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UPDATED: Senate Banking postpones finance reform markup

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WASHINGTON (4/29/14, UPDATED 10:45 A.M. ET)--The Senate Banking Committee postponed the markup of S. 1217, the Johnson-Crapo Housing Finance Reform bill, in response to committee members, according to a statement from Chairman Tim Johnson (D-S.D.).
 
"As all of the members already know, there continue to be important discussions to build a larger coalition supporting the bill. While we have the votes to report the bill out today, members of the Committee have asked for a brief delay to try to work out additional issues prior to a final vote," Johnson's statement said. "I have talked with ranking member (Mike) Crapo, and we will continue working with interested members on both sides. Staff will notify members when the committee is set to reconvene in the coming days."
 
Important changes backed by the Credit Union National Association were included in the draft manager's amendment to S. 1217 prior to the vote that is now scheduled for Wednesday. The Senate Banking Committee is expected to vote on numerous amendments to the legislation's provisions.
 
"Markup of this legislation is one of the most significant activity to take place in the Banking Committee since the Dodd-Frank Act," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said Monday. He added that lawmakers will be using the amendment process to continue to build the bill's strong bipartisan support while trying to ensure that any changes do not undermine the intent of the legislation.
 
CUNA, as part of a coalition with the National Association of Federal Credit Unions and the Independent Community Bankers of America, sent a recent letter to key lawmakers seeking changes to the draft bill. In part, the changes would address:
  • The bill's regulatory burden on credit unions and community banks;
     
  • Issues to ensure that the housing finance market remains accessible to credit unions and other smaller institutions; and
     
  • Giving credit unions, and community banks, representation in governance of the new federal entities envisioned under the proposal.
The April 11 letter was addressed to Johnson and Crapo (R-Idaho)--the chief sponsors of the housing finance reform bill.
 
The Senate bill proposes to replace government-sponsored enterprises Freddie Mac and Fannie Mae with a single agency that would be supported by the housing industry. It would also set stricter underwriting standards for new mortgage loans--and reduce taxpayer exposure to housing market busts.
 
CUNA, along with other major financial trades groups, backed an expected amendment Monday regarding the new proposed agency--the Federal Mortgage Insurance Corporation (FMIC). CUNA expressed concern that, as proposed, the FMIC would "create yet another prudential regulator with sweeping authority over the primary and secondary mortgage markets."
 
CUNA warned that would result in unnecessary complications for financial institutions, consumers and the broader mortgage market and backed a bipartisan amendment introduced by Sens. Jerry Moran (R-Kan.) and Joe Manchin (D-W.Va.) to improve the FMIC governance structure.
 
CUNA also joined the effort by another broad coalition to defuse a threat posed by a new eminent domain scheme. CUNA is backing an amendment from Sens. Patrick Toomey (Penn.) and Tom Coburn (Okla.).  The Republican duo are expected to offer language that would ban any municipality from using its eminent domain power to acquire performing but underwater mortgage loans held by private-label mortgage-backed securities and then refinancing the loans through programs administered by the Federal Housing Administration. Such a maneuver, CUNA and the coalition said, could devastate investor confidence in the country's mortgage markets.
 
CUNA's Donovan underscored Monday that the Senate Banking Committee votes occur within a "very fluid situation." In addition to the manager's amendment circulated to CUNA and other stakeholder over last weekend, there are several dozen more amendments that could be offered during the markup process.
 
"A lot of pre-markup negotiations have taken place over the last few weeks," Donovan said. "The pace and depth of these discussion have accelerated over the last two weeks. We expect the bill will clear the committee, the question is by what margin."

NEW: McWatters NCUA nomination approved by Senate Banking Committee

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WASHINGTON (4/29/14, UPDATED 10:25 a.m. ET)--The nomination of J. Mark McWatters to become a member of the National Credit Union Administration board was just cleared to go to the full U.S. Senate for final confirmation.

McWatters was nominated in December to fill Republican Michael Fryzel's spot on the NCUA board. Fryzel has been serving since July 2008 and his term has expired.

During his March nomination hearing before the Senate Banking Committee--the panel that just voted to clear his name for Senate floor action--McWatters said he intends to work with NCUA board members, agency staff and external stakeholders "in an open and respectful manner, with the goal of finding a common ground and working cooperatively through any differences."

He said that is the approach that has served him well in past positions, which include service on the TARP Congressional Oversight Panel, and as counsel for Rep. Jeb Hensarling (R-Texas), who is chairman of the House Financial Services Committee, and in his current position as assistant dean for graduate programs at Southern Methodist University's School of Law in Dallas.

If fully confirmed by the Senate, as expected, McWatters will join NCUA Chair Debbie Matz and board member Rick Metsger to fill out the three-member board.

Also approved by the committee were the nominations of Stanley Fischer to be a member and vice chairman of the Federal Reserve Board of Governors; Jerome Powell to be a member of the Federal Reserve Board of Governors; Lael Brainard to be a member of the Federal Reserve Board of Governors; and Gustavo Velasquez Aguilar to be an assistant secretary of the Housing and Urban Development.

FHFA gets $280M settlement from Barclays action

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WASHINGTON (4/29/14)--Barclays Capital agreed to pay the Federal Housing Finance Agency $280 million to settle allegations it sold faulty mortgage bonds to Fannie Mae and Freddie Mac. The bonds were among those that helped create the financial crisis in 2008.

Under reported terms of the deal, Barclays will pay $227 million to Freddie Mac and $53 million to Fannie Mae. The settlement resolves a suit that was brought against the bank and three of its executives in addition to claims brought in another suit against Ally Financial. The suit against Barclays covered approximately $4.9 billion in mortgage-backed securities sold by the bank to the  government-sponsored enterpreises.

Late last month, the FHFA announced similar settlements in cases involving Bank of America, Countrywide Financial, Merrill Lynch and others. Those settlements provide for an aggregate payment of around $9.33 billion by Bank of America.

The agency has now settled 13 of the 18 securities suits it brought against large banks in 2011. The FHFA has said it remains committed to satisfactory resolution of pending lawsuits.

The National Credit Union Administration has taken its own actions against Wall Street firms. In November, JP Morgan agreed to pay the NCUA $1.4 billion in a settlement over mortgage-backed securities issued, underwrote and sold to now-defunct corporate credit unions in 2006 and 2007. The wholesale lenders collapsed in 2009 due, in part, to the faulty instruments.

Heartbleed, DDoS risks covered in cybersecurity newsletter

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WASHINGTON (4/29/14)--New details on the OpenSSL Heartbleed vulnerability and distributed denial of service (DDoS) attacks, as well as resources to help credit unions and others deal with these threats, are provided in the April edition of the Financial Services Sector Coordinating Council for Critical Infrastructure's industry newsletter.

Items covered in the publication include:
  • The release of the National Institute of Standards and Technology cybersecurity framework;
  • Federal Financial Institution Examination Council warnings on the risks of cyberattacks on ATMs and card authorization systems;
  • The creation of the Critical Infrastructure Cyber Community C3 Voluntary Program; and
  • The U.S. Senate Committee on Commerce, Science, and Transportation's report on the 2013 Target data breach.
For the newsletter, use the resource link.

Fed Banks offer update on payments system project

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WASHINGTON (4/29/14)--Possible approaches to improving the payments system, quickening the pace of payments and enhancing network security are among the items covered in the Federal Reserve Banks' latest update on their Payment System Improvement project.
 
The Fed banks are working to address potential gaps, as well as opportunities, in the payments system, including payment speed, closed payment communities, and international, mobile, and traditional payment channels. The Fed is also exploring where it fits in the payment system going forward.
 
Last year, the Fed banks released a paper on potential payments system changes, and held a series of town hall-style discussion meetings across the country, to help collect public comment on these issues.
 
The banks recently released an update on how the project has progressed during the research phase.  In that update, they share highlights on their research regarding end-user demand for payment attributes. The banks plan to publish a follow-up paper on their next steps in the second half of this year.
 
The Credit Union National Association, its Payments Subcommittee and credit unions continue to work with the Fed banks on this project.
 
CUNA late last year filed a comment letter on the payment system issue, encouraging the Fed banks to create a payments framework that facilitates the ability of credit unions and small financial institutions to access and utilize the latest developments in payments, without undue regulatory restrictions.

The banks must also fully consider the costs and benefits, and ensure credit unions will not be negatively impacted by any changes to the payments system, CUNA said.

For more on the project, use the resource link.

CUNA seeks CU comments on chartering, FOM changes

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WASHINGTON (4/29/14)--The Credit Union National Association is seeking credit union comment on proposed amendments to credit union chartering and field of membership rules regarding associational common bond requirements.
 
The National Credit Union Administration at last week's open board meeting proposed amendments to its chartering manual which, in part, would expressly establish a threshold requirement that an association must not be formed primarily for the purpose of providing credit union membership.
 
If approved, the rule would expand the criteria for considering whether an association meets NCUA's requirements to be added to a federal credit union's field of membership.

If an association satisfies the common bond requirements based on a totality of the circumstances, the group qualifies for inclusion in the federal credit union's field of membership.
 
Comments are due to the agency 60 days after the plan is published in the Federal Register. The plan is expected to be published soon.
 
For the CUNA comment call, use the resource link.

In Congress: April 29 McWatters and GSE reform votes, May 1 for patent reform

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WASHINGTON (4/28/14)--As the U.S. Congress returns to session this week after a two-week district work period, several key credit union items are on the agenda: Mark-ups of housing finance and patent reform bills are likely to be on the schedule, and a confirmation vote on J. Mark McWatters' nomination to join the National Credit Union Administration is also expected.

The Senate Banking Committee markup of housing finance reform legislation has been scheduled for April 29, and while there have been weeks of speculation about a delay of the vote, as of late Friday the date remained steady.  A revised version of reform legislation, known as Johnson-Crapo  after the senators who authored it, could be released today or tomorrow.

As it stands, the bill 425-page draft bill takes significant steps to ensure that credit unions will continue to have access to a functioning, well-regulated, well-capitalized secondary mortgage market. The bill seeks to overhaul the housing finance market and address the issues created by the current government ownership of Fannie Mae and Freddie Mac.

The Credit Union National Association has advocated for credit union priorities on several fronts, including meetings with White House officials, Federal Housing Finance Agency Director Mel Watt and members of Congress. CUNA has encouraged policymakers to be mindful of the existing regulatory burdens of credit unions and other mortgage servicers as discussions on housing finance reform proceed. Legislators and other officials must proceed judiciously and not layer additional regulatory authority on top of existing regulatory regimes that address mortgage servicing, CUNA has said. 

CUNA has also emphasized that a new system must ensure that the housing finance market remains accessible to credit unions and other smaller institutions and that structure must be in place to prohibit domination by the country's biggest banks.

Also on this week's radar--McWatters' nomination will also be voted on during a Tuesday April 29 executive session of the Senate Banking Committee.  The panel will also vote on the Federal Reserve nominations of Stanley Fischer, Jerome Powell and Lael Brainard. The committee will also consider Gustavo Aguilar's nomination to be an assistant secretary for the U.S. Department of Housing and Urban Development.

Also important to credit unions, the Senate Judiciary Committee's bill is scheduled to vote May 1 on its Patent Transparency and Improvements Act (S. 1720), which, in part, would aid credit unions and other businesses that have been targeted by patent "trolls," who manipulate the patent system for their own gain. The markup is scheduled to occur during a May 1 committee executive session.

Senators want safeguards in card marketing to college students

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WASHINGTON (4/25/14)--The U.S. Department of Education should use its authority to prevent banks offering school-themed financial products to college students from charging high fees and aggressively marketing those products to students, a group of 23 senators said last week.

In a letter to Education Secretary Arne Duncan, Sen. Elizabeth Warren (D-Mass.) and co-signers noted that many colleges partner with banks to offer debit cards, prepaid cards or other products to students. The letter said student aid dollars in some cases may be diverted away from their intended purpose by high fees and high interest rates associated with these products.

According to the Consumer Financial Protection Bureau, there were 617 agreements between colleges and financial firms in 2012, with the firms paying colleges a combined $50 million. The agreements resulted in more than 1 million accounts being initiated.

The CFPB last September reported that details about college and university-sponsored accounts are often difficult to obtain. Consumers wanting details about these deals might only find them after filing requests under state open records laws.

The bureau called on financial institutions to be more transparent about commercial deals with colleges and universities. The U.S. Governmental Accountability Office has also reported on this issue.

"When colleges partner with financial institutions and push students into putting their federal student aid refunds into high fee accounts, it puts our federal investment at risk. Students should be able to make unbiased choices about the financial products that work best for them. Colleges should be recommending the financial products that provide the best deal to students, not the biggest financial reward for the institution," the senators wrote.

They called on the Department of Education to:
  • Ensure students can deposit aid into personal accounts without delay or penalty;
     
  • Prohibit colleges from entering into agreements with banks or other firms to offer products that charge fees for the disbursement and use of Title IV student aid;
     
  • Ensure students receive unbiased information about how to access federal student aid;
     
  • Ban revenue sharing deals between colleges and financial institutions; and
     
  • Require colleges to post financial agreements with banks on their websites, and to submit those agreements to relevant authorities for periodic review.
For the full letter, use the resource link.

CUNA encourages CU comment on CFPB remittances plan

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WASHINGTON (4/28/14)--Credit unions have until May 27 to comment on the Consumer Financial Protection Bureau's proposed modifications to its international remittance transfers rule. The Credit Union National Association is encouraging credit unions to comment as the trade association works for improvements to the proposal, including urging an exemption level well over the 100 transfers per year that the CFPB currently provides.

The proposed rule would extend for an additional five years a temporary provision that permits federally insured credit unions and other depository institutions to estimate certain remittance pricing disclosures. This temporary provision is set to expire on July 21, 2015.

Also, the proposal would make several clarifications and technical corrections, including to:
  • Consider whether U.S. military installations abroad should be considered being located in a U.S. state or a foreign country for purposes of the remittance rule;
  • Clarify that transfers from accounts primarily used for personal, family or household purposes would be subject to the remittance rule, but transfers from non-consumer accounts would not be subject to the rule;
  • Clarify that faxes are considered writings and would not be subject to additional requirements for electronic disclosures; and, separately, in certain circumstances, a remittance transfer provider may conduct the transaction orally and entirely by telephone after receiving a remittance inquiry from a consumer in writing (e.g., if a sender physically abroad a U.S. branch of a sender's institution attempts to initiate a transfer by first sending a mailed letter, and further communication by letter may be impractical.); and
  • Clarify that a provider's failure to deliver a transfer by the disclosed date of availability is not an error if such failure was caused by a delay related to a necessary investigation or other action to address Bank Secrecy Act, Office of Foreign Assets Control, or similar requirements; and, separately, to clarify remedies for certain errors.
CUNA continues to advocate to the CFPB to improve the remittance rule for credit unions, and is interested in how these proposed changes would affect the processing of international funds transfers at credit unions, corporate credit unions and other payment providers.

Use the resource link to access CUNA's Comment Call.  CUNA's comment deadline is May 12.

CDFI Fund announces five new 'capacity building' webinars

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WASHINGTON (4/28/14)--There are five new technical assistance webinars being offered to Community Development Financial Institution Minority Depository Institutions (CDFI MDIs) through the U.S. Treasury Department's CDFI Fund.
 
The CDFI Fund announced Friday that the new webinars will be provided as part of its Capacity Building Initiative's "Preserving and Expanding CDFI Minority Depository Institutions" series and will be presented between May and September.
 
The webinars will provide targeted online training and are designed to maximize the reach of the CDFI Fund's training series within the CDFI MDI sector, but are appropriate for all CDFIs.
 
The upcoming webinars include:
  • Creating a Culture of Risk Management, 4 p.m. (ET) May 12;
     
  • Attracting and Retaining Talent," 3 p.m. (ET) June 9;
  • Socially Aligned Funding for CDFI MDIs Part One: Introduction to Alternative Sources of Investments, 3 p.m. (ET) July 23;
  • Socially Aligned Funding for CDFI MDIs Part Two: Strategies for Communicating Your Story and Demonstrating Your Impact, 2 p.m. (ET) Aug. 27; and
  • CDFI MDI Marketing to Customers, 2 p.m. (ET) Sept. 24.
Use the resource link for more information and to register.

NCUA approves modified stress test rules

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ALEXANDRIA, Va. (4/25/14)--The National Credit Union Administration Thursday adopted a final rule on capital planning and stress testing for the largest credit unions. The final includes changes recommended by the Credit Union National Association, but CUNA said it still believes the rule is unnecessary.
 
CUNA President/CEO Bill Cheney said after the agency's action, "We appreciate that the agency has adopted some changes that we suggested--such as not disclosing stress test results publicly--and has agreed to allow credit unions to apply, after three years, to have results of their own tests used for these purposes.
 
"However, CUNA did not support this proposal. While we acknowledge the utility of stress tests, we see no need for a rule. Further, the agency has not sufficiently substantiated a need for the use of third parties to conduct stress testing of covered credit unions, even for a finite period, rather than reviewing the assumptions and results of credit unions' own stress tests."
 
Cheney also highlighted that the cost of the program--which must be borne by all federally insured credit unions--is now up to $5 million for the first year, which CUNA believes is a high and unnecessary cost.
 
The rule, effective 30 days after publication in the Federal Register , applies to federally insured credit unions with assets of $10 billion or more. It passed by a vote of 2-1, with NCUA board member Michael Fryzel casting the dissenting vote. Board member Rick Metsger signaled a willingness to consider additional changes to the rule.
 
The agency plans to issue guidance on the final rule and CUNA is urging the agency to allow input from CUNA and the state leagues, as well as from affected credit unions, on the document before it is made final.
 
Under the rule, covered credit unions must submit capital plans annually to NCUA, and the plans must meet specific requirements reflecting risks and complexity of each covered credit union. In addition, affected credit unions must conduct capital plan assessments over each quarter of a three-year planning horizon. The final rule requires a minimum stress-test capital ratio of 5%.
 
The NCUA removed a specific requirement under the proposal to test the impact of interest rate shocks on the net economic value of the credit union. Instead, the final rule requires that covered credit unions perform reverse stress testing as part of their capital planning.
 
Further, the NCUA changed the final rule to strengthen the provisions regarding its consultation with the applicable state supervisory authorities, a change CUNA noted it supported.

For more on the final stress test rule, use the resource link to access the NCUA document.

Senate Banking sets April 29 vote for McWatters

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WASHINGTON (4/25/14)--The Senate Banking Committee is set to vote April 29 on the nomination of J. Mark McWatters for a post on the National Credit Union Administration board, as well on three Federal Reserve Board nominations and one for the U.S. Department of Housing and Urban Development.

NCUA nominee J. Mark McWatters is shown here testifying before the Senate Banking Committee in March. He said that, if confirmed, he would "work diligently to ensure the continued integrity and safety and  soundness of our nation's credit union system." (CUNA Photo)
Just a little more than a month ago, McWatters appeared before the banking panel to testify on behalf of his qualifications for the NCUA job. At that time he pledged to "work diligently to ensure the continued integrity and safety and  soundness of our nation's credit union system in an ever-evolving marketplace."
 
Addressing one of the credit union industry's current hot-button issues, McWatters told Senate Banking Committee members that examining the overall issue of risk-based capital for credit unions in general and the NCUA's current proposal specifically would be high on his list of priorities if confirmed.
 
If the committee votes to approve McWatters' nomination, it will then send his name to the Senate floor for final confirmation.  McWatters would replace board member Michael Fryzel, whose term ended officially  Aug. 2.
 
The committee will also vote next Tuesday on the qualifications for Stanley Fischer, as a member and vice chairman of the Federal Reserve Board; Jerome Powell, as Federal Reserve Board governor; Lael Brainard, as a Fed governor; and Gustavo Aguilar, to be an assistant secretary for the U.S. Department of Housing and Urban Development.

April 29 is also the date the Senate Banking Committee has scheduled a vote on the Johsnon-Crapo housing finance reform draft.

Associational common bond rules may be tweaked for clarity

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ALEXANDRIA, Va. (4/25/14)--Changes may be coming to the National Credit Union Administration's  chartering and field of membership (FOM) rules regarding associational common bond requirements. The agency proposed amendments Thursday to its chartering manual which, in part, would expressly establish a threshold requirement that an association must not be formed primarily for the purpose of providing credit union membership.
 
That threshold reflects the agency's longstanding interpretation of the Federal Credit Union Act. During the open board meeting discussion of the requirements, NCUA Chairman Debbie Matz said the proposal is the result of enforcement actions taken where credit unions advertised open FOMs that did not reflect any limitations.
 
If approved, the rule would expand the criteria for considering whether an association meets NCUA's requirements to be added to a federal credit union's field of membership. If an association satisfies the common bond requirements based on a totality of the circumstances, the group qualifies for inclusion in the federal credit union's field of membership.
 
Importantly, the rule would support regulatory relief by  granting automatic inclusion to certain categories of groups, consistent with actions the agency has approved in the past. Such groups include alumni associations, religious organizations including churches, homeowner associations, scouting groups, electric cooperatives, and labor unions, as long as such groups meet the rule's requirements.

Comments are due within 60 days of the proposal's publication in the Federal Register .
 
For more on the proposal, use the resource link.

NCUSIF report shows drop in low-ranked CUs

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ALEXANDRIA, Va. (4/25/14)--The National Credit Union Share Insurance Fund ended the first quarter of this year with an equity ratio of 1.30% and reserves at approximately $227.5 million, according to the National Credit Union Administration's quarterly update delivered during a Thursday open board meeting.
 
The NCUA did not assess a Share Insurance Fund premium in 2013, and if the current equity ratio holds steady, a premium would be unlikely this year.  However, the NCUA said the board will make that determination for 2014 at its open meeting on July 31.
 
Click to view larger image Source: NCUA
Of the $227.5 million in reserves, $19.3 million is allocated for specific credit unions. Six federally insured credit unions failed during the first quarter of 2014. The total amount of losses associated with those failures was $18.6 million. A total of 17 credit unions were liquidated in 2013.

