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Washington Archive

Washington

NEW: CUNA Underscores Need Of Supp. Cap. For Hill Staffers

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WASHINGTON (7/18/13, UPDATED 12:54 p.m. ET)--At a briefing today for Capitol Hill staffers on issues surrounding the need for credit unions to have access to supplemental forms of capital, Credit Union National Association President/CEO Bill Cheney said every credit union "can benefit from the option of supplemental capital."
 
Twenty percent of credit unions saw their capital decline 2% during the economic downturn, Cheney noted, adding that new sources of capital would be a tool that would help credit unions better serve their members.
 
Under current law, a credit union's net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets.  
 
Also at the briefing, Rep. Peter King (R-N.Y.) called the current stature that limits credit union capital to retained earnings a "quirk" in the law.
 
"As the economy is trying to rebound, the last thing we need is quirks in the law to hurt on of our mainstays" in the financial services arena, he said.
 
King has introduced legislation that would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings. CUNA supports the their "Capital Access for Small Business and Jobs Act" (H.R. 719).
 
"We are going to push this bill. It is not going to be easy. The banks are opposed. We are going to tie it to a larger regulatory relief bill," King told the gathering.
 
The head of the Credit Union Association of New York, Bill Mellin, also participating in the briefing, noted supplemental capital does not change the credit union structure: "It doesn't change who owns and runs the credit union. We remain cooperative and member-owned; one member, one vote. We are very different from banks."
 
And Linda Armyn, of Bethpage FCU in Long Island, N.Y., shared a cautionary tale. Armyn said that credit unions in her state had to slow branch growth because new deposits lowered capital ratio.
 
"There is a negative effect on the community when credit unions have to slow growth," she noted.

Merchants Must Be Held To Higher Data Breach Standards: CUNA

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WASHINGTON (7/18/13)--Merchants must be held to the same high data security standards that are required of credit unions if the nation is to make any progress in the fight to shore up personal financial data, the Credit Union National Association will tell lawmakers today.
 
In a statement submitted for the record of an 11 a.m. (ET) House Energy and Commerce subcommittee hearing entitled "Reporting Data Breaches: Is Federal Legislation Needed to Protect Consumers," CUNA urges lawmakers to make two important statutory changes.
 
First, CUNA says, the nation's laws must impose higher merchant data security standards. Second, credit unions and other financial institutions must be allowed to disclose the source of data breaches affecting their members or customers.
 
CUNA also urges that merchants be required to reimburse consumers and financial institutions for the costs associated with data breaches.     
 
"The chain of data security is only as strong as its weakest link. A data breach can occur anywhere along the payments transaction, from the merchant, to the merchant bank, the issuing card bank, and ultimately the financial institutions," the letter from CUNA President/CEO Bill Cheney notes.  The letter reminds lawmakers of the "very high data security standards" required of credit unions and other financial institutions under the Gramm-Leach Bliley Act of 1999.
 
The letter underscores that merchants benefit greatly from the electronic payments system, especially through the elimination of risk they would otherwise have to assume if the transaction were paid with cash (theft risk, handling and security costs) or a check (bounce risk, which includes non-payment and collection expenses). Merchants also benefit from streamlined accounting, reduced credit risk, faster check-out and increased purchase amounts compared to checks or cash.
 
However, merchants are not required to follow the GLBA standards, and until they are held to the same standard, consumers will remain vulnerable to a system that does not protect their information, Cheney warns.
 
"Until there are consequences to these bad actions, voluntary standards will not be sufficient to protect consumers ...To protect consumers, Congress should require merchants to be regulated to at least the same extent that financial institutions are when it comes to data security," the CUNA letter says.

When posted to the CUNA website, the hearing statement will be available through the resource link below.

NEW: NCUA To Re-align Regional Supervisory Authority In 2014

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ALEXANDRIA, Va. (7/19/13, UPDATED 11:42 a.m. ET )--To maximize operational efficiency, the National Credit Union Administration says it will re-align its regional supervision of federally insured credit unions in nine states, effective Jan. 1, 2014.
 
Under the new divisions:
  • Federally insured credit unions in Colorado, Montana, New Mexico and Wyoming will be moved to Region IV from Region V;
  • Louisiana and Arkansas supervisory responsibilities will move to Region III from Region IV;
  • Wisconsin will be covered by Region I, no longer Region IV;
  • Ohio will come under Region II, moving from Region III; and
  • California will return to the supervision of Region V, not Region II.
"We continually monitor our regional workload and, when necessary, make adjustments to distribute exam hours proportionally," NCUA Chair Debbie Matz said announcing the upcoming changes.
 
"Several years ago, NCUA moved California, Nevada and several individual credit unions, for supervision purposes, to different regions.
 
"Now that the economic downturn has ended, with the economy gaining strength and with the credit union industry generally performing well, we are reconfiguring our regions to create geographically compact districts that better balance workload, improve efficiency and reduce travel costs by more than $900,000 per year," she added.
 
Also starting in 2014 and announced earlier this year, a newly created Office of National Examinations and Supervision will begin supervising the nation's largest consumer credit unions. The NCUA notes that the new office was created by the re-allocation of existing resources.

Free Training Available For New C-note Security

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WASHINGTON (7/18/13)--While U.S. consumers certainly will not need any training on how to spend the newly re-designed  $100 notes that
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will begin circulating on Oct. 8, the Federal Reserve is offering training for those responsible for screening the bill's new security features to determine the authenticity of the currency.
 
The Fed has created a variety of training materials and they are available free--and even in multiple languages.
 
The new $100 notes have two new security features incorporated in the design; a three-dimensional security ribbon and a bell-in-the-inkwell graphic.
 
