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CUNA CEO meets with key Treasury official

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WASHINGTON (5/26/11)--Debit card interchange fee regulation, preserving the tax-exempt status of credit unions, the National Credit Union Administration’s Corporation Credit Union Stabilization Fund, increased member business lending authority, and supplementary capital authority for credit unions were among the central issues Credit Union National Association (CUNA) President/CEO Bill Cheney discussed with Treasury Undersecretary for Domestic Finance Jeffrey Goldstein during meeting at that agency yesterday. Concerning the tax exemption for credit unions, Cheney focused on the benefits consumers receive in the way of favorable rates and fees that are directly attributable to the tax-exempt status of credit unions. CUNA urges the administration and the U.S. Congress, as they grapple with solutions to the nation’s budget deficit, to be mindful of the importance of credit unions in the financial marketplace. On debit card fee regulation, Cheney emphasized that CUNA is doing all it can, working with credit unions and leagues, to urge Congress to delay implementation of the Federal Reserve Board’s final interchange rule, due to go into effect July 21. That rule, as proposed, would set a seven- to 12-cent cap on debit card interchange fees for issuers with more than $10 billion in assets. While smaller issuers are exempt from the cap, CUNA has concerns that the statutory exemption will not be sufficiently effective, resulting in substantial declines in fees to smaller issuers. Cheney also indicated that CUNA is working on the regulatory side of the interchange issue, pushing the Fed to improve its rule for credit union debit card issuers. CUNA is scheduled to meet with key Federal Reserve Board officials again next week. The proper role of the Consumer Financial Protection Bureau (CFPB) was also on the agenda. CUNA wants to ensure that the agency protects consumers as Congress intended, but without imposing unnecessary regulatory burdens on credit unions in the process. To further fight regulatory burden, CUNA is also working with credit unions and leagues to provide comment on the Consumer Financial Protection Bureau’s proposed new form that would combine and significantly reduce the number of mortgage disclosure forms provided by lenders to borrowers under the Truth-in-Lending Act and the Real Estate Settlement Procedures Act. (See related story: CUNA/CFPB meet on mortgage disclosure, comment deadline Friday.) Cheney also said at the Wednesday meeting that CUNA wants to work closely with the Treasury on greater authority for credit unions to provide member business loans (MBL) and to obtain supplementary capital authority. He thanked the department for its support of the legislation championed by Sen. Mark Udall (D-Colo.) to raise the MBL cap. Under Secretary Goldstein advises Treasury Secretary Geithner and leads the department’s efforts on domestic finance and fiscal policy, among other issues. Also at the meeting were Don Graves, Treasury Deputy Assistant Secretary, and Felton Booker, acting director of the agency’s Office of Financial Institutions Policy. Attending the meeting with Cheney were CUNA senior staff John Magill, Ryan Donovan, and Mary Dunn.

CUNA meets with CFPB on mortgage disclosure

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WASHINGTON (5/26/11)--Just two days before comments are due on the Consumer Financial Protection Bureau’s (CFPB) proposed simplified mortgage disclosure document, the Credit Union National Association (CUNA) met with bureau officials to continue discussions regarding the form. The CFPB, earlier this month, released for comment its "Know Before You Owe" project, which attempts to combine the complicated documents required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into a single page, two-sided disclosure. Comments using the CFPB’s online interactive “Industry Tool” can be provided through this Friday. At a meeting attended by CUNA earlier this month, CFPB architect Elizabeth Warren that was the first step in a long process of gaining feedback from financial institutions, consumers and other interested parties on the new draft form. After the initial comment period ends this week, the CFPB intends to revise the forms five separate times between May and September, with a final version of the new form scheduled for a July 2012 release. According to CFPB transition team members, each new draft of the form will also be available for online review and comment using the CFPB’s website. The CFPB is concurrently conducting consumer testing of these disclosures in both English and Spanish. At yesterday’s meeting, CUNA Deputy General Counsel Mary Dunn, CUNA Senior Assistant General Counsel Michael Edwards, and representatives from ten credit unions were among those that met with CFPB assistant director for community banks and credit unions Elizabeth Vale and other CFPB representatives. CUNA and credit union representatives will again meet with the CFPB when it releases an updated mortgage disclosure proposal next month. Vale said that the CFPB wants to have frequent dialogue with credit unions as it develops new rules or revamps existing regulations. CFPB representatives during the meeting added that they would seek credit union input and follow similar development timelines in their future rulemaking projects. CUNA has recommended that the CFPB outreach effort include a separate interview panel comprised solely of credit union lending professional because--as not-for-profit cooperatives organized to promote thrift and make loans to members at reasonable rates of interest--credit unions are different from for-profit banks and non-depository mortgage lenders, as well as different from mortgage brokers. Use the resource link below for information on how to comment on the proposed combine disclosure form.

