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Bank thrift mortgage delinquencies a three-year low

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WASHINGTON (6/28/12)--Mortgage portfolios at national banks and federal savings and loans are performing much better, according to a report released Wednesday by the Office of the Comptroller of the Currency, and delinquencies associated with first lien loans is at its lowest level in three years.

The OCC Mortgage Metrics Report for the First Quarter of 2012 also shows that percentages of mortgages that were 30 to 59 and 60 to 89 days delinquent also decreased to their lowest levels since the OCC began publishing its report on mortgage performance in first quarter of 2008.

The OCC attributed the improved performance to such factors as strengthening economic conditions during the quarter, seasonal effects, servicing transfers, and the "ongoing effects of home retention programs as well as home forfeiture actions."

The OCC said the large number of delinquent loans continues to work through the loss mitigation process, and the number of new foreclosures initiated during the quarter decreased to 286,951—down 1.8% from the previous quarter. The inventory of foreclosures in process increased from the previous quarter to 1,269,921, but is down from 1,308,757 a year ago, the report shows.

Use the resource link below to access the OCC report and to see the Credit Union National Association's most recent Credit Union Monthly Estimates.

Sen. Brown CU tax status as justified as ever

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WASHINGTON (6/28/12)—Sen. Sherrod Brown, in a letter to U.S. Treasury Secretary Timothy Geithner, said the federal credit union tax status continues to be as valid today as it was when it was first established by the U.S. Congress.

The Ohio Democrat's June 26 letter reminded that credit unions were initially exempted from federal taxation under the Federal Credit Union Act, because:

*They are cooperatives operated for and by their members; and

*Credit union shares are essentially members' deposits.

Brown added that Congress reaffirmed its tax decision regarding federal credit unions in 1998 and noted that it was because credit unions are "member-owned, democratically operated, not-for-profit organizations generally managed by volunteer boards of directors and because they have the specified mission of meeting the credit and savings needs of consumers, especially persons of modest means."

Brown told Geithner that these justifications are as true today as they were when Congress passed the law.

Credit unions, Brown wrote:

  • Have deep roots in their communities;
  • Are tight-knit organizations whose members are united by a common bond;
  • Are made up of co-workers, colleagues, and neighbors who joingt together to become co-owners of 'true community institutions";
  • Provide loans so small businesses can hire workers and export products to new markets; and
  • Help make college more affordable for students, as well as provide financial education to help families plan their finances and save for the future.
Brown's endorsement of the credit union tax status comes at a time when the government is considering revisions to the country's tax code as Bush-era tax rates are set to expire on Jan. 1, 2013.

The tax-exempt status of credit unions has not been mentioned in any of the current reform discussions. However, preserving the credit union tax status is a top Credit Union National Association (CUNA) priority, and CUNA will remain engaged and vigilant as tax reform discussions move forward.

NCUA bans two from CU work

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ALEXANDRIA, Va. (6/28/12)--The National Credit Union Administration (NCUA) on Wednesday blocked former KBR CU employee Edgar Hugh Kelly and former Hingham  (Mass.) FCU employee Joanne Taylor from participating in the affairs of any federally insured financial institution.

Kelly, who worked for the Tacoma, Wash., credit union, was recently convicted of theft from a lending, credit, or insurance institution and sentenced to 33 months in prison and three years of supervised release. He will also pay $440,000 in restitution.

Taylor  is scheduled to serve five years of supervised release and will pay $35,000 in restitution. She was convicted of larceny by a credit union employee.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link to access all NCUA prohibition orders.

For the full NCUA release, use the resource link.

CUs DNC join in Charlotte playground project

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WASHINGTON (6/28/12)--More than 75 volunteers from local credit unions, joined by Credit Union National Association (CUNA), North Carolina Credit Union League (NCCUL), National Journal Group and Democratic National Convention Committee (DNCC) staff, gathered Wednesday at Levine Children's Hospital in Charlotte, N.C., to lend a hand in an ongoing rooftop playground renewal project.

Wednesday's playground renovation efforts received extensive local media coverage, as demonstrated here, in a group shot with volunteers and a local news reporter. (Photo provided by the North Carolina Credit Union League)
The volunteers decorated and assembled a permanent art installation that will be displayed outside the 12th floor rooftop playground, and worked with patients to decorate garden-themed arts and crafts projects, including birdhouses. Volunteers also had an opportunity to tour Levine Children's Hospital and learn about the impact their efforts will have on patients.

A touch-activated light and color "bubble wall," a deck and pavilion, outdoor play equipment, and much-needed environmental improvements are also being added as part of this playground project.