The NCUA also reported that there are currently 306 low-rated CAMEL 4 and 5 credit unions. They hold approximately $11.9 billion of insured shares, which is about 1.4% of total insured shares.  That 1.37% is a significant improvement since the peak in December 2009 when CAMEL 4 and 5 credit unions represented of 5.72% of insured shares.
 
The agency staff also noted that there are 1,471 CAMEL 3 credit unions, which represent 11.02% of insured shares, or $95.5 billion. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 12.39% of total insured shares, according to the agency report.

No extension for RBC comments, Matz tells CUNA, NAFCU

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WASHINGTON (4/25/14)--National Credit Union Administration Chairman Debbie Matz has again said no to a joint request by the Credit Union National Association and National Association of Federal Credit Unions to extend the comment period for the agency's risk-based capital proposal.
 
The credit union trade associations have twice requested a 90-day extension based on concerns that the current May 28 deadline does not give credit unions enough time to analyze the proposal's impact on their individual operations and to prepare their responses.
 
"Given the health of the credit union system, we do not see the need to rush this rule and believe more time for comments will also benefit the agency through the production of well-reasoned letters," CUNA President/CEO Bill Cheney and NAFCU President/CEO Dan Berger argued.
 
Matz in her response delivered Thursday noted her assurances that the agency is "prepared to make those changes to the proposal we conclude are fundamentally sound and justifiable from a public policy perspective." She also said that the RBC comment period is "one of the longest in NCUA history."
 
"I agree that that history is being made here," CUNA's Cheney said, "The proposed rule is one of the most significant ever for credit unions. For that reason I still believe credit unions deserve more time to consider all of the ways the proposal will affect them--and 90 days, or even 120, is just not enough."

NEW: NCUA approves modified stress test rules

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ALEXANDRIA, Va. (4/24/13, UPDATED 11: 28 a.m. ET)--A new rule on stress tests for large credit unions was adopted today by the National Credit Union Administration. It includes changes recommended by CUNA, but CUNA still believes the rule is not necessary.
 
CUNA has commented to the agency that new regulations are not needed to ensure that credit unions conduct robust stress tests and comprehensive capital planning because it is in their own best interests, and the best interest of their members, to do so.
 
The NCUA proposed the rule last October. It will require federally insured credit unions with assets exceeding $10 billion to develop and maintain capital plans, and undergo annual stress tests.

CUNA-endorsed changes made to the rule include dropping a provision that would have required public disclosure stress test results. Also under the approved rule, credit unions can apply after three years to have their own stress test results used, instead of NCUA's, for NCUA's review.

Also, the agency increased its cost projection to a more realistic $5 million, up from $4.2 million, for implementation of the rule in just the first year.  That price tag will be shouldered by all federally insured credit unions.

The stress test requirements, as adopted, will require covered credit unions to conduct specific capital analyses to evaluate how changes in variables, parameters and inputs used by credit unions in their capital plans could affect their capital.

CUNA also had recommended that, if adopted, the rule should:
  • Require the NCUA to coordinate with the Federal Reserve Board to have the Fed conduct the reviews of the credit unions' tests;
  • Not to subject affected credit unions to sanctions for failure to meet capital planning or stress test benchmarks; and,
  • Not establish a formal process for rejecting a credit union's capital plan.
The rule passed by a vote of 2-1, with NCUA board member Michael Fryzel casting the dissenting vote.  Board member Rick Metsger signaled a willingness to consider additional changes to the rule.

Mortgage-closing pain points ID'ed, CFPB plans action

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WASHINGTON (4/24/14)--The complexity and size of mortgage closing document packages, and the short amount of time given to review those documents, are creating issues for homebuyers, the Consumer Financial Protection Bureau said in a report released Wednesday. The bureau has reacted to these reported issues by planning a new pilot program that will examine how technology can be used to ease the closing process.
 
The CFPB report, "Mortgage closings today," was developed through examinations of consumer complaints--or mortgage-closing "pain points." The report notes consumers are:
  • Frustrated by the short amount of time they have to look over the closing documents, and the pressure some put on them to move quickly and sign the documents they often do not understand;
  • Overwhelmed by the sheer volume of paperwork that is provided to help them better understand the closing process and to fulfill various regulatory requirements; and
  • Confused by the legalese and technical jargon contained in many closing documents.
"When the CFPB's new Know Before You Owe mortgage rule takes effect, it will address some of these challenges" the bureau said in a Wednesday release. "However, this rule does not apply to any of the other paperwork consumers receive at the closing table. The bureau only has jurisdiction over a few forms in the closing stack. More needs to be done to improve the closing experience for consumers," the CFPB release added.
 
Electronic closings (e-closings) may be one way these closing issues can be avoided, and the overall process can be improved, the CFPB said. E-closings are being used in some instances but have not been widely adopted, the CFPB said.
 
As part of its pilot program, the CFPB said it plans to:
  • Test whether educational materials such as document summaries, term definitions or process explanations that can be reviewed prior to the closing table help improve the process for consumers, and whether reordering these documents can change the consumer process;
  • Study technologies that could help consumers see their closing documents ahead of time, and whether earlier availability of closing documents will help consumers; and
  • Test tools that will help spot closing document errors and discrepancies.
The goal of the project is not to write a new rule, the CFPB said.
 
For more, use the resource link.

CUNA, CUANY thank lawmakers seeking RBC plan changes

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WASHINGTON (4/24/14)--The Credit Union National Association and the Credit Union Association of New York thanked House Financial Services Committee members Peter King (R-N.Y.) and Gregory Meeks (D-N.Y.) for their concern expressed regarding the across-the-board approach set forth in a recent risk-based capital proposal.
 
Such an approach, currently being considered by the National Credit Union Administration, "would be burdensome for credit unions, expensive (potentially drawing up to $7 billion in credit union capital out of the economy), and likely impose on credit union members higher loan rates and service fees, and diminish members' return on savings," CUNA President/CEO Bill Cheney and CUANY CEO William Mellin wrote.
 
King and Meeks last week took their concerns to the NCUA and asked their House colleagues to join in the fight to amend the RBC rule in a letter to the agency. (See April 21 News Now: Lawmakers seek colleagues' backing on RBC plan changes.)
 
The legislators' letter encouraged the NCUA to:
  • Take into account the cost and burden of implementing new risk-based capital requirements beyond the current leverage ratio;
  • Provide justification and more clarity as to why the proposed risk weights differ from those applied to other community financial institutions; and
  • Give credit unions more time than the proposal's allotted 18 months to come into compliance after it is finalized.
"We strongly support your shared view, as expressed in your letter to [NCUA] Chairman Matz, that certain changes and clarifications be made to ensure that a rule does not unduly burden credit unions, and does not adversely affect healthy credit unions' ability to meet the needs of their members," Cheney and Mellin said.

CFPB reported to be considering changes to QM loan fees

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WASHINGTON (4/24/14)--The Consumer Financial Protection Bureau is expected to ease its rules setting fees for Qualified Mortgage loans, as defined under the bureau's Ability-to-Repay rules, American Banker reported Wednesday.
 
The article quoted Leonard Chanin, a partner at Morrison & Forester who is the former head of regulation at the CFPB.
 
The existing CFPB rule on QM fees paid to affiliates are restricted to 3% of the loan amount, and that must include points. Chanin told American Banker that he has heard from unofficial sources that the agency is working to clarify the ATR rule.
 
He said addressing fees passed through an affiliate would be an area that would be relatively easy to fix or clarify. The article said that Richard Andreano, an attorney at Ballard Spahr, agreed with Chanin's assessment, adding that he expects the CFPB to address the issue when it releases technical changes this spring.
 
The Credit Union National Association has noted the QM rule's 3% limitation on points and fees for a qualified mortgage loan may be problematic for some credit unions, and has also said the rule's total debt-to-total-monthly-income ratio of 43% should be expanded.
 
As CUNA Deputy General Counsel Mary Dunn told Bloomberg Business News Americas back in December, there are many creditworthy borrowers with debt-to-income ratios that exceed the limits proposed in the QM regulations. "You can still demonstrate an ability to repay a loan, but have a debt-to-income ratio that is higher than 43%," Dunn said.

Data breaches could have been avoided: Verizon report

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WASHINGTON (4/24/14)--A new Verizon data security report reveals that many point-of-sale (POS) breaches could be prevented by taking basic security enhancement steps. Those steps include limiting remote access to networks, using POS devices only for their intended purpose, updating antivirus software and providing two-factor identification on the perimeter of networks.

The report, released Wednesday, was compiled from data on 1,367 confirmed data breaches and 63,437 security incidents that occurred in 95 separate countries. Fifty organizations provided information for the report.

Click to view larger image Source: Verizon
The year 2013 may be tagged as the "year of the retailer breach," but a more comprehensive assessment of the information security risk environment shows it was a year of transition from geopolitical attacks to large-scale attacks on payment card systems, Verizon said.

Through its data analysis, Verizon found that nine patterns described 92% of the confirmed data breaches cited in the report. "We find it simply astounding that nine out of 10 of all breaches observed by 50 global organizations over a full year can be described by nine distinct patterns," report author Wade Baker wrote.

The nine patterns are:
  • Denial of service attacks;
  • Crimeware;
  • Cyber-espionage;
  • Web application attacks;
  • Insider misuse;
  • Miscellaneous errors;
  • Physical theft and loss;
  • Payment card skimmers; and
  • POS intrusions.
The Verizon analysis found that:
  • Web app attacks accounted for 35% of breaches; and
  • POS intrusions accounted for 14% of breaches.
Web app attacks will continue to compromise networks if organizations do not regularly test their network and software security, and update their computer systems, Verizon said.

"Most organizations cannot keep up with cybercrime--and the bad guys are winning," Baker wrote. "But by applying big data analytics to security risk management, we can begin to bend the curve and combat cybercrime more effectively and strategically," he added.

Overall, Baker said, "organizations need to realize no one is immune from a data breach. Compounding this issue is the fact that it is taking longer to identify compromises within an organization--often weeks or months, while penetrating an organization can take minutes or hours."
 
For the full Verizon report, use the resource link.

Ala. LICU teaches 'How to Win the Money Game'

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ALEXANDRIA, Va. (4/24/14)--Tuscaloosa (Ala.) CU's efforts to provide 450 participants with credit counseling, resume-writing help and other job and educational assistance were highlighted in this month's edition of the FOCUS eNewsletter.

FOCUS is published monthly by the National Credit Union Administration's Office of Small Credit Union Initiatives. Tuscaloosa CU, a designated low-income credit union, used Community Development Revolving Loan Fund grant money to cover many costs of the West Alabama Education and Job Fair, including:
  • Creating a financial literacy curriculum, including a class called "How to Win the Money Game," on budgeting and personal finance;
  • Reproducing materials for attendees;
  • Securing event space; and
  • Marketing the event.
A total of 28 companies and 10 social service agencies took part in the event, and loan officers from other local credit unions provided counseling for those in attendance. Attendees could also register with employment services and create new resumes stored on their own new flash drives. 

Tommy Cobb, president/CEO of the $61 million-asset credit union, said his credit union would not have had the money needed to put on the event without an NCUA grant. There had never been a citywide job fair in Tuscaloosa.

For more of this month's FOCUS eNewsletter, use the resource link.

CUNA ready to raise QM issue in latest high-level housing finance reform meetings

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NEW YORK (4/24/14)--Credit Union National Association Housing Finance Reform Task Force member Bill O'Brien Tuesday attended the latest Obama administration meeting with stakeholders on housing finance reform. 
 
O'Brien, president/CEO of $886 million-asset Suffolk FCU, Medford, N.Y., participated in a roundtable discussion in New York headed by Department of Housing and Urban Development Secretary Shaun Donovan. The meeting followed by one day an exclusive meeting between White House and CUNA officials to discuss credit union priorities regarding housing finance reform policy issues.
 
Also on Wednesday, in Washington, D.C., CUNA attended the final White House group meeting of housing finance reform stakeholders. Deputy General Counsel Mary Dunn and Assistant General Counsel for Special Projects Robin Cook stressed what small lenders need in terms of setting up the Federal Mortgage Insurance Corp. while winding down Fannie Mae and Freddie Mac, as proposed by draft Senate legislation.
 
At the New York meeting, O'Brien was prepared to bring up CUNA's and credit unions' concerns about a point made recently by Donovan: That the qualified mortgage model, as defined under the Consumer Financial Protections Bureau's Ability-to-Repay rule, would become the standard mortgage for the secondary market.
 
CUNA argues that if the QM rule became the secondary market standard, credit-worthy individuals who fall outside the criteria could be denied a mortgage.
 
CUNA has previously raised this issue with the White House and with the Senate Banking Committee, which is scheduled to consider its housing finance reform bill on April 29.
 
Donovan most recently made the point about the QM standard during a Tuesday webinar hosted by the Bipartisan Policy Council. During that session, Donovan said the administration is pleased with the direction of the Johnson-Crapo reform draft for four reasons:
  • The government guarantee is made explicit rather than implicit;
     
  • The bill would attracts private capital back into play;
     
  • It proposes to use market-based incentives to ensure broad access to mortgage market; and
     
  • It addresses affordability across housing market.

Major changes needed if NCUA stress-testing rule advances: CUNA

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WASHINGTON (4/24/14)--While the Credit Union National Association opposed the capital planning and stress-testing proposal issued by the National Credit Union Administration in December, it urged the agency to include significant changes if the board votes to adopt the rule in final form.

The rule is on the agency's open board meeting agenda today. The final rule would directly impact credit unions with assets of $10 billion or more.
 
CUNA will also be reviewing carefully the agency's field-of-membership proposal regarding associational group additions, which is also on the agenda.
 
Regarding the stress-testing proposal, CUNA cited among its concerns the hefty $4 million total price tag all federally insured credit unions would shoulder for the agency's implementation of the rule in just the first year.
 
CUNA is also concerned that the proposal called for the results of the stress tests to be made public and that NCUA's approach would duplicate what large credit unions are already doing in terms of stress testing.
 
These concerns are in addition to the fact that there is no statutory requirement for such testing, CUNA has noted.

Another top consideration emphasized by CUNA is the timing of the adoption of the stress-testing rule. CUNA argues it should not be approved prior to the issuance of a risk-based capital (RBC) rule because stress-test results could impact RBC requirements.
 
The NCUA proposed a controversial RBC plan at its January open board meeting, and credit unions have until May 28 to comment. CUNA has urged a 90-day extension to that comment deadline.

Green NCUA highlights mark Earth Day

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ALEXANDRIA, Va. (4/23/14)--The National Credit Union Administration has had some real success in its green initiatives, the agency said Tuesday in a release that marked Earth Day.  The NCUA has worked to reduce consumption of electricity, cut water usage--resulting in a 423,000-gallon reduction from 2012's total--and institute in-office electronics recycling programs.

NCUA Chairman Debbie Matz said being a responsible corporate citizen and a good steward of the public trust is a priority for the agency, noting that the NCUA in 2013 not only took steps to reduce resource use, it also worked decrease the amount of waste produced, and make the agency more environmentally efficient.

Steps taken at the NCUA's central office included:
  • Receiving an ENERGY STAR certification from the U.S Environmental Protection Agency, scoring 86 out of a possible 100 points;
  • Beginning a load-shed program that reduces electrical consumption by using a generator to produce energy during high-demand days;
  • Reducing water usage by switching to low-flow faucets and toilets, resulting in a 423,000-gallon reduction from 2012's total water use;
  • Initiating a new recycling program for batteries, cell phones and small electrical devices; and
  • Reducing the number of print communications and replacing them with online versions.
 
"We encourage credit unions to make a similar commitment to increasing efficiency, reducing environmental costs and promoting greater environmental awareness in their operations," Matz said.
 
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.

CFPB warns private lenders can send students to early default

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WASHINGTON (4/23/14)--Some private student lenders are demanding full payment of a loan when a co-signer, such as a parent, has died or filed for bankruptcy, a practice that drives many loans directly into default, the Consumer Financial Protection Bureau reported on Tuesday.

This practice, CFPB Student Loan Ombudsman Rohit Chopra said, is happening even when the borrower is making monthly, timely payments on their loan. The information is included in the CFPB's mid-year report on the private student loan market, which examines more than 2,300 private student loan complaints and more than 1,300 student loan debt collection complaints received by the bureau between Oct. 1 and March 31.

Credit unions are not mentioned in the report.

While many private student lenders claim to give borrowers the option of releasing a co-signer's signature after a given period of time, the language in these documents is often hard to decipher, the CFPB said. Further, many student loan borrowers said they have faced issues when they tried to activate these clauses in their loan contracts.

The CFPB in a blog post provided advice and sample letters for student loan borrowers who are facing this issue.

For the CFPB report, use the resource link.
 
 

Senators seek GAO too-big-bank study refinements

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WASHINGTON (4/23/14)--As it develops a second report on "too-big-to-fail" banks and the benefits they may have received due to "perceived government support," a pair of senators have encouraged the Government Accountability Office (GAO) to be mindful to "compare apples to apples."  

The senators encouraged the GAO to consider important criteria and relevant questions that will help members of the U.S. Congress properly evaluate the GAO report.

The letter to the GAO was sent by Sens. Tom Carper (D-Del.) and Mark Kirk (R-Ill.).  The lawmakers charged that the GAO's first report on "too-big-to-fail" banks was incomplete and that lawmakers did not find it all that useful to their oversight responsibilities.

They pushed the GAO to beyond determining whether or not a "perceived funding advantage" exists and explore instead whether there is a  competitive advantage created by that perception.

The senators requested that the GAO, in its analysis, consider how the Dodd-Frank Act and other regulatory reforms may have impacted credit ratings and investor confidence in the market. Other items that should be added to the GAO's analysis include:
  • Whether portions of Dodd-Frank that ban bailouts can be circumvented;
  • If stress test protocols developed and implemented by the Federal Reserve have impacted risks taken by relevant bank creditors, and if the stress tests reduce the likelihood of large bank failures; and
  • How the current capital positions of large financial institutions compare to those taken before the financial crisis.
The senators also encouraged the GAO to limit its analysis to only U.S. banks, the eight firms that the Financial Stability Board has labeled "systemically important." The GAO should also exclude non-financial firms such as insurance companies and asset managers from its analysis, they said. 

Carper and Kirk also asked if the competitive advantage seen in the banking industry is disproportionate to the advantages large firms enjoy in other industries.

Today is NCUA's fin. lit. Twitter chat

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ALEXANDRIA, Va. (4/23/14)--The National Credit Union Administration's Twitter chat to share best practices for helping members increase their financial literacy is today.

It's scheduled to take place between 11 a.m. and noon (ET) and will be hosted by Kenneth Worthey, financial literacy and outreach analyst with NCUA's Office of Consumer Protection.

Followers can take part in the conversation by watching the agency's @TheNCUA Twitter feed and the #NCUAChat hashtag. Participants can also submit questions before the chat to socialmedia@ncua.gov.

The NCUA Twitter talk is part of National Credit Union Youth Week activities. From April 20-26, sunny beaches and rolling waves are being featured everywhere at credit unions to grab attention for this year's theme, which encourages young potential credit union members to "Catch the $ave Wave."

See resource links for more.
 

White House reps meet with CUNA on GSE reform

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WASHINGTON (4/23/14)--White House officials requested an exclusive meeting with the Credit Union National Association Tuesday and CUNA leaders discussed credit union priorities regarding housing finance reform policy issues.
 
The meeting with CUNA was one of a series the White House scheduled with top financial industry trade associations and other key stakeholders, held in advance of a scheduled April 29 markup by the Senate Banking Committee of its extensive housing finance reform bill. CUNA has also participated in recent White House meetings with groups of stakeholders.
 
The Tuesday meeting involved members of the White House Interagency GSE Reform Working Group. 
 
CUNA underscored at the meeting that the top three issues for credit unions are:
  • The bill's regulatory burden on credit unions;
  • Ensuring that the housing finance market remains accessible to credit unions and other smaller institutions; and,
  •  Giving credit unions representation in governance of the new federal entities envisioned under the proposal.
CUNA reminded that restructuring the system is "unchartered and untested" territory and therefore raises numerous questions regarding fees and functionality when applied to the real-world marketplace.

Representing CUNA at the meeting were President/CEO Bill Cheney, Chief Economist Bill Hampel, General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Senior Vice President of Legislative Affairs Ryan Donovan, and Assistant General Counsel for Special Projects Robin Cook joined in the meeting.

The Senate Banking Committee bill was drafted by its chairman, Sen. Tim Johnson (D-S.D.), and its ranking Republican member, Sen. Mike Crapo (Idaho).  It is currently the focus of a drive by its authors to build unshakeable bi-partisan support before the panel considers the draft.
Reports have circulated in recent weeks that the April 29 markup could be delayed, but it is widely believed that a vote will occur next week.

Also this week, CUNA Housing Finance Reform Task Force member Bill O'Brien, from Suffolk FCU, Medford, N.Y., is invited to a meeting on housing finance reform today with Department of Housing and Urban Development Secretary Shaun Donovan.

NCUA circulates call report deadline reminder, warning

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ALEXANDRIA, Va. (4/23/14)--The National Credit Union Administration is circulating this reminder and warning: Credit unions failing to meet the April 25 call report filing deadline are potentially subject to civil money penalties.

The NCUA put late-filers on notice in January with a Letter to Credit Unions (14-CU-03). The agency called filing tardiness a "serious problem" that impacts its ability to conduct effective off-site supervision and drains agency resources. Late filings also delay the release of quarterly industry data to the general public.

The NCUA attached that January letter to the reminder its sent Tuesday to credit union directors and CEOs.

Potential penalties for late filers include:
  • Up to a maximum of $2,000 per day for each day a required report is "minimally" late or contains uncorrected false/misleading information if the late or false/misleading filing is unintentional and the credit union has reasonable procedures in place to avoid such errors;
  • Up to a maximum of $20,000 per day for each day a required report is late or contains false/misleading information if the late or false/misleading filing is not covered by the "unintentional" safe harbor outlined above; or
  • Up to a maximum of $1 million, or 1% of total assets, whichever is less, per day if a federally insured credit union knowingly or with reckless disregard for accuracy submits a false or misleading report and fails to correct it.
Use the resource link to access the NCUA Letter to Credit Unions (14-CU-03).
 

