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CUNA at CFPB to discuss large issuers

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WASHINGTON (7/8/11)—The Credit Union National Association (CUNA) was one of several industry representatives that discussed on Thursday how the Consumer Financial Protection Bureau (CFPB) should approach its regulation of non-bank/non-credit union “larger participants” in consumer financial services. The CFPB meeting aimed to identify what types of large non-bank/non-credit union financial entities should be subject to CFPB supervision and examination. It is considering regulating non-financial institution auto lenders, debt collection agencies, credit reporting agencies, prepaid credit card firms, debt relief firms, and money transfer firms. The CFPB is accepting public comment on how to treat these types of entities. CUNA and the CFPB were joined in the discussion by the Independent Community Bankers of America (ICBA), the AFL-CIO, and several other industry and consumer groups. The CFPB is holding additional meetings with more than 100 organizations. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is authorized to supervise all sizes of nonbank payday lenders, private student lenders, and mortgage companies. Dodd-Frank requires that the CFPB issue an initial rule on large non-bank firm regulation no later than July 21, 2012, one year after the designated transfer date. While the supervision of privately insured credit unions was not discussed during the CFPB roundtable on large non-bank financial entities, CUNA following the meeting said it is committed to minimizing the regulatory burden of these credit unions. CUNA added that if the CFPB elects to take on regulation of privately insured credit unions, it should rely on state-regulators to examine these credit unions. For more on this CFPB project, use the resource link.

Survey Debit preferred over checks at POS

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WASHINGTON (7/8/11)--A consumer survey has revealed that debit cards are the most popular form of payment at retail points of sale (POS), and checks are “largely a thing of the past” to most consumers, according to payment services firm TSYS. The TSYS survey questioned more than 1,000 debit card users on their card usage, payment preference, and interest in debit card account perks. The survey found that cash was the main fallback for consumers who did not use their debit cards, and the study found that consumers would “reduce or completely stop using their debit cards if they were charged fees.” However, consumers would be more interested in debit card services if they were offered “instant-issue” cards and increased online personal identification number (PIN) security. Adding or increasing debit account fees may be unavoidable for some credit unions when the Federal Reserve’s debit interchange rule comes into effect later this year. The Fed’s final interchange rule, which was approved by a 4 to 1 vote late last month, would cap large issuer debit interchange fees at 21 cents, to cover network connectivity, hardware, software and labor costs, as well as costs related to network processing and transaction monitoring. An additional five basis points per transaction may be charged to cover fraud losses. A separate interim final rule proposed would allow an additional penny to be charged if financial institutions are in compliance with Fed established fraud prevention standards. Debit card issuers with less than $10 billion in assets, prepaid cards, and government-issued cards are exempt from the cap provisions. The Fed will be required to report on the interchange cap’s impact on small-issuer interchange fee income and whether merchants are discriminating against small issuers that are still able to charge more for debit card purchases.

Inside Washington (07/07/2011)

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* WASHINGTON (7/8/11)--The Federal Reserve Board Thursday released a report of the 2010 payment and account information from more than 1,000 agreements between institutions of higher education, or their affiliated organizations, and credit card issuers. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) requires issuers to submit to the Fed every year their agreements with educational institutions or affiliated organizations, such as alumni associations. For each agreement, issuers are also required to submit information regarding payments made to the institution or organization and the number of accounts opened under the agreement. An online database provides the complete text of each agreement and the payment and accounts information submitted by issuers. Users may also search for agreements by card issuer, by educational institution or organization, or by the city or state in which the institution or organization is located ... * WASHINGTON (7/8/11)--The Consumer Financial Protection Bureau (CFPB) announced an agreement with the U.S. Army, Marine Corps, Navy, Air Force and Coast Guard to provide stronger protections for service members and their families in connection with consumer financial products and services. Military lawyers and the CFPB will work together to track consumer financial complaints from military families. “Service members and their families sacrifice a great deal for our country and they deserve advocates who will use every available resource to protect them from financial threats, said Hollister K. Petraeus, CFPB’s assistant director for the Office of Service Member Affairs. “Through this partnership and our other efforts, we will work to make sure that the days of military families being easy targets for predatory practices and unscrupulous lenders are a thing of the past” …

Larceny conviction brings NCUA prohibition order

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ALEXANDRIA, Va. (7/8/11)--The National Credit Union Administration (NCUA) issued an order prohibiting Stephen Shinnick from participating in the affairs of any federally insured financial institution. The NCUA said that Shinnick, a former employee of Norwood School Employees FCU, Norwood, Mass., pleaded guilty to three counts of larceny and was sentenced to five years probation. In April it was reported that Shinnick, a former vice principal at Coakley Middle School in Norwood, was sentenced to two and a half years in prison for stealing more than $250,000 over a period of years (NorwoddPatch.com April 5) According to the court documents, Shinnick had a gambling problem and used credit union funds to pay more than $164,516 in personal bills, to issue checks payable to himself totaling $130,402 and to pay his children a total of $13,000. The credit union ceased operating in June 2009 and was merged into Rockland (Mass.) CU. Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the link below to access NCUA enforcement orders.