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CUNA Says Relief Bill Is Good As First Step

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WASHINGTON (4/29/13)--Credit Union National Association President/CEO Bill Cheney Friday commended Rep. Blaine Luetkemeyer (R-Mo.) for introducing legislation that would address several regulatory burdens facing credit unions and community banks.

"This legislation is a good first step toward providing regulatory relief, but it can only be viewed as a first step," Cheney said Thursday night when the bill was introduced. "More will need to be done to address the cumulative effect of regulatory changes that continue to challenge credit unions."

In a letter of thanks to Luetkemeyer for taking this step, Cheney reminded, "It is not just one new law or revised regulation that challenges credit unions but the cumulative effect of regulatory changes," a phenomenon that has been "building for over a decade."

The Luetkemeyer bill, called the "Community Lending Enhancement and Regulatory Relief Act (CLEAR Relief Act)," would aid community-based financial institutions--both credit unions and community banks--by:
  • Providing regulatory relief in the mortgage area; and
  • Eliminating a requirement that privacy notices be sent on an annual basis.
The CLEAR Relief Act would also eliminate a requirement that financial institutions verify that automated clearing house payments are not a prohibited transaction, if the financial institutions originating the transaction has warranted that they have complied with Office of Foreign Assets Control regulations.

"Your legislation would address several regulatory burdens facing credit unions and community banks, and we commend you for seeking common ground on regulatory relief legislation. It is important to recognize, however, that much more needs to be done to address the crisis of creeping complexity, and we look forward to continuing to work with you to that end," Cheney concluded.

Youth Fin Lit Efforts To Be CFPB Session Focus

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WASHINGTON (4/29/13)--Credit Union National Association Assistant General Counsel Luke Martone will be among the invited attendees at the Consumer Financial Protection Bureau's Youth Financial Education all-day session on April 30.

The event, "Investing in our Future: A National Conference on Financial Capability for Children and Youth," will be hosted by the CFPB's Office of Financial Education.

"The Conference will highlight promising practices, critical challenges, and opportunities in promoting the financial capability of children and youth populations," the CFPB said in a release. Public, private, and nonprofit representatives have been invited to attend the event.

Topics on the agenda include:
  • Integrating financial education in K-12 schools;
  • The role of innovation and hands-on learning in promoting financial capability of children and youth; and
  • Critical research and evaluation needs for making the policy case for school based financial capability initiatives.

Cheney Report: Wash CUs Unite For Good Of Members

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WASHINGTON (4/29/13)--Three Washington state credit unions--Peninsula CU, Connection CU and Kitsap CU--recently united for the good of their members, and their efforts are lauded in this week's edition of The Cheney Report.

These three credit unions are among many that have reached out to help their members deal with the impact of the federal sequester. Elliot Gregg, president/CEO of Kitsap CU, said the three credit unions met to discuss "how to proactively help our members through the impact of financial change."

Peninsula has made contact information for local utility companies, financial counseling services, and community resource providers available on its homepage. In the April edition of Kitsap CU's newsletter, Gregg encouraged members that have newfound financial concerns due to the sequester to have an open dialogue with his credit union. That type of action will "go a long way in creating a positive course of action," Gregg said.

These collaborative effort resulted in positive press coverage and CUNA's Unite for Good vision. "It's only been a few months since we launched our vision of "Americans Choose Credit Unions as their Best Financial Partner," and examples like in Washington State are evidence that credit unions are ready to "Unite for Good" to achieve that vision, Cheney wrote.

This week's Cheney Report also includes:

  • Member business lending and tax reform news;
  • CUNA capital standards advocacy;
  • Details on a Consumer Financial Protection Bureau report on payday lending; and
  • News on credit union Financial Literacy Month activities.

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.

To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

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

CFPB Issues Financial Civil Penalty Fund Rule

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WASHINGTON (4/29/13)--The Consumer Financial Protection Bureau Friday proposed a rule to establish a "Consumer Financial Civil Penalty Fund," which was created under the Dodd-Frank Wall Street Reform Act.

The proposal, in effect, would lay out procedures for allocating funds the bureau collects as fines from financial institutions for faulty products or services to consumers who were harmed by them. It also interprets what kinds of payments to victims are appropriate.

To the extent that such victims cannot be located or "such payments are otherwise not practicable," the rule would allow the CFPB to use the civil penalty funds for consumer education and financial literacy programs. However, the proposal notes that, in the future, the bureau may limit the amount of funds that the fund administrator may allocate to consumer education and financial literacy programs.

Also under the proposed rule, the administrator would allocate funds from the Civil Penalty Fund on a six-month schedule.

Use the resource link to access the CFPB proposal document.

$80K For LICU Summer Interns To Be Provided By NCUA

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WASHINGTON (4/29/13)--Up to $80,000 in funds will be made available to successful credit union applicants through the 2013 round of the National Credit Union Administration's Student Internship Grant Initiative.

The agency program provides individual grants of up to $4,000 to help eligible credit unions hire student interns during the summer months. Program funding is provided through the Community Development Revolving Loan Fund.

"The Student Internship Grant Initiative provides the next generation with the opportunity to gain professional experience, enhance job skills, and learn more about the credit union industry," NCUA Board Chair Debbie Matz said. "Additionally, this initiative allows low-income credit unions to find and groom the industry's future leaders. The infusion of new and diverse talent will assist credit unions to continue to improve their member services," she added.

Only low-income designated, financially viable credit unions may take part in the grant program. The grants can only be used for student internship costs, the NCUA said. Further, credit unions that received grants in 2012 may not reapply in 2013. A combined $106,000 was awarded to 24 credit unions during the 2012 round of the program.

Applications will be accepted between May 1 and 20. The NCUA's Office of Small Credit Union Initiatives will approve applications on a first-come, first-served basis. Funding awards will be announced in mid-June, the NCUA said.

To apply for the grant program, use the resource link.

Additional grant initiatives for 2013 will be announced in mid-June, the NCUA said.

Jump$tart, CUNA Join Hill Fin Lit Fest

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WASHINGTON (4/29/13)--Rep. Ruben Hinojosa (D-Texas) highlighted his Deep South Texas Financial Literacy Alliance, which seeks to increase understanding of key financial concepts with the help of credit unions and others, during Friday's Financial Literacy Day on Capitol Hill.

CUNA staff promote aSmarterChoice at Friday's Capitol Hill event. (CUNA Photo)
The congressman also urged legislators at the event to join his Financial and Economic Literacy Caucus. He was one of 12 members when the group began. He said he hopes to increase membership to 100 legislators soon.

The Jump$tart Coalition for Financial Literacy, the Credit Union National Association and other partners held the event to update members of Congress and their staff on the many financial literacy projects of government, nonprofit and corporate organizations. This is the 11th year the event has been hosted on Capitol Hill.

Rep. Terri Sewell (D-Ala.) also spoke during the event. U.S. House staffers, the National Credit Union Administration, other financial regulators and Washington financial services groups also took part in the day's festivities.

CUNA staff distributed financial literacy materials and promoted aSmarterChoice.org during the event. Users can read basic information on key credit union concepts and find a local credit union they can join through that site.

For more on aSmarterChoice.org, use the resource link.

NCUA Notes FSOC Recommendations That Affect CUs

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ALEXANDRIA, Va. (4/29/13)--The Financial Stability Oversight Council's 2013 Annual Report, released late last week, features three regulatory recommendations credit unions should be aware of, National Credit Union Administration Chair Debbie Matz said Friday.

"As the supervisor and insurer of the credit union system, NCUA takes these recommendations and the analysis of emerging risks very seriously. A number of the risks identified and recommendations are consistent with our regulatory and supervisory priorities, and the report reinforces and reaffirms the critical nature of these priorities," Matz added.

The FSOC report:

  • Recommends that regulatory agencies continue their scrutiny of how potential changes in interest rates could adversely affect risk profiles;
  • Emphasizes that capital and liquidity buffers form the most fundamental protection for the broader financial system; and
  • Notes that operational risks, including cyber-security risks, are an emerging and rapidly changing threat.
For the full NCUA release, use the resource link.

The Credit Union National Association is reviewing this report and will be following up with NCUA to further spotlight credit unions efforts in these areas. "To the second point, the ability of credit unions to have access to supplementary capital, which NCUA supports, would provide additional protection to credit unions and the National Credit Union Share Insurance Fund," CUNA Deputy General Counsel Mary Dunn said.

CUNA: Bank Capital Changes Should Be Tied To CU Changes

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WASHINGTON (4/26/13)--The U.S. Congress should consider the capital concerns of credit unions as it discusses Basel III exemptions for small banks, Credit Union National Association President/CEO Bill Cheney urged in a Thursday letter to members of the U.S. House.

Basel III standards would require U.S. banks to hold common equity of 4.5% by 2015. In addition, banks would be required to hold a 2.5% conservation buffer, which would be gradually introduced by 2019, and increase Tier 1 levels from 4% to 6% by 2015.

Recent House legislation (H.R. 1693) would exempt community banks from the application of Basel III capital standards.

"To be clear: we would have very significant concerns if Congress were to exempt the small banks from the Basel III capital requirements and not at the same time address reforms to credit union capital requirements," the CUNA CEO said.

The CUNA letter encouraged legislators that support H.R. 1693 to also back the Capital Access for Small Businesses and Jobs Act (H.R. 719). 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 co-sponsors.

Strong capital requirements are in the best interests of consumers and financial institutions, and reforms to financial institution capital standards should be done through a process that includes consideration of capital reform for credit unions as well as for community banks, Cheney noted.

CUNA: Fin Lit Bill Will Complement CU Efforts

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WASHINGTON (4/26/13)--Credit unions work hard to improve financial literacy in their communities, and Sen. Kay Hagan's (D-N.C.) new financial education bill will surely aid those efforts, the Credit Union National Association said Thursday.

During a financial literacy hearing Wednesday held by the Senate subcommittee which she chairs, Hagan announced she will soon re-introduce her 2012 legislation, the Financial Literacy for All Students Act.  (Use the resource link to read April 24 News Now story: Witness Highlights CU Fin Lit Efforts In Senate Hearing)

The bill, according to Hagan, would create incentive grants for states to incorporate financial literacy education into their elementary and secondary school curricula. Professional development would also be provided to help teachers better teach the topics. The senator introduced similar legislation in 2011.

Credit unions provide financial counseling to more than 1.5 million consumers each year, according to a National Credit Union Foundation report entitled "Credit Unions: Focused on Financial Capability across the Nation." Early-age financial literacy efforts are a key part of this counseling, as credit unions hold nearly 25,000 annual educational presentations for more than 600,000 students, the NCUF wrote.

On-campus credit union branches held more than $34 million in funds from 111,500 student members as of 2010. Nearly 5,000 student workers received on-the-job training experiences at those 1,400 in-school credit union branches.

In total, credit unions invested more than $140 million in financial literacy efforts in 2010.

CUNA and credit unions are celebrating April's Financial Literacy Month with special events to highlight the educational services they offer their members. CUNA's National Credit Union Youth Week this week focuses on teaching the benefits of saving and goal setting, and invites 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. That challenge rewards 10 savers with $100 cash prizes.

While Bank Payday Loans Scrutinized, CUNA Underscores CU Difference

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WASHINGTON (4/26/13)--As regulators unveiled plans Thursday to put bank payday and advance-deposit loan practices under increased scrutiny, the Credit Union National Association noted that there are pro-consumer credit union alternatives to predatory payday lending.

The proposed Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. guidance aims to improve underwriting standards for these short-term loans, require banks to evaluate an applicant's ability to repay before they take out a loan, and create a mandatory one-month "cooling-off period" between loans. The OCC and FDIC will accept comments on their proposed guidance for 30 days after it is published in the Federal Register.

CUNA is reviewing the rule and will be filing a comment letter.

A March Center for Responsible Lending report condemned some big banks' payday lending practices, and found that payday loans offered by six large firms carried an average effective annual percentage rate (APR) of 225% to 300%. Credit unions across the country have implemented various programs in order to provide individuals in their communities an alternative to these and other high-priced products.

CUNA Director of Data & Statistics Marc Shafroth noted 8% of credit unions offer payday loan alternatives. 

The National Credit Union Administration's short-term, small amount loan program permits federal credit unions to 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%. Many of these products feature low fees, and credit unions also reach out to members that take out these loans to offer financial counseling and encourage them to take on more stable sources of financial services.

For more on the OCC and FDIC guidance, use the resource links.

The Consumer Financial Protection Bureau also plans to look into payday loan regulations. State and federal legislators are also acting to address payday loans. (Use the resource link to read April 24 News Now story: CFPB Payday Loan Study Warns Of Harmful Debt Cycle.)

SBA 504, 7(a) Loan Simplifications Backed By CUNA

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WASHINGTON (4/26/13)--The Credit Union National Association supports a U.S. Small Business Administration (SBA) proposal that would ease the loan application process for small business owners, as well as increase access to certain SBA financing for certain business owners.  In a comment letter to the SBA, CUNA also noted that congressional action to increase the member business lending cap would also help small businesses.

The SBA proposal would "strip away regulatory restrictions that detract from the 504 Loan Program's core job creation mission as well as the 7(a) Loan Program's positive job creation impact on the American economy," the CUNA letter noted. The proposal would achieve this end, in part, by:

  • Eliminating a personal resources test from the regulations for both loan programs; and
  • Allowing SBA applicants more flexibility to use their loans to finance expenses.
"CUNA strongly supports efforts of federal agencies to eliminate unnecessary, outdated regulatory restrictions on credit unions," CUNA Senior Assistant General Counsel for Regulatory Advocacy Luke Martone wrote.

There were 347 credit unions with over 8,100 SBA loans outstanding, totaling $921 million in funds, at the end of 2012, he noted. The SBA-guaranteed portion of a 7(a) Loan is not counted against a credit union's business lending cap, but there are approximately 500 credit unions that are currently constrained by or actively managing their MBL cap.

CUNA in the comment letter urged the SBA to give facilitate credit union loans to small businesses by supporting legislation that would increase the 12.25%-of-assets MBL cap. The cap "restricts some credit unions from fulfilling the small business financing needs of their members," Martone wrote.

Increasing the MBL cap to 27.5%-of-assets, as proposed in the Credit Union Small Business Jobs Creation Act (H.R. 688), would permit credit unions to lend an additional $13 billion to small businesses, helping them create over 146,000 new jobs in the first year after enactment.

"This can be done at no cost to taxpayers and without increasing the size of government. Credit unions do not need taxpayer assistance to encourage them to do more business lending; credit unions only need authority from Congress," the CUNA letter noted.

For the full comment letter, use the resource link.

NEW: CUNA Says Relief Bill Is 'Good First Step'

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WASHINGTON (UPDATED: 4/26/13, 10:30 a.m. ET)--Credit Union National Association President/CEO Bill Cheney today commended Rep. Blaine Luetkemeyer (R-Mo.) for introducing legislation that would address several regulatory burdens facing credit unions and community banks.

"This legislation is a good first step toward providing regulatory relief, but it can only be viewed as a first step," Cheney said Thursday night when the bill was introduced. "More will need to be done to address the cumulative effect of regulatory changes that continue to challenge credit unions."

In a letter of thanks to Luetkemeyer for taking this step, Cheney reminded, "It is not just one new law or revised regulation that challenges credit unions but the cumulative effect of regulatory changes," a phenomenon that has been "building for over a decade."

The Luetkemeyer bill, called the "Community Lending Enhancement and Regulatory Relief Act (CLEAR Relief Act)," would aid community-based financial institutions--both credit unions and community banks--by:

  • Providing regulatory relief in the mortgage area; and
  • Eliminating a requirement that privacy notices be sent on an annual basis.

The CLEAR Relief Act would also eliminate a requirement that financial institutions verify that automated clearing house payments are not a prohibited transaction, if the financial institutions originating the transaction has warranted that they have complied with Office of Foreign Assets Control regulations.

"Your legislation would address several regulatory burdens facing credit unions and community banks, and we commend you for seeking common ground on regulatory relief legislation. It is important to recognize, however, that much more needs to be done to address the crisis of creeping complexity, and we look forward to continuing to work with you to that end," Cheney concluded.

Capitol Hill Hosts Jump$tart, CUNA Fin Ed Day

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WASHINGTON (4/26/13)--The Jump$tart Coalition for Financial Literacy, the Credit Union National Association and other partners will educate members of the U.S. Congress and their staff on the many financial literacy projects of government, nonprofit and corporate organizations during today's Financial Literacy Day.

This is the 11th year that Jump$tart and partners have presented Financial Literacy Day on Capitol Hill. The event, which will be held in the Cannon House Office Building, will feature remarks from co-chairs Reps. Ruben Hinojosa (D-Texas) and Steven Stivers (R-Ohio).

CUNA staff will be on hand at the event to distribute financial literacy materials and promote aSmarterChoice.org, which provides a comprehensive credit union locator that includes every credit union in the U.S. Consumers can go on the site, answer a few simple questions about where they live, work or worship, and find credit unions nearby that they can join.

For more, use the links.

Senate 'Too Big To Fail' Bill Released

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WASHINGTON (4/25/13)--Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) on Wednesday introduced the Terminating Bailouts for Taxpayer Fairness Act (S. 798), which, in part, would impose stronger capital requirements on banks.

The bill would require the largest banks to maintain a capital ratio of at least 15%. Smaller banks would be subject to a lower threshold of between 8% and nearly 10%.

Credit Union National Association Vice President of Legislative Affairs Ryan Donovan said that if lawmakers address community bank capital standards, that action should be paired with legislation to address credit union capital issues, particularly the ability of credit unions to accept supplemental forms of capital.

The Brown-Vitter bill, however, does contain some provisions that would apply to credit unions as well as banks. For example, the privacy notification bill--which would eliminate repetitive privacy notices by eliminating a requirement that the notices be sent annually--has been included in this bill. It also includes the part of the examination fairness bill, creating an examination ombudsman for all the federal financial institution regulators.

The Brown-Vitter bill would also provide some relief with respect to the definition of a qualified mortgage. The legislation would also exempt financial institutions under $10 billion in assets from small business data collection requirements under the Equal Credit Opportunity Act.

Proir to the bill's introduction, CUNA President/CEO Bill Cheney told The Hill newspaper in an interview that  "the people in the positions who made the decisions to bail out the big banks before would probably have to do the same thing today"  barring any changes to the law.  He added, "I think too big to fail still exists."

Cheney also told the publication that many rules out of regulatory agencies like the Consumer Financial Protection Bureau (CFPB) are unduly burdening credit unions instead of major banks and predatory lenders.

CUNA has presented a 35-point plan to Congress recommending regulatory relief measure for credit unions, which includes a proposal to permit credit unions accept supplemental forms of capital consistent with the cooperative principles.

CFPB Payday Loan Study Warns Of Harmful Debt Cycle

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WASHINGTON (4/25/13)--Some payday and deposit advance loan products can trap borrowers, putting "many consumers at risk of turning what is supposed to be a short-term, emergency loan into a long-term, expensive debt burden," Consumer Financial Protection Bureau Director Richard Cordray said Wednesday.

Cordray made his remarks as the bureau released a report on those loans. The CFPB study found many borrowers face a harmful combination of loose lending standards, high costs, and risky loan structures.

Credit Union National Association Deputy General Counsel Mary Dunn said credit unions and CUNA 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. CUNA is collating data on these efforts, she said.

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. That program permits federal credit unions to 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%. 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.

Many borrowers use payday loan products to pay off their existing debts, the CFPB study found. This practice, when coupled with the high cost of the payday loan or advance, may make it more difficult for borrowers to pay off those debts. "It is unclear whether consumers understand the costs, benefits, and risks of using these products," the bureau report added.

The CFPB analysis of 15 million payday loans generated by storefronts in 33 states revealed:
  • A median loan amount of $350 and a mean loan size of $392;
  • A median loan term of 14 days and a mean loan term of 18.3 days; and
  • An average borrower income of $10,000 to $40,000 per year.
The study found that 18% of payday loan applicants were paid some form of federal or state public assistance. One quarter of payday loan borrowers paid $781 or more in fees over the course of a year, not counting the principal of the loan.

Agency action to address payday and loan advance issues may be in the offing, and the CFPB said it is also looking into online payday lender practices. State and federal legislators are also acting to address payday loans. (Use the resource link to read April 18 News Now story: California Is Latest Front In Larger Payday Loan Fight.)

Bank regulators are also examining banks' short-term loan products and considering strict limits on the "deposit-advance" loans that could force dramatic changes to the bank offerings, American Banker reported Wednesday. The article said the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. will impose such limit "soon." The regulators are considering such restrictions as a "cooling off" period, which would require consumers to wait a month after paying off one such loan before taking out another.

Witness Highlights CU Fin. Lit. Efforts In Senate Hearing

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WASHINGTON (4/25/13)--Financial literacy is a key mission for credit unions, and strong financial education and literacy efforts are even more important in times of economic strife, Cathy Pace, president of the credit union division of Allegacy FCU, Winston Salem, N.C., said during a Wednesday Senate Committee on Health, Education, Labor, and Pensions subcommittee hearing.

