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Cheney urges full MBL support at CU exec meeting

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WASHINGTON (6/26/12)--Addressing a group of Washington, D.C.-area credit union executives Monday evening, Credit Union National Association (CUNA) President/CEO Bill Cheney urged all credit unions to rally behind the effort to convince the U.S. Congress to increase the cap on member business lending (MBL).

Click to view larger imageMACUMA Chairman John Hayez (left), COO of United States Senate FCU, Washington, D.C., and CUNA President/CEO Bill Cheney (right) greet one another as Cheney arrives to address the monthly meeting of D.C.-area credit union executives. (CUNA Photo)
Cheney, addressing the Metropolitan Credit Union Management Association's (MACUMA) monthly meeting, reported that CUNA has helped facilitate over 90,000 grassroots contacts with federal lawmakers in favor of legislation to increase the cap.

"Even if your credit union never intends to make a business loan, it's important that we have the ability to pass proactive legislation to enhance the credit union charter.

"A win will be a huge shot in the arm not just on this issue, but on all our future efforts to enhance the charter," Cheney said.

Credit unions can make a difference in helping the economy grow and recover through increased member business lending, Cheney told the credit union group.

He underscored that the MBL legislation has the strong backing of many small business groups, as demonstrated, for instance, in February when CUNA sponsored a "Small Business Hike the Hill," where credit unions brought their small business borrowers to Capitol Hill in support of credit union business lending legislation.

Pending legislation in both the House (H.R. 1418) and Senate (S. 2231) would increase the MBL cap to 27.5% of assets, up from 12.25%.  Senate Majority Leader Harry Reid of Nevada has said the Senate bill, sponsored by Sen. Mark Udall (D-Colo.), will be voted this session.

"As I've discussed with Sen. Udall many times," Cheney said Monday evening, "our goal is not to just have a vote, our goal is to win a vote. We're making progress. We're very close to 60 votes."

He added a key factor is that senators are hearing directly from small businesses. "That's making all the difference in the world."

Cheney also discussed other credit union priority issues, including an ATM disclosure bill that is up for a House committee vote this week.

Cheney noted CUNA's strong support of the ATM bill (H.R. 4367) that was introduced by Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) in April.

The bill would eliminate portions of Regulation E that 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. Under Luetkemeyer-Scott legislation, ATMs would only be required to display the ATM disclosures on a screen, and give ATM users the choice of opting in to such a fee.

Cheney noted CUNA has worked hard over the last several weeks to move the legislation to a markup, meeting with a majority of the members of the House Financial Services Committee on the legislation, which has 120 co-sponsors and now is scheduled for Wednesday House Financial Services Committee vote.

This legislation addresses one example of an unnecessary regulatory burden for credit unions, Cheney told the MACUMA assembly, a burden that provides no off-setting benefit to consumers. He said fighting unnecessary operational burdens is a top CUNA priority and noted a recent National Credit Union Administration troubled debt restructuring (TDR) rule as an example of the positive impact CUNA and credit unions can have on the rulemaking process.

Under the new rule, credit unions soon will be allowed to modify TDR loans without having to immediately classify those loans as delinquent.

CUNA and credit unions had alerted the NCUA that under existing rules many credit unions were struggling to work with homeowners unable to pay their mortgage due to financial difficulties.

Cheney pointed out the NCUA Chairman Debbie Matz herself credited credit union trade associations and volunteers with first bringing this TDR issue to the agency's attention.

Another timely topic highlighted Monday night by the CUNA leader involves the "leave behind" projects CUNA and regional credit unions are involved in to honor the Republican and Democratic national conventions in Tampa, Fla., and Charlotte, N.C., respectively.

This Wednesday, Cheney noted, CUNA and credit union representatives will be in Charlotte at a volunteer day to work on a rooftop playground renovation project at Levine Children's Hospital. Earlier in June, a CUNA and credit union contingent rolled up their sleeves to support a similar effort at All Children's Hospital in St. Petersburg, Fla. That project will retrofit an existing playground with special play equipment for the hospital's young patients.

Cheney noted that CUNA and credit unions have earned national recognition for their charitable "leave behind" projects since 2000.

ACH security should avoid redundancy CUNA tells NACHA

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WASHINGTON (6/26/12)--NACHA--The Electronic Payments Association should minimize compliance costs for credit unions, and look for ways to eliminate redundancies, as it develops a final version of its pending automated clearinghouse (ACH) security changes, the Credit Union National Association (CUNA) said in a recent comment letter.

Under NACHA's ACH security framework proposal, credit unions and other financial institutions and groups that take part in ACH transactions would be required to protect the confidentiality and integrity of certain sensitive consumer information, and to prevent third parties from accessing that information.

Credit unions and others that handle ACH data also would need to verify, as part of their yearly ACH Rules Compliance Audits, that they have established, implemented, and updated data security policies, procedures and systems to comply with the proposed security requirements.

The proposed NACHA rule changes are scheduled to become effective on Sept. 20, 2013.

In a comment letter, CUNA Regulatory Counsel Dennis Tsang said CUNA appreciates NACHA's efforts to improve the security and integrity of the ACH network. However, the ACH security framework should not impose specific requirements, such as specific security policies, procedures, and systems.

