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Inside Washington (06/19/2012)

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  • WASHINGTON (6/20/12)—A 12-member Northwest Credit Union Association (NWCUA) group brought the credit union message to Capitol Hill earlier this month. The group, which included credit union staff from Washington and Oregon, "got around the Hill efficiently and effectively as our meetings progressed," NWCUA Vice President of Legislative Advocacy Jennifer Wagner said. The Cascadian crew met with Consumer Financial Protection Bureau and National Credit Union Administration (NCUA) staff, including NCUA Chairman Debbie Matz. During meetings with eight members of Congress, the group asked their legislators to support increasing the credit union member business lending cap and allowing credit unions greater authority to raise supplemental capital. The credit union representatives also sought congressional support for legislation that would change current ATM disclosure requirements. Capitol Hill hikes are scheduled from June until October, and the Missouri, Montana, Ohio and Texas leagues are scheduled to come to Washington next week…
  • WASHINGTON (6/20/12)—The Federal Housing Administration late last week rescinded a policy that would have harmed prospective mortgage borrowers with $1000 or more in disputed credit, or whose credit accounts were referred to a collections agency by their lenders (American Banker June 19). The FHA rule was scheduled to become effective on July 1 and would have required borrowers to pay their debts in full, or make at least three months' worth of payments, before they could qualify for an FHA mortgage loan. The FHA plans to revise the policy, FHA spokesman Lemar Wooley said…
  • WASHINGTON (6/20/12)—The Systemic Risk Council, a private sector, volunteer group led by former Federal Deposit Insurance Corp. chair Sheila Bair, held its first meeting on Monday (American Banker June 19). The group is tasked with monitoring and encouraging regulatory reform of U.S. capital markets, and will mainly focus on systemic risk. Bair on Monday said today's economy "arguably faces even greater potential problems than it did in the run-up to the subprime crisis," adding that now "is not the time for complacency." Council members added that the government is not effectively using the regulatory tools it was given by the Dodd-Frank Act. "Tools are only useful to the extent they are actively used, and used in the right way," Bair said. She said she is concerned that "little has been done to address systemic issues … throughout the financial system." Overall, many regulatory agencies suffer from insufficient leadership, Bair said. The Systemic Risk Council comprises experts in investments, capital markets and securities regulation, including senior adviser Paul Volcker, former chair of the Federal Reserve. Bair said the group would be "speaking out more publicly, having more meetings, knocking more heads" going forward…
  • WASHINGTON (6/20/12)—The Consumer Financial Protection Bureau (CFPB) on Tuesday announced several staff changes, including the addition of former National Federation of Community Development Credit Unions President/CEO Clifford Rosenthal. Rosenthal, who led the Federation for more than 30 years, will serve as the CFPB's assistant director of financial empowerment. "As the CFPB continues moving forward with its important work, we are leveraging the collective expertise of our dedicated senior staff to better serve consumers and fulfill the CFPB's mission of making consumer financial markets more fair, transparent, and competitive," CFPB Director Richard Cordray said...

CUNA in iThe Hilli ATM disclosure issues harm CU members

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WASHINGTON (6/20/12)--Current ATM disclosure requirements are creating issues for credit unions, and preventing those credit unions from more fully serving their members, Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said in The Hill.

Portions of Regulation E require credit unions and other financial institutions that provide ATM services to display a physical notice on the ATM that a fee will be charged. Fee notices are also displayed on the ATM screen.

Donovan estimated that credit unions are spending around $2,000 per ATM machine to comply with the physical ATM notice requirement. "If a credit union is spending — as in this case — $2,000 to comply with a regulatory requirement that doesn't benefit the consumer, that comes as a cost to them. We can't use that $2,000 to make a loan to them," Donovan added.

Credit unions and others have also been subject to frivolous lawsuits as a result of the dual-disclosure requirement. CUNA has noted that outside notices on ATMs are, in some cases, being intentionally removed or destroyed, without the financial institution's knowledge, and that pictures are then taken of the ATM to show noncompliance. Some ATM users may then use this as evidence of apparent non-compliance and as grounds for lawsuits, and the number and cost of these lawsuits continues to climb.

