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Washington Archive

Washington

Financial services appropriations ready for House vote

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WASHINGTON (6/21/12)--Financial services appropriations legislation for the 2013 fiscal year will move on to the full House after it was approved by a Wednesday House Appropriations Committee voice vote.

Under the House bill:

  • The National Credit Union Administration's (NCUA) Community Development Revolving Loan Fund (CDRLF) program would receive $500,000 in funding; and
  • The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund would receive $221 million in funding.
The NCUA's Central Liquidity Facility (CLF) is not addressed by the legislation, and, thus, would retain its current lending authority of 12-times its paid-in capital.

Senate appropriations legislation, which awaits action by the full Senate, would provide $233 million in CDFI Fund backing and $1.19 million in CDRLF funds, and would maintain the CLF at its current level.

Final versions of the House and Senate appropriations bills will be subject to a reconciliation process before they are moved on for final approval by President Barack Obama.

The Obama administration requested $1.19 million in CDRLF funds, $221 million for the CDFI Fund, and continued full authority for the CLF in its suggested 2013 fiscal year budget.

Five-year NFIP extension could see Senate vote soon

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WASHINGTON (6/21/12)—Legislation that would extend the National Flood Insurance Program (NFIP) until Sept. 30, 2017, could be debated by the U.S. Senate as soon as next week after Sen. Majority Leader Harry Reid (D-Nev.) filed cloture on Wednesday.

Sen. David Vitter (R-La.) worked closely with Senate leadership to move the latest version of an NFIP extension forward, and Vitter in a Wednesday release said extending the program for a further five years "is great, much needed news for homeowners and the housing market." He said he would urge his fellow senators to support the bill.

Legislation that temporarily extended the NFIP until July 31 was approved in the U.S. House and Senate late last month, just before the insurance program expired on May 30. The program has been funded by a series of short-term extensions for some time, and House and Senate members alike have called for the NFIP to be extended and reformed.

The NFIP lapsed three brief times in 2010. Credit unions, as well as other lenders, cannot write certain mortgages without NFIP coverage, and the Credit Union National Association has noted that lapses in NFIP authorization have caused significant disruption in the mortgage underwriting process for thousands of prospective homeowners.

Late yesterday, acknowledging that floor action on the long-term NFIP extension was not possible this week, Reid said, "We have to work toward completing that as quickly as we can."

CUNA suggests CFPB mortgage form changes

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WASHINGTON (6/21/12)--The Consumer Financial Protection Bureau (CFPB) continues to work toward a final version of its combined Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA) mortgage disclosure form, and the progress of that project, as well as industry impressions on the developing form, were addressed in a Wednesday U.S. House hearing.

The hearing, which was held by the House Financial Services insurance, housing and community opportunity subcommittee, featured testimony from CFPB Deputy Director Raj Date and a second panel of financial services and real estate industry representatives.

Proposed TILA/RESPA forms, and accompanying mortgage disclosure regulations, will be released by July 21, Date said. The regulations are scheduled to be finalized by Jan. 21, 2013.

The Credit Union National Association (CUNA) in a statement submitted ahead of the Wednesday hearing encouraged the subcommittee to closely monitor the CFPB's RESPA/TILA rulemaking and other agency efforts.

Warning that an overabundance of disclosures can create issues for borrowers and lenders alike, the CUNA statement also urged the CFPB to "provide consumers with efficient and complete disclosures."

CUNA also suggested the CFPB allow lenders to use model forms for their TILA disclosures. The use of model forms would still ensure lender compliance with TILA, but would grant lenders a degree of flexibility at the same time, CUNA said. Lenders could still be required to use standardized RESPA forms, CUNA added.

Allowing lenders to use a mixture of model forms and standardized forms for their mortgage disclosures would prevent unscrupulous lenders from hitting borrowers with so-called "bait and switch" schemes, and contribute overall to better consumer protection, CUNA said.

