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CUNA: Sen. Begich Letter Shows CU Tax Status Commitment

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WASHINGTON (7/30/13)--Credit Union National Association President/CEO Bill Cheney on Monday thanked Sen. Mark Begich (D-Alaska) for his support of the credit union tax exemption, noting that the senator's comments "clearly show his commitment to supporting credit unions and their service to Alaska consumers and small businesses going forward."

Begich in a letter to the chairman and ranking member of the Senate Finance Committee said the tax exempt status of credit unions should be retained in any tax reform effort. The letter from Begich is dated July 26--the deadline the Finance Committee leaders gave to their Senate colleagues to submit recommendations for what to include on a "blank sheet" as tax preferences under a new tax code.

"Alaska is far removed from traditional financial centers, and credit unions play an outsized role in our economy," the senator said in a letter to Sens. Max Baucus (D-Mont.) and Orrin Hatch (R-Utah), the chairman and ranking member of the Finance Committee, respectively.

"Sen. Begich wanted complete transparency for his thoughts about tax reform, and used a letter for making his views known," Cheney said.

Begich in his letter said retaining the credit union tax exemption would "ensure continued access to affordable credit for consumers, homebuyers and small businesses alike, all of which contribute substantially to economic growth."

In making his recommendations, Begich noted that his list of recommendations was not exhaustive. "Instead, I want to focus my response to the committee on a handful of provisions I consider absolutely critical for Alaska," he wrote.

Begich also offered recommendations with regard to Alaska natives, energy, housing and a number of miscellaneous items--which included the statements about credit unions.

NASCUS: Derivatives Proposal Ignores State Expertise

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WASHINGTON (7/30/13)--The National Credit Union Administration's derivatives proposal "would limit the authority of state regulators to supervise derivatives activities in their states," the National Association of State Credit Union Supervisors wrote in a recent comment letter. NASCUS said it cannot support the proposed derivatives regulation in its current form.

The NCUA derivatives proposal, released at the May open board meeting, would allow well-run federal credit unions to use simple derivatives to hedge against interest rate risks. The NCUA plan would allow only well-managed credit unions with $250 million or more in assets, and which have appropriate expertise, to apply for an agency derivatives investment program. Swaps and caps will be the only approved investments. Fees will be charged to cover costs related to application processing and supervision of the program.

Around 75 to 150 credit unions would apply for derivatives authority within the first two years of the program, the NCUA has estimated.

Federally insured state-chartered credit unions (FISCUs), however, are granted no new authority in the proposal, NASCUS noted in the letter. "Rather, the proposal limits the ability of states to allow FISCUs to engage in derivatives transactions, in some cases pre-empting long-standing state authorities," NASCUS added.

Overall, NASCUS said, the NCUA's proposal fails to recognize state expertise and experience. "Many state credit union regulatory agencies have experience supervising derivatives activities at the state level in state credit unions, and substantially more experience supervising the activity in state banks. That state experience, coupled with the historic independence of states to determine appropriate investments for state-chartered credit unions, should mean that NCUA has a compelling case for such sweeping pre-emption. There is no such case," NASCUS said.

The NCUA's derivatives rule "should address only federal credit unions," NASCUS added.

The Credit Union National Association has also filed a comment letter on the proposal. CUNA in that letter said it strongly opposes the imposition of application and/or supervision fees paid to the agency in order for credit unions to apply for or maintain derivatives programs or for any other financial activity that is directly authorized by statute or incidental to such authority.

CUNA also said it does not support an asset eligibility threshold for derivatives participation, and is concerned that the investment limitations set forth in the proposal are too restrictive. The CUNA comment letter urged the agency to provide for waivers and/or permit additional derivatives authority that would permit more flexibility for qualified credit unions. (See July 25 News Now story: CUNA Seeks Key Changes In NCUA Derivatives Proposal.)

For more on the CUNA and NASCUS letters, use the resource links.

Hampel Lays Out 'Rebate' Impact Of Excessive Corporate CU Assessments

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WASHINGTON (7/30/13)--With the growing likelihood that corporate stabilization losses are largely paid for, the Credit Union National Association has called for the end of any further corporate stabilization assessments.

According to CUNA Chief Economist Bill Hampel, assessments in excess of what is needed to cover losses would likely be rebated back to credit unions. That is both good and bad news.

"While rebates in and of themselves are good, to the extent rebates occur, it means prior assessments were higher than they needed to be. Rebates add to net income, but their existence means assessments previously subtracted from net income," Hampel said. "Understating Return on Assets for the next few years, and overstating it later would create incorrect signals about credit union performance," he added.

CUNA has consistently questioned why the National Credit Union Administration covered all the corporate losses in a five-year period. The agency had originally planned a 13-year lifespan for the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), and following that plan would have minimized the high up-front cost to credit unions, Hampel said.

NCUA last week announced a 2013 TCCUSF assessment of eight basis points (bp), which will amount to about $700 million. With this assessment, credit unions will have paid $4.8 billion in TCCUSF assessments since the fund was established. The projected net remaining assessments over the life of the TCCUSF, based on last December's valuation of the legacy assets, now range from $0.9 billion to $3.2 billion. However, as the performance of the legacy assets continues to improve, the range of remaining assessment estimates is likely to fall further.

"The improving performance of corporate legacy assets and positive housing and economic trends could mean the end of corporate assessments," said Hampel.

The NCUA board will consider the 2014 assessment range in November, and CUNA will continue to encourage NCUA to refrain from charging a TCCUSF assessment next year, and instead monitor how the economy in general and housing markets progress.

The other key factor in winding down the corporate stabilization fund is how fast the NCUA pays back the $4.7 billion line of credit it took out from the U.S. Treasury. After this year's payment is made, outstanding borrowing to the Treasury will total no more than $4.075 billion, NCUA staff said at last week's NCUA Board meeting. Paying down the credit line builds a cushion for emergency liquidity needs the agency or share insurance fund might encounter.

In the past, the Central Liquidity Facility (CLF) provided access to large amounts of emergency liquidity to the NCUA, but in its present form, the CLF no longer serves that purpose.

Metsger Nomination Could Be Approved Before August Recess

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WASHINGTON (7/30/13)--There is no looming crisis as the U.S. Congress enters its final week before the August recess, and with a relatively simple agenda ahead, routine matters, including the potential approval of Richard Metsger's nomination to serve on the National Credit Union Administration board, could be taken care of this week.

Senate leaders announced last week that they intend to consider nominations for the Federal Bureau of Investigation and the National Labor Relations Board. The Credit Union National Association has also learned that the Metsger nomination and the nomination of Rep. Mel Watt (D-N.C.) to be head of the Federal Housing Finance Administration could also be considered before the end of the week.

Metsger's nomination could be considered under unanimous consent before the end of the week's session; the Watt nomination would likely be subject to a vote. "Nothing is set in stone on this; we continue to monitor this situation closely," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said Monday.

The Senate is expected to consider the Transportation, Housing and Urban Development and Related Agencies Appropriations bill (S. 1243), and the House could hold votes on student lending, transportation and housing appropriations, energy, health care and regulatory relief measures this week. The regulatory relief bill, known as the Regulations from the Executive in Need of Scrutiny--or "REINS" Act (H.R. 367), would require the U.S. Congress to approve all federal agency rules that would have an economic impact of more than $100 million.

Items on a light committee schedule include:
  • Today's Senate Banking Committee hearing entitled "Mitigating Systemic Risk in Financial Markets through Wall Street Reforms;"
  • A Wednesday Joint Economic Committee hearing on how tax reform can boost economic growth; and
  • A Wednesday Senate Finance Committee hearing on energy tax reforms.

NEW: Rep. Kildee Joins Ranks Of CU Tax Status Supporters

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WASHINGTON (UPDATED: 7/30/13, 11 A.M. ET)--Rep. Dan Kildee (D-Mich.) has spoken out in support of the credit union tax exemption, noting the critical role credit unions play in Michigan's economy in a statement to the Michigan Credit Union League.

"Credit unions offer unique benefits and services to their members," Kildee said, "from the everyday worker who opens a savings account with a favorable interest rate, a family with a low-interest home mortgage loan to buy their first home, or an entrepreneur with access to a small business loan, credit unions have historically been structured in a way that directly benefits their members in my district and across the nation."

The House Financial Services Committee member said he has heard from many constituents who, like him and his family, "are members of credit unions and strongly support the services they provide to our local community and economy."

MCUL & Affiliates CEO David Adams today thanked Kildee for his strong statement of support for credit unions. "His statement gives a strong and credible endorsement for the credit union tax exemption being good public policy. We're hopeful that other members of the Michigan delegation will also affirm their support in a similar way," Adams said.

Kildee's support also reaffirms the importance of grassroots outreach, Adams added. Kildee's tax status statement follows Sen. Mark Begich's (D-Alaska) announcement that he too supports the credit union tax exemption.

Begich in a July 26 letter to the chairman and ranking member of the Senate Finance Committee said the tax exempt status of credit unions should be retained in any tax reform effort. (See News Now story: CUNA: Sen. Begich Letter Shows CU Tax Status Commitment.)

Cheney To Obama: Include MBLs In Econ Aid Packages

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WASHINGTON (7/30/13)--Credit Union National Association President/CEO Bill Cheney has encouraged President Barack Obama to "include authority for credit unions to provide more credit to small businesses, which will create at least 140,000 jobs in the first year in communities across the country without the expenditure of a single tax dollar" in any legislative jobs package his administration develops.

Cheney made his remarks in a Friday letter to Obama, and that letter is one of many items addressed in this week's CUNA Regulatory Advocacy Report. The administration is again focusing on the economy, and the CUNA CEO in his letter noted that many of the administration's economic goals can be accomplished through America's credit unions, "which community-by-community nationwide stand ready to help" middle-income families and others."

Separate House (H.R. 688) and Senate (S. 968) member business lending (MBL) bills were also introduced earlier this year. Both bills would increase the MBL cap from 12.25% of assets to 27.5%. CUNA has estimated that lifting the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers. Both bills enjoy bipartisan support. H.R. 688 has 109 co-sponsors, and S. 968 is co-sponsored by 16 senators.

These bills, Cheney stressed, "would permit credit unions with experience in business lending to continue to lend to their small business members." The CUNA letter also called attention to the fact that the U.S. Treasury, under former Secretary Tim Geithner, worked with the National Credit Union Administration to develop MBL legislation.

"This [legislation] would create jobs in small businesses that form the core of the American middle class through increased access to credit," CUNA pointed out.