"It is in the interest of credit unions and their memberships to have members that are financially literate; therefore, across the country, credit unions engage in a wide variety of efforts aimed at
Click to view larger image Sen. Kay Hagan (D-N.C.), who chairs the Senate Health, Education, Labor, and Pensions subcommittee on familes and children, greets Cathy Pace (right) before Pace testifies about the financial education efforts of her credit union, Allegacy FCU of Winston Salem.  (CUNA Photo)
ensuring that members of all ages have access to resources that help them make smarter financial choices," Pace said in a prepared statement. She highlighted the efforts of North Carolina credit unions that provide financial counseling and education to more than 500,000 North Carolinians every year.

One way Allegacy contributes to financial education efforts in that state is by participating in a student-run credit union program. That program, Pace said, provides a unique way to develop students financial and business skills through on-campus branches in seven district schools. Students take part in customer service, and build business plans. Withdrawals, deposits, transfers and account openings are all made at these credit unions, Pace noted. All in all, 300 students have worked in the school based credit unions since 2008, she said.

The Credit Union National Association and the National Credit Union Foundation backed up comments in a statement submitted for the hearing record: "Credit unions change lives each day through the 'People Helping People' philosophy that drives the credit union movement." The statement noted that credit unions invest millions each year in financial education and counseling efforts. "Against a fragmented landscape where each credit provider is seeking maximum gain, not-for-profit credit unions continue to be true to their mission of serving as trusted advisors to their members and communities," CUNA and NCUF said.

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 also testified during the hearing.

For more on the hearing, use the resource links.

CDFI Fund Awards $3.5B In New Market Tax Credits

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WASHINGTON (4/25/13)--The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund has awarded $3.5 billion in tax credit allocation authority to 85 applicants in the 2012 round of the New Market Tax Credit (NMTC) program.

Altogether, 282 applicants requested approximately $21.9 billion in credits during the 2012 round of the NMTC. "The New Markets Tax Credit addresses one of the most significant obstacles to economic development that low-income communities face: a lack of access to patient, private investment capital," Treasury Assistant Secretary for Financial Institutions Cyrus Amir-Mokri said in a release.

Credit unions are among those eligible to participate in the NMTC, which seeks to spur the investment of new private sector capital into low-income communities. To do so, it permits individual or corporate taxpayers to receive a credit against federal income taxes for making Qualified Equity Investments. Those investments must be made in designated Community Development Entities. The CDFI Fund allocates the tax credits annually through a competitive application process.

For the CDFI Fund release, use the resource link.

Big Banks Targeted By Smaller Banks, Lawmakers

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WASHINGTON (4/25/13)--Big banks are getting it from all sides in recent days, as Capitol Hill lawmakers and community banks both call attention to the need to end the nation's vulnerability to "too big to fail"--or TBTF--banks.

Click to view larger image Click for larger view
Community banks have turned the heat on their "bigger brothers" in an ad in publications targeting a Capitol Hill readership. "STOP TBTF NOW," urges one add illustrated by two maps of the United States--one showing the devastating effects of allowing a "too big to fail banking market" to wipe out a "free banking market." 

And from Senate lawmakers Wednesday came the introduction of legislation that would impose stronger capital requirements on banks. That bill, known as the Terminating Bailouts for Taxpayer Fairness Act (S. 798), would require banks with more than $500 billion in assets to maintain a capital ratio of at least 15%. (See related story: Senate 'Too Big To Fail' Bill Released.)

"Requiring the largest banks to finance themselves with more equity and with less debt will provide them with a simple choice: they can either ensure they can weather the next crisis without a bailout, or they can become smaller...adequate capital levels lower the likelihood that an institution will fail and lower the costs to the rest of the financial system and the economy if one does," Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), the TBTF bill's sponsors, said in a Wednesday joint New York Times op-ed.

NEW: Senators Intro 'Too Big' Bank Bill

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WASHINGTON (UPDATED: 4/24/13, 4:35 p.m. ET)--Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) today introduced the Terminating Bailouts for Taxpayer Fairness Act (S. 798), which, in part, would impose stronger capital requirements on banks.

The bill would require the largest banks to maintain a capital ratio of at least 15%. Smaller banks would be subject to a lower threshold of between 8% and 9.5%.

Credit Union National Association Vice President of Legislative Affairs Ryan Donovan said that if lawmakers address community bank capital standards, that action should be paired with legislation to address credit union capital issues, particularly the ability of credit unions to accept supplemental forms of capital.

The Brown-Vitter bill, however, does contain some provisions that would apply to credit unions as well as banks.  For example, the privacy notification bill--which would eliminate repetitive privacy notices by eliminating a requirement that the notices be sent annually--has been included in this bill.   It also includes the part of the examination fairness bill, creating an examination ombudsman for all the federal financial institution regulators.

The Brown-Vitter bill would also provide some relief with respect to the definition of a qualified mortgage.  The legislation would also exempt financial institutions under $10 billion in assets from small business data collection requirements under the Equal Credit Opportunity Act.  

Proir to the bill's introduction, CUNA President/CEO Bill Cheney told The Hill newspaper in an interview that  "the people in the positions who made the decisions to bail out the big banks before would probably have to do the same thing today"  barring any changes to the law.  He added, "I think too big to fail still exists."

Cheney also told the publication that many rules out of regulatory agencies like the Consumer Financial Protection Bureau (CFPB) are unduly burdening credit unions instead of major banks and predatory lenders.

CUNA has presented a 35-point plan to Congress recommending regulatory relief measure for credit unions, which includes a proposal to permit credit unions accept supplemental forms of capital consistent with the cooperative principles.

Sen Baucus To Retire In 2014

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WASHINGTON (4/24/13)--Senate Finance Committee Chairman Max Baucus (D-Mont.) on Tuesday said he will not seek re-election in 2014.

Baucus, who has served in the U.S. Senate since 1978, said "there is important work left to do" in his remaining time in the U.S. Congress. "Our country and [Montana] face enormous challenges--rising debt, a dysfunctional tax code, threats to our outdoor heritage, and the need for more good-paying jobs," he said.

As chair of the Senate's powerful tax-policy committee and leader of the Joint Committee on Taxation, Baucus is one of many currently working on a tax code revamp. Baucus has had many positive things to say about credit unions, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan noted earlier this year.

State-specific issues will also be a priority for the legislator in his remaining year-and-a-half in office. Baucus plans to officially announce his retirement in Helena, Mont. on Friday.

CUNA: New CFPB Office Gives CUs Another Advocacy Route

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WASHINGTON (4/24/13)--The Consumer Financial Protection Bureau's (CFPB) new Office of Financial Institutions and Business Liaison will give the Credit Union National Association and credit unions another avenue to communicate their concerns with this key regulator, CUNA Deputy General Counsel Mary Dunn said Tuesday.

The CFPB announced creation of the new office Monday. The new division will connect the agency with financial institution trade associations, financial institutions, and businesses to enhance collaboration and communication as the CFPB continues its work to make markets more accessible and efficient for consumers.

CUNA already works closely with the CFPB and has met on behalf of credit unions on such top financial issues as qualified mortgage and ability-to-repay rule changes, remittance rules,  payday lending, and many financial services topics. The agency most recently reached out to CUNA and credit unions asking CUNA staff if credit unions could help ease students' loan-debt burdens by consolidating several student loans into fewer payments, and at better terms. (Use the resource link to read April 23 News Now story: CFPB Seeks CU Help For Student Loan Issues.)

Dan Smith has been selected to serve as the first assistant director for the new office. Smith previously served as the director for Industry and State Relations at Freddie Mac.

As it released details on the new office and its new leader, the CFPB also announced:

  • Catherine Galicia will serve as the CFPB's new assistant director for legislative affairs;
  • Lisa Konwinski will serve as the CFPB's deputy associate director for external affairs; and
  • CFPB Office of Older Americans Assistant Director Hubert "Skip" Humphrey will now serve as the bureau's senior liaison officer.
Also related to the CFPB, Director Richard Cordray presented the semiannual report detailing the last six months of agency activity to the Senate Banking Committee on Tuesday. Issues addressed in Cordray's testimony included:
  • Credit reporting company supervision;
  • Debt collector oversight; and
  • Private student loan debt.
The director was also scheduled to submit that same report on the House side. However, House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) said the committee cannot legally accept testimony from Cordray "until he is validly appointed as the bureau's director."

For the full CFPB releases, use the resource links.

CU Advantage Noted In Fox, HuffPo Coverage

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WASHINGTON (4/24/13)--A pair of key credit union concerns, member business lending (MBL) and student loans, and the Credit Union National Association's views on those issues, received prominent press coverage in two high-profile outlets on Tuesday: Fox Business and The Huffington Post.

In a foxbusiness.com story, CUNA Executive Vice President of Strategic Communications and Engagement Paul Gentile noted the help that credit unions could provide to a still-recovering economy if allowed greater MBL authority.

The Fox Business piece noted credit unions as one way small business owners can go "out-of-the-box" and obtain funds when banks turn them down. While banks are unwilling to do a lot of the loans needed today to stem the tough economic times, "credit unions do true small business loans," Gentile said in the piece. Banks are reluctant to make loans for less than $200,000. However, Gentile said, the average credit union business loan is right around that level: Credit union business loans average $217,000.

Most small business owners need the loans to cover smaller costs like equipment and inventory updates, Gentile told Fox Business. Others, he said, need the extra funds to keep their business running if consumer spending ebbs.

CUNA's recently released student lending survey also received coverage in a Huffington Post piece on student debt issues. That survey found that nearly half of high school seniors in the U.S. don't know how much money they will need for college.

The HuffPo story also includes other CUNA findings: 22% 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. (Use the resource link to read April 17 News Now story: Survey: 50% Of High School Seniors Don't Know Student Loan Costs.)

While 70% of the CUNA survey respondents were confident they will receive a high-paying job upon graduating, the Huffington Post story painted a more complicated picture: Nearly 9% of recent college graduates are unemployed, and 18.3% are underemployed, according to an Economic Policy Institute survey cited in the same story.

For the Fox Business and Huffington Post items, use the resource links.

CUNA Cites Broken Bank Promises In SBLF Letter

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WASHINGTON (4/24/13)--The Credit Union National Association Tuesday submitted  a letter for the record of a House panel hearing entitled "Broken Promises: The Small Business Lending Fund's Backdoor Bank Bailout," and charged that the SBLF was "a sweetheart deal to further assist banks that were aided in TARP."

CUNA President/CEO Bill Cheney, in the letter to the key members of the House Oversight and Government Reform Committee, which conducted the hearing, underscored that banks used the funds from the second government bailout to pay off costs tied to their first bailout, rather than using those funds for their intended purpose of lending to struggling small businesses.

The $30 billion SBLF program was established by the Small Business Jobs Act of 2010.

Banks and their national trade associations vigorously pushed for enactment of the SBLF, but those same supporters have yet to admit that the SBLF "has done little to stimulate bank lending to small business," Cheney noted.

The CUNA letter went on to note that legislation that could help credit unions do more to aid the economy is active in the U.S. House.

Rep. Ed Royce's (R-Calif.) bill, the Credit Union Small Business Jobs Creation Act (H.R. 688), would increase the member business lending (MBL) cap to 27.5% of assets, up from the current 12.25%.  CUNA estimates the change 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. Royce's MBL bill has 89 co-sponsors.

"We know the banks oppose H.R. 688; but considering how they have used the taxpayer-subsidized SBLF, their opposition to this legislation is a pretty good reason to support it," the letter said.

Credit union lending to small business owners increased by 45% during the financial crisis, while bank small business loans contracted 15% over that same time period, CUNA noted. This favorable comparison "should speak volumes of what small business should expect" if Congress allows credit unions to increase their lending support, the letter said.

"Credit unions were there for small businesses when the banks, with taxpayer backing, abandoned them; and if Congress permits it, credit unions will continue to be there for small businesses during the recovery."

For the full CUNA letter to Congress, and to read about a  recent Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) report that said the U.S. Treasury invested only $4 billion of the $30 billion in SBLF funds that were available, use the resource links.

NCUA Webinar Gives Broad, Tailored Marketing Tips

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ALEXANDRIA, Va. (4/24/13)--The key role that member identification can play in credit union marketing efforts was one of the topics touched on in Tuesday's National Credit Union Administration webinar, "Driving the Bottom Line: Results through Marketing."

The webinar was hosted by the NCUA's Office of Small Credit Union Initiatives and featured broad and tailored advice on credit union marketing. Pennsylvania Credit Union Association Director of Credit Union Marketing Services Sandi Carangi and Gustavo Gruber, vice president of Coopera Consulting Inc., presented during the NCUA webinar.

Credit unions spend, on average, $281 on marketing to achieve a new member. Carangi said credit unions that are looking to market their services to new or existing members should clearly outline who they are marketing to, and what they hope to accomplish.

Credit unions with small or nonexistent marketing budgets can work with other credit unions, and attract free press coverage to help market their products, Carangi said. The value of social media in marketing depends on what a credit union is trying to accomplish, she warned. For example, she said social media can be a useful tool for credit unions that wish to promote financial education efforts or other local events and resources, but may not be the best way to market products or attract new members.

Overall, the most important step is to keep track of your marketing results, she said.

Some credit unions have moved aggressively to serve the Hispanic population, and are looking for ways to refine their approach, Gruber said in his portion of the presentation. Hispanics are the youngest, fastest growing and most underserved group in the country, and there isn't a credit union in the country today that isn't impacted by the growth of the Hispanic population. "If you aren't, you will be soon," he said.

Coopera, a consulting organization that helps credit unions reach Hispanic markets, has developed partnerships with state credit union leagues.

The presenters also noted Credit Union National Association tools as one of the resources that can help credit unions develop their marketing efforts.

Hagen Is New NCUA Inspector General

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ALEXANDRIA, Va. (4/24/13)--James Hagen will serve as the National Credit Union Administration's new Inspector General effective June 1, the agency announced on Tuesday.

Hagen will succeed the retiring William DeSarno.

NCUA Chair Debbie Matz said in a release that Hagen, who is the NCUA's deputy inspector general for audit, "is a dedicated and well-qualified public servant who will assume a very important role at NCUA." Hagen's "deep knowledge of financial services issues, background as an inspector general and familiarity with NCUA's operations make him ideally suited for this new role," she added.

Hagen has worked with the agency since 2005. He has also served in the inspector general's offices of the U.S. Postal Service, the Social Security Administration, and the Treasury Department, the NCUA said.

DeSarno will retire after 16 years with the NCUA, and more than 44 years of overall government service. NCUA board member Michael Fryzel said DeSarno "has handled a tough job in a fair, consistent and independent manner. His efforts to modernize and make the Inspector General's office more responsive and involved in improving the agency are well recognized."

Matz also hailed DeSarno's work during the financial crisis. "His accurate insights and careful analysis of complex issues will benefit NCUA and credit unions for many years to come," she said.

For the full NCUA release, use the resource link.

FAF Names Golden As Next FASB Chair

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NORWALK, Conn. (4/24/13)--The Financial Accounting Foundation (FAF) announced Tuesday that Russell G. Golden will be the its next chair of the Financial Accounting Standards Board (FASB), effective July 1. Golden will succeed current FASB Chair Leslie F. Seidman after her term ends on June 30.

Golden has served as a FASB member since September 2010 and before that he served for six years on the FASB staff. Before his time at FASB, Golden was a partner at Deloitte & Touche LLP. 

It is that background, said Jeffrey J. Diermeier, chair of the FAF board of trustees, that elevated Golden among "many highly qualified candidates."

"He will bring to his new position a deep understanding of technical accounting issues informed by a broad appreciation of the larger environment in which the FASB operates, which he developed during his years as both a staff member and as a board member," Diermeier said.  The FAF oversees FASB and its sister organization, the Governmental Accounting Standards Board.

Golden's initial term as FASB chairman will extend to June 30, 2017. At that time, he will be eligible to serve another term of three years, as FASB members are limited to serving a total of ten years on the board.

The Credit Union National Association, which advocates credit unions' interests with FASB on issues such as its credit loss reporting proposal, commended Golden's selection.

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.

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.

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.

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.

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.

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.

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.

Fed Says Bounced Mortgage Settlement Checks Now Okay

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WASHINGTON (4/22/13)--The Federal Reserve Board late last week assured troubled borrowers whose mortgage settlement checks had bounced that the independent paying agent had fixed the problem.

Some early recipients of checks being sent to borrowers under the Independent Foreclosure Review informed the Fed's consumer helpline on Tuesday that they were told their checks could not be cashed because of insufficient funds.

The Fed said its staff contacted the paying agent, Rust Consulting, Inc., and the paying bank, The Huntington National Bank, and that Rust subsequently corrected problems that led to some checks being rejected.

The Fed said it will continue to monitor the payments closely.

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.

Checks are being sent in waves. The first batch of 1.4 million checks was sent on April 12. The Fed announced Friday that a second wave of 1.4 million checks totaling $1.2 billion was sent, bringing value of checks sent to $2.4 billion.

All checks are expected to be distributed by mid-July 2013.

CFPB Offers Escrow Rule Help, More Mortgage Clarifications

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WASHINGTON (4/22/13)--An escrow rule summary, and tips to help small issuers and their business partners implement that rule, were released by the Consumer Financial Protection Bureau late last week. The CFPB also released a proposal to address questions regarding qualified mortgages and servicing.

The escrow rule guide provides a plain language overview of the rule, and a list of frequently asked questions. These documents will make the content of the rule "more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff," the CFPB said in a release. "The guide summarizes the TILA Escrow Rule, but it is not a substitute for the rule. Only the rule and its Official Interpretations can provide complete and definitive information regarding its requirements," the agency stressed.

Organizations that originate higher-priced mortgage loans secured by principal dwellings, servicing market participants, software providers, and other companies that serve as business partners to creditors may all find the new guidance useful, the CFPB said.

The guide, according to the agency, will help those entities determine whether the mortgages they originate would fall under the rule, and what their compliance obligations are. The guide also addresses:

  • Exceptions to the rule that may apply to a given mortgage originator;
  • Special rules for loans made by certain small creditors operating predominantly in rural or underserved markets; and
  • Special rules for loans secured by condominiums and other multi-unit developments.
The CFPB's escrow rule, issued in January, generally extends the required duration of a mortgage loan escrow account to five years, up from one year. Lenders that work in rural or underserved areas will be exempt from the escrow changes, provided they meet certain other criteria. Proposed clarifications and technical amendments to the escrow regulations were issued earlier this month. (Use the resource link to read April 14 News Now story: CFPB Releases Escrow Rule Tweaks, Clarifications.)

The CFPB's ability to repay/qualified mortgages and mortgage servicing rule clarifications, released on Friday, are meant to address questions that have been posed in the months since the rules were first issued.

The clarifications address:
  • Small servicer exemptions;
  • Debt-to-income ratios;
  • Contract variances and the temporary QM provision;
  • Purchase, guarantee or insurability status and the temporary QM; and
  • Field preemption under Regulation X.
The mortgage clarification proposal will be published in the Federal Register soon, the CFPB said. The agency plans to accept comments on the proposal for 30 days after it is published.

CUNA is analyzing the CFPB escrow guidance and the proposed clarifications.

More plain language compliance resources and updates of official regulatory interpretations, examination procedures and other materials addressing CFPB mortgage regulations will be unveiled in the coming months, the CFPB said.

For the new escrow guide and the proposed qualified mortgage and servicing clarifications, use the resource links.

House Panel To Study SBLF 'Backdoor Bailout'

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WASHINGTON (4/22/13)--House lawmakers are going to be taking a close look this week at the Small Business Lending Fund (SBLF), the $30 billion program established by the Small Business Jobs Act of 2010, which was intended to encourage banks to lend more to credit-strapped small businesses.

The hearing, scheduled by the House Oversight and Government Reform Committee, is titled, "Broken Promises: The Small Business Lending Fund's Backdoor Bank Bailout."  It is scheduled for April 25 at 9:30 a.m. (ET). Witnesses will be announced this week.

The House oversight panel is charged with being a "watchdog" committee, in effect holding the government accountable to the nation's taxpayers. SBLF is a U.S. Treasury Department administered program.

A report earlier this month from the Office of the Special Inspector General for TARP (SIGTARP) criticized the former Troubled Asset Relief Program (TARP) banks that took part in the taxpayer-funded SBLF. Those banks "have not effectively increased small-business lending and are significantly underperforming compared to non-TARP banks," SIGTARP wrote.

While the SBLF was intended to incentivize bank small-business lending, 24 former TARP banks have not increased their lending, and the remaining former TARP banks have increased lending by $1.13 for each SBLF dollar they received, the report said.

"By comparison, banks that did not participate in TARP but received SBLF funding have increased small-business lending by more than three times that amount--$3.45 for each $1 in SBLF funds," SIGTARP added.

While Congress was considering whether to give the banks $30 billion in taxpayer money to lend to small businesses, credit unions were telling Congress that  they had money to lend but needed more authority to do so.  CUNA and credit unions strongly advocate for a measure that would raise the member business lending cap and would increase credit to small businesses by $14 billion in the first year of enactment.

