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CUs CUNA stress MBL benefits in White House co-op meeting

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WASHINGTON (5/7/12)--Credit Union National Association (CUNA) Cooperative Alliances Committee Chairman Mark Cummins thanked the Obama administration for its support of member business lending (MBL) legislation and urged its continued assistance in the push for enactment during a White House briefing session last Friday organized by the National Cooperative Business Association (NCBA).

Cummins, who is also president of the Minnesota Credit Union Network, emphasized how much more credit unions could do to help small businesses and create jobs with the passage of the Credit Union Small Business Jobs Act (S. 2231), in a session hosted by Rosie Rios, the Treasurer of the U.S.  "And it can be done at no taxpayer cost," he added.

The MBL issue also drew attention during a presentation by Jon Carson, director of the White House Office of Public Engagement. Joseph Thomas, CEO of Fairfax County FCU, Fairfax, Va., said anything the administration could do to support MBL legislation would be appreciated. Carson said the administration believes "some good, smart ideas" can still be enacted this year despite the gridlock on Capitol Hill. Senate Majority Leader Harry Reid (D-Nev.) has promised to bring S. 2231 to the floor for a vote in this session.

Cummins, Thomas and Co-op Alliances Vice Chair Diana Roberts, CEO of Hershey FCU, Hummelstown, Pa., also took note of the growing regulatory burden credit unions face during the discussion with Rios. Roberts pointed out smaller credit unions sometimes have to incur the added cost of outsourcing for compliance help.   

Rios said she would relay these points in her discussions with Treasury officials.

The credit union delegation was part of 150 co-op leaders at the White House meeting, which NCBA organized to highlight 2012 as the International Year of Cooperatives and co-ops' role in economic growth. The co-op leaders discussed how their organizations create jobs, improve members' well-being and help their communities. "Co-ops build the middle class by empowering their member owners," noted NCBA interim CEO Liz Bailey. 

Credit union participants also included Joseph Bergeron, CEO, Association of Vermont Credit Unions, and Mark Wolff, CUNA senior vice president, communications.  Both serve on the NCBA board of directors. "The meeting raised the visibility of co-ops among key White House personnel and started a conversation that I know we and NCBA will seek to continue," Wolff noted.

Prior to the meeting, NCBA shared 15 case studies with White House officials, including those of Hope FCU, Jackson, Miss., and its outreach to low-income persons and the unbanked; and the Defense Credit Union Council and the affordable financial services its 210 members provide to military personnel. 

An "observation from participants" briefing paper spotlighted a CUNA point that credit unions as member-owned co-ops are truly 'Main Street" institutions. "They are not only in their communities, but 'of' their communities….They are locally based and they have a history of community involvement."

Other notable moments from the session:

  • White House Chief of Staff Jack Lew made an unscheduled appearance.  He praised credit unions as "a pretty fundamental source of capital and banking services for many Americans"  but said co-ops have "a bit of a branding problem."  Lew has been a credit union member but hadn't realized until this meeting that credit unions are co-ops.
  • Danielle Gray, deputy assistant to the president, National Economic Council, told the group:  "My mother worked for a credit union for 20 years--put me through school."
  • Jon Carson said he grew up around co-ops in Wisconsin, is a credit union member, and that his father works for Westby Co-op CU in Westby, Wis.
  • Hope FCU CEO Bill Bynum and Alternatives FCU (Ithaca, N.Y.) CEO Tristram Coffin spoke positively of the federal Community Development Financial Institutions (CDFI) program and New Market Tax Program, and suggested ways the administration could do more with both initiatives. Coffin also serves on CUNA's Cooperative Alliances Committee.
Co-op leaders urged the White House officials to look more closely at the co-op model when developing policy and to be more cognizant of cooperatives as examples of values-based, socially responsible institutions that empower individuals and invest in local communities.  Carson stressed a good way to make that happen is for co-ops to keep up the communication in Washington and locally with federal officials. "They want to hear your success stories," he said.

iCompBlogi roundup NCUA actions Reg Z changes updated

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WASHINGTON (5/7/12)--News on National Credit Union Administration actions, the latest on Regulation Z requirements, and updates on recent Consumer Financial Protection Bureau (CFPB) clarifications and pending CFPB projects are all featured in the April edition of the Credit Union National Association's CompBlog Monthly Wrap Up.

Recent regulatory news from Congress and a report from the NCUA's national staff conference in Orlando are revealed in the wrap up. The CUNA compliance wrap up also provides a new list of frequently asked credit union questions.

