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CUNA: Why CUs below $50 million threshold need to comment on RBC proposal

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WASHINGTON (5/21/14)--Credit Union National Association Deputy General Counsel Mary Dunn urges credit unions--even those under a $50 million-in-assets threshold--to read the National Credit Union Administration's risk-based capital (RBC) proposal, determine the extent to which they could be impacted in the future, and get their comments in to the federal regulator.
The period to comment on RBC plan ends May 28--five business days from today--and 950 comment letters have already been sent, according to the NCUA.
"We're urging credit unions, even if they have less than $50 million in assets, to read the proposal and determine the extent to which they could be impacted into the future. Even if they're not affected by the change right now, they certainly could be," Dunn said. "Credit unions grow, and if this proposal is adopted, it will affect these credit unions' ability to plan their product offerings and investment strategies."
The RBC plan proposed by the NCUA would make changes to Prompt Corrective Action rules, replacing existing risk-based net worth requirements with new risk-weighted asset and capital requirements for federally insured "natural person" credit unions with more than $50 million in assets.
CUNA believes that the rule's requirement that a well-capitalized credit union would need 7% and a RBC ratio of 10.5% that is higher than the proposed requirement for an adequately capitalized credit unions, is in violation of the Federal Credit Union Act. The act does not authorize the NCUA to set a RBC ratio for well-capitalized credit unions that would exceed the RBC component for adequately capitalized credit unions.
"It's important that every credit union understand this proposal, how they might be affected by it and file a comment letter based on their consideration of the proposal," she said.
Use the resource link below for more information.

New Experian white paper analyzes data breach laws

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COSTA MESA, Calif. (5/21/14)--A new white paper developed by Experian Data Breach Resolution analyzes the current legislative and regulatory landscape surrounding data breaches.
Released Tuesday, "Policymakers Review Focus on Data Breach Laws" notes that efforts to prepare a data-breach-response plan must include a review of state and federal laws to understand the framework for notifications and other requirements.
"You don't want to learn the current patchwork of federal and state data-breach laws while in the midst of a breach," said Michael Bruemmer, vice president, Experian Data Breach Resolution, when unveiling the free white paper. Having the right group of experts identified in advance of a problem will significantly improve a company's ability to respond in a way that meets regulatory requirements and keeps the focus on assisting the affected population, Bruemmer said.
In its release Experian noted that the absence of a federal data security and breach standard, while there are 47 separate state notification laws, fosters a lot of uncertainty. However, the state statutes along with  a regulatory threshold established by the attorneys general and the Federal Trade Commission through enforcement orders, "comprise the law of the land, and both the attorneys general and the FTC are taking action to ensure compliance."
In examining the current landscape, key topics addressed in the paper include:
  • Continued FTC action: Since 2001, the FTC has brought more than 50 cases that accused businesses of failing to protect consumers' personal information. In the settlements, the FTC has required entities to implement a comprehensive information security program and undergo evaluation every two years by a certified third party.
  • Federal focus on new data breach laws: New legislation continues to be introduced in the U.S. Congress to address the absence of a national data breach standard.
  • Global policy trend considerations in data breach notification within the European Union, as well as in Australia and countries in Latin America--including Mexico, Costa Rica and Colombia.
To download the full complimentary white paper, use the resource link.


Early promise shown by CU-backed candidates in Tuesday's primaries

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WASHINGTON (5/21/14)--Credit union-backed candidates saw mostly positive early results in Tuesday's primary elections in Georgia, Kentucky, Arkansas, Pennsylvania and Idaho.

"These are candidates who have strong connections and have demonstrated their commitment to credit unions, and we know the importance of supporting them," said Trey Hawkins, the Credit Union National Association vice president of political affairs. "As primary season heats up, we'll continue to back candidates who are strong credit union supporters."

In the Senate primaries, credit union-backed candidate Sen. Mitch McConnell (R-Ky.) handily defeated challenger Matt Bevin, identified as "favorite of the Tea Party" in media accounts.  McConnell, the current Senate minority leader, was supported by $156,000 worth of television ads via the Credit Union Legislative Action Council (CULAC).