The Fed says its training materials also include an overview of previously redesigned denominations and are accompanied by a training script "for easy reference."
 
See the resource links below for more.

CUNA: CUs Need Relief Found In PATH Act Draft

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WASHINGTON (7/18/13)--Credit unions strongly support the regulatory relief provisions found in a new draft bill on housing policy reform unveiled last week by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), and also back many other positive aspects of the legislation, according to the Credit Union National Association.
 
In a statement submitted today for the record of a hearing on that bill, called the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013," CUNA President/CEO Bill Cheney wrote that credit unions' strong support includes a provision to delay the mandatory implementation of all Dodd-Frank Act mortgage rules for an additional year.
 
"The compliance obligations imposed by the mortgage rules are simply overwhelming to many credit unions, especially America's smallest credit unions, and the tight timeframe for compliance puts the availability of mortgage credit--and thus America's nascent housing recovery--at risk. 
 
"Another year would ensure that mortgage credit remains available to millions of credit union members while credit unions all over the country continue to understand how to implement the most sweeping regulatory changes to mortgage lending in U.S. history, and would be welcome relief to credit unions," the CUNA leader wrote.
 
Cheney also said credit unions appreciate that the PATH Act recognizes that portfolio lending should not be treated the same for purposes of designing a regulatory framework for a housing finance system, a recognition that would provide "extraordinary relief for credit unions." Historically, credit unions have been portfolio lenders, holding 60%-75% of the mortgages they write on the books in most years prior to the financial crisis. 
 
The PATH Act would exempt any residential mortgage held on the balance sheet of the originating creditor from the Home Mortgage Disclosure Act, eliminate the requirement to set up an escrow account for higher-priced mortgage loans held in portfolio, and relieve credit union portfolio loans of many of the requirements of the Dodd-Frank Act that will be very burdensome and costly to implement. This importantly includes the ability-to-repay and Qualified Mortgage requirements. 
 
However, Cheney added, CUNA does have preliminary concerns on behalf of credit unions regarding some provisions of the PATH Act. For example, CUNA has serious concerns that the PATH Act may not provide credit union members with a sustainable secondary market that can provide the necessary liquidity and structure that will ensure the continuation of long-term fixed-rate mortgage products.
This is of particular concern for credit unions because more than 83% of credit union mortgages issued since 2008 have been fixed-rate mortgages; this signifies particularly strong member demand for a fixed-rate mortgage product. 
 
The PATH Act hearing starts at 1 p.m. (ET) July 18. In general, the bill seeks to minimize government involvement in the secondary market, limit taxpayer liability, foster innovation and allow for more private-sector capital in the marketplace. Additionally, the bill strives to provide equal access to all financial institutions regardless of asset size. 
 
Use the resource links to access the CUNA letter when it is posted to the CUNA website and to read more about today's hearing.

CUNA To Testify July 23 On Housing Reform In Senate

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WASHINGTON (7/18/13)--Bill Hampel, chief economist of the Credit Union National Association, is scheduled to testify July 23 before a Senate Banking subcommittee on the topic of  "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions."
 
The hearing, called by the subcommittee on securities, insurance and investment, is scheduled for 90 minutes starting at 3 p.m. (ET).
 
There will be two sets of witnesses.  The first panel includes a single witness:  Sandra Thompson, deputy director, Division of Housing Mission and Goals, Federal Housing Finance Agency.
 
In addition to CUNA's Hampel, the second panel is expected to include : Jack A. Hartings, president/CEO, The Peoples Bank Company on behalf of the Independent Community Bankers of America; Andrew J. Jetter, president/CEO, Federal Home Loan Bank of Topeka; and Michael Middleton, chairman/CEO of Community Bank of Tri-County, on behalf of the American Bankers Association.
 
CUNA has told housing policy makers, through letters to the Obama administration and in earlier congressional testimony, that the needs of credit unions and other small mortgage lenders must be considered as the country moves forward on needed reforms.

Capitol Hill Staffers To Be Briefed By CUNA, Others On CU Supp Cap

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WASHINGTON (7/18/13)--The Credit Union National Association will participate today in a briefing for Capitol Hill staffers on issues surrounding the need for credit unions to have access to supplemental forms of capital.
 
CUNA President/CEO Bill Cheney will describe the need for new laws to support well-capitalized credit unions and their members.
 
Under current law, a credit union's net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets.  
 
As a consequence, a credit union that is successful in serving its members and attracting new shares runs the risk of diluting its regulatory capital ratio, triggering non-discretionary capital-based supervisory actions under prompt corrective action (PCA) rules. Healthy credit unions may be forced to turn away deposits and to restrict lending to satisfy rigid regulatory capital requirements.
 
CUNA supports pending legislation that would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings.
 
The bill also has National Credit Union Administration support. NCUA Chair Debbie Matz pledged in a May 2 letter to the bill's chief sponsors, Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.), that if the U.S. Congress enacts their "Capital Access for Small Business and Jobs Act"  (H.R. 719), her agency will "promptly propose the necessary rule changes required for implementation."

NEW: Senate Banking Clears Metsger Nomination For Senate Vote

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WASHINGTON (7/18/13, UPDATED 12:11 p.m. ET)--Voting by voice vote, the Senate Banking Committee has cleared the nomination of Richard Metsger to move forward to the full Senate floor for a confirmation vote.

Although there is no definitive word yet on timing, Metsger's nomination is not considered to be controversial and could get a full Senate vote  before the U.S. Congress breaks in August for its Summer District Work Session.  

The committee also voted to move forward the nominations of Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency, Jason Furman, to be a member and chairman of the Council of Economic Advisers; Kara Stein, Michael Piwowar, and Mary Jo White, to be members of the Securities and Exchange Commission.