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NCUA issues CandD to former WesCorp HR officer

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ALEXANDRIA, Va. (7/3/12)--Former Western Corporate FCU (WesCorp) employee Thomas Swedberg has agreed to the terms of a National Credit Union Administration (NCUA) cease and desist order that would prevent him from working for any federally insured corporate credit union.

Swedberg was the director of human resources for the former $34 billion corporate credit union, and was one of five former WesCorp employees that were sued by the agency.

The order, which was released to the public by the NCUA last Friday, bans him from:

  • Becoming an employee of, holding any office in, or otherwise participating in any manner in the conduct of affairs of any federally insured corporate credit union;
  • Consulting or advising any federally insured corporate on any matters involving or relating to investment securities, investment policy, or investment strategy; or
  • Selling any investment securities to any federally insured corporate credit union.
Swedberg consented to the order, without admitting fault, the NCUA said.

The NCUA in its lawsuit against former senior WesCorp officials had alleged that they were negligent in monitoring mortgage-backed security investments that were made by the corporate, and that there was a breach of fiduciary duty and fraud related to these investments, which resulted in $6.8 billion in portfolio losses. The WesCorp employees filed counterclaims and affirmative defenses against NCUA, alleging the agency was aware of WesCorp's investment strategies and approved of and encouraged the strategies.

Swedberg was not involved in the purchase of these failed investments, but was among those who received payments through WesCorp's Supplemental Executive Retention Plan, netting a lump sum of $1.2 million in 2008.

The former WesCorp employee and the agency filed a settlement agreement with a federal court in Los Angeles, dismissing the case against him, in April of this year. Former WesCorp Chief Risk Officer Timothy Sidley and Chief Investment Officer Robert Burrell have also agreed to cease-and–desist orders with the agency, and settled the charges against them.

Former WesCorp President/CEO Robert Siravo and Chief Financial Officer Todd Lane have not settled with the agency.

CUs keep up drive for MBLs other CU issues

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WASHINGTON (7/3/12)--Credit union advocates from Missouri, Montana, Ohio and Texas participated in the Credit Union National Association's (CUNA) ongoing Hike the Hill efforts last week, seeking congressional support for member business lending (MBL) cap increase legislation, enhanced supplemental capital access, ATM fee disclosure fixes and other credit union priorities ahead of this week's July 4 district work period.

MBL cap increase legislation, which has been introduced in the U.S. House and Senate, would help credit unions increase their lending to local small businesses, the credit union advocates said.

Click to view larger image Montana credit union representatives discuss key credit union priorities with credit union supporter Sen. Jon Tester (D-Mont.) and members of his staff, at a meeting in Washington. (CUNA photo)
The Senate version of MBL legislation is expected to come up for a vote this year. The Credit Union National Association (CUNA) has estimated that lifting the MBL cap to 27.5% of assets, from 12.25%, would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment. Both benefits come at no cost to taxpayers.

Nearly two dozen Texas credit union leaders traveled with Texas Credit Union League (TCUL) representatives for their Washington meetings, and members of that group visited with key members of the House Financial Services Committee and others from their state. Duplicative ATM disclosure regulations are creating issues for credit unions nationwide, as some are vandalizing disclosure placards on ATMs and suing financial institutions for noncompliance.

One member of the Texas group told of how the credit union was targeted by a frivolous ATM lawsuit, with the credit union paying a $10,000 settlement. Nine-tenths of the settlement amount went to the attorney that brought the case, and the TCUL said this story seemed to resonate with elected officials.

Legislation (H.R. 4367) that would help eliminate frivolous lawsuits by removing dual ATM disclosure requirements was passed unanimously by the House Financial Services Committee last week. H.R. 4367 has 145 co-sponsors, and could come up for a full House vote once Congress returns to Washington next week.

The Montana group also covered these national issues, and regional issues, during their meetings with Sens. Jon Tester (D) and Max Baucus (D), and Rep. Dennis Rehberg (R). The Montana group noted that the job growth created by the recent oil boom in the eastern part of the state is resulting in changes for credit unions and communities alike. Credit union members that own land, and oil rights, above Eastern Montana's Bakken oil field are receiving large payouts, and, in turn, are making large share deposits. However, they are not taking out any loans. Share growth is outpacing loan growth, and, as a result, capital is being eroded, the credit union representatives said. "This is an excellent example of a place where supplemental capital could be of great assistance," Montana Credit Union Network President/CEO Tracie Kenyon stressed.

