Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

NEW: CUNA Details Just-Approved NCUA Final Rule

 Permanent link
WASHINGTON (6/20/13, UPDATED: 5:15 p.m. ET)--The new "loan participations" rule adopted by the National Credit Union Administration earlier today is the topic of discussion in the latest episode of "Inside Exchange," the Credit Union National Association's regular video feature.

Paul Gentile, CUNA executive vice president of communications, and Mary Dunn, CUNA deputy general counsel, discuss the highlights of the final rule, changes that were made from the proposal, and the rule's impact on credit unions. (For more, see today's News Now story: NCUA Approves Loan Participation Rule)



CUNA created the "Inside Exchange" video series as a new way to directly communicate to member credit unions, and to provide detailed insights into what's happening in Washington, D.C., in the legislative, regulatory and political arenas.

For more on this new video, and previous videos featuring CUNA comments on credit union advocacy efforts, use the resource link.

The "Inside Exchange" videos can also be found by clicking on the "stay informed" section of the gray menu bar at the top of the cuna.org homepage and scrolling down to the "Inside Exchange" pane.

Tax Options Paper Gets Inside Exchange Spotlight

 Permanent link
WASHINGTON (6/20/13)--The threat level of credit unions of tax reform--raised by the release June 13 of a "tax options" paper by the Senate Finance Committee--is explored in the latest episode of "Inside Exchange," the Credit Union National Association's video series of key legislative, regulatory and political topics.

In this episode, titled "Impact of tax reform on credit unions," Paul Gentile, CUNA executive vice president of communications, and Ryan Donovan, CUNA senior vice president of legislative affairs, discuss what the "tax options" paper means for credit unions, how that affects the threat level for credit unions, and the process going forward. They also discuss why now is the time for credit unions to become engaged in preserving and protecting the tax exemption.



CUNA created the "Inside Exchange" video series as a new way to directly communicate to member credit unions, and to provide detailed insights into what's happening in Washington, D.C., in the legislative, regulatory and political arenas.

For more on this new video, and previous videos featuring CUNA comments on credit union advocacy efforts, use the resource link.

The "Inside Exchange" videos can also be found by clicking on the "stay informed" section of the gray menu bar at the top of the cuna.org homepage and scrolling down to the "Inside Exchange" pane.

NEW: Senate Banking To Consider New NCUA Member Thursday

 Permanent link
WASHINGTON (6/20/13, UPDATED: 2:30 p.m.  ET)--The nomination of former Oregon State Sen. Rick Metsger (D) to become the third member of the National Credit Union Administration will be considered by the Senate Banking Committee next Thursday, June 27, at 10 a.m. (ET).

Metsger was member of the board of directors at Portland Teachers CU from 1993 to 2001.

He was named by the White House in May as a candidate to fill the vacant seat on the NCUA board, a position left open since former member Gigi Hyland exited late last year. If confirmed, Metsger will join NCUA Chair Debbie Matz and board member Michael Fryzel.

When the nomination was announced said Northwest Credit Union Association President/CEO Troy Stang said, "Sen. Metsger has a strong background of public service and certainly understands the complexity of the financial services landscape including the importance of safety and soundness in the credit union system.

"With so many consumers interested in becoming part of the cooperative credit union system, it's important the industry's regulatory and insurance system is led by the most qualified individuals. Sen. Metsger should complement the skills and talent on the NCUA board well with a solid focus on the future."

Among other highlights of Metsger's resume, he chaired the Oregon Senate committee that heard all financial institution legislation, and he has been a board member of Financial Beginnings, a nonprofit focused on increasing students' financial literacy.

Metsger also has been:

  • Oregon state senator from 1999 to 2011;
  • Oregon Senate president pro-tempore from 2009 to 2011; and
  • Oregon state Debt Policy Advisory Commission member from 2001 to 2011.
     Other nominees on the committee's June 27 agenda include Rep.  Melvin L. Watt (D-N.C.) to be director of the Federal Housing Finance Agency; Dr. Jason Furman, of New York, to be chairman of the Council of Economic Advisers; Kara M. Stein, of Maryland, to be a member of the Securities and Exchange Commission; and Dr. Michael S. Piwowar, of Virginia, also to be an SEC member.

