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CDFI Fund Grant Requests Jump $15 Million

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WASHINGTON (5/9/13)--Three times as many funds were requested this year through the U.S. Department of the Treasury's Community Development Financial Institutions Fund (CDFI Fund) as were available to grant.

For Fiscal Year 2013, CDFI program applicants requested a total of $410.8 million, which was a $15 million jump over last year's requests of nearly $395.7 million. Financial assistance (FA) applicants requested $402.2 million and technical assistance (TA) applicants requested nearly $8.6 million, according to a Treasury release.

The CDFI Fund received 401 applications for this funding round. The  309 applications for FA came from 43 states plus the District of Columbia and Puerto Rico; and the 92 TA applicants came from 30 states plus the District of Columbia and Puerto Rico.

The deadline for CDFI Program applications was February 28. The awards are expected to be announced in the fall.

For more, use the resource link for the CDFI Fund's release.

Possible Tax Reform-Debt Ceiling Link Heightens Need For CU Vigilance

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WASHINGTON (5/9/13)--Reports that a key lawmaker cleared a path yesterday for tax code reform debate--by publicly backing the idea of linking an overhaul of the tax code to an increase in the debt limit--truly highlights the need for credit unions to be vigilant in defense of their tax status right now, said CUNA Executive Vice President of Government Affairs John Magill.

"Credit unions must be educating their members--now--about the public policy value of the credit union federal tax exemption. Our research shows that informed members are ready to stand with us in this battle," Magill said.

House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) have said they are ready to push ahead with efforts to revise the tax code. It was Camp who backed tying tax talks with debt-ceiling talks, which would create a package harder to derail during the legislative process (Bloomberg Government May 8).

On May 6, the Joint Committee on Taxation released a report detailing the findings of 11 House Ways and Means Committee tax reform working groups. (News Now May 6).

CUNA noted at that time that the next several weeks will be key in terms of what actually goes into a tax reform bill in the House and that it is possible that the House could consider comprehensive tax reform legislation before the end of July.

"This is a critical time for credit unions to be educating their members and encouraging them to contact lawmakers to express their support for the value they receive from the credit union tax exemption," Magill underscored.

"And on the political front, credit unions must use every chance possible to tell lawmakers loudly, early and often that a tax on credit unions is nothing more than a tax on 96 million Americans who are credit union members."

CUNA provides a Tax Advocacy Toolkit to its member credit unions to help with their efforts to educate their own members on credit union tax issues.

CUNA members can use the resource link to access the toolkit.

CFPB Proposes CUNA-sought Credit Rule Delay

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WASHINGTON (5/9/13)--The Consumer Financial Protection Bureau has favorably responded to the Credit Union National Association's recent request that the agency delay a June 1 effective date relating to the prohibition on financing certain credit insurance charges. The provision is contained within the bureau's mortgage loan originator compensation rule.

The CFPB told CUNA it will seek comment for 15 days on a proposed delay.

CUNA had expressed concern that certain language within the new rule needed clarification, and that a June 1 effective date of this prohibition could upend practices at some credit unions. However, CUNA does not support the financing of actual single premium insurance charges.

The CFPB's mortgage loan originator compensation rule contains a provision, as required by the Dodd-Frank Act, which bans the financing of any premiums or fees for payment protection products in connection with certain consumer credit transactions secured by a dwelling. The rule does allow the products to be calculated and paid for in full on a monthly basis.

To ease compliance and help avoid unneeded costs, CUNA had urged the CFPB to delay the effective date of any provisions of the final rule that would impact products other than actual single-premium credit insurance, as well as any future rule that will address these issues, until Jan. 10, 2014.  Most of the rest of the mortgage loan originator compensation rule is set to take effect at that time.

CU SAR Vigilance Helps Fraud, Drug Cases

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WASHINGTON (5/9/13)--One credit union's vigilance, and frequent filing of Suspicious Activity Reports (SARs), helped uncover an alleged $2 million mortgage loan fraud scheme and resulted in a win for law enforcement, the Financial Crimes Enforcement Network (FinCEN) reported in its SAR Activity Review--Tips, Trends & Issues.

According to FinCEN, the credit union reported a local accountant that allegedly helped clients and complicit realtors obtain mortgage loans by creating fraudulent tax letters stating the borrowers had self-employment income and owned their own businesses. The accountant and employees of his tax preparation business also prepared fraudulent tax returns to back up these claims.

The accountant and his accomplices used these falsified documents to secure loans for homebuyers. The accountant pleaded guilty to bank fraud charges and was sentenced to two years in prison.

In a separate case, credit union SARs contributed to the dismantling of a multi-state drug trafficking and money laundering ring.

Overall, the number of SARs from credit unions that listed the National Credit Union Administration as their primary federal regulator declined by 3% between 2012 and 2011, FinCEN said in another document, its SAR Activity Review--By the Numbers.

That number had increased every year since 2003, according to FinCEN.

Overall, the total number of SARs filed by credit unions and other financial institutions increased by 8% in 2012, with mortgage fraud and check fraud continuing to rank as the most common criminal offenses.

However, there were 29% fewer mortgage fraud SARs filed in 2012 than there were in 2011, FinCEN added. Commercial loan fraud SARs also declined by 19% during that same time period.

Check, commercial loan, consumer loan, credit and debit card, mortgage and wire transfer fraud accounted for 23% of all suspicious activities reported by depository institutions in 2012, FinCEN said.

For both FinCEN releases, use the resource links.

Foreign Account Tax Act Repeal Would Give Reg Relief

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WASHINGTON (5/9/13)--The Foreign Account Tax Compliance Act (FATCA), if left in place, "will impose billions of dollars of compliance costs on U.S. credit unions and banks annually," Credit Union National Association President/CEO Bill Cheney wrote in a Wednesday letter to Sen. Rand Paul (R-Ky.). The CUNA letter follows Paul's Tuesday introduction of a bill (S. 887) that would repeal FATCA.

