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NCUA Sets Ethics Standard For Its Employees

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ALEXANDRIA, Va. (4/18/13)--The National Credit Union Administration has enhanced its employee ethics standards, adding new rules that would prevent its workers, including examiners, from taking on additional credit union employment to avoid potential conflicts of interest.

As of the effective date yesterday, agency employees must also obtain agency approval for any outside work they engage in. The NCUA made the ethics policy enhancements in a final rule adopted at a closed meeting in February. The rule is  entitled "Supplemental Standards of Ethical Conduct for Employees of the National Credit Union Administration."

An outright prohibition against NCUA employees, other than special government employees, working for credit unions, credit union service organizations, credit union trade groups, and related entities "is appropriate and necessary because such employment or other service would either involve a direct conflict of interest or the appearance of a conflict of interest," the NCUA said in the final rule.

"For example, an NCUA examiner could not serve as a volunteer director of a credit union as this would present an appearance of a conflict of interest as well as other potential violations of the Standards. Neither could an NCUA examiner serve as a paid part-time manager of a credit union for the same reasons," the NCUA wrote.

The final rule notes there have been recent cases in which NCUA employees' outside activities have "resulted in either an appearance of or an actual conflict of interest."

Most financial regulatory agency supplemental ethics regulations contain an outright prohibition against their employees working for their own regulated entities as well as affiliated entities, in any capacity, the NCUA added.

The new NCUA document supplements ethical conduct standards that were issued by the Office of Government Ethics.

For the NCUA final rule, as published in the Federal Register, use the resource link.

CUNA's H&FF Radio Marks 300th Broadcast Sunday

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WASHINGTON (4/18/13)--This Sunday, April 21, will mark the 300th broadcast of Home & Family Finance Radio, the weekly personal finance radio show that the Credit Union National Association launched to help foster financial literacy and build the credit union brand.

The one-hour program airs Sundays at 3 p.m. (ET) on the Radio America
Click to view larger image CUNA's Paul Gentile (right) and H&FF Radio host Paul Berry (left) discuss CUNA's first annual survey on how much students know--or don't--about the college debt they are taking on. (CUNA Photo)
network and is "presented by America's credit unions." Launched six years ago in 29 markets, CUNA's show now airs in 64 markets nationwide and is carried to U.S. military bases overseas via the American Forces Radio Network.

"For much of the time our show has been on the air, the economy has been struggling. So we feel a program like ours, focused on the kind of pocketbook financial issues families routinely discuss around their kitchen tables, has performed a real service while at the same time strengthening credit unions' brand identity as a trusted consumer resource," said Mark Wolff, CUNA senior vice president-communications and the show's executive producer.

This Sunday's milestone show returns to a topic frequently addressed on Home & Family Finance: financial literacy. Guests include CUNA Executive Vice President of Communications Paul Gentile, discussing CUNA's first annual survey on how much students know--or don't--about the college debt they are taking on; and Shawn Gilfedder, CEO of McGraw Hill FCU, East Windsor, N.J., discussing his credit union's recent survey of the toll personal finance worries can take on people's productivity at work and how financial wellness programs can help.

The show is hosted by Paul Berry, whom many credit unions know best as the master of ceremonies at CUNA's Governmental Affairs Conference. Berry is also a veteran broadcast journalist with more than 40 years of experience.  Staff from CUNA's Center for Personal Finance also regularly contribute to the program.

Prominent guests who have appeared on the show during its six-year run include Reps. Carolyn Maloney (D-N.Y.), Sen. Jon Tester (D-Mont.), Rep. Spencer Bachus (R-Ala.), National Credit Union Administration Chairman Debbie Matz and board member Michael Fryzel, Consumer Federation of America Executive Director Stephen Brobeck and noted personal finance journalists Jean Chatzky of NBC Today, Elisabeth Leamy of ABC's Good Morning America, Janet Bodnar of Kiplinger's Personal Finance, Kathy Kristof of the Los Angeles Times, and Liz Pulliam Weston of MSNMoney.com. 

"The show is a forum for our guests to give helpful guidance  to consumers, but it also demonstrates to these influential policy makers, journalists and experts how seriously credit unions are devoted to their mission of promoting financial education," Wolff noted.

CUNA also expressed gratitude to the show's longtime sponsors: CO OP Financial Services, the Defense Credit Union Council, and Cabot Creamery Cooperative. For a list of stations airing the show and links to podcasts, use the resource link.

California Is Latest Front In Larger Payday Loan Fight

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WASHINGTON (4/18/13)--The California State Legislature is the latest to take action to address payday lending issues, scheduling a Wednesday State Senate Banking and Financial Institutions Committee hearing on legislation that would impose new restrictions on payday loans and their lenders.

