to get a vote in the 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.

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. The Credit Union National Association backs 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.

CU Performance Scenarios Are Subject Of NCUA Video

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ALEXANDRIA, Va. (3/20/13)--The immediate future of the U.S. economy remains uncertain, and National Credit Union Administration Chief Economist John Worth addresses what different economic forecasts could mean for credit unions in a new YouTube video.



The video is the latest in a series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The videos can also be viewed on the NCUA's YouTube page by using the resource link below.

Fair Lending Is Topic Of NCUA April 4 Webinar

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ALEXANDRIA, Va. (3/20/13)--The National Credit Union Administration will provide an overview of its 2013 fair lending examination program, and detail fair lending best practices, during an April 4 webinar.

The free webinar, entitled "Fair Lending Examination Program and Compliance Assistance," is scheduled to begin at 1 p.m. ET.

NCUA Office of Consumer Protection (OCP) Director Gail Laster and agency staff will present the webinar. The NCUA staff plan to address how the fair lending off-site supervision contact process works, and take related questions during the webinar.

The NCUA said webinar participants may submit questions in advance by sending an email to WebinarQuestions@ncua.gov. The subject line of the email should read, "Fair Lending Webinar." 

The webinar follows the Tuesday release of a letter to federal credit unions (13-FCU-02) that addresses fair lending issues and examinations. (See News Now story: Exam Criteria Addressed By NCUA Fair Lending Letter)

To register for the NCUA webinar, use the resource link.

Also on fair lending, the NCUA Tuesday released a new letter to federal credit unions (13-FCU-02) saying it will select a number of federal credit unions to undergo a fair lending examination this year. The letter also outlined the factors that agency examiners will use to determine whether a federal credit union should be subject to further fair lending reviews. (See related story: Exam Criteria Addressed By NCUA Fair Lending Letter.)

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: 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.

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.

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.

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.

Cheney Report Covers a Positive Week For CUs

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WASHINGTON (3/18/13)--Credit Union National Association President/CEO Bill Cheney details a positive past week for credit unions in the regulatory, political and public spheres in the latest edition of The Cheney Report.

In this edition, Cheney reports on a recent CUNA conference with National Credit Union Administration Chairman Debbie Matz and agency staff, during which derivatives authority, examination issues and NCUA efforts to update Prompt Corrective Action standards were discussed.

Productive meetings were also held on Capitol Hill, with Cheney and CUNA legislative staff discussing the credit union tax status and other issues with key legislators. Cheney notes that no legislator CUNA has spoken with has suggested that credit union taxation is on the table as a tax reform or spending issue. "We know an educated Congress, and public, are the best ways to preserve credit unions' tax exemption; that process continues on both fronts," Cheney writes.

The public perception of credit unions was again boosted by an early week CUNA appearance on Bloomberg Radio. Traffic on CUNA's consumer website aSmarterChoice.org received 804 daily searches for credit unions following CUNA Executive Vice President of Strategic Communications Paul Gentile's interview on Taking Stock with Pimm Fox, Cheney notes.

Each Friday, The Cheney Report delivers Cheney's insights on three to four key events and policy developments affecting credit unions into the e-mail inboxes of credit union CEOs.

The report also provides a valuable window into CUNA's actions on behalf of member credit unions and reinforces the value of CUNA membership, Gentile notes.

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

New CUNA Website Design Emphasizes User Ease

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WASHINGTON (3/18/13)--When you click onto cuna.org this morning, you will immediately notice a transformation that was almost a year in the making. The Credit Union National Association has completely re-thought and redesigned its website to make it more appealing to users both in function and graphic elements.

"We have incorporated graphic 'theaters' throughout, so our pages have lost their out-dated, static appearances and have come alive with rotating displays of the most important and current information in each content area."

CUNA has also completely revamped its website search function. Users can start with a keyword search, and then refine that search by sorting through filters that will result in the most relevant "finds."

The website now is organized into seven "channels," or content areas. Each of the channels have theaters that will promote up to five top issues or hot products and services for that area.

The channels and their contents are:

  • Stay Informed: Access CUNA's daily online news service News Now, the newly launched weekly, "The Cheney Report," CUNA's members-only bi-weekly Credit Union NewsWatch, the monthly Credit Union Magazine, press releases, and more;
  • Grassroots: Find information on Hike the Hill, the Credit Union Legislative Action Committee, Project Zip Code, and the grassroots action center, among other advocacy tools;
  • Legislative & Regulatory: This section holds the latest legislative updates and legislative hot topics, as well as archived materials, the weekly Regulatory Advocacy Report, CUNA comment calls and comment letters, final rule analyses, as well as other regulatory information. This location also houses State Governmental Affairs materials, such as issues digests and state legislation and regulation trackers;
  • Compliance: A compilation of copious compliance help, such as CompBlog, the E-Guide, additional compliance support;
  • Research and Strategy: Economics research and strategy are found here, plus products that help credit unions plan for their future, like the Credit Union Environmental Escan, and survey products;
  • Marketing and Member Education: This is the credit union system's premiere location for all products and services that provide help to credit unions as they market their products, explore business development and member retention and growth;
  • Training and Events: This channel focuses on training products that are available to all credit unions.
"Set aside a few minutes. Explore our new site," Nohelty invites credit unions. "I think you are going to like what you find."

NCUA Shutters Two Small CUs

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ALEXANDRIA, Va. (3/18/13)--The National Credit Union Administration on Friday liquidated two troubled small credit unions: I.C.E. FCU, Inglewood, Calif., and Pepsi Cola FCU, Buena Park, Calif.

The agency in separate releases said it moved to liquidate the credit unions after it determined that both were insolvent and had no prospects for restoring viable operations.

The 942 member, $3.4 million-in-asset I.C.E. FCU was chartered in 1939 and served Inglewood city employees and their families.

Pepsi Cola FCU, chartered in 1956, served 558 members and held $652,000 in assets, the NCUA said. The credit union served employees of the Pepsi Cola Bottling Co.

The credit unions represented the third and fourth credit unions to be liquidated in 2013.

The agency reminded members that their deposits are federally insured by the National Credit Union Share Insurance Fund up to $250,000. The NCUA's Asset Management and Assistance Center will issue correspondence to individuals holding verified share accounts in the credit union within one week, the agency added.

For more, use the resource link.

NCUA Approves Landmark CU Acquisition Of Hartford Savings Bank

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ALEXANDRIA, Va. (3/18/13)--The National Credit Union Administration has approved Landmark CU's request to purchase and assume Hartford Savings Bank.

The acquisition was approved unanimously during the agency's closed board meeting on Thursday. The transaction will be subject to Federal Deposit Insurance Corporation approval.

Landmark is based in New Berlin, Wis., and is Wisconsin's largest credit union, holding $2.1 billion in assets. Hartford Savings Bank is located Hartford, Wis. and has three branch locations in Hartford, Juneau and Hubertus, Wis.

Discussions between the two institutions began in June 2012 and each CEO and board agreed quickly to the acquisition.

"Our institutions are strikingly similar in our mutual memberships, shared beliefs in excellent customer service and focus on employee satisfaction and community involvement," Ron Kase, who was Landmark CU CEO at the time of the application, said last year. He recently retired. Kase noted that Landmark's "broader offering of products and services will bring a variety of benefits to the area."

The acquisition of Hartford Savings Bank will allow the credit union to strategically expand its branch locations and better serve members, Kase added. Landmark currently serves members in Washington and Dodge counties from branches in Germantown, West Bend and Watertown.

Senate Subcommittee Reports JPMorgan 'Misconduct'

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WASHINGTON (3/18/13)--A Senate Homeland Security and Governmental Affairs permanent subcommittee on investigations report has revealed troubling misconduct and high-risk activities at JPMorgan Chase, and broader, systemic problems related to the valuation, risk analysis, disclosure, and oversight of synthetic credit derivatives held by U.S. financial institutions.

The report was released at a Friday hearing entitled "JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses." The report and the hearing follow JPMorgan Chase's 2012 derivatives trading loss of more than $6.2 billion. The subcommittee developed the more than 300-page report by collecting nearly 90,000 documents and conducted more than 50 interviews and briefings, subcommittee Chairman Carl Levin (D-Mich.) said.

The congressional report alleges that JPMorgan Chase:

  • Engaged in high risk derivatives trading;
  • Mismarked the Synthetic Credit Portfolio book to hide hundreds of millions of dollars of losses;
  • Disregarded multiple internal indicators of increasing risk;
  • Manipulated models;
  • Dodged Office of the Comptroller of the Currency oversight; and
  • Misinformed investors, regulators, and the public about the nature of its risky derivatives trading.
Levin in prepared remarks said the investigation "brought home one overarching fact:  the U.S. financial system may have significant vulnerabilities attributable to major bank involvement with high-risk derivatives trading. The four largest U.S. banks control 90% of U.S. derivatives markets, and their profitability is invested, in part, in their derivatives holdings, nowhere more so than at JPMorgan."

For more on the hearing, use the resource link.

Senate Banking To Vote Cordray Nomination This Week

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WASHINGTON (3/18/13)--The Senate Banking Committee is set to vote Tuesday on Consumer Financial Protection Bureau Director Richard Cordray's nomination to continue as head of that agency.

Cordray's committee nomination hearing was held last week.

Credit Union National Association Senior Vice President for Legislative Affairs Ryan Donovan said Cordray is expected to be approved by the committee. However, he said, Cordray's prospects before the full Senate are uncertain.

The banking committee approved Cordray's nomination in late 2011, but he did not receive a full vote in the Senate. President Barack Obama appointed Cordray to the director position during a brief congressional recess in 2012, and some have questioned the constitutionality of this appointment.

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.

Nonbank Student Loan Servicers Are New CFPB Focus

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WASHINGTON (3/15/13)--Large servicers of both federal and private student loans may soon fall under the oversight of the Consumer Financial Protection Bureau under a proposal issued Thursday.  The bureau said the plan would add the final tool for the CFPB to have visibility into the complete cycle of student loan debt, from origination through servicing to debt collection and credit reporting.

"Student loan servicers can have a profound impact on borrowers and their families.  Servicers collect payments on loans, work with struggling borrowers on repayment options, and may report borrowers' activity to credit reporting agencies," said CFPB Director Richard Cordray when announcing the proposal.

"In many ways, a student loan can make or break people's financial lives.  A borrower's sole contact regarding a loan, for most of the life of the loan, is with a servicer.  So we need to make sure they are complying with federal consumer financial laws."

The Credit Union National Association commended the CFPB for taking steps to regulate entities that have been operating without regulation. CUNA has urged the CFPB to focus on these entities rather than on regulated institutions.  

If adopted, the rule would place any nonbank student loan servicer that handles more than 1 million borrower accounts under CFPB supervisory authority. The bureau estimated that threshold places  the seven largest student loan servicers under its authority and that, combined, those seven service the loans of 49 million borrower accounts, representing most of the activity in the student loan servicing market.

The proposed rule would cover servicing of both federal and private student loans. Federal student loans are commonly serviced by private companies, and any of those companies that handle more than 1 million borrower accounts would be subject to the Bureau's supervisory authority. The CFPB will continue to coordinate closely with the U.S. Department of Education, which conducts reviews of companies handling loans in accordance with the federal student aid program.

The public will have 60 days to comment on the proposed rule after it is published in the Federal Register.

Use the resource link to access a factsheet on the student loan servicing proposed rule.

New CUNA Resource Backs CUs In 'Unite For Good' Effort

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WASHINGTON (3/15/13)--Credit unions across the country are embracing the Credit Union National Association's new strategic vision where "Americans choose credit unions as their best financial partner," and CUNA has unveiled a new resource with specific actions individual credit unions can take to "Unite for Good" and advance this shared vision.

The action steps align with the three key goals credit unions will need to reach to achieve CUNA's shared vision for the credit union system: removing barriers, creating awareness; and fostering service excellence. The broad range of advocacy and service improvement steps are listed on CUNA's strategic vision website, uniteforgood.org.

The suggested steps run the gamut of local and large-scale credit union involvement, from legislative and grassroots mobilization, regulatory action, political/campaign involvement, and media and community interaction.

Credit unions can also consider a service excellence and standards initiative at their branches, support local financial literacy efforts, or send communications to their members seeking their support for credit union friendly candidates, CUNA suggests.

"The list is not meant to be exhaustive, and we know not every suggestion will be right for every credit union, but it's a good blueprint and one we hope you will factor into your strategic planning," CUNA President/CEO Bill Cheney said. "Rallying credit unions to take actions that will move us toward our common vision is what Unite for Good is all about," he added.

To see the full range of CUNA's s suggested action steps for credit unions, use the resource link.

NEW: NCUA Liquidates ICE FCU

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ALEXANDRIA, Va. (UPDATED: 3/15/13, 12:25 p.m.ET)--I.C.E. FCU, Inglewood, Calif., has been liquidated by the National Credit Union Administration.

The agency in a release said it moved to liquidate the 942 member, $3.4 million-in-asset credit union after it determined the credit union was insolvent and had no prospect for restoring viable operations.

The credit union, which was chartered in 1939, served Inglewood city employees and their families.

I.C.E. FCU is the third federally insured credit union to be liquidated in 2013.

For more, use the resource link.

PCA, Risk Management Discussed In CUNA/NCUA Meeting

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WASHINGTON (3/15/13)--Agency efforts to update prompt corrective action (PCA) requirements was one of the many regulatory issues discussed when Credit Union National Association President/CEO Bill Cheney and CUNA's Executive Committee met with National Credit Union Administration Chairman Debbie Matz this week.

CUNA General Counsel Eric Richard, Chief Economist Bill Hampel and Deputy General Counsel Mary Dunn joined Cheney and NCUA senior staff at the meeting, which lasted over an hour. Matz during the meeting emphasized that the NCUA "can't hold credit unions back when there aren't safety and soundness issues."