The Regulatory Advocacy Report also features details on:
  • NCUA open board meeting results;
  • The NCUA's 2013 regulatory review;
  • Consumer Financial Protection Bureau actions regarding mortgage loan originator compensation practices; and
  • CUNA discussions with the Federal Reserve regarding payments research and coordination.
For CUNA's letter to President Obama and this week's Regulatory Advocacy Report, use the resource links.

NEW: Sen. Supports CU Tax Status In Reform Recommendations

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WASHINGTON (UPDATED: 7/29/13, 11:40 A.M. ET)--The tax exempt status of credit unions should be retained in any tax reform effort, Sen. Mark Begich (D-Alaska) has told the chairman and ranking member of the Senate Finance Committee in making his recommendations for tax reform.

"Alaska is far removed from traditional financial centers, and credit unions play an outsized role in our economy," the Senator said in a letter to Sens. Max Baucus (D-Mont.) and Orrin Hatch (R-Utah), the chairman and ranking member of the Finance Committee, respectively.

Begich said retaining the credit union tax exemption would "ensure continued access to affordable credit for consumers, homebuyers and small businesses alike, all of which contribute substantially to economic growth."

The letter from Begich is dated July 26--the deadline the Finance Committee leaders gave to their Senate colleagues to submit recommendations for what to include on a "blank sheet" as tax preferences under a new tax code.

In making his recommendations, Begich noted that his list of recommendations was not exhaustive. "Instead, I want to focus my response to the Committee on a handful of provisions I consider absolutely critical for Alaska," he wrote.

Begich also offered recommendations with regard to Alaska natives, energy, housing and a number of miscellaneous items--which included credit unions.

Reg Alert Reminds Of Remittance Requirements, Compliance Deadline

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ALEXANDRIA, Va. (7/29/13)--The National Credit Union Administration has reminded credit unions of recent major changes to the remittance transfer rule by the Consumer Financial Protection Bureau (CFPB), and the upcoming Oct. 28 compliance date, in a new Regulatory Alert (13-RA-06).

Under the rule, remittance transfer providers are required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors.

"If your credit union sends money to foreign countries on behalf of members or non-members within your field of membership, you may have to comply with the amended remittance transfer provisions under Regulation E (the Electronic Fund Transfer Act)," the agency said in the alert.

Questions addressed in the NCUA regulatory alert include what types of remittances are covered under the rule, and which credit unions are exempt from the rule. Basic remittance regulation requirements are also addressed.

Credit unions that offer remittance transfer services to their members should take several actions to implement the regulatory requirements prior to the rule's effective date, the NCUA notes. Those actions include:
  • Becoming familiar with the new remittance transfer requirements;
  • Tracking the number of international wire transfers and international ACH transfers your credit union completes each year;
  • Modifying data processing systems, as necessary, to generate proper terms and content for the required disclosures; and
  • Developing and maintaining written policies and procedures to ensure compliance with the error resolution provisions.
The NCUA alert also links to the full text of the final rule, and CFPB compliance resources.

For the full alert, use the resource link.

2014 CDFI, CDRLF Spending Approved By Senate Committee

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WASHINGTON (7/29/13)--The Senate Appropriations Committee late last week approved its appropriations package for fiscal year 2014, which includes $230 million for the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund.

That funding level would represent a $20 million increase above the 2013 post-sequester level of $210 million. The CDFI Fund helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit.

A total of $1.2 million in funds would be allocated to the National Credit Union Administration's Community Development Revolving Loan Fund (CDRLF) under the committee budget. The Obama administration has requested $1.127 million in CDRLF funding in its own 2014 budget. A total of $1.144 million in CDRLF funding was approved in the 2013 budget. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions, as defined by NCUA regulations.

Last August, the NCUA awarded $1.4 million in technical assistance grants to just over 100 small credit unions through the CDRLF.

The Senate committee spending bill would also allocate $10 million in funds to the Cooperative Development Program (CDP), and $265 million to various microenterprise and microfinance initiatives. The CDP aids the work of credit unions and other cooperatives in developing countries by funding sustainable development assistance carried out by eight U.S.-based cooperative development organizations.

Student debt and lending issues were also noted in the committee appropriations package.

The committee directed the U.S. Treasury to work with the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the NCUA and the Federal Reserve "to offer clear guidance consistent with safety and soundness principles recognizing the unique characteristics of private student loans compared to other debt and providing flexibility to lenders working with borrowers to avoid default."

There is over $1 trillion in outstanding student loan debt, of which $150 billion is in private student loans. More than 850,000 students have defaulted on their private student loans worth more than $8.1 billion, the committee noted.

NCUA Cost Containment, Pay-for-Play In Cheney Report

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WASHINGTON (7/29/13)--In this week's edition of The Cheney Report, Credit Union National Association President/CEO Bill Cheney speaks up on two recent National Credit Union Administration developments: The agency's Thursday release of its mid-year budget adjustment and Temporary Corporate Credit Union Stabilization Fund assessment, and the ongoing efforts to move forward with a derivatives rule.

The 2013 TCCUSF assessment will be eight basis points, and Cheney says this decision "is welcome news for all credit unions." However, he adds, CUNA also believes that with the strong performance of corporate legacy assets and positive housing and economic trends "this should be the end of corporate assessments.

"We have consistently advocated keeping the assessments as low as possible--if not eliminate them outright--to ease the costs to credit unions," Cheney says.

Reducing expenses wherever possible is another way that the NCUA could limit credit union costs, and the agency did just that last week, reducing its 2013 budget by $2.6 million. This adjustment is a sign that the NCUA has listened to CUNA's suggestion that it "hold the line on or reduce expenses" and hold itself to "the same standards of containing costs that credit unions are held to by their examiners." However, Cheney notes, CUNA thinks "more can be done in the next year, and will continue to push our case."

In the latest Cheney Report, the CUNA CEO also states that the "pay for play" aspect of the NCUA's derivatives proposal "is a slippery slope.

"Make no mistake, CUNA strongly opposes fees for derivatives authority or for any financial activity allowed credit unions by law," Cheney writes.

"While we support the agency's efforts to move forward with a derivatives rule, the fee proposal is a non-starter. In our view, NCUA can develop the expertise necessary to enable it to properly regulate the evolving business model of a credit union without imposing extra charges on credit unions," he adds.

Use the resource link below to access the full Cheney Report.

Gerard Poliquin Is New NCUA Board Secretary

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ALEXANDRIA, Va. (7/29/13)--Gerard Poliquin is the new secretary of the National Credit Union Administration board. He fills the spot vacated recently when Mary Rupp retired after 27 years at the agency.

NCUA Chair Debbie Matz said Poliquin brings a solid NCUA background to the job, having joined the agency in 1996. Most recently he has served as a senior trial attorney. Before moving to the NCUA, Poliquin served as an enforcement attorney at the Office of Thrift Supervision.

NCUA board member Fryzel said in addition to a strong legal background, Poliquin has a technical background as well.

Matz and Fryzel each also praised Rupp, citing her long service and commitment. They noted that for the last nine years as board secretary, she never missed a board meeting.

Tax Policy Leaders Continue Field Talks Today

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PHILADELPHIA, Pa. (7/29/13)--House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) are scheduled to continue their tax-reform, town hall-style field meetings today, visiting two businesses here: third-generation, family-owned Mrs. G's TV & Appliances and The Hub Centers for Meeting and Collaboration, opened in 2004.

The Philadelphia trip is the second in a planned series of such meetings. The lawmakers said in a release the focus today will be on "how a simpler and fairer tax code can help small business and families boost the economy, create jobs and improve wages."

The chairmen of the Senate's two tax-policy panels developed the tour idea to give them a chance to speak with a range of Americans and businesses on tax reform issues--from large multinational corporations to small, family-run businesses, and to individual taxpayers.

Tax policy leaders are taking a "blank slate" approach to reform legislation, and Friday, July 26 was the deadline for senators to submit their tax reform proposals to Finance Committee leaders. The legislators are now expected to begin to build legislation to create a comprehensive proposal for a new U.S. tax code.

With this deadline looming, the Credit Union National Association last week launched "Don't Tax My CU Tuesday," a social media campaign that saw the "Don't Tax My Credit Union" message delivered to more than 875,397 people, including members of Congress and their Twitter followers.

The "Don't Tax My Credit Union messages" included tweets from two congressmen--Rep. Lloyd Doggett (D-Texas) and Rep. David Scott (D-Ga.)--who tweeted back their agreement with the message.

The Tuesday twitter effort was part of the large-scale, nationwide grassroots-mobilization campaign led by CUNA and the leagues. That campaign continues to encourage 96 million credit union members nationwide to present a unified message to members of Congress: Don't Tax My Credit Union!

Actively participating in credit union grassroots activities and the political process is one tenet of CUNA's Unite for Good. Through Unite for Good, CUNA has called on credit unions to rally together to help create a nation in which "Americans choose credit unions as their best financial partner."

For more CUNA/league tax advocacy resources, and more on Unite for Good, use the resource links.

CU E-filing Could Be Required

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ALEXANDRIA, Va. (7/26/13)--A proposed rule that would require all federal credit unions to electronically file their financial, statistical and other reports was approved by the National Credit Union Administration on Thursday.

If the rule is adopted, the reports would have to be filed using the agency's information system or other means specified by NCUA. Manual filing would no longer be an option, the NCUA said.

A computer with internet access, and an e-mail address, is all that would be needed to comply with this rule, the agency stressed.

The proposed e-filing rule will be released for a 30-day comment period.

The agency today also proposed an Interpretive Ruling and Policy Statement addressing a minority credit union preservation program. Under the program, credit unions with high percentages of minority members and management (50% and above) would be eligible to receive minority credit union status from the agency.
 
This status would grant them access to NCUA Office of Small Credit Union Initiatives resources, including grant program eligibility.

The goal of the program, which is mandated by the Dodd-Frank Act, is to promote and preserve minority ownership in the credit union industry. The program should not create any new burdens or requirements for credit unions.

The agency also approved San Francisco FCU's application to expand its service area to persons and businesses in San Francisco and San Mateo counties. The community chartered credit union currently has 31,000 members and holds $832 million in assets.

Quarterly National Credit Union Share Insurance Fund statistics were also reported during the meeting.

The agency reported a total of nine credit union liquidations as of June 30, an increase from the four reported in the first quarter of 2013.

The total number of CAMEL code 3, 4 and 5 credit unions fell to 1,838 in the second quarter, down from the first quarter total of 1,897.

In total, the NCUSIF ended the second quarter of 2013 with $103.2 million in net income and an equity ratio of 1.27%.

For more NCUA meeting results, use the resource link.

NCUA Reduces 2013 Spending Plan

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ALEXANDRIA, Va. (7/26/13)--The National Credit Union Administration Thursday approved changes to its 2013 operating budget, reducing that budget by $2.6 million.

