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CU Champion Sherman among todays primary tests

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WASHINGTON (6/5/12)--With a combined 78 primary electoral contests set to take place today in California, Iowa, Montana, New Jersey, New Mexico and South Dakota, June 5 is a mini-Super Tuesday, and credit union advocates are key players in several close races, Credit Union National Association Vice President of Political Affairs Trey Hawkins notes.

One key race involves incumbent Rep. Brad Sherman (D-Calif.), who is facing fellow incumbent Rep. Howard Berman (D-Calif.) and five other opponents. Sherman has consistently championed many credit union legislative priorities, including maintaining their not-for-profit tax status, relieving regulatory burdens, increasing the member business lending (MBL) cap, and easing access to supplemental capital.

Hawkins said the Sherman race is "critical" to credit unions. The Credit Union Legislative Action Council (CULAC) and the California Credit Union League are both supporting Sherman, and the league is stepping up its efforts with in-district activities.

California's primary process has been tweaked this year, with the top two vote getters from each district, regardless of party affiliation, moving on to face each other in November's general election contests. CUNA political experts expect Sherman to be one of the top-two finishers in his district, and noted that the real race will take place in November.

CULAC and the league are also backing incumbent Sen. Dianne Feinstein (D) in her primary bid, and Feinstein is expected to lead the group of 24 candidates that are running for one of California's U.S. Senate seats.

California U.S. House primary candidates Doug La Malfa (R), Jared Huffman (D), David Valadao (R), Tony Cardenas (D), Janice Hahn (D), Alan Lowenthal (D) and Juan Vargas (D), and incumbent candidates Jeff Denham (R) and Brian Bilbray (R), are also among those facing competitive primaries that have received CULAC and league support in their respective general election contests.

Senate candidate Mark Heinrich noted that increasing credit union MBL authority would help boost the economy in a recent debate.
Potential U.S. Senate candidate and current U.S. House member Martin Heinrich (D) is also backed by CULAC and the Credit Union Association of New Mexico, and he noted his support for legislation that would increase the credit union MBL cap in a June 3 primary debate against fellow Senate candidate Hector Balderas (D). Heinrich added that the U.S. Congress could help create new jobs by opening such new financing opportunities for small businesses.

Heinrich leads Balderas by 25 points in a recent Albuquerque Journal polls, and is expected to face Republican Heather Wilson (R) this fall, the Journal reported. Wilson held Heinrich's current House seat before she left to mount an unsuccessful run for the U.S. Senate. Hawkins said this year's New Mexico Senate race should be competitive.

He noted there are many other credit union candidates running in other states, including current Sen. Jon Tester (D-Mont.), but they are all expected to win their nomination fights.

Regulators understanding meant to cut some burden

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WASHINGTON (6/5/12)--In a move that could minimize regulatory burdens for credit unions and other financial institutions with more than $10 billion in assets, the National Credit Union Administration, the Consumer Financial Protection Bureau (CFPB), the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency announced they would soon coordinate some of their supervisory and examination efforts.

The collaborative effort was made official in a recent Memorandum of Understanding (MOU).

The Federal Financial Institutions Examination Council (FFIEC), which is comprised of those regulators, said the MOU would help regulators establish arrangements for coordination and cooperation between the CFPB and the prudential regulators, minimize unnecessary regulatory burden, avoid unnecessary duplication of effort, and decrease the risk of conflicting supervisory directives.

Under the MOU, federal financial regulators will, in some cases, work together to schedule examinations and share draft reports of examinations, the FFIEC said. Regulators may also conduct simultaneous examinations of covered depository institutions, but financial institutions will have the ability to request separate examinations from their various regulators, the FFIEC added.

However, the Credit Union National Association (CUNA) said it is concerned by language in the MOU that would allow regulators to hold joint examinations, and share information gathered in those examinations, on a so-called "sampling basis."

For the full FFIEC release, use the resource link.

