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Legislators ask CFPB DOE to examine bankcollege cards

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WASHINGTON (6/11/12)--Noting in a release that many colleges are pushing students into using campus debit cards that carry "numerous unnecessary, costly and unknown bank fees," Sen. Richard Durbin (D-Ill.) and Rep. George Miller (D-Calif.) last week urged the Department of Education and the Consumer Financial Protection Bureau (CFPB) to examine the bank-affiliated student debit card practices at more than 900 colleges and universities.

The legislators in a letter to CFPB Director Richard Cordray, Secretary of Education Arne Duncan, and Department of Education Inspector General Kathleen Tighe said they were concerned over the issues that bank/university debit card agreements could be creating for college students.

The debit cards held by many students "may come with high user fees, hidden transaction costs and insufficient consumer protections – adding to the mountain of debt many higher-education students must take on," they added. "U.S. student loan debt is reaching the $1 trillion mark, we should not allow costly and inappropriate debit card fees to add to that debt," the legislators said.

The release cited a U.S. Public Interest Research Group (PIRG) report that named PIN debit fees, balance inquiry fees, abandoned account fees, account closure fees, and prepaid debit card reloading fees among those giving students trouble.

However, PIRG in a separate release said "a well-structured debit card program can provide benefits to students."

Credit unions in many states offer the benefits of credit union membership to students through on-campus branches or college- or university-affiliated credit unions that serve students and employees of the school.

ATM disclosure bill slated for committee markup

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WASHINGTON (6/11/12)--Legislation that would ease the current ATM fee disclosure regulations that are, in some cases, leading to bogus lawsuits against ATM operators will be the subject of a June 27 markup session, House Financial Services Committee Chairman Spencer Bachus (R-Ala.) announced Friday.

The hearing is scheduled to begin at 10:00 a.m. ET.

The ATM bill, known as H.R. 4367, was introduced by Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) in April. It has 95 cosponsors.

The Credit Union National Association (CUNA) strongly supports this legislation and "has worked very hard over the last several weeks to move this legislation to mark up," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

"CUNA lobbyists and league staff have met with a majority of the members of the financial services committee on this legislation, and as a result of our effort, this legislation has been cosponsored by many of the members of the committee. We hope that the bill will see floor consideration soon after the mark up," he added.

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.

"This legislation addresses one example of an unnecessary regulatory burden for credit unions that provides no benefit to consumers," Donovan said. "As we have approached this bill, our intention has not been to reduce disclosure or consumer information, but rather ensure that credit unions are able to efficiently use the resources of the credit union to the benefit of the member," he added.

CUNA has also asked the Consumer Financial Protection Bureau (CFPB) to address the ATM disclosure issue.

ATM disclosure requirements have caused issues for credit unions and other financial institutions. 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 non-compliance and as grounds for lawsuits, and the number and cost of these lawsuits continues to climb.

CUNA recently estimated that the total number of these lawsuits could be in the hundreds, and many credit unions are settling the suits to avoid the cost of litigation.

Other items on the June financial services schedule include:
  • A June 19 House Financial Services Committee hearing on JPMorgan Chase's recent multi-billion dollar trading loss. JPMorgan CEO Jamie Dimon is scheduled to testify;
  • A June 20 House capital markets and government sponsored enterprises subcommittee hearing on the structure of U.S. equity markets;
  • A June 20 House insurance, housing and community opportunity subcommittee hearing on the Consumer Financial Protection Bureau's recent mortgage closing disclosure work;
  • A June 21 House financial institutions and consumer credit subcommittee hearing on money service businesses;
  • A June 28 House insurance, housing and community opportunity subcommittee hearing on the appraisal industry and mortgage regulations; and
  • A June 28 House domestic monetary policy and technology subcommittee hearing on the impact of fractional reserve banking on monetary policy.
The committee release emphasized this schedule is subject to change.

NCUAs Fryzel calls for credit union nation

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ALEXANDRIA, Va. (6/11/12)--National Credit Union Administration (NCUA) board member Michael Fryzel last week urged New York credit unions to "take the reins of a movement that is poised on the cusp of greatness, of great expansion, of new popularity" and turn the United States into "a credit union nation."

Speaking before the Credit Union Association of New York's annual convention in Bolton Landing, N.Y., Fryzel praised New York credit unions for their high levels of performance.

New York credit unions, he noted, have grown membership nearly two-thirds the national average, and have grown their member shares at the national average of 18.7%. Loan and capital growth rates have also exceeded national averages. "These are extraordinary results," he said.

"Right now ordinary Americans are seeing the pocket-book advantages of credit unions and opening accounts in record numbers. The credit union business-model makes sense to more and more people every day. People are seeing the advantage of an organization whose board of directors is pledged to work not for a profit but solely for the benefit of the persons who join," Fryzel said.

Overall, he added, credit unions "are a dynamic and developing industry" that can grow to reach every household in America. Those single accounts "can become five, and five accounts can lead to mortgages, auto loans, small business loans," all serving to families keep more of their hard-earned pay than they could by using alternative financial services, he said.

For more on the speech, use the resource link.

Inside Washington (06/08/2012)

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  • WASHINGTON (6/11/12)--The Federal Reserve Board on Thursday approved a final rule to implement changes to the market risk capital rule based on an international agreement known as Basel III. The new rule requires banks with significant trading activities to adjust their capital requirements to better account for the market risks of those activities (American Banker June 8). Banks will be required to maintain top-quality capital equivalent to 7% of their risk-bearing assets. The final rule applies to bank holding companies and state-chartered banks that are members of the Federal Reserve System. The new rules will become effective Jan. 1, but banks will not be required to be in full compliance until 2019 …
  • WASHINGTON (6/11/12)--Although the Federal Reserve is limited in its ability to ease Europe's economic difficulties, the central bank remains prepared to withstand any ill effects from overseas that may touch the U.S., Federal Reserve Chairman Benjamin Bernanke said Thursday. "As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate," Bernanke told a congressional committee Thursday. Concerns about sovereign debt and the health of banks in many European countries have has acted as a drag on U.S exports, weighing on business and consumer confidence, Bernanke said. Lawmakers can help improve the U.S. economy by adopting fiscal policy that results in a stable or declining ratio of federal debt to gross domestic product, Bernanke said …
  • WASHINGTON (6/11/12)--West Virginia Rep. Shelley Moore Capito (R-W. Va.) has asked the Federal Deposit Insurance Corp. (FDIC) to assess the cost of a program that allows banks to offer its customers unlimited deposit insurance on noninterest-bearing transaction accounts. Lawmakers must decide whether to extend the four-year-old Transaction Account Guarantee (TAG) program when it expires Dec. 31 (American Banker June 8). FDIC initiated TAG as a voluntary program in 2008 during the financial crisis to address concerns that a large number of account holders might withdraw their uninsured account balances from financial institutions due to economic uncertainties. In 2010, Congress extended the program through 2012 and required participation from all banks.  Generally, small banks support a further extension of the program, while large banks are against it …