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FHFA To Congress: Fannie, Freddie Were 'Critical Concerns' In 2012

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WASHINGTON (6/14/13)--In its fifth annual report to the U.S. Congress, which detailed the agency's 2012 examinations of Fannie Mae and Freddie Mac, the Federal Housing Finance Agency said it continued to deem the GSEs as "critical concerns," but noted both generated positive annual income for the first time since 2006.

The report also covers the FHFA's examinations of the 12 Federal Home Loan Banks (FHLB) and the FHLBs' joint Office of Finance.

In a release the FHFA highlighted the following points from the annual report:

  • Combined, Fannie and Freddie guaranteed $1.3 trillion in new mortgages, representing 77% of all mortgages originated in 2012;
  • Since the first quarter of the conservatorship, which was put in place in September 2008, Fannie Mae and Freddie Mac completed nearly 2.7 million actions to prevent foreclosures with more than half being loan modifications;
  • Almost 1.1 million homeowners refinanced through the Home Affordable Refinance Program--or HARP--in 2012, bringing the total to 2.1 million since it began in April 2009;
  • Through year-end 2012, the cumulative draws on the U.S. Treasury from Fannie and Freddie Mac totaled $187.5 billion and the GSEs have paid $55.1 billion in cash dividends to Treasury;
  • Key challenges facing Fannie and Freddie include ongoing stress in the nation's housing markets, the challenging economic environment, uncertainty regarding the long-term prospects of their operations and charters, and the need to implement the FHFA Strategic Plan for Enterprise Conservatorships; and
  • For a third consecutive year, all FHLBs recorded positive annual earnings making 2012 the most profitable year since 2007. The FHLBanks ended 2012 with total assets of $763.1 billion, down less than one percent from 2011.

CUNA: New 'Tax Options' Paper Is Wake Up Call For CUs

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WASHINGTON (6/14/13)--The Senate Finance Committee's "tax options" paper on exempt organizations and charitable giving, released Thursday, included two options of particular interest to credit unions, noted Credit Union National Association President/CEO Bill Cheney.

The CUNA leader called the options paper "a wake-up call for action by credit unions."

First, the paper mentions that one option for tax reform could be to "disallow tax-exempt status for certain organizations engaged in business activities, such as credit unions, nonprofit hospitals or certain types of insurance."  CUNA had expected credit unions to be mentioned in the report and Cheney noted the paper represents confirmation that credit union taxation is an option that some in the U.S. Congress are considering. 

The report also includes a discussion of options to expand Unrelated Business Income Tax (UBIT).  While it does not list expanding UBIT to include federally chartered credit unions, the report does include as an option "Revise the UBIT rules for organizations engaged in commercial activity." 

"As Congress proceeds to consider comprehensive tax reform, rest assured that we are also monitoring proposals that may alter or impact the application of UBIT on credit unions," Cheney pledged.

The options paper yesterday was the ninth to be released by the committee in recent months.  It follows papers on simplifying the tax system for families and businesses, business investment and innovation, infrastructure, international competitiveness, and economic development.

"As CUNA has been saying for some time, our tax exemption, and its preservation for the long-term, is actively in the mix of discussion on Capitol Hill, as this 'options paper' clearly shows. That's why we launched our 'Don't Tax My Credit Union campaign," Cheney said.

He emphasized that credit unions are different from all other groups mentioned in the most recent paper. "We are cooperatives, operating on a not-for-profit basis, and actively returning billions of dollars in benefits each year to our members--benefits that far exceed any new revenue that would come from taxing credit unions.

"We can make the distinction that credit unions are different and preserve our tax status - if we speak up, now. Credit unions should contact their senators and congressmen without delay with the simple message, 'Don't Tax My Credit Union!'," he urged.

The groundbreaking grassroots advocacy campaign to support the credit union tax status combines CUNA's traditional efforts of such things as email-writing drives, with new social media and online outreach efforts.

For more CUNA/league advocacy resources, use the resource links.  (And see related News Nowstory: Tax Reform Group Backs CU Tax Status.)