The $2.6 million savings will help offset costs of the 2014 budget, the NCUA said. 

The budget decrease brings the total 2013 budget to $248,811,780. This is the fourth mid-year budget decrease the agency has approved. 

The agency is also holding employee base salaries at their current levels, in voluntary compliance with the federal pay freeze. The agency had planned $9.1 million in 2013 salary and benefits.

The decrease to the operating budget is primarily due to a $6.3 million net decrease in pay and benefits, but the NCUA board did agree to a $3.6 million one-time lump sum payment to eligible employees.

The one-time payment will average 3% of eligible employee's salaries.

NCUA said this action was necessary because under the Federal Credit Union Act, the agency's pay scale must be comparable to that of other federal financial regulators. NCUA salaries have not kept pace with those of other regulators, the board noted.

The Credit Union National Association has encouraged the agency to hold itself to the same standards of containing costs that credit unions are held to by their examiners--including on conditional pay increases for employees. 

"While credit unions are performing well financially, they are still working hard to contain costs, and many are being instructed by examiners to do even more to watch their expenses, including salary increases. Credit unions believe NCUA should be held at least to similar standards," CUNA President/CEO Bill Cheney said. 

In adopting its 2013 budget last fall, the agency noted the U.S. Congress had not yet approved a federal employee pay increase, and indicated that NCUA would not expend $9.1 million it had set aside for a conditional pay increase. Congress has still not approved a federal budget, and CUNA has urged NCUA to continue holding off this expenditure until that approval occurs.

CUNA has also suggested that NCUA:
  • Consider providing even more information about its budget, such as detailing cost increases per employee for the fiscal year; and
  • Contain costs related its proposal on derivatives, which includes additional costs to credit unions of implementing the program of between $6 million and $11 million.

CUNA: Corporate Assessments Should End If Current Trends Continue

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ALEXANDRIA, Va. (7/26/13)--The National Credit Union Administration approved a corporate stabilization fund assessment of eight basis points (bp) at yesterday's board meeting after reporting on strong performance of the corporate legacy assets. CUNA Chief Economist Bill Hampel believes future assessments may not be necessary, based on that performance as well as housing and economic trends.

Click to view larger image CUNA's Bill Hampel, right, talks assessments and budgets with the NCUA's Larry Fazio following Thursday's open board meeting. (CUNA Photo) 
"This year's assessment amount of about $700 million could well be sufficient to cover the remaining losses on the legacy assets acquired from the five failed corporate credit unions," said Hampel. "If this is the case, a 2014 assessment may well be unnecessary and therefore unlikely."

Both NCUA Chair Debbie Matz and board member Michael Fryzel asked NCUA Director of Examination and Insurance Larry Fazio if the assessment could have been lower than 8 bp based on the strong performance of the assets. Fazio maintained that market conditions could still change and that the NCUA is focused on paying down the $4.7 billion line of credit from the U.S. Treasury Department.

After the payment is made, outstanding borrowing to the Treasury will total no more than $4.075 billion, agency staff said. Paying down the credit line builds a cushion for emergency liquidity needs the agency or share insurance fund might encounter. In the past, the Central Liquidity Facility (CLF) provided access to large amounts of emergency liquidity to the NCUA, but in its present form, the CLF no longer serves that purpose.

"Unfortunately, the timing of the assessments is being driven by factors other than actual losses or the latest estimates of losses to be covered. It is clear that the assessment decision was based more on liquidity concerns than on loss estimates," said Hampel.

The range for 2014 corporate assessments will be set in November, NCUA's Matz said.

Hampel also questioned the NCUA's decision to cover almost all of the losses of corporate stabilization in just the first five years of what could have been a 13-year program. "Because many of the remaining losses won't actually be realized until a few more years into the future, it would have been preferable for the timing of the assessments to more closely correspond to the timing of the realization of the losses. That also would have smoothed the effects of the assessments on credit union income statements."

FHFA Reaches $885 Million MBS Settlement

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WASHINGTON (7/26/13)--The Federal Housing Finance Agency (FHFA), in its role as conservator of the two government-sponsored housing enterprises, Fannie Mae and Freddie Mac, announced Thursday that it has reached a settlement with UBS Americas Inc. for $885 million.
 
The FHFA said the settlement covers claims of alleged violations of federal and state securities laws in connection with private-label residential mortgage-backed securities (RMBS) purchased by Fannie and Freddie.
 
FHFA said UBS will pay approximately $415 million to Fannie and $470 million to Freddie to resolve certain claims related to securities sold to the companies between 2004 and 2007.
 
"The satisfactory resolution of this matter provides greater clarity and certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae's and Freddie Mac's assets on behalf of taxpayers," said FHFA Acting Director Edward DeMarco.
 
The settlement agreement covers claims between FHFA and UBS in the following cases: FHFAv. UBS Americas, Inc., et al., 11 Civ. 5201 (DLC) (S.D.N.Y.); FHFA v. Ally Financial Inc., et al., 11 Civ. 7010 (DLC) (S.D.N.Y.); FHFA v. Countrywide Financial Corp., et al., No. 12 Civ. 1059 (MRP) (C.D. Cal.); FHFA v. First Horizon National Corp., et al., No. 11 Civ. 6193 (DLC) (S.D.N.Y.).

The settlement is between FHFA and UBS Americas Inc., UBS Real Estate Securities Inc., UBS Securities LLC, Mortgage Asset Securitization Transactions Inc., and other named defendants, according to the agency.
 
FHFA has now settled three of the 18 suits it filed in 2011, and remains committed to satisfactorily resolving the remaining suits as well.

NEW: NCUA Reduces 2013 Spending Plan

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ALEXANDRIA, Va. (UPDATED: 7/25/13, 11:14 a.m.  ET)--The National Credit Union Administration today approved changes to its 2013 operating budget, reducing that budget by $2.6 million. 

The $2.6 million savings will help offset costs of the 2014 budget, the NCUA said. 
The budget decrease brings the total 2013 budget to $248,811,780. This is the fourth mid-year budget decrease the agency has approved. 

The agency is also holding employee base salaries at their current levels, in voluntary compliance with the federal pay freeze. The agency had planned $9.1 million in 2013 salary and benefits.  

The Credit Union National Association has encouraged the agency to hold itself to the same standards of containing costs that credit unions are held to by their examiners--including on conditional pay increases for employees. 

"While credit unions are performing well financially, they are still working hard to contain costs, and many are being instructed by examiners to do even more to watch their expenses, including salary increases. Credit unions believe NCUA should be held at least to similar standards," CUNA President/CEO Bill Cheney said. 

In adopting its 2013 budget last fall, the agency noted the U.S. Congress had not yet approved a federal employee pay increase, and indicated that NCUA would not expend $9.1 million it had set aside for a conditional pay increase. Congress has still not approved a federal budget, and CUNA has urged NCUA to continue holding off this expenditure until that approval occurs. 

CUNA has also suggested the NCUA:
  • Consider providing even more information about its budget, such as detailing cost increases per employee for the fiscal year; and
  • Contain costs related its proposal on derivatives, which includes additional costs to credit unions of implementing the program of between $6 million and $11 million.

DDoS Group Says More FI Attacks Are Planned

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WASHINGTON D.C. (7/25/13)--A  group responsible for several distributed-denial-of-service (DDoS) attacks against financial institutions over the past year announced its plans for further attacks against financial institutions, in an online posting on July 23, according to BankInfoSecurity.com. 
 
Mike Smith, from Akamai Technologies, an online security provider, warns that with each new phase of the group's attack, it creates a new format that most targets are not expecting.  
 
Whether the attack focuses on a new target, a larger botnet,  or new technologies, the Izz ad-Din al-Qassam Cyber Fighters employ unforeseen tactics as a response to the heightened DDoS-mitigation strategies financial institutions have implemented.
 
Since the group's first DDoS campaign launched Sept. 18, each phase has lasted longer than the one before. There is no estimated time frame for how long the fourth phase of the attacks will last but it is projected to last longer than the eight weeks that phase three claimed, the article predicts.
 
"Financial institutions should continue to be aware of the ongoing DDoS threats, and follow regulations on Internet and data security, as well as Federal Financial Institutions Examination Council  guidance on Internet authentication," said Dennis Tsang, regulatory counsel for the Credit Union National Association. (See resource link for the guidance.)
 
CUNA also encourages credit unions to be aware of  the National Credit Union  Administration's Risk Alert (13-Risk-01), which identifies  appropriate policies and procedures in for guarding against DDoS attacks for credit unions.  (see the resource link.)

To mitigate effects from DDoS attacks, the NCUA recommends that credit unions:
  • Perform risk assessments to identify risks associated with DDoS attacks;
  • Ensure incident response programs include a DDoS attack scenario during testing and address activities before, during, and after such an attack; and
  • Perform ongoing third-party due diligence, in particular on Internet related providers, to identify risks and implement appropriate traffic management policies and controls.
For a more in-depth look at how credit unions can protect themselves, CUNA's Credit Union Magazine has featured an article, "Learn Strategies to Mitigate Cyberattacks,"  in its April issue (members only). 
 
Also, the CUNA Technology Council has posted a recording of its May webinar on "Mitigating and Responding to a Distributed Denial of Service (DDoS) Attack," which features speakers including CUNA BITS Task Force member Bill Podborny, chief security officer of Alliant CU.

For more information on DDoS, please visit the CUNA members-only webpage to access supplemental resources from BITS.               
 

PATH Act Approved By Committee 30-27

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WASHINGTON (7/25/13)--House Financial Services Committee members on Wednesday approved the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013" (H.R. 2767) on a 30-27 vote that mainly split along party lines. The bill may now be considered by the full U.S. House.

Technical amendments were added to the original bill during the markup process, which began on Tuesday. Importantly for credit unions, the approved bill contains regulatory relief provisions strongly supported by the Credit Union National Association, including a provision to delay the mandatory implementation of all Dodd-Frank Act mortgage rules for an additional year.

The PATH Act also would: 
  • Phase out government-sponsored enterprises Fannie Mae and Freddie Mac within five years;
  • End the federal government guarantee and reduce government involvement in the housing finance system; and
  • Give consumers more choices in determining which mortgage product best suits their needs.

Survey Gives CUNA High Marks As Trade Association

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WASHINGTON (7/25/13)--The Credit Union National Association was among the nine national trade associations--out of 50 ranked--that received highest grades in a new survey for being effective in representing their membership.

That new study by APCO Worldwide took a look at the best and worst performing industries across 15 characteristics common to trade associations.

APCO said its study surveyed 456 policy leaders in Washington, D.C., and analyzed their perceptions of what makes an association an effective public policy advocate in the eyes of its key audiences.