FEMA launches 'PrepareAthon' campaign

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WASHINGTON (4/23/14)--The Federal Emergency Management Agency--FEMA for short--is launching a "PrepareAthon!," a nationwide campaign to improve the country's resilience during and after an emergency situation.

Registration is open now for the April 30 event--being billed by FEMA as the first National Day of Action.  FEMA says participants will learn what to do before a tornado, wildfire, flood, or hurricane strikes their community.  Credit unions have helped their members and communities through each one of these natural disasters in recent years.

The session will share preparedness tips for family, community, and business.  It will provide preparedness resources, such as:
  • "How-to" guides;
  • Preparedness playbooks;
  • Promotional materials;
  • Events calendar;
  • Discussion groups; and
  • Additional resources tailored to specific hazards and audiences.
Use resource link to register.

CUNA subcommittee meets with NCUA on RBC plan concerns

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WASHINGTON (4/22/14)--In discussions with top staff at the National Credit Union Administration, the Credit Union National Association's Examination and Supervision Subcommittee continued a thorough review of concerns on legal and economic grounds regarding the agency's proposed risk-based capital proposal.

NCUA Director of Examination and Insurance (E&I) Larry Fazio and Deputy E&I Director Tim Segerson participated in the meeting.

During the meeting, the credit union subcommittee leaders directly questioned the proposal's impact on credit unions' capital cushions above the well-capitalized level, as well the proposed authority to allow the agency, on a case-by-case basis, to impose additional capital requirements above what the rule specifically would require.

The subcommittee also expressed concerns about some of the proposal's highest risk weightings--such as those for mortgages, investments, and member business loans--and the detrimental impact those risk-weightings would have on business and agricultural lending in rural areas.

Well-capitalized credit unions have a higher leverage ratio than other financial institutions and have lower risk generally. In light of this, the subcommittee raised a number of questions regarding the need for a such a high well-capitalized risk-based capital requirement, which would be a ratio of equity to cover losses divided by risk-weighted assets as defined by NCUA and set at 10.5% under the proposal.

The RBC proposal would apply to credit unions with over $50 million in assets. Comments are due May 28.  CUNA has reiterated its request that the agency extend the comment period by 90 days.

CUNA has estimated that the RBC proposal, as written, will reduce credit unions' capital buffers by about $7.6 billion.

The meeting was chaired by Wisconsin Credit Union League President Brett Thompson, and in addition to subcommittee member, CUNA President/CEO Bill Cheney, Chief Economist Bill Hampel, General Counsel Eric Richard, Deputy General Counsel Mary Dunn, and Assistant General Counsel for Special Projects Robin Cook joined in the meeting.

Use the resource link for CUNA's Risk-Based Capital Action Center.

In Congress: Patent, housing reforms still front burner

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WASHINGTON (4/22/14)--Congress is back in session on April 28. The Senate Judiciary Committee is expected to markup a new text of its patent reform bill early in the week, and the Senate Banking Committee still has April 29 on its calendar as the date for a markup of its housing finance reform bill.
 
The Senate Judiciary Committee's bill is the Patent Transparency and Improvements Act (S. 1720), which, in part, would aid credit unions and other businesses that have been targeted by patent "trolls," who manipulate the patent system for their own gain.
 
It has been widely reported that a committee vote on the Senate Banking Committee bill on housing finance reform could be delayed, and Credit Union National Association Senior Vice President for Legislative Affairs Ryan Donovan said Monday that delay could happen.
 
"A delay would not be a bad thing--it would just mean that the bill's sponsors are working to secure additional votes for the bill," Donovan said, adding, "The bill's passage is not in doubt.  What is in question is the number of votes it will get."
 
Donovan said CUNA submitted additional materials in support of the bill to the committee and its staff last week, and CUNA expects to see a new bill draft on April 28 or 29 in advance of the markup.

Reps. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) earlier this year released the original 425-page draft bill, which addresses how to overhaul the housing finance market, as well as what to do with government-owned Fannie Mae and Freddie Mac.
 
In meetings with White House officials and Federal Housing Finance Agency Director Mel Watt, CUNA has encouraged policymakers to be mindful of the existing regulatory burdens of credit unions and other mortgage servicers as discussions on housing finance reform proceed. Legislators and other officials must proceed judiciously and not layer additional regulatory authority on top of existing regulatory regimes that address mortgage servicing, CUNA has said.
 
CUNA has also underscored on credit unions' behalf that a new system must ensure that the housing finance market remains accessible to credit unions and other smaller institutions and that structure must be in place to prohibit domination by the country's biggest banks.

Fryzel looks to CUs' future, past as tenure winds down

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ALEXANDRIA, Va. (4/22/14)--As the National Credit Union Administration awaits Senate action on the nomination of J. Mark McWatters to replace Michael Fryzel on the agency board, Fryzel took the occasion of this month's The NCUA Report to reflect on the recent past and the near future of the credit union movement.

Fryzel's term ended in August, but he has agreed to serve until a replacement is confirmed by the Senate.

Fryzel, who writes a monthly column in the Report , this month urged credit unions "to accept the challenges that lie ahead."  He said they include interest rate risk, cybersecurity, competition and the continued avalanche of regulation.

Fryzel said that "how the industry's institutions meet and handle these challenges will determine who survives and can continue to serve their members' needs." He encouraged credit unions to "vigorously pursue and put in place the solutions that will enable you to overcome and successfully move forward to success in the future."

The path, he said, may be difficult at times, "but the rewards will be worth the hard work."

With a philosophy of people helping people, with slogans like "members first," and with a creed of "not for profit, but for service," the tradition of true cooperative financial services will live forever, Fryzel wrote.

The regulator also recounted some the major events that have shaped his tenure at the agency since joining the board as chairman in July 2008. Fryzel served as chairman until Aug. 24, 2009. Major experiences included:
  • Addressing failures in the corporate credit union system;
  • Forming the Office of Consumer Protection and the Office of National Examinations and Supervision;
  • Creating and putting into use a new examination manual to better ensure fair and consistent exams across all regions;
  • Helping the agency recover more than $1.75 billion from banks that created the financial crisis;
  • Drafting new corporate credit union rules;
  • Giving credit unions the authority to engage in derivatives; and
  • Seeing the increase in credit union membership, and the record earnings brought in by some credit unions.
Fryzel's term on the NCUA board officially ended Aug. 2. The Senate Banking Committee is expected to move forward with a vote on McWatters' nomination within the next couple of weeks.
 
For more of The NCUA Report , use the resource link.

FHFA seeks comment on mortgage database expansion

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WASHINGTON (4/21/14)--The Federal Housing Finance Agency is considering expanding the scope of a planned national mortgage database, and is seeking public comment on the potential expansion, Politico reported last week.
 
The database expansion would provide space for specific loan information and details on mortgage borrowers.
 
The FHFA will accept comment on the database expansion until May 16. The agency plans to begin collecting the additional loan and borrower information on May 27, but that date could be moved back, Politico said.
 
The FHFA and Consumer Financial Protection Bureau joined to develop the National Mortgage Database in late 2012, saying it would be the first comprehensive repository of detailed mortgage loan information.
 
The database, once completed, will primarily be used to support the two agencies' policymaking and research efforts and to help regulators better understand emerging mortgage and housing market trends. The designers said it will include information spanning the life of a mortgage loan from origination through servicing and include a variety of borrower characteristics.
 
Specifically, the database will include loan-level data about the mortgage including:
  •  A borrower's financial and credit profile;
  • The mortgage product and terms;
  • The property purchased or refinanced; and
  • The ongoing payment history of the loan.
Data will be updated on a monthly basis and track as far back as 1998.
 
The agencies have said that the database will not contain personally identifiable information and that precautions will be taken to ensure that individual consumers cannot be identified through the database or through any datasets that may be made available to researchers or the public.

Lawmakers seek colleagues' backing on RBC plan changes

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WASHINGTON (4/21/14)--Two members of the House Financial Services Committee, Reps. Peter King (R-N.Y. ) and Gregory Meeks (D-N.Y.), are circulating a letter among House colleagues urging the National Credit Union Administration to consider changes to its proposed risk-based capital (RBC) regulations. The letter expresses the concern that any final RBC rule should not unduly burden credit unions and should not adversely affect healthy credit unions' ability to meet the financial services needs of their members.

The letter notes several concerns that must be addressed before the NCUA adopts a rule. The legislators plan to forward the letter to the agency once congressional signatures are collected.

The letter encourages the NCUA to:
  • Take into account the cost and burden of implementing new risk-based capital requirements beyond the current leverage ratio;
  • Provide justification and more clarity as to why the proposed risk weights differ from those applied to other community financial institutions; and
  • Give credit unions more time than the proposal's allotted 18 months to come into compliance after it is finalized.
"During the financial crisis, natural person credit unions served as an important source of liquidity in local communities and the overwhelming majority of them successfully weathered the downturn. These cooperatives did not engage in the risky lending practices that led up to the crisis and nearly all maintained their well-capitalized status," the letter notes. It adds that the crisis did not provide evidence for greater capital reserves for natural person credit unions, and the NCUA's across-the-board approach seems burdensome and raises concerns.

At a congressional hearing earlier this month, many lawmakers' expressed interest in the RBC proposal.

"We have urged Congress to take a particular interest in the proposed risk-based capital rule, and clearly the issue has piqued interest," Credit Union National Association President/CEO Bill Cheney said following the hearing. The questions during the hearing about the risk-based capital proposal reflect "a level of concern in Congress that the proposal is in need of significant improvements," he added.

Comments on the RBC plan are due to the agency by May 28. CUNA and the National Association of Federal Credit Unions last week repeated their call on the agency to extend the comment deadline by 90 days.

CUNA has extensive resources for credit unions regarding the RBC plan. Use the resource link.

CUNA: New data breach shows need for improved merchant security standards

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WASHINGTON (4/21/14)--A data breach at Michaels Stores and associated business Aaron Brothers may have impacted 2.6 million cardholders, the arts and crafts retailer confirmed late last week.
 
The security breach was created by "criminals using highly sophisticated malware that had not been encountered previously by either of the security firms," Michaels said in a statement. The retailer said the incident has been contained. This is the second such incident that has occurred at Michaels since 2011.
 
The Credit Union National Association is pressing federal lawmakers to address data security relative to merchants, who are not held to the same standards of security as credit union and other financial institutions.
 
In particular, CUNA maintains that all payments system participants must be held to comparable levels of federal data security requirements; those responsible for the data breach should be responsible for the costs of helping consumers; and those responsible should ensure consumers know where their information was breached.
 
The newest Michael's breach took place between May 8, 2013, and Jan. 27, 2014, according to reports. The 2.6 million cards that were potentially impacted represent 7% of cards that were used at Michaels stores during that time period. Another 400,000 cards may have been impacted at Aaron Brothers stores between June 26, 2013, and Feb. 27, 2014.
 
"There was no evidence that data such as customers' name or personal identification number were at risk," Michaels Stores said in their release.
 
In March, the National Credit Union Administration launched a new resource for credit unions--a webpage that provides links to cybersecurity and data security resources. Use the resource link.

April Legislative Update Webcast covers capital, housing, patent reform status

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WASHINGTON (4/18/14)--In the April edition of the Credit Union National Association's "Legislative Update Webcast," CUNA Senior Vice President of Legislative Affairs Ryan Donovan gives a quick update on five essential credit union issues: Capital reforms, housing finance reforms, merchant data breaches, patent reforms and regulatory burdens.

This list of issues, when combined with others such as interchange and overdraft protections, represents a number of topics that could come up "on any given day" for credit unions on Capitol Hill. There are plenty of things CUNA hopes Congress will take care of, and other things they hope Congress won't touch, Donovan emphasized.

Each month, CUNA's legislative update webinar breaks down vital information on top congressional concerns into an easy to access and understand format.

The May edition of the legislative update webinar will be released in early May in advance of that month's Hike the Hill meetings.

For the full 15-minute April webinar, use the resource link.

Technical difficulty disrupts News Now distribution

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WASHINGTON and MADISON, Wis. (4/18/14)--(Editor's note: Due to technical problems with our website operations Thursday--now resolved--emails of the daily News Now headlines were not distributed as per usual at 5 a.m. (ET). The news on the CUNA homepage was not updated. News Now regrets the inconvenience to readers. Now that the technical problems have been resolved, News Now is back on schedule.)

New video provides NCUA answers to CUs' RBC questions

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ALEXANDRIA, Va. (4/18/14)--A two-part, 20-minute video has been released by the National Credit Union Administration, one that is intended to help federally insured credit unions with questions about the agency's proposed risk-based capital rule.

The new NCUA resource for credit unions is free and available on its YouTube channel (see resource link).

"NCUA's risk-based capital proposal is complex, but its overall purpose is simple," NCUA Chairman Debbie Matz said in a release. The video, she said, clears up "misinformation," explains why the agency believes the rule is necessary, and how it would affect credit unions. It also, she added, helps credit unions understand how and why the NCUA's proposal differs from the Federal Deposit Insurance Corp.'s rule and Basel III.

Comments on the RBC plan are due to the agency by May 28.  The Credit Union National Association and the National Association of Federal Credit Unions continue to urge a 90-day extension to the comment deadline.  (See related story: CUNA, NAFCU jointly repeat urging for RBC comment extension.)

CUNA has extensive resources for credit unions regarding the RBC plan.  Use the resource link.

Carolina CUs, armed with membership numbers, call on lawmakers

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WASHINGTON (4/18/14)--"Preparation is key to effective visits with legislators," Carolinas Credit Union League Director of Government Relations Billy Boylston said this week, highlighting how the Credit Union National Association's Project Zip Code (PZC) helped advocates from Palmetto Citizens FCU, Columbia, S.C., prepare for their visits to the nearby South Carolina State House.

The $602 million-asset credit union provided a summary document that includes membership data by legislative district taken from PZC documentation. "Palmetto Citizens has done a great job preparing and presenting information, and it shows in legislators' responses," Boylston added (In the Loop April 17).

Credit unions can also use PZC to better track their membership and to plan future ATM and branching expansion. Project Zip Code protects the privacy of credit union members, as only membership totals per legislative district and county, and not information on individual members, are transmitted from credit unions to the PZC database.

The number of credit union members matched to their respective legislative districts and counties by CUNA's PZC software has reached another milestone: 82.7 million members. Around 700,000 of these matches have been made in the month-plus since the 2014 CUNA Governmental Affairs Conference.

The PZC version 14.0 software was introduced during this year's GAC.

The software, and the data gleaned from it, can give credit union supporters a great advantage as they work to advocate for credit unions and their members. The data will be vital as this fall's election season comes into full swing.

PZC data allows CUNA, the leagues and credit unions to show elected officials how many credit union members are among their constituents with very clear numbers. "The more credit unions that participate in Project Zip Code, the more accurate these membership counts will be," said Kristen Prather, CUNA grassroots manager and day-to-day PZC manager.

For more Project Zip Code information, use the resource link.

NCUA a-Twitter with fin. lit. chat

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WASHINGTON (4/18/14)--Interested in sharing best practices for helping members increase their financial literacy? The National Credit Union Administration has set an April 23 Twitter chat on the issue.

The NCUA Financial Literacy Twitter chat is scheduled to take place between 11 a.m. and noon ET. The event will be hosted by Kenneth Worthey, financial literacy and outreach analyst with NCUA's Office of Consumer Protection.

Followers can take part in the conversation by watching the agency's @TheNCUA Twitter feed and the #NCUAChat hashtag. Participants can also submit questions before the chat to socialmedia@ncua.gov.

The Twitter chat is part of the NCUA's National Financial Capability Month activities. This month, the NCUA has also used its consumer-oriented Twitter feed @MyCUgov to share personal finance tips with the public, and hosted a financial literacy webinar to share best practices.

The NCUA Twitter talk will take place during National Credit Union Youth Week, April 20-26. Sunny beaches and rolling waves are a part of this year's theme, which encourages young potential credit union members to "Catch the $ave Wave." During the week, credit unions will engage and encourage younger members to set up savings accounts, learn how to manage money and be more financially literate.

Credit unions nationwide may join in the celebration through April, or even just during National Credit Union Youth Week.

Stress testing for large CUs, common bond proposal on next NCUA agenda

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ALEXANDRIA, Va. (4/18/24)--A final stress testing rule for large credit unions will lead the agenda when the National Credit Union Administration holds its April open meeting next Thursday.

Under a proposed version of the stress test regulation released last year, federally insured credit unions with assets exceeding $10 billion would be required to develop and maintain capital plans, and undergo annual stress tests.

The stress test requirements, drafted by the agency's Office of National Examinations and Supervision, would require impacted credit unions to conduct specific capital analyses to evaluate how changes in variables, parameters and inputs used by credit unions in their capital plans could affect their capital. Credit unions would also need to test how interest rate shocks of at least plus or minus 300 basis points would affect their net economic value.

"While we acknowledged the utility of stress testing, we did not feel a new rule was necessary or that NCUA had substantiated the need for it," Credit Union National Association Deputy General Counsel Mary Dunn said.

CUNA offered recommendations that would help improve the proposal, including:

  • Stress test results should not be disclosed publicly;
  • Sanctions should not apply if planning or test benchmarks are not met; and
  • Rejection of a credit unions' capital plan should only occur under a formal process.

Other items on the agenda include:

  • A new proposal that would address requirements for multi-group credit unions to add associational groups;
  • A board briefing on a proposed interagency policy statement addressing joint diversity standards for regulated entities;
  • A board briefing on a proposed interagency rule on loans in areas having special flood hazards;
  • The quarterly National Credit Union Share Insurance Fund report;
  • A final rule on the electronic filing of financial reports; and
  • A final rule on liquidity and contingency funding plans.

The Thursday open meeting is scheduled to begin at 10 a.m. (ET).

Two federal credit union act requests are on the closed board meeting agenda.

For the full NCUA agenda, use the resource link.

CUNA, NAFCU jointly repeat urging for RBC comment extension

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WASHINGTON (4/18/14)--Joining forces, the Credit Union National Association and National Association of Federal Credit Unions Thursday urged a 90-day extension for the comment period for the National Credit Union Administration's risk-based capital plan (RBC), set to elapse on May 28.
 
Both organizations previously asked for just such an extension back in February, and it was denied by the agency. 
 
"We simply do not believe that the comment period provides sufficient time for a number of credit unions to analyze the proposal's impact on their individual operations and prepare their responses,"  CUNA President/CEO Bill Cheney and NAFCU President/CEO Dan Berger wrote to the NCUA board members.
 
"Given the health of the credit union system, we do not see the need to rush this rule and believe more time for comments will also benefit the agency through the production of well-reasoned letters," the credit unions leaders argued.
 
The joint letter called the RBC plan the "most significant proposed rulemaking that credit unions will face this year and likely for years to come." It noted that credit unions already are struggling, in some cases, to meet an onslaught of new regulatory requirements this year, and need additional time to provide the NCUA with substantive comments on the RBC plan that reflect their particular situations.
 
CUNA strongly supports risk-based capital for credit unions, but warns that the NCUA's current proposal is not the approach to take. CUNA analysis shows that, as written, the NCUA plan could force credit unions to hold as much as $7.3 billion in additional capital.
 
As described in the Federal Register, the NCUA proposal would revise the risk-weights for many of the NCUA's current asset classifications, require higher minimum levels of capital for federally insured natural-person credit unions with concentrations of assets in real estate loans, member business loans (MBLs) or higher levels of delinquent loans; and set forth the process for the NCUA to require an individual federally insured natural-person credit union to hold higher levels of risk-based capital to address unique supervisory concerns raised by NCUA.
 
It would apply to credit unions with $50 million or more in assets.

World Council suggests revisions to international RBA guidance

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WASHINGTON (4/17/14)--A comment letter from the World Council of Credit Unions filed Monday with the Financial Action Task Force (FATF) suggests revisions to the international guidance on the risk-based approach (RBA) to anti-money laundering and countering the financing of terrorism (AML/CFT) compliance. The changes would help to promote financial inclusion and to limit regulatory burdens on credit unions and other less complex financial institutions
 
The World Council comment letter was filed in response to new FATF proposal for the risk-based approach of the banking sector on AML/CFT.

The FATF is currently updating its RBA guidance to better align the guidance with its also-updated International Standards on Combatting Money Laundering and the Financing of Terrorism & Proliferation document--commonly called the "40 Recommendations."  The comment letter follows a recent FATF's private sector consultative meeting on the RBA guidance project held in March at the headquarters of the European Banking Federation in Brussels.
 
The FATF's changes to the RBA standards, once finalized, are likely to be incorporated into the U.S. Bank Secrecy Act (BSA) rules within the next year, the World Council has predicted.
 
In the letter, World Council Vice President and Chief Counsel Michael Edwards said the association supports most aspects of the proposal in relation to credit unions, but suggested several revisions to the draft guidance, including:

In both the comment letter and at the recent meeting at the headquarters of the European Banking Federation in Brussels, Edwards said the FATF could limit regulatory burdens on credit unions.

To do so, as part of revisions to its RBA guidance for financial institutions, FATF should increase the detail in its RBA for banking institutions guidance paper thereby increasing clarity regarding when and how it is appropriate to apply risk-based policies for AML/CFT, Edwards said.

  • Limiting AML/CFT compliance requirements for business activities that have lower money laundering/terrorist financing risks;
  • Limited compliance burdens on less complex financial institutions;
  • Allowing flexibility in AML/CFT requirements, such as customer due diligence/know your member rules, in order to promote financial inclusion of unbanked persons; and
  • The concern that some banks may be "de-risking" their customer relationships by ceasing to provide correspondent banking services to credit unions and other types of businesses which handle funds on behalf of members/customers.