"Small businesses must wonder what's going on here.  Of the $30 billion in taxpayer-funded SBLF money,  banks didn't even make use of most of it.  But many of the banks that did participate in SBLF used that bailout money to pay off another bailout," Ryan Donovan, CUNA senior vice president of legislative affairs, noted Friday.

He added, "All the while, a growing number of credit unions have been forced to stand on the sidelines with money to lend but a cap to contend with.  And today, the community banks have the gall to go to Congress and block additional credit union lending.  Looking at all of this, it make you wonder if they want anyone lending to small businesses… including themselves!"

Postponing Credit Insurance Rule Effective Date Would Improve Compliance Efforts

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WASHINGTON (4/22/13)--The compliance deadline for portions of pending credit insurance provisions must be extended beyond June 1, the Credit Union National Association said in a Friday letter to Consumer Financial Protection Bureau Director Richard Cordray.

The CFPB credit insurance rule bans the financing of any premiums or fees for payment protection products in connection with a consumer credit transaction secured by a dwelling. The rule does allow the products to be paid for on a monthly basis.

CUNA Deputy General Counsel Mary Dunn in the letter said CUNA supports prohibiting the financing of true single-premium credit insurance. However, credit union mortgage lenders are concerned by language in the regulation that appears to prohibit the financing of any premiums or fees for credit insurance. Some terms in the supplementary language of the rule have also puzzled credit unions, Dunn wrote.

Language that may prohibit the addition of any monthly charge for the insurance to the loan balance has also given credit unions pause, she noted: "This practice appears to be fairly common among credit union mortgage lenders as a number of credit unions' data processing systems add the insurance premium amount to the loan balance on a monthly basis." It will be quite costly for credit unions to make the needed changes to comply with this portion of the rule by June, Dunn added.

To ease compliance and help avoid unneeded costs, the CUNA letter suggested the CFPB delay the effective date of any provisions of the existing final rule that would impact products other than actual single-premium credit insurance, as well as any future rule that will address these issues, until January 10, 2014. Most of the rest of the mortgage loan originator compensation rule is set to take effect at that time.

Postponing the effective date of these provisions will give all parties the time needed to gain a clear understanding on what is required, and to take the necessary compliance steps, Dunn wrote. Such steps could include changes to contracts, data processing programs, and member payment arrangements.

New Simpson-Bowles Tax Plan Strips To Rebuild Code

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WASHINGTON (4/22/13)--Former Sen. Alan Simpson, a Republican, and former White House Chief of Staff Erskine Bowles, who worked for the Clinton White House, released a new versiono of their self-named Simpson-Bowles tax reform and debt-reduction plan Friday.

The authors are co-chairs of President Obama's Deficit Commission and they are proposing nearly $2.5 trillion in reduced spending and increased tax revenues over ten years. On the tax side of the equation, the duo offer "the Zero Plan," which strips all expenditures and then rebuilds the tax code from the bottom up.

The Credit Union National Association noted last week (News Now April 16), the "zero plan" idea reflects an approach that is gaining more attention in Washington.

The Simpson-Bowles proposals, which made their first round in 2010, were unable at that time to garner enough support to be approved by the U.S. Congress. However, as CUNA President/CEO Bill Cheney said in his weekly newsletter, The Cheney Report, Friday, it remains to be seen to what degree this new version will be embraced on Capitol Hill.

Cheney also noted that the emergence of Simpson-Bowles 2.0, as some are already calling it, is "another stark reminder of how serious Washington is this year about moving forward on broad tax reform--and how serious we must all be about preserving credit unions' tax status."

Preserving the credit union tax status is a top issue for CUNA, and the group has been meeting with Washington's tax policy writers to educate them about the public policy reasons that dictate the credit union tax status.

CUNA also provides its members with an online toolkit to help credit unions educate members about the value and benefits of credit unions. 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.

Avalos Is Now NCUA Region IV Associate Director

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ALEXANDRIA, Va. (4/22/13)--Milagro "Millie" Avalos has been named Associate Regional Director--Programs for the National Credit Union Administration's Region IV office in Austin, Texas.

Avalos has been an agency employee since 1999, most recently working as a Division of Supervision analyst and a Supervisory Examiner in Region II. She has also served as a field examiner. Avalos spent 13 years in the credit union industry and worked as an auditor before joining the agency.

Region IV covers Arkansas, Illinois, Iowa, Kansas, Louisiana, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, South Dakota, Texas and Wisconsin.

For the full NCUA release, use the resource link.

NCUA Letters Address LICU, Corporate Credit Risk Issues

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ALEXANDRIA, Va. (4/22/13)--The National Credit Union Administration on Friday sent out two letters: One on low income credit union (LICU) changes and a second letter that addresses creditworthiness and credit risk guidance for corporate credit unions.

The LICU letter was sent to federally insured state-chartered credit unions. The letter highlights recent NCUA procedural changes that streamline the process for state-chartered credit unions to determine if they are eligible for a LICU designation. The NCUA and the National Association of State Credit Union Supervisors (NASCUS) in February announced a joint plan that allows state regulators to provide limited geographic and income data to the NCUA when they upload their examinations.

The NCUA said it will use that data to determine if there are state-chartered credit unions eligible for the low-income designation and provide a list to state regulators on a quarterly basis of those credit unions. State regulators have the sole authority to make the LICU designation for state-chartered credit unions.

The creditworthiness and credit risk guidance follows a December final rule that replaces the ordinal credit rating scale used by natural person and corporate credit unions with a pair of new standards: "investment-grade" and "minimal amount of credit risk." The NCUA in the new corporate credit union guidance said it expects corporate credit unions to follow this final rule by maintaining "the credit quality of their securities, their issuers, and any counterparties, in all investment transactions."

The letter also provides a detailed outline of the credit rating rule, which is scheduled to come into effect on June 11.

For both letters, use the resource links.

Fed Warns Of Student Debt Economic Impact

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WASHINGTON (4/22/13)--Unprecedented levels of student debt may be restricting the spending power of young, skilled workers, and, in turn, harming the recovery of U.S. housing, automobile and general consumer markets, Federal Reserve Bank of New York economists reported in a blog post filed last week.

The New York Fed research found that the percentage of 25-year-olds with some level of student debt has nearly doubled, from 25% in 2003 to 43% in 2012.

Average student loan balances have increased by 91% in that period, from $10,649 to $20,326. The post also noted an increase in student loan delinquencies.

While the homeownership rate for 30-year-old student debtors traditionally has exceeded the homeownership rate of those without higher education debt, that relationship changed, falling 10 percentage points by 2012. "Now, for the first time in at least 10 years, 30-year-olds with no history of student loans are more likely to have home-secured debt than those with a history of student loans," the Fed economists wrote. Student loan borrowers may also have issues accessing other forms of credit due to tightening lending standards, and their own high debt-to-income ratios, the said.

The Consumer Financial Protection Bureau has noted that 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. 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.

To address student loan issues, President Barack Obama in his 2014 budget suggested capping federal student loan repayments at 10% of a borrower's discretionary income and forgiving any remaining student loan debt after 20 years of repayments have been made. The Obama budget also proposed changing the structure of interest rates on federal student and parent loans to reflect prevailing market interest rates at the time loans are made, with rates remaining fixed for the life of the loans.

Interest rates on subsidized Stafford Loans are scheduled to increase from 3.4% to 6.8% on July 1 if changes are not approved.

CUNA estimates that around 300 credit unions currently offer student loans to their members. Credit unions also provide financial education and seminars relating to student lending generally, and encourage students to attend. The CUStudentLoans.org website also provides extensive financial education regarding student lending, through both written information and webinars.

In a March letter to the CFPB, CUNA emphasized that credit unions should be given greater latitude to provide student loans to their members. CUNA is forming a student loan advisory group to address these and other student lending issues, and that group plans to meet with officials from the CFPB and the NCUA.

For the full Fed blog post and more on student lending, use the resource links.

House Passes CUNA-backed CISPA Cybersecurity Bill

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WASHINGTON (4/19/13)--The Cyber Intelligence Sharing and Protection Act (CISPA) (H.R. 624) passed the House by a 288 to 127 vote on Thursday, and the Credit Union National Association in a joint letter commended the bill's voluntary approach to information sharing.

Such an approach avoids creating additional regulatory burden for American businesses, the letter said. CISPA is the fourth cybersecurity bill CUNA has supported this week. (Use the resource link to read April 17 News Now story:  CUNA: Cybersecurity Bills Offer Coordination, Protections.)

CISPA would facilitate and increase cyber intelligence information sharing between public- and private-sector organizations. The bill would also provide privacy protections for consumers by limiting the inclusion of consumer data in shared threat information.

The bill "continues to protect an individual's privacy, while allowing for the sharing of critical threat information essential to secure the public and private sector, as well as individuals," the letter said.

CUNA co-signed the letter with the American Bankers Association, the Consumer Bankers Association, the Electronic Funds Transfer Association, the Financial Services Roundtable, the Independent Community Bankers of America, NACHA-The Electronic Payments Association and the Securities Industry and Financial Markets Association.

CUNA continues to work with the National Credit Union Administration, the U.S. Treasury's Financial Services Sector Coordinating Council, BITS, the Treasury and other entities to coordinate on cybersecurity issues, and to ensure that credit unions are not unduly impacted from the cybersecurity framework for critical infrastructure entities. The financial services sector is more prepared than most to deal with cybersecurity issues as a result of Y2K preparations, CUNA has noted.

CUNA Backs MBL Disaster Exception Bill

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WASHINGTON (4/19/13)--Noting that credit unions often face greater business lending demand from their members in the wake of natural and other disasters, the Credit Union National Association has thrown its support behind new legislation that would give credit unions more flexibility in making those loans to aid in disaster recovery.

The bill (H.R. 1646), which was introduced by Rep. Carolyn Maloney (D-N.Y.) on Thursday afternoon, would exempt disaster loans made by credit unions from the 12.25%-of-assets member business lending (MBL) cap.

CUNA President/CEO Bill Cheney said Maloney's bill "will enable credit unions to fulfill their mission to their members in times of greatest need."

Because they are not-for-profit cooperatives, credit unions operate with a different incentive structure than banks, tending to be more risk-averse, the letter explained. "This does not translate into reduced credit availability in times of crisis; rather, it results in a counter-cyclical lending phenomenon that keeps credit unions in the market when other lenders pull back," Cheney wrote.

While CUNA supports the bill, and encouraged other House members to back it, Cheney said "the legislation is made necessary not because credit unions need encouragement to respond to their members affected by disasters, but because Congress imposed a statutory cap on credit union business lending in 1998 at the behest of the banking industry."

A more complete way to enable credit unions to serve fully their small business members would be to permit well-capitalized credit unions with significant business lending experience operating near the member business lending cap the opportunity to apply to NCUA for permission to expand business lending up to 27.5% of their total assets, Cheney wrote.

Rep. Ed Royce's (R-Calif.) bill, the Credit Union Small Business Jobs Creation Act (H.R. 688), would increase the MBL cap to 27.5% of assets, from the current 12.25%-of-assets level. Doing so would generate $14.5 billion available for MBLs--and increase jobs by 158,000 in the first year without costing the taxpayer, according to CUNA statistics. Royce's MBL bill has 89 co-sponsors.

NCUSIF Report Reflects Improving Economy

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ALEXANDRIA, Va. (4/19/13)--CAMEL code and corporate stabilization statistics reported during the April open board meeting "reflect an improving economy" and "a resilient credit union industry," National Credit Union Administration Chairman Debbie Matz said on Thursday at a one-item open board meeting.

Click to view larger image NCUA Chief Financial Officer Mary Ann Woodson, left, presents the quarterly insurance fund statistics during Thursday's brief board meeting. (CUNA Photo)
The number of CAMEL 4 and 5 credit unions fell by 30 during the first quarter of 2013, NCUA Chief Financial Officer Mary Ann Woodson reported during the meeting. 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 totaled $101.6 billion and $114.4 billion, respectively, at the end of the first quarter. Both of those numbers are improvements when compared to the $105.9 billion in shares and $119.3 billion in assets CAMEL code 3 credit unions held in the previous quarter.

NCUA staff reported that the National Credit Union Share Insurance Fund's (NCUSIF) equity ratio increased slightly to 1.31% as of March 31, 2013, but is expected to revert to 1.30% at the June 2013 update, at which time the capitalization deposit will be expensed. The ending reserve NCUSIF balance was $330 million, $13 million of which is allocated to specific credit unions.

The four failures that have occurred in the first quarter of 2013 cost the fund $75,000 in losses, Woodson said. This appears to be a slower credit union failure rate than the industry experienced in 2012, CUNA Deputy General Counsel Mary Dunn noted.

Altogether, CAMEL code 3, 4 and 5 credit unions held 12.6% of all credit union assets. "Assets at risk in credit unions with CAMEL codes 3, 4 and 5 have dropped for 10 straight quarters and with that, so has our level of exposure to potential losses," Matz said. "While we cannot predict the future with certainty, the growing strength of credit unions as a whole is a very positive sign," she added.

The total net position of the Temporary Corporate Credit Union Stabilization Fund was similar to the position reported in 2012's final quarter, and the Fund had $5.1 billion in outstanding borrowings with the U.S. Treasury as of March 31, 2013.

The quarterly financial report was the only item on Thursday's agenda. For more on the meeting, use the resource link.

Camp Announces Tax Hearing On Housing Provisions

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WASHINGTON (4/19/13)--Rep. Dave Camp (R-Mich.), who chairs the House Ways and Means Committee, announced Thursday that his panel will conduct an April 25 hearing on federal tax provisions that affect residential real estate. Camp said the hearing is part of the committee's ongoing work on comprehensive tax reform.

Federal tax provisions that directly affect residential real estate and the housing sector include the mortgage interest deduction and a deduction for state and local real property taxes. However, a committee release noted that the provisions do not apply to all taxpayers equally.

Other housing-related tax provisions include the exclusion of gain on the sale of a principal residence, the low-income housing tax credit, and the temporary exclusion from income of cancellation of mortgage debt.

Camp said it is "important to do a top to bottom review" of the tax code as the country works toward a "simpler and fairer" set of rules.

"Homeownership is an integral part of the American Dream, and the tax code has long provided a variety of incentives to make it easier for families to buy and own a home. Before considering any proposal, the Committee must better understand how tax reform might affect the housing sector and this hearing is an opportunity to hear directly from both academic experts and industry stakeholders," Camp said.

The hearing is slated to begin at 9:30 a.m. (ET) in Room 1100 of the Longworth House Office Building.

CUNA's Dunn In Reuters: FASB Rule Would Burden CUs

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WASHINGTON (4/19/13)--Credit Union National Association Deputy General Counsel Mary Dunn highlighted credit union concerns with a developing Financial Accounting Standards Board proposal before a national audience in a recent Reuters article.

FASB has proposed credit loss reporting changes that 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.

Dunn in the Reuters piece said this proposal, if approved, would force credit unions to double their allowance accounts. "The more you put in an account like that, the less there is out there for loans and new product development because it's sitting there parked," she said.

The Reuters report notes that the FASB proposal could significantly restrict lending by many forms of financial institution.

FASB is accepting comment on the credit loss proposal until May 31, and CUNA is developing a comment letter on the issue.

CUNA has noted the proposal could impact credit unions more severely than other institutions because of the statutory restrictions on their net worth. Credit unions, which are member-owned and are not publicly traded, should not be subject to FASB's proposed credit loss reporting rules, CUNA has said.

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.

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.

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.)

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."

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.

SC Group Wins $50K NCUA Collaboration Grant

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ALEXANDRIA, Va. (4/17/13)--The National Credit Union Administration's move to support a developing credit union collaborative talent management program with a $50,000 grant "is a great 'win' for credit unions small and large," Health Facilities FCU CEO Robert Harris told News Now on Tuesday. Health Facilities FCU is based in Florence, S.C.

The NCUA announced Tuesday that Health Facilities, South Carolina FCU, of North Charleston, and Optimal Talent Solutions, a South Carolina credit union service organization, will receive the $50,000 grant an NCUA grant program that rewards a credit union group for developing the best plan to collaborate and better serve their members. Greenwood Municipal CU, Greenwood, S.C., and Spartan FCU, Spartanburg, S.C., will also take part in the program.

The NCUA in a release said the group will work together to provide free talent management consulting and training in areas including succession management, recruitment, performance management, and diversity and inclusion.

Larger credit unions with excess capacity, whether it is in training, back office, collections, or human resources, can provide talent management and consulting services to smaller credit unions, not for free but for a fee, Harris explained. The developing collaborative program "will help the larger credit unions offset some of their expenses while providing a true service to small credit unions that would not be able to otherwise afford the service," Harris added.

"Collaborations among small credit unions to help them develop best practices are important to their long-term success," NCUA Chairman Debbie Matz said. "Employee recruitment, development, and succession are all core needs for any business, but small credit unions with limited capacity and resources have a difficult time managing those needs. This project can help provide that capacity and those resources," she added.

The South Carolina credit unions represented one of seven low-income credit union groups that submitted ideas to the agency.

To qualify for the grant, a low-income credit union--or LICU--must partner with at least one other credit union. State credit union leagues and associations, additional credit unions, credit union service organizations and third-party vendors may also be added to the collaborative effort.

The NCUA's Office of Small Credit Union Initiatives (OSCUI) evaluated grant applications based on their scalability, potential benefits, innovativeness, and other factors. Funding for this grant is provided by the Community Development Revolving Loan Fund.

NCUA OSCUI Director William Myers said the agency will "continue to seek out and fund areas of outstanding collaboration for small credit unions."

For more on the grant program award, use the resource link.

Marketing Tips To Be Offered In April NCUA Webinar

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ALEXANDRIA, Va. (4/17/13)--Marketing tips for credit unions large and small will be provided during an April 23 National Credit Union Administration webinar.

The free webinar, entitled "Driving the Bottom Line: Results through Marketing," is scheduled to begin at 2 p.m. ET.

The NCUA's Office of Small Credit Union Initiatives will host the webinar. During the webinar, Pennsylvania Credit Union Association Director of Credit Union Marketing Services Sandi Carangi and Gustavo Grüber, vice president of Coopera Consulting Inc., are scheduled to advise credit unions on:

  • Developing core components of an effective marketing plan;
  • Understanding how marketing goals and strategies can affect a credit union's financial performance ratios;
  • Analyzing consumer data and developing market research to help credit unions identify potential members; and
  • Using marketing strategies to reach the growing Hispanic population.
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, "Driving the Bottom Line: Results through Marketing."

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

CUNA: Cybersecurity Bills Offer Coordination, Protections

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WASHINGTON (4/17/13)--The U.S. House passed three cybersecurity bills Tuesday and the Credit Union National Association joined a group of financial trade groups in a letter that voiced support for the legislation trio to every House member.

"Our nation's cybersecurity requires the active participation of the government, business and every consumer. We believe these bills encourage the participation of all, while providing the tools to defend against cyber threats by funding research and development activities," the joint trade group letter said.

The three cybersecurity bills are:

  • The Cybersecurity Enhancement Act (H.R. 756), which supports increased public and private cybersecurity research;
  • The Advancing America's Networking and Information Technology Research and Development Act (H.R. 967) which will refocus the National High-Performance Computing Program on a larger mission and increase research and development within the Program; and
  • The Federal Information Security Amendments Act (H.R. 1163), which will update the Federal Information Security Management Act and require federal agencies to comply with National Institute of Standards and Technology computer standards and perform risk-based analysis of cyber threats to develop appropriate controls.
The financial services industry is committed to cybersecurity efforts "and will remain a willing partner with the Congress and the administration to secure our nation's cyber infrastructure," the trade group letter said.

CUNA co-signed the letter with the American Bankers Association, the Consumer Bankers Association, the Electronic Funds Transfer Association, the Financial Services Roundtable, the Independent Community Bankers of America, NACHA-The Electronic Payments Association and the Securities Industry and Financial Markets Association.

The bill now move to the Senate for consideration.

For the full letter, use the resource link.

CUNA Supports House, Senate Exam Fairness Bills

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WASHINGTON (4/17/13)--The Credit Union National Association on Tuesday thanked U.S. House and Senate lawmakers for introducing bills that would enhance safety and soundness by increasing the consistency and fairness of the regulatory examination system. CUNA President/CEO Bill Cheney said CUNA looks forward to working with Congress to ensure timely enactment of exam fairness legislation.

The letters to the bills' chief sponsors followed the Monday introduction of  legislation that would improve the federal examination process for credit unions and other financial institutions.

Sens. Joe Manchin (D-W. Va.) and Jerry Moran (R-Kan.) introduced the Senate version (S. 727) Monday afternoon. Reps. Shelly Moore Capito (R-W. Va.) and Carolyn Maloney (D-N.Y.) dropped their House legislation (H.R. 1553) just hours later. (Use the resource link to read April 16 News Now story: Senate, House Introduce Exam Fairness Bills)

Cheney in the letters said both bills take needed steps "toward ensuring the federal financial institution regulatory agencies conduct fair exams for those they supervise which are consistent with the law and regulation and ensure safety and soundness."