The agency is reviewing its PCA requirements in response to a January 2012 study of the NCUA's handling of problem credit unions, and the NCUA has developed a working group to tackle the issue. The NCUA said it is also considering ways to enhance risk based net worth provisions.

Cheney suggested the NCUA could add supplementary capital authority changes to any PCA reforms it develops, and noted that CUNA wants to work with the NCUA to pursue this. CUNA is also developing PCA recommendations in this area and will be meeting with NCUA Director of Examinations and Insurance Larry Fazio on this topic in early May.

CUNA also plans to discuss due diligence concerns with Fazio in the near future. CUNA has noted that due diligence requirements, regardless of the level of risk, can stymie innovation.

Enterprise risk management, and what it means for examiners and credit unions, was another topic addressed during the meeting. Matz said the NCUA is preparing a supervisory letter to examiners on this issue, a step that CUNA has urged.

Matz during the meeting reiterated her support for derivative authority as a means to help address rising interest rates, and agency staff stated that interest rate risk (IRR) is the biggest forward facing risk NCUA has. On issues such as the measurement of IRR, where there can be legitimate disagreements between credit unions and their examiners, Matz said the agency is urging credit unions to talk with their supervisory examiner.

The CUNA officials strongly urged the agency to allow credit unions to invest in simple derivatives to manage interest rate risks. An NCUA IRR proposal is expected this summer, and CUNA is pressing the agency to move forward on this issue.

Corporate stabilization fund management and examination issues were also discussed during the meeting. Dunn said overall the meeting was productive. "CUNA will continue to pursue all of these issues with NCUA," she added.

Housing Policy Bills Unveiled In House And Senate

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WASHINGTON (3/15/13)--The future of federal housing policy continues to be hotly debated in Congress, and U.S. House and Senate members on Thursday introduced separate bills addressing the government's role in that market.

In the House, Financial Services Committee Ranking Member Maxine Waters (D-Calif.) reintroduced legislation that would strengthen the Federal Housing Administration (FHA) and help ensure that agency's long-term solvency.

The bill, known as the FHA Emergency Fiscal Solvency Act, would in part accomplish this by:
  • Giving the FHA greater flexibility to take action against loan originators that have high loan losses or take part in faulty underwriting; and
  • Authorizing FHA to require indemnification for improperly written loans.
Waters in a release noted that similar legislation was passed by the House last session. The bill is co-sponsored by Rep. Michael Capuano (D-Mass.).

Another Massachusetts legislator, Sen. Elizabeth Warren (D), joined with Senate Banking Committee colleagues Bob Corker (R-Tenn.), Mark Warner (D-Va.) and David Vitter (R-La.) to introduce the Jumpstart GSE Reform Act.

According to a release, the Senate bill would:
  • Prohibit any increase in the guarantee fees charged by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac from offsetting other government spending; and
  • Prohibit the sale of preferred GSE shares without congressional approval and structural housing finance reform.
The U.S. Treasury has held the preferred GSE shares since the two institutions were taken under government conservatorship in 2008. That agency has the authority to sell or dispose of the shares.

The senators in a release said any premature actions outside of structural reform will only build obstacles to a new housing finance system. "We know our housing finance system is not sustainable in its current form, and this legislation will keep us on a path to accomplish real reforms," Warner said in the release.

A range of mortgage market reforms have been discussed, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Congressional hearings on mortgage market reforms have also been held.

The Credit Union National Association has repeatedly said that any changes to secondary mortgage market structure must allow credit unions and other small issuers to maintain full and unrestricted access to that market. CUNA has also highlighted the importance of preserving 30-year, fixed-rate mortgages and ensuring that the secondary market is strong enough to weather economic adversity.

Fixed-Asset Rule Clarifications Proposed, Charter Change Approved: NCUA

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ALEXANDRIA, Va. (3/15/13)--The National Credit Union Administration voted to seek comments on a proposal that clarifies and reorganizes portions of its rule addressing federal credit union ownership of fixed assets during a swift March open board meeting.

Click to view larger image NCUA Chairman Debbie Matz, center-right, Board Member Michael Fryzel, center-left, and agency staff share a light moment before a less-than-lengthy NCUA open board meeting on Thursday. The meeting took around 20 minutes to complete. (CUNA Photo)
The NCUA's current fixed assets rule, Section 701.36, allows federal credit unions to purchase, hold and dispose of property necessary or incidental to their operations. These fixed assets include office buildings, branch facilities, furniture, computer hardware and software, and ATMs.

The proposal is not intended to impose new requirements on credit unions. It revamps portions of the rule to use more plain language, reorganizes certain definitions, and adds a new introduction to define the scope and application of the regulation. The proposal also clarifies the processes for obtaining regulatory waivers from the rule. New definitions for the terms "partially occupy" and "unimproved land or unimproved property" have also been added, the NCUA said.

The proposal is not intended to impose new requirements on credit unions. It revamps portions of the rule to use more plain language, reorganizes certain definitions, and adds a new introduction to define the scope and application of the regulation. The proposal also clarifies the processes for obtaining regulatory waivers from the rule. New definitions for the terms "partially occupy" and "unimproved land or unimproved property" have also been added, the NCUA said.

NCUA Chairman Debbie Matz credited board member Michael Fryzel with first suggesting that the agency could simplify the regulation into plain English. She said the NCUA will look for ways to treat other existing regulations in a similar fashion as the agency moves forward with its regulatory modernization initiative.

"By reorganizing the rule, adding definitions and using the principles of plain writing, we're making it easier for credit unions to follow the rule," Matz said.

Comments on the proposal will be due 60 days after the plan is published in the Federal Register.

Credit Union National Assocition Deputy General Counsel Mary Dunn said "CUNA will be using this opportunity to review the rule in detail and provide broad comments."

The NCUA also voted to approve a community charter conversion request from Cinfed FCU, Cincinnati, Ohio. That multiple common-bond chartered credit union was established in 1934, and holds $312.9 million in assets. Cinfed has 29,791 members, representing nearly 75% of the credit union's potential membership base. The charter expansion will allow the credit union to serve residents of Boone, Campbell and Kenton counties in Kentucky and Hamilton County in Ohio. This expands the credit union's potential field of membership to 1,171,241, the agency said.

Matz acknowledged Cinfed for putting a great deal of thought into their charter change proposal. The credit union plans to diversify its membership, increase earnings and reach into the Latin American community with outreach activities and potentially a Spanish-language version of its website. The credit union also plans to work extensively with underserved populations by offering low-deposit checking accounts, credit rebuilder loans, and rate reductions for members once they establish payment history, the NCUA said.

For more on the meeting, use the resource links.

NEW: NCUA Seeks Comment On Fixed-Asset Rule Clarifications

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ALEXANDRIA, Va. (UPDATED: 3/14/13, 10:15 a.m. ET)--At what was a very brief meeting this morning, the National Credit Union Administration has just voted to seek comments on a proposal that clarifies and reorganizes portions of its rule addressing federal credit union ownership of fixed assets.  Comments will be due 60 days after the plan is published in the Federal Register.

The proposal is not intended to impose new requirements on credit unions, but would update the existing regulation by reorganizing and clarifying the current requirements in a more user friendly format.

The NCUA also voted to approve a community charter conversion request from Cinfed FCU, Cincinnati, Ohio.

The NCUA's closed session, which will follow the open meeting, will feature three items. Those items are:

  • A purchase and assumption request;
  • A merger request; and
  • Requests under Section 205(d) of the Federal Credit Union Act, which deals with prohibitions on individuals convicted of crimes involving dishonest and exceptions to those prohibitions.
Watch News Now for more on the NCUA meeting results.

Small Creditor Escrow Relief Previewed By CFPB

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WASHINGTON (3/14/13)--A preliminary list of the counties in which small creditors will be exempt from pending escrow requirements has been released by the Consumer Financial Protection Bureau.

The CFPB's escrow rule, issued in January, generally extends the required duration of a mortgage loan escrow account to five years. The current minimum duration is one year. Lenders that work in rural or underserved areas will be exempt from the escrow changes, provided they meet certain other criteria, the CFPB said.

The preliminary list of CFPB-approved rural and underserved areas covers counties in 46 states and Puerto Rico. A finalized list will be released alongside some technical amendments to the escrow rule before June 1, the agency said. The escrow rule is also expected to be finalized at that time.

The CFPB said it will define rural counties by using the U.S. Department of Agriculture Economic Research Service's urban influence codes. Underserved counties are defined by reference to data collected under the Home Mortgage Disclosure Act, the agency said. Some counties' status may change from year to year, the CFPB added.

The Credit Union National Association has developed an escrow account compliance chart and other resources to help credit unions comply with this and other CFPB 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 also in the works.

For the CFPB release and the CUNA chart, use the resource links.

CUNA Works All Fronts For CU Reg Relief

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WASHINGTON (3/14/13)--The Credit Union National Association works every day to fight credit unions' regulatory burden on three fronts--legislative, regulatory and political, CUNA Executive Vice President of Government Affairs John Magill notes.

"CUNA is on Capitol Hill to talk about regulatory burden every single day, meeting with legislators and members of their staff, whether the discussion is addressing pending legislation or looking for future avenues of relief," Magill adds.

These efforts are meant to keep the issue of regulatory relief for credit unions in the forefront of the minds of lawmakers and regulators and have meant results for credit unions in recent months: CUNA-backed legislation that would reduce the frequency of costly member privacy notices passed the U.S. House this week.

That followed closely on the heels of last year's bill that revised Regulation E to require that ATM fee disclosures only need to be presented on an ATM's screen. That bill was signed into law in December. CUNA's current priorities remain protecting the credit union tax status and supporting legislative priorities such as increasing the member business lending cap and providing greater access to supplemental capital to credit unions.

On the regulatory front, CUNA is continually communicating with the range of agencies that affect credit unions, including the National Credit Union Administration, to urge regulatory relief. CUNA CEO Bill Cheney met personally with NCUA Chairman Debbie Matz as recently as Tuesday.

One recent action that reflects CUNA's work is the agency's approval of a regulation that increases the asset-size threshold that defines a "small" credit union, notes CUNA Deputy General Counsel Mary Dunn. CUNA-recommended changes were included in the NCUA's final regulation. CUNA also advocated for an expanded definition of "rural district" as it applies to field of membership, which NCUA approved last month, as well as authority for federal credit unions to purchase Treasury Inflation Protection Securities. CUNA is strongly encouraging the agency to take other steps to address examination and regulatory burden issues.

CUNA also is working proactively to urge the Consumer Financial Protection Bureau to focus more attention on exemption of credit unions and 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. CUNA has also urged the agency to guard against overburdening credit unions with unnecessary rules, and has called on the CFPB to bring its awareness of the credit union difference into play as it develops any new rules.

These types of legislative and regulatory improvements "are paramount if credit unions want to be able to offer much-needed services to more members, and we are broadening our focus so we can incorporate everyone into this effort--CUNA, the state credit union leagues, small business advocates, and consumers," Magill says.

CUNA research shows credit union leaders are becoming more receptive to involving their members in political affairs, noting that 52% of board members that responded to a recent CUNA survey said they "strongly support" asking their credit union's members to oppose anti-credit union issues. "We need our members to be aware of what credit unions are doing for them and how they can be a part of that," CUNA Senior Vice President of Political Affairs Richard Gose notes.

Increased grassroots advocacy will help credit unions reach all 535 members of Congress, and Gose reiterated the CUNA/credit union league Plan to Win has an outline for how best to reach all members of Congress: From committee leadership to first-time legislators.

"We may not turn them all into credit union champions, but we will be able to move them toward a higher level of credit union understanding and support," he said.

CUNA and leagues' thrust for regulatory relief is also central to achieving the new strategic vision for the credit union system that CUNA's Cheney outlined at the 2013 Governmental Affairs Conference, a vision where "Americans choose credit unions as their best financial partner."

Realizing this vision, he explained, will require that the credit union system "unite for good" to remove regulatory and legislative barriers, raise consumer awareness of credit unions, and foster movement-wide service excellence.

For more on CUNA's vision for the credit union system, use the resource link.

Exam Issues Are Topic Of Free NCUA Webinar

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ALEXANDRIA, Va. (3/14/13)--National Credit Union Administration Office of Examination and Insurance Deputy Director Timothy Segerson will discuss how agency examiners evaluate a credit union's ability to manage operational and balance sheet risk during a March 27 agency 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 also discuss:
  • How credit unions can effectively manage interest rate and liquidity risk;
  • How credit unions can control for concentration risk;
  • How a credit union can measure and manage technology risks;
  • Whether a credit union's internal controls are sufficient to deter and mitigate fraud, errors or other operational problems; and
  • Whether a credit union's supervisory committee and audit functions are adequate for its size and complexity.
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.

Report Says Small Biz Unmet Capital Needs Harm Economy

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WASHINGTON (3/14/13)--A TD Securities report shows that limited access to capital is slowing the overall economic recovery, and this report underscores a longtime credit union argument: that the U.S. Congress must act to remove the low, arbitrary 12.25%-of-assets cap on credit union member business loans.

In a release cited on businessinsider.com, TD Securites said overall credit conditions have been on the mend, but also noted access to credit has been limited for some small business owners.

The proportion of businesses ready to increase their capital spending has held steady at around 20%, below the pre-recession average of 30%, TD Securities reported. This shows credit access has impacted hiring and capital spending decisions, TD Securities noted.

According to U.S. Small Business Administration statistics, small businesses represent 99.7% of all employer firms, employ half of all private sector employees, and pay 44% of total U.S. private payroll.

Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) in mid-February introduced 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.

The Credit Union National Association continues to strongly support the MBL bill, which has 63 cosponsors.