The 50 associations ranked by the policy makers were chosen for the survey "due to their prominence in key industries that influence considerable portions of the U.S. economy," APCO said.

PhRMA, the U.S. Chamber of Commerce and the U.S. Travel Association were at the pinnacle of APCO's top 10, short list.

PhRMA got top marks for lobbying, multilateral impact, local impact and membership mobilization. The Chamber got its high marks for coalition building and events. And U.S. Travel was ranked high for bipartisanship, maintaining their industry's reputation and media relations.

APCO is an independent, global communication, stakeholder engagement and business strategy firm.

FHA Commissioner Backs Senate Enhancements

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WASHINGTON (7/25/13)--The Federal Housing Administration Solvency Act of 2013 "addresses many longstanding legislative requests of the [FHA] in an evenhanded and forward-looking manner," FHA Commissioner Carol Galante said during a Wednesday Senate Banking Committee hearing.

Galante said the bill, which was introduced in draft form on July 15 by Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho), would give the U.S. Department of Housing and Urban Development "the tools to ensure a fiscally sound and vibrant FHA continues to support responsible homeownership and affordable housing for generations to come."

Such tools include strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA's reverse mortgage program. (For more on the bill, see July 16 News Now story: House, Senate Keep Housing-GSE Reform As Hot Topic.)

While Galante supports the Senate FHA bill, she also identified topics that should be further discussed as the bill moves forward, including ensuring mortgage servicers are held accountable for their performance, and allowing FHA to shift servicing to a specialized sub-servicer if original servicers cannot fulfill their obligations under the contract of insurance. "This additional authority would minimize losses to the Fund by facilitating more effective loss mitigation, yielding better results for both borrowers and FHA," Galante said.

The committee should also work with the FHA to craft language that best facilitates recapitalization using the full range of options available, Galante added.

An increasingly complex mortgage market, aging FHA systems and infrastructure, a need for additional skills and expertise, and difficulty responding quickly to major risk issues as a result of contractual and statutory limitations are other issues that must be dealt with, Galante said.

For more on the hearing, use the resource link.

CUNA Seeks Key Changes In NCUA Derivatives Proposal

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WASHINGTON (7/25/13)--The Credit Union National Association supports the National Credit Union Administration's efforts to solicit comments on a proposal to authorize derivatives to manage interest rate risk (IRR), but "does not support a number of the key provisions in the proposal," CUNA's Deputy General Counsel Mary Dunn said in a recent comment letter.

Comments on the proposal are due by July 29. CUNA's letter was developed under the auspices of the CUNA Examination and Supervision Subcommittee, with broad input from the credit union system.

CUNA's board earlier this month specifically reviewed this issue and all members of the board agreed one aspect under consideration in particular is of deep concern: Whether application and supervision fees should be imposed in order for credit unions to gain derivatives authority.

CUNA adamantly opposed this approach. "If derivatives reduce IRR, then NCUA should be encouraging credit unions to make appropriate use of permissible derivative options instead of retiring barriers to their use, such as fees to apply or for supervision," Dunn said.

"An à la carte fee structure sets a precedent that, if applied to other products and services, could stifle innovation for credit unions by imposing additional burdens and costs that are simply not justified," the CUNA letter emphasizes. "We feel that it is incumbent upon NCUA to develop the expertise necessary to enable it to properly regulate the evolving business model of a credit union without imposing extra changes," Dunn stated.

Other issues of concern addressed by Dunn in the comment letter include:
  • CUNA strongly opposes the imposition of application and/or supervision fees paid to the agency in order for credit unions to apply for or maintain derivatives programs or for any other financial activity that is directly authorized by statute or incidental to such authority;
  • CUNA does not support an asset eligibility threshold for derivatives participation;
  • CUNA is concerned that the investment limitations are too restrictive and urges the agency to provide for waivers and/or permit additional derivatives authority that would permit more flexibility for qualified credit unions;
  • Credit unions should be able to rely on external service providers to a greater extent than the proposal would permit to meet expertise and experience requirements;
  • An internal controls audit will be extremely costly for applicants and redundant since other audit requirements will provide NCUA with the information it needs to be assured a credit union will conduct its derivatives program in a safe and sound manner;
  • While all eligible credit unions should be permitted to engage in derivatives to hedge against interest rate risk, state chartered credit unions should not be subject to this rule. Rather, they should be permitted to engage in derivatives activities as authorized by state law implemented by state regulators; and
  • Credit unions that have participated in the pilot program on derivatives should be allowed to continue to do so, without having to reapply for derivatives authority.
Ultimately the comment letter states that the requirements in the rule will prove so costly to meet that most credit unions will choose not to seek derivatives authority because their benefits will not out weight the costs.

"This is a very important proposal, for many reasons. CUNA strongly supports the agency's efforts to move forward with a derivatives rule" but "at the same time we urge the agency to make the key revisions we are advocating in order to ensure the program will be as accessible as possible to mitigate IRR as broadly as possible," Dunn said.

Senate Relief Bill Would Help CUs

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WASHINGTON (7/25/13)--Sens. Jon Tester (D-Mont.) and Jerry Moran (R-Kan.), both members of the Senate Banking Committee, are preparing to introduce a bill that would provide some regulatory relief for both community banks and credit unions.
 
Although the title of the Senate bill will be the same as similar legislation in the House, the Community Lending Enhancement and Regulatory Relief Act (CLEAR Act),  the bills are not identical.  The House bill was introduced this Spring by Rep. Blaine Luekemeyer (R-Mo.).
 
Nevertheless, like the Luetkemeyer bill, the Senate CLEAR Act would provide regulatory relief to credit unions and community banks, though focuses on banks.
The Senate bill includes four key provisions, two of which would benefit credit unions.

Those provisions would:
  • Eliminate an escrow requirement for high-priced, first lien mortgage loans; and
  • Provide a safe harbor from the Qualified Mortgage regulation to loans made by financial institutions under $10 billion and held in portfolio for more than three years.
The bill's other two provisions would provide:
  • An exemption for community banks from Section 404 of the Sarbanes Oxley Act with respect to the annual management assessment of internal controls requirement. Credit unions are not subject to Section 404; and
  • Direct the Federal Reserve Board to make certain changes to the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors, which would not affect credit unions.
A bill introduced in June by House Financial Services Committee Vice Chairman Gary Miller (R-Calif.) (H.R. 2572) also would provide regulatory relief for credit unions and community banks. Miller's bill focuses on credit unions, and topics discussed within its section range from enhancements to National Credit Union Administration authority, to improved capital standards for credit unions, to a cost-benefit analysis of rules, past and present, and more.

NEW: CUNA Seeks Key Changes in NCUA Derivatives Proposal

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WASHINGTON (UPDATED: 7/24/13, 12:10 P.M. ET)--The Credit Union National Association supports the National Credit Union Administration's efforts to solicit comments on a proposal to authorize derivatives to manage interest rate risk (IRR), but "does not support a number of the key provisions in the proposal," CUNA's Deputy General Counsel Mary Dunn said in a comment letter to the agency filed yesterday.

Comments on the proposal are due by July 29. CUNA's letter was developed under the auspices of the CUNA Examination and Supervision Subcommittee, with broad input from the credit union system.

CUNA's board earlier this month specifically reviewed this issue and all members of the board agreed one aspect under consideration in particular is of deep concern: Whether application and supervision fees should be imposed in order for credit unions to gain derivatives authority.

CUNA adamantly opposed this approach. "If derivatives reduce IRR, then NCUA should be encouraging credit unions to make appropriate use of permissible derivative options instead of retiring barriers to their use, such as fees to apply or for supervision," Dunn said.

"An à la carte fee structure sets a precedent that, if applied to other products and services, could stifle innovation for credit unions by imposing additional burdens and costs that are simply not justified," the CUNA letter emphasizes. "We feel that it is incumbent upon NCUA to develop the expertise necessary to enable it to properly regulate the evolving business model of a credit union without imposing extra changes," Dunn stated.

Other issues of concern addressed by Dunn in the comment letter include:
  • CUNA strongly opposes the imposition of application and/or supervision fees paid to the agency in order for credit unions to apply for or maintain derivatives programs or for any other financial activity that is directly authorized by statute or incidental to such authority;
  • CUNA does not support an asset eligibility threshold for derivatives participation;
  • CUNA is concerned that the investment limitations are too restrictive and urges the agency to provide for waivers and/or permit additional derivatives authority that would permit more flexibility for qualified credit unions;
  • Credit unions should be able to rely on external service providers to a greater extent than the proposal would permit to meet expertise and experience requirements;
  • An internal controls audit will be extremely costly for applicants and redundant since other audit requirements will provide NCUA with the information it needs to be assured a credit union will conduct its derivatives program in a safe and sound manner;
  • While all eligible credit unions should be permitted to engage in derivatives to hedge against interest rate risk, state chartered credit unions should not be subject to this rule. Rather, they should be permitted to engage in derivatives activities as authorized by state law implemented by state regulators; and
  • Credit unions that have participated in the pilot program on derivatives should be allowed to continue to do so, without having to reapply for derivatives authority.
Ultimately the comment letter states that the requirements in the rule will prove so costly to meet that most credit unions will choose not to seek derivatives authority because their benefits will not out weight the costs.

"This is a very important proposal, for many reasons. CUNA strongly supports the agency's efforts to move forward with a derivatives rule" but "at the same time we urge the agency to make the key revisions we are advocating in order to ensure the program will be as accessible as possible to mitigate IRR as broadly as possible," Dunn said.

Cheney Meets With NCUA's Matz On Key CU Issues

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WASHINGTON (7/24/13)--Credit Union National Association President/CEO Bill Cheney and National Credit Union Administration Chair Debbie Matz met Tuesday to discuss a number of timely issues, including the agency's operating budget.  
 
The operating budget, and perhaps refinements to the agency's 2013 spending plan, is an agenda time on the NCUIA's open board meeting agenda for Thursday.
 
Cheney said that the meeting was "productive." Credit unions remain concerned that they work hard to contain costs and they feel their agency should do so as well, Cheney noted. He added that it is a point CUNA consistently emphasizes.
 
In the past, the NCUA board has voted to cut its budget during mid-year adjustments. The board will review the NCUA budget at its July 25 meeting and CUNA has encouraged the agency to do all it can to minimize costs.

CUNA Outlines CU Principles For Housing Market Reforms

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WASHINGTON (7/24/13)--Credit Union National Association Chief Economist Bill Hampel, testifying at the Senate's first hearing this year on housing finance reform, noted credit unions appreciate the need to reform the current housing finance system, but any reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way.

