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Washington Archive

Washington

NCUA CUs may invest in insurance agencies as CUSOs

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WASHINGTON (6/15/11)--Federal credit unions may purchase or invest in an insurance agency as a credit union service organization (CUSO) provided the insurance agency primarily serves credit unions, their members, or the membership of credit unions that are under contract with the agency. The insurance agency also could engage only in activities “related to the routine daily operations of credit unions.” These comments were made in a National Credit Union Administration (NCUA) legal opinion letter by NCUA Associate General Counsel Hattie Ulan. Ulan in the letter responded to a question from Sharon Henderson of McGuire Woods LLP, Jacksonville, Fla. Insurance sales, vehicle warranty services, group purchasing programs, and real estate settlement services are among the list of permissible activities, according to the NCUA. The NCUA added that credit unions must assess the number of credit union affiliated members that the insurance agency serves and the amount of revenues that the agency derives from credit union members. The number of insurance policies that have been sold to members, and the general accessibility of services for credit union members must also be determined before a credit union can invest, according to the NCUA. Credit unions “must vigilantly reassess” these customer base requirements “on a constant basis,” the NCUA added. The agency said that failure to adhere to these standards “could easily lead to safety and soundness problems” for credit unions, and could potentially threaten the National Credit Union Share Insurance Fund. The NCUA said that credit unions “have the authority to invest up to 1% of their paid-in and unimpaired capital and surplus in CUSOs structured as a corporation, limited liability company, or limited partnership.” For the full letter, use the resource link.

CFPB notes commitment to discussing CU concerns

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WASHINGTON (6/15/11)--The Consumer Financial Protection Bureau (CFPB) this week said it is “committed to remaining attentive” to the concerns of credit unions and other small financial institutions, and looks forward to addressing the concerns of credit unions and community banks throughout the development of CFPB priorities. CFPB Assistant Director for Community Banks and Credit Unions Elizabeth Vale made the remarks in a a CFPPB blog post, which follows a late May meeting with credit union representatives. Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn and CUNA Senior Assistant General Counsel Michael Edwards were among those attending the meeting, and the CFPB said that this meeting led “to valuable, specific insights on what mortgage information works best for consumers.” The CFPB added that it “wanted to make sure individuals from credit unions and community banks were heard from alongside the consumers they serve and other stakeholders.” A mortgage form that combines the disclosure requirements outlined in the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into a single page, two-sided disclosure is under CFPB development. The CFPB released a sample form earlier this year, and more refined versions of this sample form will be released as that agency works toward a July 2012 implementation date for a final version of the form. CUNA and credit union representatives will again meet with the CFPB when it releases an updated mortgage disclosure proposal later this month. Regulations addressing lending, savings, and consumer privacy will also be reworked by the CFPB when a number of finance industry oversight tasks are moved from the Federal Reserve, the National Credit Union Administration, the Federal Deposit Insurance Corp., and other regulators next month. The Equal Credit Opportunity Act and the Fair Credit Reporting Act, as well as regulations addressing electronic fund transfers, mortgage originator registration, and mortgage assistance relief services, are also no the CFPB’s regulatory agenda. A total of 47 rules are scheduled to come under the CFPB’s oversight in late July. For the CFPB blog post, and more on upcoming CFPB actions, use the resource link.

Inside Washington (06/14/2011)

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* WASHINGTON (6/15/11)--Big banks will be required to follow the same minimum capital requirements as all other depository institutions under a final rule passed by the Federal Deposit Insurance Corp. (FDIC) board of directors Tuesday. The rule is part of an amendment proposed by U.S. Sen. Susan Collins (R-Maine) to the Dodd-Frank Act. It prevents banks from taking the Basel II “advanced approach” of holding less capital than smaller domestic institutions. Basel II requires banks to use a system in which capital levels could fluctuate. The amendment ensures that even under Basel II, U.S. banks could never reduce their capital below the traditional levels used by domestic regulators for other institutions. The regulation will be issued jointly by the FDIC, Federal Reserve Board and Office of the Comptroller of the Currency …

NCUA makes 1.74M available for small CU assistance

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ALEXANDRIA, Va. (6/15/11)--The National Credit Union Administration (NCUA) will make $1.74 million in funds available to low-income credit unions during the 2011 edition of its Community Development Revolving Loan Fund (CDRLF) Technical Assistance Initiative. The initiative aims to help low-income credit unions “improve the quality and quantity of financial services to their members,” and NCUA Chairman Debbie Matz in a release strongly encouraged all low-income designated credit unions “to consider the advantages of CDRLF programs and apply for technical assistance.” Congress appropriated $1.25 million in funds to this CDRLF initiative in 2010. $1.25 million was also appropriated by Congress for this 2011, and the NCUA elected to add about $500,000 of its own CDRLF money. Matz said that the funding was increased for 2011 due to heightened demand last year. Matz in the release paid particular attention to the agency’s Financial Education and Financial Literacy in Schools Initiative, noting that funds from that initiative could be used to reimburse credit unions “for collaborative functions with schools, community organizations, and other financial institutions to broaden the delivery of financial literacy and financial education training.” Matz added that the maximum allocation for the NCUA’s Urgent Needs Initiative, which covers expenses incurred during natural disasters or other unexpected events, has been increased to $7,500. The maximum allocation in 2010 was $5,000. A total of $400,000 is being made available for these requests. Up to $400,000 will be made available for credit unions that wish to build their internal capacity, and $600,000 in CDRLF funds will be evenly split between volunteer income tax assistance, internships and job creation, and staff training initiatives. $300,000 will be available for community outreach and partnerships. The Credit Union National Association (CUNA) supports the CDRLF program, and has said that increasing CDRLF funding “will enhance the growth and long-term viability of credit unions in underserved and low-income communities.” For the NCUA's letter to credit unions and background information on the CDRLF program, use the resource links.