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Inside Washington (05/01/2012)

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  • WASHINGTON (5/2/12)--John Munn was re-elected chairman of the Federal Financial Institutions Examination Council State Liaison's Committee (SLC). His term will run through April 30, 2013.  Munn is the director of the Nebraska Department of Banking and Finance, where he has served since January 2005. Munn was first elected chairman of the SLC in February 2008 for a partial term created when the previous chairman resigned.  Since May of 2008, Munn has been subsequently re-elected to five one-year terms.  Also, David J. Cotney, commissioner, Massachusetts Division of Banks, was reappointed to the SLC.  His nomination was first confirmed by the council in 2010 to complete a partial term vacancy created by the resignation of Sarah Bloom Raskin, upon her appointment to the Board of Governors of the Federal Reserve System. Cotney's first full term will continue through April 30, 2014. Cotney has more than 20 years experience with the Massachusetts Division of Banks. He previously served as the chief operating officer and senior deputy commissioner for administration and policy, and 10 years experience as deputy commissioner in various units of the division ...
  • WASHINGTON (5/2/12)--About 60% of lenders said they were now "much less likely" to originate home loans backed by Fannie Mae and Freddie Mae to an applicant with a FICO score of 620 and a 10% down payment than they were before the financial crisis, according to the Federal Reserve's Senior Loan Officer Opinion Survey. Banks provided several reasons for their hesitancy, including fear of exposure to residential real estate; effects of legislative changes, supervisory actions and new accounting standards; higher servicing costs for delinquent mortgages; and the challenges some borrowers face in obtaining second liens (American Banker May 1). The survey indicated banks were less likely to originate Fannie Mae and Freddie Mac-backed loans to potential borrowers with a FICO score of 680 regardless of the size of the down payment. Reservations by banks about using the government-sponsored enterprises for borrowers with a FICO score above 720 with a 10% down payment have changed little from 2006. About 71% of lenders said their likelihood to lend to those borrowers was about the same

May 8 webinar is for CTR SAR tech specifications

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VIENNA, Va. (5/2/12)--Information technology (IT) professionals--those responsible for integrating upcoming technical specifications for updates to the Financial Crimes Enforcement Network's (FinCEN) new Currency Transaction Report (CTR) and Suspicious Activity Report (SAR)--may be interested in a May 8 informational webinar.

The FinCEN webinar will also address recently released specifications for its new Designation of Exempt Person (DOEP) report. The session is specifically designed for those IT professionals responsible for integrating the new technical specifications into batch filing processes; these may be vendors of batch filing programs as well as in-house IT staff of financial institutions.

FinCEN representatives will discuss the following topics during the webinar:

  • Overview of the e-filing specifications for FinCEN's new CTR, SAR, and DOEP;
  • Overview of BSA e-filing test site and testing process; and
  • FAQs about the e-filing specifications.
FinCEN will be offering a separate webinar at a later date for financial institution employees and compliance professionals with BSA-related responsibilities.

It is recommended that participants of the IT webinar review the technical specifications prior to the session and document any specific questions for discussion. Use the resource link to access the specifications.

La. insurance commission is first to partner with FinCEN

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VIENNA, Va. (5/2/12)--The Louisiana Commissioner of Insurance and the Financial Crimes Enforcement Network (FinCEN) have signed a Memorandum of Understanding (MOU) that will allow the state and federal regulators to share information meant to better protect the financial industry and consumers from criminal activity and fraud.

FinCEN hopes this is just the first of many such agreements with states. The goal of the MOU are to enhance communication and coordination between FinCEN and state insurance departments to help states better identify, deter and interdict financial crime. FinCEN the agreement should also help states to efficiently pass information along to FinCEN, which would enhance its crime-fighting efforts.

Louisiana's insurance commissioner, James J. Donelon, is president-elect of the National Association of Insurance Commissioners, and FinCEN said he will "help set the standard for other states to follow."

"This is a significant tool that will enhance our efforts to better protect our consumers from fraud and other criminal activity," said Commissioner Donelon in the MOU announcement.

IRS announces 2013 VITA application deadline

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WASHINGTON (5/2/12)--Applications for the Internal Revenue Service's Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) grant programs will be accepted until May 31, the IRS has announced.