Click to view larger image CUNA Chief Economist Bill Hampel testifies before a Tuesday Senate Banking subcommittee hearing on housing finance reforms. (CUNA Photo)
Hampel, the credit union witness for the Senate Banking subcommittee on securities, insurance and investment members hearing entitled "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions," in part discussed S. 1217, a secondary mortgage market reform bill recently introduced by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.). Other co-sponsors include Sens. Mike Johanns (R-Neb.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.) and Kay Hagan (D-N.C.).

"CUNA believes that S. 1217 is a positive step towards creating a sustainable and affordable housing market," Hampel emphasized in his remarks.

Hampel told subcommittee chairman Sen. Jon Tester (D-Mont.) and committee member Heidi Heitkamp (D-N.D.) that the thirty year fixed rate mortgage as we know it would not exist without a government guarantee.

Without a government guarantee, credit unions would still be able to make some of these loans, but not nearly as many as their members would want, he said. Further, he added, credit unions would only be able to make as many thirty-year fixed rate loans as they could hold on their books. "Once we had a significant portion of those, we would have to sell them to someone else," he added. Thirty-year loans are likely to be held on an institution's books for a long time, and need some form of credit enhancement for an investor to buy them, he explained.

Thirty year mortgages, if taken on in a normal market, can be a very good thing for first-time homebuyers "because they are freezing in their housing costs for several years," he emphasized. 

Hampel also noted that credit unions need equal and fair access to a secondary market for lenders of all sizes that will ensure affordable mortgage products for their members. Outsourcing mortgage securitization to private entities could raise significant concerns regarding fair and equal access for credit unions, Hampel said in response to a question from Tester.
The CUNA economist also outlined a number of principles that CUNA hopes a new housing market finance system will accommodate. Those principles include:
  • Maintaining a strong regulator with rigorous market oversight to ensure safety and soundness, system standardization and equal access;
  • The ability to retain servicing rights when mortgages are sold on the secondary market;
  • Ensuring that even in troubled economic times, mortgage loans will continue to be made to qualified borrowers;
  • Emphasizing consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • Maintaining consumer access to products that provide predictable, affordable mortgage payments to qualified borrowers, such as the 30-year fixed rate mortgage; and
  • Setting reasonable conforming loan size limits that adequately take into consideration variations in local real estate costs.
Overall, Hampel said, the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.

The hearing was held as the House Financial Services Committee marked up its own housing finance reform bill, the Protecting American Taxpayers and Homeowners (PATH) Act (H.R. 2767).

Lawmakers Start PATH Act Approval Process

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WASHINGTON (7/24/13)--House Financial Services Committee members on Tuesday began consideration of the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013," (H.R. 2767), a housing-finance reform bill that its chief sponsor, committee chairman Rep. Jeb Hensarling (R-Texas), has said would create a sustainable housing finance system.

The committee first approved a substitute version of the PATH Act; for the most part the substitute added just technical amendments to the original bill. Importantly for credit unions, the substitute version still contains the regulatory relief provisions strongly supported by the Credit Union National Association, including a provision to delay the mandatory implementation of all Dodd-Frank Act mortgage rules for an additional year.

The PATH Act also would: 
  • Phase out government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac within five years;
  • End the federal government guarantee and reduce government involvement in the housing finance system; and
  • Give consumers more choices in determining which mortgage product best suits their needs.
It could take multiple days to complete the mark up of this bill.

Some committee Democrats said they are concerned that the PATH Act may not preserve the 30-year fixed rate mortgage. Republicans counter that those fixed-rate mortgages would still be available through a variety of government avenues.

Also on GSE reform Tuesday, CUNA Chief Economist Bill Hampel discussed Senate reform efforts, and the impact that housing finance reforms could have on the 30-year mortgage. He testified at a  Senate Banking subcommittee hearing entitled "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions." (See related News Now story: CUNA Outlines CU Principles For Housing Market Reforms.)

NEW: PATH Act Approved By Committee, Moves On To U.S. House

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WASHINGTON (UPDATED: 7/24/13, 10:15 A.M. ET)--House Financial Services Committee members this morning approved the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013" (H.R. 2767) on a mainly party line vote. The bill may now be considered by the full U.S. House.

Technical amendments were added to the original bill during the markup process, which began on Tuesday. Importantly for credit unions, the approved bill contains regulatory relief provisions strongly supported by the Credit Union National Association, including a provision to delay the mandatory implementation of all Dodd-Frank Act mortgage rules for an additional year.

The PATH Act also would: 
  • Phase out government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac within five years;
  • End the federal government guarantee and reduce government involvement in the housing finance system; and
  • Give consumers more choices in determining which mortgage product best suits their needs.

NCUA Earns 'Energy Star' Rating

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ALEXANDRIA, Va. (7/24/13)--The National Credit Union Administration on Tuesday announced it has received ENERGY STAR certification from the U.S. Environmental Protection Agency for its Alexandria headquarters.

ENERGY STAR is a voluntary program that helps businesses and individuals save money and protect the environment through improved energy efficiency.

"NCUA strives to be a leader in the area of environmental responsibility, efficiency and cost savings," NCUA Chairman Debbie Matz said. "Being a model corporate citizen is one of my priorities for NCUA, and receiving the ENERGY STAR certification is a most satisfying accomplishment.

Agency headquarters met all four criteria necessary for ENERGY STAR certification: energy performance, thermal comfort, indoor air quality, and illumination levels. The NCUA surpassed the General Services Administration standard requiring an ENERGY STAR rating of 75 for federal agencies leasing space outside a GSA-owned property. The NCUA rating is 86 on the scale of one to 100.

House GSE-reform PATH Act Is Officially Introduced

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WASHINGTON (7/23/13)--The Protecting American Taxpayers and Homeowners--or PATH--Act, unveiled by House Financial Services Committee Chair Jeb Hensarling (R-Texas) on July 11, has now been formally introduced in the House.
 
It was introduced Monday by Rep. Scott Garrett, a Republican representing New Jersey.
 
The housing finance reform bill, now H.R. 2767, was subject to a Financial Services Committee hearing last week and is scheduled for markup starting this morning at 10:15 a.m. (ET).
 
During last week's hearing, it was clear that there was a partisan divide regarding support for the bill. Republican committee members mostly hailed it as the way to "create a sustainable housing finance system." Many Democrats expressed worry that it would kill availability of the traditional 30-year, fixed rate mortgage for many Americans.
 
Also on housing, on the Senate side, Credit Union National Association Chief Economist Bill Hampel is scheduled to testify Tuesday before a Senate Banking subcommittee on the topic of  "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions." (See related story: CUs' Mortgage Market Access Is Key In Housing Reform: CUNA Testifies Today.)
 

NEW: CUNA Outlines CU Principles For Housing Market Reforms

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WASHINGTON (UPDATED, 7/23/13, 3:54  p.m. ET)--Credit Union National Association Chief Economist Bill Hampel, testifying this afternoon at the Senate's first hearing this year on housing finance reform, will note credit unions appreciate the need to reform the current housing finance system, but any reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way.

Hampel, the credit union witness for the Senate Banking subcommittee on securities, insurance and investment members hearing entitled "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions," in part discusses S. 1217, a secondary mortgage market reform bill recently introduced by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.). Other co-sponsors include Sens. Mike Johanns (R-Neb.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.) and Kay Hagan (D-N.C.).

"CUNA believes that S. 1217 is a positive step towards creating a sustainable and affordable housing market," Hampel emphasizes in his remarks.

"CUNA appreciates the attention this subcommittee is giving to housing finance reform," and "credit unions need equal and fair access to a secondary market for lenders of all sizes that will ensure affordable mortgage products for our members," Hampel adds.

However, he said, there are a number of principles that CUNA hopes a new housing market finance system will accommodate. Those principles include:
  • Maintaining a strong regulator with rigorous market oversight to ensure safety and soundness, system standardization and equal access;
  • The ability to retain servicing rights when mortgages are sold on the secondary market;
  • Ensuring that even in troubled economic times, mortgage loans will continue to be made to qualified borrowers;
  • Emphasizing consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • Maintaining consumer access to products that provide predictable, affordable mortgage payments to qualified borrowers, such as the 30-year fixed rate mortgage; and
  • Setting reasonable conforming loan size limits that adequately take into consideration variations in local real estate costs.
Overall, Hampel says, the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.

The hearing is taking place as the House Financial Services Committee today marks up its own housing finance reform bill, the Protecting American Taxpayers and Homeowners (PATH) Act (H.R. 2767).

Sen. Brown Outlines Upcoming Overdraft Bill

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WASHINGTON (7/23/13)--Legislation that aims to prevent financial institutions from reordering account deposits and withdrawals to maximize the amount of overdraft fees that may be charged to accountholders was announced by Sen. Sherrod Brown (D-Ohio) Monday.

The senator outlined the bill, which has not been introduced in the Senate, at a press conference in Cleveland. "Banks should play by the rules instead of purposefully 'reordering' their customers' debit card transactions so that they profit while consumers rack up costly penalties," he said.

Brown's bill, which is still being finalized, would also:
  • Give the Consumer Financial Protection Bureau authority to monitor banks overdraft practices;
  • Allow that agency to establish fair guidelines to protect consumers, as well as credit unions and banks that treat members and customers well; and
  • Ensure that financial institutions clearly post transactions in an easy to understand format.
Under the bill, the CFPB would also offer safe harbor to financial institutions that follow any new CFPB overdraft guidelines.

For the full release, use the link.

CUs' Mortgage Market Access Is Key In Housing Reform: CUNA Testifies Today

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WASHINGTON (7/23/13)--Consumers are increasingly choosing credit unions as their mortgage lenders, and it is critical credit unions have fair and readily available access to a functioning, well-regulated secondary market that accommodates their members' demand for long-term, fixed-rate mortgages, Credit Union National Association Chief Economist Bill Hampel will tell members of a Senate Banking subcommittee this afternoon.

Hampel will testify this afternoon before a Senate Banking subcommittee on securities, insurance and investment hearing entitled "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions."

The 90-minute hearing is scheduled to begin at 3 p.m. (ET).

Sandra Thompson, deputy director, Division of Housing Mission and Goals, Federal Housing Finance Agency, will be the lone witness for on the first witness panel.  On the second panel, Hampel will be joined by the following witnesses: Jack A. Hartings, president/CEO, The Peoples Bank Company on behalf of the Independent Community Bankers of America; Andrew J. Jetter, president/CEO, Federal Home Loan Bank of Topeka; and Michael Middleton, chairman/CEO of Community Bank of Tri-County, on behalf of the American Bankers Association.

CUNA has told housing policy makers, through letters to the Obama administration and in earlier congressional testimony, that the needs of credit unions and other small mortgage lenders must be considered as the country moves forward on needed reforms.