Function should be focus of any CUSO regs, says NASCUS chair

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LAKE BUENA VISTA, Fla. (4/17/14)--Regulators' interest in credit union service organizations (CUSOs) should focus specifically on the impact these organizations' services deliver to credit unions rather than their overall safety and soundness, John Kolhoff, chairman of the National Association of State Credit Union Supervisors (NASCUS), told attendees of the National Association of Credit Union Service Organizations' annual conference.

Kolhoff  said it can be difficult to determine a CUSO's direct impact on a credit union's bottom line due to secondary subsidiaries and other interconnected players; and there's no efficient pipeline to share this information with other involved parties.

And that, he said, is the CUSO trap for regulators. He addressed the conference Monday.

"We don't need to regulate CUSOs, we just need to understand how they work," said Kolhoff, who also heads the Michigan Department of Insurance and Financial Services' Office of Credit Unions. "The tools are there to go after [CUSOs] if there's an exorbitant amount of risk we need to mitigate."

NASCUS has expressed this viewpoint to National Credit Union Administration, which lacks direct regulatory authority over CUSOs but is implementing requirements for the organizations through directives to credit unions. NCUA Chairman Debbie Matz recently reaffirmed the agency's intent to obtain direct authority over CUSOs.

"We need examination oversight, not enforcement or regulatory oversight," Kolhoff said.

CUSOs allow credit unions to innovate, reduce costs, increase income, become more efficient and share risks, said Kolhoff, who classifies them along with third-party vendors who perform similar functions.

"What I need to know is how your services directly relate to the safety and soundness of the credit union," Kolhoff said. "That's all I should be looking at."

To address risk, Kolhoff believes regulators should focus on credit unions' due diligence to ensure they're aware of the risks of their relationships with particular CUSOs and that they've taken steps to mitigate those risks.

"Instead of making those decisions, we are reviewing those decisions," he said.

Kolhoff added that credit unions would benefit from a shared information pool about CUSOs. He proposed developing a CUSO registry that credit unions could access, similar to the Nationwide Mortgage Licensing System and Registry.

Click to view larger image John Kolhoff, chairman of the  National Association of State Credit Union Supervisors and a state regulator, says regulators need "examination oversight, not enforcement or regulatory oversight" of CUSOs. (CUNA photo)

NCUA: CUs can help consumers avoid predatory payday loans

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ALEXANDRIA, Va. (4/17/14)--The basics of credit union payday alternative loans (PALs) and advice for credit unions looking to start up their own programs were addressed during a Wednesday National Credit Union Administration webinar.
 
NCUA representatives included Tom Penna Jr., Office of Small Credit Union Initiatives economic development specialist; Lucinda Johnson, Office of Examination and Insurance program officer; and Kerri Donald, NCUA Region III examiner. Also participating in the webinar were Katia Marini-Nunez, CEO of $7.5 million-asset St. Francis FCU, Greenville, S.C.; Jennifer Lovett, CEO of  $7.3 million-asset Mississippi DHS FCU, Jackson, Miss.; and Vickie Hastings, CEO of  $34.9 million-asset Greenwood (S.C.) Municipal FCU. 
 
The presenters stressed that NCUA PALs can serve as a viable option to predatory payday loans for many credit union members, as well as non-members. The loans, they said, give credit unions a chance to transition borrowers to more traditional products offered by credit unions.


The NCUA'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. Currently, 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. 
 
Nearly two-thirds of webinar participants said they did not offer PALs or other short-term small-amount loans. Twenty-seven percent of attendees said they offer the loans. 
 
Direct deposit payments can be a useful tool to help credit unions limit the risk presented by these loans, but is not a requirement for PALs. Payroll deduction can also be used for PAL payments but cannot be a condition of extending credit. However, credit unions may offer lower rates or other incentives for members who choose to pay off their PALs using payroll deductions. 
 
The webinar also covered other types of small-dollar loans provided by credit unions, which do not have the same requirements as PALs and are limited to an APR of 18% or less. Credit unions must ensure these other loan programs are in accordance with all applicable laws and regulations. Standard safety and soundness guidelines must also be applied, the presenters said. 
 
When they examine a credit union's small-dollar and payday-alternative loan programs, NCUA staff said they will look to ensure adequate policies and procedures and sufficient documentation of loan files. NCUA examiners will also check for verified application fees as well as established and well-monitored lending limits.

Click to view larger image An NCUA analysis presented during the webinar showed that the 28% APR charged by many credit unions is well below the 661.80% APR reportedly charged in some payday loan situations. Monthly payments, fees and total payments on a $250 loan were also lower. (Source: NCUA)

Yellen's latest hints at new big bank capital, liquidity standards

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WASHINGTON (4/16/14)--There may be room to strengthen capital and liquidity standards for large banks, Federal Reserve Chair Janet Yellen said in remarks made Tuesday.
 
Yellen's comments were broadcast through a video shown at the Federal Reserve Bank of Atlanta's 2014 Financial Markets Conference in Atlanta.
 
Current Liquidity Coverage Ratios (LCR) and Net Stable Funding Ratios (NSFR) do not address financial stability risks associated with so-called matched books of securities financing transactions, Yellen explained.
 
To address securities financing transactions and other residual risks in wholesale funding markets, Yellen said Fed staff is considering requiring firms to hold larger amounts of capital, stable funding, or highly liquid assets based on use of short-term wholesale funding.
 
These changes would likely apply only to the largest, most complex banking organizations, she noted. Other measures, such as minimum margin requirements for repurchase agreements and other securities financing transactions, could be applied to the market as a whole, she noted.
 
"There may be net social gains from introducing further reforms to address short-term wholesale funding risks," Yellen said, adding that the Fed is carefully examining the pros and cons of each option. Meetings like the Financial Markets Conference will be a vital part of the process as the Fed moves forward, Yellen emphasized.
 
For Yellen's full comments, use the resource link.

FTC offers free fin. lit. resources

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WASHINGTON (4/16/14)--Credit unions looking for new materials to enhance their focus on consumer financial literacy--now during Financial Literacy Month and beyond--can check out the Federal Trade Commission (FTC) website.

The FTC, in part charged with preventing business practices that are anticompetitive or deceptive or unfair to consumers, has information for everybody--students, young adults, parents, servicemembers on active duty, veterans or grandparents. It covers such financial topics as saving and shopping, credit and debt, buying a home or car, and looking for a job or paying for school.

In Tuesday's release, the FTC noted that all its materials are in the public domain. They can be posted, reprinted, or adapted to educate people about their consumer rights.
 
Use the resource link for articles, videos and blog posts about financial topics.

CUNA compliance audios are back and even better

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WASHINGTON (4/16/14)--Back by popular demand, Credit Union National Association compliance staff are posting new audio updates on the hottest compliance topics.

The new audio posts are broken into smaller chunks, down from their former 60 to 90 minutes, and will be posted more frequently than before when they were offered on a quarterly basis. The new format allows users to pick and choose the topics they listen to.
 
"We have heard from many in the credit union system over the past year requesting that CUNA's compliance staff bring back the quarterly 'Pressing Issues' conference calls, and we are really happy to do that," CUNA Federal Compliance Counsel Colleen Kelly said.

"However," she added, "many have also told us that as the unprecedented deluge of regulations continues, they rarely have 90 minutes to spare to participate on a scheduled conference call. So, in response, we are rolling out a new format."

The first editions of CUNA's newly formatted audio conference cover:
  • Mortgage lending;
  • The latest National Credit Union Administration developments;
  • The Bank Secrecy Act and the U.S. Treasury Department's Office of Foreign Assets Control; and
  • Other federal regulatory issues.
Printable handouts will also be provided as part of the CUNA programs. Short recordings on other topics will be posted in the coming months.

For the new CUNA resource, use the links (members only).

As threats grow, Mich. league work for members' data safety gets spotlight

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WASHINGTON (4/16/14)--Even with the U.S. Congress out of session until April 28, credit unions are keeping the focus on what must be done to improve the country's data security.

The Michigan Credit Union League's efforts in support of consumer data security gained coverage on MiBiz.com , with the league suggesting that the Consumer Financial Protection Bureau supervise retailer consumer data protection practices and how those retailers investigate consumer data theft.

"We think retailers should have skin in the game, and they ought to be responsible and have a vested interest in protecting customers' information," MCUL Chief Operating Officer Ken Ross told MiBiz.com . While credit unions and banks are subject to strict security requirements, retailers are not held to the same standards. If one part of the larger puzzle doesn't fit correctly, there can be serious downstream implications, he told MiBiz .

The retailers, Ross argued, must make security a priority, as credit unions and others do.

A data breach at Target stores last year resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals. Credit unions incurred more than $30 million in losses as a result of the breach.

While a recent Newtek Business Services survey showed that 67% of business owners polled were not concerned about credit card security at their businesses, data breaches and other methods of online theft are becoming all too common. (See March 7 News Now : Survey says majority of business owners unconcerned about card security.)

Around 20% of Americans have been affected by a data breach, a January Pew Research Center report showed. According to the Pew report:
  • 18% of online adults have had their Social Security Number, credit card, bank account or other important information stolen; and
  • 21% of online adults have seen their email or social networking accounts compromised.
For the MCUL story and more on the data breach report, use the resource links.

CFPB extends remittance rule shield

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WASHINGTON (4/16/14)--The Consumer Financial Protection Bureau is proposing a five-year extension to an exception that minimizes for some credit unions and other financial institutions certain information reporting requirements of its international remittance transfer rule.

The proposal will be available for comments for thirty days from the date it is published in the Federal Register . The agency is also proposing several clarifications and technical corrections to the final rule and commentary.

Under the CFPB rule, international remittance transfer providers are generally required to give prepayment and receipt disclosures to the consumer-sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer.

Remittance transfer providers will also be required to investigate disputes and correct errors. The rule has been in effect since Oct. 28.

The bureau in a release noted that the Dodd-Frank Wall Street Reform Act explicitly allows federally insured financial institutions, like banks and credit unions, to estimate third-party fees and exchange rates when providing remittance transfers to their accountholders for which they cannot determine exact amounts until July 21, 2015. Insured institutions can only use this exception when they cannot determine the exact amounts for reasons beyond their control.

This exception would continue until July 21, 2020, if the proposal is adopted. The CFPB said it moved to extend the exception when institutions reported that current market conditions would make it impossible to know the exact fees and exchange rates associated with a minority of their remittance transfers.

"Without the exemption, these insured institutions report that they would be unable to send some transfers to certain parts of the world that they currently serve," the CFPB noted.

The Credit Union National Association has repeatedly called on the CFPB to use the full authority granted to it in the Dodd-Frank Act to exempt credit unions from the international remittance transfer rule and other regulations.

"When the remittance rule was finalized, several credit unions stopped offering the service to their members," CUNA President/CEO Bill Cheney wrote in a February letter to Congress.

What's on radar for Congress' April 28 return

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WASHINGTON (4/15/14)--The U.S. Congress is out of session for a two-week Spring District Work Session, but the Credit Union National Association continues its advocacy work on key credit union issues.
 
A credit union priority that will return to prominence after this late-April break is housing finance reform. CUNA continues to meet with Senate staff in advance of a planned April 29 mark-up of reform legislation drafted by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking Republican member Mike Crapo (Idaho). (See related story: XXXXXX)
 
CUNA last week outlined several housing finance reform concerns and suggested language to address those issues in a joint trade group letter to Johnson and Crapo, and expects to have additional discussions with staff and perhaps see modifications made to the Johnson-Crapo bill in the coming weeks.
 
CUNA is also working in anticipation of a vote on patent reform legislation--a markup session that was postponed three times prior to the break. The Senate Judiciary Committee is expected to take up consideration of that bill, the Patent Transparency and Improvements Act (S. 1720), soon after returning to session.
 
CUNA and credit unions will also be watching Senate calendars closely to see when a confirmation vote might occur for National Credit Union Administration nominee Mark McWatters. The Senate Banking Committee conducted a hearing on the McWatters nomination, along with other Obama administration nominees, on March 13.

New FHFA director meets with CUNA on housing, mortgage issues

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WASHINGTON (4/15/14)--The Credit Union National Association met with new Federal Housing Finance Agency Director Mel Watt Monday, raising a number of issues of concern to credit unions. At the FHFA meeting, the sale in the secondary market of non-Qualified Mortgage (QM) loans, containing guarantee fees, and increasing loan limits for eligible loans were among the issues CUNA addressed with Watt and members of his senior staff. Other issues that CUNA discussed during the session included the director's priorities, the role of credit unions in the mortgage market and CUNA's efforts on housing finance reform to ensure credit unions' interests are fully protected. CUNA President/CEO Bill Cheney stated after the meeting, "This was an important inaugural meeting with Director Watt as he has only been at the agency for about 100 days. "Credit union mortgage lenders, which have about 7% of the single family home loan market, are very concerned about these issues. This discussion provided an important opportunity to ensure credit union concerns, including fair and equitable access to the secondary mortgage market, are given due consideration by the agency." Cheney was accompanied by General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Senior Vice President for Legislative Affairs Ryan Donovan and Chief Economist Bill Hampel. CUNA will be following up with FHFA staff in the coming weeks to continue to advocate for credit union issues. Also on Monday, CUNA staff attended another in a series of White House housing finance reform policy discussions. (See related story: CUNA warns of reg burden at White House housing finance policy discussions.)

Tax day: Cheney reminds, CU exemption staunchly serves original purpose

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WASHINGTON (4/15/14)--It's tax day and what better day is there, asks Credit Union National Association President/CEO Bill Cheney, to remind credit unions and their members that the tax treatment of credit unions continues to serve the purpose for which it was created--namely, to create substantial financial benefits to members and to the public, far in excess of the cost.
 
"Every April 15, we should all be mindful of our tax exemption, and remind our members and our communities that Congress should not tax credit unions because doing so would represent a tax increase on 99 million Americans. It would likely lead to the elimination of many, if not most, credit unions," Cheney says.
 
According to the latest numbers and estimates gathered by CUNA:
  • The benefits that credit unions provide to both members and others--amounting to an estimated $8.5 billion in 2013 alone--far exceed the total annual tax that could be raised by taxing credit unions (less than one-tenth of that amount, on average, annually).
  • Those benefits are realized by credit union members in the forms of higher returns on savings, lower rates on loans, and lower or fewer fees than members would have paid or received had they been customers at other financial institutions. Those totaled $6.1 billion in 2013.
  • In addition, several independent researchers have found that credit unions have a moderating influence on bank pricing: raising bank deposit interest rates and lowering bank loan rates. Based on this research, CUNA estimates that bank customers saved about $2.4 billion in 2013 from more favorable pricing due to the presence of credit unions in their local markets.
  • Over the past eight years credit union benefits have totaled an estimated $87.3 billion.
The CUNA leader noted the recent decision by the House Ways and Means Committee to leave intact the credit union tax exemption in the committee's proposed tax reform plan, and thanked committee members for doing so.
 
"Thanks to Chairman Dave Camp (R-Mich.) and ranking member Sander Levin (D-Mich.) and rest of the committee for maintaining our tax status," Cheney said. "Repealing the credit union tax exemption would result in negative consequences for savers and borrowers, the most severe of which would be the erosion of a credit union option for millions of Americans. Credit unions must continue to remind their lawmakers, and the public, of the importance and value of the tax exemption."

White House housing finance policy discussions: CUNA warns of reg burden

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WASHINGTON (4/15/14)--Policymakers must be mindful of the existing regulatory obligations of credit unions and other mortgage servicers as discussions on housing finance reform proceed. That was one of the messages delivered by the Credit Union National Association at a Monday meeting with White House and U.S. Treasury staff. At the White House meeting, CUNA noted that a pending Senate bill to revamp the housing finance system proposes creation of a new regulatory authority over mortgage servicing operations. CUNA stressed that policymakers must proceed judiciously and not layer additional regulatory authority on top of existing regulatory regimes that address mortgage servicing. CUNA also underscored on credit unions' behalf that a new system must ensure that the housing finance market remains accessible to credit unions and other smaller institutions and that structure must be in place to prohibit domination by the country's biggest banks. The meeting was part of a series of stakeholders' sessions that have been being held as the Senate Banking Committee prepares to consider the Johnson-Crapo housing finance reform bill on April 29. (See related story: New FHFA director meets with CUNA on housing, mortgage issues.)

CFPB announces forum on mortgage closing process

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WASHINGTON (4/15/14)--Consumer groups, the general public and financial services industry representatives will discuss the mortgage closing process with the Consumer Financial Protection Bureau in an April 23 forum in Washington.
 
The forum is scheduled to begin at 1:30 p.m. (ET) and will feature remarks from CFPB Director Richard Cordray and others. The event will also be streamed live on the CFPB's blog.
 
The CFPB earlier this year asked consumers, realtors, settlement closing agents, attorneys, financial counselors and others to provide their mortgage closing "pain points" and suggest how those particular concerns might be addressed by market innovations and technology.
 
The Credit Union National Association, in a letter to the CFPB, said credit union members are often overwhelmed with the sheer amount of paperwork required and the number of disclosures they receive at closing. CUNA suggested that many closing documents could be consolidated.
 
While many borrowers feel helpless at closing, credit unions have suggested that clearly laid out, simplified financial information about the transaction would aid the borrowers and lenders. The agency said it plans to research and test solutions that would address certain closing issues.
 
For the CUNA comment letter and more on the planned CFPB session, use the resource links.

CUNA reminds CUs of tax Form 990 deadline

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WASHINGTON (4/15/14)--With taxes on everyone's mind today, the Credit Union National Association reminds credit unions of another looming deadline: Many credit union leagues and state-chartered credit unions must file their Internal Revenue Service Form 990 for 2013 by May 15.

Those that fail to file by May 15 risk losing their tax-exempt status. Organizations will see their federal tax exemptions automatically revoked if they have not filed reports for three consecutive years, according to the IRS.
 
State-chartered credit unions are required to file Form 990 with the IRS annually, although a few states still permit group 990 filings. Federal credit unions are not required to file, since they are not subject to unrelated business income taxes.

Small tax-exempt organizations with annual receipts of $50,000 or less can file an electronic notice Form 990-N (e-Postcard). Tax-exempts with annual receipts above $50,000 must file a Form 990 or 990-EZ, depending on their annual receipts. Filing extensions are available.

The IRS, not surprisingly, has been on a roll, putting out information that might help tax filers get the job done before the deadline falls. This one might help a lot of people today: Advice to help last-minute filers avoid common filing mistakes (see resource link).
 
The tax agency also offered these recently:
  • Social media tools to help filers check their refund status and get the latest tax information (see resource link); and,
  • Details on more than 200 new IRS investigations into identity theft and refund fraud schemes (see resource link).

NCUA reports positive CLF growth trends

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ALEXANDRIA, Va. (4/14/14)--The National Credit Union Administration's Central Liquidity Facility (CLF) performed well during the first quarter of this year, the agency announced Friday.
 
The CLF's stock dividend rate increased to 0.25%, its assets reached $180 million, up from $115 million at the end of the first quarter of 2013, and its retained earnings hit $27.8 million, up from $27.4 million at the same time last year.
 
CLF membership grew to 218 credit unions, up from 129 at the end of the first quarter of 2013.
 
The CLF, created by Congress in 1998, serves as a lender of last resort for credit unions to meet short- or long-term liquidity needs, much as the Federal Reserve System does for banks. Credit unions are also allowed access to the Fed discount window.
 
The NCUA also reported that the maximum legal borrowing authority of the CLF grew to $3.8 billion, up from $2.4 billion at the end of the first quarter of 2013.
 
The NCUA called the 0.25% stock dividend rate for the CLF is a "significant change" from the 0.10% rate paid quarterly since the fourth quarter of 2012.  The agency added that CLF management expects moderate growth in both membership and portfolio earnings during 2014, with a strong likelihood the 0.25% rate will continue.
 
"The CLF's steady growth in membership and assets has enabled it to expand its earnings base and borrowing capacity, increase retained earnings and pay the higher dividend rate," the NCUA noted in a release.

As of March 31, credit unions with assets of $250 million or more are required to have access to either the CLF or the Fed's discount window for an emergency source of liquidity.

Idaho gov. signs patent troll bill, CUs keeps pressure on

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BOISE, Idaho (4/14/14)--With lobbying support from the Idaho Credit Union League, Idaho Gov. Butch Otter last week signed legislation to protect credit unions from so-called patent trolls ( The Idaho Statesman April 11).

Patent law reforms to address "trolls" is a significant issue for credit unions and is seeing a lot of attention from lawmakers on both the federal and state levels.

Without actually inventing anything or adding to innovation, patent trolls buy up patents in order to extract fees--or legal settlements--from other companies that may use that technology. Small companies such as credit unions find themselves between a rock and a hard place: paying what amounts to extorted fees may be cheaper than fighting the trolls in court.

The Idaho law defines bad-faith patent litigation threats as any of the following:
  • A letter threatening patent infringement litigation but lacks the patent number or name and address of the sender;
  • The letter demands payment for a license fee or a response in an unreasonably short period of time;
  • The person offers to license the patent for an amount that is not reasonably based on the value of the license to the patent; and
  • When a reasonable person would recognize that a person's claim of patent infringement had no merit.
Other states that have enacted legislation include Alabama, Idaho, Oregon, South Dakota and Utah.

States with pending legislation include: Connecticut, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Missouri, Nebraska, New Hampshire,  New Jersey, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Virginia and Wisconsin.

On the federal level, Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) has introduced the Patent Transparency and Improvements Act of 2013 (S. 1720), which would aid credit unions and other businesses that have been targeted by patent trolls.

The Credit Union National Association supports support the demand-letter language within S. 1720, which would aid credit unions and other businesses that have been targeted with financial threats through demand letters by bad actors who have been come to be referred to as "patent trolls."

Last week, Attorney General Bill Sorrell, at the request of U.S. Rep. Peter Welch (D-Vt.), testified before a subcommittee of the U.S. House of Representatives' Committee on Energy and Commerce to urge Congress to take steps to address the patent troll issue, the Association of Vermont Credit Unions reported. In addition to better understanding the problem, the goal of the hearing was to explore ways to prevent abusive patent demand letters, while preserving the right of legitimate businesses to use demand letters to negotiate licenses to their inventions ( Newslines Express April 11).

