Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

NEW: Senate Banking approves Johnson-Crapo housing finance reform bill

 Permanent link
WASHINGTON (5/15/14 UPDATED 11:07 a.m. ET)-- The Senate Banking Committee voted this morning to approve its Housing Finance Reform and Taxpayer Protection Act of 2014 (S. 1217). The vote was 13-9.
 
Sen. Mike Crapo (R-Idaho), the committee's ranking member, has called housing reform "the most significant piece of unfinished business from the 2008 financial crisis."
 
Credit Union National Association President/CEO Bill Cheney, following the vote, said, "It's critical that government-sponsored enterprise reform ensures equal and competitive access for credit unions and other small lenders to the housing finance market--and avoids further concentration of the primary and secondary mortgage markets to Wall Street and the largest of lenders.
 
"This legislation takes significant steps toward accomplishing both. Our thanks to Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo for their leadership."
 
The bill is intended to redesign the nation's housing finance reform system to address problems that caused and resulted from the country's recent mortgage market and economic meltdown.
 
The bill's summary says it is "designed to protect taxpayers from bearing the cost of a housing downturn; promote stable, liquid and efficient mortgage markets for single-family and multifamily housing; ensure that affordable, 30-year, fixed-rate mortgages continue to be available, and that affordability remains a key consideration; provide equal access for lenders of all sizes to the secondary market; and facilitate broad availability of mortgage credit for all eligible borrowers in all areas and for single-family and multifamily housing types."
 
Sam Whitfield, CUNA vice president of legislative affairs, also reiterated CUNA's thanks to the sponsors of the bill for listening to credit unions' concerns, and pledged CUNA's continued work with lawmakers as they make reforms happen.
 
"The Johnson-Crapo bill is a bipartisan effort with the majority of the committee members behind it, as shown by this vote. This monumental reform legislation takes into consideration the important role small lenders, like credit unions, have in the marketplace.  The prospect of full Senate consideration is unknown at this time, but it is widely agreed that S. 1217 will be a good starting place for future legislation," Whitfield added.
 
CUNA has advocated for several changes to the bill that were made, including the raising of an assets cap to $500 billion from $15 billion for participation in a mutual securitization company to provide credit unions and smaller lenders access to securitizing their mortgages.
 
For more information on the draft bill, use the resource link. Also, watch News Now Friday for more on the bill's details.

Sen. Franken spotlights CUs' RBC plan concerns

 Permanent link
WASHINGTON (5/15/14)--Sen. Al Franken (D-Minn.) sent a letter Wednesday to National Credit Union Administration Chair Debbie Matz urging her to consider the input of Minnesota's credit unions as the agency considers its risk-based capital (RBC) proposal.
 
Franken added his voice to a growing chorus of lawmakers who are urging the federal regulatory agency to heed credit union concerns that the RBC plan, as written, could adversely affect small businesses and credit union members. A bipartisan collection of more than 320 House lawmakers joined Reps. Peter King (R-N.Y.) and Gregory Meeks (D-N.Y.) this week to urge the NCUA to be judicious as it works to finalize a RBC rule. (See News Now May 14: Concerned about RBC proposal, 75% of U.S. Reps. sign letter to NCUA.)
 
In his separate letter Franken wrote, "Minnesota credit unions have contacted me with a number of concerns regarding the proposed rule. Capital rules must be tailored to the circumstances of credit unions and their customers."
 
The NCUA's proposal would replace existing risk-based net worth requirements with new risk-weighted asset and capital requirements.  The rule would apply to federally insured "natural person" credit unions with more than $50 million in assets.
 
Under the proposed rule, an adequately capitalized credit union would need to maintain a net worth ratio of 6% and an RBC ratio of 8% of equity to risk assets, while a well-capitalized credit union would need 7% and a higher RBC ratio of 10.5%, meaning the RBC ratio for well-capitalized credit unions exceeds that for adequately capitalized credit unions. This violates the Federal Credit Union Act, the Credit Union National Association says. 
 
The act directs the NCUA to set any risk-based component for the well-capitalized threshold no higher than the component for the adequately capitalized level. 
 
CUNA opposes the NCUA's current proposal and is developing a comment letter with its Examination and Supervision Subcommittee. The trade association is also encouraging all credit union with assets above $40 million to consider how the proposal will affect their operations and to file a comment letter by the May 28 deadline.

CUNA seeks comments on mortgage rule amendments

 Permanent link
WASHINGTON (5/15/14)--The Credit Union National Association is seeking comments from credit unions on a Consumer Financial Protection Bureau proposal that would amend certain mortgage rules issued in 2013.