CUNA to CUs Emphasize payday program positives

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WASHINGTON (6/5/12)--Noting that the Federal Deposit Insurance Corp. (FDIC) is planning to investigate banks that offer payday loan products, Credit Union National Association General Counsel Eric Richard said credit unions offering similar products can guard against regulatory intrusion on similar products by ensuring that their programs are clearly distinguishable from others by virtue of their member-friendly features.

The Minneapolis Star Tribune recently reported the FDIC is concerned by news that banks are taking advantage of lower-income borrowers with questionable payday loan practices. Around 250 pro-consumer groups wrote the FDIC earlier this year, asking the regulator to prevent big banks "from trapping their customers in long-term debt at 400 percent annual interest," the Star Tribune said.

FDIC spokesman Andrew Gray told the Star Tribune his agency has "long-standing guidance related to payday lending and has encouraged banks to offer small dollar short-term loans on a responsible basis."

Most credit unions offering payday loan alternatives appear to have included interest rate restrictions, limited fees, member financial counseling, or other positive features of credit union short-term small amount loans, Richard said. Many credit union programs also encourage members to open savings accounts and provide incentives for members that switch to longer-term and lower-cost lending products, he added.

The National Credit Union Administration currently allows federal credit unions to offer short-term small amount loans to their members as an alternative to predatory payday loans that are offered by other financial service providers. Federal credit unions may charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. A $20 application fee may also be charged. The loans may total as high as $1,000 and may last for as long as six months, and the loans cannot be rolled over.

In Congress Hearings include CARD Act housing

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WASHINGTON (6/5/12)—A House subcommittee on financial institutions and consumer credit hearing on implementation of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act is one of many items credit unions will want to keep an eye on as the U.S. House and Senate work through this week.

The CARD Act hearing, entitled "an Examination of the Federal Reserve's Final Rule on the CARD Act's 'Ability to Repay' Requirement," is scheduled to be held on Wednesday afternoon. A witness list had not been released as of late Monday.

A Thursday House Financial Services subcommittee on insurance, housing and community opportunity hearing will also be of interest to credit unions. That hearing will focus on the Federal Housing Administration's multi-family housing programs. That hearing will feature testimony from Deputy Assistant Secretary Marie Head, National Housing Trust President Michael Bodaken and National Low Income Housing Coalition CEO Sheila Crowley, among others. AmeriSphere CEO Rodrigo López is also scheduled to testify on behalf of the Mortgage Bankers Association.

The House Financial Services Committee will has also scheduled a Wednesday hearing. That panel will review the Investment Adviser Oversight Act (H.R. 4624), which would provide for the registration and oversight of national investment adviser associations, on the schedule. Investor issues will again be addressed on Thursday in a House capital markets subcommittee hearing. The House Small Business Committee has scheduled a Wednesday hearing on the management of the Capital Access Program by the Small Business Administration.

A Wednesday Senate Banking Committee hearing on derivatives regulations is also scheduled. That hearing will focus on the steps the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission are taking to implement provisions of the Dodd-Frank Wall Street Reform Act, and their efforts to reduce systemic risk and improve market oversight. The session also will review the $2 billion J.P. Morgan Chase trading loss, which is being investigated by federal authorities.

The Paycheck Fairness Act (S. 3220) will be considered by the Senate this week, and various appropriations bills will be addressed by the House.

House members will return to their home districts until June 18 at the end of this week, but the Senate will remain in session.

Inside Washington (06/04/2012)