NCCUL President/CEO John Radebaugh, Carolinas Credit Union Foundation President/CEO John McGrail, and DNCC Senior Advisor Cameron Moody and Charlotte in 2012 Convention Host Committee Executive Director Dr. Dan Murrey also joined in the volunteer efforts.

Radebaugh said his group was "excited to put the credit union philosophy of people helping people into action by helping with this worthy project."

The playground renovations are part of a "leave behind" project, which is in honor of this summer's 2012 Democratic National Convention in Charlotte. Credit unions have honored the host cities for each national convention with a "leave behind" project that benefits local communities since 2000, and a similar project is underway at All Children's Hospital in St. Petersburg, Fla. (See related June 14 News Now story: CUs, CUNA 'dig in' on playground renovation)

"Credit unions really see this as an opportunity to leave something positive behind that will continue to benefit the Charlotte and Tampa communities long after the balloons have dropped and the convention ended," CUNA President/CEO Bill Cheney said.

The two 2012 projects will cost a combined $600,000, and credit unions nationwide, as well as the Carolinas Credit Union Foundation and the League of Southeastern Credit Unions Foundation have raised funds for the projects.

Senates Hatch among CU-backed primary winners

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WASHINGTON (6/28/12)--Credit union-backed candidates took part in many primary contests this week, and Tuesday's results were mostly positive for credit unions, Credit Union National Association (CUNA) Vice President of Political Affairs Trey Hawkins said.

In one of Tuesday's highest profile contests, six-term incumbent Sen. Orin Hatch (R-Utah) defeated his Republican primary opponent, former Utah State Sen. Dan Liljenquist, by winning 67% of votes cast. Hatch, who is the highest ranking minority member on the Senate Finance Committee, was supported by the Credit Union Legislative Action Council (CULAC) and Utah credit unions. Hatch will face another former state senator, Scott Howell (D), this fall, but Hatch is widely expected to retain his seat.

Another credit union- and CULAC-backed incumbent, Rep. Doug Lamborn (R-Colo.), also won his primary contest with more than 60% of the vote. Lamborn defeated community bank vice chairman Robert Blaha, and he may not face a Democratic opponent in November. He is expected to retain his seat, which represents a heavily Republican district encompassing Colorado Springs, Colo., and surrounding suburbs.

New York State Assemblyman Rory Lancman, who was also supported by CULAC, fell short in his House primary contest. Fellow Assemblywoman Grace Meng defeated Lancman to win the Democratic nomination, and will face Dan Halloran (R) for the right to take on Rep. Gary Ackerman's U.S. House seat next year. Ackerman, who has represented portions of Long Island and Queens for 15 terms, is not running for re-election.

CUNA urges congressional action on NFIP extension

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WASHINGTON (6/28/12)--The Credit Union National Association (CUNA) on Wednesday urged members of the U.S. Congress to enact a five-year extension of the National Flood Insurance Program (NFIP) before the program's current authorization expires on July 31.

The Senate could vote this week on legislation that would extend the NFIP for five years and make some reforms to the program. Similar legislation has also been introduced in the House, but a vote on that legislation has not been scheduled.

While CUNA supports both the House and Senate NFIP extension bills, CUNA in the letter also asked legislators to include language addressing force-placed flood insurance in a final version of NFIP legislation.

Forced-place insurance is an insurance policy taken out by a lender or creditor when a customer does not carry insurance on an asset. The charges for this insurance are passed on to the customer.

The House bill includes language that would allow lenders to charge borrowers for costs of premiums and fees incurred by the lender after borrowers required to have flood insurance either cancel or let the required policy lapse--and then fail to purchase flood insurance within 45 days after notification of that lapse.

"This language is important because it removes any ambiguity and clarifies that in such cases the lender or servicer may charge the borrower for the premiums or fees incurred for coverage beginning on the date which flood insurance coverage lapsed or did not provide a sufficient coverage amount," wrote CUNA President and CEO Bill Cheney. "We hope this language can be included in the bill that Congress ultimately enacts," he added.

The NFIP is scheduled to expire on July 31.

ATM bill vote a step forward for CUs CUNA

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WASHINGTON (6/28/12)--The House Financial Services Committee unanimously approved legislation that would ease duplicative ATM disclosure regulations on Wednesday, and Credit Union National Association (CUNA) President/CEO Bill Cheney said this committee approval was "a big step toward rectifying a problematic case of regulatory redundancy."

