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House to consider CU relief bills next week

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WASHINGTON (5/2/14)--Regulatory relief -- a top priority for the Credit Union National Association--would be realized for credit unions under a number of measures that will be considered next week on the House floor.

Among the items on the House schedule for consideration are:
  • H.R. 3468, which would  extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts. This bill, supported by CUNA, would provide parity for credit unions with banks with respect to federal insurance coverage of lawyer trust accounts (IOLTAs: Interest on Lawyer Trust Accounts) and other similar accounts;
  • H.R. 3584, which would  broaden credit unions' ability to apply for Federal Home Loan Bank membership.  CUNA strongly supports this bill that would put the country's privately insured credit unions on the same footing as their federally insured counterparts where it comes to membership in the FHLB system; and,
  • H.R. 2672, which would grant credit unions and other lenders greater input into rural-area designations made by the Consumer Financial Protection Bureau. The rural county designations determined by regulators can impact the types of products credit unions may offer their members in those areas and CUNA maintains that any time credit unions can gain an additional opportunity to provide input into the process, they should do so.

CUNA: Fed remote capture changes could create loss risks

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WASHINGTON (5/2/14)--Proposed changes to remote deposit capture (RDC) standards could increase risks for all financial institutions that offer that product, and alternative approaches to addressing the issue must be considered, the Credit Union National Association said in a letter to the Federal Reserve.

RDC transactions allow credit union members and bank customers to transmit scanned share drafts or checks to their financial institutions from remote locations.

The Fed is considering changes that would allow a depository institution that accepts an original check to recover directly from the financial institution that permitted the check to be deposited through RDC when there has been duplicate presentment.

The Fed has also proposed new indemnity rules relating to RDC to cover institutions that receive deposit of an original paper check returned unpaid, because it was previously deposited (and paid) using RDC.

CUNA supports the intent behind the proposal--to improve the check-clearing process and to account for a shift toward fully electronic checks, Assistant General Counsel Dennis Tsang wrote. However, he added, the board should also minimize the impact the proposed changes could have on smaller institutions.

Credit unions, the CUNA letter noted, have concerns that the Fed's proposed changes would increase risks for institutions offering RDC. Also, financial institutions offering RDC generally have taken steps already to reduce the risk of duplicate presentments and the likelihood that other institutions will deposit the paper check again after they have honored it.

The CUNA letter also called on the Fed to:
  • Consider whether the proposed indemnity could be applied only to paper checks that have not been restrictively endorsed;
  • Further assess and research the likely operational impacts that a pair of proposed alternative RDC approaches could create;
  • Limit changes to Reg CC that would maintain an expedited check-return process;
  • Address and limit any increased risks that applying Check-21-like warranties to electronic images and electronic information could create for financial institutions;
  • Clarify the indemnities and warranties in Reg CC that should apply to electronically created items; and
  • Provide appropriate flexibility for financial institutions to vary certain terms by agreement, and also address risk management regarding the unique attributes and risks associated with electronically created items.
In addition, CUNA called for a delayed effective date of at least one year to provide adequate time for credit unions and others to implement any changes.
CUNA also encouraged the Fed and Consumer Financial Protection Bureau to work closely with credit unions on check and other payments issues, and to solicit comments on the impact to credit unions during the rulemaking processes.

For the full comment letter, use the resource link.

NCUA stands firm on May 28 RBC comment deadline

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ALEXANDRIA, Va. (5/2/14)--The comment deadline for the National Credit Union Administration's risk-based capital (RBC) plan remains at May 28, said agency board member Rick Metsger in a letter to the Credit Union National Association.  The response aligns Metsger with NCUA Chair Debbie Matz who also said no to a joint request by CUNA and the National Association of Federal Credit Unions to extend the comment period.
A key reason the deadline must remain May 28, according to Metsger, is that the regulator wants adequate time for staff to summarize written RBC comments to better inform the Listening Sessions Matz and Metsger--and perhaps NCUA nominee J. Mark McWatters by then--will be conducting across the country this summer. 
Also, basic human nature--lulling many to wait until the last minute to submit a report or comments--argues against an extension, Metsger asserted.
"Extension of the comment period is more likely to delay the receipt of comments (and thus delay their consideration) than it is to generate additional comments. It would seem more productive for interested parties to utilize the significant time still left in the comment period to focus their energy on actually analyzing the proposal and providing input, rather than eroding that time on other issues," he wrote.
Metsger noted in his April 30 letter that he will carefully consider any comment on the proposal prior to a final vote, regardless of when it is received. CUNA General Counsel Eric Richard pointed out, however, that the other members of the NCUA board have not made any similar commitment. "The comment deadline remains May 28--that is hard and fast.  A credit union must meet that deadline to become a part of the official record on this historic proposal," he said.
Metsger reminded in his letter that the agency has created resources, available at , to help credit unions understand the proposed rule.
Reflecting another point made by Matz when she sent her response to the joint trade group request for an extension, Metsger said, "While I cannot predict what the board will do, it is common for final rules to be modified to reflect comments received.  History suggests the more complex and significant a rule is, the greater the likelihood modifications will be made."