One proposed rule would provide an alternative definition of "small servicer" for nonprofit entities that service, for a fee loans, on behalf of other nonprofit chapters of the same organization.

Another proposal from the CFPB would amend the Regulation Z ability-to-repay requirements to provide that some interest-free, contingent subordinate liens originated by nonprofit creditors will not be counted toward the 200 mortgage loan credit extension limit.

The proposed rule would provide a limited, post-consummation cure mechanism for loans that are originated with the good faith expectation of qualified mortgage (QM) status but that actually exceed the points and fees limit for QMs.

The CFPB is seeking comments on how to provide a limited, post-consummation cure or correction provision for loans that are originated with a good faith expectation of QM status, but that actually exceed the 43% debt-to-income ratio limit that applies to certain QMs.

The CFPB is also seeking feedback and data from smaller creditors regarding implementation of certain provisions of the 2013 mortgage rules that are tailored to account for small creditor operations and how their origination activities have changed in light of the new rules.

Comments are due to CUNA by May 30, with a CFPB deadline of June 5.

For the CUNA comment call, use the resource link.

Domestic, foreign co-op programs need full funding: CUNA, World Council

 Permanent link
WASHINGTON (5/15/14)--In joint letters to U.S. House and Senate lawmakers, the Credit Union National Association and the World Council of Credit Unions advocated for re-authorization of the U.S. Agency for International Development's (USAID) Cooperative Development Program (CDP), and also for increased USAID development assistance to Ukraine.

CUNA and the World Council represent 99 million credit union members in the U.S. and 200 million members worldwide, respectively.
 
In letters to House and Senate state, foreign operations subcommittee leadership, the credit union trade associations requested reauthorization of the CDP program for FY2015 at its FY2014 funding level of $10 million. The CDP is a competitive grants program that responds to the needs of local credit unions and other cooperatives by utilizing the expertise and resources of long-established U.S. cooperative organizations, their members and volunteers.
 
"The CDP allows U.S. credit unions and other cooperatives to continue in a leadership role in reducing hunger and lifting people out of poverty. The resources that you make available to our cooperative development organizations generate positive impacts and results for millions of people in the developing world," wrote CUNA President/CEO Bill Cheney and World Council President/CEO Brian Branch.
 
In urging that Congress increase USAID development assistance to Ukraine, the joint letter said such an increase would "promote democracy as well as economic and social stability in that country."
 
Credit unions in Ukraine were restarted in the early 1990s after the dissolution of the Soviet Union with the support of World Council, the letter noted, and added that the 620 credit unions in Ukraine perform an important private-sector financial and development role for their approximately 1 million natural person members as well as for Ukrainian small and medium enterprises.

Fryzel assures RBC plan will see changes

 Permanent link
WASHINGTON (5/15/14)--National Credit Union Administration board member Michael Fryzel, responding to a letter from the Credit Union National Association, said that he is confident that significant changes will be made to the agency's current risk-based capital proposal for credit unions before it is finalized, reflecting a message that the agency chair and other board member have also stated.

However, Fryzel parted ways with his fellow regulators in his letter to CUNA when he said that if the question of extending the comment deadline on the proposal--as CUNA has recommended--came before the board for a vote, he would vote for an extension.  That opinion, however, puts him in a two-to-one minority as the others on the three-person board have told CUNA that they believe the current May 28 deadline is sufficient for comment gathering.

Fryzel was responding to a joint request by CUNA and the National Association of Federal Credit Unions for the comment extensions.

He wrote, "I am confident that, when the NCUA finalizes the risk-based capital rule, it will include significant changes from what has been proposed, and will incorporate the suggestions of your trade associations and credit unions across the country.
 
"I am a firm believer in taking the time to get a rule right. During the corporate crisis, quick decisions were necessary. We did not have the luxury of time. Fortunately, we are not in a crisis mode and should take this opportunity to proceed with all appropriate care and precision. The NCUA board can afford to take the time to get it right. "
 
The NCUA proposal would make changes to Prompt Corrective Action (PCA) rules, that would replace existing risk-based net worth requirements with new risk-weighted asset and capital requirements.  The rule would apply to federally insured "natural person" credit unions with more than $50 million in assets.
 
CUNA supports risk-based capital, but strongly opposes the proposal the NCUA has issued for comment. Working with its Examination and Supervision Subcommittee, CUNA is developing its comment letter, and is encouraging all credit union with assets above $40 million to consider how the proposal will affect their operations and to file a comment letter.

LICUs eligible for $1.2M in second round CDRLF grants

 Permanent link
ALEXANDRIA, Va. (5/15/14)--The National Credit Union Administration will invest an additional $1.2 million in low-income credit unions through its second round of 2014 Community Development Revolving Loan Fund grants.
 