The exam fairness bills would:

  • Make available to financial institutions the information used to make decisions in their examination;
  • Codify certain examination policy guidance; and
  • Establish an ombudsman at the Federal Financial Institution Examination Council to which financial institutions could raise concerns with respect to their examination.

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 the CUNA letters and a full list of Unite for Good action steps, use the resource links.

FBI Dragnet Snags 530 Foreclosure Fraudsters

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VIENNA, Va. (4/17/13)--The Distressed Homeowner Initiative, a program launched six months ago by the Federal Bureau of Investigation, resulted in 530 criminal defendants charged with involvement in a fraud scheme preying on distressed homeowners, reported Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network (FinCEN), addressing a mortgage fraud issues conference.

The defendants included 172 executives and the cases involved more than 73,000 homeowner victims, with total losses by those victims estimated at more than $1 billion, Shasky Calvery noted. The FBI initiative is intended to be a year-long project.

While the FBI generated new investigations by gathering victim complaint data from Federal Trade Commission databases and other sources--analyzing the data, and distributing information of lead value to field offices from coast-to-coast--another key tool for law enforcement were Suspicious Activity Reports (SARs)  filed by "alert financial institutions," Shasky Calvery pointed out.

"Critical to the investigation were 4,395 SARs reporting 'foreclosure rescue fraud.' These SARs were crucial to the law enforcement officials conducting these investigations," she said. Shasky Calvery went on to note that during 2011 and 2012, FinCEN saw dramatic growth in the number of SARs discussing "foreclosure rescue" scams in the narrative. In 2011, nearly 2,800 SARs indicated this activity, and in 2012, over 4,400 SARs reported this activity, she said.

The FinCEN director also discussed third-party payment processors, advanced analysis, and the universal SAR, and gave a regulatory update in her address to the Mortgage Bankers Association conference.

To read her remarks, use the resource link.

Community Banks Testify On Reg Burdens

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WASHINGTON (4/17/13)--Following on the heels of last week's hearing on credit union regulatory relief, community bankers were given their chance to air their regulatory grievances during a Tuesday hearing before the House Financial Services financial institutions subcommittee.

Credit Union National Association witness Pamela Stephens, CEO of $55-million-in-assets Security One FCU of Arlington, Texas, last week testified on behalf of CUNA as lawmakers sought direction about potential regulatory relief legislation.  Stephens said she feels her credit union is constantly running, trying to catch up to be in compliance with all the rules. Stephens also presented part of a 35-point platform of regulatory relief measures developed by the Credit Union National Association. (Use the resource link to read April 11 News Now story: CUNA 35-point Plan Could Help Spell Out Relief Bill.)

The Tuesday community bank hearing discussion touched on many of the same themes covered in last week's hearing on credit union regulatory burdens: Examination issues, regulatory pressures, and how small financial institutions are harmed by regulations that are intended for larger banks. The Consumer Financial Protection Bureau's qualified mortgage standards were one item that frequently came up in the Tuesday discussion.

Rep. David Scott (D-Ga.) said Congress should not be afraid to make regulatory adjustments to financial regulations, and Rep. Denny Heck (D-Wash.) said many agree that some form of regulatory relief is in order for both credit unions and community banks.

Legislators also encouraged the community bank representatives to work with credit unions to achieve greater regulatory relief for both groups. Committee members are looking for areas where credit union and community bank interests may intersect, and CUNA has cited examination fairness legislation as one area, in particular, where there is common interest.

CUNA is continuing its credit union advocacy efforts as the House develops regulatory relief legislation although, as CUNA Vice President of Legislative Affairs Sam Whitfield noted in News Now on Monday, it is too early to tell what form regulatory relief legislation may take. (Use the resource link to read April 13 News Now story: Reg Relief Package Develops As CUNA Continues Advocacy)

Another bank-issue hearing--this one on ending "Too Big to Fail" banks--was held by the House Financial Services oversight and investigations subcommittee uesday. The House Financial Services Committee also announced a new member: Rep. Keith Rothfus (R-Pa.). Rothfus, who is a first-term member of Congress. Rothgfus took part in the "Too Big to Fail" hearing.

For more on both hearings, use the resource links.

Lengthy Reg Burden List Highlighted In CUNA Reg Advocacy Report

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WASHINGTON (4/16/13)--A chart detailing of the 157 rule changes credit unions have been subjected to since 2008 is one of many key regulatory resources provided in this week's edition of the Credit Union National Association's Regulatory Advocacy Report.

Most of the rule changes, which were made by more than 15 agencies, were written before the Consumer Financial Protection Bureau issued its first rule, the Report notes. Regulations from the National Credit Union Administration, the Federal Housing Administration, the Federal Emergency Management Agency and the CFPB are among those listed in the document.

The impact of these and other regulations on credit unions were addressed in CUNA testimony before a House Financial Services financial institutions subcommittee hearing held last week. (Use the resource link to read April 11 News Now story: CUNA 35-point Plan Could Help Spell Out Relief Bill)

Other issues addressed in CUNA's weekly members-only publication on regulatory developments include:

  • Possible NCUA regulatory actions;
  • Proposed changes to the U.S. Small Business Administration's 504 and 7(a) loan programs;
  • CUNA's comments on National Institute of Standards and Technology data security requirements; and
  • The results of a U.S. Government Accountability Office study on ATM fees.
An updated chart on the CFPB's proposed and final rules is also included in the report.

To see the complete chart of rule changes and to read the full report, 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.

This Week: Reg Reform, Housing On Hearing Schedule

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WASHINGTON (4/16/13)--Financial regulatory reform and housing policy discussions are set to continue in what should be another busy week for the U.S. Congress.

On Tuesday, credit unions will want to watch for a House Financial Services financial institutions and consumer credit subcommittee hearing on community bank regulatory burdens and a House Financial Services oversight and investigations subcommittee hearing on the need to end "Too Big to Fail."

The Wednesday congressional hearing schedule includes:

  • A House Financial Services Committee hearing on impediments to private capital in the housing finance system;
  • A House Financial Services oversight and investigations subcommittee hearing on the Securities and Exchange Commission's failure to implement the Jumpstart Our Business Startups Act;
  • A Senate Banking transportation and community development subcommittee hearing on foreclosure review issues; and
  • A Senate Banking Committee hearing on Federal Housing Finance Agency oversight.
The Joint Economic Committee on Thursday plans to discuss Federal Reserve monetary policy issues. House and Senate budget committees will also hold separate Tuesday hearings on President Barack Obama's 2014 revenue and economic policy proposals.

The Cybersecurity Enhancement Act of 2013 (H.R. 756) and the Cyber Intelligence Sharing and Protection Act (H.R. 624) are likely to be considered by the House this week. The Senate this week has resumed consideration of S. 649, the Safe Communities, Safe Schools Act of 2013.

See For Yourself: aSmarterChoice Takes Manhattan

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NEW YORK (4/16/13)--It's green and blue.  It's 26-feet wide and 20-feet high.
Click to view larger image The CBS video billboard in Times Square in New York City is 26-feet wide and 20-feet high and it spreads the word about the benefits of credit union membership.
  And it sings the praises of credit union membership in the middle of New York's most hustling and most bustling of all midtown neighborhoods--Times Square.  It's the credit union video billboard message that the Credit Union National Association has arranged to run hourly on the iconic CBS Screen on famed 42nd Street starting yesterday, April 15, and running through July 4.

"We all know we need to do a better job in spreading the word about credit unions. This is an important step to making our message more visible,"  said Paul Gentile, who is CUNA's executive vice president of strategic communications and engagement. "Credit unions are trusted. Credit unions are a better deal. Credit unions are 'aSmarterChoice' for consumers and we are going to use every tool we can to get that message out. I am confident we will see results from this latest initiative."

The billboard touts the credit union difference in rotating messages displayed in the colors of aSmarterChoice, the consumer website developed by CUNA and the state credit union leagues.

"Need a bank you can trust?  Try a CU.  Better rates. Lower fees. Great service…and no stockholders," the CUNA billboard says.   It then drives viewers to aSmarterChoice.org, developed by CUNA and the state credit union leagues to provide a comprehensive credit union locator that includes every credit union in the U.S.  

The billboard's run encompasses the timeframes of CUNA's America's Credit Union Conference in New York City June 30 at the nearby Hilton New York and the tourist-packed  July 4 holiday. Also during the eight-week period, New York will celebrate such high-profile events as the Tribeca Film Festival, Memorial Day, the AIDS Walk, and Father's Day.

Bill Would Slow NFIP Premium Increases

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WASHINGTON (4/16/13)--Legislation to ease the impact of planned National Flood Insurance Program (NFIP) premium increases has been introduced in the U.S. House.

Rep. Frank LoBiondo (R-N.J.) outlined his bill (H.R. 1485) in remarks delivered in the coastal city of Brigantine, N.J. on Monday. Under H.R. 1485, the rate of flood insurance premium increase would be slowed to 12.5% each year for eight years. This rate of premium increase would allow NFIP premiums to still reach "full-risk cost without continuing the taxpayer subsidy but easing the immediate financial impact to Jersey Shore residents and others still rebuilding from Hurricane Sandy," LoBiondo said.

The changes would not only apply to Sandy impacted areas, however. The changes would impact flood-prone areas nationwide.

The lawmaker in a release noted that the Federal Emergency Management Agency has historically charged NFIP premiums of around 40% to 45% of full cost on mortgages for homes in flood-prone areas. Taxpayers subsidize the remaining costs of flood insurance coverage. The Biggert-Waters Flood Insurance Reform Act of 2012, which was signed into law on July 6, would increase these NFIP premiums by 25% per year over a four-year period in a bid to phase out government-subsidized flood insurance. The premium increases do not impact NFIP policies on primary residences.

Lobiondo in a statement said his bill "appropriately balances the goal of making the NFIP solvent with the real financial concerns of those facing steep premium increases and protecting the taxpayers' interest." Rep. Jon Runyan (R-N.J.) is an original cosponsor of the bill, which was introduced on April 11.

The NFIP was established in 1968 and is intended to protect homes and businesses from financial ruin when flooding occurs.

For more on H.R. 1485, use the resource link.

Reg Relief Package Develops As CUNA Continues Advocacy

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WASHINGTON (4/15/13)--The Credit Union National Association continues to discuss key regulatory reform ideas with U.S. House Financial Services Committee members as they consider a range of options on how to proceed to provide relief for credit unions and other small financial institutions.

"While it is too early to tell what legislation may look like, there is little doubt that the House is taking a hard look at improving the regulatory environment for small financial institutions," CUNA Vice President of Legislative Affairs Sam Whitfield said Monday.

CUNA, testifying last week at a House Financial Services subcommittee hearing on credit union regulatory relief, released a 35-point action plan for reducing credit union regulatory burdens.  (Use the resource link to read April 11 News Now story: CUNA 35-point Plan Could Help Spell Out Relief Bill.)

Suggestions offered in the CUNA plan include:

  • Increasing National Credit Union Administration budget transparency;
  • Adjusting the treatment of non-owner occupied one- to four-family dwelling loans for credit unions from business loans to residential real estate loans;
  • Increasing the maturity limit for higher education loans made by federal credit unions; and
  • Expanding investment authority in credit union service organizations.
CUNA's Whitfield noted that committee members are looking for areas where credit union and community bank interests may intersect in a bill. CUNA has assured lawmakers that such areas exist;  for instance, one such area is examination fairness legislation.

This week community banks will have a chance to discuss their own regulatory burdens in a House financial institutions subcommittee hearing scheduled for Tuesday.

The recent Senate legislative agenda has been dominated by issues such as immigration reform, nomination hearings and gun laws, and that body has not yet turned its attention to financial institution regulatory relief issues.

Senate, House Introduce Exam Fairness Bills

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WASHINGTON (4/16/13)--Legislation that would improve the federal examination process for credit unions and other financial institutions was introduced on Monday, first in the U.S. Senate and then hours later in the House, and Credit Union National Association President/CEO Bill Cheney said the bills "take firm steps in the right direction toward making the examination process fairer and more consistent."

Calling the bills "much-needed legislation," Cheney thanked Sens. Joe Manchin (D-W. Va.) and Jerry Moran (R-Kan.) for introducing S. 727 and Reps. Shelly Moore Capito (R-W.Va.) and Carolyn Maloney (D-N.Y.) for introducing the House bill (HR 1553).

"This legislation would make available to credit unions and other financial institutions the information used by examiners to make decisions in their examination, which is a key concern to credit unions," Cheney said when the bills were introduced.  "In our national exam survey, completed earlier this year, a common concern expressed by credit unions was that examiners tended to focus too much on their own views of best practices, rather than on legal and regulatory requirements."

"Regulators should address the supervision and examination of credit unions in a professional manner, taking into full account legal requirements credit unions must meet as well as the need for credit unions to have reasonable flexibility to serve their members well. These bills take firm steps in the right direction toward making the examination process fairer and more consistent," Cheney added.

The exam fairness bills would:

  • Make available to financial institutions the information used to make decisions in their examination;
  • Codify certain examination policy guidance;
  • Establish an ombudsman at the Federal Financial Institution Examination Council to which financial institutions could raise concerns with respect to their examination; and

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.

CUNA to Lawmakers: CU Tax Status Is Dictated By Cooperative Structure

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WASHINGTON (4/16/13)--The Credit Union National Association continues the fight to preserve the credit union tax exemption, and sent a letter Monday responding to a House Ways and Means Committee request that asked stakeholders to outline why their tax treatment under the current code should continue.

In the letter to lawmakers, CUNA again emphasized the positive effects of the credit union tax exemption, and the need to maintain the exemption going forward.

The letter is one of many being sent to House Ways and Means Committee members. "Congress is essentially starting with a blank sheet of paper as it rethinks the current taxation system, and everything is up for consideration," CUNA President/CEO Bill Cheney explained. The CUNA letter, with those of other stakeholders, will be posted on the House Ways and Means Committee website.

The CUNA letter underscored that credit unions were first made tax-exempt by a ruling by the U.S. Attorney General in 1917, and the U.S. Congress conveyed that exemption from federal income tax to state- and federally chartered credit unions because of their ownership structure and special mission. The exemption has been reaffirmed many times, including in 1935, 1936, 1937, 1951 and 1998, the letter noted.

Credit unions' not-for-profit financial cooperative structure allows credit unions to focus totally on member value and service, and, overall, prevents them from taking the types of risks banks take in the name of profits. The not-for-profit structure also creates significant benefits for the nation's 96 million credit union members, including lower rates on loans, lower fees on services, and higher returns on deposits. Non-members also benefit from the exceptional service of credit unions, which keeps competitive pressure on banks, CUNA wrote.

Monday's letter mirrors discussions that Cheney and other CUNA representatives had last week with four members of the powerful tax-policy committee and about 15 staffers. (Use the resource link to read April 12 News Now story: CUNA Supports CU Tax Status At Congressional Staff Briefing)

For the full CUNA letter, use the resource link.

Reg Accountability Bill Passes Judiciary Committee

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WASHINGTON (4/15/13)--The House Judiciary Committee approved a bill last week that would require the U.S. Congress to approve all federal agency rules that would have an economic impact of more than $100 million.

Committee members declined to add an amendment to the Regulations from the Executive in Need of Scrutiny--or "REINS" Act (H.R. 367) that would have removed Dodd-Frank Act regulations from the reach of the congressional review.

Rep. Spencer Bachus (R-Ala.), who is a judiciary committee member and chairman of one of its subcommittees, said in a release that the Dodd-Frank Act regulations "are exactly the type of rules that need to be put under closer review." Bachus, who is House Financial Services Committee chairman emeritus, noted the burden the burden that Dodd-Frank Act regulations have imposed on credit unions and community banks.

To move forward, the REINS Act would next be considered by the full House.

The Credit Union National Association continues to fight regulatory burdens, acting on behalf of credit unions on several fronts.

Last week, Pamela Stephens, CEO of Security One FCU, Arlington, Texas, represented CUNA and credit union concerns as she testified before the House Financial Services financial institutions subcommittee to promote CUNA-backed regulatory relief measures. Stephens during the hearing delivered CUNA's 35 recommendations for statutory addressing a broad range of credit union issues, including examinations, accounting standards and regulatory agency budgets. (Use resource link to see an April 11 News Now story: CUNA 35-point Plan Could Help Spell Out Relief Bill.)

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.

NEW: Exam Fairness Bill Introduced In Senate

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WASHINGTON (UPDATED: 4/15/13, 4:25 P.M. ET)--Legislation that would improve the federal examination process for credit unions and other financial institutions has been introduced by Sens. Jerry Moran (R-Kan.) and Joe Manchin (D-W. Va.).

The exam fairness bill, backed by the Credit Union National Association, would:

  • Make available to financial institutions the information used to make decisions in their examination;
  • Codify certain examination policy guidance;
  • Establish an ombudsman at the Federal Financial Institution Examination Council to which financial institutions could raise concerns with respect to their examination; and
  • Establish an appeals process before an independent administrative law judge.
CUNA has called examination fairness legislation "a firm step in the right direction toward ensuring the federal financial institution regulatory agencies conduct fair exams which are consistent with the law and regulation and ensure safety and soundness."

A House version of similar legislation is expected to be released soon, perhaps as early as today.

Graham Becomes Head Of FHFA Division Of FHLBs

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WASHINGTON (4/15/13)--The Federal Housing Finance Agency (FHFA) announced the promotion of Fred C. Graham to become deputy director of the division of Federal Home Loan Bank Regulation, effective immediately.

Graham joined the agency when it was established in 2008 and has held several senior positions there: Most recently he served as acting deputy director of the Division of Supervision Policy and Support.

Before joining FHFA, Graham was senior economist and head of risk modeling with the Federal Housing Finance Board, one of FHFA's predecessor agencies. Graham also spent time as an economist with the Office of the Comptroller of the Currency.

Cheney Report: CUs Not Subject Of Student Loan Complaints

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WASHINGTON (4/13/13)--Of the consumer complaints filed with the Consumer Financial Protection Bureau about student loans, 87% were directed at the same seven lending companies, and none of those complaints mentioned credit unions, Credit Union National Association President/CEO Bill Cheney highlighted in the latest edition of The Cheney Report.

In fact, he said, "only one of the roughly 3,500 complaints to CFPB involved a credit union, and that one was resolved." The student loan complaint data is also referenced in an April 8 CUNA comment letter to the CFPB. (Use the resource link to read April 10 News Now story: CUNA Urges Leeway For CUs To Help Student Borrowers.)

The complaint data, Cheney said, "shows why CFPB would be better off focusing its regulatory attention on these seven companies triggering all the complaints and other bad actors in the student lending field," rather than credit unions.

This week's Cheney Report also includes:

  • Details on last week's House hearing on credit union regulatory relief;
  • A report on CUNA's House Ways and Means briefing on the credit union tax exemption;
  • The results of a TARP fund inspector general report;
  • An update on Financial Literacy Month activities; and
  • A preview of aSmarterChoice's Times Square debut.
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.

To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

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

CUNA Ads Accent CU Difference To Hill Audience

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WASHINGTON (4/15/13)--The Credit Union National Association is keeping the difference between credit unions and banks fresh on the minds of lawmakers, running new ads in key Capitol Hill news sources as banking groups make scheduled visits to Washington in the coming days.

Click to view larger image Click for larger view
"Credit unions really are different, and it's important to make sure members of Congress recognize that," CUNA Senior Vice President of Political Affairs Richard Gose said.

The CUNA ads detail how America's member-owned, member-directed, not-for-profit credit unions put people first, and fight for their 96 million members every day.

Credit unions, one ad notes, did "something spectacular" last year: they provided $5.8 billion in direct financial benefits to their members in the form of lower interest rates for loans, lower fees for financial services and higher returns on savings accounts.

CUNA's consumer website, aSmarterChoice.org, also features prominently in the ads. aSmarterChoice features basic information for consumers and media that want to learn more about the credit union system, and provides resources to help consumers find credit unions they can join.

For more on aSmarterChoice.org, use the resource link.

The CUNA ads will run from April 15-17 and again from April 23-25 in two widely read Washington publications: Politico and Roll Call. The American Bankers Association has a conference scheduled to begin in Washington on April 15, and the Independent Community Bankers of America have a similar event set to start on April 24.

"There will be a lot of misinformation about credit unions spread in Washington during those two weeks, and we want to make sure our message is out there," Gose emphasized.

CFPB Releases Escrow Rule Tweaks, Clarifications

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WASHINGTON (4/15/13)--Proposed clarifications and technical amendments to the Consumer Financial Protection Bureau's new escrow regulations were issued by the agency on Friday.

The CFPB's escrow rule, issued in January, generally extends the required duration of a mortgage loan escrow account to five years, up from one year. Lenders that work in rural or underserved areas will be exempt from the escrow changes, provided they meet certain other criteria. The proposals issued Friday would not substantially alter this rule.

One of the proposed clarifications is intended to ensure that an existing rule that provides protections regarding assessments of consumers' ability to repay and prepayment penalties on certain "higher-priced" mortgage loans remains in effect until January 2014.

