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Washington Archive

Washington

NCUA seeks 629M in damages from RBS Securities

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ALEXANDRIA, Va. (7/19/11)--The National Credit Union Administration (NCUA) is seeking $629 million in damages from RBS Securities, again alleging that that firm violated federal and state securities laws when it sold securities to Western Corporate FCU. This is the third suit of its kind. Similar suits have been filed against RBS Securities and J.P. Morgan Securities, LLC in Kansas federal district court. Those suits related to securities that were purchased by U.S. Central FCU, based in Lenexa, Kansas. The NCUA in its suit has claimed that RBS’ sellers and underwriters “made numerous material misrepresentations in the offering documents. “These misrepresentations caused WesCorp to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial. The mortgage-backed securities experienced dramatic, unprecedented declines in value, effectively rendering WesCorp insolvent,” the agency added. The NCUA said the suits are intended to "recover losses from the purchase of securities that caused the failures" of five large wholesale credit unions. Those institutions are U.S. Central, WesCorp, Southwest Corporate, Members United Corporate, and Constitution Corporate. The agency is currently requesting $1.5 billion in combined damages, and has said that as many as seven additional court actions could be taken. Any recoveries from these actions will reduce the total losses resulting from the failure of the five corporate credit unions and would help to reduce the amount of future corporate credit union stabilization fund assessments on credit unions, the NCUA has said. NCUA Chairman Debbie Matz said that it is the agency’s “statutory duty to replenish the insurance fund that protects consumer deposits by seeking recoveries. “Those who caused the problems in the wholesale credit unions should pay for the losses now being paid by retail credit unions,” Matz added. The Credit Union National Association (CUNA) has encouraged the NCUA to take "all reasonable actions" available to pursue effective restitution from securities firms who "share the culpability for the events that led to the corporate failures."

Obama announces Cordray as CFPB nominee

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WASHINGTON (7/19/11)--President Barack Obama on Monday announced Richard Cordray as his nominee to serve as Consumer Financial Protection Bureau (CFPB) director, adding that he looked forward to working with the new agency. Cordray has been serving as the CFPB's assistant director for enforcement, and has also served as the attorney general of Ohio and that state’s treasurer. Ohio Credit Union League representatives told News Now that the league worked closely with Cordray at the county and state levels as he developed a financial literacy campaign and encouraged younger Ohioans to plan for their financial futures through the “small savers” campaign. Obama said that CFPB architect Elizabeth Warren recommended Cordray for the post. Warren herself in a Monday statement said that Cordray “has a proven track record of fighting for families during his time as head of the CFPB enforcement division, as attorney general of Ohio, and throughout his career” and will be “a strong leader” for the CFPB. A number of key Republicans had opposed Warren for the CFPB position, raising doubts about the ability of her nomination to clear the US Senate. Cordray's nomination also will require Senate confirmation and is not assured. Some in Congress are calling for structural changes to the CFPB before agreeing to confirm a director. Created by the Dodd-Frank financial reform law, the CFPB is scheduled to become operational on Thursday. The new agency will take on oversight of the Equal Credit Opportunity Act and the Fair Credit Reporting Act, as well as regulations addressing electronic fund transfers, mortgage originator registration, and mortgage assistance relief services, on that date. The CFPB is taking over authority of these and other rules from the National Credit Union Administration, the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Trade Commission, and the U.S. Department of Housing and Urban Development. The agency also plans to release separate reports on remittances and credit scores on Thursday. The remittance report, according to the agency, will focus on ways to improve transparency and disclosures and on consumer remittance history. The credit score report will focus on differences between the credit scores that are provided to individual consumers for informational purposes and the credit scores that financial institutions use to determine eligibility for loans and other financial products. The Credit Union National Association was updated on the CFPB's progress during a Monday conference call, and a release detailing the CFPB’s work over the past year has also been published. For that release, use the resource link.

Consumer protection in House Senate this week

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WASHINGTON (7/19/11)--The House and Senate return to Washington this week with the debt ceiling debate still looming large, and weeks to go before their traditional August recess. Credit union watchers will want to focus first on today’s Senate Banking Committee hearing on enhancing consumer financial protection. Truliant FCU President/CEO Marcus Schaefer will testify alongside witnesses from the U.S. Chamber of Commerce and the Center for Responsible Lending, among others. The House Financial Services Committee will hold a Tuesday markup session, and the Senate Banking Committee has scheduled a Thursday hearing to review the Wall Street Reform Act. Deputy Treasury Secretary Neal Wolin, Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro, and other federal regulators will testify during that hearing. The Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 1315), which would modify the voting procedure of the Financial Stability Oversight Council (FSOC) when voting to stay or set aside rules finalized by the Consumer Financial Protection Bureau (CFPB), is on the Wednesday House schedule. The Credit Union National Association (CUNA) in April testimony supported allowing the FSOC to take action if a CFPB regulation would be unreasonably burdensome for financial institutions or the burden to financial institutions outweighs the benefit to consumers. The House this week is also set to consider the Cut, Cap and Balance Act (H.R. 2560), the FAA Reauthorization Act (H.R. 2553), the Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 1315) and the Legislative Branch Appropriations Act (H.R. 2551). In the Senate, debate will focus on the Military Construction Appropriations Act (H.R.2055) and potentially a debt ceiling proposal.

Inside Washington (07/18/2011)

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* WASHINGTON (7/19/11)--Sen. Chris Coons (D-Del.) recently congratulated $338 million asset Dover (Del.) FCU, Dover, Del. on its first Small Business Administration (SBA) loan.
“Getting our economy moving again means giving small business owners the tools they need to turn their ideas into reality,” said Coons (pictured fourth from the right). “By helping promising entrepreneurs get access to the capital they need to grow, we are helping more Delawareans get back to work. That’s why these SBA loans are so important.” Dover FCU received SBA certification earlier this year, providing access to additional capital to help entrepreneurs open and expand businesses. SBA loans are part of a business products and services portfolio launched by the credit union in April. CUNA and credit unions are pressing Congress to increase credit unions’ member business lending (MBL) cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said. (Photo provided by Dover FCU) …

NEW President to nominate Richard Cordray as CFPB director

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WASHINGTON (7/18/11)--President Obama on Sunday announced his intent to nominate former Ohio attorney general Richard Cordray to head the Consumer Financial Protection Bureau.

Cordray has been serving as the CFPB's assistant director for enforcement. In choosing Cordray to be the CFPB director, President Obama opted not to nominate the CFPB's architect, Elizabeth Warren, who has been serving as special advisor to the US Treasury secreatry and assistant to the president.

A number of key Republicans had opposed Warren for the CFPB position, raising doubts about the ability of her nominaton to clear the US Senate. Cordray's nomination also will require Senate confirmation and is not assured. Some in Congress are callling for structural changes to the CFPB before agreeing to confirm a director.

In a statement issued yesterday, Warren said she was "very pleased for the CFPB" with the President's choice of Cordray. "Rich has a proven track record of fighting for families during his time as head of the CFPB enforcement division, as Attorney General of Ohio, and throughout his career. He was one of the first senior executives I recruited for the agency, and his hard work and deep commitment make it clear that he can make many important contributions in leading this agency. He will make a stellar director."

Created by the Dodd-Frank financial reform law, the CFPB is scheduled to become operational later this week, on July 21.