Fed Changes Time For FOMC Statements, News Conferences

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WASHINGTON (3/14/13)--The Federal Reserve announced Wednesday that it is cutting the time between the release of the Federal Open Market Committee's (FOMC) quarterly statement and the beginning of the news conference to discuss the FOMC actions.

From now on, FOMC policy statements for all regularly scheduled meetings will be released at 2 p.m. (ET).  For meetings with news conferences, the committee's current economic projections will also be released at 2 p.m. (ET) and the Fed chairman's news conference will begin at approximately 2:30 p.m. (ET).

House Passes Privacy Notice Bill: CUNA Urges Senate To Act

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WASHINGTON (3/13/13)--The U.S. House on Tuesday approved by voice vote the Eliminate Privacy Notice Confusion Act (H.R. 749), and the bill will now move on for Senate consideration.

Credit Union National Association President/CEO Bill Cheney 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, so House passage is a benefit to consumers and credit unions alike," he added.

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 backed the bill since it was introduced in the last session of Congress, and urged House members to vote yes on H.R. 749 in a letter sent Tuesday morning. Thousands of credit union representatives also sought support for the legislation when they met with their Washington representatives during the recently completed CUNA 2013 Governmental Affairs Conference.

The CUNA CEO thanked Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) for their leadership on the privacy notice issue, and urged the Senate to take note of Tuesday's strong House vote "and act promptly in similar fashion to enact this important piece of legislation."

CUNA Senior Vice President for Legislative Affairs Ryan Donovan said a Senate companion bill could be released as soon as this week. Donovan said CUNA looks forward to working with the Senate to pass H.R. 749, or a similar companion bill.

'Understanding Student Loans' In NCUA Monthly Report

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ALEXANDRIA, Va. (3/13/13)--The March edition of "The NCUA Report" is now available and among this month's newsletter features is an article called, "Understanding the Risks of Private Student Lending."

The article says that, for the most part, credit unions have been in this market for a relatively short time-most have offered private student loans for less than five years. 

The article notes:

  • The Consumer Financial Protection Bureau reports that student loan debt just surpassed $1 trillion in 2012 and is now the largest form of consumer debt in the U.S., eclipsing credit cards;
  • Private student loans comprise 15% of total outstanding student loan debt. The remaining 85% is federally guaranteed loans; and
  • Total delinquencies (loans past due more than 60 days) in the private student loan market nationwide is 5.4% (according to CFPB), and total delinquency for credit unions in their portfolios is a much lower 1.46%.
As credit unions become more involved in providing these loans to their members, they must be aware that it is an attractive loan product but with rising delinquency rates. They also must consider all risks associated with private student loans before entering the market, the NCUA says.

The agency names some of the risks as:

  • An increasing reliance on parents as co-borrowers for private student loans, which has almost doubled since 2005. According to CFPB, 55% of private student loans had cosigners in 2005;
  • That number jumped to 91% in 2011;
  • The compounding of interest because of a deferral period can be quite large when the repayment period begins. A typical private student loan can have a deferral period up to five years while the borrower is in school. This results in the borrower owing much more than just the original principal; and
  • Unlike federal guaranteed student loans that have fixed rates, private student loans usually have adjustable rates. Although the current interest rate environment is at an all-time low, there is no guarantee that rates will remain that low three to four years out.
The NCUA states it expects credit unions to establish reasonable concentration limits for a private student loan portfolio to protect against risk.

Use the resource link to read more.

CUs Are Not Mentioned In New Tax Proposals

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WASHINGTON (3/13/13)--As expected, the credit union tax status is not mentioned nor targeted in a U.S. House Republican budget released on Tuesday. Other items of interest to credit unions, however, including Fannie Mae and Freddie Mac and financial regulations, are addressed.

The Credit Union National Association's work to educate lawmakers and the public about the public policy value of the credit union tax status is a top priority.

The Republican budget plan would:

  • Wind down Fannie Mae and Freddie Mac and decrease the government's role in the mortgage sector;
  • Require the use of fair-value scoring for federal housing-credit programs;
  • Revisit elements of financial regulations, and the Dodd-Frank Wall Street Reform Act; and
  • Require that the costs of legislation related to housing be calculated on a fair-value basis and authorize the use of fair-value costs estimates for other credit programs.
The plan also instructs eight congressional committees to each produce their own legislation that would reduce the federal deficit by at least $1 billion over ten years.

Overall, the Republican plan would reduce spending by $4.6 trillion by 2023 through healthcare changes, welfare reforms, closing loopholes, consolidating some tax forms and making other changes.

A Senate Democrat budget is expected to be released on Wednesday. While that full plan was not revealed as of late Tuesday, several outlets reported basic details of the plan. The Democratic budget plan would create $975 billion in new revenues by reducing tax expenditures, cut domestic spending by $493 billion, reduce defense spending by $240 billion, and add $100 billion in new infrastructure spending. These results would be achieved over a ten-year span.

Both budgets are being released to the backdrop of budget and tax discussions. A long-term budget has not been passed by Congress since 2009, and the government has been funded on short-term bills since that time.

CUNA Executive Vice President of Government Affairs John Magill this week said "absolutely everything in the tax code could fall under the microscope of those policy makers charged with developing tax reform. 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, we know that an educated Congress, and an educated public, are the credit union movement's best tools to work to keep it that way."

Magill has also encouraged credit unions to continue their conversations with lawmakers and to engage their members as well by using a Tax Status Advocacy Toolkit provided by CUNA and the leagues.

Cordray Says CFPB Should Protect CUs During Nomination Hearing

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WASHINGTON (3/13/13)--Credit unions and community banks did not engage in practices that caused the financial crisis, and the Consumer Financial Protection Bureau's regulatory actions "should take account of that fact and protect and preserve their traditional model of lending which is a very responsible model and good for many communities across this country," CFPB Director Richard Cordray said on Tuesday.

Cordray made the remarks during a Senate Banking Committee confirmation hearing. Committee Chairman Tim Johnson (D-S.D.) started Cordray's questioning by noting that credit unions and community banks continue to raise concerns about regulatory burden, and asking how the CFPB plans to address these issues while protecting consumers.

The CFPB has met with credit unions and other small financial institutions in South Dakota and elsewhere, and the CFPB's work has been influenced by these meetings, Cordray responded. The meetings affected the agency's qualified mortgage rule, escrow rule and servicing rule, he noted. The CFPB has created separate credit union and community bank advisory councils to speak regularly and specifically with small financial institutions about the issues they face, Cordray added. The regulation of non-banks and the shadow banking system are areas of emphasis for the agency, he said.

The agency's structure and funding were also touched on during the hearing. Cordray said he is open to working with the Senate to further develop transparency and accountability of the agency. He added that the agency is always accountable to Congress, and said he himself has found the congressional oversight process to be "vigorous and meaningful."

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. The Credit Union National Association 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.

Senate Republicans have consistently said they would block any CFPB nominee if certain structural changes were not made to the agency.

The committee also heard from Mary Jo White, who is President Barack Obama's nominee to lead the Securities and Exchange Commission. A vote on both nominees will be held at a later date.

Cordray's nomination is expected to pass through the committee, but his prospects before the full Senate are uncertain, CUNA Senior Vice President for Legislative Affairs Ryan Donovan said. The banking committee approved Cordray's nomination in late 2011, but he did not receive a full vote in the Senate. President Barack Obama appointed Cordray to the director position during a brief congressional recess in 2012, and some have questioned the constitutionality of this appointment.

House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) in a March 8 letter to Federal Reserve Chairman Ben Bernanke said the nature of Cordray's appointment could impact the agency's funding. The letter questioned the circumstances under which the Fed could lawfully fund the CFPB's operations, and asked Bernanke to comment on that issue.

CFPB Sets March Field Hearing For Consumer Complaint Database

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WASHINGTON (3/13/2013)--The Consumer Financial Protection Bureau's (CFPB) Office of Consumer Response will host a field hearing on its consumer complaint database on Thursday, March 28 at 11 a.m. (CT), in Des Moines, Iowa.

CFPB Director Richard Cordray will open the hearing with remarks and the event also will feature testimony from consumer groups, industry representatives, and members of the public.

The CFPB database compiles consumer complaints related to credit cards, deposit accounts, mortgage loans, student loans and consumer loans. The bureau plans to add consumer complaints on other types of financial products over time.

While credit unions will not likely be the subject of a sizable number of consumer complaints, the Credit Union National Association has expressed concern that the public data release could have unintended consequences.

CUNA has warned that sensitive or confidential business or consumer information could be inadvertently disclosed when consumer complaints are filed in the database. "The bureau should take steps to minimize privacy risks and other unintended consequences," CUNA has said in a series of comment letters.

The CFPB said more information on the hearing will follow its Tuesday announcement. The event is open to the public and any interested party can sign up at cfpb.events@cfpb.gov with their full name and organizational affiliation, if it applies.

CDFI Fund Bond Program Detailed In Agency Release

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WASHINGTON (3/12/13)--The Community Development Financial Institutions (CDFI) Fund continues to develop its bond guarantee program, and has released a powerpoint presentation to educate credit unions and other CDFI Fund participants on the program before it is implemented.

Under the CDFI Fund bond program, notes or bonds of up to 30 years duration issued by CDFIs would have full guarantees from the U.S. Treasury. The bond program, which is still being developed, would support CDFI lending and investment by providing a source of long-term, patient capital to CDFIs, the CDFI Fund said. The bond guarantee program was enacted by the Small Business Jobs Act of 2010.

The bond program development is currently in the interim final rule stage. Comments on the interim final rule will be accepted until April 8.

The 85-page powerpoint presentation is identical to the document released at a series of February information sessions. The CDFI Fund said the document includes:

  • An introduction to the program's secondary loan requirements;
  • An overview of the CDFI Bond Guarantee Program's Interim Rule and financial structure;
  • Information on financial structure terms, requirements and timing, and risk assessments with respect to a bond issuance; and
  • Details on repayment and relending terms.
The CDFI Fund also plans to post transcripts of its information sessions, clarify elements of the rule through frequently-asked-question documents, and release webisodes to detail "more complex components" of the bond guarantee program. Additional workshops on the program are being planned.

The Credit Union National Association has recommended that credit unions that are designated CDFIs be eligible for guarantees on notes that could be used as secondary capital. CUNA added that credit unions should be allowed to count any proceeds from these bonds as supplemental capital.

For the CDFI Fund release, use the resource link.

Reps Hensarling, McHenry Seek Too Big To Fail Docs

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WASHINGTON (3/12/13)--House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) and Rep. Patrick McHenry (R-N.C.), who is chairman of that panel's subcommittee on financial services oversight and investigations, are seeking documents detailing how federal agencies assess the impact of potential criminal and civil cases against large complex financial institutions.

The lawmakers' letter to Attorney General Eric Holder and U.S. Treasury Secretary Jack Lew followed Holder's recent comments that some banks may be too big for the government to effectively prosecute.

Holder testified at a Senate Judiciary Committee hearing held last week,"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy." Holder on Dec. 19 said the Department of Justice takes financial market stability into consideration, and works with outside experts, when it determines how best to move forward with potential prosecutions or other actions.

The letter asked for any communications regarding the economic impact that criminal or civil suits, or administrative actions, taken against large institutions could have. The letter suggested these records could come from the Department of Justice, the Office of the Comptroller of the Currency, the Treasury and/or the Financial Stability Oversight Council.

The letter asked the Administration to provide the documents by March 22.

Hensarling and McHenry in the letter said the committee may hold hearings on the issue.

CFPB: Nonbanks, Larger Banks Are Main Focus

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WASHINGTON (3/12/13)--Unregulated nonbank entities and large financial institutions are two of the prime targets of the Consumer Financial Protection Bureau's attention, CFPB Southeast regional director Jim Carley told a bank group last week (American Banker, March 11).

The Credit Union National Association has been encouraging 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. CUNA has also urged the agency to guard against overburdening credit unions with unnecessary rules. In fact, CUNA has called on the CFPB to bring its awareness of the credit union difference into play as it develops any new rules.

In a January letter to the agency, CUNA President/CEO Bill Cheney wrote that credit unions do not always expect to be exempt from new regulations. However, he added, "There are a number of factors unique to credit unions that support liberal use of the CFPB's exemption authorities for our members, and we urge the agency to be as proactive as possible in considering how those authorities should be applied."

"We urge the agency to help direct its appreciation of the way credit unions operate into meaningful regulatory relief for credit unions so that they can do even more to serve their communities," Cheney added.

CFPB Director Richard Cordray will speak before a Senate Banking Committee confirmation hearing today. (See News Now story: Cordray Nomination, Privacy Bill Vote, NCUA Meeting Fill the Washington Week)

CUNA: Banks' Attack On CU Bill Misfires

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WASHINGTON (3/12/13)--Banks' attacks against a supplemental capital bill for credit unions are spurious, will go nowhere, and run counter to a growing interest among members of Congress in capital reform not only for credit unions, but for financial institutions generally, said the Credit Union National Association Monday.

"The Independent Community Bankers of America Association's criticism of the Capital Access for Small Business Act (H.R. 719) is disingenuous and will be seen as such on the Hill," said CUNA Executive Vice President of Government Affairs John Magill Monday, after the ICBA circulated a letter to federal lawmakers attacking the legislation.

"The truth is, this bill is very balanced. That is and will continue to be our message on Capitol Hill. It would provide credit unions with the appropriate ability to raise capital from sources other than retained earnings without in any way jeopardizing the 'one member, one vote' principle that is the bedrock of the credit union ownership structure.

"Moreover, this bill also would strengthen the safety and soundness of credit unions by allowing them to develop a supplemental cushion as an added safeguard," Magill noted.

