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Foreign account reports may now be e-filed FinCEN

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WASHINGTON (7/20/11)--Foreign Bank and Financial Account Reports (FBAR) can now be filed electronically, the Financial Crimes Enforcement Network (FinCEN) reported this week. FinCEN’s filing system will accept Forms TD F 90-22.1 online. This new computer-based filing system will provide “a quicker, cheaper, more secure, and more reliable way for individuals to file FBARs,” FinCEN said. FBAR forms are filed annually and are used to report a financial interest in, or signature or other authority over, bank accounts, securities, or other types of financial accounts in foreign countries. FBARs must be filed for accounts that hold over $10,000 in funds at any time during the year, and are required to be filed once per year. However, FinCEN said that the electronic filing options are somewhat limited for the time being. For now, electronically filed FBARs may only have one signature per form. For example, married couples that wish to file a joint FBAR may only do so with the paper forms. Each spouse would be required to file their own FBAR if they choose to file them electronically. FBARs cannot currently be created and filed using tax preparation software, but FinCEN said it is “working to create that convenience and capability.” For the FinCEN FBAR release, use the resource link.

CU reg burden focus of CUNA Hill letter CU testimony

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WASHINGTON (7/20/11)—Making it easier for the Financial Stability Oversight Council (FSOC) to stay or set aside potentially burdensome Consumer Financial Protection Bureau (CFPB) rules would balance consumer protection with safety and soundness concerns, the Credit Union National Association (CUNA) said in a letter to Speaker of the House John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.). The FSOC is comprised of National Credit Union Administration (NCUA) Chairman Debbie Matz, Treasury Secretary and FSOC Chairman Tim Geithner, Federal Reserve Chairman Ben Bernanke, and other regulators. The council, which held its first meeting in October of 2010, is charged with monitoring the financial system, overseeing the resolution of troubled financial institutions and providing a forum for discussion between financial regulatory agencies. A bill (H.R. 1315) scheduled to be considered by the House this week would reduce the voting threshold needed for the FSOC to stay or set aside rules finalized by the CFPB from a two-thirds vote to a majority vote. The CFPB director would not be part of that vote. “Given the financial crisis from which we are struggling to emerge, the threshold to prevent harmful regulation from going into effect should not be as high as a two-thirds vote of the financial regulators,” CUNA said in support of that provision of the pending legislation. Potential regulatory issues could also be avoided if the CFPB, as suggested by CUNA, creates its own department whose function would be to monitor regulatory burden. Such an office could be tied to the CFPB’s Office of Community Banks and Credit Unions, and could work with the National Credit Union Administration (NCUA) and other prudential regulators to assess the regulatory burdens face by credit unions and other financial institutions, the CUNA letter said. The CFPB was also the central topic of a Tuesday Senate Banking Committee hearing entitled “Enhanced Consumer Protection After the Financial Crisis.” Truliant FCU president/CEO Marcus Schaefer told the committee that while a consumer protection-focused regulator is a necessary part of the U.S. financial landscape, regulators should recognize that broadly implemented regulation can negatively impact the consumer-friendly practices of credit unions. Schaefer, testifying on behalf of Truliant, is also chairman of the CUNA Federal Credit Union Subcommittee. “Seemingly small regulatory dictates can have a large impact on [credit unions and other small institutions] and ignore their ‘local knowledge’ of how best to communicate with members,” Schaefer added. He also warned that “there may be unintended consequences to consumer-friendly institutions as the ‘bad actors’ are reined in by ‘one-size-fits-all’ regulations.” The CEO of the $1.5 billion, 180,000 member, Winston Salem, N.C.-based credit union testified alongside Center for Responsible Lending president Michael Calhoun, SpiritBank CEO Albert Kelly, Jacksonville Area Legal Aid representative Lynn Drysdale, U.S. Chamber of Commerce representative Andrew Pincus, and Georgetown University law professor Adam Levitin. The CFPB 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. President Barack Obama named Richard Cordray as his nominee for CFPB director on Monday. (See related July 19 story: Obama announces Cordray as CFPB nominee.) For CUNA’s letter to Congress and more on the Senate hearing, use the resource links.