A CFPB release explains that portions of its January escrow rule, as currently written, "can be read to cut off the old protections before the new expanded protections take effect." Such a reading could result in a six-month gap where consumers would not be adequately protected, the agency said.

The proposals also further clarify how the agency determines whether or not a county is considered "rural" or "underserved" for exemption purposes. A preliminary list of CFPB-approved rural and underserved areas, covering counties in 46 states and Puerto Rico, was released last month. (Use the resource link to read March 14 News Now story: Small Creditor Escrow Relief Previewed By CFPB.)

Credit Union National Association staff will review the proposed rule, and the CFPB said it will accept comment on the proposal for 15 days after it is published in the Federal Register.

Additional guidance and clarifications on other mortgage regulations will be released later this month, the CFPB said.

For the full CFPB release, use the resource link.

$24M-asset Va FCU Closed Friday By NCUA

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ALEXANDRIA, Va. (4/15/13)--Shiloh of Alexandria (Va.) FCU, a $2.4 million-asset, 624-member institution chartered in 1993, closed Friday, the National Credit Union Administration announced late in the day.

The NCUA said the decision to liquidate the credit union, which served members and employees of Shiloh Baptist Church and their immediate family members, as well as an underserved area within the City of Alexandria, was based on finding the credit union was insolvent and had no prospect for restoring viable operations.

Shiloh of Alexandria is the fifth federally insured credit union liquidation in 2013.

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

Former Shiloh members, or any credit union member, with questions about their insurance coverage may contact NCUA's Consumer Assistance Center toll free at 800-755-1030., Monday through Friday between 8 a.m. and 5 p.m. (ET), or use the resource link below for more information.

CUNA Supports CU Tax Status At Congressional Staff Briefing

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WASHINGTON (4/12/13)--The Credit Union National Association Thursday participated in a House Ways and Means Committee briefing on the credit union tax status, talking to four members of the powerful tax-policy committee and about 15 staffers. CUNA President/CEO Bill Cheney underscored that the U.S. Congress conveyed an exemption from federal income tax to state- and federally chartered credit unions because of their ownership structure and special mission.

Cheney, after the meeting, reiterated that preserving the credit union tax status continues to be a top CUNA priority. He said CUNA was at the meeting to share the public policy reasons for the credit union tax status: "Credit unions are Americans' best option for financial services, and the credit union tax status represents one of the best investments that the government makes in its citizens.  Not all tax preferences are alike.  Some benefit a small group.  Others encourage socially beneficial behavior.  The credit union tax exemption clearly falls into the second category."

Credit unions were first made tax-exempt by a ruling by the U.S. Attorney General in 1917, less than 10 years after the first one appeared in this country and 17 years prior to the enactment of the Federal Credit Union Act. CUNA senior staff reminded the tax-policy staffers that the exemption has been reaffirmed many times, including in 1935, 1936, 1937, 1951 and 1998.

Credit unions behave differently from for-profit institutions due to their not-for-profit financial cooperative structure, the CUNA group said. That structure allows credit unions to focus totally on member value and service, and, overall, prevents them from taking the types of risks banks take in the name of profits.

This resulting difference in behavior creates substantial benefits for both the nation's 96 million credit union members and non-members as well, they said. Members benefit from lower rates on loans, lower fees on services, and higher returns on deposits. Credit unions' focus on exceptional service also keep competitive pressure on banks to the benefit of consumers.

Cheney and the CUNA group noted these economic benefits provide gains to tax-paying credit union members and other consumers that far outweigh any funds that would be brought in by imposing a federal income tax on credit unions: While the Joint Committee on Taxation estimated the credit union "Tax expenditure" meant $0.5 billion in unclaimed government revenues in 2012, CUNA estimates that credit unions gave $8 billion back to their members in the form of low fees, low rates and other benefits.

Simply put, but with profound results, the CUNA group said, a tax on credit unions is a tax on 96 million Americans who are their members.

Further, CUNA pointed out,  credit unions provide full and fair service to all members and  more than half of members that rely on credit unions for their primary financial services are middle class Americans, bringing in annual incomes of $25,000 to $75,000.

The credit union tax status was the sole topic of the briefing, which was also attended by other stakeholders. 

CUNA Executive Vice President of Government Affairs John Magill, Senior Vice President of Legislative Affairs Ryan Donovan, Vice President of Legislative Affairs Sam Whitfield, Senior Legislative Representative John Hildreth and Chief Economist Bill Hampel also took part in the meeting.

FHA May Request Treasury Infusion

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WASHINGTON (4/12/13)--The Federal Housing Administration (FHA) may need a $943 million credit from the U.S. Treasury in October to make certain sufficient reserves are on hand today to cover projected losses over the next 30-years, FHA Commissioner Carol Galante said this week.

In a release, Galante said the FHA is still under stress from loans insured in 2009 and earlier, and from mortgages insured under its reverse mortgage programs. However, she added, the FHA "is taking every appropriate action to reduce the likelihood" that Treasury assistance is needed going forward. The FHA has not required this type of appropriation from the Treasury in the past, agency staff told News Now.

The FHA's single-family insurance fund is currently facing a projected shortfall of $16.3 billion due to mortgage loan defaults by borrowers, and House Financial Services Committee Chairman Rep. Jeb Hensarling (R-Texas) and others have called for serious reforms to the agency.

Legislation that would strengthen the FHA and help ensure that agency's long-term solvency was reintroduced by Financial Services Committee Ranking Member Maxine Waters (D-Calif.) last month. The bill, known as the FHA Emergency Fiscal Solvency Act (H.R. 1145), would give the FHA greater flexibility to take action against loan originators that have high loan losses or take part in faulty underwriting; and authorize the FHA to require indemnification for improperly written loans.

The agency earlier this year announced some of its own reforms that could help improve its financial condition and manage and protect its single-family insurance programs. The changes will also encourage the return of private capital to the housing market. Galante last year said she would consider down payment requirement and insurance pricing changes to protect the FHA against losses on high-balance loans that are outside Fannie Mae and Freddie Mac conforming loan limits. This change could also help to scale back the government's footprint in the housing market, the FHA said.

CLF, CDRLF, CDFI Fund Spending Changes Are In Obama 2014 Budget

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WASHINGTON (4/12/13)--The maximum loan limitation of the National Credit Union Administration's Central Liquidity Facility (CLF) would continue at its current fiscal 2013 level under the Obama administration's proposed budget for fiscal 2014. The CLF is authorized by the Federal Credit Union Act to lend up to 12 times its paid-in capital.

Under the Obama administrations proposed 2014 budget, funding for the NCUA's Community Development Revolving Loan Fund (CDRLF) program would fall slightly from 2013's funding total. The administration has requested $1.127 million for 2014. A total of $1.144 million in CDRLF funding was approved in the 2013 budget. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions, as defined by NCUA regulations. Last August, the NCUA awarded $1.4 million in technical assistance grants to just over 100 small credit unions through the CDRLF.

Funding for the U.S. Treasury's Community Development Financial Institutions (CDFI) fund would be increased under the Obama budget plan, totaling $224.9 million. That fund received $210 million in government backing for fiscal 2013.

The CDFI Fund late last year said it expects to provide up to $165 million to eligible financial institutions in 2013. The 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.

Times Square Lights Up With CU Difference

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WASHINGTON (4/12/13)--Springtime in New York City is legendary.  And starting Monday, the throngs of people moving through one of Manhattan's most bustling thoroughfares, Times Square, will see a message in the neon lights letting them know they'll get better rates and lower fees by switching to a credit union, and urging them to find one at www.aSmarterChoice.org.

The Credit Union National Association has arranged for the message to run
A series of messages about the benefits of credit union membership will be rotated on this  26-feet wide,  20-feet high video billboard starting Monday. Credit unions and aSmarterChoice will  be featured on the CBS Screen at Times Square (shown center), in New York City, from April 15 through July 4.
hourly on the iconic CBS Screen on famed 42nd Street starting Monday, April 15, through July 4, a period that also encompasses CUNA's America's Credit Union Conference in New York City June 30  to July 4 at the nearby Hilton New York.

"CUNA and the leagues developed and launched aSmarterChoice to raise consumer awareness about credit unions and grow membership," noted Paul Gentile, CUNA EVP of Strategic Communication and Engagement.  "We are thrilled to have our message running so prominently in one of the most famous venues in the world, during one of its busiest periods."

Over 450 million people pass through Times Square annually, and some 60,000 cars cross 42nd Street and 7th Avenue every day.  CUNA's video billboard ad for aSmarterChoice will appear over an eight-week period when New York will celebrate such high-profile events as the Tribeca Film Festival, Memorial Day, the AIDS Walk, Father's Day and Independence Day.

The full-color, full-motion 15-second ad will be shown throughout the day and evening, repeating hourly on the CBS Screen, which is 26-feet wide and 20-feet high.  The message tells consumers if they want a bank they can actually trust, go to a credit union, where they'll find better rates, lower fees, and no stockholders competing against their interests.  The logo and URL for aSmarterChoice are displayed throughout the message's duration.

"Since launching the site, we've seen a significant spike in visitors whenever it is featured in the media," Gentile noted. "We anticipate a significant boost in traffic to the site as a result this ad run in Times Square. That means more people from all walks of life discovering and joining credit unions.  It is a great example of how we are putting our new strategic vision into practice."

Raising awareness about credit unions is a key tenet of the strategic vision that CUNA President/CEO Bill Cheney debuted at CUNA's Governmental Affairs Conference.  "Uniting for Good" to raise awareness, remove barriers and foster service excellence will achieve a vision where "Americans choosing credit unions as their best financial partner." (See related story: Cheney in NewsWatch: Concrete Steps Lead To CU 'Vision.')

Quarterly Insurance Report Is Lone NCUA Agenda Item

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ALEXANDRIA, Va. (4/12/13)--A quarterly insurance fund report will be the lone item on the agenda when the National Credit Union Administration board meets on Thursday, April 18.

"It is always a good development when credit unions don't need to worry another new rule or proposal will be issued," Credit Union National Association Deputy General Counsel Mary Dunn said of the abgreviated agenda.

The agency has not scheduled a closed board meeting at this time.

The previous quarterly report, released at the February open board meeting, showed that the number of federal credit unions with CAMEL codes 3, 4 and 5 dropped significantly during 2012.

The agency also reported the National Credit Union Share Insurance Fund NCUSIF ended 2012 with a 1.30% equity ratio, after transferring $88 million in "excess equity" to the Temporary Corporate Stabilization Fund (TCCUSF). The NCUA said it calculated the ratio on an insured share base of $839.4 billion, compared to $795.3 billion at the end of 2011, indicating growth of 5.5%.

The last quaterly report also showed good 2012 results for the TCCUSF. Based on "preliminary and unaudited" information, for 2012 the total net position of the fund improved nearly $1.8 billion.

For the full agenda, use the resource link.

HARP Extended Through 2015

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WASHINGTON (4/12/13)--The life of a government mortgage financing program known as HARP--the Home Affordable Refinance Program--was extended by two years yesterday when the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to extend it to Dec. 31, 2015. The program was set to expire Dec. 31, 2013.

FHFA Acting Director Edward DeMarco called the HARP program a "useful tool for reducing risk," which has helped more than two million homeowners refinance their mortgages if held by Fannie or Freddie.

He announced that his agency soon will launch a nationwide campaign to inform more homeowners about HARP and its eligibility requirements and to motivate them to explore their options and utilize HARP before the program ends.

HARP was launched in 2009 to let troubled homeowners bypass a requirement that they have at least 20% equity in their home to be able to refinance their mortgages at lower rates. Late in 2011 changes were made to the program--removing certain restrictions--to help more underwater borrowers benefit from refinancing their home mortgages through HARP.

Use the resource link to access FHFA's Refinance Report.

Cheney in NewsWatch: Concrete Steps Lead To CU 'Vision'

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WASHINGTON (4/12/13)--Sustained, unified action will enable the credit union movement to achieve its vision where "Americans choose credit unions as their best financial partner," Credit Union National Association President/CEO Bill Cheney noted in the latest issue of CUNA's Credit Union NewsWatch. He shared concrete steps that will help take the system toward its new vision.

Cheney was discussing the new "Unite for Good" rallying cry for credit unions that CUNA unveiled at its 2013 Governmental Affairs Conference here in March. CUNA has called upon credit unions to work toward a movement-wide strategic vision, collaborating to remove barriers, raise awareness, and  foster service excellence under the "Unite for Good" banner.

"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 our members' financial well-being.  That, in turn, will get us to a place where millions of more Americans choose credit unions as their best financial partner," Cheney wrote in NewsWatch, CUNA's members-only bi-weekly newsletter.

Cheney shared action steps credit unions can take to achieve the system goals:

• To remove barriers, action steps include having regular contact with elected officials, participating in CUNA's Hike the Hill program, supporting credit union-friendly candidates, and regularly filing regulatory comment letters;

• Increase consumer awareness by being active with social media, stay in contact with local reporters and editors, and be active in local civic organizations; and

• Foster service excellence by such things as being competitive on rates and fees, being more convenient through ATMs, shared branching and online solutions, and staying current with in-demand product offerings.

The "Unite for Good" vision was developed over more than a year from discussions with credit union and league leaders, credit union system partners, and CUNA's own leadership.

CUNA member credit unions can use the link below to access a full list of action steps and more on the Unite for Good website. However, the CUNA list is not meant to be exhaustive and CUNA encourages credit unions to share additional ideas by emailing them to uniteforgood@cuna.coop.

Political Advocacy Award Goes To CUNA/MCUN Ad

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WASHINGTON (4/11/13)--Credit union-backed political campaign materials have again been recognized for their effectiveness, as an ad produced by the Credit Union National Association, the Montana Credit Union Network (MCUN) and partner Compass Media Group took home a bronze trophy at the 2013 edition of the "Pollies."

Click to view larger image This award-winning ad was one of many ways CUNA and MCUN supported Sen. Jon Tester (D-Mont.) in last year's elections. Tester fended off a strong Republican challenge to retain his Senate seat.
The "Pollie" awards are presented each year by the American Association of Political Consultants (AAPC). The awards have been called the "Oscars of political advertising."

A direct mail piece for Sen. Jon Tester (D-Mont.), entitled "Farmer," won third prize in the best direct mail for membership organization--Democrat category. CUNA Vice President of Political Affairs Trey Hawkins thanked the AAPC for its recognition of the quality of this credit union political communication.

Tester's 2012 reelection was one of CUNA's highest political support priorities, and this and other mailers were sent to credit union members in Montana as CUNA teamed up with MCUN to support the senator. Tester also received CUNA and credit union backing in the form of volunteerism, phone banking, fundraisers and neighborhood canvassing.

"I'm delighted that this beautiful piece won a prestigious 'Pollie' Award. It is wonderful to be validated by peers. However, the best prize of all was the reelection of Senator Jon Tester--I know that these professional, positive messages assisted us in keeping a great credit union friend in the U.S. Senate," Tracie Kenyon, MCUN President/CEO, said.

CUNA 35-point Plan Could Help Spell Out Relief Bill

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WASHINGTON (4/11/13)--U.S. House members showed interest in regulatory relief for credit unions, and outlined some of their own plans for credit union action, during a Wednesday hearing in which the Credit Union National Association released a 35-point plan for relieving credit union regulatory burden.

Click to view larger image Security One FCU CEO Pamela Stephens, testifying on CUNA's behalf, described for members of a House Financial Services subcommittee how there seems to be a "treadmill' of regulatory burden. "I'm constantly running, trying to catch up and fear we are not in compliance," she said. Security One is a $55-million-asset credit union in Arlington, Texas. Shown behind Stephens is (left) CUNA Senior Vice President of Legislative Affairs Ryan Donovan and (right) CUNA President CEO Bill Cheney. (CUNA Photo)
CUNA's comprehensive plan, presented to the subcommittee by its witness, Pamela Stephens, highlights ongoing concerns with the National Credit Union Administration, the Consumer Financial Protection Bureau, and the Financial Accounting Standards Board, among other things. Stephens is CEO of $55-million-in-assets Security One FCU of Arlington, Texas.

Ryan Donovan, CUNA senior vice president of legislative affairs, said the hearing is an indication that lawmakers have heard the need for credit union regulatory relief "and are preparing to put a solution on the table."

The chairman of the House Financial Services financial institutions subcommittee, Rep. Shelley Moore Capito (R-W.Va.), and ranking subcommittee member Rep. Gregory Meeks (D-N.Y.) both noted the importance of credit unions to their communities.

Subcommittee members said they favored streamlining regulations for credit unions and allowing greater credit union investment opportunities, including access to supplemental capital. Lawmakers also asked pointed questions about qualified mortgages and the true costs of regulatory burdens, and commented on the need for increased lending to small business owners during the hearing.

Legislative fixes to some of the burdensome issues facing credit unions were also discussed.  For instance:

  • Rep. Gary Miller (R-Calif.), vice chairman of the House Financial Services Committee, announced he will introduce a credit union relief bill; and
  • Rep. Carolyn Maloney (D-N.Y.) said she is working on legislation that would ensure that credit union loans made to businesses impacted by disasters do not count against the member business lending (MBL) cap.
Rep. Ed Royce (R-Calif.) also discussed the MBL cap, and his bill (H.R. 688) that would increase that cap from 12.25%-of-assets to 27.5%-of-assets. He noted that many of his constituents have turned to credit unions to help them fund their businesses, and said many small businesses are still in dire need of sources of funding.

During the hearing, Stephens likened credit union battles with regulatory burden with being on an endless treadmill. She said she feels her credit union is constantly running, trying to catch up and be in compliance with all the rules. Stephens emphasized that her credit union is trying to reach out to the Hispanic community in her area, but regulatory burden and issues raising capital have made that more difficult.

The Hispanic community in her area makes a great deal of remittance transfers, and Stephens said her credit union is "trying to get into that business."

Stephens addressed a Consumer Financial Protection Bureau proposal to allow a safe harbor exemption from certain requirements of a developing remittance rule.  The safe harbor would release remittance providers that transact 100 or fewer remittances per year from disclosure and other requirements. However, Stephens said that such a low threshold "in no way addresses where we need to be."

Credit unions could better serve their members if resources were not drained on compliance issues, she told lawmakers.

To address regulatory burdens, CUNA has developed its 35-point plan, described by Stephens in her testimony.  Items suggested in that plan include:

  • Requiring the National Credit Union Administration budget process to become more transparent by, for instance, requiring an annual open hearing on its spending plans;
  • Helping credit unions make more small business loans by:  fully exempting government-guaranteed business loans from the MBL cap; and increasing the de minimis credit union business loan amount to $500,000, among other changes;
  • Making improvements to Regulation D, such as increasing the number of automatic transfers allowed from a members savings to share accounts;
  • Increasing the maturity limit for higher education loans made by federal credit unions; and
  • Increasing  the NCUA board membership from three members to five members, including a state regulator's presence, and modernizing other aspects of the board structure;
The CUNA regulatory relief document also addresses concerns regarding CFPB, NCUA and Financial Accounting Standards Board projects and their impact on credit unions.

For prepared hearing testimony, a summary of CUNA's regulatory recommendations, and more News Now coverage of the hearing, use the resource links.

CFPB 'Open' To Info Privacy Comments On Database

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WASHINGTON (4/11/13)--In the April 10 issue of the Federal Register, the Consumer Financial Protection Bureau acknowledged the concerns of the Credit Union National Association and others that public disclosure of consumer complaints could have the unintended consequence of unmerited reputational damage.

The CFPB officially launched a database of consumer complaints regarding financial products and services in late March by making more than 90,000 comments publicly available.

CUNA had underscored that while credit unions will not likely be the subject of a sizable number of consumer complaints, the database still could have unintended negative 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 bureau, in the April 10 document, acknowledged the possibility that "some consumers may draw (or be led to) erroneous conclusions from the data."

Although the CFPB also makes the point that the same would be true of "any market data," it went on to say the agency is "open, however, to further suggestions from trade associations, companies, and other concerned stakeholders on how best to provide additional context for the public database."

NEW: CUNA: Good Public Policy Dictates CU Tax Status

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WASHINGTON (4/11/13, UPDATED 4:55 p.m. ET)--Participating today in a House Ways and Means Committee staff briefing on the credit union tax status, Credit Union National Association President/CEO Bill Cheney underscored that the U.S. Congress conveyed an exemption from federal income tax to state- and federally chartered credit unions because of their ownership structure and special mission.

Of the briefing's importance, Cheney said CUNA was there to educate on the public policy reasons for the credit union tax status: "Credit unions are Americans' best option for financial services, and the credit union tax status represents one of the best investments that the government makes in its citizens.  Not all tax preferences are alike.  Some benefit a small group.  Others encourage socially beneficial behavior.  The credit union tax exemption clearly falls into the second category."

Credit unions were first made tax-exempt by a ruling by the U.S. Attorney General in 1917, less than 10 years after the first one appeared in this country and 17 years prior to the enactment of the Federal Credit Union Act. CUNA senior staff reminded the tax-policy staffers that the exemption has been reaffirmed many times, including in 1935, 1936, 1937, 1951 and 1998.