The bill was introduce Feb. 14 by Reps. Pete King (R-N.Y.) and Brad Sherman (D-Calif.) and would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--which currently is the only type of capital that counts at a credit union. The bill is substantially similar to last year's H.R. 3993, which had 45 cosponsors.  "Congress is showing greater interest in capital reform, and we expect our legislation to be part of the discussion," said Magill.

In January, CUNA  named a four-pillar 2013 legislative agenda, which includes advancing charter enhancements and which named  supplemental capital and increased member business lending (MBL) as two priorities.  Within a day of the introduction of the supplemental capital bill, Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.)  reintroduced legislation (H.R. 688) to increase the MBL cap to 27.5% of assets, from the current 12.25%.  Both bills were the focus of advocacy efforts on Capitol Hill when more than 4,200 came to Washington recently for CUNA's Governmental Affairs Conference.

To counter the bankers' latest misinformation, CUNA is providing more information to key offices on Capitol Hill regarding the need for supplemental capital, as well as increased MBL authority, which CUNA estimates 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.

NEW: House Approves Privacy Notice Bill

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WASHINGTON (UPDATED: 3/12/13, 5:20 p.m.ET)--The U.S. House has approved by voice vote the Eliminate Privacy Notice Confusion Act (H.R. 749), and the bill will now move on for Senate consideration.

Credit Union National Association President/CEO Bill Cheney 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, so House passage is a benefit to consumers and credit unions alike," he added.

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 backed the bill since it was introduced in the last session of Congress, and urged House members to vote yes on H.R. 749 in a letter sent Tuesday morning. Thousands of credit union representatives also sought support for the legislation when they met with their Washington representatives during the recently completed CUNA 2013 Governmental Affairs Conference.

The CUNA CEO thanked Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) for their leadership on the privacy notice issue, and urged the Senate to take note of Tuesday's strong House vote "and act promptly in similar fashion to enact this important piece of legislation."

CUNA Senior Vice President for Legislative Affairs Ryan Donovan said a Senate companion bill could be released as soon as this week. Donovan said CUNA looks forward to working with the Senate to pass H.R. 749, or a similar companion bill.

Regulatory Advocacy Report Features CUNA TILA/RESPA Comments

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WASHINGTON (3/12/13)--The Consumer Financial Protection Bureau continues its work to integrate Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) mortgage disclosures, and a Credit Union National Association comment letter on this project is one of many issues tackled in this week's Regulatory Advocacy Report.

In the comment letter, CUNA says it is concerned that the CFPB's proposal to test certain fixed rate and adjustable rate loans may not adequately address all loans in the product marketplace.

For example, CUNA Associate General Counsel Jared Ihrig wrote that CUNA does not see evidence that the CFPB is testing loans where features such as simultaneous second lien loans, refinance transactions, cash-out transactions, loans where buydowns may occur with third parties, loans with lender credits, or loans where there are non-borrowers signing the security instrument, but not the note, are occurring.

The CUNA comment letter called on the CFPB to expand the scope of its quantitative testing to include more loan scenarios as part of its proposed testing methodology.

"Without testing for these and other variables that can often be made part of borrowers' real estate transactions, CUNA believes that the combined TILA/RESPA disclosures may not adequately take into account the differences in these transactions, which may cause further concern and frustration for lenders and consumers, alike," Ihrig wrote. The CUNA comment letter suggested the CFPB incorporate points and fees calculations to its testing regime. CUNA also commented on the timing of the tests.

For the full comment letter, use the resource link.

This week's edition of the Regulatory Advocacy Report also features details on:
  • A CFPB survey on financial services marketed to higher education students;
  • Federal Financial Institution Examination Council social media guidance;
  • National Credit Union Administration regulation reviews;
  • The Financial Accounting Standards Board's (FASB) proposal regarding financial reporting of expected credit losses on loans and other financial assets, and more.
The FASB proposal was among many items covered in a CUNA "Pressing Regulatory and Compliance Issues Audio Conference" held last week. (See News Now coverage: FASB Changes, CFPB Agenda Detailed In CUNA Audio Conference: Part 2, and New Credit Rating, CFPB Info Featured In CUNA Pressing Issues Call)

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

The Regulatory Advocacy Report is archived on cuna.org.

NEW: CUNA Urges House Support Ahead Of Privacy Bill Vote

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WASHINGTON (UPDATED: 3/12/13, 11:05 a.m. ET)--The Credit Union National Association this morning continues its strong push for a vote, perhaps as soon as today, on the Eliminate Privacy Notice Confusion Act (H.R. 749).

In a letter sent to all members of the U.S. House today, CUNA President/CEO Bill Cheney has encouraged members to pass the legislation that CUNA says will help credit unions by reducing their operational burden and help consumers by ending a requirement that the notices be sent annually even when the conditions have remained the same. Under the terms of the bill, privacy notices would only to be sent when the privacy policy of a financial institution has changed.

The bill is on Tuesday's suspension calendar, and debate is expected to begin around 5 p.m. ET. A recorded vote, if requested, could take place thereafter.

CUNA strongly supports the bill and has worked closely with lawmakers to get the bill to this point.

Cheney in the letter said credit unions have sent an estimated one billion annual privacy notifications to members since 2001. However, he said, fewer than one-quarter of consumers read the privacy notifications they receive, according to one survey. More than three-quarters of consumers would be more likely to read them if they were only sent when the financial institution changed its policy, he noted.

"This suggests that the public policy goal of privacy notifications would be better achieved if the notices had more meaning to consumers." H.R. 749 achieves this end, Cheney wrote.

For the full CUNA letter, use the resource link.

Cordray Nomination, Privacy Bill Vote, NCUA Meeting Fill the Washington Week

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WASHINGTON (3/12/13)--Three items of interest to credit unions are on the Washington agenda this week: A Tuesday confirmation hearing for Consumer Financial Protection Bureau Director Richard Cordray, a potential vote on legislation that would eliminate burdensome annual privacy notice requirements, and the March National Credit Union Administration board meeting.

The Senate Banking Committee confirmation hearing is scheduled to begin at 10 a.m. (ET). Credit Union National Association Senior Vice President for Legislative Affairs Ryan Donovan said committee-level confirmation hearings can often provide those under an agency's oversight to highlight some of the regulatory burdens they face.

Cordray's nomination is expected to pass through the committee, but his prospects before the full Senate are uncertain, Donovan noted. This is the second time the CFPB director has been nominated for that post: The banking committee approved his nomination by a party-line 12-10 vote in late 2011, but he did not receive a full vote in the Senate. President Barack Obama appointed Cordray to the director position during a brief congressional recess in 2012.

Some Senate Republicans have consistently said they would block any CFPB nominee if certain structural changes were not made to the CFPB. One such change is replacing the director's position with a five-member panel of leadership as a way, supporters say, of making the CFPB's actions more transparent.

Legislation that would create such a panel (s. 205) has been introduced in the Senate.  The Credit Union National Association backs such a multi-member directors panel 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.

While the CFPB and Cordray's nomination to lead that agency have proved polarizing for some, one item that has not been controversial is a CUNA-supported privacy notification bill, H.R. 749, the Eliminate Privacy Notice Confusion Act.

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.

The bill is on Tuesday's suspension calendar. Non-controversial bills are added to this calendar, and Donovan said it is expected to pass the House easily. 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.

"Getting the bill through the House early will give CUNA a lot of time to work it through the Senate," Donovan noted. CUNA hopes to see a companion bill introduced in the Senate, he added.

H.R. 1035, which would require a study of voluntary community-based flood insurance options and how such options could be incorporated into the national flood insurance program, could also be considered in the House this week.

Other items on this week's congressional agenda include:

  • A Wednesday House Financial Services housing and insurance subcommittee hearing entitled "Mortgage Insurance: Comparing Private Sector and Government-Subsidized Approaches.";
  • A Thursday House Financial Services oversight and investigations subcommittee hearing on too big to fail  institutions and the Government Accountability Office's assessment of the Financial Stability Oversight Council and the Office of Financial Research;
  • A House Judiciary courts and intellectual property subcommittee on abusive patent litigation;
  • A Senate Small Business and Entrepreneurship Committee hearing on small business access to capital and disaster recovery; and
  • A Joint Economic Committee hearing on federal debt issues.
These and other issues are covered in the CUNA Legislative Update, provided each week to CUNA members for the latest information involving Capitol Hill. Use the resource link to access this issue, as well as earlier ones.

The NCUA open board meeting, which is scheduled for Thursday, will feature discussion of a proposed rule addressing federal credit union ownership of fixed assets and a community charter conversion request. A purchase and assumption request, a merger request and requests under Section 205(d) of the Federal Credit Union Act are on the agenda for the closed NCUA board meeting.

Cheney Interviewed In Bloomberg BoA 'Gaffes' Article

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WASHINGTON (3/12/13)--Credit Union National Association President/CEO Bill Cheney was quoted in a Bloomberg/Business Week feature, also appearing in Sunday's Washington Post, on how Bank of America's rush in late 2011 to impose a $5 a month debit card fee backfired and drove consumers to join credit unions by the thousands.

Cheney was among those asked to comment for a feature story on B of A CEO Brian Moynihan. The feature chronicled missteps and rebounds by the mega-bank's CEO since he came on board in the wake of the financial crisis.

CUNA's Cheney noted in the article that the bank fee was a major miscalculation that sparked the consumer-led Bank Transfer Day, which allowed credit unions to gain hundreds of thousands of new account holders in the month after the $5 fee was announced (and later rescinded by B of A).  "Clearly, it was a strategic error, especially since they backed down from it," Cheney said. 

The article noted that the big bank's fee decision was "was met with protests at branches from Los Angeles to Boston."

CUNA has highlighted that credit unions reported phenomenal membership growth in 2011, with the boost from Bank Transfer Day, and that growth has continued to date, indicating that consumers trust credit unions with their financial business.

NCUA-CFPB Webinar Now Available Online

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ALEXANDRIA, Va. (3/12/12)--The National Credit Union Administration has posted to its website an archived version of its recent virtual town hall webinar with Consumer Financial Protection Bureau (CFPB) Director Richard Cordray.

During the Feb. 5 webinar NCUA Chairman Debbie Matz noted that the agency continues to examine credit union derivatives issues, and a proposed rule on derivatives could be released in the first half of 2013.

Cordray previewed some of his agency's future plans during the webinar and noted a final version of the proposed remittance transfer regulations will be released in February or March, and will become effective 90 days after it is released. He also noted 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. (News Now Feb. 6)

Also topics discussed during the webinar were:

  • Mortgage servicing rules;
  • NCUA's Regulatory Modernization Initiative;
  • Implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and
  • CFPB's proposed overdraft regulations.
More than 1,700 participants took part in the 90-minute webinar. The archived audio recording of the virtual town hall and a written transcript of the webinar are available by using the first resource link below.

Cheney: Privacy Bill Passage Would Eliminate Needless Burden On CUs

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WASHINGTON (3/11/13)--H.R. 749, the Eliminate Privacy Notice Confusion Act, is scheduled for a full U.S. House Tuesday. The House on Friday announced that the item is on its suspension calendar for that day.

The Credit Union National Association supports the bill, which 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. Citing statistics that showed more consumers would read privacy notices if they were sent only when account terms changed, CUNA President/CEO Bill Cheney called on Congress to eliminate repetitive, annual privacy notices by passing H.R.749.

Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) introduced the bill earlier this year, and the bill has 48 co-sponsors. The bill is identical to legislation that unanimously passed the House before the 112th Congress adjourned. The Senate, however, did not act on the bill in time.

Under current rules, credit unions alone have sent an estimated one billion annual privacy notifications to members since 2001, CUNA estimates. CUNA President/CEO Bill Cheney in a letter to lawmakers noted a survey that shows 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." H.R. 749 achieves this end, Cheney wrote.

CUs' Helping Hand Covered In CU Magazine Story

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WASHINGTON (3/11/13)--This month's edition of News Now's sister publication, Credit Union Magazine, features an extensive article highlighting the many benefits of credit union membership.

The story, entitled "CUs Lend Members a Hand," notes that the worst of economic times tend to bring out the best in credit unions. Credit unions during the recent recession did what banks wouldn't: "They stood by their members and extended financial lifelines to those in need. They went the extra mile to help members in financial turmoil," the story says.

The Credit Union Magazine item provides an extensive  chart detailing how much credit union members saved, in total, between September 2011 and September 2012 due to credit unions' fee structure, and rates on savings and loans--a value that adds up to $5.8 billion annually.

Other ways that credit unions helped their members include:
  • Compiling a menu of existing products and services for members experiencing financial hardship;
  • Accepting higher levels of risk to continue lending to members with declining credit ratings;
  • Loans that aim to help members build their credit;
  • Training credit union employees to serve as financial educators; and
  • Partnering with community organizations.
Similar credit union outreach efforts have also been covered in a number of recent News Now articles noting how credit unions have helped members facing sequester furloughs. (See March 6 News Now story: More CUs Preparing Members For Sequestration Issues: A Special Report)

For the full Credit Union Magazine article, and more engaging stories, use the resource link.

FASB Changes, CFPB Agenda Detailed In CUNA Audio Conference: Part 2

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WASHINGTON (3/11/13)--The Credit Union National Association last week reiterated there is growing anxiety about the Financial Accounting Standards Board's (FASB) proposal regarding financial reporting of expected credit losses on loans and other financial assets. CUNA Deputy General Counsel Mary Dunn said CUNA is addressing these issues head on, and will meet with FASB officials in mid-March.

During a Thursday CUNA "Pressing Regulatory and Compliance Issues Audio Conference," free to CUNA-affiliated credit unions and leagues, CUNA Senior Assistant General Counsel for Regulatory Advocacy Luke Martone noted that FASB's proposed model would utilize a single "expected loss" measurement for the recognition of credit losses. This would replace the multiple existing impairment models in U.S. generally accepted accounting principles (GAAP) that primarily use an "incurred loss" approach.