CUNA, NAFCU, ICBA letter unites on housing finance reform issues

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WASHINGTON (4/14/14)--As part of a coalition of small financial institutions--both credit unions and banks--the Credit Union National Association has urged improvements to proposed housing finance reform legislation that would address the unique needs of those institutions in the housing market.
 
The creation of the coalition enables CUNA, along with the National Association of Federal Credit Unions and the Independent Community Bankers of America, to present a united front on key changes needed in proposed housing finance reform legislation. The changes address:
  • The bill's regulatory burden on credit unions and community banks;
  • Issues to ensure that the housing finance market remains accessible to credit unions and other smaller institutions; and,
  •   Give credit unions, and community banks, representation in governance of the new federal entities envisioned under the proposal.
The letter is addressed to Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) and thanks the senators for introducing their Housing Finance Reform and Taxpayer Protection Act discussion draft. 
 
The coalition letter notes that the current secondary market structure works well for credit unions and community banks and allows them to meet their borrowers' needs. It warns that restructuring the system is "unchartered and untested" territory and therefore raises numerous questions regarding fees and functionality when applied to the real-world marketplace.
 
"We understand some of the specific details of the proposal are still to be established and we hope those changes will satisfy our ongoing concerns and address the uncertainty faced by our member institutions," the letter notes.
 
"Any housing reform proposal must ensure equal and competitive access for community banks and credit unions, while avoiding further concentration of the primary and secondary mortgage markets to the largest of lenders and Wall Street firms," the three groups wrote.
 
They added, "We look forward to providing ongoing input on the concerns raised by community banks and credit unions as we continue to review and digest the evolving measures."
 
The letter was signed by CUNA President/CEO Bill Cheney, ICBA President/CEO Camden Fine and NAFCU President/CEO B. Dan Berger.

CU director's concern for members re: RBC plan sparks his 1st comment letter

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WASHINGTON (4/14/14)--Until the risk-based capital plan was issued, Lou Gill, secretary and director of Chartway FCU, was happy to let his credit union's CEO take the lead on comment letters that addressed regulatory proposals. But this time it's different. Very different.

As a volunteer elected credit union official representing over 180,000 members, I have a responsibility to comment on this RBC proposed regulation because, if approved as written, it will change the future credit unions--and not for the good Gill agrees with CUNA and most credit unions that the industry needs a "smart and thoughtful" risk-based capital plan.

However, he also agrees this proposed regulation "is simply not it." The Virginia Beach, Va. credit union official says his review of the NCUA's 196-page plan showed the proposal would impede Chartway's ability to be competitive in the marketplace in providing sound and safe member financial services.

"Member/consumer lending, mortgage lending and the use of our collaborative CUSO (credit union Service organization) will all be impacted. Our credit union may be forced to reduce dividends on member shares and CDs. Traditional ALM/ALCO (Asset Liability Management/Asset Liability Committee) strategies will be replaced with the new proposed regulatory balance sheet requirements, adversely affecting all of our products."

Please, Gill urges all credit union representatives, work with your CEO, use CUNA's website (see resource link below) to provide NCUA your concerns and suggestions, share your comment letter with your federal lawmakers--before the May 28 deadline elapses.

CUNA at White House meeting on housing reform

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WASHINGTON (4/11/14)--"Access to mortgage credit in the current market" was the topic Thursday of the White House's latest in a series of stakeholders' meetings held to discuss housing finance policy issues.
 
The stakeholders' sessions have been being held as the Senate Banking Committee prepares to consider the Johnson-Crapo housing finance reform bill on April 29.
 
Credit Union National Association officials and staff attended the meeting at which the Johnson-Crapo bill was discussed, as were:
  • Mortgage down payment requirements;
  • Federal Housing Administration (FHA) fees;
  • The FHA Homeowners Armed With Knowledge (HAWK) initiative, which seeks ways to embed housing counseling into FHA mortgage origination and servicing; and
  • The Federal Housing Finance Agency development of a common securitization platform on behalf of the government-sponsored housing enterprises.
FHA Commissioner and Assistant Secretary for Housing Carol Galante was in attendance at the meeting.  CUNA was represented by General Counsel Eric Richard, Deputy General Counsel Mary Dunn and Assistant General Counsel for Special Projects Robin Cook.

Ind. senator proposes relief measure for CUs, community banks

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WASHINGTON (4/11/14)--A Republican senator from Indiana introduced a bill Thursday intended to give credit unions and community banks some relief from "crippling financial regulations" enacted in the wake of the 2008 financial crisis.

Sen. Dan Coats said his bill would modify the way in which the Consumer Financial Protection Bureau (CFPB) requests information from financial institutions with less than $10 billion in assets. The CFPB would be required to use publicly available information or seek the requested information from existing banking regulators.

The Indiana Credit Union League and the Credit Union National Association support the legislation.

In announcing his bill, Coats noted that credit unions and community banks are paying a price of burdensome regulation for mistakes made by players on Wall Street. Credit unions and community banks "did not cause the financial crisis, but they are being treated as if they did by federal bureaucrats," he admonished.

John McKenzie, president of the Indiana Credit Union League, said Coats' bill would be a good first step to bringing a measure of relief from some of the burdens created for credit unions and community banks by the Dodd-Frank and its creation of the CFPB. He said credit unions face "crushing regulatory burdens" in the post-Dodd Frank world.

"We appreciate and support Sen. Coats' efforts to clarify that such reporting requirements need to flow instead through the reports that credit unions are already required to provide to their primary regulators," McKenzie said.

The Coats bill also would allow a financial institution's prudential regulator to deny any request for information from the CFPB, and would allow the CFPB to request only institution-specific information rather than industry-wide information.

Award confers women-friendly workplace status on NCUA

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ALEXANDRIA, Va. (4/11/14)--Women seeking employment in the Washington, D.C.-metropolitan area might want to check out the "jobs available" section of the National Credit Union Administration's website. The agency announced Thursday that it has been recognized by Professional Woman's Magazine as a "Best of the Best" place to work for women.

Workplaces are scored based on policies supporting equal access, advancement and inclusion of all individuals, as well as other activities demonstrating a commitment to diversity and equal opportunity, according to the agency's announcement.

The parent company of Professional Woman's Magazine, DiversityComm Inc., is a human resources research and consulting firm specializing in workplace diversity. The company annually conducts evaluations of employers, including government agencies, to identify those it classifies as "Best of the Best" in terms of outreach and accessibility to African-American, Hispanic, female and veteran populations.

The NCUA took the opportunity of the award announcement to highlight its most recent annual report to Congress about the agency's diversity efforts. 2013 found the representation of women in executive positions had jumped by 11.2 percentage points to 42.6% since 2011. Additionally, minorities, including multiracial, collectively represented 26.8% of the NCUA's workforce in 2013, an increase of 1.6 percentage points over 2011 (News Now April 1).
 
"NCUA strives every day to be an employer of choice," NCUA Chairman Debbie Matz said. "Part of that effort is to promote workplace diversity and opportunities for women and minorities to pursue rewarding careers."

Comment due June 9 on AMC proposal

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WASHINGTON (4/11/14)--An interagency proposed rule on the regulation of appraisal management companies (AMCs) was published in the Federal Register Wednesday. Comments are due by June 9.

This is the rule proposed last month by the National Credit Union Administration and the federal banking agencies to implement requirements of the 2010 Dodd-Frank Act for the registration and supervision of AMCs.

An AMC is an entity that serves as an intermediary between appraisers and lenders and provides appraisal management services.

The proposed rule would apply to states that choose to establish an appraiser certification and licensing agency with the authority to register and supervise AMCs. Under the proposed rule, a participating state would require AMCs to:
  • Register in the state, which will be responsible for supervising its AMCs;
  • Use only state-certified or licensed appraisers for federally related transactions;
  • Comply with the Uniform Standards of Professional Appraisal Practice (USPAP);
  • Ensure the selection of competent and independent appraisers; and
  • Have controls in place to ensure that appraisals comply with the appraisal independence standards under the Truth in Lending Act (TILA).
During the March NCUA open board meeting at which the rule was proposed, NCUA staff indicated they did not think the proposed rule would measurably impact credit unions.  Use the resource link to access the joint-agency proposal.

Treasury research shows in-school branches deepen fin. ed. effort

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WASHINGTON (4/11/14)--A recent U.S. Treasury Department study found that having an in-school credit union or bank branch really helped a financial education curriculum resonate and gain traction with young students.

Treasury commissioned the Corporation for Enterprise Development (CFED) and the Center for Financial Security at the University of Wisconsin-Madison to conduct this "first-of-its kind" examination of the combination of classroom financial education and in-school savings account access. A summary of the report called it "a promising approach for driving measurable improvements in financial capability."

The Treasury's approach would be considered experiential learning, a method based on the argument that people--small or otherwise--learn better when they can apply what they learn in a practical setting and if it is shown to be relevant to their lives.

The study involved Royal CU, a $1.4 billion-asset credit union in Eau Claire, Wis., and Amarillo, Texas-based Happy State Bank, $2.4 billion in assets. The research took place in elementary school classrooms in the two school districts during the 2011-2012 and 2012-2013 school years.

"We're really encouraged by the result of this study," noted Gigi Hyland, executive director of the National Credit Union Foundation. "Through NCUF programs, we know first-hand the power of youth financial literacy and experiential learning. I hope credit unions use this data to further and strengthen their own financial education efforts to improve their member's financial well-being."

In the report summary, Treasury noted, "Overall, the research found improved outcomes from the hands-on financial education approach. Even relatively short classroom financial education significantly improved student financial knowledge, the effects of which persisted through the end of the study period."

"Both the financial education and access to in-school savings accounts were found to improve students' attitudes toward saving and about financial institutions," the summary said, adding that a student with access to financial services in his or her school also was more likely to have a savings account than a student who did not.

Treasury concluded that partnerships between local financial institutions and school districts are a promising strategy to teach financial skills to children early in life, particularly when in-school branches can be combined with a financial education curriculum.

The CFED has scheduled an April 23 webinar to detail the study findings.

Use the resource links to access the study and the webinar registration link.

CFPB hits BofA with $727M in fines, repayments

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WASHINGTON (4/10/14)--Bank of America, N.A. and FIA Card Services, N.A. have been ordered to repay an estimated $727 million in relief to around 1.4 million consumers for alleged deception in the marketing of credit card add-on products.

The CFPB has also hit Bank of America with a $20 million civil penalty for allegedly charging 1.9 million consumers for credit monitoring and credit reporting services that they did not receive.

"We have consistently warned companies about illegal practices related to credit card add-on products," CFPB Director Richard Cordray said Wednesday. "Bank of America both deceived consumers and unfairly billed consumers for services not performed. We will not tolerate such practices and will continue to be vigilant in our pursuit of companies who wrong consumers in this market," he added.

The alleged deceptions took place between 2010 and 2012.

Among other things, Bank of America is said to have misled consumers about the cost of coverage provided under two credit card payment protection products, "Credit Protection Plus" and "Credit Protection Deluxe." The products were intended to help customers in times of hardship or other life events such as college or retirement.

Bank of America telemarketers reportedly also misrepresented the sign-up process for these products, leading customers to believe there were more steps involved when, in fact, they had been signed up for the products during the calls, and being charged for them. The bank allegedly also told customers that protections provided by the products would last longer than the duration stipulated under the contract, and promoted a $25,000 death benefit that was never provided.

CFPB says Bank of America also:
  • Unfairly charged consumers for interest and fees, sometimes pushing those customers over their credit card account limits. This led to additional fees being charged; and
  • Failed to monitor consumer accounts for signs of fraud and identity theft, as promised.
Under the terms of the order, Bank of America will be prohibited from marketing any credit protection or credit monitoring add-on products until it submits a compliance plan, the CFPB said. The bank will also end all unfair billing practices and repay impacted consumers.

More actions will be brought against other banks that may have misled or overcharged credit customers, a senior agency official told Politico .

CUNA: IRS UBIT memo clears way for past-tax refunds for CUs

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WASHINGTON (4/10/14)--Credit unions have received a much-sought-after interpretation by the Internal Revenue Service that clears nearly all credit union products from being subject to unrelated business income tax (UBIT).
 
Finally bowing to the results of two federal court cases brought by credit unions, the IRS recently issued a memorandum that defines nearly all credit union products at stake in the litigation as "substantially related income"--not subject to UBIT.
 
Credit Union National Association President/CEO Bill Cheney hailed the "highly significant development," particularly as it signals that refund requests for past tax payments by credit unions may now be processed. "And--most importantly," Cheney said, "credit unions now may be able to offer products and services to their members in the future with a significantly diminished threat of having to pay this tax."
 
Larry Blanchard, chairman of a coalition of credit union groups that has supported the litigation, said of the IRS memo, "This is clearly a breakthrough with the agency. It signals that credit union tax refunds for past UBIT payments should now be processed."
 
He also emphasized that the IRS action bolsters credit union arguments that future payments to the IRS of UBIT on these same products may not be due.
 
"Credit unions should talk this over with their tax advisers. In any event, this is a welcome development for credit unions," Blanchard observed.
 
He added that the IRS memo reflects the agency's appreciation for rulings of the courts: That the credit union mission to serve members extends well beyond loans and savings accounts.
 
The coalition, called the UBIT Steering Committee, is comprised of representatives of the Credit Union National Association, CUNA Mutual Group, the American Association of Credit Union Leagues and the National Association of State Credit Union Supervisors.
 
According to a three-page, March 24 "memorandum for all exempt organizations employees"--geared toward IRS examiners of exempt organizations, such as credit unions--revenue from the following income-producing activities are deemed by IRS "substantially related income" not subject to UBIT:
  • Sale of checks/fees from a check-printing company;
  • Debit card program's interchange fees;
  • Credit card program's interchange fees;
  • Interest from credit card loans;
  • Sale of collateral protection insurance;
  • Credit life and credit disability insurance (not subject to UBIT if sold to members); and
  • Guaranteed asset protection (GAP) auto insurance (not subject to UBIT if sold to members).
Royalty income from the marketing of accidental death and dismemberment (AD&D) insurance to credit union members is also exempt.
 
IRS has also indicated it will incorporate the memo into its Examination Manual to guide future audits of credit unions.
 
"After 15 years of work--and millions of dollars in litigation expenses--it is ironic that a breakthrough in the struggle of this scope comes down to a three-page memo," Blanchard said. "But the effort has been entirely worth the time and money, particularly for those credit unions who have filed their returns and made payments in the past."
 
In 2009, a jury in federal court ruled in favor of Community First CU, Appleton, Wis., as UBIT related to three insurance products; credit life and credit disability insurance and GAP products. The jury found that these products were substantially related to the tax-exempt purposes of credit unions.
 
In 2010, a federal court in Colorado ruled in favor of Bellco CU. The Greenwood Village, Colo.-based credit union challenged UBIT on income from many of the same products through its direct lending program and its indirect lending program for the tax year 2003 and the portion of tax year 2001 for which it had accurate income records.
 
As to the impact of the IRS guidance on future tax liabilities, neither the UBIT Steering Committee nor any of its members can provide tax advice to credit unions. The committee urges credit unions to consult with their tax advisers on whether the IRS pronouncement, combined with the previous court rulings, provide "substantial authority" to refrain from reporting the affected categories of income in the future. In the past, a law firm retained by the Steering Committee has provided a general opinion on the impact of the court cases on the "substantial authority" issue.  (Use the second resource link to access this opinion.)
 
There are, Blanchard pointed out, some remaining issues to be resolved related to the March 24 IRS memo.
 
"However," he noted, "this development gives us great hope that real light is at the end of the tunnel, and that credit unions will be able to offer products and services to their members in the future with a significantly diminished threat of having to pay this tax."
 
Use the first resource link to access the IRS memo.

NCUA clarifies hearing comments on supplemental capital

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WASHINGTON (4/10/14)--The National Credit Union Administration has "very limited statutory authority" to establish supplemental capital that would benefit federally insured, consumer credit unions by enhancing their net worth for prompt corrective action purposes, agency general counsel noted in a follow-up letter to a Tuesday House Financial Services Committee hearing at which he testified.
 
During the hearing, Rep. Brad Sherman (D-Calif.) asked NCUA General Counsel Mike McKenna a series of questions regarding the NCUA's risk-based capital proposal, including one about supplemental capital as it relates to the RBC plan. The follow-up letter to committee leadership is intended to provide greater clarity on McKenna's answer, the agency said.
 
McKenna in response to Sherman said the agency could consider allowing credit unions greater access to supplemental capital as it finalizes proposed RBC regulations.
 
In his clarification letter, he noted that with the exception of low-income designated credit unions, Congress has limited the definition of "net worth" to retained earnings as defined by generally accepted accounting principles.
 
"Therefore, unless Congress amends the statutory definition of 'net worth,' other forms of capital, including supplemental capital, cannot legally be counted as 'net worth' for federally insured, consumer credit unions, other than those with low-income designation."

The Credit Union National Association has a different interpretation of the credit union capital statute. CUNA maintains that supplemental capital could be used for risk-based capital purposes under a regulatory proposal without legislative changes.

McKenna, in his letter to lawmakers, also noted NCUA concerns that a credit union's inability to raise capital outside of retained earnings limits its ability to serve its members. He reiterated NCUA's support for the Capital Access for Small Business and Jobs Act (H.R. 719).  That legislation would give credit unions an additional tool to promote capital stability by issuing supplemental capital that would count as net worth.

The NCUA general counsel concluded his letter by offering to work with House Financial Services Committee members on H.R. 719 or any similar proposal that would increase access to supplemental capital for "healthy, well-managed" credit unions.

Tighter rules may be on the way for alternative currencies

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WASHINGTON (4/10/14)--Money-laundering and know-your-customer controls will need to be applied to virtual currency transactions such as those made through bitcoin, U.S. Attorney General Eric Holder told U.S. House Committee on the Judiciary members this week.
 
These controls would help fight illegal activity on these marketplaces, Holder said ( Finextra.com April 9). The Department of Justice is working with financial regulators to assess the issue, Holder said, noting that the popularity of alternative currencies
among criminals has created a new issue for law enforcement and regulators alike.
 
The new government attention has made some fear that tightening regulations could tighten the online currency business, Finextra.com wrote.

The question is not if the government will regulate online currencies, but when and which agency will oversee the transactions, MarketWatch.com reported (April 9).
 
There must be regulation, Boston University professor Mark Williams told participants at a recent MarketWatch panel discussion held in New York. Consumer protection must be a focus, he added.
 
Bitcoin Investment Trust creator Barry Silbert argued that bitcoin is regulated, noting that the Financial Crimes Enforcement Network has released guidance on virtual currencies. Silbert said the Federal Reserve, Securities and Exchange Commission, Commodity Futures Trading Commission and the Federal Trade Commission are not likely to regulate the nascent currency.
 
State regulators and the Consumer Financial Protection Bureau may be the bodies in charge of rulemaking for bitcoin, he said. The CFTC may develop regulations if bitcoin derivatives are created, he added.

Committee patent reform vote pushed back two weeks

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WASHINGTON (4/10/14)--Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) said Wednesday that although the committee has made "enormous progress" on complex issues involved in its patent reform bill, the lawmakers "need additional time to draft the important provisions" that have been the subject of most recent discussions.  

Therefore, he again pushed back the committee's scheduled vote on the bill known as the Patent Transparency and Improvements Act (S. 1720). 

"I have talked to many senators on both sides, and because I want to be sure everyone is comfortable with how these pieces fit together, I will circulate a manager's package the day we return from recess, and the Judiciary Committee will consider that legislation the first week we are back," Leahy said in a statement released Wednesday.

On Friday, Congress adjourns for a two-week Spring District Work session.

NCUA testifies sup. capital could be considered as part of RBC discussions

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WASHINGTON (4/9/14)--Lawmakers' expressed interest in the National Credit Union Administration's risk-based capital (RBC) proposal, as heard during a Tuesday House Financial Services Committee hearing, is a "terrific development," Credit Union National Association President/CEO Bill Cheney said.
 
"We have urged Congress to take a particular interest in the proposed risk-based capital rule, and clearly the issue has piqued interest," Cheney said. The questions during the hearing about the risk-based capital proposal reflect "a level of concern in Congress that the proposal is in need of significant improvements." he added.
 
NCUA General Counsel Mike McKenna, a witness at the regulatory burden hearing, said the agency could consider allowing credit unions greater access to supplemental capital as it finalizes proposed RBC regulations.
 
McKenna made his remarks in response to a question during a House Financial Services Committee hearing titled "Who's In Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom."
 
California Reps. Ed Royce (R) and Brad Sherman (D) each had questions about the RBC proposal for McKenna.
 
Royce told McKenna he is concerned that the risk weights applied to mortgages under the RBC proposal do not reflect actual risk and are more stringent then the standards imposed on community banks despite credit unions' generally better delinquency rates.
 
Royce also questioned whether the RBC rule could prevent some credit unions from making loans to their members.
 
Both Royce and Sherman asked McKenna why the risk weights in the NCUA proposal differ so much from those imposed in similar regulations placed on community banks. McKenna noted that the agency has received many comments on risk weights and is looking them over and considering the issue.
 
The NCUA hopes to work with all stakeholders to make the final RBC rule more effective, McKenna said.
 
"We appreciate that NCUA has indicated it will make changes and we will continue to encourage them to do so," CUNA's Cheney said. "Meanwhile, as credit unions file their comment letters with the agency on the proposal, we are urging them to share their comments with their lawmakers, so that Congress can keep a watchful eye on this issue going forward."  (Use the resource link to access CUNA's Risk-Based Capital Action Center.)
 
During the hearing, Royce also took a moment to draw attention to his Credit Union Residential Loan Parity Act, which he noted would increase the amount of capital made available to small businesses and also increase the amount of rental housing available to Americans. McKenna said the agency has reviewed Royce's legislation and has no concerns about it.