Credit unions behave differently from for-profit institutions due to their not-for-profit financial cooperative structure, the CUNA group said. That structure allows credit unions to focus totally on member value and service, and, overall, prevents them from taking the types of risks banks take in the name of profits.

This resulting difference in behavior creates substantial benefits for both the nation's 96 million credit union members and non-members as well, they said. Members benefit from lower rates on loans, lower fees on services, and higher returns on deposits. Credit unions' focus on exceptional service also keep competitive pressure on banks to the benefit of consumers.

Cheney and the CUNA group noted these economic benefits provide gains to tax-paying credit union members and other consumers that far outweigh any funds that would be brought in by imposing a federal income tax on credit unions: While the Joint Committee on Taxation estimated the credit union "Tax expenditure" meant $0.5 billion in unclaimed government revenues in 2012, CUNA estimates that credit unions gave $8 billion back to their members in the form of low fees, low rates and other benefits.

Simply put, but with profound results, the CUNA group said, a tax on credit unions is a tax on 96 million Americans who are their members.

Further, CUNA pointed out,  credit unions provide full and fair service to all members and  more than half of members that rely on credit unions for their primary financial services are middle class Americans, bringing in annual incomes of $25,000 to $75,000.

The credit union tax status was the sole topic of the briefing, which was also attended by other stakeholders. 

CUNA Executive Vice President of Government Affairs John Magill, Senior Vice President of Legislative Affairs Ryan Donovan, Vice President of Legislative Affairs Sam Whitfield, Senior Legislative Representative John Hildreth and Chief Economist Bill Hampel also took part in the meeting.

'Plain Language' Guide Available For QM Rule

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WASHINGTON (4/11/13)--A "Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage Rule" is now available from the Consumer Financial Protection Bureau.

This is the first of a series of planned "plain language" compliance guides and other informational materials the CFPB plans to provide over the next few months on its new mortgage regulations.

The bureau has said the goal of the guidance series, including the Wednesday release, is to provide a comprehensive rule summary in a plain language and FAQ format, which makes the content more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff.

The CFPB issued standards to define a "qualified mortgage" under the agency's "ability to repay" rules in January. The rule amended Regulation Z, which implements the Truth in Lending Act, to require creditors to make a reasonable, good faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for "qualified mortgages."

The Credit Union National Association is reviewing the guide and will be following up with the CFPB on any issues of concern.

Use the resource link below to access the guide.

NEW: CUNA Offers 35 Steps For CU Reg Relief

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WASHINGTON (4/10/13, Updated 3:30 p.m. ET)--Credit unions did not cause the financial crisis and don't engage in abusive practices, but "are being forced to pay the price and comply with the same rules designed for those who did cause the crisis," Security One FCU, Arlington, Texas, CEO Pamela Stephens said on behalf of her credit union and the Credit Union National Association at a House Financial Services subcommittee hearing today.

CUNA offered a 35-point plan for comprehensive regulatory relief that would help credit unions better serve their members by ceasing to require the diversion of so many resources to compliance with burdensome regulation.

Stephens, who is CEO of $55-million-in-assets Security One FCU, Arlington, Texas, told members of the House Financial Services financial institutions and consumer credit subcommittee that the burden of complying with ever-changing regulatory requirements is particularly onerous for small institutions like hers.

"If a smaller credit union offers a service, it has to be concerned about complying with most of the same rules as a larger institution, but can only spread those costs over a much smaller volume of business," she said in a prepared statement.

Regulatory burden is "a key reason that roughly 300 small credit unions merge into larger credit unions each year," she added.

Around 3,000 credit unions have five or fewer employees, CUNA notes.

"Regulatory burden is not a new problem for credit unions, but it is getting worse," she said. Since 2008, credit unions have been subjected to 157 rule changes from over 15 agencies, with most written before the Consumer Financial Protection Bureau issued its first rule. "That's almost one a week," Stephens said.

See more in tomorrow's News Now.

NEW: Cost Of Reg Burden Gets Human Face From CUNA Witness

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WASHINGTON (4/10/13, UPDATED 4:45 p.m. ET)--The overwhelming regulatory burden, and the difficulty of raising capital, have made it more difficult for her credit union to reach out effectively to the Hispanic community in her area, the Credit Union National Associatin's witness told a hearing today on providing credit unions with regulatory relief.

CUNA witness Pamela Stephens, answering questions during the just-recessed House Financial Services subcommittee hearing on credit union regulatory burden, succeeded in putting a face to the human cost of regulatory burden during the extensive question-and-answer session of the hearing.

Stephens, CEO of Security One FCU, Arlington, Texas, emphasized that her credit union is trying to reach out to the Hispanic community in her area, but regulatory burden and difficulty raising capital have made that more difficult. She made an appeal to remove a current restriction that credit unions may only use retained earnings as capital.

Also in response to a question, Stephens emphasized that a one-size-fits-all approach to financial services regulations, where a "Bank of America" and a small institutions like a credit union are treated the same--and rules aimed at financial services "bad actors"  are applied to community-minded and responsible players like credit unions--impede a credit union's ability to serve all its members.

And, Stephens emphasized, the reg burden problem "always gets worse, never gets better."

The Dodd-Frank Act and the creation of the Consumer Financial Protection Bureau have created a more difficult regulatory environment for credit unions, she said.

She said it is sometimes hard to understand what some of the regulatory changes are, what they mean, and how to comply.  Credit unions like her own are too small to afford the cost os a compliance officer and people like herself spend their nights and evenings wrestling with the copious rules and how to address them.

Also, she argued, "Members do not understand some of the new disclosures rules…Not many things coming down the pipe have been helpful to consumers now."

The credit union movement is losing around one credit union per day, and a huge part of it has to do with the regulatory burden they face. "If there's not somebody who is going to step to the plate and take care of that, consolidation seems to be the answer," she said.

News Now will have additional hearing coverage in its Thursday issue.

CUNA Urges Leeway For CUs To Help Student Borrowers

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WASHINGTON (4/10/13)--Following up on a recent meeting with the Consumer Financial Protection Bureau, the Credit Union National Association in a comment letter emphasized that credit unions should be given greater latitude to provide student loans to their members.

Many credit unions are growing their student lending programs, and CUNA Deputy General Counsel Mary Dunn noted that 600 credit unions currently offer private student loans to their members. "Like the CFPB, these credit unions want to ensure they provide products on favorable terms and that their members understand their responsibilities under student loan agreements--as credit unions do with other loan products they offer," Dunn wrote.

Recent CFPB data has shown that 87% of student lending complaints the agency has received originated from consumer dealings with seven firms, none of which were credit unions. "In fact, as the report indicates, out of the approximately 3,500 complaints about student loans, only one involved a credit union, and it is our understanding that the complaint has been satisfactorily resolved," Dunn added.

Dunn urged the CFPB to "recognize that there is no record of abuse by credit unions in this area of activity that would justify the imposition of additional regulations on credit unions."

The CUNA comment letter also recommends changes that could "help remove legal and other barriers that will enable credit unions to make even more student loans, consistent with their members' needs for such lending, current legal requirements, and reasonable safety and soundness considerations."

Extending the 15-year student loan maturity limit imposed by the Federal Credit Union Act is one such fix, Dunn said. Giving credit unions greater leeway to work with student loan borrowers and adjust the terms of their loans, as needed, could make monthly payments more manageable for borrowers and help credit unions minimize delinquencies or even charge offs, she wrote. CUNA has suggested this change to Congress and also intends to work with the CFPB and National Credit Union Administration to pursue this regulatory relief, she added.

Dunn also called on the CFPB to work with the NCUA and other financial regulators to ensure that credit unions and other creditors can offer student loan modifications, when needed, to their borrowers.

CUNA is forming a student loan advisory group to address these and other student lending issues, and that group plans to meet with officials from the CFPB and the NCUA, she added.

For the full CUNA comment letter, use the resource link.

Senate Bill Introduces Payday Loan Rate Cap

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WASHINGTON (4/10/13)--Legislation that would impose a 36% maximum annual percentage rate cap on all open- and closed-end consumer credit transactions has been introduced in the U.S. Senate.

The bill, known as the Protecting Consumers from Unreasonable Credit Rates Act, would impact payday loans, mortgages, car loans, credit cards, overdraft loans, car title loans and refund anticipation loans, according to a release. The bill is co-sponsored by Sens. Richard Durbin (D-Ill.), Jeff Merkley (D-Ore.), Richard Blumenthal (D-Conn.), Sheldon Whitehouse (D-R.I.) and Barbara Boxer (D-Calif.).

The bill would allow lenders to continue to charge initial application fees, insufficient funds fees and late fees. Measures to ensure that the federal law does not preempt stricter state laws are included in the bill. The bill would penalize violations of the 36% cap.

Durbin, Blumenthal and Merkley were also among those that introduced a bill to ban certain harmful online payday lending practices earlier this year. That bill, the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act (S. 172), has five consponsors.

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.

CUNA supports the ability of credit unions to provide beneficial short-term, small amount loans as alternatives to predatory payday lending, which have "no place in the financial marketplace."

Payday 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.

Hearing Today Is 'Step Toward Reg Relief'

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WASHINGTON (4/10/13)--Credit Union National Association witness Pamela Stephens takes to the witness table today to urge lawmakers to remove regulatory barriers that impede credit unions' ability to best serve the financial needs of their members.

Today's hearing by the House Financial Services subcommittee on financial institutions and consumer credit is the first of a series planned this year to study, in part, the impact of the Dodd-Frank Act. The credit union hearing occurs one week before an April 16 hearing on bank regulatory issues.

CUNA Senior Vice President of Legislative Affairs Ryan Donovan has said that the April 10 session may be a turning point of sorts for credit unions.

"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," Donovan said when the hearing was announced in late March.

CUNA testified several times in the last Congress regarding the "ever-increasing, never-decreasing" complexity of the regulatory framework within which credit unions must operate.

Today's relief hearing, Donovan added, "hopefully represents the beginning of the process in this Congress to move legislation to provide relief to America's credit unions."

Stephens, who is CEO of $55-million-in-assets Security One FCU, Arlington, Texas, will note that this increased complexity has disproportionately impacted small credit unions.

While noting that creating an exhaustive list of regulatory relief proposals is impossible, Stephens will offer an extensive list of CUNA-backed reforms in her testimony.

Watch News Now for hearing coverage and follow NewsNowLiveWire on Twitter for immediate action updates.

Also, use the link below at 2 p.m. (ET) to listen to the hearing live.

CUNA: CUs Already Have Strong Data Security Standards

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WASHINGTON (4/10/13)--Credit unions are already subject to robust data security requirements and standards, and should not be subject to additional regulations, Credit Union National Association Assistant General Counsel Dennis Tsang wrote in a comment letter filed with the National Institute of Standards and Technology (NIST).

The CUNA letter follows an NIST request for information on developing a framework to improve cybersecurity for critical infrastructure.

While a limited number of credit unions and other financial institutions have been the subject of cyberattacks and data breaches, "these problems do not mean that more regulation in this area is required for financial institutions," Tsang noted. "On the contrary, financial institution systems have been tested like few others, and are probably ahead of some other sectors in the evolution and adoption of defensive measures," he wrote.

NIST should instead "focus on maximizing the ability of the federal government to address communications and other gaps that undermine the ability of sectors such as financial institutions to protect themselves" and fully assess whether new or revised security standards are needed for non-financial entities. Increased coordination between national enforcement and intelligence-gathering agencies could help to more quickly identify potential threats, the CUNA letter added.

Tsang in the letter suggested that NIST coordinate any critical Infrastructure cybersecurity initiatives it undertakes with both public and private stakeholders going forward, and also protect business confidentiality, individual privacy and civil liberties.

"By working with the Department of Homeland Security and national intelligence agencies, sector-specific agencies, including the U.S. Treasury, [National Credit Union Administration] and other regulators; the Financial Services Sector Coordinating Council (FSSCC) and other sector-coordinating councils, and CUNA and other trade associations, NIST will be better able to identify, refine, and guide the many interrelated cybersecurity considerations from all key sectors," he wrote.

CUNA is a member of the FSSCC, which is comprised of more than 50 financial services entities and associations and works closely with the Financial and Banking Information Infrastructure Committee. That group coordinates the government's critical infrastructure efforts. The NCUA and U.S. Treasury are members of the group.

For the full CUNA comment letter, use the resource link.

New: House Subcommittee Members Have CU Reg Relief Legislation In Mind

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WASHINGTON (4/10/13, UPDATED 4:20 p.m. ET)--Regulatory relief legislation for credit unions has clearly been on the minds of House Financial Services subcommittee members today during a hearing on that subject at which Credit Union National Association witness Pamela Stephens presented CUNA's 35-point relief plan.

After multiple introductory statements by subcommittee members that noted a willingness to move forward on legislation, and after Stephens presented CUNA's relief plan, the vice chairman of the House Financial Services Committee, Rep. Gary Miller (R-Calif.) announced he will introduce a credit union relief bill.

Other subcommittee members noted interest is developing a legislative package t to address simultaneously credit union regulatory concerns along with those of community banks.  Stephens, who is CEO of Secuirty One FCU, Arlington, Texas, assured lawmakers that there are many issues credit unions and small banks could agree on.

The hearing continues.

NEW: CUNA Offers 35 Steps For CU Reg Relief

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WASHINGTON (4/10/13, Updated 3:30 p.m. ET)--Credit unions did not cause the financial crisis and don't engage in abusive practices, but "are being forced to pay the price and comply with the same rules designed for those who did cause the crisis," Security One FCU, Arlington, Texas, CEO Pamela Stephens said on behalf of her credit union and the Credit Union National Association at a House Financial Services subcommittee hearing today.

CUNA offered a 35-point plan for comprehensive regulatory relief that would help credit unions better serve their members by ceasing to require the diversion of so many resources to compliance with burdensome regulation.

Stephens, who is CEO of $55-million-in-assets Security One FCU, Arlington, Texas, told members of the House Financial Services financial institutions and consumer credit subcommittee that the burden of complying with ever-changing regulatory requirements is particularly onerous for small institutions like hers.

"If a smaller credit union offers a service, it has to be concerned about complying with most of the same rules as a larger institution, but can only spread those costs over a much smaller volume of business," she said in a prepared statement.

Regulatory burden is "a key reason that roughly 300 small credit unions merge into larger credit unions each year," she added.

Around 3,000 credit unions have five or fewer employees, CUNA notes.

"Regulatory burden is not a new problem for credit unions, but it is getting worse," she said. Since 2008, credit unions have been subjected to 157 rule changes from over 15 agencies, with most written before the Consumer Financial Protection Bureau issued its first rule. "That's almost one a week," Stephens said.

See more in tomorrow's News Now.

TARP Watchdog: SBLF Little Used To Boost Lending

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WASHINGTON (4/10/13)--Former Troubled Asset Relief Program (TARP) banks that took part in the taxpayer-funded Small Business Lending Fund (SBLF) "have not effectively increased small-business lending and are significantly underperforming compared to non-TARP banks," the Office of the Special Inspector General for TARP (SIGTARP) reported on Tuesday.

While the SBLF was intended to incentivize bank small-business lending, 24 former TARP banks have not increased their lending, and the remaining former TARP banks have increased lending by $1.13 for each SBLF dollar they received, the report said. "By comparison, banks that did not participate in TARP but received SBLF funding have increased small-business lending by more than three times that amount--$3.45 for each $1 in SBLF funds," SIGTARP added.

"Basically, you have TARP banks taking unused TARP funds channeled to the SBLF and using it to pay off their TARP obligations instead of helping small businesses--it's unconscionable," said Credit Union National Association President/CEO Bill Cheney after the report became public. "This is just further evidence why Congress should take the far more logical step of enacting legislation to raise the member business lending cap. You'll see billions in new loans from credit unions to small businesses, with no need on our part for a TARP-like government handout."

The majority of former TARP banks that did not increase their lending after receiving SBLF funds instead used approximately 80% of those funds to repay their TARP obligations, the report found. "TARP banks had much to gain and little to lose from refinancing into SBLF irrespective of their small-business lending capability or willingness to lend," SIGTARP noted.

For the full SIGTARP report, use the resource link.

Extensive CUNA Reg Reform List To Be Offered Wednesday

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WASHINGTON (4/9/13)--Credit Union National Association witness Pamela Stephens will target the "crisis of complexity" that burdensome regulations have created for credit unions and offer an extensive list of CUNA-backed reforms during Wednesday's House Financial Services subcommittee on financial institutions and consumer credit.

Stephens, who is CEO of $55-million-in-assets Security One FCU, Arlington, Texas, will note that this increased complexity has disproportionately impacted small credit unions.

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.

Amendments to the Federal Credit Union Act's supplemental capital and member business lending regulations will be on the CUNA agenda for Wednesday's hearing. Specific concerns regarding Consumer Financial Protection Bureau, National Credit Union Administration and Financial Accounting Standards Board projects and their impact on credit unions will also be discussed by the CUNA witness.

Stephens will also focus on additional changes that would help credit unions better serve their members, including:

  • Adjusting the treatment of non-owner occupied one- to four-family dwelling loans for credit unions from business loans to residential real estate loans;
  • Addressing the treatment of prepaid debit accounts under the National Credit Union Share Insurance Fund;
  • Pursuing examination fairness legislation;
  • Examining Regulation D and the treatment of automatic transfers from savings to checking accounts;
  • Reducing loan loss reserve requirements on U.S. Small Business Administration microloan programs;
  • Ensuring that credit unions are able to maintain their current membership base, and add to that base, when they pursue mergers; and
  • Allowing privately insured credit unions to join the Federal Home Loan Bank.

The CUNA witness will also encourage the NCUA and CFPB to work more closely together to help ensure that credit union issues are more fully understood and addressed as new CFPB regulations are developed.

The hearing is scheduled to begin at 2 p.m. (ET). Also scheduled to testify are:

  • Melrose CU General Counsel Mitchell Reiver, who will testify on behalf of his $1.6 billion-in-assets, Briarwood, N.Y. credit union; and
  • Robert Burrow, president/CEO of Bayer Heritage FCU, Proctor, W. Va., who will testify on behalf of his 28,000 member, $309 million-in-assets credit union and the National Association of Federal Credit Unions.

Regulatory relief has been a theme for the House Financial Services Committee early this year, and CUNA believes Wednesday's hearing could be an early step in the development of regulatory relief legislation. (See related News Now story: April 10 Hearing Could Lead To Reg Relief Rewards.)

CFPB, NCUA Action Detailed In CUNA Reg Advocacy Report

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WASHINGTON (4/9/13)--Credit Union National Association analysis of recent releases from the National Credit Union Administration and the Consumer Financial Protection Bureau are among the topics featured in this week's edition of the Regulatory Advocacy Report.

Issues addressed in CUNA's weekly members-only publication on regulatory developments include:

  • An NCUA legal opinion letter on the use of mail ballots in connection with special credit union board meetings;
  • The NCUA Office of Minority and Women Inclusion's report on agency efforts to enhance workforce diversity;
  • Credit Union National Association comments on the Electronic Payments Association's (NACHA) latest compliance and operational topics proposal;
  • The CFPB's move to begin accepting consumer complaints on international remittance transfers and other money transfers; and
  • NCUA guidance on Loan Workout Policies and Reporting of Troubled Debt Restructurings.
An updated chart on the CFPB's proposed and final rules is also included in the report.

To read the full report, 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.

April 10 Hearing Could Lead To Reg Relief Rewards

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WASHINGTON (4/9/13)--Credit unions could ultimately reap regulatory relief as a result of Wednesday's House Financial Services subcommittee on financial institutions and consumer credit hearing, John Magill, executive vice president of government affairs for the Credit Union National Association, said on Monday.

The Wednesday hearing, which is scheduled to begin at 2 p.m. (ET), shows that lawmakers have heard the pleas of credit unions and other community-based financial institutions and are preparing to act to address these needs, CUNA Senior Vice President of Legislative Affairs Ryan Donovan added.

The credit union regulatory relief hearing is one way that House Financial Services Committee members are soliciting ideas for legislation they feel they could move through the House, he said. CUNA's witness, Pamela Stephens, will present a full slate of CUNA-backed regulatory changes that legislators could act on to aid credit unions. (See related News Now story: Extensive CUNA Reg Reform List To Be Offered Wednesday.)  Stephens is the CEO of Security One FCU, Arlington, Texas.

The House could use these and other credit union regulatory relief measures as part of a smaller legislative package, or could compile a larger bill full of credit union and bank regulatory relief provisions, Donovan said.

"Right now, we are getting the ideas out on the table. Ours not an exhaustive list, but it's a start, and we're grateful that the committee is engaging in this process.

"We will support any of these concepts that make it into the Senate," Donovan added.

Donovan said Senate Banking Committee members have also indicated they are open to reducing regulatory burdens for credit unions. However, Donovan noted, they have not yet this year developed as formal of a process as the House committee, where regulatory relief and reducing regulatory burden have been areas of emphasis for new House Financial Services Chairman Jeb Hensarling (R-Texas).

CUNA is talking with bank representatives to stake out common ground on regulatory issues, and has also spoken with the NCUA on aspects of this week's testimony.

