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Treasury reports busy opening for CFPB

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WASHINGTON (7/22/11)--The Consumer Financial Protection Bureau (CFPB) began its first official business day on Thursday by sending a letter of introduction to the CEOs of the financial institutions that it now oversees. The U.S. Treasury, parent agency to the CFPB, said that the letters “outline the agency’s approach to supervision and examination” and “mark the beginning of the CFPB’s regular communications with the institutions it supervises.” The CFPB is also ready to accept consumer credit card complaints and prepared to offer referrals to financially troubled homeowners to home counseling services. The agency soon will have the capacity to deal with other issues. Federal consumer financial laws will now be enforced by the CFPB, the Treasury added. The CFPB is getting ready to publish a final list of the regulations it will enforce and it will release a series of interim rules that will cover confidentiality, how testimony of records are made available to the public, and related Privacy Act and Freedom of Information Act requirements. The CFPB will also detail how its own investigative procedures and administrative enforcements will proceed. Other administrative and internal CFPB matters are being handled at this time, the CFPB added. The agency was established by the Dodd-Frank Wall Street Reform Act, which was signed into law one year ago yesterday. NCUA Chairman Debbie Matz marked the occasion at Thursday’s open board meeting, saying that the Dodd-Frank Act has “begun to achieve its desired results of promoting a stronger, safer, more stable financial system. “The actions of NCUA and other regulators, together and independently, are correcting many of the weaknesses laid bare by the financial crisis,” she added. Also relating to the CFPB late yesterday, the House voted 241-173 in favor of establishing a five-member, bipartisan commission to manage the bureau, rather than having a single director at its head as the Dodd-Frank Act now requires. The Credit Union National Assocaiton has suggested that if Congress adopts a law requiring a five-member panel, one panel member, at least, should have credit union experience. See News Now Monday for more on the bill. For the Treasury and NCUA releases, use the resource links.

CUSOs would file financials to NCUA under proposal

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ALEXANDRIA, Va. (7/22/11)—Credit union service organizations (CUSOs) would be required to file their yearly financial reports directly to the National Credit Union Administration (NCUA) under a proposal released on Thursday. Financials would also need to be forwarded to appropriate state supervisors. Any CUSO subsidiary would also have to comply with the regulation if it is adopted as a final rule. The NCUA currently has the authority to inspect the financials and records of some CUSOs, but that authority is not universal. The majority of financial information on CUSOs is provided to the NCUA by natural person credit unions that obtain services from the CUSOs. NCUA staff noted that this is an “inefficient” system, and the agency added that the lack of detailed CUSO information “restricts NCUA’s ability to conduct offsite monitoring and evaluate systemic risks posed by CUSOs.” The agency in a release said that the proposal, if enacted, would “enhance protections to consumers, credit unions and the National Credit Union Share Insurance Fund (NCUSIF).” NCUA Chairman Debbie Matz said that while recognized this is a controversial change, it is needed. Board member Gigi Hyland added that this change allows the NCUA to increase its knowledge of the system without adding any new authorities. The Credit Union National Association (CUNA) said that it will work with its Examination and Supervision Subcommittee, the leagues, and the CUNA CFO Council to analyze the impact of the proposal and develop comments. The NCUA during the July open meeting also combined the roles of deputy executive director and chief operating officer into a single position and amended its rule to clarify that remittance transfers are permissible financial services for federal credit unions. Both of these changes were required by congressional actions. For more on the NCUA meeting, use the resource link.

CUs have just one week to comply with Registry rule

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WASHINGTON (7/22/11)—With the compliance deadline just one week away for a statutory requirement that credit unions and their employees who are “mortgage loan originators” (MLOs) must register on a nationwide licensing system, some credit unions may be contacted by their federal or state regulator just double-checking that they are on top of the requirements, said Kathy Thompson, head of the Credit Union National Association‘s compliance department. Effective July 29, the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires MLOs to have registered on the Nationwide Mortgage Licensing System & Registry (NMLS), and for MLOs to start putting their unique NMLS-assigned identifier number on appropriate mortgage documents. As a brief refresher, Thompson reminds that if a credit union offers residential mortgage loans and employs individuals required to be federally registered as mortgage loan originators, the credit union must be registered with NMLS. Residential mortgage loans include first mortgages, second mortgages, home equity lines of credit (HELOCs), refinanced mortgage loans, reverse mortgages and land purchased for the construction of a residence. A credit union must determine what employees meet the definition of mortgage loan originator, a term that is defined as an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain. These MLOs must disclose their identifying number to members applying for a loan. The SAFE Act does provide a de minimus exception from registration if someone who would otherwise be an MLO makes five or fewer mortgage loans during a 12-month period. Thompson added, “If credit unions have any compliance questions about the new requirements, there are plenty of resources available, and their league certainly is ready to help with any implementation issues.” Thompson noted that effective Aug. 1, consumers will be able to get some information about the loan officer from the NMLS public site based on the MLO identifier number, so it’s very important that credit unions that make mortgage loans are ready to go starting in a week. Use the resource links below for more information. Also, visit CUNA's CompBlog, which features a July 21 Safe Act posting, to be followed by another this morning.