The letter suggested NACHA's security framework could instead allow entities that are subject to the data security rules to implement ACH security on protected information based on their own individual business and risk needs.

NACHA should also modify the framework to provide additional flexibility for institutions that use mobile and online applications in their business practices, he said.

CUNA also encouraged NACHA to minimize data security standard redundancies, noting that credit unions are already subject to data security requirements that are issued by the National Credit Union Administration, Federal Financial Institutions Examination Council, and other regulators.

For the full letter, use the resource link.

CUNA meets with CFPB on CU priorities

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WASHINGTON (6/26/12)--Credit Union National Association (CUNA) in a Monday meeting urged Consumer Financial Protection Bureau (CFPB) officials to ease credit unions' regulatory burdens and to consider the extent to which credit unions could be exempt from certain requirements.

Other key issues that were discussed during the meeting with CFPB Assistant Director for Regulations Leonard Chanin and other agency staff at CFPB's headquarters in Washington included the need for credit unions to have flexibility in offering overdraft protection plans. CUNA also recommended the agency consider addressing issues relating to redundant outside ATM notices that have spawned recent lawsuits against credit unions and other institutions.

Multi-featured open-end lending programs, remittance transfer regulations, Regulation Z, the CFPB's pending mortgage disclosure revisions, and mortgage servicing issues were also discussed during the meeting.

In the meeting, CUNA stressed that the Dodd-Frank Wall Street Reform Act gives the CFPB the authority to exempt any class of institution it regulates from any of its rules. Credit unions, as a whole, have a strong track record of working with their members and helping them make informed financial decisions, CUNA said, adding that the CFPB should use its exemption power to help ease the burden faced by these credit unions.

The CFPB should also use its regulatory authority to eliminate redundant ATM disclosures, which are of questionable utility to consumers and are subjecting credit unions to needless costs and potential lawsuits, CUNA said during the meeting. The agency could revise its Regulation E requirements to no longer mandate duplicate ATM notices, CUNA added. In the alternative, CUNA staff discussed moving the outside notices to the ATM welcome screen.

Under current ATM notice requirements, credit unions and other financial institutions must display at each ATM location that fees will or may be charged. More detailed ATM fee information must also be provided before the transaction is completed, either by showing it on the ATM's screen or providing the ATM user with a small printed disclosure before the consumer is committed to paying the fee.

ATM placards posted on the outside of the machine are being intentionally removed or destroyed, and pictures of the damaged ATMs are then being used as evidence in non-compliance lawsuits against credit unions and other institutions. These lawsuits number in the hundreds, and some institutions are settling with plaintiffs to avoid legal costs, CUNA has noted.

A legislative fix to address this ATM issue has also been introduced, and that legislation is scheduled to be marked up during a Wednesday House Financial Services Committee hearing. The bill, H.R. 4367, had 120 cosponsors as of Monday.

CUNA Deputy General Counsel Mary Dunn, Senior Assistant General Counsel Jared Ihrig, Assistant General Counsel Luke Martone and Regulatory Counsel Dennis Tsang represented CUNA at the meeting.

BSA e-filing deadline is July 1

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WASHINGTON (6/26/12)--Electronic filing of all Bank Secrecy Act (BSA) reports will become mandatory on July 1, Credit Union National Association (CUNA) reminds credit unions. The Financial Crimes Enforcement Network (FinCEN), however, has been encouraging financial institutions for weeks to begin using its BSA e-filing system "as soon as possible."

Currency Transaction Reports, Designations of Exempt Persons, and Suspicious Activity Reports are among the reports that can be e-filed. Almost all BSA reports will need to be e-filed as of July 1, FinCEN said, but Currency and Monetary Instrument Reports are not covered under the e-filing requirement.

FinCEN has said the switch to all-electronic BSA filing would improve efficiency, reduce costs for the financial industry, and enhance the ability of investigators, analysts, and examiners to gain better and more timely access to important financial information. Increased BSA E-Filing would also help speed up financial crime investigations, the agency added.

Financial penalties may be imposed on institutions that file non-electronic reports after the deadline, FinCEN said.

Small credit unions and other institutions that do not have internet connectivity, and file few BSA reports, were permitted to file hardship exemption requests ahead of the deadline. However, FinCEN noted, these exemption requests would only shelter those institutions from the e-filing requirements until March 31, 2013.

Some credit unions and other financial institutions that have the technical ability to e-file BSA Currency Transaction Reports (CTR) but are using aggregation systems that are currently incompatible with the BSA E-Filing System's batch and computer-to-computer reporting capabilities were also granted temporary exemptions. Those exemptions would expire on December 31, FinCEN said.

FinCEN has not published a list of organizations that were granted e-filing exemptions. However, the agency has released guidance, an archived webinar, and a list of frequently asked questions to help credit unions and other institutions manage the shift to an e-filing only BSA reporting system.

For these FinCEN resources, click the link.

