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CUs, Co-ops Can Boost In Troubled Times, Cheney Tells Internat'l Publication

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WASHINGTON (4/4/13)--Credit unions and other co-operatives can be a genuine solution for Americans who are struggling to get back on their feet after a long and very difficult economic downturn, Credit Union National Association President/CEO Bill Cheney said in a recent interview published in the International Summit of Cooperatives' newsletter.

The Summit is a biennial forum for leaders from the cooperative and mutalist worlds who want to discuss their concerns about the current and future challenges they all share.

Cheney said in the interview that people in the U.S. "are being drawn to values-based businesses that are centered in their own communities...So the cooperative business model has particular resonance."

The appeal of cooperatives is undeniable, "we've just got to continue to find new ways to reach those who have not yet discovered all we have to offer," he added.

Public outreach and increasing awareness of credit unions are key components of CUNA's "Unite for Good," the new initiative to rally credit unions around a shared vision for growth and success, a vision where "Americans choose credit unions as their best financial partner."

The goal of Unite for Good, Cheney explained, "is to rally U.S. credit unions in support of actions that will achieve our vision: removing legislative and regulatory barriers, raising the level of consumer awareness of credit unions, and fostering service excellence."

The vision sets clear, ten-year targets for increasing the number of U.S. consumers who view credit unions as their primary financial institution and the value that credit unions return to their members, Cheney said.

"By achieving the goals that underlie the new vision our movement has embraced, credit unions will be able to make an even greater impact than we do today on the economic lives of U.S. consumers. I would say the same is true in other cooperative sectors," Cheney added.

CUNA's consumer-oriented website aSmarterChoice.org is one way potential credit union members can learn more about credit unions, and find a credit union that they can join.

For the interview, and more on aSmarterChoice.org, use the resource links.

CFPB Requests Info On Targeted Fin Ed Efforts

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WASHINGTON (4/4/13)--The Consumer Financial Protection Bureau's (CFPB) Office of Financial Empowerment this week has issued two requests for information (RFI) to financial institutions, research organizations, community-service providers and potential vendors.

The first RFI, put out in conjunction with the Office of Service Member Affairs, is seeking information about financial coaching services for economically vulnerable consumers and "veterans in transition."

The CFPB is striving to empower and build veterans financial capability to make more effective financial decisions and ultimately have a better financial wellbeing.

The bureau seeks:

  • Best practices in developing and executing veteran financial coaching;
  • Already existing solutions; and
  • Vendors with the capability to provide these services in an effective way.
The second RFI is meant to collect information about building financial capability for people with disabilities, specifically those who are transitioning back into the workforce.  The CFPB aims to protect these particularly vulnerable consumers from financial harm by learning about existing programs and organizations that currently exist.

The bureau wants data on:

  • Organizations that work to build the financial capability of people with disabilities; and
  • Existing best practices and expertise in delivering and integrating financial capability programming services to people with disabilities.
Interested parties are asked to respond no later than April 12 at 4 p.m. (ET) and to submit information via e-mail to Matthew Chmielewski at Matthew.Chmielewski@cfpb.gov.

For more information regarding the CFPB's request for information follow the links.

CU Magazine: 'Devil Is In Definitions' In CFPB Regs

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WASHINGTON (4/4/13)--New escrow account requirement regulations are one of three Regulation Z changes set to take effect on June 1. In this month's edition of News Now's sister publication, Credit Union Magazine, Credit Union National Association compliance staff have warned that, in this case, the "devil is in the definitions."

Reg Z currently requires creditors to establish escrow accounts for higher priced mortgage loans secured by a first lien on a borrower's principal dwelling. Pending Consumer Financial Protection Bureau changes to the rule lengthen the time--from one year to five years--creditors must maintain a mandatory escrow account. The rule also exempts credit unions with less than $2 billion in assets that operate predominantly in rural or underserved areas and meet certain criteria.

In the Credit Union Magazine article, CUNA Federal Compliance Counsel Colleen Kelly and CUNA Director of Compliance Information Valerie Moss advised credit unions to first understand the definitions of "higher-priced mortgage," "dwelling," "rural," and "underserved" to help determine the impact this rule will have on their mortgage program or whether they may be exempt.

Credit unions that decide to close a higher-priced mortgage should then determine whether any of the exemptions apply. The CUNA compliance staffers noted that transactions secured by shares in a cooperative do not require escrow accounts.

Transactions to finance the initial construction of a dwelling, temporary or "bridge" loans with terms of 12 months or less, and reverse mortgage also do not require escrow accounts, they wrote.

Exemptions may also be extended to credit unions that meet certain thresholds for serving "rural" or "underserved" communities or that are under certain mortgage origination or asset limits.

However, they warned, there's an exception to the exemption: If, before closing, the credit union agreed to sell a first-lien, higher-priced mortgage to an entity that doesn't satisfy these conditions, this exemption won't apply and you must establish an escrow account, they wrote.

The Credit Union Magazine story also addressed prohibitions on single premium credit insurance and prohibitions on mandatory arbitration clauses.

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

Members Must Be Present To Remove Directors, NCUA Opines

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ALEXANDRIA, Va. (4/4/13)--The use of mail ballots in a director removal election violates federal credit union bylaws, National Credit Union Administration General Counsel Michael McKenna said in a legal opinion letter released Wednesday.

The NCUA incorporated federal credit union bylaws into its regulations in 2007, and has full authority to interpret and enforce them, McKenna added.

The bylaws, McKenna explained, hold that a credit union's director or committee member may be removed from office by the affirmative vote of a majority of members present at a special meeting called for the purpose. The director or committee member in question must also be given an opportunity to be heard.

"The use of the phrase 'present at a special meeting' precludes the possibility of voting in absentia by mail to remove a director," McKenna wrote. "If voting by mail were allowed in lieu of being present, members would be denied the opportunity to observe the director's demeanor, hear the director's defenses, and ask the director questions. The give and take that is part of being present at a special meeting provides a director with more due process and better informs the membership," he added.

McKenna in the letter also said state laws "play no role in determining governance issues where the federal credit union bylaws are clear and unambiguous." However, McKenna added, the agency may choose to defer to state law on certain issues where the Federal Credit Union Act and federal credit union bylaws laws are silent or sufficiently ambiguous to warrant state law consideration.

The NCUA legal opinion letter responded to a question from attorney and former NCUA Assistant General Counsel Steven Bisker.

For the full letter, use the resource link.