The agency will accept applications from June 2 through 5 p.m. (ET) June 30. Each applicant may apply in any of four grant categories, but a credit union may only receive funding in one category.

The grants are used by credit unions to improve their service by adding new products, modernizing technology, and expanding staff training. As well as to expand their community outreach efforts.

The grant categories are:
  • Community Development Financial Institution (CDFI) Certification. The NCUA said it anticipates awarding 60 credit unions $2,500 each to cover the cost of applying for CDFI certification. This certification makes a credit union eligible for funding to help service low-income members and communities that lack adequate access to affordable financial services products. 
  • New Product and Service Development. This is for credit unions that want to offer members new electronic services, which include first-time websites, home banking, mobile banking, bill pay, remote deposit capture, online loan and member applications, electronic or digital signatures, and debit, credit or prepaid cards. There is a maximum award of $7,500 for each successful applicant. 
  • Collaboration. The NCUA will award four collaboration grants of up to $50,000 each for a total of $200,000. The grants may be used to establish collaborative relationships for cost-saving projects such as  back-office operations, vendor due diligence, and secondary capital investment pools. A minimum of three credit unions must apply for a single collaboration grant, with the lead credit union having its low-income designation. Collaborations may include leagues, credit union service organization or vendors. 
  • Training. Grants of up to $3,000 each will be available to pay for training in compliance, collections and lending, and governance. The total allocation for training grants is $198,000.
In announcing the new round of grants, NCUA Chairman Debbie Matz said, "Because NCUA's grants to low-income credit unions can improve service and support local economies, I encourage all qualified credit unions to apply."
 
Funding for NCUA's grant initiatives is provided by the Community Development Revolving Loan Fund, a fund created by the U.S. Congress to support credit unions that serve low-income communities. NCUA's Office of Small Credit Union Initiatives administers the fund.

Use the resource link for more information or to apply online.

Housing reform markup on for today

 Permanent link
WASHINGTON (5/15/14)--Despite rumors and reports that its plans could be again derailed, the Senate Banking Committee is still scheduled to begin markup of the Housing Finance Reform and Taxpayer Protection Act of 2014 today.
 
As currently constructed, the bill would call for a wind down of government-sponsored enterprises Fannie Mae and Freddie Mac, and their functions to be replaced by a set of private entities to be overseen by the newly created Federal Mortgage Insurance Corp. (FMIC).
 
According to the committee's summary of the bill it is "designed to protect taxpayers from bearing the cost of a housing downturn; promote stable, liquid and efficient mortgage markets for single-family and multifamily housing; ensure that affordable, 30-year, fixed-rate mortgages continue to be available, and that affordability remains a key consideration; provide equal access for lenders of all sizes to the secondary market; and facilitate broad availability of mortgage credit for all eligible borrowers in all areas and for single-family and multifamily housing types."
 
The markup is likely to be finished today, with the bill widely expected likely to pass the 22-person committee.
 
According to a report by Bloomberg last week, six Democrats--Sens. Elizabeth Warren (Mass.), Charles Schumer (N.Y.), Sherrod Brown (Ohio), Jeff Merkley (Ore.), Robert Menendez (N.J.) and Jack Reed (R.I.) --agreed that they would not support the proposal without significant revisions.
 
Without votes from those six, even if the bill passes committee, it is not expected to make it to the floor for a vote by the Senate as a whole.
 
"Housing reform is critically important, whether it comes in the short term or the long term," said Ryan Donovan, Credit Union National Association's senior vice president of legislative affairs. "We are grateful to the sponsors of this bill for listening to credit unions' concerns and will continue to work with lawmakers as they make reforms happen."
 
CUNA supports housing reform, and previously advocated successfully for a change in the bill that proposed a mutual securitization company to provide credit unions and smaller lenders access to securitizing their mortgages. 
 
The assets cap for participation in the mutual was eventually raised to $500 billion from the original $15 billion, after testimony from CUNA Chief Economist Bill Hampel, among others.

FHFA launches social media accounts

 Permanent link
WASHINGTON (5/15/14)--The Federal Housing Finance Agency has launched an official Twitter account: Its handle is @FHFA.
 
The feed aims to increase the availability and accessibility of FHFA news, and will be used to tweet links to speeches, testimony, news releases, research papers, monthly and quarterly reports and other select announcements.
 
FHFA will also post select news on its newly created FHFA YouTube channel. The channel features recent radio and TV spots from FHFA's national education campaign on the Home Affordable Refinance Program.
 
Also, the FHFA will use LinkedIn to post job advertisements on an occasional basis.
 
Use the resource links for more information.