Among the items addressed in this month's list are:

  • Whether adverse action notices are required when a credit union denies a member's request to open an additional share account;
  • If credit unions are allowed to use funds collected from loan originations to pay for employee qualified profit sharing, 401(k), and employee stock ownership plans; and
  • Whether the Financial Crime Enforcement Network's new rule on non-bank mortgage lenders addresses credit union service organizations.
The March update also highlights the effective dates of pending changes to Regulation D, remittance changes, interest rate risk management policies, and the Bank Secrecy Act.

For more of CUNA CompBlog's monthly wrap up, and other compliance gems, use the resource links.

FinCEN should withdraw due diligence proposal CUNA

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WASHINGTON (5/7/12)--The Credit Union National Association (CUNA) said that while it supports the objective to improve the tracking of money laundering and terrorist financing, the Financial Crimes Enforcement Network (FinCEN) should not propose new customer due diligence regulations, as the increased regulatory burdens and costs on credit unions would far outweigh the purported benefits to FinCEN.

FinCEN recently released an Advanced Notice of Proposed Rulemaking (ANPR) proposing to codify, clarify, consolidate, and strengthen current consumer due diligence (CDD) rules. The proposed CDD rule would apply to financial institutions, brokers or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities, and would require these entities to establish and maintain policies for monitoring the accounts they hold. A key part of the FinCEN ANPR addresses standards for verifying the identity of each member/customer and understanding the "nature and purpose" of each account that is held at an institution to assess the likelihood of suspicious activity.

FinCEN last week announced it would extend the comment deadline for this ANPR for another thirty days. The comment period was originally set to expire on May 4.

The proposed FinCEN regulations would be one part of a broader U.S. Treasury strategy to enhance financial transparency in order to strengthen efforts to combat financial crimes.

Credit unions would have to attempt to obtain additional documentation and agreements related to all applicable members if "beneficial ownership" requirements were expanded, as proposed by the ANPR, CUNA Regulatory Counsel Dennis Tsang said. CUNA is especially concerned about this potential expansion, noting that it can be difficult for some credit unions to obtain such information from their members. Reviewing accounts to determine if they meet "beneficial ownership" standards can be time consuming, and the requirements can conflict or interfere with member confidentiality standards and can create fiduciary or legal issues, CUNA added. Credit unions and other financial institutions would also need to increase staffing and training resources, and make software and system changes to implement and maintain the potential "beneficial ownership" requirements, CUNA said.

FinCEN should abandon the due diligence ANPR and, instead, work with federal financial regulators to further clarify current Bank Secrecy Act and anti- money laundering rules, and develop more specific guidance to address related problem areas, the letter said. CUNA also suggested FinCEN work with the National Credit Union Administration, other federal and state financial institution regulators, and law enforcement authorities to address BSA, AML, and due diligence issues.

For the full comment letter, use the resource link.

Inside Washington (05/04/2012)

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  • WASHINGTON (5/7/12)--Trade groups are concerned about how the Consumer Financial Protection Bureau (CFPB) will define larger non-bank market participants under its supervision. Under the current proposal, the CFPB would regulate large debt collection and credit reporting firms. Trade groups say the proposal also would include small companies. "The mere fact that this rule identifies 'larger participants' does not mean that it has no impact on small business," David Hirschmann, president/CEO of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, said in a comment letter last month. The chamber maintains the CFPB's proposal does not comply with the Small Business Regulatory Enforcement Act, which requires the bureau to convene a panel of small business experts if the rule would substantially affect small firms (American Banker May 4). The proposal calls for firms with more than $10 million in annual debt collection receipts or those with more than $7 million in credit reporting receipts to be subject to CFPB supervision. The National Credit Reporting Association said the proposal should also consider the number of people employed by firms …
  • WASHINGTON (5/7/12)--The Treasury Department on Thursday provided additional details on its exit strategy for winding down the remaining bank investments in the Troubled Asset Relief Program (TARP). Treasury will use a combination of repayments, restructuring and sales of investments, Tim Massad, assistant secretary for financial stability, wrote in a blog entry. There are still 343 banks remaining in TARP's Capital Purchase Program, most of them community banks. Massad said only a few banks will repurchase their preferred shares. A "handful" of banks have proposed restructuring their investments, usually in the form of a merger or a plan to raise new capital, Massad said. Treasury, in turn, agrees to receive cash or other securities. The agency has participated in about 20 such transactions and will continue to do so in limited cases, Massad said. In March, Treasury sold its preferred stock investments in six banks through public auctions. The stock sales generated more than $362 million in income. "We expect the sale of existing investments to be an ongoing component of the wind down of TARP's bank programs," Massad wrote …