The TCE Program offers free tax help to taxpayers who are 60 and older, and VITA offers free tax help to people earning $50,000 or less. Many credit unions offer these forms of tax preparation assistance.

Credit unions and community organizations that take part in the VITA Program receive IRS-provided training in the preparation of basic tax returns and establishment of tax preparation sites. Organizations that apply for funding in this round may receive annual VITA funding for as many as three years.

The IRS in a release noted it awarded $5.6 million in funds to 30 TCE grantees ahead of the most recent tax filing season. A total of $12 million was awarded to 213 VITA grantees in that same time period, and the IRS said the two programs had processed more than 2 million returns as of April 9.

Despite Fed survey jury out on interchange impact CUNA

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WASHINGTON (5/2/12)--While the Federal Reserve's study of the impact of the debit card interchange fee cap suggested that smaller issuers have only seen modest changes in their rates, Credit Union National Association (CUNA) President/CEO Bill Cheney said "the jury is still out" and credit unions continue to be concerned that market forces will ultimately drive down the fees that the exemption for smaller institutions is intended to protect.

For a CUNA summary of the Fed survery report, use the resource link below.

The survey, which was required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and is intended to help the regulator monitor the interchange rule's impact on markets and the effectiveness of the interchange fee limitation exemption for small issuers, found that:

  • The average interchange fee received by credit unions and other debit card issuers that are exempt from the Federal Reserve's debit interchange fee cap was 43 cents per transaction in 2011;
  • The average interchange fee charged by financial institutions that are subject to the cap was far lower in that time period, totaling 24 cents per transaction; and
  • The average interchange fee in 2009 was 43 cents.
The Fed reported there were 46.7 billion debit card transactions in 2011, with a value of more than $1.8 trillion. This total was a 24% increase from 2009's transaction total of 37.6 billion, and a 27% increase from the amount of interchange income tallied in 2009, $1.4 trillion, the Fed added.

The survey collected data on all costs associated with debit card programs and debit card transactions from card issuers and payment network representatives.

The surveys are intended to compile aggregate or summary information concerning the costs incurred, and interchange transaction fees charged or received by issuers or payment card networks in connection with debit card transactions.

Overall, Cheney said, it would be a mistake to read too much into the results of Federal Reserve's debit card interchange fee survey.

The debit interchange fee cap regulations, which became effective last fall, limit debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allow an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap.

Cheney on Tuesday noted that the debit fee regulations do not require card networks to maintain a two-tiered system; they do so only at their discretion. And secondly, it is too soon to tell whether the routing and exclusivity provisions that dictate the use of PIN or signature networks will over time undermine any two-tiered interchange fee structure by driving small-issuer rates toward the large-issuer cap.

The routing and exclusivity provisions in the interchange regulation have only been in effect since April 1, and the Fed survey only covers the fourth quarter of 2011, he also noted.

For more on the Fed survey, including CUNA's summary, use the resource links.

CU comment sought on NCUA annual reg review

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WASHINGTON (5/2/12)--Each year, the National Credit Union Administration (NCUA) reviews one-third of its regulations to identify any rule or provision that it deems "outmoded, ineffective, insufficient, or excessively burdensome," and the Credit Union National Association (CUNA) has asked credit unions to share their concerns regarding the NCUA's 2012 regulatory reform list, which was released earlier this year.

Regulations under review in 2012 include rules governing bylaws, fields of membership, fixed-asset ownership, mergers, and corporate credit unions, among others.