Overall, Magill said, the U.S. Congress likely wants to "get something done" and pass things of this nature to help their constituents.

Other hearings this week of credit union interest include two on Wednesday:

  • A House Financial Services subcommittee hearing on sustainable housing finance; and
  • A House Appropriations subcommittee on financial services and general government hearing on Small Business Administration oversight.
The House Thursday hearing schedule includes:
  • A House Financial Services subcommittee hearing on the International Monetary Fund;
  • Separate House Ways and Means Committee and Senate Finance Committee hearings on President Barack Obama's 2014 budget; and
  • A House Financial Services subcommittee on capital markets hearing on derivatives.

CUNA To Meet On CU Tax Status With Ways And Means Working Group

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WASHINGTON (4/9/13)--The House Ways and Means Committee has asked the Credit Union National Association and other stakeholders to brief the panel's financial services tax reform working group on the public policy reasons backing the credit union federal tax exemption.

"Credit unions have a good story to tell and we look forward to sharing it again with the tax policymakers," said CUNA Senior Vice President of Legislative Affairs Ryan Donovan Monday.

Donovan reiterated that no legislator CUNA has spoken with has suggested that credit union taxation is on the table as a tax reform or spending issue. However, he added, none have suggested that CUNA should be anything but vigilant on this key issue as tax reform talks move forward and all sorts of ideas are thrown into the discussions.

"We do know an educated Congress, and public, are the best ways to preserve credit unions' tax exemption. We continue with that process on both fronts," Donovan said, adding, for instance, that CUNA lobbyists and President/CEO Bill Cheney met last month with Rep. Adrian Smith (R-Neb.), chairman of the Ways and Means Committee's financial services tax reform working group.

"Credit unions are exempt from federal income tax because they are not-for-profit financial cooperatives with a mission of providing access to credit and promoting thrift to their members," Donovan said, adding that consumers benefit to the tune of $8 billion annually in terms of lower rates on loans, lower fees on services, and higher returns on deposits. 

Non-members benefit as well because credit union competition helps keep bank savings rates higher and loan prices lower, he reminded.

Preserving the credit union tax status remains CUNA's top legislative priority, and CUNA has emphasized that credit unions must work collaboratively to communicate the importance of that status to their members.

CUNA's has designed a members-only toolkit to help credit unions connect with their members and educate the public about credit unions. 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.

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.

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

CFPB To Release Plain Language Compliance Guide

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WASHINGTON (4/8/13)--The first documents in a series of plain language compliance guides and other informational materials on pending Consumer Financial Protection Bureau mortgage regulations will be released this week, the agency said.

The agency in January released a slew of final mortgage rules, many of which are scheduled to go into effect in January 2014. The CFPB regulations address mortgage servicing, mortgage loan originator compensation, high-risk-mortgage appraisals, ability to repay requirements, escrow accounts and "high-cost" mortgages.

More plain language compliance resources and updates of official regulatory interpretations, examination procedures and other materials addressing these regulations will be unveiled in the coming months, the agency added.

"A good implementation plan reduces confusion and costs for industry. That means less time figuring out what the rules mean and more time designing business practices that serve consumers and follow the rules. That's a market that works better for everyone," the CFPB said in a Friday release.

The CFPB has promised easy-to-understand summaries of the regulations in both written and video format. The "official interpretations" of the rules will provide guidance on how to comply with the rules and allow the agency to address industry, consumer and regulatory questions regarding the regulations, the CFPB added. Mortgage originators and servicers will also be provided with a checklist of implementation, training and policy revision plans. The bureau also plans to inform consumers about the new mortgage rules through a broad-reaching education campaign.

The Credit Union National Association has produced a set of charts covering the CFPB mortgage rules and their key components. For the CUNA charts, use the resource links.

CUNA, CUs Support 'Run' Raising $6M Total for Kids' Hospitals

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WASHINGTON (4/8/13)--More than 15,000 runners signed on for Sunday's annual Credit Union Cherry Blossom Ten Mile Run and anyone venturing out on the National Mall--even in the pre-dawn hours--would assure you that it seemed they were all there for the teeming and lively scene.

Click for slide show The 41st running of the Credit Union Cherry Blossom Ten Mile Run took place Sunday, April 7. (CUNA Photo)
More than 160 members of Congress were honorary chairs of this year's event, nearly 800 Capitol Hill staffers participated in the race, and the event was blanketed with credit union volunteers supporting the effort, including a strong contingent form the Credit Union National Association. Four former Members of Congress also signed on to be Honorary Race Chairs.

A kick-off press conference was held in the Capitol Visitor Center Thursday, April 4, and a Kids' Play Day at Children's National Medical Center in Washington' DC' was a Friday highlight of the weekend's credit union activities surrounding the race.

Credit Union Miracle Day (CUMD) is the title sponsor group of the race. Sunday was the 41st year of the annual run, and twelfth with credit unions as chief sponsor.

"We are very proud of the way credit unions and their business partners, including our lead partner, PSCU, and runners have all united and collaborated to raise funds for Children's Miracle Network Hospitals under the umbrella of Credit Unions for Kids," CUMD Chairman Juri Valdov said about the 2013 race.

CUMD's 2013 donation of $483,000 will bring the 12-year total of funds donated to Children's Miracle Network Hospitals nationwide to over $6 million. Approximately $112,000 alone was raised by runners and their families and friends in 2013.

Credit Union Miracle Day is slated to sponsor the race through 2016.

CUNA volunteers once again showed the credit union difference by taking on bag check responsibilities for the 10-mile run and 5k run/walk event. And CUNA athletes, including Executive Vice President of Government Affairs John Magill, also made a good showing in the main event.

USA Track and Field has named this year's Credit Union Cherry Blossom Ten Mile as the USA Women's 10-Mile Championship, Presented by America's Credit Unions. As a result, top American female athletes, including five-time U.S. National Road Running Champion and London Olympian Janet Cherobon Bawcom were scheduled to run. U.S. Olympians Jen Rhines and Colleen De Reuck also signed on to compete in to run the race.

Boston Half Marathon record holder and 2012 Credit Union Cherry Blossom Ten Mile champion Allan Kiprono went up again 2012 runner-up Lani Kiplagat and others in the men's race.

The CUMD Family of Races has expanded beyond the Washington event. Also on Sunday, the second annual Credit Union SacTown 10 Mile Run took take place in downtown Sacramento, Calif., to raise money for Children's Miracle Network hospitals in California and Nevada.

And two "freedom runs" were organized: One held Sunday at Camp Arifjan in Kuwait, sponsored by the Defense Credit Union Council Overseas Subcouncil, and the other scheduled for April 20 at Army Garrison Wiesbaden, Germany, sponsored by Andrews FCU.

Reg Relief Testimony Gets Cheney Report Preview

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WASHINGTON (4/8/13)--Wednesday's House Financial Services subcommittee hearing on credit union regulatory relief "will be a good day for credit unions," and Credit Union National Association President/CEO Bill Cheney previewed the issues that CUNA's witness will emphasize this week in the latest edition of The Cheney Report.

"We're set for the great opportunity presented by Wednesday's House subcommittee hearing on regulatory relief," Cheney said. The last 12 times Congress has looked at this issue, Cheney noted, hearings have been under the banner of regulatory burden. "This is the first characterization as 'relief', and this characterization, Cheney said, is "more than semantics...It signals the Financial Services Committee's intent to move actual legislation, the first of its kind in years."

In her testimony on behalf of CUNA and credit unions, Pamela Stephens, CEO of $55-million-in-assets Security One FCU, Arlington, Texas, plans to recommend nearly three dozen statutory changes or studies, all aimed at delivering substantive regulatory relief to credit unions. The recommendations will address:
  • Exam fairness and the appeals process;
  • Greater openness in the National Credit Union Administration's budgeting;
  • Assessing the unintended consequences of accounting standards;
  • Increasing maturity limits on student loans; and
  • Expanding investment authority in credit union service organizations.
Implementing capital reforms, making greater use of Consumer Financial Protection Bureau exemption authority for credit unions, and adding small business service flexibility are other topics the CUNA witness plans to touch upon, Cheney added.

This week's Cheney Report also includes:
  • Recent regulatory relief efforts by the Credit Union Association of the Dakotas;
  • News on NCUA legal actions against Wall Street firms;
  • An update on how credit unions are working together to foster service excellence; and
  • Encouraging credit union financial data.
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.

To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

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

CUNA to NACHA: Mind Compliance, Implementation Costs

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WASHINGTON (4/8/13)--The Electronic Payments Association (NACHA) must minimize implementation and compliance costs as it works to clarify the meaning or intent of certain provisions, improve processing efficiency, and eliminate requirements that no longer add value to the ACH network, the Credit Union National Association said in a new comment letter.

The CUNA comment letter is in response to NACHA's latest compliance and operational topics proposal, which was released in February.

NACHA has proposed amending its operating rules by:

  • Removing change code C04 (incorrect individual name/receiving company name) to reduce compliance and liability challenges associated with name changes;
  • Reducing the mandatory six-day waiting period associated with prenotification (prenote) entries; and
  • Making technical corrections to the rules on the authorization of reclamation entries.
Originating depository financial institutions (ODFIs) and receiving depository financial institutions (RDFIs) would be impacted by these changes, CUNA Assistant General Counsel for Regulatory Research Dennis Tsang noted.

Tsang said CUNA generally supports the changes.

Reducing the mandatory six-day waiting period on prenotification entries, as proposed by NACHA, should help facilitate a more timely use of the prenote, and could also help reduce exceptions, Tsang wrote.

The proposed technical changes on authorization of reclamation entries would make the rules for reclamation entries consistent with the rules for reversing entries, he added.

For the full CUNA comment letter, use the resource link.

Registration For NCUA/League CEO Boot Camps Opens

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ALEXANDRIA, Va. (4/8/13)--Registration for the National Credit Union Administration's series of Credit Union CEO Boot Camps is now open.

The NCUA has partnered with state credit union leagues to develop a significant number of the training sessions.

Succession planning will be the central topic at the Office of Small Credit Union Initiatives boot camps. Representatives from the California & Nevada Credit Union Leagues, Maryland and D.C. Credit Union Association, the Virginia Credit Union League, the Illinois Credit Union League, the Missouri Credit Union Association, the Ohio Credit Union League, the Texas Credit Union League and the League of Southeastern Credit Unions are developing separate agendas for the different boot camp sessions.

Representatives from the Credit Union Executive Society, CUNA Mutual Group, the National Credit Union Foundation and the National Federation of Community Development Credit Unions are also scheduled to particpate in the meetings.

The NCUA has designed the boot camps, which were announced earlier this year, to serve as an intense, full day of managerial education. Each session will also include round-robin discussions. Key ratios, loan underwriting, collections, new products and services for small credit unions, and pricing are among the topics to be addressed.

The first of these six boot camps is scheduled for May 4 in Ontario, Calif. A second boot camp will be held near the NCUA's Alexandria, Va. headquarters on May 8.

Others are scheduled for:

  • June 11 in Collinsville, Ill.;
  • July 17 in Columbus, Ohio;
  • Sept. 18 in Dallas, Texas; and
  • Sept. 25 in Birmingham, Ala.
To register for the NCUA OSCUI boot camp sessions, use the resource link.

CUs Raise $6M for Kids' Hospitals

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WASHINGTON (4/5/13)--More than 15,000 runners are set to take to the streets of Washington, D.C. this Sunday as part of the Credit Union Cherry Blossom 10-Mile Run, and Credit Union National Association (CUNA) President/CEO Bill Cheney on Thursday said CUNA is again "honored to be a part of it."

CUNA President/CEO Bill Cheney on Thursday told attendees at a Credit Union Cherry Blossom 10-Mile Run press conference that he, like many of them, will be out early on Sunday to take part in the day's festivities. CUNA volunteers are again running the race bag check, and some brave souls are taking part in the race itself. (CUNA Photo) 
Cheney joined race organizers and representatives from Congressional FCU, Washington, D.C.; CUNA Mutual; PSCU Financial Services; and Children's Miracle Network Hospitals at a Thursday press conference to kick off the Credit Union Cherry Blossom Run.

The 10-mile run and 5k run/walk event raises funds for Children's Miracle Network Hospitals. The title sponsor, Credit Union Miracle Day Inc., is entering its 12th year of race sponsorship. This year's donation of $483,000 will bring the total amount of funds raised to more than $6 million since beginning its sponsorship of the race in 2002. The group is slated to sponsor the race through 2016.

This is the 12th straight year that CUNA will support the race. A group of CUNA volunteers will work the race bag check tent, where runners will store their belongings while they race. CUNA employees are also taking part in the day's festivities by either running or walking the 10-mile or 5k routes.

The customary Capitol Hill Competition will also be held, as nearly 800 staffers from 70 teams represent their congressional offices. More than 160 members of Congress are serving as honorary race chairs this year.

USA Track and Field has named this year's Credit Union Cherry Blossom Ten Mile as the USA Women's 10 Mile Championship, Presented by America's Credit Unions. As a result, top American female athletes, including five-time U.S. National Road Running Champion and London Olympian Janet Cherobon Bawcom, are scheduled to run this weekend. U.S. Olympians Jen Rhines and Colleen De Reuck are also planning to run the race.

Boston Half Marathon record holder and 2012 Credit Union Cherry Blossom Ten Mile champion Allan Kiprono will defend his title against 2012 runner-up Lani Kiplagat and others in the Men's race.

Nearly 1,700 runners are expected to take part in the Credit Union SacTown Ten-Mile Run in Sacramento, Calif., and more than 1,000 athletes are set to run in two separate Credit Union Freedom Runs at the U.S. Army Garrison in Wiesbaden, Germany, and Camp Arifjan in Kuwait.

Mortgage Market Reforms Continue On Difficult Path

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WASHINGTON (4/5/13)--While Congress continues to wade through a myriad of possible housing finance system models, financial regulators and housing agencies are working on their own to address the future of the housing finance system.

A range of housing policy changes have been discussed by the U.S. House, the Senate, and the Obama administration in recent months, including full market privatization, limiting government market intervention, and several stops in-between. (See Part 1 of this two-part series, detailing legislative work to address housing finance issues, in an April 1 News Now story: GSE Reform Will Remain Hot Topic As Congress Returns)

Engaging in housing finance reform is one of the Credit Union National Association's top 2013 legislative priorities.

Fannie Mae this week reported a record $17.2 billion in annual profits and $7.6 billion in fourth quarter profits for 2012, and said it "expects to remain profitable for the foreseeable future." However, many, including Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), have expressed the need for long-term housing finance system reforms, and said these record profits should not become an excuse for inaction.

So, profitable or not, Fannie Mae and fellow government-sponsored enterprise (GSE) Freddie Mac seem set for reforms.

The GSEs have been held under government conservatorship since 2008, and they continue to repay more than $150 billion in taxpayer funds that were used to prop them up. Fannie Mae paid $11.6 billion in dividends to the U.S. Treasury under the terms of a senior preferred stock purchase agreement unveiled last year, and the Treasury last year said the gradual winding down of mortgage investment portfolios held by the GSEs will be accelerated. Fannie and Freddie's investment portfolios are being wound down at an annual rate of 15%, with the goal of reducing the amount of mortgage assets held by the GSEs to $250 billion by 2018.

The Treasury also requires the GSEs to submit plans detailing how they will reduce taxpayer exposure to mortgage credit risk on an annual basis.

Other government agencies are also acting to address housing financing issues. Acting Federal Housing Administration (FHA) Commissioner Carol Galante last year said she would consider down payment requirement and insurance pricing changes to protect the FHA against losses on high-balance loans that are outside Fannie Mae and Freddie Mac conforming loan limits. This change could also help to scale back the government's footprint in the housing market.

Fannie and Freddie themselves are preparing for change. Federal Housing Finance Agency Acting Director Edward DeMarco early last month said the GSEs would 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.

"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.

CUNA 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.

Four Mortgage Insurers To Pay $154M In CFPB Penalties

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WASHINGTON (4/5/13)--Four mortgage insurers have been ordered to stop alleged illegal payment schemes and to pay a combined $15.4 million in penalties under Consumer Financial Protection Bureau enforcement actions announced on Thursday.

The enforcement actions allege that Genworth Mortgage Insurance Corporation, United Guaranty Corporation, Radian Guaranty Inc., and Mortgage Guaranty Insurance Corporation provided payments to mortgage lenders by purchasing captive reinsurance.

The CFPB noted that many insurance companies purchase reinsurance to reduce their own risk if unexpectedly high mortgage losses occur. Mortgage lenders can set up subsidiaries to provide reinsurance for mortgage insurers, and reinsurance provided under these circumstances is known as captive reinsurance. "It is 'captive' because the lender both originates the loan and, through its own subsidiary, provides the reinsurance," the CFPB explained.

The captive reinsurance that these four mortgage insurance firms purchased was essentially worthless, but was designed to make a profit for the lenders, the CFPB reported in a press release.

These actions, which are violations of the Real Estate Settlement Procedures Act, helped mortgage insurance companies funnel millions of dollars to mortgage lenders "for well over a decade," CFPB Director Richard Cordray said. "Illegal kickbacks distort markets and can inflate the financial burden of homeownership for consumers," he added.

The four companies have agreed to the terms of the enforcement orders, and the orders must now be approved by the presiding judge of the United States District Court for the Southern District of Florida.

Under the orders, the four companies will not enter into any new captive mortgage reinsurance arrangements with affiliates of mortgage lenders, or obtain captive reinsurance on any new mortgages, for a 10-year period. The CFPB will also monitor the companies to ensure compliance with the terms of the orders.

For the full CFPB release, use the resource link.

CFPB Now Accepting Money Transfer Complaints

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WASHINGTON (4/5/13)--Consumers now can take their complaints about a bad money transfer experience to the Consumer Financial Protection Bureau.

In a blog post announcing that the bureau now takes money transfer complaints, the CFPB noted that it is "pretty incredible" that a person can quickly send money to almost anywhere in the United States or abroad, and that many do so on a daily basis.

The CFPB told consumers they can submit a complaint for such issues as:

  • Money was not available when promised;
  • Wrong amount charged or received (Transfer amounts, fees, exchange rates, taxes, etc.);
  • Incorrect/missing disclosures or info;
  • Other transaction issues (Unauthorized transaction, cancellation, refund, etc.);
  • Other service issues (Advertising or marketing, pricing, privacy, etc.); and/or
  • Fraud or scams.
"Reading your complaints about money transfers will complement work we have already started in this area, including issuing a rule on international money transfers, which will include a new set of protections for consumers who send money internationally," the CFPB said.

The CFPB in January announced it was delaying the effective date of its international remittance transfer rule that was set to go into effect Feb. 7. A new effective date will be set later in the year.

Use the resource link to read more about the CFPB money transfer rule.

GAO Report: Independent Foreclosure Review Process Is Flawed

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WASHINGTON (4/5/13)--Complexity, overly broad guidance, and limited monitoring for consistency hampered the progress of regulators' Independent Foreclosure Review (IFR), the U.S. Government Accountability Office (GAO) reported on Thursday.

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 Office of the Comptroller of the Currency and the Federal Reserve Board on Jan. 7 announced that the IFR process would instead be replaced with a tentative $9.3 billion settlement. The settlement would allow all IFR-eligible borrowers "to receive compensation significantly more quickly," the OCC said in a release.

Thursday's GAO report said limited communication with borrowers and the public adversely impacted transparency and public confidence in the foreclosure review. Borrowers that asked for reviews also experienced gaps in communication, with some waiting for nearly one year before they were updated on the status of their case, the GAO said.

"Broad guidance and limited monitoring reduced the potential usefulness of data from consultants and increased risks of inconsistency," the GAO added. Guidance for consultants and others reviewing lending cases was revised. "Regulators lacked objective monitoring measures, resulting in difficulty assessing the extent of borrower harm," GAO added.

Rep. Maxine Waters (D-Calif.), who, along with other legislators, requested the GAO study in early 2012, said "the report confirms that the Independent Foreclosure Review process was poorly designed and executed." She also criticized the OCC's oversight of independent consultants that were hired by mortgage servicers to work the review cases, and said she will soon introduce "legislation to address the problem of relying on outside contractors for enforcement actions.

For the GAO report and Rep. Waters' statement, use the resource link.

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.

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.

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.

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.

B of A, NCUA Agree To $165M Securities Sale Settlement

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ALEXANDRIA, Va. (4/3/13)--The total amount of funds recovered from National Credit Union Administration securities lawsuits now totals more than $335 million after Bank of America and certain subsidiaries agreed to settle with the agency.

Bank of America has agreed to pay $165 million to the NCUA under the terms of the settlement announced on Tuesday. The agency has also settled with Citigroup, Deutsche Bank Securities, and HSBC, avoiding the cost of litigation and bringing in more than $170 million in funds that were lost due to the corporate credit union investments.

Bank of America is one of several Wall Street Firms the NCUA has pursued legal action against, alleging violations of federal and state securities laws when they sold billions in residential mortgage-backed securities that later failed to now-defunct corporate credit unions.

Bank of America did not admit fault under the terms of the settlement.

