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Bachus Will Add His Support To CU Capital Bill

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WASHINGTON (6/6/13)--Rep. Spencer Bachus (R-Ala.), immediate past chair of the House Financial Services Committee, has agreed to co-sponsor a credit union supplemental capital bill, the Capital Access for Small Businesses and Jobs Act  (H.R. 719).

The bill would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--which currently is the only type of capital that counts toward capital ratio. It was introduced in February by Rep. Pete King (R-N.Y.) and reached 29 co-sponsors this week when Rep. Charles Rangel (D-N.Y.)  signed on with his support.

The Credit Union National Association  strongly backs the bill and the legislation has regulators' support as well. The League of Southeastern Credit Unions met with Bachus during the recent Memorial Day District Work Session to discuss credit union proirities, such as the supplemental capital bill.

Last month, National Credit Union Administration Chair Debbie Matz wrote to lawmaker King, and his chief co-sponsor, Rep. Brad Sherman (D-Calif.), to say that if the U.S. Congress enacts the capital-access bill, her agency will "promptly propose the necessary rule changes required for implementation."

Matz wrote, "As we witnessed during the recent economic crisis, maintaining sufficient capital is critical at time of economic stress...Your legislation would provide credit unions with an additional tool to promote sufficient capital--even under adverse economic conditions--and ensure that healthy credit unions would no longer be forced to turn away deposits in order to protect their net worth."

Compliance: Answers To Your Mandatory Arbitration Clause Questions

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WASHINGTON (6/6/13)--If the effective date of prohibitions on financing credit insurance premiums in connection with certain mortgage loans has been delayed by the Consumer Financial Protection Bureau, have mandatory arbitration clauses also been pushed back? No, Credit Union National Association Senior Director of Compliance Analysis Valerie Moss explained in a recent Comp Blog post.

The compliance date for the premium financing prohibitions has been pushed back until Jan. 10, 2014, Moss said. However, portions of Regulation Z that prohibit the inclusion of mandatory arbitration provisions in any agreement for a closed-end loan secured by a dwelling or an open-end loan secured by the consumer's principal dwelling apply to loans for which an application is received on or after June 1, 2013.

Reg Z also prohibits interpreting any provisions in these agreements as barring consumers from bringing a claim in court for any alleged violation of Federal law, Moss added.  However, she said, the rule doesn't prohibit a consumer and creditor from agreeing to use arbitration after a dispute arises.

"Credit unions now using mortgage loan documentation containing such provisions should take steps to ensure that these clauses are removed from documentation for covered loans," Moss recommended.

Use the resource link for more CUNA compliance gems.

CFPB Shares Lending Rule Exam Emphasis

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WASHINGTON (6/6/13)--Examination procedure manuals for two lending regulations, the Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA), have been released by the Consumer Financial Protection Bureau.

The CFPB in a release said the new manuals "are intended for use by CFPB examiners and the financial institutions and mortgage companies subject to the new regulations.

"They are the first round of updates for what will likely be multiple updates," the bureau said.

Examination procedures for ability-to-repay and mortgage servicing rules will also be released in the coming months, the CFPB added. The bureau also said it plans to publish additional interim examination procedures in the near future. These and other examination changes will eventually be incorporated into the CFPB's general supervision and examination manual.

The exam procedures, according to the CFPB, will help financial institutions and mortgage companies understand how they will be examined for CFPB rules that:
  • Set qualification and screening standards for loan originators;
  • Prohibit steering incentives;
  • Prohibit dual compensation;
  • Protect borrowers of higher-priced mortgage loans;
  • Prohibit the waiver of consumer rights;
  • Prohibit mandatory arbitration;
  • Require lenders provide appraisal reports and valuations; and
  • Prohibit single premium credit insurance.
For more on the new TILA and ECOA exam procedures, use the resource links.

CUNA To Congress: Approve MBLs To Ease Small Biz Capital Crunch

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WASHINGTON (6/6/13)--Increasing the credit union member business lending (MBL) cap is "one very simple solution to assist small businesses in raising capital," Credit Union National Association President/CEO Bill Cheney wrote in a Wednesday letter to the U.S. Congress.

The letter was submitted for the record of a Thursday House Small Business investigations, oversight and regulations subcommittee hearing entitled "Financing America's Small Businesses: Innovative Ideas for Raising Capital."

Cheney in the letter said "credit unions understand that in order for the economy to fully recover, small businesses need access to credit, which will help their businesses grow. Credit unions have capital to lend, a history of prudent and safe small business lending, and a mission to help provide access to credit to their members--including their small business-owning members."

Congress could help credit unions unleash this capital, and help small businesses and the economy, by approving MBL cap increase legislation. U.S. House (H.R. 688) and Senate (S. 968) bills would increase the credit union MBL cap from 12.25% of assets to 27.5%. CUNA has estimated that lifting the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers and without increasing the size of government.

S. 968, which was introduced by Sen. Mark Udall (D-Colo.) earlier this month, currently has 15 co-sponsors. H.R. 688, introduced by Reps. Ed Royce (R-Calif.) and co-sponsor Carolyn McCarthy (D-N.Y.), has 100 co-sponsors.

More than 500 credit unions are at or quickly approaching the cap, accounting for approximately 60% of credit union business lending, Cheney noted. "If the cap is not increased, the ability of these credit unions to continue to be there for their small business-owning members will be jeopardized," he wrote.