CU interchange push at critical point Cheney

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WASHINGTON (5/26/11)--As the Credit Union National Association (CUNA), leagues and credit unions nationwide enter a “critical stage” in the battle to ensure the best possible operating environment for credit unions, CUNA President/CEO Bill Cheney again called on credit unions and state leagues to keep up the grassroots pressure during the Memorial Day congressional recess and the weeks that follow by continuing to urge their legislators to delay implementation of the Federal Reserve’s debit interchange fee cap regulation. The Fed's proposed interchange regulations could limit debit card transaction fees to as little as seven to 12 cents per transaction. A proposed exemption for issuers with under $10 billion in assets is included in the proposal, but CUNA, leagues and credit unions have been emphasizing that the exemption is flawed and will not work in practice. Cheney in a Wednesday call with state league presidents said that credit union advocacy – through direct, in-district meetings, meetings in Washington, and CUNA’s online grassroots action center – has made the esoteric debit interchange fee cap issue one of the hottest and most-lobbied issues on Capitol Hill. Over 500,000 credit union contacts have been made to legislators. And about half of the 11,000 comment letters the Fed has received on its proposal came from credit unions. “We still have the momentum to reduce the impact of this new law and rules on credit unions—but we cannot let down now,” Cheney emphasized, “particularly with a holiday weekend coming up, and some crucial days ahead over the next three to four weeks.” The debit interchange regulations, which have not yet been finalized by the Fed, must by statute take effect on July 21. The current congressional schedule shows both joint and separate recess periods for the House and Senate, and this scheduling arrangement means that there are essentially only five complete weeks of full sessions of Congress between now and that deadline, adding to the urgency to enact pending legislation delaying the rules. Cheney’s call for continued grassroots pressure comes as Sen. Majority Leader Harry Reid (D-Nev.) reportedly said that interchange delay legislation could come up for a Senate vote in mid-June. After this week, the Senate will recess until June 6. The coming Memorial Day recess is another chance for credit unions to be heard on this issue while legislators are back home. “Every time they turn around, someone should be there from a credit union to talk to them about interchange,” Cheney told the league presidents. “Participate in any town hall meetings—live, phone or ‘virtual—and keep up the pressure,’ said Cheney. “Visit your Senators’ Facebook page and post questions and comments about interchange.” Cheney also pointed out the stepped up credit union contacts with legislators is having another benefit: All the Capitol Hill contacts put more pressure on the Fed to make substantive changes to its proposed rule. Further, all the grassroots action by credit unions has made the interchange issue “radioactive,” squelching earlier talk from some lawmakers and merchant groups that wanted next to reform credit card as well as debit interchange. Sens. Jon Tester (D-Mont.) and Bob Corker’s (R-Tenn.) S. 575 would delay implementation of the debit interchange provisions by 15 months. A study of their impact on consumers, credit unions and other financial institutions, and merchants would also be ordered. (See related May 18 story: Tester: 15-mo. interchange delay is 'bare minimum') Similar legislation has been offered in the House, but House members have said that they would wait for the Senate to act first on the interchange issue, since that legislation was first offered in the Senate.

NCUA advises on hurricane season preparedness

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ALEXANDRIA, Va. (5/26/11)--With National Hurricane Preparedness Week ending this weekend, the National Credit Union Administration has reminded credit unions in hurricane-prone areas of the many resources that can help them and their members remain physically and financially safe. The NCUA has provided a number of online resources aimed at helping credit unions review their existing disaster plans. The agency will also soon release a letter to credit unions addressing hurricane planning. NCUA Chairman Debbie Matz in a release said that credit unions should ensure that their disaster plans are commensurate with the complexity of their operations. Those plans should “focus on minimizing service interruptions” and should also “instill confidence during an emergency,” according to the NCUA. Credit unions may also call their regional NCUA office or examiner in the event of a disaster, the agency added. The NCUA also suggested that credit unions and their members make use of direct deposit to avoid potential postal service delays that could be caused by the storms. The 2011 season will start on June 1, and the National Oceanic and Atmospheric Administration has predicted that as many as 18 named storms could develop. Up to ten of those could develop into “named” storms with winds of 74 miles per hour or higher, and as many as six of those named storms could eclipse the 111 mph sustained wind threshold and become “major” hurricanes. For the full NCUA release, use the resource link.

Inside Washington (05/25/2011)

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* WASHINGTON (5/26/11)--Kansas City Federal Reserve President Thomas Hoenig expressed his support for the Volcker Rule and said banks need to get “back to the business of banking.” He made the comment during a speech in Philadelphia on Tuesday. The Volcker Rule, part of the Dodd-Frank Act, restricts banking organizations from engaging in proprietary trading activities and involvement with hedge and private equity funds. Dealing, market making, brokerage, and proprietary trading create instability in core banking services such as deposits and lending, Hoenig said. The difficulty in assessing those risks led to the recent financial crisis, he said. “Banking is based on a long-term customer relationship where the interests of the bank and customer are more aligned,” Hoenig said. “Both the bank and loan customers benefit if borrowers do well and are able to pay off their loans. In contrast, as shown only too clearly with this recent crisis, trading is an adversarial zero-sum game--the trader’s gains are the losses of the counterparty, who is oftentimes the customer” … * WASHINGTON (5/26/11)--Five of the nation’s largest banks were told by state attorneys general on Tuesday that they could face more than $17 billion in civil lawsuits if a settlement is not reached on foreclosure handling abuses The Wall St. Journal May 25). Still to be included are billions of dollars in potential claims from federal agencies. Federal officials have not submitted a possible settlement figure. Representatives of the nation’s largest banks met on Tuesday with state and federal officials to discuss potential costs they will face if a settlement isn’t reached. Federal and state officials have dismissed banks’ $5 billion settlement offer to compensate borrowers negatively affected by the foreclosure process. Some officials have said $20 billion would be sufficient to resolve foreclosure-handling abuses that surfaced last fall …