CUNA also suggested the CFPB could remove or revise portions of the developing disclosure that would require lenders to provide:

  • The total amount of interest that a consumer will pay over the life of the loan as a percentage of the principal of the loan; and
  • The approximate amount of the wholesale rate of funds in connection with the loan.
CUNA questioned whether either of these disclosures would provide any benefit to consumers.

The comments of some hearing witnesses echoed other CUNA concerns, as they questioned the CFPB's plan to require integrated settlement disclosures to be provided to home buyers and sellers three business days before closing. CUNA said it is difficult for credit union lenders to coordinate with title companies and others 24 hours in advance of a real estate closing, and adding an additional 48 hours to this equation could create problems for credit unions and borrowers.

Witnesses also called on the CFPB to provide a "reasonable" implementation period to allow financial institutions to adjust to the new disclosures once they are issued.

Inside Washington (06/20/2012)

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  • WASHINGTON (6/21/12)--JP Morgan Chase's recent $2 billion loss fueled the political arguments of both Democrats and Republicans at a House Financial Services Committee hearing held this week. While Democrats argued that the loss demonstrated the need for stronger oversight, and the need for greater funding for regulators such as the Commodity Futures Trading Commission, Republicans noted that the loss was merely an example of how financial markets operate (American Banker, June 20). Rep. Ed Royce (R-Calif.) said capital "is the ultimate buffer" against unforeseen business losses, and Republicans said JP Morgan's reserves provide a better defense against systemic issues than regulations could. However, Rep. Maxine Waters (D-Calif.) said the issue is not JP Morgan's one-time loss, but potentially bigger losses that could occur down the road. Lawmakers from both sides of the aisle criticized regulatory responses to the JP Morgan crisis, however, noting that they did not hear about the trading issues, which originated at the firm's London office, until they were reported in the press. JP Morgan CEO Jamie Dimon was also questioned during the hearing, with legislators asking if his firm is too large and too complex to be effectively managed…
  • WASHINGTON (6/21/12)--The U.S. Treasury this week informed 200 banks that pools of their securities that are currently held in the agency's Troubled Asset Relief Program (TARP) would soon be auctioned off (American Banker, June 21). The auctions are scheduled to begin this fall. The Treasury in a letter to the banks said the upcoming auctions would "help support the objectives of winding down TARP, recovering taxpayer dollars, and helping community banks attract private capital to replace temporary government support." The 200 banks that are scheduled to take part in the auction represent $2 billion of the $11 billion the Treasury has invested in TARP's Capital Purchase Program…

Survey on compliance costs shouldnt add to them CUNA

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WASHINGTON (6/21/12)--The Consumer Financial Protection Bureau (CFPB) should "fully understand and minimize the potential implementation and ongoing compliance costs and unintended consequences on credit unions from its potential new regulations,'' the Credit Union National Associaiton (CUNA) wrote in a letter to the agency.  CUNA Regulatory Counsel Dennis Tsang recommended that the agency "develop limited, targeted questions'' when the bureau begins collecting information about compliance costs and other effects of regulations.

CUNA has been working diligently since the CFPB began operations last year to ensure that credit unions, which already face substantial regulatory burdens, don't have to deal with additional unnecessary time and financial costs.

The CFPB sought input as part of its rulemaking process. The bureau has direct supervisory authority over financial institutions with assets of more than $10 billion. Other credit unions must comply with the CFPB's rules, but the enforcement is done by the NCUA or their state regulator.

CUNA also suggested that sampling institutions that are representative of the markets affected by the CFPB rulemakings can be more efficient than broader inquiries.

"The agency should utilize proper statistical and research methods to ensure a representative sample for each affected market to properly measure compliance costs," CUNA wrote. "Other institutions that are not part of the sample should have an option to submit their information after reviewing the information collection materials."

Use the resource link to access CUNA full comments.