European Network, World Council talk CU issues with EU policymakers

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BRUSSELS (4/9/14)--Representatives from the European Network of Credit Unions (ENCU) and World Council of Credit Unions met with European Union (EU) policymakers in Brussels last week to discuss the EU's implementation of the Basel III liquidity rules, a draft EU directive on the automatic exchange of tax information--modeled on the U.S. Foreign Account Tax Compliance Act (FATCA), and the EU's aid package to Ukraine.
 
Click to view larger image From left: Pawel Grzesik, National Association of Cooperative Savings and Credit Unions director of Warsaw office, Poland; Brian Branch, World Council president/CEO; Grzegorz Bierecki, World Council chairman; Marian Harkin, Member of the European Parliament, Ireland; and Brian McCrory, World Council director and Irish League of Credit Unions treasurer. (World Council Photo)
ENCU and World Council officials encouraged EU policymakers to include aid to Ukrainian credit unions as part of the EU's 11 billion euro Ukraine support package. There are more than 600 credit unions in Ukraine with nearly 1.1 million members.
 
The Brussels meeting was held prior to the 2014 European Parliamentary elections, coming this May, and ENCU and World Council advocated better legislative and regulatory outcomes for credit unions throughout the region.
 
"World Council's European members face complex regulatory challenges that require constant communication with regulators and policymakers to protect their countries' credit unions' interests," said Brian Branch, World Council president/CEO. "With the European Network of Credit Unions' help, World Council will continue giving credit unions a global voice to influence standards that apply at national, regional and international levels."
 
Although the EU's legislative schedule has slowed because of the impending elections, ENCU and World Council met with the European Commission about the European Banking Authority's report, released in December, which recommended revising Europe's Basel III liquidity rules to help credit unions maintain access to favorable yields on banks term deposits.
 
In addition, ENCU and World Council met with Commission and EU Council representatives regarding the EU's draft tax information reporting directive modeled on FATCA, which the EU plans to implement by 2017.
 
ENCU member organizations participating in the Brussels meeting included the Association of British Credit Unions Ltd.; the Estonian Union of Credit Cooperatives; FULM Savings House, Macedonia; the Irish League of Credit Unions; and the National Association of Co-operative Savings & Credit Unions, Poland.
 
Also participating in the discussions were Pat Jury, president/CEO, Iowa Credit Union League; Anne Cochran, president/CEO, Louisiana Credit Union League; Bruce Foulke, president/CEO, American Heritage FCU, Philadelphia; and Steve Stapp, president/CEO, San Francisco FCU.

CFPB to become fin. lit. partners with libraries

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WASHINGTON (4/8/14)--In Chicago Monday, the Consumer Financial Protection Bureau launched a financial literacy initiative that eventually will give communities' librarians "unbiased" education materials they can, in turn, share with their visitors.

According to a number of librarians who spoke at the CFPB launch event, folks sometimes seem to stream into their libraries seeking written guidance on financial challenges or planning.

While there is no dearth of available financial education materials, the librarians said their limited resources make it a daunting challenge to provide the right information (American Banker April 8). CFPB Director Richard Cordray said he hoped the pilot program would address these concerns and added he'd like to turn the neighborhood library into a "hub" for financial education.

So far, the pilot program has partnered with such federal agencies as the Institute of Museum and Library Services, the Federal Deposit Insurance Corp., the Federal Reserve Bank of Chicago, and also national organizations like the Financial Industry Regulatory Authority's Investor Education Foundation and the American Library Association.

During the live-streamed Chicago event, Cordray said the bureau will support this effort by providing both online and in-person training for library staff and managers. He added that his agency is considering creating its own financial education materials to share.

The CFPB has said a recording of the session will be available soon on its site. Use the resource link for more information.
 

Leahy delays Senate committee vote on patent reform bill

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WASHINGTON (8/9/14)--The Senate Judiciary Committee sent out notice Tuesday to postpone its scheduled 2:30 p.m. (ET) markup of a patent reform bill known as the Patent Transparency and Improvements Act (S. 1720).
 
The panel's chairman and bill's primary sponsor, Sen. Patrick Leahy (D-Vt.), has made it clear that he wants to move forward with a vote on the bill this spring.  The markup has been rescheduled for Thursday.  If any unexpected, further delays occur, however, it could push the committee's consideration of the bill to after a two-week Spring District Work Session that begins April 11.

The Credit Union National Association supports support the demand-letter language within S. 1720, which would aid credit unions and other businesses that have been targeted with financial threats through demand letters by bad actors who have been come to be referred to as "patent trolls."
 
Use the resource link to read the language of the bill.

McKenna argues NCUA's actions spell clarity, relief for CUs

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WASHINGTON (4/9/14)--Representatives from federal financial regulatory agencies at Tuesday's House Financial Services Committee hearing on regulatory burdens agreed with Rep. Gregory Meeks' (D-N.Y.) assertion that one-size-fits-all regulations are bad for institutions and consumers.
 
Meeks and committee colleagues questioned representatives from the National Credit Union Administration, Consumer Financial Protection Bureau, Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency during Tuesday's hearing, titled "Who's In Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom."
 
In his opening statement, NCUA General Counsel Mike McKenna asserted that 70% of new rules approved by the agency since January 2013 have "provided regulatory relief or greater clarity without imposing new compliance costs.
 
"Since the beginning of 2013, the NCUA board has approved 17 final rules," McKenna said. "Of those, one was required by the Dodd-Frank Act. Five provided regulatory relief. Four addressed safety and soundness matters, and the remaining seven rules were technical in nature," he added.
 
In response, Credit Union National Association General Counsel Eric Richard said after the hearing that credit unions see things quite differently. "Counting the number of rules and deciding how many were regulatory and how many were de-regulatory is not a viable approach. It is the impact of the rules--not their number--that is the real issue."

During the hearing, McKenna said the agency works hard to balance safety and soundness with regulatory burdens. "NCUA is working to streamline its regulatory framework," he added.
 
"Through this initiative, the NCUA board has approved four targeted rules to mitigate risk and six rules to cut regulatory burdens. Rather than adopting one-size-fits-all regulations, NCUA targets rules to risk and asset size and strives to ensure rulemaking is reasonable and cost-effective," he said. Examples of these streamlining efforts include the NCUA's ongoing three-year rule review process, examination process revamps and the re-allocation of agency resources to focus on potential risks, he said.
 
"As we learned from the recent financial crisis," he said, "the cost of inaction can sometimes be greater than the cost of action."
 
McKenna also commented on the agency's risk-based capital rule during the hearing. (See News Now story: NCUA testifies supplemental capital could be considered as part of RBC plan.)
 
Speaking on remittance transfer regulations, Rep. Shelley Moore Capito (R-W.Va.) noted that many firms are exiting that business. New Consumer Financial Protection Bureau rules are making it more difficult and more expensive to provide these services, she said. Capito also noted that she and Meeks are crafting a bill that would require regulators to examine their standards for duplicative regulations.
 
Other topics discussed during the lengthy hearing included:
  • How the regulators examine the impact of their rules;
  • Operation Chokepoint;
  • CFPB actions against auto lenders; and
  • Collateralized loan obligations.

NEW: IRS yields to CU-led court decisions challenging tax payments

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WASHINGTON (4/9/14, UPDATED 2:20 p.m. ET)--Credit unions have received a much-sought-after interpretation by the Internal Revenue Service that clears nearly all credit union products from being subject to unrelated business income tax (UBIT).
 
Finally bowing to the results of two federal court cases brought by credit unions, the IRS recently issued a memorandum that defines nearly all credit union products at stake in the litigation as "substantially related income"--not subject to UBIT.
 
"This is clearly a breakthrough with the agency," said Larry Blanchard, chairman of a coalition of credit union groups that has supported the litigation. "It signals that credit union tax refunds for past UBIT payments should now be processed."
 
He also emphasized that the IRS action bolsters credit union arguments that future payments to the IRS of UBIT on these same products may not be due.
 
"Credit unions should talk this over with their tax advisers. In any event, this is a welcome development for credit unions," Blanchard observed.
 
He added that the IRS memo reflects the agency's appreciation for rulings of the courts: That the credit union mission to serve members extends well beyond loans and savings accounts.
 
The coalition, called the UBIT Steering Committee, is comprised of representatives of the Credit Union National Association, CUNA Mutual Group, the American Association of Credit Union Leagues and the National Association of State Credit Union Supervisors.
 
According to a three-page, March 24 "memorandum for all exempt organizations employees"--geared toward IRS examiners of exempt organizations, such as credit unions--revenue from the following income-producing activities are deemed by IRS "substantially related income" not subject to UBIT:
 
  • Sale of checks/fees from a check-printing company;
  • Debit card program's interchange fees;
  • Credit card program's interchange fees;
  • Interest from credit card loans;
  • Sale of collateral protection insurance;
  • Credit life and credit disability insurance (not subject to UBIT if sold to members); and
  • Guaranteed asset protection (GAP) auto insurance (not subject to UBIT if sold to members).
Royalty income from the marketing of accidental death and dismemberment (AD&D) insurance to credit union members is also exempt.
 
IRS has also indicated it will incorporate the memo into its Examination Manual to guide future audits of credit unions.
 
"After 15 years of work--and millions of dollars in litigation expenses--it is ironic that a breakthrough in the struggle of this scope comes down to a three-page memo," Blanchard said. "But the effort has been entirely worth the time and money, particularly for those credit unions who have filed their returns and made payments in the past."
 
In 2009, a jury in federal court ruled in favor of Community First CU, Appleton, Wis., as UBIT related to three insurance products; credit life and credit disability insurance and GAP products. The jury found that these products were substantially related to the tax-exempt purposes of credit unions.
 
In 2010, a federal court in Colorado ruled in favor of Bellco CU. The Greenwood Village, Colo.-based credit union challenged UBIT on income from many of the same products through its Direct Lending Program and its Indirect Lending Program for the tax year 2003 and the portion of tax year 2001 for which it had accurate income records.
 
As to the impact of the IRS guidance on future tax liabilities, neither the UBIT Steering Committee nor any of its members can provide tax advice to credit unions. The committee urges credit unions to consult with their tax advisers on whether the IRS pronouncement, combined with the previous court rulings, provide "substantial authority" to refrain from reporting the affected categories of income in the future. In the past, a law firm retained by the Steering Committee has provided a general opinion on the impact of the court cases on the "substantial authority" issue.  (Use the second resource link to access this opinion.)
 
There are, Blanchard pointed out, some remaining issues to be resolved related to the March 24 IRS memo.
 
"However," he noted, "this development gives us great hope that real light is at the end of the tunnel, and that credit unions will be able to offer products and services to their members in the future with a significantly diminished threat of having to pay this tax."
 
Use the first resource link to access the IRS memo.
 

NEW: NCUA testifies supplemental capital could be considered as part of RBC plan

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WASHINGTON (4/8/14, UPDATED 1:34 p.m. ET)--The National Credit Union Administration could consider allowing credit unions greater access to supplemental capital as it finalizes proposed risk-based capital regulations, NCUA General Counsel Mike McKenna said this morning.
 
McKenna made his remarks in response to a question during today's ongoing House Financial Services Committee hearing entitled "Who's In Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom."
 
California Reps. Ed Royce (R) and Brad Sherman (D) each had questions about the RBC proposal for McKenna.
 
Royce told McKenna he is concerned that the risk weights applied to mortgages under the RBC proposal do not reflect actual risk and are more stringent then the standards imposed on community banks despite credit union generally better delinquency rates.
 
Royce also questioned whether the RBC rule could prevent some credit unions from making loans to their members.
 
Both Royce and Sherman asked McKenna why the risk weights in the NCUA proposal differ so much from those imposed in similar regulations placed on comment banks. McKenna noted that the agency has received many comments on risk weights and is looking them over and considering the issue.
 
The NCUA hopes to work with all stakeholders to make the final RBC rule more effective, McKenna said.

Credit Union National Association  President/CEO Bill Cheney said of the hearing comments, "It's terrific to see and hear Congress' deep interest in the subjects of credit union capital and business lending. We have urged Congress to take a particular interest in the proposed risk-based capital rule, and clearly the issue has piqued interest."
 
He continued, "The questions about the risk-based capital proposal reflect a level of concern in Congress that the proposal is in need of significant improvements. We appreciate that NCUA has indicated it will consider changes and we will continue to encourage them to do so.
 
"Meanwhile, as credit unions file their comment letters with the agency on the proposal, we are urging them to share their comments with their lawmakers, so that Congress can keep a watchful eye on this issue going forward."
 
During the hearing, Royce also took a moment to draw attention to his Credit Union Residential Loan Parity Act, which he noted would increase the amount of capital made available to small businesses and also increase the amount of rental housing available to Americans. McKenna said the agency has reviewed Royce's legislation and has no concerns about it.
 
Watch News Now Wednesday for more.

Congress this week: Reg burden, patent troll hearings on tap

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WASHINGTON (4/8/14)--A Tuesday House committee hearing on regulatory burdens will lead the week for credit unions, but also high on the radar are congressional actions involving patent reform bills. The Senate Judiciary Committee is expected to complete a mark-up of patent reform legislation and the House Energy and Commerce subcommittee has scheduled a hearing on patent abuses.
 
On financial institution regulatory issues, the House Financial Services Committee regulatory burden hearing, entitled "Who's in Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom," will feature testimony from:
  • National Credit Union Administration General Counsel Michael McKenna;
  • Consumer Financial Protection Bureau General Counsel Meredith Fuchs;
  • Federal Deposit Insurance Corp. Acting General Counsel Richard Osterman;
  • Federal Reserve Board General Counsel Scott Alvarez; and
  • Office of the Comptroller of the Currency Senior Deputy Comptroller and Chief Counsel Amy Friend.
Also on Tuesday, the Senate Judiciary Committee plans to mark up the Patent Transparency and Improvements Act of 2013 (S.1720). CUNA and partners have called on the committee to make improvements to the bill. Patent law abuses will also be on the agenda when the House Energy and Commerce manufacturing and trade subcommittee holds a hearing entitled "Trolling for a Solution: Ending Abusive Patent Demand Letters." (See related story: A details CU reg burden, patent reform concerns for the record.)
 
Other Tuesday hearings include:
  • A Senate Budget Committee hearing on "Supporting Broad-Based Economic Growth and Fiscal Responsibility through a Fairer Tax Code."; and,
  • A House Appropriations homeland security subcommittee hearing on cybersecurity spending in the 2015 budget.
 
On Wednesday, the House Financial Services capital markets subcommittee has scheduled a hearing on legislative proposals to enhance capital formation for small companies. And the Senate Finance Committee on Thursday has scheduled a hearing on President Barack Obama's 2015 budget.
 
The House this week is expected to consider the fiscal 2015 Budget Resolution (H.Con.Res. 96), the Baseline Reform Act of 2013 (H.R. 1871), and the Budget and Accounting Transparency Act of 2014 (H.R. 1872). The Senate is expected to vote on the Emergency Unemployment Benefits Extension Act (H.R. 3979).
 
Congress recesses for a Spring District Work Session on April 11.

Hampel urges CU exec meeting to send RBC plan comments

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WASHINGTON  (4/8/14)--Addressing a group of about 60 Washington, D.C.-area credit union executives and officials Monday evening, Credit Union National Association Chief Economist Bill Hampel explained the National Credit Union Administration's proposed risk-based capital rule to the group.
 
Click to view larger image CUNA's Bill Hampel discusses details of the NCUA proposal on risk-based capital with a participant at Monday's Metropolitan Credit Union Management Association meeting in Arlington, Va. Hampel explained the proposal, CUNA's concerns about it, and urged the group to comment on the proposal. (CUNA Photo)
Addressing the Metropolitan Credit Union Management Association's monthly meeting, Hampel noted CUNA's concerns with the proposal and strongly urged the credit union representatives to file comment letters urging the agency to make changes.
 
He urged his audience to share those comment letters with their representatives in Congress, as well as with CUNA and their credit union league.
 
CUNA has called the NCUA proposal fundamentally flawed. For example, it would increase by a total of $7.3 billion the amount of capital credit unions would be required to hold to be "well capitalized" through the imposition of asset risk-weightings that are poorly calibrated.

Because of the poorly designed risk-weights, the proposed rule would have a significant, adverse impact on credit unions' ability to serve their members, particularly through mortgage lending and small business loans. Also, CUNA maintains that the time period for implementation is unreasonably short at 18 months.

"It's really important that NCUA hears from you on this. If they hear from enough of us, I think there is a really good chance that they will revise this substantially before it becomes final," Hampel said.
 
Hampel said he bases that assessment, in part, on how the agency significantly modified its final rule on credit union derivatives use to reflect industry concerns expressed in CUNA's and credit unions' comment letters. 
 
He added that when the NCUA proposed the RBC, on the same day it approved the final derivatives rule, the agency itself called attention to the changes it made in the derivatives final.
 
Hampel noted that CUNA has created a Risk Based Capital Action Center on its website that, in part, help credit unions both calculate the impact of the RBC plan on their operations and supports comment letter writing efforts.

Fed offers free April 10 compliance webinar

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WASHINGTON (4/8/14)--Common compliance concerns and the components of a successful compliance program will be addressed in an April 10 Federal Reserve Outlook Live webinar.

The hourlong webinar, titled "Consumer Compliance Management Program--Common Concerns and Best Practices," is scheduled to begin at 2 p.m. (ET).

The event is free of charge.

Federal Reserve Bank of Boston examiners Katina Tsagaroulis and Evangelia Stergiou will make presenations during the webinar. A question-and-answer segment will follow.

To register for the event, use the resource link.

CUNA details CU reg burden, patent reform concerns for the record

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WASHINGTON (4/8/14)--The Credit Union National Association this week has submitted letters for the record of hearings on two key credit union issues.

In a letter for the record of today's House Financial Services Committee hearing, entitled "Who's In Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom," CUNA said the ever-increasing regulatory burden that credit unions face makes it more difficult for them to promote thrift and provide credit.

Today's hearing will feature testimony from National Credit Union Administration, Consumer Financial Protection Bureau, Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency representatives. The hearing is scheduled to begin at 10 a.m. (ET). (See related story: Reg burden, patent troll hearings on tap this week.)

The crisis of increasing regulatory burdens "has contributed to consolidation in the financial services industry and a reduction in the availability of services to consumers and small businesses. New and frequently changing regulations drive costs up for credit unions and their members, making matters worse," CUNA President/CEO Bill Cheney said in the letter.

Cheney called on committee members to closely examine the National Credit Union Administration's proposed risk-based capital regulation, calling the rule "one of the most severe threats to credit unions' ability to continue to fulfill their statutory mission.

CUNA also joined a coalition of financial services representatives to submit a second joint letter to the hearing. In that letter, CUNA and others said they fully support the federal government's role in fighting fraud and ensuring the integrity of markets, but are concerned that the overly aggressive enforcement tactics promoted by the Financial Fraud Task Force's initiative "Operation Choke Point" undermine its effectiveness and create serious risks to consumers and the economy.

The Senate Judiciary Committee's is expected to finish marking up its patent reform bill. And patent demand letter abuses will also be a topic as a House Energy and Commerce's subcommittee conducts its hearing entitled "Trolling for a Solution: Ending Abusive Patent Demand Letters."

In a letter to that subcommittee, CUNA urged members of Congress to consider provisions that increase transparency and strengthen disclosure requirements for demand letters, and clarify that the Federal Trade Commission has enforcement authority over patent trolls that operate in unfair or deceptive ways. Minimum disclosure standards would help ensure that only demand letters truly asserting a potentially valid claim of infringement are sent, the CUNA letter said.

CUNA also participated in a patent reform discussion Monday during a Main Street Patent Coalition event on Capitol Hill.

NCUA to CUs: Work with members affected by Wash. mudslide

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ALEXANDRIA, Va. (4/8/14)--Recognizing that a disaster can disrupt the "orderly conduct of lending relationships with individual members," the National Credit Union Administration Monday encouraged credit unions to work with their members affected by the March 22 mudslide in Snohomish County, Wash.

The mudslide was responsible for at least 30 deaths and an estimated $10 million in property damage. The agency said it is monitoring the situation closely.
 
The agency said in a release that appropriate efforts to assist those members could include extending the terms of loan repayments, restructuring a borrower's debt obligations and easing credit terms for new loans, consistent with prudent practices.
 
Credit unions can also make members aware of assistance from other government agencies.
 
Also related to credit unions helping victims of the mudslide, the Northwest Credit Union Association and Northwest Credit Union Foundation partnered to raise funds for families impacted by the disaster (News Now April 1).  The campaign already has raised $50,000, and online donations will be accepted through Wednesday. To donate, use the resource link.
 
The National Credit Union Foundation also said it has funds in its CUAid general disaster relief fund and is working with NWCUA and NWCUF to get disaster relief grant applications to credit union people who were affected by the mudslide.

CUNA seeks Congress' thorough exam of NCUA RBC plan

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WASHINGTON (4/7/14)--Congress should thoroughly examine the National Credit Union Administration's proposed risk-based capital rule and direct the agency to make significant changes to address serious deficiencies in the regulation, the Credit Union National Association said in a letter to House Financial Services Committee leaders.

The letter was sent to Committee Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) ahead of a planned Tuesday hearing on regulatory red tape. General counsels from federal financial institution regulatory agencies, including the NCUA and Consumer Financial Protection Bureau, are expected to speak during that hearing. 

Concerns raised in the letter to Congress include: 
  • The rule is fundamentally flawed. For example, it would increase by $7.3 billion the amount of capital credit unions would be required to hold to be "well capitalized" through the imposition of asset risk-weightings that are poorly calibrated--and, in some cases, more stringent than what banks face under Basel III;
  • Because of the poorly designed risk-weights, the proposed rule would have a significant, adverse impact on credit unions' ability to serve their members, particularly through mortgage lending and small business loans; and
  • The time period for implementation is unreasonably short at 18 months.
CUNA in the letter also commented on recent CFPB rules, noting that that agency in every case should target the bad actors in the financial services market, not force out the good actors. Credit unions should be exempted from CFPB rulemakings, unless there is a record of abusive practices by credit unions on the issue being addressed, CUNA has repeatedly emphasized. 