CU Collaboration Spotlighted In Upcoming NCUA Webinar

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ALEXANDRIA, Va. (6/14/13)--Collaboration initiatives and strategies that can help credit unions band together for the betterment of their communities will be the topic of an upcoming June 25 National Credit Union Administration webinar.

The free webinar, entitled "Credit Union Collaboration," is scheduled to begin at 2 p.m. ET. The NCUA's Office of Small Credit Union Initiatives will host the webinar. Ben Rogers of the Filene Research Institute, Crissy Ortiz of Optimal Talent Solutions and Guy Messick and Jack Antonini of the National Association of Credit Union Service Organizations will join OSCUI Director Bill Myers to present the webinar.

Topics on the webinar schedule include:

  • Reducing operating expenses and encouraging growth in membership and products and services;
  • Accessing financial resources through OSCUI's grant programs;
  • Succession planning and finding new managerial talent;
  • Developing performance metrics and establishing benchmarks for success; and
  • Maintaining a credit union's viability in a rapidly evolving financial services industry.
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, "Credit Union Collaboration."

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

New CFPB Page Consolidates Reg Guidance

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WASHINGTON (6/14/13)--The Consumer Financial Protection Bureau has consolidated its new and pending mortgage rules, and associated implementation materials, into a new one-stop regulatory resource for credit unions and others impacted by and interested in is rules.

The bureau's new Regulatory Implementation web page includes:

  • Mortgage rules at a glance;
  • Small entity compliance guides;
  • Videos;
  • Quick reference charts;
  • The 2013 rural or underserved counties list; and
  • Other materials.
"Our goal with this page is to provide access to our mortgage-related implementation resources though a single web page that makes the rule content more accessible for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff," the CFPB said in a release.

New resources will be added to the page as they are developed, the bureau added. For more on the CFPB page, use the link.

The CFPB stressed that the implementation materials are not substitutes for the underlying rules.

The Credit Union National Association's next members-only Regulatory Advocacy Report will be taking a deeper look at the new CFPB resource, noting such things as the page's links to a new table that lists for each mortgage rule:

  • All of the mortgage rules at a glance, including the Dodd-Frank Act citations;
  • Small entity compliance guides and videos;
  • Each Federal Register notice, including those for the proposed rules, final rules and any amendments or updates to the final rules; and
  • Other resources such as charts.
CUNA members may use the resource link below to sign up for the RAR, which is published each Monday.

Tax Reform Group Backs CU Tax Status

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WASHINGTON (6/14/13)--Americans for Tax Reform (ATR) President Grover Norquist has asked members of his group to take immediate action to urge lawmakers to "protect credit unions and all the good work they do" by opposing any punitive attempt to eliminate the credit union federal income tax exemption.

Click to view larger image Americans for Tax Reform has aided CUNA's advocacy efforts with a post on its own Facebook page. (Facebook/ATR photo)
This call created 6,200 contacts to the U.S. Congress. A posting with the same message on ATR's Facebook page, which is seen by more than 45,000 fans on the social networking site, has also seen significant traffic. The post has been shared more than 150 times and liked 252 times.

"Credit unions are superior to banks in many local communities because they are essentially owned by the customers, not a board of elites. It is because of financially achievable loans issued by credit unions that 96 million Americans are able to work towards the American Dream each day," Norquist wrote to ATR members, referring to the nationwide number of credit union members.

Increasing taxes on not-for-profit credit unions "would have dramatic consequences" for those millions of Americans that use their financial services, Norquist wrote in a recent communication to his group's supporters.

"Credit unions were established to help local communities...are often the only source of financing for disadvantaged communities" and "provide low cost credit alternatives to communities that are in dire need, but have no other means for obtaining loans," Norquist noted.

"Taking away their tax-exempt status will hinder their ability to help community members receive financial services," he said. Credit union loans help Americans start new businesses, go to school, purchase a car or help finance a home, he added.