On Thursday, Richard reiterated CUNA's urging to credit unions to weigh in on the RBC plan.

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. However, the association strongly opposes the proposal the NCUA has issued for comment. Working with CUNA's Examination and Supervision Subcommittee, CUNA is developing its comment letter, which it says will reflect major concerns and present a range of recommendations to make the proposal workable.

In the meantime, CUNA 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.

Use the resource link for CUNA's RBC Action Center.

Grants available to CUs in storm-hit areas: NCUA

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ALEXANDRIA, Va. (5/2/14)--Grants are available to help credit unions impacted by recent storms repair their facilities and restore their operations, the National Credit Union Administration reminded on Thursday.

The four days of storms, which hit much of the Southeast, Mid-Atlantic and Northeast, and parts of the Midwest, threw off an estimated 79 tornadoes and created floods of historical proportions from Florida to La Guardia.

Low-income designated credit unions may apply for up to $7,500 in grant funding to pay for repairs and fix or replace damaged equipment through the agency's Urgent Needs Initiative. The fund is supported by the Community Development Revolving Loan Fund and is administered by the NCUA's Office of Small Credit Union Initiatives. It provides grants to help restore operations and fix facilities damaged by natural disasters and other unexpected events, but the agency accepts applications for the initiative year-round.

For the full NCUA release, use the resource link.

Credit unions are one group that can play a critical role in helping communities recover after disaster strikes. Agility Recovery this week gave tips on how preemptive steps taken by credit unions and other organizations can help.

Use the resource link to access the News Now article: Expert shares disaster preparedness advice with CUs.

Mass. bank commish reappointed to FFIEC slot

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WASHINGTON (5/2/14)--David Cotney, Massachusetts Commissioner of Banks, has been reappointed to the Federal Financial Institutions Examination Council's (FFIEC) State Liaison Committee (SLC).

Cotney was also selected to serve as SLC chairman for one year but can be elected for additional terms as leader. His SLC term is scheduled to end on April 30, 2016.

The SLC encourages the application of uniform examination principles and standards by state and federal agencies and allows state regulators to participate in the development of those principles and standards.

The group consists of five representatives of state financial institution regulatory agencies, and members are designated from the Conference of State Bank Supervisors, the American Council of State Savings Supervisors, the National Association of State Credit Union Supervisors and the FFIEC for two-year terms.
The FFIEC is comprised of the leaders of the National Credit Union Administration, the Federal Reserve Board, the office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corp.
For the full release, use the resource link.

Fair lending focus on high-risk areas, CFPB says

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WASHINGTON (5/2/14)--High-risk areas have become the focus as the Consumer Financial Protection Bureau refines its fair lending examination and supervisory work, the agency said this week.

"For many consumers, access to responsible credit remains a challenge. Without fair and equal access to credit, some people may never reach their financial goals. Worse, some consumers may face discrimination in the process," CFPB Assistant Director for the Office of Fair Lending and Equal Opportunity Patrice Ficklin wrote.

He added, "We've created, refined, and implemented a process to focus our supervisory work on areas that present higher risk to consumers when it comes to fair lending."

Ficklin said the CFPB's supervisory work on behalf of consumers takes agency staff into institutions to analyze data and review policies and practices to determine compliance with the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act.

The CFPB blog post highlighted recent agency actions against ECOA and HMDA violators, including:
  • Actions taken against two mortgage lenders that had significant mortgage loan application data errors;
  • Actions against a credit card company that unlawfully discriminated against car applicants;
  • Actions against a mortgage lender that charged African-American and Hispanic borrowers higher rates than it charged white borrowers with similar creditworthiness; and
  • Actions against an indirect auto lender that overcharged minority borrowers.
For more on CFPB enforcement, use the resource link.