Credit unions can comment on the NCUA's proposed risk-based capital rule until May 28. CUNA has developed resources to help credit unions develop and file their letters.

For more resources, use the link.

NCUA CU leadership boot camp registration open

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ALEXANDRIA, Va. (4/7/14)--Credit union managers and board directors interested in signing up for an April 12 Leadership Boot Camp still have time to do so.
 
The leadership-training session is hosted by the National Credit Union Administration's Office of Small Credit Union Initiatives (OSCUI) and will be held at the Sheraton Baltimore City Center Hotel.
 
Click to view larger image Click for larger view
Staff from OSCUI, CUNA Mutual Group and the Maryland-District of Columbia Credit Union Association will make presentations. Topics to be covered include:
  • Supervisory committee--your internal audit team;
  • Bank Secrecy Act;
  • Employment practice from CUNA Mutual Group;
  • Succession planning and passing on the baton;
  • Revisiting the allowance for loan and lease losses account;
  • Board governance; and
  • Communications for credit union management.
Started just last year as CEO Boot Camps to focus training on credit union managers and those new to credit union management, this year OSCUI will offer 10 of the expanded leadership sessions.
 
OSCUI offers free training to credit unions regardless of asset size.

Use the resource link to register for the Baltimore boot camp or to view a list of all OSCUI training programs for 2014.

NCUA letter warns, advises about taxi-medallion lending

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ALEXANDRIA, Va. (4/7/14)--Credit unions that make taxi-medallion secured loans, participate in those loans or are contemplating doing so should review new agency guidance on the topic.

The National Credit Union Administration noted in a Letter to Credit Unions (14-CU-06) sent last week that taxi-medallion lending is a valuable form of member business  lending when provided by certain credit unions with proper expertise, but warned that it entails some "unique risks."

The medallions are symbols that usually are attached to the hood of city cabs. The medallions are licenses that are regulated by the city and allow drivers to pick up curbside passengers who hail a cab.

The NCUA letter said that market forces have led to an increase in medallion values in several major metropolitan markets. "As a result, credit unions that offer or participate in these loans can be exposed to increased risk," NCUA Chairman Debbie Matz said. 

The agency also has released a supervisory letter to ensure examiners take a consistent approach to supervising credit unions engaged in taxi-medallion lending. The guidance also provides information that will help credit unions manage the unique risks associated with the loans. 

For the full NCUA letter, use the resource link.

Million$ have been raised for sick kids through CU Run

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WASHINGTON (4/7/14)--It may have been called the Credit Union 'Almost-Cherry Blossom' Run by one announcer, but the
Click to view larger image Both the Men's and Women's USA 10-Mile Championships presented by America's Credit Unions were held in conjunction with the 42nd Credit Union Cherry Blossom 10-Mile Run Sunday. Mamitu Daska (not shown) of Ethiopia won the Women's race and Kenyan Stephen Sambu (not shown) won the Men's. However, the particpipants pictured above appear to have won a whole lot of good feelings with their finishes. (CUNA Photo)
late blooming of Washington's glorious Japanese Cherry Trees didn't dampen the enthusiasm of the 15,000 runners who signed on to help raise almost a half-million dollars for Children's Miracle Network Hospitals (CMNH) Sunday.

A record number of members of Congress became honorary race chairs of the event this year--231 representing all 50 states. Capitol Hill staffers also are present among participants in the race, which was awarded most popular D.C. race by readers of Washingtonian magazine last year.

Overheard conversations between runners reported near-ideal race conditions.  There was just a bit of a headwind in a final leg of the course, which winds its way along national monuments and the landmark Tidal Basin.

Also arriving with much spirit were the many credit union volunteers. They hit the National Mall in chilly pre-dawn hours to back the runners by setting up support stations, and stayed through a beautiful sunrise and during the festive after-race activities.

The volunteers, like the Credit Union National Association's faithful crew at the baggage check-in tent, helped stow the
Click to view larger image For the 13th consecutive year, CUNA volunteers helped to tag, stow, secure and then return the thousands and thousands of bags of runners' personal belongings. (CUNA Photo)
personal belongings of the racers, helped organize thousands of bananas for post-race distribution, pointed the way to the right starting spots at the right time, handed out space blankets to each finisher, and lined up medals and awards to recognize achievements, among other support activities.

Credit Union Miracle Day became the title sponsor group of the now 42-year-old race in 2002 and will remain so through 2016. The effort is a collaboration of 101 credit unions and 48 business partners and credit union service organizations, including lead partner PSCU.

CUMD's 2014 donation of $487,000 will bring the 13-year total of funds donated to Children's Miracle Network Hospitals nationwide to well-over $6 million. Approximately $102,000 of the total was raised by runners and their families and friends alone.

Children's Miracle Network Hospitals are an alliance of premier children's hospitals that treat 10 million critically ill children each year, regardless of their ability to pay.

The donations are made under the umbrella of Credit Unions for Kids, one of the top three corporate contributors to Children's' Miracle Network nationwide.

The race, as always, boasted a star-studded field. It included defending champion Janet Bawcom, who broke a record and finished second, U.S. Olympians Jen Rhines and Blake Russell, Sara Hall and Lindsey Scherf on the women's side. Participating in the men's field were Matt Tegenkamp, Mo Trafeh--winner of the Half Marathon and 25K USA Championships in 2013--Christo Landry and Matt Llano.

The runners competed for a total of $81,800 in prize money, the largest amount awarded at the race to date.

Also on Sunday, the third annual Credit Union SacTown Ten-Mile Run took place at the State Capitol in Sacramento, Calif. Nearly 2,000 participants signed on for the event which features a 10-mile race, a three-person relay and a kids' Miracle Mile.

The 2014 Run serves as the Pacific Association 10-Mile Championship, Parties interested in the credit union fundraising effort can use the resource link below to make a contribution.

March NCUA meeting now available online

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ALEXANDRIA, Va. (4/7/14)--If you missed the March 20 National Credit Union Administration open meeting, you can now go online and hear and see all that went on.
 
The March agenda included two items: 
  • A proposed interagency rule on minimum requirements for appraisal management companies; and
  • The Temporary Corporate Credit Union Stabilization Fund quarterly report. 
The NCUA started posting recorded versions of its monthly open meetings in April 2013. The agency says the practice is part of its ongoing efforts to provide transparency--and to give those unable to attend a board meetings the opportunity to become better informed about agency actions.
 
It takes a little while to get the videos up on the website, the agency has explained, so the posting is accessible to the hearing and visually impaired.
 
Use the resource link to access the archived meetings.
 
 

CFPB addresses reg implementation criticisms

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WASHINGTON (4/7/14)--The Consumer Financial Protection Bureau seems to have gone on the defensive last week regarding regulatory burden as its director, Richard Cordray, told a lawyers' group that his agency is "very committed to developing sensible and workable solutions" to regulatory implementation issues.

Cordray made his remarks before the American Bar Association.

Cordray emphasized that the CFPB's rulemaking process "does not end with finalizing a set of rules."

"It is not good enough for us to take the view that once new rules are published, our work is done and we can say to financial institutions that 'it is your problem now,'" he said.

"If the point of our regulations is to protect consumers and to promote fair, transparent, and competitive markets, then we should care a great deal about how well the rules are implemented," he added. 

Cordray noted that the many operational and compliance changes that a regulatory change can prompt pose interesting problems that "may not be fully understood until the process is under way and the problems are confronted directly."

It can also be difficult for financial institutions and others to gauge the appropriate length of the implementation period for a given rule or set of rules, he added.  

Cordray said it is unclear how best to resolve these regulatory dilemmas, but noted the agency is very committed to developing sensible and workable solutions.

"We will continue to learn more about these issues by deepening our outreach to vendors and taking other steps to set appropriate implementation periods," he said. 

See resource link for more.

Stein to leave Fed board May 28

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WASHINGTON (4/4/14)--Federal Reserve Board Governor Jeremy Stein Thursday submitted his resignation, effective May 28, and announced plans to return to his teaching position in Harvard University's department of economics.

Stein has been a Fed board member since May 30, 2012, and was appointed by President Barack Obama to fill an unexpired term that ends Jan. 31, 2018.

New Fed Chair Janel Yellen said of Stein, "His understanding of monetary policy and markets as well as his expertise in banking and financial regulation has proven invaluable in his service to the Federal Reserve and the country." She added he has served as an "intellectual leader" during his time at the Fed.

While at the Fed, Stein served on the Committee on Bank Supervision and Regulation. He co-chaired the Financial Stability Board's Official Sector Steering Group on reforming interest-rate benchmarks, an international group of regulators charged with developing alternative reference rates and transition strategies in the wake of the "well-documented problems with LIBOR."

Use the resource link to access Stein's letter of resignation.

CUNA names Russell Reynolds to conduct CEO search

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WASHINGTON (4/4/14)--Overseeing the search for a new president/CEO for the Credit Union National Association will be the task of a seven-member committee appointed by CUNA Board Chairman Dennis Pierce, the association announced Thursday.

CUNA also announced it has retained the executive search firm of Russell Reynolds Associates of Washington, D.C., to conduct the search.

CUNA is conducting a search to replace outgoing president/CEO Bill Cheney, who is returning to California to become president/CEO of SchoolsFirst FCU, Santa Ana. SchoolsFirst FCU is the fifth-largest credit union in the country, serving more than 600,000 members and with $10 billion in assets. Cheney--who came to CUNA in 2010 after serving as a credit union and state association CEO in California--will leave the association in June.

"Bill Cheney is returning to California with both CUNA and credit unions in excellent condition," said Pierce, who is also president/CEO of CommunityAmerica CU, Lenexa, Kan. "The search committee has a big job to do in finding Bill's replacement. But I know that the committee members' combined experience, dedication and deep understanding of the mission of credit unions and our trade association will serve the movement well in selecting a new leader."

Serving on the committee are:
  • Susan Streifel (chair), CEO, Woodstone CU, Federal Way, Wash.;
  • Tony Budet, CEO, University FCU, Austin, Texas;
  • Pete Dzuris, CEO, Northland Area FCU, Oscoda, Mich.;
  • Brett Martinez, CEO, Redwood CU, Santa Rosa, Calif.;
  • Rod Staatz, CEO, SECU, Linthicum, Md.;
  • Wendell Lyons, CEO, Kentucky Credit Union League, Louisville, Ky.; and
  • Pat Wesenberg, CEO, Central City CU, Marshfield, Wis.
Pierce will serve ex officio on the committee.

Committee members were chosen who represent a cross section of credit union size and geographic location, as well as the leagues and CUNA's subsidiary, CUNA Strategic Services Inc.

The firm selected to conduct the search, Russell Reynolds Associates, performed the same function prior to Cheney's hiring as CEO in 2010. Russell Reynolds is a global provider of senior-level executive search and assessment with 42 offices across North and South America, Europe and Asia/Pacific. The firm advises clients on recruiting, assessing and retaining leadership.

NCUA grants year's 1st new charter to CommunityWorks FCU

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ALEXANDRIA, Va. (4/4/14)--CommunityWorks Inc., a nonprofit community development financial institution, is sponsoring the first newly chartered credit union of the year with support from the United Way of Greenville County, S.C., and the Hollingsworth Fund.

The National Credit Union Administration announced Thursday that it granted a community charter to CommunityWorks FCU to serve people who live, work, worship or attend school in Greenville County, as well as businesses and other legal entities in the county.

The credit union's potential field of membership is nearly 475,000 people. The credit union plans to offer affordable financial services to individuals who currently are limited to high-cost alternatives.

"Everyone needs and deserves to have access to financial products and services they can afford," NCUA Chair Debbie Matz said. "CommunityWorks will serve a real need among people who live in Greenville County. I commend everyone who worked hard to establish this credit union and made a commitment to the future of their community."

The new federally chartered credit union is expected to open in June with a main office in Greenville. It will serve a low-income community and intends to seek a low-income credit union designation at a later date.

NCUA will drop RBC calculator from site

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ALEXANDRIA, Va. (4/4/14)--The National Credit Union Administration's risk-based net worth calculator, which is intended to help credit unions calculate how an agency proposal would impact their business practices, will be taken off the NCUA homepage once the comment period on the proposal is up on May 28.
 
The Credit Union National Association has urged the agency to limit access to the calculator, as the online tool currently allows the public to determine a credit union's capital adequacy under the proposal. CUNA is pleased the agency will take the calculator down but feels it should not have been available to the general public.  

The announcement was made within an NCUA release Thursday that reminded credit unions that they have until May 28 to comment on the agency's pending risk-based capital proposal.  

The NCUA release also referred to an extended phase-in period for the final risk-based capital (RBC) rule in order to allow credit unions enough time to adjust risk profiles or capital levels, or both, and to ensure compliance with the new regulation. 

The supplementary information to the RBC proposed rule indicates an 18-month implementation period. CUNA asserts that this is nowhere near long enough and points out that commercial banks have until 2019 to comply with Basel III risk-based requirements.

In the release the agency also noted that after it approves a final rule, it will modify the Call Report to comply with the terms of a new rule and provide Prompt Corrective Action classifications accordingly.

The NCUA board approved the RBC proposal at its January open board meeting. The plan would apply to credit unions with assets greater than $50 million and assigns certain risk weights for different assets.
 
In mid-March, NCUA Chairman Debbie Matz wrote to CUNA President/CEO Bill Cheney--in response to CUNA's urgings that the agency scrap the plan or make significant changes--and at the very least allow for an extended phase-in period. She said key changes to the proposal are "not out of the question."
 
Matz added, "Just as NCUA incorporated significant changes to our final rules on troubled debt restructurings, loan participations and derivatives ... I assure you NCUA will do so, as appropriate, on this critically important rule"  (News Now March 11).
 
CUNA continues to urge credit unions to weigh in on the proposal to let regulators know their concerns. CUNA's RBC Action Center is a complete catalog of reference materials for credit unions and it also provides credit unions with a tool to send comment letters to the NCUA.
 
For the NCUA release and CUNA's RBC action center, use the resource links.

Final patent bill must strengthen end-user protections: CUNA

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WASHINGTON (4/4/14)--Effective protections for the end users of technologies like ATMs must be a part of any patent reform legislation enacted into law, the Credit Union National Association wrote in a Thursday joint letter to members of Congress.

The letter was sent to Senate Judiciary Committee Chairman Pat Leahy (D-Vt.), ranking member Charles Grassley (R-Iowa) and all other committee members in advance of an expected markup of a patent reform bill.

Effective protections, the letter said, would include clarifying that depository institutions are included under the definition of "covered customer" as defined in the Federal Reserve Act.

"Credit unions and banks, are in almost all circumstances buyers (end users) of technology and rarely develop it themselves. Simply, they should not be sued for buying something in good faith, off the shelf," the letter said.

Other protections advocated in the letter include:
  • Defining in greater detail the minimum elements of demand letter transparency, or
     
  • Allowing a federal agency, such as the Federal Trade Commission or Patent and Trademark Office, to promulgate standards for a demand letter through rulemaking that the FTC could enforce; and
     
  • Enhancing pleading standards for patent litigation.
Leahy last year introduced the Patent Transparency and Improvements Act of 2013 (S. 1720), which would aid credit unions and other businesses that have been targeted by patent trolls. The committee may mark up this patent reform legislation on Tuesday.

Other Senate bills that would address patent troll issues include the Patent Litigation Integrity Act of 2013 (S. 1612) and the Patent Quality Improvement Act of 2013 (S. 866), offered by Sen. Charles Schumer (D-N.Y.).

"Reforms are desperately needed. This growing problem will not be solved until Congress passes bipartisan legislation that makes clear patent trolls can no longer get away with abusing the system," CUNA and others said in the letter.

The Independent Community Bankers of America,  National Association of Federal Credit Unions and American Bankers Association co-signed the letter.

Additional credit union priorities for patent law reform include:
  • More transparency in demand letters;
     
  • Clarification of Federal Trade Commission enforcement authority over unfair and deceptive demand letters;
     
  • A demand letter registry; and
     
  • Stronger end-user protections.
For the full letter, use the resource link.

New CUNA RBCblog keeps CUs informed on all fronts

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WASHINGTON (4/4/14)--The Credit Union National Association wants the credit union system conversation on risk-based capital (RBC) to become more interactive. The trade association has launched a new blog to provide the means to make that happen.

Making its debut this morning, the RBCblog is the latest CUNA advocacy tool sparked by the National Credit Union Administration's RBC plan proposed at its January open board meeting. The 198-page risk-based capital framework would impose new requirements on credit unions with assets of $50 million and above. The current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor.
 
CUNA supports a risk-based approach to capital but urges significant changes to the NCUA's plan. CUNA maintains that the current proposal will impact far more than the 199 credit unions predicted by the NCUA, and have a far greater cost to credit unions working to replenish their existing capital buffers.
 
The intent of the new blog is to provide a forum for sharing thoughts on risk-based capital in general and the NCUA's proposal in particular, and to serve as an aggregator of industry-wide thoughts, comments, questions and concerns regarding the proposal.

The blog will allow credit unions and state credit union leagues to air their concerns and share how the proposal will affect their operations.  CUNA will also be updating the blog with the latest developments in its efforts to improve the outcome for credit unions regarding the proposal.    

For more information about the blog, contact Robin Cook, assistant general counsel for special projects, or Lance Noggle, assistant general counsel for regulatory advocacy, at CUNA. Use the resource links to visit the blog and to access CUNA's RBC Action Center.

Avoid penalties--report on time, CUNA reminds CUs

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WASHINGTON (4/4/14)--First quarter Call Reports are due to the National Credit Union Administration April 25, and that deadline must be met to avoid a potential civil money penalty, the Credit Union National Association is reminding credit unions.
 
The NCUA put late-filers on notice in January with a Letter to Credit Unions (14-CU-03). The agency called filing tardiness a "a serious problem" that impacts its ability to conduct effective off-site supervision and drains agency resources. Late filings also delay the release of quarterly industry data to the general public.
 
"The NCUA has made it abundantly clear that it will not condone late reports any longer," said CUNA Assistant General Counsel Lance Noggle. 
 
"The agency, in effect, fired a warning shot last quarter by sending late-filers a warning letter. And the warning is that any subsequent late filings could  be subject to civil money penalties," Noggle added.
 
Potential penalties for late filers include:
  • Up to a maximum of $2,000 per day for each day a required report is "minimally" late or contains uncorrected false/misleading information if the late or false/misleading filing is unintentional and the credit union has reasonable procedures in place to avoid such errors;
  • Up to a maximum of $20,000 per day for each day a required report is late or contains false/misleading information if the late or false/misleading filing is not covered by the "unintentional" safe harbor outlined above; or
  • Up to a maximum of $1 million, or 1% of total assets, whichever is less, per day if a federally insured credit union knowingly or with reckless disregard for accuracy submits a false or misleading report and fails to correct it.
To determine the size of the fine, the NCUA said it will consider:
  • The size of financial resources and good faith of the credit union;
  • The gravity of the violation;
  • The history of previous violations; and,
  • Other matters as justice may require regarding the circumstances of late or false/misleading submissions, such as natural disasters and incapacitation of key employees.
Proceeds from the fines will go to the U.S. Treasury, the NCUA said.

Debit fraud protection bill introduced in Senate

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WASHINGTON (4/4/14)--Legislation that would put a $50 liability cap for consumers hit by debit card fraud was introduced in the U.S. Senate.
 
The primary sponsors of the bill, known as the Consumer Debit Card Protection Act of 2014, are Sens. Mark Warner (D-Va.) and Mark Kirk (R-Ill.). The proposed $50 maximum liability limit matches the limit protecting credit card fraud victims. Debit card fraud victims can currently be on the hook for as much as $500 of a wrongfully made purchase.
 
"Debit card use has just exploded in recent years, especially among young people, and consumer protections must keep pace," Warner said of the bill's intent. "This legislation ensures that our federal statutes for debit card protections are on par with those of credit cards, and will help consumers keep their wallets safe," Kirk added.

"In light of the millions of consumers who have had their financial information stolen during one of the recent data breaches, Sen. Warner and I will continue to take data security and the importance of consumer protections very seriously," Kirk pledged.
 
The bill would also shorten the time consumers must wait to receive refunds for fraudulent debit card charges to seven business days from 10 business days.
 
Consumers made 47 billion debit card purchases in 2012, nearly double the 26 million credit card purchases that were made in that year. Debit card transactions were behind $1.68 trillion in 2012 commerce, according to a release by the senators.

New CUNA survey seeks CUs' mortgage rule assessments

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WASHINGTON (4/3/14)--The Credit Union National Association is following up with credit unions now that the Consumer Financial Protection Bureau's new mortgage rules have been in effect since Jan. 10, seeking more information about how those rules are affecting credit union practices.
 
CUNA has posted a new, brief survey on its website asking questions about how credit unions are handling the requirements of the CFPB's Ability-to-Repay/Qualified Mortgage lending rules.
 
"We want to know if the rules are impacting credit availability in the marketplace and whether credit unions are reducing their mortgage loan product offerings as a result of having to comply with the rules," CUNA Deputy General Counsel Mary Dunn said. 
 
The rules cover consumer closed-end mortgage loans including home-purchase loans, refinances, and home equity loans secured by the borrower's dwelling.  There is a tight turn-around for the survey results.  CUNA asks credit unions to respond by respond by noon (ET) on April 7--this Monday.
 
Use the resource link to access the survey.

What's brewing on patent reform

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WASHINGTON (4/4/14)--A House Energy and Commerce subcommittee has scheduled a hearing next Tuesday--April 8--on patent reform issues, entitled "Trolling for a Solution: Ending Abusive Patent Demand Letters." That announcement comes amid reports that the Senate Judiciary Committee's expected patent reform bill markup could be delayed to April 8.

At the Tuesday 10 a.m. hearing, the subcommittee will gather testimony from stakeholders regarding the "growing abuse" of patent demand letters.  
 