NEW: NCUA Approves Loan Participation Rule

 Permanent link
WASHINGTON (6/20/13, UPDATED 11:08 a.m. ET)--The National Credit Union Administration's final approved rule on loan participations implemented a number of changes sought by the Credit Union National Association and is now a much more workable framework for credit unions to utilize loan participations, said CUNA President/CEO Bill Cheney.

The NCUA this morning approved a final rule on loan participations with a limit on loans from one originator of 100% of a credit union's net worth.  This is up from the proposed 25% of net worth cap. Also very significant, the federal regulator approved an expanded waiver process for the single-originator limit and limits to one borrower.

The NCUA also approved a grandfather provision so that credit unions pushed over the limit by new rule can move their loans into line: such credit unions would not have to sell loans immediately to come into compliance.

"Loan participations are an important tool for credit unions and are an example of how credit unions cooperate together to better serve members," said Bill Cheney after the open board meeting this morning.

"The original proposal had strict limitations that would have limited the ability of credit unions to utilize participations. We are pleased to see that NCUA has taken into consideration the majority of CUNA's recommendations and worked with the system to make significant improvements in the final rule," he said.

The rule will go into effect 30 days after its publication in the Federal Register.

During consideration of the rule this morning, NCUA Chair Debbie Matz emphasized that the rule focuses on purchasers, not originators. It is meant to protect the credit union system without discouraging credit union loan participations, she added.

CUNA raised serious concerns about the proposal when it was issued in December 2011, saying it would add to the regulatory burden of affected credit unions in a manner that is wholly disproportionate to the risks associated with loan participations.

A proposed Illinois Member Business Loan rule was the only other item on the open board meeting agenda. See News Now Friday for more information. Supervisory activity considerations will be considered during the closed board meeting.

Three-day Disclosure Flexibility Still Issue In CFPB Rule

 Permanent link
 WASHINGTON (6/19/13)--Richard Cordray, who heads the Consumer Financial Protection Bureau, said in a letter to lawmakers Wednesday that his agency is "sensitive" to issues revolving around its proposed rule integrating mortgage disclosures required under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z).

The CFPB director was responding to recent letters from 82 members of Congress, 62 Republicans and 20 Democrats, who stated concerns with a provision in the proposal that would require that consumers receive final loan-cost disclosures at least three days before closing on the loan.  The provision is intended to give potential borrowers time to review the disclosure without pressure.

However, as pointed out by the lawmakers, as well as by the Credit Union National Association in a joint trade group letter, in a typical real estate transaction, changes frequently occur in the three days prior to closing that could increase a borrower's cost to close.

Additional flexibility is needed in the three-day requirement, concerned parties have said, or the CFPB's proposed rule could cause costly delays to closings, which could harm consumers by reducing their ability to make reasonable changes to their purchase, increasing their costs, putting at risk their mortgage rate lock and even the expiration of their purchase contract and earnest money deposit to the seller.

Cordray wrote that the bureau understands that things do sometimes change between the time of a three-day disclosure and the closing, and that not all changes justify delaying the closing date.

Cordray added that although the proposed rule specifies several exceptions that would not force an additional waiting period, the CFPB continues to review public comments to determine the "most appropriate way" to provide meaningful disclosures while avoiding unnecessary delays.

The final TILA/RESPA rule is expected out later this year, perhaps between September and December.

SEC May Seek Guilt Admissions In Some Malfeasance Cases

 Permanent link
WASHINGTON (6/20/13)--Financial wrongdoers may soon be forced to admit their crimes as a part of the case settlement process, Securities and Exchange Commission Chairman Mary Jo White said this week.

White reportedly made her remarks at The Wall Street Journal's CFO Network Conference in Washington, D.C.

She said the agency would push for admissions of fault in the worst of cases, such as those with high degrees of investor harm.

However, White told reporters the change should not be interpreted as a criticism of the SEC's current settlement policy. The SEC will still reserve the right to allow alleged criminals to settle their cases without admitting or denying fault.

The new policy will not apply to cases that are already in the settlement process, White told Bloomberg.

One such case is a $285 million settlement the SEC reached with Citibank. U.S. District Court Judge Jed Rakoff rejected that suit in late 2011, saying the public should know more about Citigroup's actions.