CUNA witness to seek SBA extensions reg relief

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WASHINGTON (6/21/12)--Congress should reauthorize the U.S. Small Business Administration's (SBA) 504 refinance loan program and the SBA 504 First Mortgage Lien Pool (FMLP) program to enable credit unions to continue helping small business grow, Redwood CU President/CEO Brett Martinez, a member of the Credit Union National Association (CUNA) board, is expected to tell a House subcommittee today.

Martinez's 220,000-member, $2 billion-asset Santa Rosa, Calif.-based credit union is the largest SBA credit union lender in the country by loan volume. He plans to tell the House Small Business subcommittee investigations, oversight and regulations that SBA guaranteed loans are important for borrowers who otherwise would not be able to get a conventional business loan, but add they are complicated to make.'

He also plans to tell lawmakers that despite the statutory cap on member business loans--12.25% of assets-- at the end of 2011, credit unions had $40 billion in business loans outstanding, making it the fastest growing type of credit union lending over the last several years and representing approximately 6% of the depository institution market. CUNA supports legislation that would increase the cap to 27.5% of assets to enable credit unions to do more to support small businesses and boost the economy.

In addition, he will reiterate CUNA's support for the SBA's adaption of a single electronic lender application which will reduce the paperwork burden at credit unions and should result in increased lender participation. SBA should also develop an optional credit scoring methodology to be used by SBA lender partners in the underwriting process in an effort to lower lenders' costs of delivering capital to borrowers.

NCUA postpones action on CUSO rule

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ALEXANDRIA, Va. (6/21/12)--The National Credit Union Administration (NCUA) yesterday cancelled its scheduled June open board meeting, and this decision will give the Credit Union National Association (CUNA) the chance to continue raising concerns and priorities regarding the NCUA's pending final credit union service organization (CUSO) rule with NCUA board members and staff, CUNA President/CEO Bill Cheney said.

A CUSO final rule was the lone item on today's open meeting agenda. Under a proposed version of the CUSO rule, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. The NCUA currently has the authority to inspect the financials and records of some CUSOs, but the majority of financial information on CUSOs is provided by natural person credit unions that obtain services from the CUSOs.

The NCUA has argued that enhancing the monitoring of CUSOs would protect consumers, credit unions and the National Credit Union Share Insurance Fund (NCUSIF). However, CUNA has said that while some CUSOs have had issues, CUSOs as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF.

"CUNA will continue to press for minimal regulation that will not impose unnecessary constraints on sound and beneficial CUSO operations," Cheney said.

The NCUA's closed board meeting is still scheduled. Four supervisory activities and one personnell matter are on the closed board meeting agenda, according to the NCUA.

NEW NCUA cancels June meeting postpones action on CUSO rule

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ALEXANDRIA, Va. (UPDATED: 1:30 P.M. ET, 6/20/12)--The National Credit Union Administration (NCUA) today cancelled its scheduled June open board meeting, and this decision will give the Credit Union National Association (CUNA) the chance to continue raising concerns and priorities regarding the NCUA's pending final credit union service organization (CUSO) rule with NCUA board members and staff, CUNA President/CEO Bill Cheney said.

A CUSO final rule was the lone item on Thursday's open meeting agenda. Under a proposed version of the CUSO rule, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. The NCUA currently has the authority to inspect the financials and records of some CUSOs, but the majority of financial information on CUSOs is provided by natural person credit unions that obtain services from the CUSOs.

The NCUA has argued that enhancing the monitoring of CUSOs would protect consumers, credit unions and the National Credit Union Share Insurance Fund (NCUSIF). However, CUNA has said that while some CUSOs have had issues, CUSOs as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF.

"CUNA will continue to press for minimal regulation that will not impose unnecessary constraints on sound and beneficial CUSO operations," Cheney said.

The NCUA's closed board meeting will still be held. Four supervisory activities and one personnell matter will be addressed at that meeting, the NCUA said.