CU comment sought on credit-risk retention plan

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WASHINGTON (7/20/11)—The Credit Union National Association (CUNA) is seeking comment on a proposed credit-risk retention rule that would require securitizers to retain an economic interest in the credit risk of assets they securitize. The proposal was issued jointly by the U.S. Treasury Department, Federal Reserve Board, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, Securities and Exchange Commission, and the U.S. Department of Housing and Urban Development as required under the Dodd-Frank Wall Street Reform Act. Congress intended that the agencies implement rules requiring credit securitizers to maintain “skin in the game” by retaining not less than a 5% economic interest in any asset, such as mortgage loans, other loans or leases, that the securitizer transfers, sells or conveys to a third party to securitize into an asset-backed security (ABS). Originators--including credit unions and credit union service organizations--generally would be exempt from the requirements if they contribute less than 20% of the loans or other collateral to the ABS pool. However, if any originator contributes 20% or more of the collateral, the proposed rules permit the securitizer to allocate a portion of its risk retention requirement to the originator in the same percentage amount as its contribution to the asset pool. Furthermore, the originator would have to hold its allocated share of the risk retention in the same manner as would have been required of the securitizer and subject to the same restrictions on transferring, hedging, and financing the retained interest. There are two major exemptions to this requirements: securities backed by assets consisting entirely of qualified residential mortgages (QRMs); and, securities backed by certain commercial mortgages, commercial loans, and automobile loans meeting specific underwriting standards. For credit unions, the most problematic aspect of this proposal is the QRM definition, although the agencies continue to seek comments on this and other aspects of the proposed rules. The proposed rule would define a QRM as follows:
* A QRM must be secured by a first lien on a one-to-four family property to be purchased or refinanced, and have a maturity date of not more than thirty years. At least one unit must be the principal dwelling of a borrower; * A QRM must meet the following stringent underwriting standards: * The borrower cannot currently be 30 days past due on any debt obligation, and cannot have been 60 or more days past due on any debt obligation in the preceding 24 months; * The borrower must not, within the preceding 36 months, have been a debtor in a bankruptcy proceeding, had property repossessed or foreclosed upon, engaged in a short sale or deed-in-lieu of foreclosure, or have been subject to Federal or State judgment for collection of any unpaid debt; * The borrower must provide a 20% down payment in the case of a purchase transaction, and private mortgage insurance cannot be used to support the down payment; *The mortgage must have maximum front-end and back-end debt-to-income ratios of 28% and 36%, respectively; * The mortgage must have a maximum loan-to-value ratio of 80 percent in the case of a purchase transaction, 75% on a refinance transaction, and 70% on cash-out refinance loans; * The total points and fees paid by the borrower in connection with the mortgage cannot exceed three percent of the total loan amount; and * A QRM mortgage cannot have payment terms that allow for interest-only payments or negative amortization, nor can the QRM mortgage permit a balloon payment.
CUNA is seeking credit union comment on the QRM definition and other aspects of the credit-risk retention proposal by July 26. The agency comment deadline is Aug. 1--extended from the original due date of June 20. CUNA has been working as part of the Coalition for Sensible Housing to oppose the proposed QRM standard. The coalition has issued a white paper, released on June 22, warning that the proposed definition threatens to harm credit-worthy borrowers and frustrate a recovery of the nation’s housing market. CUNA has also argued that the proposal goes beyond what Dodd-Frank intended, and would also have a negative impact on credit unions. CUNA Deputy General Counsel Mary Dunn, earlier this week, participated in a CUNA Mutual Group webinar to outline issues that most affect credit unions. An archived version of the webinar is expected to be available later this week. Use the resource links below to access the CUNA Comment Call and the coalition white paper.

Inside Washington (07/19/2011)

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* WASHINGTON (7/20/11)--Three House members from Colorado are sponsoring a bill to allow community banks with less than $10 billion in assets to amortize losses on commercial real estate (CRE) for seven years (American Banker July 19). The bill’s sponsors--Democrat Ed Perlmutter and Republicans Scott Tipton and Mike Coffman--believe the pushing out of CRE losses would free up capital that would otherwise be eroded by losses, giving community banks more capacity to lend. This is Perlmutter’s second attempt to move the Capital Access for Main Street Act through Congress. Last year, he attached the proposal to the small-business bill that created the $30 billion Small Business Lending Fund. The amendment was struck down in the Senate. The current version was assigned to the House Financial Services Committee … * WASHINGTON (7/20/11)--The House Financial Services Committee has scheduled a markup today to vote on four bills. The bill numbers and titles are: H.R. 2056, To instruct the Inspector General of the Federal Deposit Insurance Corp. to study the impact of insured depository institution failures, and for other purposes; H.R. 1539, Asset-Backed Market Stabilization Act; H.R. 2527, Baseball Hall of Fame Commemorative Coin Act; and H.R. 1751, CJ’s Home Protection Act. The session is slated to begin at 10 a.m. (ET) … * WASHINGTON (7/20/11)--The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) Monday released a final rule intended to more clearly define what businesses qualify under FinCEN rules as Money Services Businesses (MSBs) and that subject to anti-money laundering rules under the Bank Secrecy Act. FinCEN also has alerted subscribers of its publications, SAR Activity Review--Trends, Tips & Issues and The SAR Activity Review--By the Numbers, that it will launch a reader survey to “assess the value” of its editorial products. “Through the survey, we hope to learn more about (subscribers’) needs and identify opportunities to improve these products,” FinCEN said in a release. The survey will be conducted by an independent research firm and results will be reported to FinCEN only in the aggregate. Visit FinCEN’s online newsroom for more information on the MSB definition and the readers’ survey …

NCUA prohibits ex-exec from future CU work

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ALEXANDRIA, Va. (7/20/11)--Amy Shufelt-Cure, a former president of Hudson, N.Y.-based Columbia Greene FCU, has been banned from future work at any federally insured financial institution by the National Credit Union Administration. Shufelt-Cure received the ban after she was sentenced to probation and ordered to pay $29,000 in restitution to the credit union. She was found guilty of petit larceny, the NCUA reported. Violation of a prohibition order is a felony offense punishable by imprisonment and up to $1 million in fines. For the full NCUA release, use the resource link.