Hampel outlined a series of principles that CUNA hopes a new housing market finance system will accommodate during a housing policy discussion hosted last month by Rep. Maxine Waters (D-Calif.), the ranking Democrat of the House Financial Services Committee.

Other hearings scheduled for this week include:
  • A Tuesday House Financial Services Committee markup of the Protecting American Taxpayers and Homeowners (PATH) Act of 2013 (H.R. 2767). It could take multiple days to complete consideration of this bill;
  • A Tuesday Senate Banking financial institutions and consumer protection subcommittee hearing entitled: "Examining Financial Holding Companies: Should Banks Control Power Plants, Warehouses, and Oil Refineries;"
  • A Tuesday Senate Appropriations financial services and general government subcommittee markup of the 2014 fiscal year Financial Services and General Government Appropriations bill; and
  • A Wednesday Senate Banking Committee hearing entitled "The FHA Solvency Act of 2013."
Also this week, the House is expected to consider the Defense Appropriations bill, the Energy Consumers Relief Act of 2013 (H.R. 1582) and the Coal Residuals Reuse and Management Act of 2013 (H.R. 2218). The Senate is expected to renew the motion to proceed to the Transportation, Housing and Urban Development, and Related Agencies Appropriations bill (S. 1243).

CUNA: Today Is 'Don't Tax Tuesday'

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WASHINGTON (7/23/13)--Credit unions and their members are being urged to get on board with the Credit Union National Association's "Don't Tax My CU Tuesday" campaign today and ignite their advocacy efforts by lighting up the social media world to get their message across.
 
As detailed in the newest edition of "Inside Exchange," CUNA's video dialogue on the credit union movement's hottest topics, the initiative is intended to utilize the credit union community's growing presence on social media to instantly enforce a unified message to Capitol Hill that a tax on credit union would be a tax on their 96 million member-owners.
 


Trey Hawkins, CUNA vice president of political affairs, tells viewers that social media is the "new frontier" on Capitol Hill for reaching lawmakers, and its smart use goes far to bolster the effort to support the credit union tax status as policymakers considered tax reform measures.
 
"Every Senate office has a Twitter presence and 90% of House members have a presence on Twitter," Hawkins says.  And unlike traditional communications through mail or e-mail or phone massages that often are monitored by a lawmaker's staff, most senators and House members monitor their own Twitter or Facebook accounts.

"With social media, your message goes straight to your target," Hawkins says.
CUNA and the state credit union leagues have set today--July 23--as "Don't Tax My CU Tuesday"--a day to maximize the power of social media to make a single-day punch for credit unions in advance of a Senate deadline for tax reform recommendations.

July 26--this Friday--is the deadline for senators to submit their tax reform proposals to Finance Committee leaders, who will then begin to build legislation to create a comprehensive proposal for a new U.S. tax code.
 
Already credit union advocates have sent more than 440,000 "Don't Tax My Credit Union" messages to Congress through the CUNA system alone--and not counting social media contact.

"Tomorrow is a terrific opportunity to get everyone to send one tweet or make one Facebook post--or one more tweet or Facebook post for those who have already done so--to really make an impact: To tell their senators and House members that a tax on credit unions is a tax on their 96 million member-owners," Hawkins says.

Hawkins suggest a tweet can  be as simple as "Please #DontTaxMyCU @ (Twitter handle of your senator here) #DontTaxTuesday." He notes credit unions and individuals can participate by tweeting to their senators and congressmen using the #DontTaxMyCU hashtag, or posting on Facebook by including the senator or representative in a post by typing the "@" sign and then typing the lawmaker's name.

Suit Challenges CFPB Constitutionality

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WASHINGTON (7/23/13)--The Consumer Financial Protection Bureau is facing yet another challenge to its constitutionality: This time, a pair of plaintiffs are arguing the agency structure insulates it from political accountability and internal checks and balances in violation of the U.S. Constitution.

The suit, filed in the U.S. District Court for the District of Columbia by Connecticut attorney Kimberly Pisinski and a Nevada software firm she contracts with, Morgan Drexen, Inc., alleges that the CFPB has engaged in abusive practices, including:
  • Attempts to regulate the practice of law;
  • Threatening plaintiffs with legal action and using improper and coercive tactics against plaintiffs;
  • Attempts to collect attorney-client protected material; and
  • Making overreaching demands for, and mining of, personal financial information of American citizens.
The plaintiffs have sought an order halting these tactics and declaring CFPB's structure to be unconstitutional, and declaring unconstitutional the provisions of the Dodd-Frank Act creating and empowering the CFPB, according to a complaint.

The suit follows a March 13, 2012 CFPB Civil Investigative Demand (CID) that was issued to Morgan Drexen. Pisinski offers bankruptcy services as part of her practice, and Morgan Drexen has provided debt resolution, bankruptcy, personal injury, mass tort litigation, and tax preparation support services to Pisinski and other attorneys.

The CID sought confidential financial information tied to clients of some attorneys that employ Morgan Drexen's support services, and information from Morgan Drexen CEO Walter Ledda.

The CFPB has threatened enforcement action against Morgan Drexen, and has itself alleged that attorneys supported by Morgan Drexen are in violation of the Telemarketing Sales Rule.

Morgan Drexen denies these allegations.  The firm, according to its complaint, has said that:
  • CFPB did not have jurisdiction over the law practice of the attorneys supported by Morgan Drexen;
  • Fees charged by the attorneys supported by Morgan Drexen for bankruptcy services are not collected in connection with debt settlement and are thus not 'upfront fees' prohibited by the TSR; and
  • The CFPB could not prohibit Morgan Drexen from supporting attorneys who provide services in parallel with debt settlement because this would be tantamount to an outright ban on commercial speech in violation of the First Amendment.

Reg Cost-benefit, MLO Payments And More Detailed In CUNA Report

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WASHINGTON (7/23/13)--This week's edition of the Credit Union National Association's Regulatory Advocacy Report features updates on three slightly under-the-radar items that are of importance to credit unions: An Administrative Conference of the U.S. call for regulators to improve their own cost-benefit analyses, a U.S. Appeals Court decision regarding Mortgage Loan Officer payments, and potential action on Department of Defense (DoD) service members consumer credit regulations.

The Administrative Conference of the U.S. (ACUS), an independent federal agency focused on improving the administrative process, has adopted a number of best practices for cost-benefit analysis in rulemaking by independent regulatory agencies, and the group believes independent regulatory agencies and other governmental bodies should document their own cost-benefit analysis practices.

The ACUS has also encouraged agencies to:
  • Develop written guidance on cost-benefit analysis; and
  • Consider analytical practices under current Office of Management and Budget requirements for major rules.
CUNA continues to urge the Consumer Financial Protection Bureau and National Credit Union Administration to conduct detailed cost-benefit analysis on proposed and final rules to minimize regulatory burdens on credit unions.

Developments in a U.S. Court of Appeals for the District of Columbia Circuit case are also being closely watched by CUNA. That court recently vacated a 2010 Department of Labor (DOL) federal wage-and-hour law interpretation, under which the DOL concluded the typical duties performed by mortgage loan officers do not qualify for the administrative exemption under the Fair Labor Standards Act. Under this decision, mortgage loan officers would be eligible for overtime pay, unless they qualified for another exemption.

CUNA has also asked credit unions that are offering small dollar loans to servicemen and women to detail those programs in a new comment call. The DoD recently released an advanced notice of proposed rulemaking (ANPR) on protections that apply to consumer credit extended to members of the armed forces and their dependents. The agency is considering changes to these regulations. The CUNA comment call also includes a summary and draft discussion points regarding the DoD ANPR.

For more on these issues and other key credit union regulatory developments, as detailed in this week's RAR, use the resource link.

Proposed Treatment Of Credit Life Insurance Positive, CUNA Tells CFPB

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WASHINGTON (7/23/13)--A Consumer Financial Protection Bureau amendment to the mortgage loan originator (MLO) compensation rules regarding the payment of monthly credit-related insurance premiums in connection with certain home loans is positive, according to the comment letter filed yesterday by the Credit Union National Association.
 
"Where creditors are adding a monthly credit insurance premium to the principal balance of the loan, but subtracting the premium from the principal balance immediately or as soon as the premium or fee is paid," this would not constitute prohibited financing of such premiums in a prohibitive way under the proposal, CUNA noted.  
 
Nonetheless, credit union mortgage lenders remain "extremely concerned" about their compliance responsibilities in order to be ready for a January 2014 implementation of various mortgage rules recently issued by the Consumer Financial Protection Bureau, CUNA noted in its comment letter to the agency listing 14 separate areas under mortgage rule requirements.
 
In the letter commenting on mortgage rules under the Equal Credit Opportunity Act (Reg B), the Real Estate Settlement Procedures Act (Reg X) and the Truth in Lending Act (Reg Z), CUNA also urged the agency to set up a compliance "hotline" for creditors to use in the first part of 2014 to direct their questions and concerns about compliance to the CFPB.
 
"We also urge the agency to agree to review the implementation of mortgage-related rules in the summer of 2014 and in January 2015 through stakeholder meetings to determine whether further changes are needed to minimize regulatory burdens without jeopardizing the purpose of Dodd-Frank Act mortgage credit provisions," CUNA wrote.
 
Moreover, where credit unions have evidence of working with their members to avoid foreclosures, CUNA is also seeking flexibility so that an inevitable foreclosure does not have to be delayed 120 days. Also properties should not be allowed to fall within disrepair during the pre-foreclosure period, CUNA stressed, to avoid further losses to the credit union that are born by all other members.   
 
The 14 areas that the letter addresses are:
  • Regulation B "Valuation" Amendments;
  • Loss Mitigation Procedures;
  • Application Time Period Disclosures;
  • Foreclosure Sale Clarification;
  • Short-Term Forbearance Clarifications;
  • Reasonable Expectation of Completeness;
  • Pre-Foreclosure Review Period Clarifications;
  • 120-Day Foreclosure Period;
  • Clarification of Points and Fees;
  • Rural & Underserved Exception;
  • Escrow Exception;
  • Loan Originator Clarifications;
  • Prohibition on Financing of Credit Insurance Premiums or Fees;
  • Effective Date for Other Provisions of the Mortgage Loan; and Originator Compensation Rule
The CUNA letter can be accessed through the link below.

News Coverage Helps Poke Holes In Banks' Attacks

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WASHINGTON (7/23/13)--Goliath. Meet David. He's not backing down.
In news publications across the country, commentators are comparing credit unions to the Bible's David, a young man with a small-but-true weapon who takes on a terrible giant who has hounded David's people.
 