More than 20 Ohio credit union leaders joined Ohio Credit Union League staff during their meetings last week, and the Ohio group met with many key members from their state, including Reps. Steve Chabot (R) and Jim Renacci (R) and Sen. Sherrod Brown (D).

Meetings with Sens. Claire McCaskill (D) and Roy Blunt (R), and Reps. Todd Akin (R), Russ Carnahan (D), William Lacy Clay (D), Emanuel Cleaver (D), Jo Ann Emerson (R), Sam Graves (R), Vicky Hartzler (R), Billy Long (R) and Blaine Luetkemeyer (R) were on the schedule for Missouri Credit Union Association staff and credit union representatives from that state.

The Missouri and Montana groups also met with National Credit Union Administration staff during their visits.

More Hike the Hill visits are scheduled for this fall.

CUNA has encouraged credit unions and small business advocates to meet with House and Senate lawmakers in their home offices during the district work period to continue to encourage passage of the MBL bills. CUNA also noted the broad support that MBL legislation has gained in recent ads. (See July 2 News Now story: Pre-break CUNA ads highlight MBL support).

CUNA seeks comment on two CFPB releases

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WASHINGTON (7/3/12)--The Consumer Financial Protection Bureau (CFPB) has asked for public comment on nonbank supervisory and notification procedures and information on general purpose prepaid cards that are offered by financial institutions. The Credit Union National Association (CUNA) has encouraged credit unions to provide comments on both of these issues to the CFPB and CUNA in a pair of new Comment Calls.

The CFPB proposed rules set up the process under which the agency could supervise nonbanks to prevent them from offering financial products or services that pose risks to consumers. The CFPB rules for nonbanks do not apply to credit unions, but CUNA continues to monitor the potential impact to credit unions from CFPB supervision of nonbank entities and the implementation of the Dodd-Frank Act.

CUNA in its Comment Call asks credit unions for recommendations regarding how the CFPB should supervise nonbank entities, and whether or not credit unions believe that the potential nonbank supervision standards could impact credit unions or the credit union system.

The CFPB is also seeking information on the costs, benefits, and risks of prepaid card use. The agency in May announced it would begin the process of regulating prepaid cards under Regulation E, which implements the Electronic Funds Transfers Act. The CFPB has not said when it will begin writing new prepaid card rules, but improving the safety and transparency of prepaid cards and their providers will be two main goals of the CFPB's rulemaking effort, according to the agency.

CUNA in this second Comment Call asks if certain aspects of Reg E should be applied to prepaid cards, and how the CFPB could minimize compliance costs as it develops potential prepaid card rules. CUNA is also seeking credit unions' general comments on how prepaid card products are designed and marketed.

Comments are due to CUNA by July 9. The CFPB deadline for comments on either issue is July 24.

For the two comment calls, use the resource links.

Inside Washington (07/02/2012)

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  • WASHINGTON (7/3/12)--Regulatory agencies Friday announced the availability of the 2012 list of distressed or underserved nonmetropolitan middle-income geographies where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as "community development." "Distressed nonmetropolitan middle-income geographies" and "underserved nonmetropolitan middle-income geographies" are designated by the agencies in accordance with their CRA regulations. The criteria for designating these areas are available on the Federal Financial Institutions Examination Council website ( The designations reflect local economic conditions, including triggers such as unemployment, poverty and population changes. The U.S. Census Bureau revised some census tract boundaries as a result of the 2010 census. The current list of distressed or underserved nonmetropolitan middle-income geographies does not reference the 2011 designation. Geographies on the 2012 list will not necessarily have a corresponding 2011 geography  …
  • WASHINGTON (7/3/12)--April foreclosure statistics from Lender Processing Services (LPS) were inaccurate, said the Federal Housing Administration (FHA) on Friday. LPS provides statistical services to several federal agencies, as well as state and local governments. Statistics released by LPS in May showed FHA foreclosure starts had increased 73% in April, to 63,129 from 36,311 in March (American Banker July 2). The agency said LPS reported a higher number of monthly FHA foreclosure starts than FHA's data show, the agency said. LPS uses data supplied by the Department of Housing and Urban Development, which oversees FHA. FHA and LPS they are working together to identify the data discrepancy