In Georgia, credit union-backed Republican Rep. Jack Kingston, who faced a tough fight Tuesday, now moves on to a runoff. When the Associated Press called the race just after 11:30 p.m. (ET),  Kingston claimed 26% of the vote to win a spot against businessman David Perdue, with 30%, to faceoff in a July runoff for the Georgia Senate GOP nomination to fill the vacant Senate seat left by Sen. Saxby Chambliss (R).

Also in Georgia, CUNA, CULAC and the Georgia Credit Union Affiliates supported candidates in the first, fourth, 10th and 11th congressional districts. CUNA, the state credit union associations and credit unions also backed candidates in Arkansas, Pennsylvania and Idaho, where final results were not available before News Now's publishing deadline.
Watch News Now Thursday for more primary results.

CFPB director describes ripple effect of student loan debt

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BOULDER, Colo. (5/21/14)--Consumer Financial Protection Bureau Director Richard Cordray spoke at the 2014 Boulder Summer Conference on Consumer Financial Decision Making Monday, addressing the many ways in which student loan debt can have a ripple effect on other areas of the economy.
He recalled numerous instances of the CFPB hearing from consumers that student debt prevented them from buying a house, opening a small business or starting a family. Referring to the $1.2 trillion in student loan debt in America, Cordray said "we are now standing at a precipice" when it comes to the current economy.
"This is not debt that can be quickly erased--it can take many years to pay it back, which means that it may prevent borrowers from achieving other financial milestones for at least that long," he said. "A recent Pew study found that about 40% of younger households--those headed by someone under the age of 40--have student loan debt, and we can see no reason why this percentage will not continue to grow."
According to the CFPB, more than seven million Americans are in default of a student loan. Those who are in default at a young age can see their credit score affected negatively, which can have an effect on everything from employment background checks to the home-buying process.
A recent Pew research survey said that more than one-third of people age 18 to 31 are living with their parents, which is 18% higher than it was at the start of the recession. This leads to fewer households being created, which Cordray said is a key driver of economic growth.
Student loan debt also has consequences that can follow individuals later in life as well, Cordray said. He quoted a study that said student loan debt can cost more than $200,000 in net assets, including nearly $135,000 in net retirement savings over the course of a career.
"If the consequences of student loan debt weigh down individuals and markets, it is inevitable that they hold back communities as well. Recent research has shown that for every $10,000 in additional student debt, young graduates are 6% less likely to pursue a career in public service, especially careers as teachers," he said. "Rural areas in particular struggle to attract and retain doctors, nurses, and other young professionals. In many of these places, ownership of a car is a prerequisite for employment and rental housing may be scarce."
Cordray said the CFPB plans to combat these trends by:
  • Using supervisory authority over financial institutions to send examination teams into firms to assess compliance with the law;
  • Working with regulators to incentivize student loan servicers to provide more loan modification and refinancing options; and
  • Created the "Financial Aid Shopping Sheet," which gives college-bound students hard numbers in a common-sense format in partnership with the Department of Education. This has been adopted by more than 2,000 schools.
Use the resource link below for more information.