Under the proposal, Martone said, a credit union would estimate the cash flows that it does not expect to collect, using all available information, including historical experience and forecasts about the future. The proposed approach--referred to as the current expected credit loss (CECL) model--considers more forward-looking information than is currently permitted under GAAP.

Martone said credit unions are concerned that:

  • The model could cause a doubling of an entity's credit impairment allowance; and
  • The proposed "expected loss" approach would require use of speculative forecasting of the performance of an asset over the remainder of the asset's life.During this year's Governmental Affairs Conference, CUNA's accounting subcommittee met with guests from the industry as well as the National Credit Union Administration to discuss this and other issues.
FASB is accepting public comments on the proposal until April 30, and CUNA is developing its comment letter on this issue which it will circulate later this month.

Consumer Financial Protection Bureau issues were also addressed during the call. Dunn said "CUNA is going to stay vigilant, but overdraft protection action does not seem to be at the top of the agency's list of priorities for the time being." She noted that student loans are a priority for the CFPB and CUNA is talking with the agency on those issues. She said NCUA has also raised issues regarding appropriate controls over student loan programs and that additional guidance may be developing. 

Thursday's session was the first of four related audio conferences CUNA is offering during the year. CUNA recommends that registrants attend all four to ensure a complete first-hand view of the latest regulatory and compliance issues, first-hand. An archived version of the session will be posted.

Other topics addressed during the free CUNA call included:
  • The latest legislative developments affecting credit unions;
  • Pending NCUA proposals and a summary of the February NCUA board meeting actions; and
  • Proposals currently open for comment.
News Now covered other CFPB and NCUA issues that were addressed during the call in Friday's edition. (See March 8 News Now story: New Credit Rating, CFPB Info Featured In CUNA Pressing Issues Call.)

Topics for the spring, summer and fall offerings will be announced as those programs are finalized. Those sessions are scheduled for June 4, Sept. 5 and Dec. 5.

For more on the CUNA call, and regulatory resources, use the links.

Sunday Wash Post Spotlights Tax Reform's Momentum

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WASHINGTON (3/11/13)-A front-page, tax-reform story in the Sunday edition of The Washington Post did not break any new ground or pose any specific threats to credit unions, but what it did do, said the Credit Union National Association's top legislative affairs officer, is underscore that the looming tax battle has to remain the number one action target for CUNA, the state credit union leagues and credit unions.

The article, 'Lobbyists Gird For Looming Tax Battle,' noted, "momentum has quietly been building toward a once-in-a-generation push to overhaul federal taxes, an effort that would likely affect nearly every family and business."

It continued, every industry, "(f)rom corporate chiefs and hedge fund lobbyists to Montana ranchers and Broadway producers," are trooping up to Capitol Hill to press their agenda.

CUNA's John Magill, executive vice president of government affairs, said that CUNA's work to educate lawmakers and the public about the public policy value of the credit union tax status is a top priority.

"Absolutely everything in the tax code could fall under the microscope of those policy makers charged with developing tax reform.  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," Magill emphasized, "we know that an educated Congress, and an educated public, are the credit union movement's best tools to work to keep it that way."

He encouraged credit unions to continue their conversations with lawmakers and to engage their members as well by using a Tax Status Advocacy Toolkit provided by CUNA and the leagues.

"CUNA's research shows that when members understand the value of membership, they will stand with us to defend the exemption. We have to work together to communicate the value proposition of credit union membership to them." (See the resource link.)

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. Under the act, credit unions have a statutory mission to promote thrift and provide credit for provident purposes to their members.

Credit unions pass on their tax savings to their taxpaying members/owners in the form of dividends or their fee structure and rates on savings and loans--a value that adds up to $5.8 billion annually.

The tax article also appeared on the washingtonpost.com.  Use the resource link.

Current, Future CU Advocacy Efforts Detailed In The Cheney Report

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WASHINGTON (3/11/13)--Credit Union National Association President/CEO Bill Cheney and CUNA's legislative team last week continued to meet with new and continuing members of the U.S. Congress. In this week's edition of The Cheney Report, the CUNA CEO said many credit unions are comfortable with asking their members to also help advance credit union legislative goals.

CUNA's recent survey of credit union CEOs and board members has found that "more and more leaders throughout the movement embrace the vital nature of political engagement."

Altogether, 52% of board members that responded to the survey said they "strongly support" asking their credit union's members to oppose anti-credit union issues. Further, 35% of board members said they were "very" or "somewhat willing" to send members political direct mail in support of a pro-credit union candidate for office. Both of these numbers are increases from recent results.

The 2013 CUNA Governmental Affairs Conference showed how many credit unions are politically involved, but Cheney noted that "political success, and movement toward realizing our strategic vision, hinges on a willingness to engage your credit union's members when necessary.

"Clearly, more of you understand that," Cheney wrote.

CUNA has created an important members-only toolkit designed to help credit unions connect with their members and educate the public about credit unions. For more on the toolkit, use the resource link.

This week's edition of The Cheney Report also provided details on recent CUNA legislative advocacy efforts, commentary on just released credit union financial results, and details on this week's scheduled Senate Banking Committee confirmation hearing for Consumer Financial Protection Bureau Director Richard Cordray.

Each Friday, The Cheney Report delivers Cheney's insights on three to four key events and policy developments affecting credit unions into the e-mail inboxes of credit union CEOs.

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.

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

CU Rep Joins Philly Fed Advisory Council

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WASHINGTON (3/11/13)--Gregory A. Smith, president/CEO of Pennsylvania State Employees CU, Harrisburg, Pa., will join the 12-member Federal Reserve Bank of Philadelphia's Community Depository Institution Advisory Council (CDIAC) in 2013.

Smith began his credit union career with Torrey Pines FCU, San Diego, Calif., in 1972, and has also worked with Western Corporate FCU, San Dimas, Calif.; Orange County's CU, Santa Ana, Calif.; Teachers FCU, Long Island, N.Y.; and Michigan State University EFCU, East Lansing, Mich. Smith is a member of the Pennsylvania Credit Union Association's State Credit Union Advisory and Regulatory Review committees. He is also active in the association's Governmental Affairs Committee.

There are 12 CDIAC groups nationwide, with each group representing one Federal Reserve district. The district CDIACs are comprised of representatives from commercial banks, thrifts and credit unions with assets of $10 billion or less.

Philadelphia Fed CDIAC members are drawn from eastern Pennsylvania, southern New Jersey, and Delaware.

The councils provide input to the Fed on the economy, lending conditions and other issues. The Fed selects one member from each of its 12 Fed local advisory councils to serve on the full CDIAC, and the council meets with the Fed in Washington, D.C., twice each year.

NCUA Sets 2013 CU Workshop Schedule

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ALEXANDRIA, Va. (3/11/13)--Examinations, strategic planning, fraud detection, leadership and fair lending compliance will be among the topics addressed when the National Credit Union Administration holds its first free workshop of 2013 on March 22.

NCUA Office of Small Credit Union Initiatives staff and representatives from the Credit Union Executives Society, Real Solutions, CUNA Mutual Group and the National Federation of Community Development Credit Unions will share their insights during the workshop.

The free workshop will be held at the Double Tree Hotel Richmond Airport in Richmond, Va.

Additional workshops have been scheduled for the following dates and locations:
  • April 4 in Philadelphia, Pa.;
  • April 4 in Chicago, Ill.;
  • April 25 in Portland, Ore.;
  • April 27 in New York, N.Y.;
  • May 2 in Detroit, Mich.;
  • May 18 in Denver, Colo.;
  • June 22 in Houston, Texas;
  • June 28 in Minneapolis, Minn.;
  • July 20 in Honolulu, Hawaii;
  • July 25 in Pittsburgh, Pa.;
  • Aug. 15 in Memphis, Tenn.;
  • Sept. 12 in Independence, Ohio;
  • Sept. 28 in Buffalo, N.Y.; and
  • Oct. 17 in New Orleans, La.
For more on workshop registration, and scholarships to these workshops, use the resource link.

New Credit Rating, CFPB Info Featured In CUNA Pressing Issues Call

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WASHINGTON (3/8/13)--A trio of pending Consumer Financial Protection Bureau mortgage regulations and new National Credit Union Administration credit rating rules were among the items addressed at the Credit Union National Association's Thursday "Pressing Regulatory and Compliance Issues Audio Conference."

The audio conference was free to affiliated credit unions and was attended by 812 callers.

During the call, CUNA compliance staff reviewed three mortgage lending requirements that will become effective June 1:

  • Prohibition on financing credit insurance or debt cancellation products (single premium insurance paid separately from the mortgage loan and monthly insurance payments are permissible);
  • Prohibition on mandatory arbitration clauses in mortgage loan and home equity lines of credit agreements; and
  • New escrow account rules for "higher-priced" mortgage loans secured by a first lien on the member's principal dwelling. 
CUNA staff also discussed the new NCUA rules, required by the Dodd-Frank Act, that remove all references to credit ratings from the agency's regulations and substitute a new standard of creditworthiness of securities. Effective June 11, NCUA is establishing for federal credit unions in Section 703 a new standard of "investment grade," which is an evaluation that "the issuer of a security has an adequate capacity to meet the financial commitments under the security." This, in essence, means the risk of default by the obligor is low, Senior Vice President for Compliance Kathy Thompson explained.

The NCUA regulation lists eight factors that a federal credit union can use for its evaluation, including "external risk assessments." Credit unions should understand that although NCUA can't reference credit ratings in its regulations, there is nothing that prohibits credit unions from using credit ratings as an element of their required analysis, Thompson said.

According to Thompson, the NCUA believes that about 750 federal credit unions will need "to develop or augment" their systems to evaluate creditworthiness of their investments. Although NCUA's Section 703 on investments doesn't apply to state-chartered credit unions, any investment held by a state-chartered credit union that isn't permissible for a federal credit union may require a special reserve, she noted. Any state-chartered credit unions with investments that rely on credit ratings will need to review NCUA's regulation to see if they need to change their analysis standards to avoid special reserving, Thompson added.

She said the NCUA is imposing new concentration limits on three permissible investments because of concerns about possible increased risks. Federal credit unions holding European financial options contracts, mortgage note repurchase transactions, and municipal securities need to review the restrictions, Thompson suggested. For instance, she said under the current investment regulation, a federal credit union can hold municipal securities that have one of four highest credit ratings without limit. Under the new regulation, the NCUA will limit a federal credit union's aggregate holdings of municipals to no more than 75% of its net worth. CUNA is discussing with NCUA what credit unions that have holdings which exceed the new limits are expected to do to comply.

The NCUA has said credit unions can expect additional information this spring, which will further explain the regulatory requirements, such as factors that can be used to evaluate "investment grade" creditworthiness, and what examiners will be looking for regarding compliance, Thompson noted.

CUNA staff during the audio conference urged credit unions to submit their questions about the new regulation to cucomply@cuna.com. CUNA will pass on these questions to the NCUA, and the questions may be addressed in upcoming NCUA guidance.

An update on the Financial Accounting Standards Board's proposed accounting standards for credit losses on financial instruments was also provided. CUNA has released a comment call on that issue, and comments are due to CUNA by April 8 and to FASB by April 30.

Thursday's session was the first of four related audio conferences CUNA is offering during the year. CUNA recommends that registrants attend all four to ensure a complete first-hand view of the latest regulatory and compliance issues, first-hand. An archived version of the session will be posted.

Other topics addressed by CUNA regulatory, compliance and legislative experts included:

  • The latest legislative developments affecting credit unions;
  • Consumer Financial Protection Bureau rules, including international remittance transfers, mortgage servicing, ability to repay and originator compensation;
  • Other pending NCUA proposals and a summary of the February NCUA board meeting actions; and
  • Proposals currently open for comment.
Topics for the spring, summer and fall offerings will be announced as those programs are finalized. Those sessions are scheduled for June 4, Sept. 5 and Dec. 5.

Part 2 of this article, on regulatory advocacy issues and what CUNA is doing to address regulatory relief, will be in Monday's News Now.

NEW: Privacy Notice Bill Could See House Vote Next Week

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WASHINGTON (3/8/13, UPDATED: 12:45 p.m. ET)--H.R. 749, the Eliminate Privacy Notice Confusion Act, is scheduled for a full U.S. House Tuesday. The House just announced that the item is on its suspension calendar for that day.

The Credit Union National Association supports the bill, which 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.

Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) introduced H.R. 749 earlier this year, and the bill has 48 cosponsors. The bill is identical to legislation that unanimously passed the House before the 112th Congress adjourned. The Senate, however, did not act on the bill in time.

Under current rules, credit unions alone have sent an estimated one billion annual privacy notifications to members since 2001, CUNA estimates. CUNA President/CEO Bill Cheney in a letter to lawmakers noted a survey that shows 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." H.R. 749 achieves this end, Cheney wrote.

FIs Reminded Of FinCEN April E-filing Deadline

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VIENNA, Va. (3/8/13)--The Financial Crimes Enforcement Network (FinCEN) sent out a reminder Thursday that credit unions and all other financial institutions and entities that must file Bank Secrecy Act (BSA) have an April 1 e-filing deadline approaching.

Last February, FinCEN issued a final notice requiring the electronic filing of most BSA reports by July 1, 2012.

That action specifically required submission of Suspicious Activity Reports, Currency Transaction Reports, Registration of Money Services Business, and Designation of Exempt Person Reports.

FinCEN yesterday said financial institutions are reminded that they must begin using the new FinCEN reports, which are available only electronically through the BSA E-Filing System, the first of  April. Use the resource link for more.