CUNA recently estimated that the total number of these lawsuits could be in the hundreds, and many credit unions are settling the suits to avoid the cost of litigation.

Legislation that would help credit unions and others by easing these ATM regulations is scheduled to be discussed during a June 27 House Financial Services Committee markup session. The ATM bill, known as H.R. 4367, was introduced by Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) in April. It has 106 cosponsors.

However, as noted in The Hill, Consumers Union, Consumer Action and the U.S. Public Interest Research Group (PIRG) have urged members of Congress to oppose ATM disclosure relief legislation. The consumer groups are concerned that consumers could engage in an ATM transaction without knowing the full extent of fees that could be charged if the disclosure placards are removed. They have also suggested that the ATM issue should be addressed by regulators, not legislators.

CUNA's intention has not been to reduce disclosure or consumer information, but rather to ensure that credit unions are able to efficiently use the resources of the credit union to the benefit of the member, Donovan said earlier this month. CUNA has also urged the Consumer Financial Protection Bureau to use its own authority under the Dodd-Frank Wall Street Reform Act and the Electronic Fund Transfer Act to amend Regulation E and eliminate the requirement for on-machine ATM fee disclosure notices.

CFPB 137 card complaints live 17000 in backlog

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WASHINGTON (6/20/12)--While the Consumer Financial Protection Bureau's (CFPB) consumer credit card complaint database, which went live on Tuesday, features 137 separate credit card complaints, none of the issues reported are tied to credit union cards.

The CFPB's database gives details on the issue that prompted a consumer's credit card complaint, the zip code of the consumer that made the complaint, and the company against which the complaint was made. Information on how the issue raised was resolved, and whether it was resolved in a satisfactory fashion, is also included.

The database does not include those credit card complaints which the CFPB has received, and referred to other prudential regulators.

The agency said it will update the database as new complaints are received. Overall, the CFPB said it has received around 17,000 complaints in the past year, and these complaints should be added into the new online database later this year. The CFPB has only collected, and passed on to credit card issuers, complaints related to financial institutions with more than $10 billion in assets.

According to 2010 Federal Reserve estimates, nearly 610 million credit cards are held by U.S. consumers, and the average credit card user maintains 3.5 credit accounts.

Billing disputes have been the most common complaint lodged with the agency, and the CFPB said that 84% of the credit card complaints filed have been forwarded on to consumers' respective credit card companies. Card companies have responded to 2,000 of the complaints by compensating cardholders financially, and the CFPB said $25 payments were the most common form of financial relief given by card companies. The median amount of relief given was $130.

The agency on Tuesday said it is also considering creating similar databases to compile and present complaints regarding the other consumer financial products it regulates, including mortgages, private student loans, and bank products. The CFPB will accept public comment on this possibility until July 19, and similar databases could go live by the end of this year.

The Credit Union National Association will file a comment letter strongly recommending the CFPB's consumer complaint process be as tailored as possible to avoid groundless consumer complaints.

FHFA seeks to improve Fannie Freddie exam system

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WASHINGTON (6/20/12)—The Federal Housing Finance Agency (FHFA) has asked for public comment on proposed changes to how examiners assess the financial well-being of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and various Federal Home Loan Banks (FHLBs).

Under the proposed examination rating system, Fannie Mae, Freddie Mac, the Federal Home Loan Banks and their respective finance offices would be judged on their capital, asset quality, management, earnings, liquidity, sensitivity to market risk, and operational risk. The GSEs and FHLBs would be assigned a rating of one to five for each of these categories, with a score of one indicating little to no risk and a score of five indicating a high risk.

A composite rating would be created from these seven individual rating categories. The FHFA said, however, that the relative importance of each rating component "would be determined on a case-by-case basis."

The FHFA said the new system would be adopted on Jan. 1, 2013, if a final version is approved.

Comments on the proposed rating framework will be accepted until July 19.

The FHFA currently uses the Federal Home Loan Bank's examination framework.