"In recent years, small businesses have increasingly been targeted with financial threats through demand letters. Businesses are often told to either pay for a license within a short period of time, or face going to court for infringing the sender's vaguely defined and often specious intellectual property rights," the subcommittee notice explains. Credit unions are among the businesses to fall victim to the patent exploitation.

However, patent demand letters are not always abusive, and the subcommittee intends to explore ways to prevent the bad actors from abusing the process.

Patent law reforms to address "trolls" is a significant issue for credit unions and is seeing a lot of attention from lawmakers on both the federal and state levels.

The Credit Union National Association and many state credit union leagues continue to heavily advocate for patent reforms on Capitol Hill and in state legislative offices.

CUNA also participated in a recent White House gathering of stakeholders to discuss patent law reforms--including addressing the plague of patent trolls. At the meeting, the U.S. Patent and Trade Office unveiled a website to help consumers and businesses who receive demand letters understand their rights and get answers to common questions.  See the resource link.

CUNA pens OMB: RBC plan casts wide net of burden

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WASHINGTON (4/3/14)--The National Credit Union Administration's definition of "complex credit union," as set forth in its proposed risk-based capital (RBC) regulation, "casts a regulatory net that is far too wide" and would create lasting burdens for credit unions, the Credit Union National Association said in a Wednesday letter.
 
The letter was sent to the Office of Management and Budget in response to that agency's request for public assessments of the paperwork burden any new rule would create. 

Under the 198-page NCUA RBC proposal, the current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, the agency has said credit unions with assets of $50 million would be considered "complex," and, thus, would be subject to revised risk-based capital requirements.
 
"The idea that a financial institution becomes 'complex' the moment its assets cross the $50 million threshold is arbitrary. By any reasonable measure, a financial institution with slightly more than $50 million in assets is small and likely to be relatively simple," CUNA Deputy General Counsel Mary Dunn wrote.
 
The CUNA letter also noted that the the FCU Act requires the agency to take more than asset size into consideration when it determines the complexity of a credit union. The NCUA must consider the complexity of a credit union's book of assets such as loan and investments as well as liabilities, and to determine whether a credit union's operations are "sufficiently multi-faceted to warrant the credit union being designated as 'complex'," Dunn said.

While the current definition of "complex," which sets that standard at $50 million in assets and a 6% risk-based net worth ratio, is not perfect, "it does go beyond mere asset size to determine whether a credit union is complex," the CUNA letter noted.
 
While the NCUA claims the proposal will impact less than 200 credit unions, CUNA has repeatedly warned that the RBC plan, as proposed, could affect the core operations of most, if not all, credit unions with assets over $50 million.

The proposed "complex" definition would make many more relatively small credit unions subject to the proposal, and create paperwork and regulatory burdens for credit unions that should not even be under the rule. "Because of their small size, many of these credit unions lack the staff resources necessary to deal with the associated burdens," Dunn noted.
 
For the full CUNA letter, use the resource link.

Federal agencies warn ATM cyber-attacks increasing

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WASHINGTON (4/2/14)--Credit unions and all financial institutions are being alerted to the risks associated with cyber-attacks on ATM and card authorization systems and the continued distributed denial of service (DDoS) attacks on public-facing websites. 
 
The National Credit Union Administration, in conjunction with the other federal financial regulators comprising the Federal Financial Institutions Examination Council (FFIEC), just released a statement that describes steps the regulators expect institutions to take to address these attacks. The release also highlights resources institutions can use to help mitigate the risks posed by such attacks. 
 
Cyber-attacks on financial institutions to gain access to, and alter the settings on, Web-based ATM control panels used by small- to medium-sized institutions are on the rise, the NCUA and partner agencies warn.

Financial institutions must review the adequacy of their controls over information technology networks, card issuer authorization systems, ATM usage parameters and fraud detection processes, the FFIEC states.
 
Also, the joint-agency body expects financial institutions to have effective response programs to manage this type of incident.
 
Regarding DDoS readiness, the FFIEC expects institutions to address it as part of their ongoing information security and incident plans. 
 
"More specifically, each institution is expected to monitor incoming traffic to its public website, activate incident response plans if it suspects that a DDoS attack is occurring, and ensure sufficient staffing for the duration of the attack, including the use of pre-contracted third-party servicers, if appropriate," the agencies said.
 
The FFIEC is comprised of the NCUA, the Federal Reserve Board, the Federal Deposit Insurance Corp., the Comptroller of the Currency, the Consumer Financial Protection Bureau and the State Liaison Committee. 

See resource links for more information.

Thousands prepare for CU Cherry Blossom 10-Mile Run

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WASHINGTON (4/2/14)--Thousands of runners, including more than 900 congressional staffers, are preparing to take to the streets of Washington this weekend for the annual Credit Union Cherry Blossom Ten-Mile Run. A total of 231 Members of Congress representing 50 states, American Samoa, the District of Columbia and Guam, have signed on as honorary race chairs.
Shown here: The sun shines on the starting line of the 2013 Credit Union Cherry Blossom Ten Mile Run. (CUNA Photo)

And, there is good news for Washingtonians and visitors: There is no snow in the forecast!

This is the 13th year that Credit Union Miracle Day (CUMD) is title sponsor group of the race, which is now in its 42nd year. Credit Union Miracle Day is slated to sponsor the race through 2016.

Also maintaining a long-standing tradition, dozens of credit union and Credit Union National Association staff will be on hand the morning of the race to volunteer to keep things "running" smoothly for the race participants. CUNA volunteers will once again show the credit union difference by taking on bag check responsibilities for the  Sunday 10-mile run and 5K run/walk event.

More than 160 members of Congress were honorary chairs at last 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 from the Credit Union National Association. Four former members of Congress also signed on to be honorary race chairs.

Event Director Phil Stewart hailed the star-studded field, which will include defending champion Janet Bawcom, U.S. Olympians Jen Rhines and Blake Russell, Sara Hall and Lindsey Scherf on the women's side. The men's field is led by Matt Tegenkamp, Mo Trafeh--winner of the Half Marathon and 25K USA Championships in 2013--Christo Landry and Matt Llano.

"The Credit Union Cherry Blossom 10-Mile Run has always featured highly competitive fields, with foreign runners winning the men's and women's races as far back as 1984. There has been a long drought of American winners ... and it's exciting to think that we might see an American runner win the race outright this year," Stewart said.

The runners will compete for a total of $81,800 in prize money, the largest amount awarded at the race. (See resource link for online fundraising.)

Also on Sunday, the third annual Credit Union SacTown Ten-Mile Run will take place at the State Capitol in Sacramento, Calif.  Nearly 2,000 participants are expected in the event which features a 10-mile race, a three-person relay and a kids' Miracle Mile.
 
Rep. Ami Bera (CA-07) is the official starter. The 2014 Run serves as the Pacific Association 10-Mile Championship,
 
A check will be presented at a press conference on Friday, April 4 at 10:00 a.m. (PT) at the U.C. Davis Children's Hospital in Sacramento, followed by a CMN Kids Medal Ceremony at 10:35 a.m., and tour of the Pediatric Intensive Care Unit at 10:45 a.m.

NCUA sets April 16 small dollar lending webinar

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WASHINGTON (4/1/14)--Details on how consumer-friendly, low-cost, short-term loans can help a credit union's members and its bottom line alike will be shared in an April 16 National Credit Union Administration webinar.

The free webinar, "Small Dollar Lending," will begin at 2 p.m. (ET). During the webinar, NCUA officials and credit union representatives will discuss:
  • The benefits short-term, small-dollar loans can bring to a credit union's portfolio mix;
  • Regulatory concerns governing this type of product offering; and
  • The costs associated with developing or initiating short-term loans.
NCUA Office of Small Credit Union Initiatives Economic Development Specialist Tom Penna Jr., NCUA Office of Examination and Insurance Program Officer Lucinda Johnson and two credit union representatives will present the webinar.

Participants can submit questions in advance at WebinarQuestions@ncua.gov. The subject line of the email should read, "Small Dollar Lending Webinar."

The NCUA'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. Currently, 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.

To register for the webinar, use the resource link.

NEW: This week on patent reform: What's brewing

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WASHINGTON (4/3/14, UPDATED 9:28 a.m. ET)--A House Energy and Commerce subcommittee has scheduled a hearing next Tuesday--April 8--on patent reform issues, entitled "Trolling for a Solution: Ending Abusive Patent Demand Letters." That announcement comes amid reports that the Senate Judiciary Committee's expected patent reform bill markup could be delayed from April 3 to April 8.
 
At the Tuesday 10 a.m. hearing, the subcommittee will gather testimony from stakeholders regarding the "growing abuse" of patent demand letters.  
 
"In recent years, small businesses have increasingly been targeted with financial threats through demand letters. Businesses are often told to either pay for a license within a short period of time, or face going to court for infringing the sender's vaguely defined and often specious intellectual property rights," the subcommittee notice explains. Credit unions are among the businesses to fall victim to the patent exploitation.

However, patent demand letters are not always abusive and the subcommittee intends to explore ways to prevent the bad actors from abusing the process.

Patent law reforms to address "trolls" is a significant issue for credit unions and is seeing a lot of attention from lawmakers on both the federal and state levels.

The Credit Union National Association and many state credit union leagues continue to heavily advocate for patent reforms on Capitol Hill and in state legislative offices.

CUNA also participated in a recent White House gathering of stakeholders to discuss patent law reforms--including addressing the plague of patent trolls. At the meeting, the U.S. Patent and Tarde Office unveiled a website to help consumers and businesses who receive demand letters understand their rights and get answers to common questions.  See the resource link.

CFPB reports on 2013 consumer complaint volume, type

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WASHINGTON (4/2/14)--The volume of consumer complaints received by the Consumer Financial Protection Bureau was nearly double in 2013 compared to 2012, totaling 163,700 at the end of last year.
 
"Consumer complaints have become central to the work of this agency. These complaints allow the CFPB to listen to, and amplify, the concerns of any American who wants to be heard," agency director Richard Cordray said.
 
"They are also our compass. They make a difference by informing our work and helping us identify and prioritize problems for potential action," he added.

The bureau receives complaints about mortgages, bank accounts and services, private student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection, and payday loans.

Mortgage complaints made up the majority of 2013's tally, with 60,000 consumers contacting the agency.  Not surprisingly,
Click to view larger image Source: CFPB
the CFPB said consumers were most concerned with issues related to loan modifications, collections or foreclosures.
 
The CFPB also received a heavy volume of debt collection and credit reporting complaints: They accounted for 19% and 15% of 2013 complaint volume, respectively.

Complaints filed with the CFPB have helped consumers by forcing financial firms to offer mortgage foreclosure alternatives, restore lines of credit and address unanswered inquiries or fix incorrect information, the bureau maintains.  The complaints have also caused debt collectors to stop engaging in excessive collection communications, and resulted in cleaned-up credit reports, according to the CFPB.

Around 7% of consumers who have filed complaints have received financial compensation as a result of their complaints.

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

New liquidity, contingency plan rules in effect for CUs

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ALEXANDRIA, Va. (4/1/14)--New three-tier liquidity and contingency planning regulations for credit unions went into effect Monday. Under the new rule, credit unions with less than $50 million in assets must maintain a basic written emergency liquidity policy, but will not be required to take further action.

Also under the National Credit Union Administration final rule:
  • Credit unions with assets of $50 million or more are now required to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations; and
  • Credit unions with assets of $250 million or more must have access to a backup federal liquidity source for emergency situations.
Credit unions have two options to ensure a federal liquidity source for emergency situations: Becoming a member of the NCUA's Central Liquidity Facility (CLF) by subscribing to CLF stock or accessing the Federal Reserve's discount window.

In its Letter to Credit Unions 14-CU-05, the NCUA included a supervisory letter and examination questionnaire for examiners to use when reviewing liquidity risk management at credit unions. The Credit Union National Association has developed an eGuide section on the emergency liquidity rule. Use the links below to access these resources.

Ways & Means' Camp will not seek re-election

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WASHINGTON (4/1/14)--House Ways and Means Committee Chairman Dave Camp (R-Mich.) announced Monday that when his term ends in nine months, he will not seek re-election.  On Feb. 26, Camp released a much-anticipated tax reform plan and at the time pundits predicted Camp intended it to be the signature piece of legislation of his career.
 
"During the next nine months, I will redouble my efforts to grow our economy and expand opportunity for every American by fixing our broken tax code, permanently solving physician payments for seniors, strengthening the social safety net and finding new markets for U.S. goods and services," Camp said in a release announcing his retirement from the House.

CUNA Executive Vice President of Government Affairs John Magill said of Camp, "He has been among the strongest of supporters of credit unions throughout his career. We look forward to continued conversations with the chairman during the rest of his term, and we of course wish him well in the next chapter of his life."
 
The specific credit union tax status was left untouched in Camp's plan, an outcome for which the Credit Union National Association strongly advocated.  CUNA, the state credit union associations and credit unions together amassed 1.3 million contacts with lawmakers urging them "don't tax my credit union."
 
Late last month Camp notified his Ways and Means colleagues that the committee will move forward with hearings on his tax reform draft in April--first taking on the amorphous area of tax "extenders." The chairman said the committee will go policy-by-policy and, through hearings and markup sessions, determine what extenders should become permanent to the tax code. Specific dates and topics will be forthcoming.

CUNA will continue to monitor the tax reform process as it unfolds.
 
"While credit unions were untouched in the original tax draft, CUNA will continue to advocate for and educate about the credit union tax status as long as the tax reform process is alive," CUNA's John Magill has vowed.

Mayfair FCU of Philly closes, shares assumed by Freedom CU

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ALEXANDRIA, Va. (4/1/14)--The National Credit Union Administration Monday liquidated Mayfair FCU of Philadelphia. Freedom CU, of Warminster, Pa., immediately assumed Mayfair's members and deposits as well as a portion of the loan portfolio and other assets.

Mayfair was placed into conservatorship in 2013 to protect its financial stability and operations. However, the NCUA made this subsequent decision to liquidate and discontinue operations after determining Mayfair was insolvent with no prospect for restoring viable operations.

The new Freedom CU members will experience no interruption in services, and their accounts remain federally insured by the National Credit Union Share Insurance Fund up to $250,000. Administered by NCUA, the fund has the backing of the full faith and credit of the U.S. Government.

Freedom is a state-chartered credit union serving more than 60,000 members and holding nearly $623 million in assets, according to its most recent Call Report. At the time of its liquidation, Mayfair served 1,519 members and had assets of $14.3 million, according its most recent Call Report data. Chartered in 1936, Mayfair served a low-income community in Philadelphia.

Mayfair FCU is the fourth federally insured credit union liquidation in 2014.

Probation, gambling treatment ordered for former CU employee

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ALEXANDRIA, Va. (4/1/14)--A former employee of Uncle CU, Livermore, Calif., Rhandy Tabar, is now prohibited by a National Credit Union Administration prohibition order from any future work with a federally insured financial institution. Tabar also is under orders to enter into a gambling addiction treatment program.
 
Tabar recently pleaded no contest to grand theft and embezzlement charges and has been sentenced to five years of probation. As a condition of that probation Tabar will serve the first year in county jail. 
 
The former credit union employee was also ordered to pay $606,541.33 in restitution, according to the NCUA.
 
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.
 
Use the resource link below to access the agency's archived enforcement orders.
 
 
 

CUNA represents CUs at White House GSE reform meeting

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WASHINGTON (4/1/14)--In a meeting at the White House complex yesterday, Credit Union National Association General Counsel Eric Richard urged Obama administration officials to consider field-of-membership limitations on credit unions as the officials review issues relating to credit accessibility for borrowers of varying incomes.

The meeting was one of a series that White House staff have held to discuss housing finance policy issues with myriad stakeholders as the Senate Banking Committee prepares to consider the Johnson-Crapo housing finance reform bill (S. 1217) on April 29.
In fact, just last week CUNA Chief Economist Bill Hampel and General Counsel Eric Richard represented credit unions in another such stakeholders' session investigating reform options.

At Monday's meeting, Deputy General Counsel Mary Dunn recommended that the administration facilitate the extension of loans that do not fit the qualified mortgage provisions if the Ability-to-Repay factors have been met and consider incentives for credit unions to continue making high-performing mortgages.

CUNA urges the U.S. Congress and the Obama administration, as they consider comprehensive housing finance reform, to ensure that credit unions and other community financial institutions continue to have access to the secondary mortgage market.

CUNA has highlighted many credit union priorities for reform, including:
  • Allowing credit unions to continue to offer mortgage products with predictable payments, like the 30-year fixed-rate mortgage; and
  • Ensuring the transition to a new system is smooth.

Housing finance reform is a huge issue in the current Congress, with the Senate Banking Committee markup in the offing on its housing finance reform legislation. Housing finance reform bills have also been released by House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Ranking Minority Member Maxine Waters (D-Calif.).

TILA-RESPA integrated disclosures: A CFPB small-entity guide

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WASHINGTON (4/1/14)--An overview of the upcoming Truth-in-Lending Act/Real Estate Settlement Procedures Act rule, and details on "issues that small creditors, and those that work with them, might find helpful to consider when implementing the rule," are included in a new Consumer Financial Protection Bureau guide.
 
In the guidance, the CFPB notes that financial institutions may want to review their processes, software, contracts with service providers, or other aspects of business operations in order to identify any changes needed to comply with the rule.

"Changes related to this rule may take careful planning, time, or resources to implement," the CFPB said. The TILA-RESPA rule goes into effect Aug. 1, 2015.
 
Areas addressed in the guidance include:
  • The loan-estimate disclosure;
  • Delivery of the loan estimate;
  • Good faith requirement and tolerances;
  • Revisions and corrections to loan estimates;
  • Timing for revisions to loan estimate;
  • Closing disclosures;
  •  Practical implementation and compliance issues;
  • Delivery of closing disclosures; and
  • Revisions and corrections to closing disclosures.
The rule features integrated mortgage disclosures under Regulation X and Regulation Z, and provides a detailed explanation of how the forms should be filled out and used.
 
For the full CFPB guide, use the resource link.

NCUA reports to Congress on diversity gains

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ALEXANDRIA, Va. (4/1/14)--The National Credit Union Administration continues to make progress in increasing the diversity of its workforce and its vendors, according to a report to Congress released Monday. However, the rate of increase in minorities collectively represented in the NCUA workforce slowed from the significant increase of the year prior.
 
The report indicates that minorities collectively represented 26.8% of the agency's workforce in 2013. The NCUA notes that that is a 1.6 percentage point increase from 2011, but it is up just 0.1 percentage point from 2012.
 
"NCUA is absolutely committed to developing a stronger, more diverse workplace where everyone's talents are recognized and opportunities abound," said NCUA Chairman Debbie Matz in a release. "We take this responsibility very seriously as part of the overall effort to make the agency an employer of choice. We are likewise committed to expanding the opportunities for minority- and women-owned companies to do business with NCUA."

The report notes that total dollar awards to women- and minority-owned businesses was $8.3 million in 2013, a 137% increase from 2012, and that amount represented 22% of all reportable contracts.

Among the report's other findings for 2013:
  • Women represented 43.7% of all employees in 2013, and 42.6% of senior staff. The year priot women in senior staff positions increased to 41% from 24% , which represented a 17% increase;
  • African Americans represented 14.5% of all employees and 7.4% of senior staff;
  • Hispanic Americans represented 4.4% of all employees and 3.7% of senior staff; and
  • Asian Americans, including Native Hawaiians or Pacific Islanders, represented 5.8% of all employees and 3.7% of senior staff.
The percentages of minority employees remained stable from 2012 or showed slight increases.

In its release the NCUA notes that the agency is regularly recognized by the Partnership for Public Service as a desirable place for women and minorities to work, earning high marks for leadership, diversity, fairness and employee empowerment. Among mid-sized federal agencies, the NCUA ranked first in 2013 with Hispanics and African Americans in the Partnership for Public Service's Best Places to Work in the Federal Government.

Established Jan. 21, 2011, the Office of Minority and Women Inclusion is responsible for all agency matters relating to measuring, monitoring and establishing policies for diversity in NCUA's management, employment and business activities. OMWI is also responsible for assessing the diversity policies and practices of NCUA's regulated entities, excluding the enforcement of statutes, regulations and executive orders pertaining to civil rights.

In Congress: Patent bill, data breaches on the agenda this week

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WASHINGTON (4/1/14)--Possible consideration of patent reform legislation and a data breach hearing are two items credit unions can look out for this week in the U.S. Congress.
 
As reported by News Now last week, The Patent Transparency and Improvements Act of 2013 (S. 1720) is on the Senate Judiciary Committee's markup agenda this week, but the action could be pushed back another week depending on other committee priorities.
 
The data breach hearing, titled "Data Breach on the Rise: Protecting Personal Information from Harm," is scheduled to be conducted Wednesday by the Senate Homeland Security and Governmental Affairs Committee.
 
Federal Trade Commission Chair Edith Ramirez, William Noonan of the U.S. Secret Service's cyber operations division, and U.S. Government Accountability Office Director of Information Security Issues Gregory Wilshusen will testify during the hearing's first panel. Financial Services Roundtable CEO Tim Pawlenty, Retail Industry Leaders Association President Sandra Kennedy and iSIGHT Partners, Inc. Senior Vice President and Chief Revenue Officer Tiffany Jones will testify as part of a second panel of witnesses.

Last week--in a separate data security hearing--Sen. Claire McCaskill (D-Mo.) brought attention to the fact that there is public confusion about who is held financially responsible for the costs that occur when a merchant's data is not secure. She noted that the companies collecting consumers' personal information are not held financially responsible for the costs. Instead, she said, credit unions and other financial institutions bear that burden ( News Now March 27).

Other hearings scheduled this week include:
  • A Wednesday House Appropriations financial services and general government subcommittee hearing on the U.S. Treasury's fiscal 2015 budget; and
  • A Wednesday House Financial Services oversight and investigations subcommittee hearing on allegations of discrimination and retaliation against Consumer Financial Protection Bureau employees.