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CFPB Seeks CU Help For Student Loan Issues

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WASHINGTON (4/23/13)--Credit unions could do more to help debt-saddled grads if the maximum credit union student loan maturity of 15 years was increased, the Credit Union National Association emphasized in a recent meeting with the Consumer Financial Protection Bureau.

The CFPB in the CUNA meeting said it is concerned that college graduates are leaving school with multiple loans to their name and starting their careers with significant debt. A recent CUNA student loan survey found that 25% of students expect to take out two or more student loans during their college careers. Twenty-two percent of those surveyed said they will owe between $11,000 and $50,000 when they graduate, and 15% expected debt of $10,000 or less. Thirteen percent said they would owe more than $50,000 in debt at graduation. (Use the resource link to read April 17 News Now story: Survey: 50% Of High School Seniors Don't Know Student Loan Costs.)

Bureau officials asked CUNA Deputy General Counsel Mary Dunn and Executive Vice President of Strategic Communications and Engagement Paul Gentile if credit unions could help ease students' loan-debt burdens by consolidating several student loans into fewer payments, and at better terms.

To be most effective in providing help, Dunn and Gentile said, credit unions need more flexibility to offer longer-term student loans to their members.

Current law restricts federal credit unions to loans with maturities of 15 years or less, except for first mortgages and other certain loans. CUNA earlier this month asked the U.S. Congress to permit private student loans with maturities of up to 30 years for credit unions that are well positioned to manage such loans. The recommendation was made as part of a 35-point CUNA regulatory relief plan for credit unions.

Student loan debt, which surpassed $1 trillion in 2012, has exceeded credit card debt as the largest source of consumer debt in the U.S., according to the CFPB. More than $150 billion of this $1 trillion total is comprised of private student loans, and at least $8 billion of these private student loans are in default, the CFPB said.

NEW: Senate Finance Chair Will Not Seek Reelection In 2014

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WASHINGTON (UPDATED: 4/23/13, 10:40 A.M. ET)--Senate Finance Committee Chairman Max Baucus (D-Mont.) will not seek reelection in 2014, several news outlets are reporting.

Baucus, who has served in the U.S. Senate since 1978, plans to retire at that time, according to Democratic strategists.

The Senator also leads the Joint Committee on Taxation, and is one of many currently working on a tax code revamp.

44th Earth Day Witnesses a Greener NCUA

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ALEXANDRIA, Va. (4/23/13)--Marking the annual observation of Earth Day, the National Credit Union Administration Monday announced that, as part of its commitment to being a "responsible corporate citizen," the agency is awaiting ENERGY STAR certification for its central office here.

"Our greeNCUA initiative has promoted greater energy efficiency, waste reduction, and other efforts to reduce our environmental footprint. We have made significant progress over the years, including our latest efforts to obtain the ENERGY STAR certification. We encourage credit unions to make the same commitment to incorporating greater environmental awareness into their daily operations," NCUA Chair Debbie Matz said in a Monday release.

She noted that the NCUA's headquarters has met all four criteria necessary for ENERGY STAR certification: energy performance, thermal comfort, indoor air quality, and illumination levels.  In fact, she said, the NCUA surpasses the General Services Administration standard requiring an ENERGY STAR rating of 75 for federal agencies leasing space outside a GSA-owned property. The NCUA rating is 86 on the scale of one to 100.

Matz said NCUA also continues to move from paper to electronic communications wherever possible.

Also for Earth Day, NCUA employees participated in a recycling event to reduce electronic waste. The agency also regularly provides a series of bulletins to help employees adopt green habits, including bicycling to work and growing plants in their offices.

This year and every year credit unions mark Earth Day with a variety of community-oriented events and programs, ranging from planting trees to promoting tree-saving electronic statements to educating youth about the environment. Use the resource link below to read an April 22 News Now story on credit union celebrations.

CFPB Addresses Misuse of 'Senior' In Financial Advice

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WASHINGTON (4/23/13)--A Consumer Financial Protection Bureau report outlining the confusion and risks that financial advisers with so-called "senior designations" can create for older Americans is one of many topics tackled in this week's Credit Union National Association Regulatory Advocacy Report.

The CFPB report, entitled "Senior Designations for Financial Advisers: Reducing Consumer Confusion and Risks," noted that the designation often implies a certain level of advanced training, knowledge and expertise regarding the financial needs of older consumers. However, the CFPB report added, the level of training required to obtain these designations ranges from none to extensive. Some are accredited, while others are not, the CFPB report said.

Differences in the more than 50 titles and acronyms that various firms have created to describe the designation also cause confusion, according to the CFPB. To address these issues, the bureau recommended:
  • Improving the dissemination of information and consumer education around senior designations;
  • Developing standards for the acquisition of senior designations;
  • Developing standards for senior designee conduct; and
  • Enforcement related to the misuse of senior designations.
While this report is not directed towards credit unions, some credit unions employ financial professionals through credit union service organizations and dual employees who sell financial products, CUNA warned. Some of these professionals may be impacted if requirements are put in place for the use of senior designations. CUNA will continue to monitor this topic with the CFPB.