Accountability, transparency of CFPB subject of House hearing today

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WASHINGTON (5/21/14)--The House Financial Services subcommittee on financial institutions and consumer credit will examine bills and discussion drafts today that are designed to promote greater transparency and accountability at the Consumer Financial Protection Bureau.
The Credit Union National Association has submitted a letter for the record of the hearing thanking the subcommittee for holding the session and stating CUNA's support for several of the bills under consideration.
"Credit unions have significant interest in the activities of the bureau because even though credit unions with less than $10 billion in assets are exempt from the bureau's examination authority, they are not exempt from the bureau's rulemaking authority, " wrote CUNA President/CEO Bill Cheney.
He added, "It has been nearly four years since the enactment of the Dodd-Frank Act and the creation of the bureau. It is appropriate for Congress to give serious consideration to legislation designed to improve the accountability and transparency of the bureau."
The subcommittee hearing is titled "Legislative Proposals to Improve Transparency and Accountability
at the CFPB" and will include the following witnesses: Andrew Pincus, partner at Mayer Brown LLP; Hester Peirce, a senior research fellow at George Mason University's Mercatus Center; and Rob Chapman, president of the American Land Title Association.
Seven house resolutions, as well as four discussion drafts are on the agenda, including:
  • H.R. 3389, the CFPB Slush Fund Elimination Act, which would eliminate the bureau's Civil Penalty Fund and require the CFPB to remit fines it collects to the U.S. Treasury;
  • H.R. 3770, the CFPB-IG Act, which would create a separate, independent inspector general for the CFPB; the CFPB currently shares an inspector general with the Federal Reserve System;
  • H.R. 4383, the Bureau of Consumer Financial Protection Small Business Advisory Board Act, which would create a small business advisory board at the CFPB;
  • H.R. 4604, the CFPB Data Collection Security Act, which would require the CFPB to create an opt-out list for consumers who do not want the CFPB to collect personally identifiable information about them and to delete or destroy information about a particular consumer within a specified period of time following collection; and
  • A discussion draft of the "Bureau Guidance Transparency Act," which would require that the CFPB, in issuing any guidance, provide a public notice and comment period before issuing the guidance in final form, and must make public any studies, data, and other analysis it relied on in preparing and issuing its guidance.
The hearing is scheduled to begin at 2 p.m. (ET) today in room 2128 of the Rayburn House Office Building.
Also on the subject of CFPB transparency, in an announcement Tuesday the CFPB said that starting June 18 it is changing the format of its Consumer Advisory Board and Council meetings to become fully open to the public, a change advocated by CUNA. The change was made to "provide more transparency and to be responsive to the requests we've received," said the bureau announcement.
The next opportunity to attend or view a Consumer Advisory Board meeting will be June 18 in Reno, Nev.
Use the resource links below for more information.

Int'l CU regulators discuss emerging risks, effective supervision

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LONDON--The International Credit Union Regulators' Network (ICURN) met here last week to share best practices on effective credit union supervision at the international regulators' annual conference.
ICURN is an independent international network of credit union regulators that promotes the guidance given by the leaders of the Group of 20 (G-20) nations for greater international coordination among financial services regulators. More than 50 supervisors of financial cooperatives from jurisdictions around the world participated in the conference, which was hosted by the Bank of England's Prudential Regulatory Authority (PRA) at its headquarters in the City of London.
The international policy topics reflected similar emerging supervisory concerns in the United States, including interest rate risk, cybersecurity, credit union capital standards, how best to ensure effective credit union corporate governance, and internal and external auditing standards.
ICURN Chairman Martin Stewart, the PRA's head of U.K. Banks and Mutuals, said that even though credit unions and other financial cooperatives vary significantly from jurisdiction to jurisdiction in terms of the level of development and applicable rulebooks, the challenges supervisors face are very similar.
Speakers at the ICURN conference included Andrew Bailey, deputy governor of the Bank of England and board member of the European Banking Authority; and Karl Cordewener, deputy secretary general of the Basel Committee on Banking Supervision.
The World Council of Credit Unions is the ICURN Secretariat.
Use the resource link to learn more about ICURN.

Senate should maintain CDFIF funding level: CUNA

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WASHINGTON (5/21/14)--In a letter to the Senate Appropriations subcommittee on financial services, the Credit Union National Association encouraged the committee to maintain the current level of funding to the Community Development Financial Institutions Fund (CDFIF).
The CDFIF makes capital grants, equity investments and awards for technical assistance to community development financial institutions (CDFIs), such as community development credit unions.
"CDFI-funded credit unions offer alternatives to predatory payday lenders and check-cashing services. They also promote economic revitalization and community development in distressed communities," the letter reads.
Funded institutions supply low-income, distressed communities with traditional banking services such as savings accounts and personal loans.
The Consolidated Appropriations Act for fiscal year 2014 funded the CDFIF at $226 million. This year's draft, for the fiscal year ending Sept. 30, 2015, does not yet have a CDFIF amount in the language. The bill was passed by the house May 1, and will next go to the Senate for consideration.