The bill, H.R. 4367, 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 has stressed that existing ATM disclosure requirements are creating issues for credit unions and other financial institutions that continue to be subject to frivolous lawsuits. Outside notices on ATMs are, in some cases, being intentionally removed or destroyed, without the financial institution's knowledge, and pictures are then taken of the ATM to show noncompliance. Some ATM users may then use this as evidence of apparent noncompliance and as grounds for lawsuits, and the number and cost of these lawsuits continues to climb.

Credit unions are spending around $2,000 per ATM machine to comply with the physical ATM notice requirement, and many credit unions that find themselves subject to legal action are settling lawsuits to avoid the cost of litigation. Credit unions that are spending money and resources to comply with these ATM regulatory requirements, and to address trumped up regulatory violations, are less able to serve their members, CUNA has noted.

Cheney thanked the committee for responding positively to CUNA's arguments about the need to fix this problem and spare credit unions from duplicative costs that provide no added benefit to consumers.

"The fact is that on-screen disclosures have eliminated the need for a physical notice on ATM machines. The bill passed by the House Financial Services Committee is a common-sense solution that will alleviate an unnecessary compliance burden and reduce instances of baseless litigation," Cheney added.

The bill was introduced by Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) in April and has 130 co-sponsors. A House roll call vote on H.R. 4367 could come soon after Congress returns from the planned July 4 district work period, and committee members said that they hoped the bill could be moved on to the Senate quickly.

CUNA Senior Vice President of Legislative Affairs Ryan Donovan said CUNA has already contacted senators and their staff to develop a plan for getting this legislation through the Senate as quickly as possible. "As we have seen over the last few years, getting a bill through the Senate is not always easy, but we are hopeful that the broad support the bill earned in the House as well as the straightforward nature of the legislation will facilitate its consideration and passage in the Senate," he added.

CUNA will continue to press Congress to enact this bill as quickly as possible, Cheney said.

Inside Washington (06/27/2012)

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  • WASHINGTON (6/28/12)--A group of bankers' banks are urging prompt extension of full Federal Deposit Insurance Corp. (FDIC) coverage for nearly $1.3 trillion in small-business deposits, according to the Independent Community Bankers of America. Bankers' banks are financial institutions that serve community banks. They are owned by investor banks and may provide services only to community banks. In a letter to congressional leaders, 15 bankers' banks that serve more than 5,000 community banks said extending the FDIC's transaction account guarantee (TAG) insurance beyond its Dec. 31 expiration date is necessary to preserving community bank liquidity and small-business lending capacity. "In the current challenging economic environment, an abrupt contraction in liquidity would pose an unacceptable risk to credit availability and the economic recovery," the bankers' banks wrote. "We ask that the Congress extend the FDIC TAG program at the earliest possible opportunity. Banks fully pay for this FDIC insurance coverage through their insurance premiums and no taxpayer money is used" …
  • WASHINGTON (6/28/12)--The Basel Committee on Banking Supervision has published a set of disclosure requirements on the composition of banks' capital. The requirements are designed to improve the quality of the disclosures detailing how institutions are complying with Basel III. The requirements are set out in five sections: 1) a breakdown of regulatory capital until Jan. 1, 2018, when the transition period for the phasing-in of deductions ends; 2) reconciliation requirements; 3) a description of capital instruments used; 4) disclosure requirements; and 5) a disclosure of capital components that are benefiting from the transitional arrangements …
  • WASHINGTON (6/28/12)--Federal Reserve Chairman Ben S. Bernanke will host a town hall meeting with educators nationwide at 2:30 p.m. ET on Aug 7. The educators will join the Bernanke in Washington, D.C., and will gather in Federal Reserve Bank offices throughout the country to participate via videoconference. Bernanke will give brief remarks about the importance of personal financial education and then respond to questions from both in-person and videoconference participants. Bernanke hosted a similar town hall in September 2010. The event will be webcast live

NEW ATM disclosure bill moves on to House

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WASHINGTON (UPDATED: 10:45 A.M. ET, 6/27/12)--Legislation that would help credit unions and other financial institutions by easing duplicative ATM regulations was unanimously approved by a House Financial Services Committee voice vote today, and could see a full U.S. House vote soon after the July 4 recess.

The bill, H.R. 4367, 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.

These ATM disclosure requirements are creating issues for credit unions and other financial institutions that continue to be subject to frivolous lawsuits. The Credit Union National Association (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 noncompliance and as grounds for lawsuits, and the number and cost of these lawsuits continues to climb.

Committee members said they hoped the bill could be voted on by the House, and moved on to the Senate quickly.

CUNA President/CEO Bill Cheney said committee approval is "a big step toward rectifying a problematic case of regulatory redundancy," and CUNA will continue press Congress to enact this bill as quickly as possible.