Fixed Assets, Community Charter On NCUA March Agenda

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WASHINGTON (3/8/13)--A proposed rule addressing federal credit union ownership of fixed assets and a community charter conversion request are all that will be addressed during another brief National Credit Union Administration open board meeting March 14.

Credit union fixed asset regulations (Sec. 701.36) were one of many items on the agency's regulatory review schedule, which was released last year. The agency last addressed Sec. 701.36 in May of 2012, when the agency approved the elimination of the Reg Flex designation program.

The community charter conversion request that will be heard at the meeting was filed by Cinfed FCU, Cincinnati, Ohio. Cinfed requested a community charter change in 2007, but that bid was denied by regional NCUA regulators. The agency upheld the regional office decision following a Cinfed appeal.

This month's NCUA open meeting is scheduled to begin at 10 a.m. ET on March 14.

The NCUA's closed session, which will follow the open meeting, will feature three items. Those items are:

  • A purchase and assumption request;
  • A merger request; and
  • Requests under Section 205(d) of the Federal Credit Union Act.
For the full NCUA agenda, use the resource link.

CUNA's Tax Status Advocacy Toolkit Empowers CUs To Tell Their Member-Value Stories

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WASHINGTON (3/7/13)--More tools were added to the Credit Union National Association's Tax Status Advocacy Toolkit this week. Three newsletter articles to help credit unions talk to their members about the value of credit union membership are now  available in the ever-growing arsenal.

"Our research shows that when members understand the value of membership, they will stand with us to defend the exemption," CUNA President/CEO Bill Cheney said when announcing the toolkit created by CUNA and the state credit union leagues.

CUNA Executive Vice President of Strategic Communications and Engagement Paul Gentile emphasizes, "We can't assume members understand the value proposition of credit union membership. We must work collaboratively to communicate it to them.

"CUNA is providing credit unions the tools to take the 'value' message to its membership.  Like all good communication efforts, we need to be consistent in continuing to tell our good story."

The coordinated communications effort, supported by the tax toolkit, are reflected in two key CUNA initiatives: a recently announced vision rollout and CUNA's top legislative priority this year for preserving the tax exemption.

CUNA and the leagues have issued a call for credit unions to rally and "Unite for Good" to help create a nation in which "Americans choose credit unions as their best financial partner."

The focus of "Unite for Good" is to bring credit union leaders toward shared goals that advance credit unions toward a common vision.  CUNA is urging credit unions to find the best way of doing this in their own communities through earned media, social media, civic organizations or state and local cooperative ad campaigns.

Regarding the tax issue, CUNA members can use the resource link below to access the Tax Status Advocacy Toolkit.

The newly added newsletter articles form a Credit Unions 101 series. The topics are "Better Rates, Lower Fees," "Member-Owned and Community-Centric," and "Our Unique Non-Profit Structure."

In addition to the newsletter articles, the site provides radio and print ads, credit union data, state-level updates on tax issues, member communications pieces, and much more.

House Subcommittee Hears Analysis Of GSEs' Housing Role

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WASHINGTON (3/7/13)--The House Financial Services subcommittee on capital markets and government-sponsored enterprises (GSE) proceeded with its study of government housing policy Wednesday even though Washington, D.C. was all but shut down due to a winter storm emergency.

Although the hearing was titled "Fannie Mae and Freddie Mac: How Government Housing Policy Failed Homeowners and Taxpayers and Led to the Financial Crisis," witnesses seemed to agree to varying degrees that the two government-sponsored housing enterprises did play a role in contributing to the housing crisis and financial meltdown. However, their outlook and proposals for GSE reform varied.

As witness Susan Wachter put it in her testimony, the GSEs contributed to the crisis and were "part of the irresponsible expansion of credit" both before and after 2007. However, she said other entities were "far more responsible for the riskiest product originated and securitized."  Wachter is the Richard B. Worley Professor of Financial Management, Professor of Real Estate and Finance, and Co-Director, Institute for Urban Research, for The Wharton School of University of Pennsylvania.

"There is, in fact, a simple way to measure the success or failure of the GSEs, relative to other entities. All we have to do is examine default rates. The GSEs' delinquency rates were far below those of non-GSE securitized loans," Wachter said.

John Ligon, policy analyst for the Center for Data Analysis of The Heritage Foundation, said the GSEs should go back to how they did business prior to the 1990s. In fact, he said, the relaxation of lending standards in the U.S. mortgage market overall "started in earnest" in the 1990s.

Lawrence White, the Robert Kavesh Professor of Economics, Leonard N. Stern School of Business, of New York University, said there are two lessons to be learned from the experience of Fannie and Freddie, which now operate under conservatorship under their regulator, the Federal Housing Finance Agency.

First, White said, the federal government should learn to be extremely wary of situations where the financial markets assume that the U.S. Treasury will come to the rescue of a financial institution's creditors. Second, he added, "large systemic financial institutions--in this case, involved with residential housing finance--must be subject to rigorous prudential regulation, with high capital requirements at the center of this regulation. Anything less is an invitation to a repeat of this costly experience."

Josh Rosner, managing director of Graham Fisher & Co., the fourth witness at the hearing, said the country's financial collapse likely would not have been avoided even if the if the GSE's followed "more responsible" housing policies during the time.

Credit unions were not mentioned in the hearing testimony.

March 12 Is Cordray Nomination Hearing

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WASHINGTON (3/6/13)--Richard Cordray will have his day before the Senate Banking Committee: The current Consumer Financial Protection Bureau director, who was appointed to that position last year, will appear at a March 12 committee hearing on his nomination.

The hearing is scheduled to begin at 10 a.m. (ET). The panel will consider the nomination of Mary Jo White to be a member of the Securities and Exchange Commission at the same time.

In early 2012, President Barack Obama appointed Cordray to lead the CFPB, and he was recently nominated to continue in his role for a five-year term. News Now on Tuesday reported Cordray's confirmation hearing would be held in the next few weeks.

Cordray will face a full Senate vote if his nomination is approved by the committee. The banking committee approved his nomination by a party-line 12-10 vote in late 2011, but he did not receive a full vote in the Senate.

Some Senate Republicans have consistently said they would block any CFPB nominee if certain structural changes were not made to the CFPB. One such change is replacing the director's position with a five-member panel of leadership as a way, supporters say, of making the CFPB's actions more transparent.

Rep. Spencer Bachus (R-Ala.) at last week's Credit Union National Association 2013 Governmental Affairs Conference said the structure of the CFPB could soon be addressed in a bipartisan manner. 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 told credit unions.

NCUA 4Q Map Details Financial, Membership Gains For CUs

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ALEXANDRIA, Va. (3/6/13)--The National Credit Union Administration's quarterly state-by-state review of the financial performance of federally insured credit unions shows that asset growth in the fourth quarter of 2012 was strongest in two states: Iowa and North Dakota.

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In the fourth quarter, assets held in Iowa credit unions increased by 11.8%, and North Dakota credit union assets increased by 11.5%, the NCUA numbers showed. Nevada was the only state to post a decline in total assets, reporting a 6.5% drop during that time, the NCUA reported.

"Our analysis shows credit unions are growing as the economy improves, making investments in their members and communities," NCUA Chairman Debbie Matz said. The NCUA's state-by-state analysis of credit union conditions "provides important benchmarks on industry performance at the ground level," she added.

The NCUA release also revealed that 44 states and Washington, D.C. reported positive loan growth, with North Dakota leading those states with a reported 15.2% increase. Loans declined in six states and territories, led by Nevada's 13.2% reduction, the NCUA said. The Credit Union National Association's own analysis of credit union financials showed continued growth in the fourth quarter, and found that loan originations and new-auto loans saw dramatic increases in 2012. (See News Now story: Improving Loan Losses, New Auto Loan Growth Fuel Strong CU Earnings)

Return on average assets (ROAA) increased at federally insured credit unions in 45 states and all territories, and the share of credit unions with positive ROAA rose in 41 states and Puerto Rico, the NCUA reported.

The NCUA map also pinpoints which states have contributed to credit unions' recent membership momentum. Fourteen states, including Virginia, Alabama and Washington, saw credit union membership growth rates of greater than 3%. Most states saw their credit union membership grow by at least 1%.

Share and deposit growth and delinquency rates are also addressed in the NCUA release.

For the NCUA maps and an agency release, use the resource link.

Free CUNA 'Pressing Issues' Audio Conference Is Tomorrow

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WASHINGTON (3/6/13)--There is still time to sign up for the Credit Union National Association's March 7 "Pressing Regulatory and Compliance Issues Audio Conference." It is free to affiliated credit unions.

Thursday's session is the first of four related audio conferences CUNA is offering during the year and  CUNA recommends that registrants attend all four to ensure a complete view of the latest regulatory and compliance issues, first-hand.

Tomorrow's program will feature CUNA regulatory, compliance and legislative experts, and topics include:

  • The latest legislative developments affecting credit unions;
  • An update on Consumer Financial Protection Bureau rules, including international remittance transfers, mortgage servicing, ability to repay and originator compensation;
  • National Credit Union Administration issues, including pending proposals and a summary of the February NCUA board meeting;
  • Proposals currently open for comment;
  • The three Reg Z provisions that go into effect June 1, 2013; and
  • The credit agency rating regulation that goes into effect June 11, 2013.
Topics for the spring, summer and fall offerings will be announced as those programs are finalized. Those sessions are scheduled to be held on June 4, Sept. 5 and Dec. 5.

Use the resource link to register.

CUNA Washington Operating In Continuity Mode

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WASHINGTON (3/6/13)--The Credit Union National Association's Washington office is officially closed Wednesday due to a winter storm emergency declared for the D.C. area. CUNA's key advocacy functions are operating in business continuity mode. CUNA's Madison, Wis. office is open and fully functioning.

CUNA Joins The Hill In Event For Committee Leadership

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WASHINGTON (3/6/13)--Joining with The Hill newspaper, the Credit Union National Association was a co-sponsor last night for a special reception for House and Senate members, including committee and subcommittee chairs and ranking members newly appointed for the 113th Congress.

CUNA President/CEO Bill Cheney and CUNA's political and legislative affairs teams joined
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 more than 50 expected lawmakers in the Capitol in a get-to-know-you session beneficial to the House and Senate leaders and credit unions as well.  Credit unions were highlighted at the event when The Hill's organizers thanked CUNA, before the roomful of policymakers, for its role in supporting the event.

The event gave CUNA the opportunity to converse both with longstanding House and Senate members, as well as newly elected officials. The committees represented ranged from House Financial Services and House Oversight and Government Reform to Senate Judiciary and Senate Small Business, to name just a few.

The Hill is a Washington-based newspaper that covers Congress, lobbying and the Capitol Hill community, and circulates broadly among congressional offices and lobbying organizations.

In conjunction with the event last night, the publication ran a CUNA ad proclaiming, in part: FOR MORE THAN 100 YEARS CREDIT UNIONS HAVE FOCUSED ON THEIR MEMBERS…Member‑owned. Member‑trusted. Meeting the needs of working Americans."

Fed Won't Revisit Interchange Cap Rule This Year

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WASHINGTON (3/6/13)--Yesterday the Federal Reserve Board said it does not plan to propose revisions to its debit card interchange fee standard or the fraud-prevention adjustment based on results of its survey of transactions in 2011.

The Fed released its bi-annual published report summarizing information on the volume and value, interchange fee revenue, certain debit card issuer costs, and fraud losses related to debit card transactions in 2011. The report is issued in connection with the Dodd-Frank debit card interchange fee provisions that went into effect in October 2011.

The standard limits debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allows an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap.

The Fed report highlighted information from May that said the average interchange fee per transaction received by exempt issuers declined 4%, from 45 cents to 43 cents after the interchange fee standard became effective Oct. 1, 2011.

Also for exempt issuers, the small decrease in interchange fees was fairly proportional between signature and PIN transactions, according to the Fed's 2011 data.

The Credit Union National Association continues to closely monitor the impact of the interchange cap and whether market forces appear to drive down the fees that the exemption for smaller institutions is intended to protect.

A recent CUNA survey found that per-transaction interchange revenue has declined in five of the six quarters since implementation. Because of these declining rates, total interchange revenue growth slowed considerably after the cap's implementation, and actually declined in the quarter ending in September 2012, the report noted. The third quarter of 2012 is the first full quarter since implementation of the routing and network exclusivity provisions of the rule.

CUNA is concerned that as the routing provisions take hold, there could be further declines not only in per-transaction rates, but also total interchange revenue. 

Also in the report, the Fed said that for issuers covered by the cap, 2011 costs of authorizing, clearing, and settling (ACS) debit card transactions, excluding fraud losses, varied greatly across respondents in 2011. The median issuer had an average ACS cost of 11 cents and the issuer at the 75th percentile had an average ACS cost of 36 cents.

Debit card issuers with the most transactions for the most part had the lowest ACS costs per transaction--reflected in an overall average of 5 cents per transaction. Issuers with the smallest debit card programs, on the other hand, generally had the highest ACS costs per transaction.

The Fed estimated debit-card fraud losses to all parties, that is merchants, cardholders, and issuers, to be $1.38 billion in 2011. The average loss was estimated at approximately 8 bp per debit card transaction, down slightly from 2009.

The median covered issuer's average fraud loss per transaction was nearly 5 bp, the same as in 2009. The median covered issuer had average fraud prevention and data security costs of slightly less than 1.5 cents per transaction, the Fed said.

CompBlog: Updates On Potential NCUA Actions

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WASHINGTON (3/6/13)--In the February edition of CUNA's CompBlog Wrap-Up, Credit Union National Association Senior Vice President for Compliance Kathy Thompson provides an overview of anticipated National Credit Union Administration actions that were gleaned during the 2013 Governmental Affairs Conference.