Nowhere is this analogy more apt than in situations, like a recent segment on KETKNBC in Texas, where a single credit union advocate, Scott Rose, president/CEO of Kelly Community FCU, Tyler, Texas, stands up to the likes of the Texas Bankers Association to debunk  misinformation they say the banks are spreading about the credit union tax status
 
Where the banks offer up the credit union exemption from federal income tax as a
Scott Rose, president/CEO of Kelly Community FCU, Tyler, Texas, tells KETKNBC that the credit union tax status is determined by the credit union difference.
solution to the country's budget deficit, Rose points out to KETKNBC reporter and anchor Roger Gray: "Credit unions in America have 6% of the financial pie. Banks have 94%. I dare say, that is not going to have a huge impact on the deficit."
 
And where banks say credit unions should be taxed because they offer a broad array of financial services to consumers, Rose points out that has nothing to do with the credit union tax status.
 
"We were created as a not-for-profit, financial cooperative," he told Gray. That is why credit unions were exempted from federal income tax 76 years ago and why the tax status remains good public policy today, credit unions say.
 
In other media coverage, a local news program on CBS-affiliate K21 News in Maryland also paints a darker image of the banks as they fight to add more taxes to credit unions.
 
"That image of starched, white-collared, cordial bankers is coming undone," the news piece says. 
 
It goes on to add that, "Commercial bankers often complain to Congress about an unfair market advantage that credit unions have, claiming the non-profit cooperatives are a real threat.
 
"They say that at a time when some commercial banks are recording near record profits."

In fact, "(t)he number of credit unions has shrunk over the last several years," points out John Bratsakis, CEO of Maryland and District of Columbia Credit Union Association, who was interviewed in the clip. That decline has been particularly steep since the 2009 economic downturn, which, Bratsakis notes, credit unions, unlike banks, were not responsible for.
 
Bratsakis also clarifies the truth behind the credit union tax status--that it is "nonsense" for banks to say credit unions do not pay taxes.
 
"Credit unions do pay tax. They pay payroll tax, they pay property taxes that go to pay for those municipalities," Bratsakis told TV news reporter Kristine Frazao.

NEW: GSE-reform PATH Act Is Offcially Introduced in House

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WASHINGTON (7/22/13, UPDATED 4:15 p.m. ET)--The Protecting American Taxpayers and Homeowners--or PATH--Act, unveiled by House Financial Services Committee Chair Jeb Hensarling (R-Texas) on July 11, has now been formally introduced in the House.

It was introduced by Rep. Scott Garrett, a Republican representing New Jersey.
 
The housing finance reform bill, now H.R. 2767, was subject to a Financial Services Committee hearing last week and is scheduled for markup starting tomorrow morning at 10:15 a.m. (ET).
 
During last week's hearing, it was clear that there was a partisan divide regarding support for the bill. Republican committee members mostly hailed it as the way to "create a sustainable housing finance system." Many Democrats expressed worry that it would kill availability of the traditional 30-year, fixed rate mortgage for many Americans.
 
Also on housing, on the Senate side, Credit Union National Association Chief Economist Bill Hampel is scheduled to testify Tuesday before a Senate Banking subcommittee on the topic of  "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions."

Committee To Vote On Housing Finance Reform Bill This Week

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WASHINGTON (7/22/13)--The House Financial Services Committee has scheduled a mark-up session for the Protecting American Taxpayers and Homeowners (PATH) Act of 2013 for Tuesday, to begin at 10:15 a.m. (ET).
 
It was a discussion draft of that legislation that was the subject of the committee's hearing last Thursday. 
 
Although the bill had not yet been formally introduced by its author, House Financial Services Committee Chair Jeb Hensarling (R-Texas), as of this writing, it will be before the mark up session proceeds. The mark up session is expected to last two days.
 
During last week's hearing, it was clear that there was a partisan divide regarding support for the bill.  Republican committee members mostly hailed it as the way to "create a sustainable housing finance system." Many Democrats expressed worry that it would kill availability of the traditional 30-year, fixed rate mortgage for many Americans.
 
The Credit Union National Association supports regulatory relief provisions found in the draft language, but has preliminary concerns on behalf of credit unions regarding some provisions of the PATH Act. For example, CUNA has serious concerns that the PATH Act may not provide credit union members with a sustainable secondary market that can provide the necessary liquidity and structure that will ensure the continuation of long-term, fixed-rate mortgage products.

CUNA is scheduled to testify this week before a Senate Banking subcommittee on the topic of  "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions."
 
The hearing, called by the subcommittee on securities, insurance and investment, is scheduled for 90 minutes starting at 3 p.m. (ET).

Also on the Senate side, The Hill reported in one of its newsletters that a compromise bill to reduce federal student loan interest rates could get an early vote on the Senate floor.

CUNA: Don't Miss Out On 'DontTaxMyCU Tuesday'

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WASHINGTON (7/22/13)--Maximizing the power of social media to make a single-day punch for credit unions in advance of a Senate deadline for tax reform recommendations is the drive behind 'DontTaxMyCU Tuesday,' a Twitter event sponsored by the Credit Union National Association and the state credit union leagues.
 
July 26--this Friday--is the deadline for senators to submit their tax reform proposals to Finance Committee leaders, who will then take those suggestions, their own ideas, and much more to create a comprehensive proposal for a new U.S. tax code.
 
To impress on senators the message "Don't Tax My Credit Union," CUNA and the leagues are mounting a campaign on Twitter tomorrow--Tuesday, July 23-- in which all credit unions and their supporters are asked to tweet "#DontTaxMyCU," aimed at their lawmakers in both the Senate and the House.
 
"Tuesday is a terrific opportunity to get everyone to send one tweet or one Facebook post to their senators and House members, reminding them that we are paying attention to their actions," Trey Hawkins, vice president of CUNA political affairs, said. "We have had a constant stream of support for the Don't Tax My Credit Union campaign since we launched--and this is the next step in taking that support to the next level of activism."
 
The initiative intends to utilize the credit union community's growing presence on social media to instantly enforce a final unified message to Capitol Hill that a tax on credit union would be a tax on their 96 million member-owners.
 
"Even if you have used social media efforts in the past to support the 'Don't Tax My CU' campaign, please do it again on Tuesday to magnify the impact," Hawkins added.
 
For example, Hawkins said, a tweet could be as simple as "Please #DontTaxMy CU @ (Twitter handle of your senator here) #DontTaxTuesday."
 
Credit unions and individuals can participate by tweeting to their senators and congressmen using the #DontTaxMyCU hashtag, or posting on Facebook by including the senator or representative in a post by typing the "@" sign and then typing the lawmaker's name. 
 
A tweet also can be personalized. For example: "I was able to get a mortgage through my #creditunion b/c it's more affordable. #DontTaxMyCU @Senator(name here) #DontTaxTuesday".
 
For more on the campaign, use the links below to read the current issue of The Cheney Report and to access the Donttaxmycreditunion site.

CFPB Reports Fin. Ed. Efforts To Congress

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WASHINGTON (7/22/13)--The Consumer Financial Protection Bureau made its first report to the U.S. Congress last week to detail what the bureau has done since its inception in 2011 to promote consumers' financial literacy.
 
"Empowering people to take more control over their economic lives is absolutely essential to our mission" of providing consumer financial protection, newly confirmed CFPB Director Richard Cordray says in an introduction to the report.

The 58-page document notes that the bureau's approach to consumer financial education is three-pronged:
  • Make sure people have the help they need, when they need it. It cites "Ask CFPB" as an example of a resource that "provides unbiased answers to commonly asked questions" about personal finance;
  • Research and identify financial education methods that work to inform the design of financial education policies and programs; and
  • Collaborate with other groups to apply and fine-tune the best approaches to financial education. The CFPB has conducted more than 300 stakeholder meetings, including those with the Credit Union National Association and credit unions. 
Use the resource link to access the full report.
 

 

NEW: 'Don't Tax Tuesday' Detailed In New CUNA Video

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WASHINGTON (7/22/13, UPDATED 2:24 p.m. ET)--Credit unions and their members are urged to ignite their advocacy efforts tomorrow on "Don't Tax My CU Tuesday" and light up the social media world to get their message across, says today's edition of  "Inside Exchange," the Credit Union National Association's video dialogue on the credit union movement's hottest topics.

Trey Hawkins, CUNA vice president of political affairs, tells viewers that social media is the "new frontier" on Capitol Hill for reaching lawmakers, and its smart use goes far to bolster the effort to support the credit union tax status as policymakers considered tax reform measures.



"Every Senate office has a Twitter presence and 90% of House members have a presence on Twitter," Hawkins says.  And unlike traditional communications through mail or email or phone massages that often are monitored by a lawmaker's staff, most senators and House members monitor their own Twitter or Facebook accounts.

"With social media, your message goes straight to your target," Hawkins says.
CUNA and the state credit union leagues have set tomorrow--July 23--as "Don't Tax My CU Tuesday"--a day to maximize the power of social media to make a single-day punch for credit unions in advance of a Senate deadline for tax reform recommendations.

July 26--this Friday--is the deadline for senators to submit their tax reform proposals to Finance Committee leaders, who will then begin to build legislation to create a comprehensive proposal for a new U.S. tax code.
 
Already credit union advocates have sent more than 440,000 "Don't Tax My Credit Union" messages to Congress through the CUNA system alone--and not counting social media contact.

"Tomorrow is a terrific opportunity to get everyone to send one tweet or make one Facebook post--or one more tweet or Facebook post for those who have already done so--to really make an imnpact: To tell their senators and House members that a tax on credit unions is a tax on their 96 million member-owners," Hawkins says.

Hawkins suggest a tweet can  be as simple as "Please #DontTaxMyCU @ (Twitter handle of your senator here) #DontTaxTuesday." He notes credit unions and individuals can participate by tweeting to their senators and congressmen using the #DontTaxMyCU hashtag, or posting on Facebook by including the senator or representative in a post by typing the "@" sign and then typing the lawmaker's name.

NEW: Sen. Brown (D-Ohio) Outlines Upcoming Overdraft Bill

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WASHINGTON (7/22/13, UPDATED 1:30 p.m. ET)--Legislation that aims to prevent financial institutions from reordering account deposits and withdrawals to maximize the amount of overdraft fees that may be charged to accountholders was announced by Sen. Sherrod Brown (D-Ohio) today.

The senator outlined the bill, which has not been introduced in the Senate, at a press conference in Cleveland. "Banks should play by the rules instead of purposefully 'reordering' their customers' debit card transactions so that they profit while consumers rack up costly penalties," he said.