The NCUA will review the following regulations in 2012:
  • § 701.1 - Federal Credit Union Chartering, Field of Membership Modifications, and Conversions;
  • § 701.2 - Federal Credit Union Bylaws;
  • § 701.3 - Member Inspection of Credit Union Books, Records, and Minutes;
  • § 701.4 - General Authorities and Duties of Federal Credit Union Directors;
  • § 701.6 - Fees Paid by Federal Credit Unions;
  • § 701.14 - Change in Official or Senior Executive Officer in Credit Unions that are Newly Chartered or are in Troubled Condition;
  • § 701.19 - Benefits for Employees of Federal Credit Unions;
  • § 701.20 - Suretyship and Guaranty;
  • § 701.21 - Loans to Members and Lines of Credit to Members;
  • § 701.22 - Loan Participation;
  • § 701.23 - Purchase, Sale and Pledge of Eligible Obligations;
  • § 701.24 - Refund of Interest;
  • § 701.25 - Charitable Contributions and Donations;
  • § 701.26 - Credit Union Service Contracts;
  • § 701.30 - Services for Nonmembers Within the Field of Membership;
  • § 701.31 - Nondiscrimination Requirements;
  • § 701.32 - Payments on Shares by Public Units and Nonmembers;
  • § 701.33 - Reimbursement, Insurance, and Indemnification of Officials and Employees;
  • § 701.34 - Designation of Low-Income Status; Acceptance of Secondary Capital Accounts by Low-Income Designated Credit Unions;
  • § 701.35 - Share, Share Draft and Share Certificate Accounts;
  • § 701.36 - FCU Ownership of Fixed Assets;
  • § 701.37 - Treasury Tax and Loan Depositories; Depositories and Financial Agents of the Government;
  • § 701.38 - Borrowed Funds from Natural Persons;
  • § 701.39 - Statutory Lien;
  • § Appendix A to Part 701 - Federal Credit Union Bylaws;
  • § Appendix B to Part 701 - Chartering and Field of Membership Manual;
  • Part 702: Prompt Corrective Action;
  • Part 703: Investment and Deposit Activities;
  • Part 704: Corporate Credit Unions;
  • Part 705: Community Development Revolving Loan Fund Access for Credit Unions;
  • Part 706: Unfair or Deceptive Acts or Practices;
  • Part 707: Truth in Savings;
  • Part 708a: Bank Conversions and Mergers;
  • Part 708b: Mergers of Federally-Insured Credit Unions; Voluntary Termination or Conversion of Insured Status;
  • Part 709: Involuntary Liquidations of Federal Credit Unions and Adjudications of Creditor Claims Involving Federally Insured Claims Involving Federally Insured Credit Unions in Liquidation; and
  • Part 710: Voluntary Liquidations.
NCUA Chairman Debbie Matz in announcing the list said the agency is "committed to 'modify, streamline, expand, or repeal' rules that are not required by statute and would not jeopardize safety and soundness," and the NCUA has noted the 2012 round of reviews begins a new three-year rotation that will result in another complete review of all NCUA regulations by 2014.

Comments should be sent to CUNA by July 16.

The NCUA is accepting public comments on the substance and wording of each rule until Aug. 3.

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

NEW Fed releases interchange survey

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WASHINGTON (UPDATED: 12:30 p.m. ET, 5/1/12)—The Federal Reserve's interchange study, as required by the Dodd-Frank Act, was released earlier today.

Among the findings:

  • The average interchange fee received by credit unions and other debit card issuers that are exempt from the Federal Reserve's debit interchange fee cap was 43 cents per transaction in 2011;
  • The average interchange fee charged by financial institutions that are subject to the cap was far lower in that time period, totaling 24 cents per transaction; and
  • The average interchange fee in 2009 was 43 cents.
The Fed reported there were 46.7 billion debit card transactions in 2011, with a value of more than $1.8 trillion. This total was a 24% increase from 2009's transaction total of 37.6 billion, and a 27% increase from the amount of interchange income tallied in 2009, $1.4 trillion, the Fed added.

The Fed's interchange market surveys collect data on all costs associated with debit card programs and debit card transactions. The survey results are drawn from debit card issuers and payment card network representatives.

The surveys are intended to compile aggregate or summary information concerning the costs incurred, and interchange transaction fees charged or received by issuers or payment card networks in connection with debit card transactions.

The Fed surveys are intended to help the regulator monitor the interchange rule's impact on markets and the effectiveness of the interchange fee limitation exemption for small issuers.

The debit interchange fee cap regulations, which became effective last fall, limit debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allow an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap.

The Credit Union National Association is analyzing the Fed report, and more on CUNA's analysis will be featured in Wednesday's News Now.

For more on the Fed survey, use the resource link.