CUNA NCUA budget reduction moves in right direction

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ALEXANDRIA, Va. (7/22/11)—The National Credit Union Administration’s (NCUA) decision to reduce its 2011 operating budget by $2 million is “a step in the right direction,” the Credit Union National Association (CUNA) said following the agency’s Thursday open board meeting. The $2 million decrease represents a 1% reduction in the NCUA’s 2011
Click to view larger image After what staff called a thorough agency-wide budget review, the NCUA approved a plan to reduce its operating budget for the remainder of 2011 by $2 million. The savings will translate into excess cash, which the NCUA says it will use offset budget requirements for 2012. (CUNA Photo)
budget, which was set at $225 million late last year. Even with the reduction, CUNA noted that the NCUA’s 2011 budget is still $23 million more than the agency spent in 2010. The budget reduction is the result of adjustments to the employee pay and benefit budget, administrative and contracting costs, travel, and other standard business expenses. The agency has added five new full-time employees this year, with two of them serving as regional lending specialists to assist with risk assessment and member business loans in the NCUA’s Region II. Noting that more can still be done, CUNA President/CEO Bill Cheney encouraged the agency to "continue a close review of its operations and look for other potential areas where expenses can be cut without detracting from its mission of safety and soundness as it develops its 2012 budget." The agency addressed other issues during the meeting, with the board unanimously agreeing to borrow $4 billion from the U.S. Treasury for its Temporary Corporate Credit Union Stabilization Fund (TCCUSF). The borrowed funds will be used to retire Asset Management Estate promissory notes to the bridge corporates and to pay off any expenses related to the winding down of those bridge corporates. The $4 billion is out of the $5.5 billion NCUA plans to borrow from the Treasury for the TCCUSF. The agency added that the National Credit Union Share Insurance Fund held a $1.2 billion reserve balance and showed a 1.28% equity ratio in June. NCUA staff reported that 19% of total credit union assets are held in CAMEL code 3, 4 and 5 credit unions, and added that the total number of CAMEL code 3 credit unions decreased by 16 between May and June. The total percentage of shares held in CAMEL Code 3 and CAMEL Code 4/5 credit unions also declined, dropping nearly 1 percentage point and .24 percentage points, respectively. Corporate capital calculation rules were also amended during the meeting. The NCUA moved to aid corporates that are shedding assets from their businesses by allowing them to choose to “reset the clock” on their 12-month moving averages for assets under both the Moving Daily Average Net Assets and the Moving Monthly Average Net Risk-Weighted Assets calculations. For more on the NCUA meeting, use the resource link.

Home prices increase for second straight month FHFA

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WASHINGTON (7/22/11)—Home prices nationwide increased by an average of 0.4% in May, the most recent month for which data is available, representing the second straight month of progress for previously plummeting home values. The Federal Housing Finance Agency in a release noted that home prices increased by .2% during April. Homes in the mountain region of the U.S. showed the greatest growth, increasing by 2% in May. Other regions showed more modest gains, while prices in the Mid-Atlantic and West South Central regions continued to dip. The relatively good news is tempered by FHFA statistics that show a 6.3% drop in home prices since May 2010. Nationwide, home prices have fallen by an average of 19.6% since April 2007. The FHFA uses the purchase price of homes with Fannie Mae- or Freddie Mac-backed mortgages to calculate its monthly index. Thirty- and 15-year mortgage rates have also increased, with Freddie Mac reporting averages of 4.52% and 3.65%, respectively, for the week ended July 21. Both of these rates increased by 0.7% when compared against the previous weekly average. Five- and one-year adjustable mortgage rates remained relatively steady, averaging 3.27% and 2.97%, respectively. Freddie Mac chief economist Frank Nothaft said that the steady mortgage results were due to mixed economic reports. Nothaft also noted that single-family housing starts were up 9.4% in June, and existing home sales dropped by 0.8%. For the FHFA and Freddie Mac releases, use the resource links.

NCUA Prepayment Plan webinar now available online

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ALEXANDRIA, Va. (7/22/11)—There were more than 2,000 participants to the National Credit Union Administration’s (NCUA) July 11 webinar on the Voluntary Prepayment of Corporate Stabilization Fund Assessments program and now an archived version of that session has been posted to the agency’s website. The prepayment plan was adopted by the NCUA board June 29 and would permit voluntary prepayments up to a total of $500 million in Corporate Stabilization Fund assessments. The plan responds to credit union stakeholder requests to explore a mechanism that would allow prepaid assessments for the Temporary Corporate Credit Union Stabilization Fund. Credit unions have until July 29 to determine whether to participate in the voluntary initiative. Use the links for more information on the plan and to access the online webinar.

Inside Washington (07/21/2011)

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* WASHINGTON (7/22/11)--The Federal Reserve Board is seeking comment on a notice outlining the regulations previously issued by the Office of Thrift Supervision (OTS) that the Federal Reserve will continue to enforce after assuming supervisory responsibility for savings and loan holding companies (SLHCs). Under the Dodd-Frank Wall Street Reform Act, supervisory and rule-writing authority for SLHCs and their non-depository subsidiaries transferred from the OTS to the Fed Thursday; the Fed requests comment by Aug. 31 and intends to issue an interim final rule soon that will include technical, nomenclature, and other changes to certain OTS regulations to accommodate the transfer of supervisory authority to the Fed board and to address modifications made by the Dodd-Frank Act. … * WASHINGTON (7/22/11)--In a final rule issued Wednesday, the Office of the Comptroller of the Currency (OCC) said operating subsidiaries of national banks must follow state consumer protection laws (American Banker July 21). The OCC revised language critics said ignored the aims of the Dodd-Frank Act. The OCC’s initial interpretation maintained that national banks can bypass any state law that “obstructs, impairs or conditions” the banking business. State advocates said that standard is too broad. Dodd-Frank says state laws that “prevent or significantly interfere” with banking can be avoided. In Wednesday’s final rule, the agency acknowledged the two standards are not the same, though the difference may be small. “To the extent that an existing preemption precedent is exclusively reliant on the phrase ‘obstructs, impairs, or conditions’ as the basis for a pre-emption determination, we believe that validity of the precedent would need to be re-examined to ascertain whether the determination is consistent with the new standard,” the rule said …