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  • WASHINGTON (6/5/12)--Former U.S. Sen. Christopher Dodd (D-Conn.) said Thursday that JPMorgan Chase's (JPM) estimated $2 billion trading loss supports the case that Congress must enact legislation to prevent large banks from taking excessive risks. Specifically, the Dodd-Frank Act, which Dodd co-wrote with Rep. Barney Frank (D-Mass.), includes a provision that would implement the so-called Volcker Rule, which would put restrictions on banks' proprietary trading (American Banker June 4). Dodd now heads the Motion Picture Association of America. In April, a group of 22 senators in a letter called on regulators to meet the July 21 deadline to write the rule (News Now April 27).  The letter lists specific issues with the proposed Volcker Rule, but asks that it not be delayed or scrapped. It urges lawmakers to eliminate loopholes; draw clear lines based on objective data and observable markets; strengthen CEO and board-level accountability and public disclosure; and provide coordinated and consistent enforcement, including data sharing by regulators …
  • WASHINGTON (6/5/12)--Financial industry representatives Friday urged lawmakers to pass a cybersecurity bill that would allow for more sharing of information between the private sector and the federal government (American Banker June 4). Greater public-private information exchange would allow financial institutions to enlist the federal government in tracing down hackers and their targets, supporters said. Sharing information about breaches would allow institutions to take action sooner and prevent fraud against their customers, said Paul Smocer, who heads the Financial Services Roundtable's technology policy division, at a House financial institutions subcommittee hearing. Democrats, including President Barack Obama, are concerned that the bill does not offer enough privacy protections. Credit unions are not expected to be affected by the legislation, said Ryan Donovan, Credit Union National Association senior vice president of legislative affairs
  • WASHINGTON (6/5/12)--The Office of Comptroller of Currency's (OCC) examination procedures during the period 2008 through 2010 were insufficient to identify weaknesses in national banks' foreclosure practices, the Treasury Department's Inspector General (IG) said in a report released Thursday. "OCC did not consider foreclosure documentation and processing to be an area of significant risk and, as a result, did not focus examination resources on this function," the report said. "The nature and extent of concerns found by OCC during its inter-agency horizontal review of mortgage foreclosure processes at major mortgage servicers indicate that OCC underestimated the level of risk in the function during the period we reviewed." The report recommended to increase examiner focus on operational risk in its examination planning; and determine whether a more specific coding of foreclosure related complaints would improve the agency's ability to identify  servicer problems. Treasury's IG also recommended OCC update and require regular review its Mortgage Banking Comptroller's Handbook …
  • WASHINGTON (6/5/12)--More than 30 Michigan credit union leaders flew to Washington last week for the Michigan Credit Union League's (MCUL) annual lobbying event (Michigan Monitor June 1). The MCUL held a luncheon featuring National Credit Union Administration Chair Debbie Matz. Also in attendance were Matz's Chief of Staff Steve Bosack and Senior Adviser Buddy Gill. The Michigan group also received a political briefing from senior Credit Union National Association (CUNA) government affairs representatives at CUNA's headquarters. The league hosted an evening reception on Capitol Hill at the Credit Union House, where Rep. Fred Upton (R-St. Joseph) made a special candidate appearance with credit union leaders. On Thursday, credit union leaders headed to Capitol Hill for office visits with representatives Michigan's 17 U.S. House and Senate member offices. Credit union leaders discussed legislation to raise the credit union member business lending cap, increase credit union access to supplemental capital, and to eliminate unnecessary ATM disclosures. Rep. Dave Camp (R-Midland) who currently serves in leadership as chairman of the Ways and Means Committee signed on as a co-sponsor of H.R. 3993, legislation to permit credit unions access to supplemental forms of capital. Also, Reps. Dale Kildee (D-Flint) and Sander Levin (D-Royal Oak) signed on as co-sponsors of H.R. 4367, legislation to eliminate the physical fee disclosure requirement on ATMs. Pictured from left Kieran Marion, MCUL; Dave Brandt, E&A CU, Port Huron; Charles Canvasser, EECU Community CU, Jackson; Phil Matous, Total Community CU, Taylor; Justin Bamford, Muskegon (Mich.) Co-Op FCU; Don Yuvan, Eaton County Educational CU, Charlotte; Phyllis White, and Melissa Zylema, St. Joseph Mercy Hospital Pontiac (Mich.) FCU. Five other states will visit Capitol Hill this week: Maine, Kansas, Oregon, Washington and Oklahoma. (Photo provided by Michigan Credit Union League) …