In her "What I Heard at the GAC" column, Thompson notes that further explanatory information on troubled debt restructuring will be released by the agency "very soon," and guidance on what recent credit ratings regulations will mean, and what examiners will be looking for, will be released "within two months." The NCUA plans to conduct more document of resolution training for examiners this spring, she adds.

Other regulatory issues that Thompson touches on include:

  • Loan participations;
  • Concentration risk and student loans;
  • Investments supporting employee benefit plans;
  • Enterprise-wide risk management;
  • Prompt corrective action;
  • Derivatives; and
  • Emergency liquidity.
The Wrap-Up also highlights the results of CUNA's recent credit union examination survey and explains how CUNA plans to use the survey results. 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 CUNA's CompBlog Wrap-Up, and other compliance gems including an announcement of the 2013 Compies Award winners, use the resource link.

Go Direct Says Goodbye

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WASHINGTON (3/6/13)--The U.S. Treasury's Go Direct program on Tuesday said goodbye to the Credit Union National Association and all other Go Direct partners.

The Go Direct program was founded in 2005 to promote direct deposit of federal benefits checks ahead of March 1, 2013. All federal benefit payments have been made electronically since that date.

Using electronic delivery, the Go Direct campaign underscored, reduces the risk of identity theft and helps reduce stolen checks and forgeries, as well as decreases the cost to the government of dispersing the benefits.

Go Direct in a final release said efforts to promote direct deposit of federal benefits have resulted in more than 15 million payments now being made electronically. "You have helped to steer millions of people toward safer electronic payments. At the same time, you've saved taxpayers millions of dollars," the Go Direct release said.

CUNA has been a Go Direct partner since 2005, when the program began. 

The Go Direct program will remain active for the time being to help enforce compliance. Godirect.org will also remain active, and a list of frequently asked questions and a toolkit to help interested parties access information on the benefits of direct deposit will remain on that site.

For the full Go Direct website, use the resource link.

FHFA Working On Shared Securitization Structure

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WASHINGTON (3/6/13)--The Federal Housing Finance Agency will begin to build a new securitization infrastructure, including a joint venture to handle mortgage securitization, and contract Fannie Mae and Freddie Mac's dominant presence in the marketplace while simplifying and shrinking some of those firms' operations, FHFA Acting Director Edward DeMarco said.

DeMarco made his remarks before the National Association for Business Economics annual conference this week.

The Credit Union National Association has repeatedly encouraged the FHFA to ensure that any changes to secondary mortgage market structure allow credit unions and other small issuers to maintain full and unrestricted access to that market. CUNA has also highlighted the importance of preserving 30-year, fixed-rate mortgages and ensuring that the secondary market is strong enough to weather economic adversity.

The new structure would be separate from Fannie Mae and Freddie Mac, and will be headed by a CEO and Chairman that are independent from those two government-sponsored entities. The new entity will also accept input from industry participants, DeMarco said. Fannie and Freddie will own the new securitzation business at first, but "the overarching goal is to create something of value that could either be sold or used by policy makers as a foundational element of the mortgage market of the future," DeMarco added.

During this secondary mortgage market restructuring, Fannie and Freddie will maintain their current foreclosure prevention activities and continue to provide credit availability for new and refinanced mortgages, DeMarco said. The steps outlined "should help to set the stage for whatever transition policy makers set forth," he noted.

The U.S. Treasury last summer announced that the winding down of mortgage investment portfolios held by Fannie and Freddie will be accelerated to an annual rate of 15%. The Obama administration is also considering a range of options for mortgage market reform, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Congressional hearings on mortgage market reforms have also been held.

For more on DeMarco's recent remarks, use the resource link.

What's That Buzz: What's Happening With the CUNA Website

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WASHINGTON (3/5/13)--With less than a week to the public unveiling of a new and improved website for the Credit Union National Association, webpage users want to know: What's in it for me?

"One of the first things we want to have pop into the heads of folks visiting our site are the words 'user-friendly.'

"Whether you are a regular user of the CUNA website, an occasional user, or seeing the online CUNA pages for the first time, we want every visit to be defined by ease-of-use.  It was the designing principle behind every change we have made," says Paul Gentile, executive vice president of strategic communications and engagement.

Gentile told credit unions to be ready to tune in to the soon-to-be-launched, updated and improved CUNA website that will feature state-of-the-art navigational tools, a dream search function, and interactive features.

HUD Reportedly Developing Its Own QM Rule For FHA Loans

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WASHINGTON (3/5/13)--The U.S. Department of Housing and Urban Development (HUD) is reportedly reviewing recently released qualified mortgage (QM) rules, and may publish a QM rule of its own.

Credit Union National Association Associate General Counsel Jared Ihrig noted that the Dodd-Frank Wall Street Reform Act gave HUD, the Federal Housing Administration and other agencies the authority to review QM rules released by the Consumer Financial Protection Bureau. They may also issue their own rules if necessary, he added.

Ihrig said any HUD proposal will likely impact credit unions that make FHA loans, and noted that CUNA will watch for future regulatory action in this area.

The CFPB's 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." 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.

NCUA, Agencies Offer Tips During Consumer Protection Week

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WASHINGTON (3/5/13)--The National Credit Union Administration is making use of the declaration of this week as National Consumer Protection Week to highlight the many resources its provides consumers--especially on its two consumer-oriented websites, MyCreditUnion.gov and Pocket Cents.

"Consumers should take full advantage of these valuable online resources not just during National Consumer Protection Week, but every week during the year," she added. The NCUA chairman also emphasized the importance of consumer empowerment through knowledge of consumer protection laws and access to financial literacy resources.

President Barack Obama proclaimed March 3-9 as National Consumer Protection Week and in a March 1 proclamation called on "government officials, industry leaders, and advocates across the nation to share information about consumer protection and provide our citizens with information about their rights as consumers."

The Consumer Financial Protection Bureau is also participating in the week by posting a series of consumer advice blogs. Holly Petraeus, CFPB assistant director for servicemember affairs, penned the first of these blogs Monday. She provides servicemembers and others with tips on how best to avoid buyer's remorse when making online purchases.

The Federal Citizen Information Center of the U.S. General Services Administration and the Federal Trade Commission have scheduled an online consumer protection week event: On Wednesday, March 6 at 2:00 p.m. (ET), Twitter users will be able to have their questions about debt collection, identity theft and online security answered by experts. To take part, Twitter users can direct their questions to @USA.gov and use the hashtag #NCPW.

Credit unions, libraries, schools, colleges, city halls, and senior centers across the U.S. are also participating in the consumer protection week. Check out ncpw.gov for more information, and use the resource link to visit CUNA's aSmarterChoice.org, a consumer website launched a year ago to help consumers find a credit union they can join.

For more information, use the resource links.

NEW: NCUA 4Q Map Details Financial, Membership Gains For CUs

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ALEXANDRIA, Va. (UPDATED: 3/5/13, 1 p.m. ET)--The National Credit Union Administration's quarterly state-by-state review of the financial performance of federally insured credit unions shows that asset growth in the fourth quarter of 2012 was strongest in two states: Iowa and North Dakota.

In the fourth quarter, assets held in Iowa credit unions increased by 11.8%, and North Dakota credit union assets increased by 11.5%, the NCUA numbers showed. Nevada was the only state to post a decline in total assets, reporting a 6.5% drop during that time, the NCUA reported.

"Our analysis shows credit unions are growing as the economy improves, making investments in their members and communities," NCUA Chairman Debbie Matz said. The NCUA's state-by-state analysis of credit union conditions "provides important benchmarks on industry performance at the ground level," she added.

Total loans outstanding, assets, share and deposit growth and delinquency rates are also addressed in the NCUA release. The Credit Union National Association's own analysis of credit union financials showed continued growth in the fourth quarter, and found that loan originations and new-auto loans saw dramatic increases in 2012. (See New Now story: Improving Loan Losses, New Auto Loan Growth Fuel Strong CU Earnings)

Return on average assets (ROAA) increased at federally insured credit unions in 45 states and all territories, and the share of credit unions with positive ROAA rose in 41 states and Puerto Rico, the NCUA reported.

The NCUA map also pinpoints which states have contributed to credit unions' recent membership momentum. Fourteen states, including Virginia, Alabama and Washington, saw credit union membership growth rates of greater than 3%. Most states saw their credit union membership grow by at least 1%.

For the NCUA maps and an agency release, use the resource link.

Cordray Nomination, Reg Burden, More Hot Topics Line March Hill Hearing Agendas

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WASHINGTON (3/5/13)--A number of topics of key interest to credit unions are set to be discussed by U.S. House and Senate committees this month.   Sessions are expected to include a confirmation hearing for Consumer Financial Protection Bureau Director Richard Cordray--perhaps next week--a series of looks at financial regulatory burdens,  and a cyber security hearing.

In early 2012, President Barack Obama appointed CFPB Director Cordray to lead that agency and that recess appointment has been the subject of controversy every since. However, Cordray was recently nominated to continue in his role for a five-year term. Cordray has said his Senate Banking Committee confirmation hearing will be held in the next few weeks. Some outlets have hinted this hearing could be held as early as March 11.

Credit unions also will want to watch for a March 20 House Financial Services financial institutions and consumer credit subcommittee hearing on the growing burden of federal regulations on small financial institutions across the country.

This week, the House Judiciary regulatory reform subcommittee will start off with a Tuesday hearing on H.R. 367, the "REINS (Regulations from the Executive in Need of Scrutiny) Act: Promoting Jobs, Growth and American Competitiveness."

Other hearings this week that could include regulatory burden discussions include:

  • A Tuesday House Oversight Committee hearing entitled "Reducing Waste and Mismanagement: Implementing Agency Watchdogs' Recommendations Could Save Taxpayers Billions";
  • A Tuesday House Appropriations financial services and general government subcommittee hearing on U.S. Treasury oversight; and
  • A Wednesday House Appropriations financial services and general government subcommittee hearing on Small Business Administration Oversight.
Bank Secrecy Act compliance and enforcement will be the topic at a Thursday Senate Banking Committee hearing. Treasury under Secretary for Terrorism and Financial Intelligence David Cohen, Comptroller of the Currency Thomas Curry and Federal Reserve Governor Jerome Powell are scheduled to testify during that hearing.

The Senate Commerce, Science and Transportation Committee and Senate Homeland Security and Governmental Affairs Committee have also scheduled a Thursday hearing. Those two committees will discuss the cyber security partnership between the private sector and the U.S. government, and how that partnership can help protect national and economic security.

Fiscal policy will be examined today by the House Financial Services monetary policy subcommittee.

The House Financial Services capital markets subcommittee will continue that committee's examination of Fannie Mae and Freddie Mac, and additional hearings on the government's role in the mortgage market are scheduled for later in the month. (See Feb. 28 News Now story: Fed Policy, Housing System, Reg Burden On House Financial Services March Agenda.)

Fair Housing App Launched By HUD

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WASHINGTON (3/4/13)--Apps abound, as everyone knows, and just last week the U.S. Department of Housing and Urban Development (HUD) did a "ta-da" on the first housing discrimination mobile application for iPhone and iPad.

It was developed by HUD's Office of Fair Housing and Equal Opportunity and Hewlett Packard.

HUD says the app uses the latest technology to provide the public with a quick and easy way to learn about their housing rights and to file housing discrimination complaints, and inform the housing industry about its responsibilities under the Fair Housing Act.

Use the resource link to see the press release.

March 7 'Pressing Issues' Audio Conference Is Free To CUNA Members

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WASHINGTON (3/4/13)--The Credit Union National Association is now offering its popular "Pressing Regulatory and Compliance Issues Audio Conference" free to affiliated credit unions and its first program of 2013 is being offered March 7.

This Thursday's program will feature:
  • The latest legislative developments affecting credit unions;
  • An update on CFPB rules, including international remittance transfers, mortgage servicing, ability to repay and originator compensation;
  • NCUA issues, including pending proposals & a summary of the February NCUA Board Meeting;
  • Proposals currently open for comment;
  • The three Reg Z provisions that go into effect June 1, 2013; and
  • The credit agency rating regulation that goes into effect June 11, 2013.
CUNA recommends that registrants attend all four free audio conferences to ensure a complete view of the latest regulatory and compliance issues, first-hand, throughout the year.

CUNA will develop in-depth training programs to cover select key issues discussed during the calls.

Topics for the spring, summer and fall offerings will be announced as those programs are finalized. Those sessions are scheduled to be held on June 4, Sept. 5 and Dec. 5.

For more on this week's session, use the resource link.

$85B In Record Earnings Set By CUs In 2012

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ALEXANDRIA, Va. (3/4/13)--"Credit unions had a pivotal year in 2012," recording $8.5 billion in earnings in that year, National Credit Union Administration Chairman Debbie Matz said in an agency release.

"The NCUA data shows the credit union movement is healthy, vibrant and on the rise," said Credit Union National Association President/CEO Bill Cheney. "We believe these figures only reinforce our assessment that burdensome new regulations are not needed for credit unions, especially in this environment. We will continue to press NCUA and other regulators to minimize new requirements," he added.

The $8.5 billion earnings total is the highest figure ever for the credit union industry, according to the agency. This 2012 total represents a 36.1% increase from 2011's earnings total of $6.3 billion, and the NCUA said the increase is mainly a result of loan loss reserve reductions.

Total credit union assets increased by $60 billion in 2012, taking federal credit union assets across the $1 trillion mark. Industry net worth increased by $8.4 billion, and membership grew by more than 2 million in 2012, the NCUA reported. Industry net worth ratio rose to 10.44%, and delinquencies declined, the agency added.

Credit union share and deposit accounts increased by $50.4 billion in 2012, a year-to-year increase of 6.1%. Regular shares, share drafts, money market shares and non-member deposits all showed quarterly increases, while share certificates and IRA/Keogh accounts experienced nominal quarterly declines, the NCUA said.