The Credit Union National Association also has pointed out in its advocacy efforts that credit unions' not-for-profit financial cooperative structure differentiates them from banks and enables them to focus totally on member value and service, and, overall, prevents them from taking the types of risks banks take in the name of profits.

This difference in behavior creates substantial benefits for both credit union members and non-members as well, CUNA notes. Members benefit from lower rates on loans, lower fees on services, and higher returns on deposits. Credit unions' focus on exceptional service also keep competitive pressure on banks to the benefit of consumers.

CUNA and the leagues kicked off a large-scale, nationwide grassroots-mobilization campaign in mid-May to encourage credit union members nationwide to present a unified message to members of congress: Don't Tax My Credit Union! The innovative campaign combines traditional online email campaign methods with newer media vehicles such as Facebook, a Twitter handle @CUNAadvocacy, and hashtag, #DontTaxMyCU, and social media micro-video site Vine.

These efforts have led to more than 80,000 congressional contacts so far.

For more tax advocacy resources, use the links.

Ill. MBL Proposal Is On NCUA's Next Open Meeting Agenda

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ALEXANDRIA, Va. (6/14/13)--A proposed Illinois Member Business Loan (MBL) rule is the lone item on the National Credit Union Administration's June open board meeting agenda.

The MBL rule was proposed by that state's credit union regulator, and is similar to the NCUA's current MBL rule. NCUA regulations allow the agency to exempt federally insured, state-chartered credit unions from compliance with MBL rules if the NCUA board determines the state has developed an MBL rule that minimizes risk and accomplishes the overall objectives of NCUA's rule.

Washington, Texas, Wisconsin, Connecticut, Oregon and Maryland have their own MBL regulations on state books.

State supervisory authorities must obtain NCUA regional office and NCUA board approval before their new state credit union regulations can become final.

Supervisory activity considerations will be considered during the closed board meeting.

For more on the NCUA agenda, use the resource link.

CUNA To Testify Tuesday On Dodd-Frank Impact

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WASHINGTON (6/14/13)--Jerry Reed, chief lending officer of Alaska USA FCU, Anchorage, will represent credit unions next week when he testifies on behalf of the Credit Union National Association at a hearing entitled, "Examining How the Dodd-Frank Act Hampers Home Ownership."

The 10 a.m. (ET) hearing next Tuesday continues a study by the House Financial Services subcommittee on financial institutions and consumer credit of the impact on the housing market of the Qualified Mortgage rule recently issued by the Consumer Financial Protection Bureau under Dodd-Frank.

The QM rule, in part, requires mortgage lenders to determine at the time a loan is made that the borrower has a reasonable ability to repay it.

If a lender fails to determine that the borrower can repay the loan, the lender is subject to statutory damages and potential class action liability under the law. In addition, the Dodd-Frank Act permits borrowers to raise the lender's failure to satisfy the ability-to-repay requirement as a defense in foreclosure proceedings.

The subcommittee intends to examine how these and other provisions affect the housing market.

Also scheduled to testify are:
  • Charles A. Vice, Commissioner, Kentucky Department of Financial Institutions, on behalf of the Conference of State Bank Supervisors;
  • James C. Gardill, chairman of the board, WesBanco, Inc., on behalf of the American Bankers Association;
  • Debra W. Still, CMB, chairman, Mortgage Bankers Association; and
  • Gary Thomas, president, National Association of Realtors.

FDIC, CFPB Offer New Tool To Fight Older Adults Financial Exploitation

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WASHINGTON (6/14/13)--The Federal Deposit Insurance Corp. and Consumer Financial Protection Bureau have jointly launched a new financial resource tool intended to help older adults and their caregivers prevent elder financial exploitation across, a growing problem across the country.

Called Money Smart for Older Adults, the new resource is a stand-alone training module developed by both agencies as part of FDIC's Money Smart financial curriculum. It's designed to raise awareness among older adults--defined as 62 and older--and their caregivers about ways to prevent, identify and respond to elder financial exploitation, to plan for a secure financial future, and to make informed financial decisions.

The resource is available online (see first resource link below) and in hard copy format (see second link), and it is free.

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