Other issues addressed in CUNA's weekly members-only publication on regulatory developments include:
  • CFPB mortgage insurance regulations;
  • Regulation Z clarifications;
  • President Barack Obama's 2014 budget; and
  • A National Credit Union Administration letter on low-income credit union designations.
Employees or volunteers of CUNA and state credit union league member credit unions can sign up below to receive the Regulatory Advocacy Report.

The Regulatory Advocacy Report is archived on cuna.org.

CU Fin. Lit. Efforts Get Senate Audience This Week

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WASHINGTON (4/23/13)--Legislators will hear directly from credit unions again this week as Cathy Pace, president of the credit union division of Allegacy FCU, Winston Salem, N.C., discusses financial literacy education before an April 24 Senate Committee on Health, Education, Labor, and Pensions subcommittee hearing.

The Wednesday hearing is entitled "The Economic Importance of Financial Literacy Education For Students."  A copy of Pace's testimony will be available on the Credit Union National Association website once it has been transmitted to the committee.

Garinger High School, Charlotte, N.C., social studies teacher Nicole Lipp; Academic Director for the Global Center for Financial Literacy at The George Washington University Annamaria Lusardi, PhD; National Urban League Vice President Cy Richardson; and Jump$tart Coalition for Personal Financial Literacy representative Curtis Biggs are also scheduled to testify.

Another high-profile hearing will be held on Tuesday, as Consumer Financial Protection Bureau Director Richard Cordray presents his agency's Semi-Annual Report to Congress before the Senate Banking Committee.

On Wednesday, credit unions can look out for:
  • A House Oversight and Government Reform Committee hearing entitled "Broken Promises: The Small Business Lending Fund's Backdoor Bank Bailout." CUNA will submit a statement for the record of this hearing (See April 22 News Now story: House Panel To Study SBLF 'Backdoor Bailout'.);
  • A House Financial Services Committee hearing entitled "Building a Sustainable Housing Finance System: Examining Regulatory Impediments to Private Investment Capital";
  • A House Small Business Committee hearing on the Small Business Administration budget; and
  • A House Financial Services international monetary policy and trade subcommittee hearing on U.S. Contributions to the International Monetary Fund.
The House Ways and Means Committee has set a Thursday hearing on tax reform and residential real estate. (See April 19 News Now story: Camp Announces Tax Hearing On Housing Provisions.)

A House Appropriations Committee financial services hearing on the U.S. Treasury budget and a House Homeland Security cyber security subcommittee hearing on protecting civil liberties and ensuring cyber attack preparedness are also on the Thursday schedule.

Training For 'Small, Emerging' CDFIs Available

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WASHINGTON (4/23/13)--The Community Development Financial Institutions Fund's (CDFI Fund) Capacity Building Initiative released a five-course training schedule Monday for the "Strengthening Small and Emerging CDFIs."

The courses will be held through the summer and early fall and are intended to provide smaller CDFIs the opportunity to receive training designed for their unique needs.

The workshops will focus on topics such as growth and sustainability, overcoming barriers to growth, building effective partnerships, and geographic and product expansion. The workshops are free and a limited number of travel scholarships are available.

The current list of training dates are:
  • June 19 -21 in Houston, Texas ;
  • July 31-Aug. 2 in Nashville, Tenn,;
  • Aug. 14-16 in Detroit, Mich.;
  • Sept. 25-27 in Los Angeles; and
  • Oct. 2-4, 2013 in New Orleans, La.
Use the resource link for more information for the CDFI Fund.

CUNA: Work Continues On Reg Relief Plans

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WASHINGTON (4/23/13)--As the U.S. House approaches a Spring recess next week, the Credit Union National Association continues to work closely with House Financial Services Committee members and staff as they develop legislative solutions to address small financial institution regulatory burden. While the House will formally adjourn for the week, staffers will continue their regular work schedules on this and other key legislative issues.

"After testifying 12 times on credit union regulatory burden, the conversation turned during our last hearing to regulatory relief,"  Ryan Donovan, CUNA senior vice president of legislative affairs, said Monday.

Credit unions and community banks have both outlined the regulatory burdens they face during the most  recent hearings. CUNA witness Pamela Stephens, CEO of $55-million-in-assets Security One FCU of Arlington, Texas, presented CUNA's 35-point platform of regulatory relief measures at an April 10 House Financial Services financial institutions subcommittee hearing.

"We've put a lot of ideas on the table," Donovan said. However, he added, CUNA would encourage the committee to continue its series of hearings on regulatory burden as the legislative process continues.

CUNA anticipates that the recent hearings could result in a combination of a regulatory relief package addressing concerns of both credit unions and community banks, as well as some stand-alone bills.

Donovan said that any talk of when a bill will be introduced would be speculation at this point. He reminded, nonetheless, that committee Chairman Jeb Hensarling (R-Texas) has cited relieving regulatory burdens as one of two issues that are his priorities for this session of Congress, the other one being housing finance policy reform.

Removing legislative and regulatory barriers is one of the key objectives outlined in CUNA's Unite for Good initiative. Unite for Good calls on credit unions to rally in support of a common vision where "Americans choose credit unions as their best financial partner."

For a full list of Unite for Good action steps, use the resource link.