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NCUA CU foundation strengthened in 2011

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ALEXANDRIA, Va. (7/5/12)--Credit unions continued to demonstrate stability and resilience as the National Credit Union Administration (NCUA) worked to strengthen the foundation of the credit union system, the NCUA said in its 2011 Annual Report.

The report, entitled Foundation for the Future, noted that credit union membership increased by 1.3 million during the year, according to NCUA numbers. Delinquencies decreased, and credit union income increased by 41.2% during 2011, the agency added. Another key indicator--return on average assets--climbed to 68 basis points (bp) by the end of the year, an 18 bp increase from 2010's total. The number of credit union failures also declined in 2011, the NCUA added.

The NCUA in the report also highlighted its regulatory modernization work, which addressed safety and soundness risks while lessening regulatory burdens.

The report also detailed the agency's 2011 regulatory actions, which included approving regulations that aim to:

  • Strengthen the corporate credit union regulatory framework;
  • Enhance the financial literacy of credit union directors;
  • Improve low-income designation procedures;
  • Ease access to the Community Development Revolving Loan Fund; and
  • Resolve credit union failures at reduced costs.
The NCUA's work on interest rate risk, troubled debt restructurings, emergency liquidity and regulatory flexibility was also noted in the report.

The report serves as the agency's official report to the President and Congress, and covers NCUA and credit union operations. The report also tabulates 10 years of financial trends for credit unions and the National Credit Union Share Insurance Fund.

For the full NCUA report, use the resource link.

The Credit Union National Association's Examination and Supervision Subcommittee will be reviewing the report and following up on issues of concern, and will emphasize that credit unions still are burdened by regulations, despite the agency's regulatory modernization work.

CUs can detail elder fin ed efforts in CUNA comment call

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WASHINGTON (6/5/12)--The Consumer Financial Protection Bureau (CFPB) has increased its efforts in the fight against elder financial abuse, and credit unions can detail the steps they have taken to educate older members, and help prevent elder financial abuse, in a new Credit Union National Association (CUNA) Comment Call.

In the comment call, CUNA asks for details on any financial education, counseling, or tailored personal finance management programs that are offered by credit unions.

Credit unions can also report any financial education efforts that focus on mitigating the financial exploitation of older military veterans.

The CFPB has also asked for public comment on any fraudulent or deceptive practices that target elderly Americans and their families.

Comments must be submitted to CUNA by Aug. 10, and the CFPB is accepting comments until Aug. 20.

An estimated $2.9 billion was stolen from financially exploited senior citizens in 2010, according to the CFPB. The agency said reported instances of financial theft from seniors grew by 12% between 2008 and 2010, and the Financial Crimes Enforcement Network (FinCEN) in 2011 reported a sharp increase in the number of financial institutions that filed Suspicious Activity Reports related to elder financial abuse.

Large ATM withdrawals, abnormal debit transactions, and sudden non-sufficient fund charges are some of the many signs of elder financial abuse. Credit unions and other financial service providers should also be aware of caregivers that take a sudden interest in a senior citizen's financial activities, caregivers that attempt to speak for the senior citizen, or caregivers that refuse to leave a senior citizen's side when they are discussing financial matters, FinCEN recommended.

For the CUNA comment call, use the resource link.

Chamber urges CFPB to define abusive

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WASHINGTON (7/5/12)--The Consumer Financial Protection Bureau (CFPB) should clearly define what constitutes an "abusive" financial product or practice, and take stronger steps to verify consumer complaints before they are published in public forums, the U.S. Chamber of Commerce said in a recent letter to CFPB Director Richard Cordray.

In the letter, David Hirschmann, president/CEO of the Chamber of Commerce's Center for Capital Markets Competitiveness, said a CFPB policy statement defining "abusive" practices "will help to prevent divergent interpretations of the 'abusive' standard around the country, and provide much needed clarity to legitimate businesses trying their best to ensure that their actions comply with the law."

The CFPB director has previously indicated that the agency would not define the term "abusive."

Hirschmann in the letter argued that without a clear definition, state attorneys general and state regulators could institute enforcement actions depending on their individual interpretations of the term. It is the CFPB's responsibility to ensure the law is enforced consistently and does not create separate standards that result in excessive compliance burdens being placed on the credit market, he wrote.

The agency's practice of publishing company-specific consumer complaint information on its website could also create issues for market participants, the letter said.

The CFPB last month unveiled an online database of consumer credit card complaints.

The database details the issue that prompted a consumer complaint, the ZIP code of the consumer that made the complaint, and the company against which the complaint was made. Information on how the complaint was resolved, and whether it was resolved in a satisfactory fashion, is also included.

The letter suggested the CFPB could make a few fundamental changes to this database "to ensure the government is not disseminating misleading information." Publishing only company-specific figures related to complaint resolutions is one way the agency could guard against fraudulent or malicious manipulation of the database, the letter said.

"This will help to ensure the validity of the underlying complaint, and help to ensure the information is actually useful to consumers," the letter added.

The letter also encouraged the CFPB to stop including enforcement attorneys as part of the examination process, noting that this practice can turn the exam process into an adversarial proceeding.

Publishing more organizational information on its homepage, and regularly releasing a schedule of planned proposed and final rulemakings, would also help the agency and those it regulates, the letter added.

For the full letter, use the resource link.

The Credit Union National Association (CUNA) has recommended actions the CFPB could take to minimize regulatory burdens in recent meetings with the agency, including exempting credit unions from potential overdraft fee regulations. CUNA has also urged the CFPB to provide credit unions with relief from final remittance regulations.

Inside Washington (07/03/2012)

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  • WASHINGTON (7/5/12)--As of June 30, about half of the 31 failed-bank resolutions this year involved an acquirer purchasing a whole bank without any loss sharing from the Federal Deposit Insurance Corp. (FDIC). That indicates the agency is moving away from covering losses created by failed-bank buyers as the economy improves (American Banker July 3). Under loss-sharing deals, the FDIC assumes some of a buyer's risk from taking over bank with a weak portfolio. It is designed to attract more bidders for a damaged institution and ensure that assets stay in the private sector. Last year, 34% of the deals involved an acquirer purchasing a bank without any loss shared from the FDIC. In 2010, just 9% of deals were made without loss sharing. Failures are typically smaller now than during the financial crisis, according to observers. Bidders are also more comfortable with the economic environment and the portfolios for which they are bidding, such as single-family mortgages, said Pamela Farwig, a deputy director in the FDIC's division of resolutions and receiverships …
  • WASHINGTON (7/5/12)--The Federal Housing Finance Agency (FHFA) announced Tuesday that it has received a good response from qualified investors interested in participating in the agency's pilot real estate-owned (REO) initiative announced in February.  FHFA solicited bids in the second quarter of the year for qualified investors to purchase about 2,500 single-family, Fannie Mae-foreclosed properties. Fannie Mae offered for sale pools of properties in geographically concentrated locations across the U.S.  "FHFA undertook this initiative to help stabilize communities and home values in areas hard-hit by the foreclosure crisis," said Edward J. DeMarco, FHFA acting director. "As conservator of Fannie Mae and Freddie Mac, we believe this pilot program will assist us in achieving our objectives and help to maximize the benefit to taxpayers. We are pleased with the response from the market and look forward to closing transactions in the near future" …