"As a result of the Bank of America settlement, NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions," NCUA Board Chairman Debbie Matz said in a release. "These settlements and our ongoing lawsuits further NCUA's goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions," she added.

Funds recovered through these legal actions will be used to help reduce the amount of future corporate stabilization assessments on credit unions, according to the NCUA.

Matz said the NCUA has "a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected. The NCUA "will continue to expend every possible effort to fulfill that important responsibility," she added.

New NCUA Online Resources Offers Fin Lit 'Fun For All Ages'

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ALEXANDRIA, Va. (4/3/13)--Financial education is often a serious topic, but the National Credit Union Administration on Tuesday announced it is taking a different tack: The agency has developed a new game to help teach youngsters how they can make better financial decisions.

The game, called "Hit the Road," is hosted on the NCUA's financial literacy microsite, Pocket Cents. In the game, participants travel on a cross-country trip to Colorado. They earn and spend money along the way, and learn how to keep track of their funds through their credit union accounts.

"NCUA is deeply committed to promoting financial literacy and educating consumers of all ages to make better choices," Chairman Debbie Matz said in a release.

The agency has also provided new financial tips for consumers of all ages on Pocket Cents and the consumer website MyCreditUnion.gov. New resources posted on those pages include details on the cost of education and homeownership, and information to help retirement planning, debt management, online financial security and emergency planning.

The game and tips are part of the NCUA's observance of April's National Financial Literacy Month. Credit unions also will be participating in two annual national efforts sponsored by the Credit Union National Association:  National Credit Union Youth Week, April 21-27, and the National Youth Saving Challenge. (See April 1 News Now story: Financial Literacy Month Kicks Off, Financially Fit Day Is Wednesday.)

'Scaling Up Microfinance' Webinars Offered By CDFI Fund

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WASHINGTON (4/3/13)--Best practices and business analysis tools and strategies for microfinance market participants will be among the items addressed in a series of upcoming free Community Development Financial Institutions Fund (CDFI Fund) technical assistance webinars.

The CDFI Fund's "Scaling Up Microfinance" series, which is scheduled to begin in April and end in October, is set to include:

  • An April 9 webinar discussing innovative business models to scale microfinance;
  • An April 30 webinar on encouraging innovation and developing talent;
  • A May 14 webinar on adding new microfinance products to achieve scale and increase impact; and
  • A May 21 webinar on how technology can improve the lending process.
The CDFI Fund is planning six additional webinars. Topics for those webinars will be revealed at a later date, but underwriting, collections, and new product development are among the topics being considered, the CDFI Fund said.

The series is a continuation of webinars that were held last year.

Scaling Up Microfinance is part of the CDFI Fund's Capacity Building Initiatives. The federation has partnered with Opportunity Finance Network to provide the program of specialized training and technical assistance for credit unions and other CDFIs engaged in or working to build their microfinance or small business lending programs.

To register for the webinars, use the resource links.

TDR Guidance Released For NCUA Examiners

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ALEXANDRIA, Va. (4/3/13)--The National Credit Union Administration has shared with credit unions guidance it provided to agency examiners on how to review loan workouts, nonaccrual policies, and regulatory reporting of troubled debt restructurings.

The guidance, which was released to the public in a Tuesday letter to credit unions (12-CU-03), provides additional clarity and consistency related to the review of loan workout programs in credit unions, the agency noted.

The release of this guidance was encouraged by the Credit Union National Association, and CUNA is reviewing the guidance at this time. "We appreciate the NCUA's decision to release this letter and guidance, and plan to review it with our Accounting Subcommittee," CUNA Deputy General Counsel Mary Dunn said.

The NCUA letter and guidance address:

  • Appropriate nonaccrual policies and procedures for loan workouts and TDRs;
  • Revised regulatory reporting requirements for loan workouts;
  • What credit unions should address in a workout policy including controls and decision-support systems consistent with the size and scope of their program;
  • Key components of a sound information system for loan workouts and TDRs; and
  • How examiners will determine which loan workouts are, or are not, TDRs;
  • Other important considerations for NCUA examiners.
NCUA TDR rules effective as of Dec. 31, 2012, allow credit unions to modify TDR loans without having to immediately classify those loans as delinquent. The rules also set consistent standards for the management of loan workout arrangements that assist borrowers, and are intended to eliminate confusion between TDRs and other loan modifications.

Credit unions are also no longer required to report modified-loan information on their 5300 Call Reports. This change affects the delinquency, charge-off and recovery, and specialized-lending schedules, the NCUA has noted.

For the NCUA letter and guidance, use the resource link.

Minority, Women Hirings Up, Says NCUA Report

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ALEXANDRIA, Va. (4/3/13)--The National Credit Union Administration says it has "made work force diversity a top priority," and these efforts have led to a 1.5% increase in minority representation in the agency workforce from Dec. 31, 2011 to Dec. 31, 2012, the agency said in a report to the U.S. Congress. With that increase minorities represented 27% of the agency workforce.

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The NCUA's Office of Minority & Women Inclusion annual report said that the most significant change in diversity representation occurred in executive positions. Minorities rose from 9% to 15% of the total senior staff positions, representing a 6% increase.

Women in senior staff positions also increased from 24%  to 41% of the total senior staff positions, representing an increase of 17%.

The report also updated Congress on the progress of diversity education and outreach efforts.

The agency said it has worked to incorporate greater supplier diversity into its procurement process, and to enhance employee awareness of supplier diversity. The NCUA said it plans in 2013 to offer greater technical assistance resources to minority and women-owned businesses, and conduct greater outreach with these businesses.

Credit unions serving diverse fields of membership have achieved some degree of diversity within their work forces, the NCUA report noted. Minorities account for 30.9% of the credit union work force, and women represent about 70.7% of that work force, according to the report. "Credit unions' work forces are generally diverse and resemble the nation's population," the NCUA said.

The NCUA said it continues to work with other federal agencies to draft joint diversity policy and practice assessment standards, and held roundtables with stakeholders on this issue during 2012. The agency said it is working to finalize these assessment standards, and plans to work with credit unions to educate them about the final assessment standards once they are adopted. The NCUA also noted it "will be burdensome for smaller credit unions to achieve diversity in employment and business activities." Developing a set of diversity assessment standards that can be applied to all financial institutions, including credit unions that are, at times, limited to serving specific geographic areas, could also prove difficult, the NCUA report said.

The Credit Union National Association in a letter sent to the NCUA last year urged the agency to implement diversity standards "in a manner that would minimize the information gathering and reporting burden on credit unions."

NCUA does not have enforcement authority regarding work force diversity standards at credit unions, CUNA has noted.

The NCUA established OMWI in January 2011. It consists of a director, an administrative assistant, a business activities program analyst and two diversity outreach program analysts. The two diversity analysts are responsible for enhancing diversity and inclusion of minorities at all levels in the workforce of the agency and in the credit union industry.

CUNA To Offer Broad List Of Relief Items At Reg Hearing

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WASHINGTON (4/2/13)--Ryan Donovan, senior vice president of legislative affairs for the Credit Union National Association, said Monday that he thinks it is positive development that a House Financial Services subcommittee is billing its upcoming hearings as studies into "regulatory relief," and not of "regulatory burden."

"CUNA testified at 12 regulatory burden hearings in the last Congress.  We testified at zero regulatory relief hearings.  I think it is a signal that (lawmakers) have heard the pleas of credit unions and other community-based financial institutions and are preparing to put a solution on the table," Donovan said.

As a CUNA witness will detail at the upcoming April 10 hearing by the House Financial Services subcommittee on financial institutions and consumer credit, CUNA has a comprehensive package of regulatory relief proposals that it has been sharing on Capitol Hill as reg relief talks grow.

Pamela Stephens, president/CEO of $52-million asset, community-chartered Security One FCU, Arlington, Texas, and a former Texas Credit Union League board chairman,  will urge lawmakers to allow credit unions to have supplemental sources of capital beyond retained earnings, and to increase the cap on credit union member business lending.

The CUNA witness also will recommend other statutory changes that will:

  • Address other means to help credit union meet the needs of their small business members;
  • Improve restrictive Federal Credit Union Act provisions;
  • Improve other provisions of law that affect credit unions; and more.
CUNA also will propose a series of studies, such as a comprehensive look at the credit union examination appeals process.

The House and Senate are on Spring District Work breaks this week and will return to session in Washington, D.C. next week.

TCCUSF, FASB And More Highlighted In CUNA Regulatory Advocacy Report

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WASHINGTON (4/2/13)--This week's Regulatory Advocacy Report takes readers on a fresh tour of the hottest regulatory developments to affect credit unions.

Topics include the National Credit Union Administration's release of improved information regarding the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), the Financial Accounting Standards Board's extension of a comment period on its credit loss proposal, and the Consumer Financial Protection Bureau's request for information on initiatives to promote student loan affordability, to name a few.

The Credit Union National Association's weekly members-only publication on regulatory developments shared the NCUA's questions and answers regarding the costs of the resolution of the five failed corporate credit unions through TCCUSF, as well as the agency's chart intended to explain financial projections for the fund.

CUNA has been urging the agency to provide much more information and clearer information to the credit union system on the handling of the corporate stabilization fund and CUNA senior staff Bill Hampel and Mary Dunn met with key agency officials on this again just weeks before the new information's release.

The NCUA chart shared in the RAR helps to explain the NCUA's projections for the fund.

As reported by CUNA's News Now last week, the top of the range of projected assessments has declined $900 million and total future remaining assessments are now projected to range between $1.6 billion and $3.9 billion, according to the agency. As recently as October 2012, the total range was $1.9 billion to $4.8 billion.

To read the full report, 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.

President Proclaims April Financial Capability Month

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WASHINGTON (4/2/13)--Just before the calendar page flicked to April, President Barack Obama issued a presidential proclamation declaring it National Financial Capability Month in 2013.

"All Americans deserve the chance to turn their hard work into a decent living for their families and a bright future for their children. Seizing that opportunity takes more than drive and initiative -- it also requires smart financial planning.

"During National Financial Capability Month, we recommit to empowering individuals and families with the knowledge and tools they need to get ahead in today's economy," the president said in the proclamation. He cited www.MyMoney.gov and ConsumerFinance.gov as government resources for consumers' financial education.

As reported in News Now (April 1), credit unions are taking this week's kickoff of National Financial Literacy Month seriously, with activities aimed at educating about finances and reemphasizing the value of credit unions. For instance,   the National Credit Union Foundation's Financially Fit Day will occur Wednesday, when credit unions can raise funds to support financial education.

Credit unions also will be participating in two annual national efforts sponsored by the Credit Union National Association:  National Credit Union Youth Week, April 21-27,  and the National Youth Saving Challenge.

And while Financial Literacy Month gives credit unions a good chance to shine a spotlight on their financial education efforts, many are dedicated to helping their members achieve financial fitness 12 months a year, with organizational commitments to financial education.

Use the resource links below to read related News Now stories.

Curry To Succeed Matz For Two-Year FFIEC Term

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WASHINGTON (4/2/13)--As National Credit Union Administration Chairman Debbie Matz winds up her two-year term as head of the Federal Financial Institutions Examination Council (FFIEC), Comptroller of the Currency Thomas Curry was named to succeed her.

Curry said, "It's truly an honor to be named to the chair of the FFIEC. I want to express my appreciation to Chairwoman Matz for her service to the FFIEC over the last two extraordinary years in our industry.

"As the FFIEC looks to the future, I will continue to work with my colleagues to help ensure uniform examinations and standards that balance the financing needs of families, communities, and businesses while preserving the safety and soundness of the banking system."

Matz was named to her term on March 4, 2011, and at that time became the first credit union representative to lead the group in more than 20 years.

The FFIEC was formed in 1978 to promote uniformity in financial institution regulation. It is comprised of the heads of the NCUA, OCC, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau, Council's State Liaison Committee, (SLC) and a member of the Federal Reserve Board.

The SLC consists of five representatives of state banking agencies that supervise financial institutions and the members are designated from the Conference of State Bank Supervisors, the American Council of State Savings Supervisors, the National Association of State Credit Union Supervisors, and the Council for two two-year terms.

NEW: Bank of America Settles With NCUA, Bringing Total Securities Suit Gains To $335M

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ALEXANDRIA, Va. (UPDATED: 4/3/13, 10:20 a.m. ET)--Bank of America has agreed to pay $165 million to the National Credit Union Administration to settle an outstanding NCUA securities lawsuit. This settlement will bring the total amount of funds recovered from agency securities lawsuits to more than $335 million, according to the NCUA.

Bank of America is one of several Wall Street Firms the NCUA has pursued legal action against. Bank of America, J.P. Morgan Securities, RBS Securities, Goldman Sachs and Wachovia are among the firms the agency alleges violated federal and state securities laws when they sold billions in residential mortgage-backed securities that later failed to now-defunct corporate credit unions.

Bank of America did not admit fault under the terms of the settlement.

"As a result of the Bank of America settlement, NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions," NCUA Board Chairman Debbie Matz said in a release. "These settlements and our ongoing lawsuits further NCUA's goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions," she added.

Funds recovered through these legal actions will be used to help reduce the amount of future corporate stabilization assessments on credit unions, according to the NCUA.

The agency has settled with Citigroup, Deutsche Bank Securities, and HSBC, avoiding the cost of litigation and bringing in more than $170 million in funds that were lost due to the corporate credit union investments.

Matz said the NCUA has "a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected. The NCUA "will continue to expend every possible effort to fulfill that important responsibility," she added.

Cheney Report: CUNA Forming Student Loan Working Group

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WASHINGTON (4/1/13)--The Credit Union National Association is developing a working group to address credit union student loan issues with the Consumer Financial Protection Bureau, and recent developments on the student lending front are one of many issues discussed in this week's edition of The Cheney Report.

In the Report, Credit Union National Association President/CEO Bill Cheney recounts a recent CUNA meeting with the CFPB. CFPB staff, he notes, said they have received thousands of complaints on student loans. However, barely any of those complaints have referenced credit union student lending practices. "Once again, the good work you do helps us advocate for credit unions being treated differently," Cheney told credit unions.

Cheney also suggested that the National Credit Union Administration could move to eliminate some student lending burdens created by troubled debt restructuring (TDR) standards.

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

  • An update on Rep. Carolyn Maloney's (D-N.Y.) new bill to impose new limits and caps on overdraft protection plans;
  • The future of the Senate Banking Committee after current chairman Tim Johnson (D-S.D.) retires from Congress next year;
  • CUNA's plans for April 10 House Financial Services financial institutions subcommittee hearing on credit union regulatory burden;
  • Favorable credit union coverage in the media; and
  • The NCUA's updated estimates of 2012 corporate resolution costs.
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.

Guidance Addresses Flood Insurance Reform Effective Dates

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WASHINGTON (4/1/13)--The National Credit Union Administration, along with bank and farm credit agencies, put out guidance to address any confusion that might be surrounding effective dates in the Biggert-Waters Flood Insurance Reform Act of 2012.

That act amended the Flood Disaster Protection Act of 1973 and a couple of its provisions were effective immediately upon enactment. They were:

* Amended force-placed insurance provisions (see resource link for details); and

* An increase in the maximum civil money penalty for an FDPA violation to $2,000, and removal of an annual penalty cap.

However, the joint agency guidance clarifies, there is a longer list of provisions that will not go into effect until their implementing regulations are drafted, discussed and made final.  These changes include requirements that:

* Lenders accept private flood insurance policies if the coverage meets the Act's standards;

* Lenders disclose to borrowers certain information regarding the National Flood Insurance Program; and

* Certain lenders and servicers establish certain escrow accounts for flood insurance premiums and fees for loans (outstanding or entered into after July 6, 2014) secured by residential improved real estate or a mobile home. 

Some financial institutions with less than $1 billion in assets will be exempt from the above escrow requirement. 

The agencies intend to publish escrow regulations in sufficient time for the industry to implement them prior to July 2014, the guidance noted.

The Credit Union National Association will provide more information and a summary of all new rules to credit unions when they are available.  Watch CUNA's News Now.

The guidance was issued by NCUA, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Farm Credit Administration.

Time's Up: All BSA Reports Must Be E-Filed Now

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WASHINGTON (4/1/13)--Time's up! Credit unions and other financial institutions must begin using new, online-only Bank Secrecy Act (BSA) report forms starting today, the Financial Crimes Enforcement Network (FinCEN) reminds.

Suspicious Activity Reports, Currency Transaction Reports, Registration of Money Services Business, and Designation of Exempt Person Reports are among the reformatted reports that must be filed electronically, FinCEN said.

FinCEN said reports that are filed in paper format may be rejected, and returned to the institution that filed them. "Financial institutions that continue to file mandated reports in paper format will fail to meet BSA reporting requirements and may be subject to civil money penalties," FinCEN added.

Use the resource link for the FinCEN advisory.

NCUA Prohibits Four From CU Work

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ALEXANDRIA, Va. (4/1/13)--The National Credit Union Administration has issued orders prohibiting four former credit union employees from any future involvement with federally insured financial institutions.

The following individuals have been banned, according to the agency:
  • Holly Cowan, a former employee of Lawrence County School Employees FCU in New Castle, Pa., pleaded guilty to the charge of embezzlement and income tax evasion. Cowan was sentenced to 15 months in prison, three years of supervised release, and ordered to pay restitution in the amount of $285,641;
  • Lisa Hood, a former employee of AllSouth FCU in Columbia, S.C., was sentenced to five years in prison and five years of probation on charges of financial identity fraud, crimes against a federally insured financial institution and breach of trust with fraudulent intent;
  • Crystal Lankford, a former employee of H.B.E. CU in Seward, Neb., pleaded guilty to the charge of embezzlement. Lankford was sentenced to 45 months in prison, five years of supervised release and ordered to pay restitution in the amount of $633,998.56; and
  • Keiona Rutledge, a former employee of G.I.C. FCU in Cleveland, Ohio, pleaded guilty to the charges of trafficking and possessing criminal tools. Rutledge was sentenced to one year of community control and ordered to pay a $500 fine.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

For more on the orders, use the resource link.

GSE Reform Will Remain Hot Topic As Congress Returns

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WASHINGTON (4/1/13)--The U.S. Congress is scheduled to return to Washington early next week, and housing issues are likely to remain a front-burner issue.

Housing policy changes discussed in the U.S. House, the Senate, and the Obama administration in recent months have ranged from 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 Senate Banking Committee earlier this month met to discuss potential bipartisan housing finance changes, and the committee chairman, Sen. Tim Johnson (D-S.D.), said during that hearing that he would work closely with ranking committee member Sen. Mike Crapo (R-Idaho) and hold additional committee hearings before developing a comprehensive reform bill.

Crapo noted that Republicans and Democrats may not completely agree on how best to move forward, but said that disagreement should not preclude them from beginning negotiations.

However, Johnson said he is concerned by the prospect of a fully privatized mortgage financing system, noting that such a system could "place homeownership out of reach for many middle income families and rural communities."

In the Congress' other chamber, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has made housing finance reforms a top priority of his committee, and the chairman has held several hearings on the topic.

At a March 19 hearing, Hensarling and Federal Housing Finance Agency Acting Director Ed DeMarco agreed that Congress should get to work and develop a plan for the future of the U.S. mortgage market. Hensarling has called for a housing finance system that is both sustainable and competitive. He wants to see the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, to be shut down.

DeMarco noted during that hearing that only Congress can abolish or modify the GSE charters "and set forth a vision for a new secondary market structure."

There is broad consensus that comprehensive housing finance reform will not arrive quickly or easily. Meanwhile, bills that address other aspects of the housing market also have been introduced recently.

In the House, the ranking financial services committee member, Rep.  Maxine Waters (D-Calif.), reintroduced legislation meant to strengthen the Federal Housing Administration (FHA) and help ensure that agency's long-term solvency.

A separate Senate bill, the Jumpstart GSE Reform Act, would prohibit any increase in the guarantee fees charged by 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. (See March 15 News Now story: Housing Policy Bills Unveiled In House And Senate.)

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.

Editor's note: This article is the first ihn a two-part series on housing policy reform. Watch News Now this week for a look at related regulatory actions.

CUNA: CFPB Reg Z Changes Unlikely To Impact Many CUs

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WASHINGTON (4/1/13)--In a new Final Rule Analysis, the Credit Union National Association notes that the Consumer Financial Protection Bureau's recent amendments to Regulation Z will likely benefit some credit card issuers, but should not have a major impact on credit union issuers directly, because credit union fees on members' credit card accounts are typically well below the limit.

Regulation Z generally limits the total amount of fees that an issuer may charge on a consumer's credit card account to 25% of the credit limit in effect when the account is opened.

The CFPB's final rule, which came into effect on March 28, amends Reg Z so that the limitation applies only during the first year after account opening.

The CFPB action specifically amends Section 1026.52 of Reg Z. In the Final Rule Analysis, CUNA Senior Assistant General Counsel for Regulatory Advocacy Luke Martone notes that all methods of compliance under previous regulation remain available to card issuers. The CFPB regulatory measure states that card issuers who were previously in compliance with Section 1026.52(a) of Reg Z "need not take any additional action to remain so."

For the full Final Rule Analysis, use the resource link.