CUNA: Freddie Mac Should Exempt CUs From Activity Fee

 Permanent link
WASHINGTON (6/20/13)--Freddie Mac's decision to impose fees on mortgage sellers and servicers that do not meet minimum activity thresholds "could hamper the ability of credit unions to serve their members in the mortgage marketplace," Credit Union National Association President/CEO Bill Cheney wrote in a letter to Freddie Mac CEO Donald Layton.

The government-sponsored enterprise (GSE) on May 15 announced that effective Jan. 1, 2014, sellers and servicers that do not meet minimum activity thresholds for the prior calendar year will be assessed a fee of $7,500 for low activity. Sellers and servicers must sell loans with an aggregate unpaid principal balance of $5 million, or service or act as servicing agent for loans with an aggregate unpaid principal balance of $25 million in the prior calendar year to avoid the fees.

Cheney urged the GSE to eliminate the minimum activity threshold fee or to exempt credit unions from the fee.

"The basis for the fee is questionable as applied to credit unions," he explained. Fannie says the fee is meant to support risk management efforts and offset other costs. However, Cheney wrote, "credit unions have not generated widespread losses to Freddie Mac, and should not be asked to pay a fee ostensibly for 'risk management.'

"The losses which Freddie Mac has experienced in the past five years were not caused by credit unions, and credit unions should not be asked to bear the burden of others," he said.

The CUNA CEO wrote the fees would impact small institutions that can afford them the least, especially impacting credit unions in rural and underserved areas where annual real estate sales activity and housing prices are not high enough to generate the dollar figures that meet Freddie Mac's thresholds.

Overall, he said, the fees could "contribute to some credit unions leaving the mortgage business altogether, restricting access to credit to millions of Americans."

For the full letter, use the resource link.

Freddie Mac was the topic of another CUNA letter sent this week. In that letter, Cheney told Federal Housing Finance Agency Acting Director Ed DeMarco that his agency's decision to prohibit Fannie Mae and Freddie Mac from purchasing mortgages that do not meet the definition of qualified mortgages could prevent credit unions from working with their members to customize financial products that meet their individual needs. (For more, see June 19 News Now story:  CUNA Warns FHFA QM Proposal Could Harm Credit Access.)

NEW: NCUA Issues Guidance On Credit Rating Rule

 Permanent link
ALEXANDRIA, Va. (6/20/13, UPDATED: 3:54 p.m. ET)--Supervisory guidance on a National Credit Union Administration rule regarding the use of credit ratings by natural-person credit unions has been sent to federal examiners and credit unions by the agency.

The credit ratings rule, required by the Dodd-Frank Act, was approved December 2012 by the NCUA and goes into effect this month. Dodd-Frank required all federal financial agencies to review their regulations for any use of credit ratings to assess the creditworthiness of a security or money-market instrument, to remove those references, and replace them with appropriate substitute standards.

The Letter to Credit Unions (13-CU-05) is intended to help credit unions understand examiners' focus on specific elements of a sound due diligence process, including:
  • Key factors to consider in analysis of credit risk for various investment types and counterparty agreements;
  • Guidance on structured securities analysis; and
  • Grandfathered investments.
The NCUA defines an "investment-grade" security under the new rule as a security in which the credit union determines the issuer has adequate capacity to meet the financial commitments under the security for the projected life of the asset or exposure even under adverse economic conditions. A security with "a minimal amount of credit risk" is one in which the issuer has a very strong capacity to meet the financial commitments under the security, the agency added.

NCUA Chairman Debbie Matz said at the December meeting the agency's goal in developing the new standards "was to make sure credit unions have the evaluation standards necessary to maintain their safety and soundness in today's investment environment."

NCUA staff at that time said that credit-risk examination processes will not change, but pledged that examiners will not take a rigid, "bright-line" approach when looking over credit union investment portfolios. Examiners will look at a credit union's investment process, pre-investment research, and what is done after an investment is made, NCUA staff said.

The newly released guidance illustrates how a credit union should fulfill its responsibility to make an independent determination about the risks associated with its investment purchases, without the sole reliance on nationally recognized statistical rating organization credit ratings.