CUNA has encouraged FinCEN to work with the National Credit Union Administration, state regulators, and third-party vendors to minimize compliance costs related to the e-filing switch. CUNA also suggested FinCEN exempt credit unions with less than $50 million in assets from the e-filing requirements, and grant waivers to credit unions that demonstrate substantial core processing or system costs.

ATM disclosures NFIP among CU issues in Congress

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WASHINGTON (6/26/12)--ATM fee dsiclosures and the National Flood Insurance Program (NFIP) reauthorization remain big issues for credit unions, and both items could see action in Congress this week.

The Flood Insurance Reform and Modernization Act of 2011 (S. 1940), which would extend the NFIP for five years, could be voted on by the full U.S. Senate later this week.

The NFIP is currently scheduled to expire on July 31. The program has been funded by a series of short-term extensions for some time, and NFIP coverage has also lapsed in recent years. Lapses in coverage can cause significant disruption in the mortgage underwriting process for thousands of prospective homeowners, as lenders, including credit unions, are unable to write certain mortgages without NFIP coverage.

House and Senate members alike have called for the NFIP to be extended and reformed, and the White House on Monday said it supported passage of S. 1940. Debate and possibly a vote on legislation that would maintain the 3.4% federal direct student loan interest rate is expected to happen after the Senate finishes any NFIP action. This bill would not impact private student loan rates.

Student loan legislation is also expected to be discussed in the U.S. House this week.

Credit unions will also want to watch this week for a Wednesday House Financial Services Committee markup of legislation that would end duplicative ATM fee disclosure requirements.

The bill would eliminate portions of Regulation E that 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. Under the legislation, ATMs would only be required to display the ATM disclosures on a screen, and give ATM users the choice of opting in to such a fee.

CUNA last week said current ATM disclosure requirements are creating issues for credit unions, and preventing those credit unions from more fully serving their members. (See related June 20 News Now story: CUNA in The Hill: ATM disclosure issues harm CU members)

A Senate Banking Committee hearing on financial services issues impacting members of the military and their families is scheduled for today.

The following hearings have also been scheduled:

  • A Thursday House Financial Services insurance, housing and community opportunity subcommittee hearing on the appraisal industry and regulations impacting the single-family mortgage market;
  • A Thursday House Financial Services domestic monetary policy and technology subcommittee hearing on fractional reserve banking (a system in which only a fraction of bank deposits are backed by actual cash-on-hand and are available for withdrawal) and its impact on monetary policy;
  • A Thursday Senate Commerce, Science and Transportation Committee hearing on personal data privacy protections; and
  • A Friday House Financial Services insurance, housing and community opportunity subcommittee hearing on mobile payment services.
The House and Senate will both return home for the July 4 district work period at the end of this week. They are scheduled to return to Washington on July 9, and will not recess again until Aug. 3.

Inside Washington (06/25/2012)

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  • WASHINGTON (6/26/12)--Commercial banks and savings associations reported trading revenues of $7 billion in the first quarter, the Office of the Comptroller of the Currency (OCC) reported Friday in the its Quarterly Report on Bank Trading and Derivatives Activities. The revenues were 178% higher than in the fourth quarter of 2011, but 5% lower than in the first quarter of 2011. Net current credit exposure, the primary metric the OCC uses to measure credit risk in derivatives activities, decreased $53 billion, or 12%, to $377 billion during the first quarter. Derivatives contracts are concentrated in a small number of institutions. The largest four banks hold 93% of the total notional amount of derivatives, while the largest 25 banks hold nearly 100%
  • WASHINGTON (6/26/12)--A lawsuit that seeks to wipe out the Consumer Financial Protection Bureau (CFPB) faces an uphill battle, but the case could still have an impact on the agency's operations, according to industry insiders. In responding to the complaint, filed by State National Bank of Big Spring, Texas, the Competitive Enterprise Institute and the 60 Plus Association, the CFPB is likely to make statements acknowledging limitations on what it can do, impacting its authority, according to Joseph Barloon, a bank industry lawyer at the law firm Skadden Arps in Washington, D.C. (American Banker June 23). The suit alleges the CFPB is unconstitutional because it is unaccountable to Congress, the president or the courts. It also challenges the constitutionality of the Financial Stability Oversight Council and the recess appointment of Richard Cordray as the CFPB's director …
  • WASHINGTON (6/26/12)--Jeremy C. Stein and Jerome H. Powell on Monday were formally sworn in as members of the Board of Governors of the Federal Reserve System at a ceremony, with Federal Reserve Chairman Ben S. Bernanke presiding. Stein assumed his position on May 30, and Powell assumed his position on May 25, following their confirmation by the Senate on May 17. Prior to his appointment to the board, Stein was the Moise Y. Safra Professor of Economics at Harvard University, where he taught courses in finance in the undergraduate and Ph.D. programs. Powell was a visiting scholar at the Bipartisan Policy Center in Washington, D.C., where he focused on federal and state fiscal issues. Stein's term expires Jan. 31, 2018. Powell's term expires Jan. 31, 2014 …
  • WASHINGTON (6/26/12)--The National Credit Union Administration has rescheduled a planned July 24 closed board meeting, moving that meeting to Monday, July 23. The meeting is set to start at 2 p.m. ET...