The California bill (S.B. 515) would ban consumers from taking out more than four payday loans per year. It would increase the payday loan repayment term to a minimum of 30 days per each $100 borrowed. Payday lenders would also be required to underwrite their loans and offer lengthier installment payment plans to customers in some situations under the terms of the bill.

Payday lending provisions have recently been offered in 24 other states, and many of these bills would create interest rate caps or limit fees that payday lenders may charge their customers, according to the National Conference of State Legislatures. Payday loans are prohibited in many states, and rate caps in several other states make the loans hard to come by. Maine, for instance, allows rate-capped payday loans only from authorized lenders.

Since 2007, interest rates for payday loans to military personnel have been limited to a 36%.

Legislation that would impose a similar 36% cap on all open- and closed-end consumer credit transactions was introduced last week in the U.S. Senate. The bill, known as the Protecting Consumers from Unreasonable Credit Rates Act (S. 673), would impact payday loans, mortgages, car loans, credit cards, overdraft loans, car title loans and refund anticipation loans.

Credit unions and the Credit Union National Association are committed to providing safe and affordable alternatives to predatory payday lenders, and credit unions across the country have implemented various programs in order to provide individuals in their communities an alternative to high-priced payday lenders.

Loans from federal credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small amount loan program.

Consumer Financial Protection Bureau Director Richard Cordray in February identified payday loans as one of four "classes of problems" that his agency will focus on going forward. CUNA has encouraged the agency to focus more attention in 2013 on payday lenders and other entities in the financial marketplace that engage in abusive practices but have been unregulated or under-regulated to date. (Use the resource link to read Feb. 21 News Now story: CFPB Consumer Group Meeting Spotlights Payday Lenders.)

NEW: CAMEL Code 3, 4, 5 CU Totals Decline, NCUA Reports

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ALEXANDRIA, Va. (UPDATED: 4/18/13, 10:45 A.M. ET)--CAMEL Code 3, 4 and 5 credit union totals declined during the first quarter of 2013, and this decline demonstrates the improvements seen throughout the credit union system, National Credit Union Administration Chairman Debbie Matz said at this morning's open board meeting.

The number of CAMEL 4 and 5 credit unions fell by 30 during the quarter. The March 2013 total of 339 CAMEL 4 and 5 credit unions represents an 8.1% decline from the total recorded at the end of 2012. This decline crossed every asset class, Woodson noted. CAMEL Code 4 and 5 credit unions held $16.8 billion in assets.

There were 1,558 CAMEL Code 3 credit unions at the end of the first quarter of 2013, a decline of 13 from the previous quarter's total. Total shares and total assets held by these credit unions also declined to $101.6 billion and $114.4 billion, respectively.

The four failures that have occurred in the first quarter of 2013 cost the fund $75,000 in losses, NCUA Chief Financial Officer Mary Ann Woodson reported.

The TCCUSF remains stable and consistent with agency expectations, Woodson said.

The quarterly report on the status of the agency's National Credit Union Share Insurance Fund and Temporary Corporate Credit Union Stabilization Fund was the only item on today's agenda.

IFR Settlement Payments Are On Their Way to Borrowers

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WASHINGTON (4/18/13)--The Office of the Comptroller of the Currency (OCC) issued a news release reminding financial institutions that a first "wave" of 1.4 million checks was sent to consumers on April 12 as part of the expected $3.6 billion in payments under the Independent Foreclosure Review process.

Nearly 50,000 checks totaling nearly $50 million relating to the IFR payments had been cashed or deposited as of close of business on April 15, the agency release said.

The payments are part of agreements between federal regulators and servicers to provide $3.6 billion in cash payments to borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.  

More than 90% of the total payments to borrowers at those servicers are expected to be sent by the end of April, the OCC said, adding that the final wave of checks is expected to go out in mid-July.

A recent U.S. Government Accountability Office (GAO) report said that complexity, overly broad guidance, and limited monitoring for consistency hampered the progress of bank regulators' IFR program.

The IFR process started in 2011 as part of consent orders issued against 14 top mortgage servicers. The foreclosure review process was meant to provide foreclosed borrowers with an opportunity to have their cases reviewed for errors and misrepresentations on the part of servicers. Restitution was also a possibility for some foreclosed borrowers.

The OCC and the Federal Reserve Board on Jan. 7 announced that the IFR process would instead be replaced with a settlement, which the OCC said in a release at the time would allow all IFR-eligible borrowers "to receive compensation significantly more quickly."