Overall, credit union lending increased by 4.6% in 2012, "meaning more people got the loans needed to buy homes, purchase cars, and go to school," Matz said.

Net member business loan balances also increased by 6.5% in 2012, bringing that total to $41.7 billion at the end of 2012.

The NCUA report on credit union financials also found:

  • First mortgage real estate loans increased 1.2% in the fourth quarter, and 5.7% between 2011 and 2012, to total $246.3 billion at the end of the year;
  • Used auto loans increased by 1.1% in the fourth quarter and 7.9% for 2012, totaling $115.2 billion at the end of the year; and
  • New auto loans increased by 2.2% in the fourth quarter and 8.7% in all of 2012, totaling $63.3 billion at the end of the year.
The NCUA noted that growth was strongest in credit unions with more than $250 million in assets. However, credit unions with assets of $10 million and less lost members and reported slower loan growth than their larger system partners. Matz said it was the agency's responsibility to monitor the health of these small credit unions "and, to the extent possible, find ways to keep them sustainable."

Just over 44,000 credit union members filed for bankruptcy in the fourth quarter, a 10.4% decrease from the total reported in the third quarter of 2012, the NCUA reported. Loan charge-offs due to bankruptcy and credit unions' net charge-off ratio both held steady from quarter-to-quarter, totaling 21.5% and 0.73%, respectively. The delinquency ratio reported by credit unions fell by 2 basis points to total 1.16%.

These and other NCUA figures are based on Call Report data submitted to and compiled by the agency for the quarter ending Dec. 31, 2012.

For more on the numbers, and CUNA analysis, watch for more on this in News Now this week. The full NCUA release on the credit union stats can be found by clicking the resource link.

Co-ops A 'Sleeping Giant': GAC Panel

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WASHINGTON (3/4/13)--Credit unions are considered by many as the "sleeping giant" of the co-op sector. Awakening that potential through collaboration and cross-sector interaction was the topic of a panel discussion Tuesday during a Credit Union National Association Governmental Affairs breakout session, "Building Powerful Alliances Across Co-op Sectors.

Serving on the panel were Mark Cummins, president/CEO of the Minnesota Credit Union Network and chairman of CUNA's Cooperative Alliances Committee; Adam Schwartz, founder and principal of The Cooperative Way; and Joanne Todd, CEO of Northeast Family CU, Manchester, Conn.

The panel was moderated by Michael Beall, the new president/CEO of the National Cooperative Business Association. He joined NCBA after serving as CEO of the Missouri Credit Union Association.

In October, CUNA's Cooperative Alliances Committee published a white paper that provided a guide on how credit unions can improve their interactions with cooperative from other sectors to grow their businesses, build advocacy and, in so doing, strengthen their communities.

Cummins told the session audience credit unions can differentiate themselves in the marketplace as cooperatives.  Today's consumers, especially, find that cooperative values resonate positively at a time of growing distrust of big corporations.

"Your members may not even know they are members," Cummins said. "They may not know they are members of a credit union, and they may not know they are members of a cooperative. You have to tell them, and tell them and tell them. But you also have to live it."

Cummins offered several suggestions from the Cooperative Alliances Committee white paper for credit unions to cultivate alliances with other cooperatives:

  • Be sure to give your new employees and board members a good, solid orientation about the cooperative business model. CUNA and the NCBA can provide resources.
  • Host a meeting of other co-op leaders at your credit union. It's a good way to network, get acquainted, and can lead to joint projects and initiatives.
  • Invite other co-op leaders to speak to members at your credit union's annual meeting.
  • Assign someone at the credit union to be a liaison with other cooperatives.
  • Once connections with other cooperatives are made, see what business opportunities exist.If the credit unions can serve other co-ops, are there certain financial products that are of particular interest to them?
  • Recruit board members that have ties to other cooperatives in your community.
  • Make cooperation among cooperatives one of the credit union's strategic objectives.
  • Use groups like the NCBA as a resource.
Among the advantages of working with other cooperatives is attracting members with cooperatives based values, said Todd, whose credit union partners includes a food co-op among its select employee groups. Todd also serves as a board member of the food co-op.

"The members of the food co-op are members of the food co-op because social responsibility and equity and fairness are important to them," Todd said. "They see the same qualities in the credit union. So they do business with us because of our place in the community. They are not rate sensitive. Think of your own credit union. Isn't that the kind of members that you want?"

NCBA's Beall said fostering more co-op interaction and advocacy partnerships will be high on his agenda as the organization's new leader.  He praised the committee white paper and urged the credit union community to embrace it as a valuable resource.

NCUA HMDA Webinar Now Available Online

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ALEXANDRIA, Va. (3/4/13)--The National Credit Union Administration has posted an archived version of a recent webinar on the Home Mortgage Disclosure Act (HMDA) and Loan Application Registers (LARs).

NCUA staff during the webinar addressed common HMDA LAR submission errors, and provided tips on how credit unions can avoid those errors and prepare LARs in a timely fashion.

For the NCUA webinar, use the resource link.

GAC Successes, 'Unite For Good' Featured In Cheney Report

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WASHINGTON (2/25/13)--In the latest edition of The Cheney Report, Credit Union National Association President/CEO Bill Cheney recaps a successful and eventful 2013 Governmental Affairs Conference, and discusses the future of CUNA's new vision for the credit union system.

Cheney at the GAC called on credit unions to rally together and "Unite for Good" to help create a nation in which "Americans choose credit unions as their best financial partner." In The Cheney Report, the CUNA CEO reiterates that "we are seeing a values-driven cultural shift in this country that is right in our wheelhouse. People are drawn to businesses they can trust and that have their best interests at heart--that's credit unions all over!"

While increasing consumer awareness of credit unions is a key pillar of CUNA's new vision, the "Unite for Good" campaign is not meant to serve as an awareness campaign, Cheney clarifies. "Our focus is on rallying credit union leaders toward shared goals that advance us toward our common vision. One of those goals centers on raising consumer awareness," Cheney says in the Report. CUNA is urging credit unions to find the best way of doing this in their own communities through earned media, social media, civic organizations or state and local cooperative ad campaigns, he adds.

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.

This week's Cheney Report also includes:

  • Noteworthy comments heard during the GAC;
  • Details on House Financial Services Chairman Jeb Hensarling's (R-Texas) positive comments about the credit union tax status; and
  • Tips on how to succinctly speak with legislators about the credit union tax status.

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

NCUA Issues New Prohibition Orders

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ALEXANDRIA, Va. (3/1/13)--The National Credit Union Administration has issued orders prohibiting former credit union employees in Oklahoma and Texas from any future involvement with federally insured financial institutions.

The following individuals have been banned, according to the agency:

  • Cindy Dechant, a former employee of Associated Blind of Oklahoma/Texas FCU in Oklahoma City, Okla., pleaded guilty to a charge of bank fraud. Dechant was sentenced to 42 months in prison, three years of supervised release, and ordered to pay restitution in the amount of $194,297.94; and
  • Theresa Portillo, a former employee of Women's Southwest FCU in Dallas, Texas, consented to the issuance of a prohibition order to avoid the time, cost and expense of administrative litigation.
NCUA enforcement orders are available online (use resource link) and available for inspection at NCUA's Office of General Counsel between 9 a.m. and 4 p.m. (ET) Monday through Friday. Copies may be ordered by mail from NCUA, 1775 Duke St., Alexandria, VA 22314-3428.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

CompBlog: CMG Gives Insight on Single-premium Credit Insurance Ban

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WASHINGTON (3/1/13)--CompBlog is featuring a post focusing on a rule that bans financing of any premiums or fees for payment protection products in connection with a consumer credit transaction secured by a dwelling, but allows the products to be paid for on a monthly basis.

Guest blogger David Tomar of CUNA Mutual Group offers "a few points to keep in mind" regarding the Dodd-Frank Act revision of Section 1414 of the Truth in Lending Act. CompBlog is a highly regarded source of compliance information provided by the Credit Union National Association to its members.

Tomar notes the Consumer Financial Protection Bureau created an implementing rule in January. It goes into effect June 1.

Tomar writes that taking a moment to understand what types of mortgage loans are affected is important.

He blogs:

  • A creditor may not finance, directly or indirectly, any premiums or fees for [payment protection] in connection with a consumer credit transaction secured by a dwelling (including a home equity line of credit secured by the consumer's principal dwelling). This prohibition does not apply to credit insurance for which premiums or fees are calculated and paid in full on a monthly basis. 12 C.F.R. 1026.36(i).
Credit unions can expect this rule might change over time, reflecting the CFPB's philosophy that the regulatory system needs to be flexible, as well proactive, the blog post warns.

"That is why we can expect the bureau to continually evolve and develop its positions on this and other issues. Exactly how that will occur is difficult to predict. What we do know is that we will have to learn and adjust along with the bureau," Tomar writes.

CUNA members can access the link below to read five points to keep in mind about the rule.

Something Is In the Air At CUNA: It's Not Spring

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WASHINGTON (3/1/13)--Something's coming. It's smart. It's big. It's beautiful. It's from the Credit Union National Association.

"CUNA has the best, most comprehensive information, products and services available to the credit union world," says Paul Gentile, executive vice president of strategic communications and engagement. "What we had to fix is how credit unions can find it."

Gentile said a soon-to-be-launched, updated and improved CUNA website will feature state-of-the-art navigational tools, a dream search function, and interactive features.

"We are leaving behind the static and confusing. It's all going to be about user-friendly and appealing," Gentile says. "You're going to want to stay tuned for this."

GAC Apex: Credit Union Boots Traverse Capitol Hill

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WASHINGTON (3/1/13)--Thousands of credit union advocates streamed into the halls of the U.S. Congress this week urging their elected representatives to maintain the credit union tax status, reduce the regulatory burden, and take action to enhance the credit union charter--among other things--as an integral part of the Credit Union National Association's  2013 Governmental Affairs Conference.

Click for slide show Credit unions concluded this year's GAC with Capitol Hill visits on Wednesday and Thursday, bringing a unified message of the good the credit union difference does for their communities. This slideshow brings you illustrations of just some of those meetings. (CUNA photo)

The GAC brought some of the nation's top lawmakers and financial institution policymakers to present their views to the gathered credit union participants, more than 4,200 in total. In addition, CUNA President/CEO Bill Cheney unveiled a comprehensive and first-ever "vision" for the credit union movement as a whole--a vision in which "Americans choose credit unions as their best financial partner."

The effort to rally in support of the vision for the movement--captured by the phrase "Unite for Good"--is rooted in credit unions' shared values: Collaboration, a focus on members, community involvement, and a dedication to financial well-being. "People want to do business with people who have their best interests at heart," Cheney said.

Cheney emphasized that a unified voice will be needed to achieve this vision, and while every credit union group had a unique story to tell their respective congressional representatives, collectively credit unions spoke in a unified voice on several common themes: Credit unions' tax status, the need for supplemental capital and greater member business lending authority, and support for recently introduced privacy notice legislation.

Prior to the GAC, CUNA created a new members-only tax toolkit, which is designed to help credit unions connect with their members and educate the public and policymakers about the importance of the credit union tax status. (For more on toolkit, use the resource link)

Under the GAC umbrella this week, credit unions met with their lawmakers in venues ranging from large receptions scheduled around breakfast, lunch, or dinner, "behind the curtain" before and after GAC speeches; in small huddles in congressional offices; and in the packed offices of senators and house members.

The visits were superbly timed to give credit unions a chance to meet with both long-time and newly elected members of the 113th Congress

NEW: CU Earnings Set $85B Record In 2012

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ALEXANDRIA, Va. (3/1/13, UPDATED: 10:30 a.m. ET)--"Credit unions had a pivotal year in 2012," recording $8.5 billion in earnings in that year, National Credit Union Administration Chairman Debbie Matz said in a release announcing credit union financial figures for 2012.

The $8.5 billion earnings total is the highest figure ever for the credit union industry, according to the agency.

Matz said federal credit unions "generated record earnings; assets crossed the $1 trillion mark; and membership grew by more than 2 million. The industry net worth ratio rose to 10.44%, and delinquencies fell again."

She also noted that credit union lending grew by 4.6%, "meaning more people got the loans needed to buy homes, purchase cars, and go to school."

These and other NCUA figures are based on Call Report data submitted to and compiled by the agency for the quarter ending Dec. 31, 2012.

For more on the numbers, and CUNA analysis, watch News Now. For an NCUA release on the credit union stats, use the resource link.

Rep Waters Questions FHFA's Force-Place Insurance Decision

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WASHINGTON (3/1/13)--Rep. Maxine Waters (D-Calif.) Thursday questioned the acting head of the Federal Housing Finance Agency about the agency's recent decision to block Fannie Mae from moving forward with a plan to lower force-placed insurance premiums for homeowners and instead opting to study the issue.

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.

Waters, the ranking Democratic member of the House Financial Services Committee, wrote to FHFA's Edward DeMarco that Fannie Mae's plan could have saved "taxpayers and borrowers from unnecessarily high costs related to force-placed insurance."

"Evidence suggests that force-placed insurance can cost up to ten times more than voluntary homeowners insurance, and that these excessive insurance costs increase the debt owed by borrowers and there impose unnecessary losses on guarantors such as the government-sponsored enterprises you are charged with conserving," Waters wrote in a Feb. 27 letter. FHFA is conservator of both Fannie Mae and Freddie Mac.

Waters asked DeMarco to provide an explanation of the agency's decision to reject Fannie's proposal, a list of the FHFA's outside stakeholders who informed the agency's decision, and an outline of its plan, if there is one, on how to proceed with force-paced insurance reform.

Credit Union National Association General Counsel Eric Richard has noted that consumer abuse in the forced placement market has attracted the attention of the Consumer Financial Protection Bureau.

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