The CUNA letter said Congress did not appear to have U.S. credit unions nor banks in mind when it developed the FATCA provisions in 2010. "Yet U.S. financial institutions will be required to bear a large proportion of FATCA's compliance burdens," Cheney said.

FATCA is designed to create a tax information reporting and withholding system for certain payments that are made to foreign financial institutions (FFIs) and other entities. Some provisions would apply to U.S. credit unions that make international payments. U.S. credit unions would also be required to identify and withhold on so-called "pass-thru payments" to FFIs involving transfers of U.S.-sourced investment or interest income an FFI that has not yet been subject to taxation.

Portions of FATCA that impact Form 1042-S filings are already in effect. Other provisions will be phased in between January 2014 and January 2017.

To cope with the FATCA changes, credit unions would need to establish procedures and practices, including staff training, for ongoing identification of covered entities and transactions, and take additional steps to ensure they met their reporting and withholding compliance responsibilities when facing transactions that come under IRS regulations.

The CUNA letter also addressed the European Union's consideration of a "European FATCA" that would regulate U.S. credit unions and banks in the same manner that the U.S.'s FATCA purports to regulate credit unions and banks in the European Union. "Unless Congress repeals FATCA, we think that it is only a matter of time before the extraterritorial diktats of a European FATCA and other FATCA-inspired foreign laws become additional compliance burdens on U.S. financial institutions," Cheney said.

"FATCA and FATCA-related intergovernmental agreements with foreign nations undermine the constitutional privacy rights of U.S. credit union members and bank customers," the CUNA letter added.

For the full letter, use the resource link.

NCUA Announces 22 Student Grant Winners

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ALEXANDRIA, Va. (5/9/13)--Twenty-two low-income credit unions in 16 states will receive a combined $80,000 in grants under the National Credit Union Administration's Student Internship Grant Initiative.

The agency grant program provides individual grants of up to $4,000 to help eligible credit unions hire student interns during the summer months. Hired students will help their respective credit unions implement marketing plans, ensure compliance and assist with day-to-day operations, among other tasks.

NCUA Board Chairman Debbie Matz said the grants will give credit unions "a chance to add some helping hands and to connect with young people, who could be future members or industry leaders."

The agency received more than 40 applications requesting upwards of $150,000 in funds on May 1, the first day applications were accepted.

Program funding is provided through the Community Development Revolving Loan Fund, and the grant program is administered by the NCUA's Office of Small Credit Union Initiatives.

Only low-income designated, financially viable credit unions are permitted to take part in the grant program. The grants can only be used for student internship costs, the NCUA said.

Details of other NCUA grant programs will be discussed during a May 22 webinar. (See related story: Grant Initiatives To Be May 22 NCUA Webinar Topic.)

For details on the 22 credit unions that received funding, use the resource link.

CUNA: FHLB Bill Creates More Mortgage Options

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WASHINGTON (5/9/13)--A bill introduced Tuesday to allow privately insured credit unions to become members of the Federal Home Loan Bank System (FHLBs) would provide a new source of mortgage funding for those financial institutions and their members, the Credit Union National Association wrote Wednesday in a letter of support for the bill.

CUNA thanked Rep. Steve Stivers (R-Ohio) for taking leadership on the issue and introducing H.R. 1862. "Passage of this legislation would advance home ownership options for members of privately insured credit unions," CUNA President/CEO Bill Cheney wrote.

The FHLBs were created by Congress in 1932 to provide liquidity support to the nation's mortgage lenders. Credit unions and other financial institutions can access the FHLB liquidity system by becoming FHLB members. However, current law prohibits privately insured credit unions from joining.

Also on the FHLB front, CUNA earlier this year called on the National Credit Union Administration to approve the FHLBs as a permissible source of emergency liquidity for credit unions. The FHLB presidents also have urged the agency to adopt that policy.

"Such action would encourage and facilitate a stable source of funding to assist credit unions of all sizes in meeting their business, community, and member needs," the presidents wrote in a letter to NCUA Chairman Debbie Matz and board member Michael Fryzel. (Use the resource link for Feb. 4 News Now story: FHLBs ask to be named a CU emergency liquidity provider.)

Ensuring greater regulatory relief for credit unions continues to be a top CUNA priority, and CUNA continues to work closely with House Financial Services Committee members and staff as they develop legislative solutions to address small financial institution regulatory burden.

Removing legislative and regulatory barriers is also one of the key objectives outlined in CUNA's Unite for Good initiative. Unite for Good calls on credit unions to rally in support of a common vision where "Americans choose credit unions as their best financial partner."

For the full CUNA letter and a list of Unite for Good action steps, use the resource links.

Grant Initiatives To Be May 22 NCUA Webinar Topic

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ALEXANDRIA, Va. (5/9/13)--Details on several National Credit Union Administration low-income credit union grant programs will be delivered during an upcoming May 22 agency webinar.

The free webinar, entitled "Multi-Initiative Grants for Low Income Credit Unions," is scheduled to begin at 2 p.m. ET. The NCUA's Office of Small Credit Union Initiatives will host the webinar. The event is intended to help credit unions:

  • Understand the application process and the qualifications necessary for grant funding;
  • Determine which grant initiatives best meet their needs;
  • Learn how these grant initiatives can assist with certain operating expenses; and
  • Understand how to use these funds to expand member services and grow.
The NCUA said webinar participants may submit questions in advance by sending an e-mail to WebinarQuestions@ncua.gov.  The subject line of the e-mail should read, "Multi-Initiative Grants for Low Income Credit Unions."

To register for the NCUA webinar, use the resource link.