Brown's bill, which is still being finalized, would also:
  • Give the Consumer Financial Protection Bureau authority to monitor banks overdraft practices;
  • Allow that agency to establish fair guidelines to protect consumers, as well as credit unions and banks that treat members and customers well; and
  • Ensure that financial institutions clearly post transactions in an easy to understand format.
Under the bill, the CFPB would also offer safe harbor to financial institutions that follow any new CFPB overdraft guidelines.

For the full release, use the link.

NCUA July Agenda Has Seven Items

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ALEXANDRIA, Va. (7/19/13)--The National Credit Union Administration has posted the agenda for its July 25 open board meeting.

Matters to be considered are:
  • A proposed Interpretive Ruling and Policy Statement on a  Minority Credit Union Preservation Program;
  • A briefing of the board members of an interagency proposal on joint diversity standards for regulated entities;
  • A proposed rule addressing Parts 741and 748 of NCUA's Rules and Regulations on the electronic filing of financial reports;
  • A request from San Francisco FCU to expand its community charter;
  • The quarterly National Credit Union Share Insurance Fund report;
  • Discussion of the 2013 Temporary Corporate Credit Union Stabilization Fund assessment; and
  • A reprogramming of NCUA's operating budget for 2013.
The meeting is scheduled for 10 a.m. (ET).

FCUs In Nine States To Be Supervisionally 'Re-aligned' In 2014

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ALEXANDRIA, Va. (7/19/13)--To maximize operational efficiency, the National Credit Union Administration says it will re-align its regional supervision of federally insured credit unions in nine states, effective Jan. 1, 2014.

Under the new divisions:
  • Federally insured credit unions in Colorado, Montana, New Mexico and Wyoming will be moved to Region IV from Region V;
  • Louisiana and Arkansas supervisory responsibilities will move to Region III from Region IV;
  • Wisconsin will be covered by Region I, no longer Region IV;
  • Ohio will come under Region II, moving from Region III; and
  • California will return to the supervision of Region V, not Region II.
"We continually monitor our regional workload and, when necessary, make adjustments to distribute exam hours proportionally," NCUA Chair Debbie Matz said announcing the upcoming changes.
 
"Several years ago, NCUA moved California, Nevada and several individual credit unions, for supervision purposes, to different regions.
 
"Now that the economic downturn has ended, with the economy gaining strength and with the credit union industry generally performing well, we are reconfiguring our regions to create geographically compact districts that better balance workload, improve efficiency and reduce travel costs by more than $900,000 per year," she added.
 
Also starting in 2014 and announced earlier this year, a newly created Office of National Examinations and Supervision will begin supervising the nation's largest consumer credit unions. The NCUA notes that the new office was created by the re-allocation of existing resources.

Senate Confirmation Vote Is Next, Final Stop For Metsger Nomination

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WASHINGTON (7/19/13)--In a voice vote, the Senate Banking Committee has cleared the nomination of Richard Metsger to the National Credit Union Administration Board. The nomination will move forward to the full Senate floor for a confirmation vote.

Although there is no definitive word yet on timing yet, Metsger's nomination is not considered to be controversial and could get a full Senate vote  before the U.S. Congress breaks in August for its Summer District Work Session.

Credit Union National Association Deputy General Counsel Mary Dunn said CUNA looks forward to working with Metsger once he is installed at NCUA.
 
The committee also voted to move forward the nominations of Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency; Jason Furman, to be a member and chairman of the Council of Economic Advisers; and Kara Stein, Michael Piwowar, and Mary Jo White, to be members of the Securities and Exchange Commission.

CUNA Urges Lawmakers To Be Alert To CU Burdens

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WASHINGTON D.C. (7/19/13)--Submitting a statement for the record of a Thursday hearing entitled "Regulatory Burdens: The Impact of Dodd-Frank on Community Banking," the Credit Union National Association alerted lawmakers that the law has affected all financial institutions--none more than credit unions.
 
In the statement to the House Government Reform and Oversight subcommittee on economic growth, job creation and regulatory affairs, CUNA President/CEO Bill Cheney emphasized that the multitude of new regulations are generating a "crisis of creeping complexity," where credit unions are forced to hire specialized employees just to ensure compliance with the new requirements and reports.
 
Because credit unions are owned by their members, the costs a credit union bears to meet the multitude of wide-ranging regulatory training and compliance responsibilities are ultimately paid by their members.
 
CUNA stressed that small credit unions are feeling the most impact and reiterated that once a new rule is implemented, credit unions must assess the rule and re-evaluate how it impacts their business. "This takes both time and money which small credit unions don't have," CUNA warned.
 
CUNA urged the subcommittee to work closely with the Consumer Financial Protection Bureau (CFPB) on its remittance proposal, specifically regarding the restriction on the amount of annual transfers.
 
CUNA noted there have been no examples of abuses regarding remittance services that credit unions provide. Unfortunately, the group has said, a number of credit unions are considering exiting the service as a result of the requirements for new disclosures regarding exchange rates, fees, taxes, the date money will be received, and more.
 
The CUNA statement also addressed how credit unions welcomed the changes made to the qualified mortgage rule but are still weary of how it will impact them directly.
 
CUNA encouraged the subcommittee to continue to exercise its critical oversight and closely scrutinize the proposals coming from the CFPB, the National Credit Union Administration and other agencies to ensure the impact on credit unions is minimal.

PATH Act Vetted In House Financial Services Hearing

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WASHINGTON (7/19/13)--Eleven witnesses came before the House Financial Services Committee Thursday bringing, by the panel's chairman's accounting, the total to 50 witnesses testifying during 12 hearings focusing on housing finance reform in six months.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) called the
The House Financial Services Committee and its subcommittees have held a long series of housing finance reform hearings over six months, including one on June 18 in which Jerry Reed, chief lending officer at Alaska USA FCU, represented credit unions for CUNA. (CUNA Photo)
hearing to examine his recently introduced discussion draft of a bill, the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013."

The bill, as Hensarling said in his remarks to open the hearing, is intended to "create a sustainable housing finance system."

"This proposal will give Americans the better, fairer, sustainable housing finance system they deserve," he said.

However, on the other side of the aisle, the committee's top Democrat, Rep. Maxine Waters of California, expressed doubt about the viability of the legislation she called the "PATH to Nowhere Bill." She said it is a "non-starter" because it is bad for community banks, bad for credit unions and bad for consumers. Democratic opponents charge that the bill would destroy access to and availabilty of 30-year, fixed-term mortgages for average Americans.

Waters said she favored an approach taken by a Senate bill, the Jumpstart GSE Reform Act.

The PATH Act would: 
  • Phase out government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac within five years;
  • Increase competition by ending the federal government's domination of the housing finance market; and
  • Give consumers more choices in determining which mortgage product best suits their needs.
The Credit Union National Association submitted a statement for the hearing record strongly supporting the regulatory relief provisions found in the language, while expressing preliminary concerns on behalf of credit unions regarding some provisions of the PATH Act.

For example, CUNA has serious concerns that the PATH Act may not provide credit union members with a sustainable secondary market that can provide the necessary liquidity and structure that will ensure the continuation of long-term, fixed-rate mortgage products.

CUNA also testified on June 18 at a House Financial Services subcommittee hearing on housing finance issues.  Jerry Reed, chief lending officer at Alaska USA FCU, represented credit unions for CUNA at a hearing conducted by the subcommittee on  financial institutions and consumer credit on "Examining How the Dodd-Frank Act Hampers Home Ownership."

Use the resource links to read CUNA's full statement and to access the hearing's witness list.

CUNA Chair, Hill Publication Describe Tax Threat

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WASHINGTON (7/19/13)--For years, big banks have been trying to saddle their nonprofit credit-union competitors with new taxes. They see a congressional tax reform push as their best chance to sneak such taxes in. Fortunately, some groups--including credit unions--are looking out for the interests of hardworking Americans in this tax reform debate.
 
So warns Credit Union National Association Chair Pat Wesenberg, who penned a guest column on the issue in Thursday's Star-Ledger of New Jersey. The author is also president/CEO of Central City CU in Marshfield, Wis.
 
Wesenberg's Star-Ledger column appeared the same day as an extensive tax reform article in The Hill, which underscores that "the stakes couldn't be higher" for those who fear "being on the short end" of a tax reform bill. The Hill is the largest circulation Capitol Hill publication, and has a focus on business, lobbying and federal lawmaking.
 
Tax policy leaders have said they will take a "blank slate" approach to reform legislation, which would remove all tax expenditures--like the credit union exemption from federal income tax--from the code and would add back in those that make the grade. It is the scenario that CUNA warned credit unions to expect and why CUNA and the state credit union leagues launched a groundbreaking "Don't Tax My Credit Union" campaign in May to defend against a tax threat.
 
As tax reform picks up speed in the U.S. Congress, Wesenberg writes in her column, consumers should hope that the big banks don't succeed in their credit union attacks.
 
"New taxes on credit unions would pick the pockets not just of their 96 million predominantly middle-class customers, but those of all Americans--by reducing competition in the financial services sector," she explains.
 
She reminds that while credit unions and banks offer many of the same services, such as checking accounts, savings accounts and home mortgages, they couldn't be more different in philosophy and structure.
 
"As nonprofit financial cooperatives, credit unions exist to benefit their member-owners. They do so by charging low or no fees and offering higher interest rates on savings and lower rates on loans. They've advanced that mission since the 1930s, when Congress authorized their creation and granted them nonprofit status.
 
"Banks, in contrast, are obligated to maximize profits for shareholders. And profitable they are, with some of the highest margins of any industry," Wesenberg writes.
 
She goes on to note that about 40% of Americans belong to credit unions today.
 
CUNA is urging credit unions and their members to contact federal lawmakers as they consider tax reform issues to make it clear that taxing credit unions would be against good public policy.
 
Through its "Don't Tax My Credit Union" advocacy campaign, CUNA provides extensive resources to inform and facilitate communications to Congress whether they are sent by mail, e-mail, or social media outlets.
 
Use the resource link to access the "Don't Tax My Credit Union" website.

CUNA Underscores Need Of Supp Cap To Hill Staffers

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WASHINGTON (7/19/13)--At a briefing Thursday for Capitol Hill staffers on issues surrounding the need for credit unions to have access to supplemental forms of capital, Credit Union National Association President/CEO Bill Cheney said every credit union "can benefit from the option of supplemental capital."
 
Twenty percent of credit unions saw their capital decline 2% during the economic
Click to view larger image Rep. Peter King (R-N.Y.), standing at the podium, told a roomful of Hill staffers that current, restrictive rules for credit union capital are a "quirk" in the law that should be remedied. To King's left are Credit Union National Association President/CEO Bill Cheney, National Association of State Credit Union Supervisors President/CEO Mary Martha Fortnoy and Credit Union Association of New York President/CEO Bill Mellin. (CUNA Photo)
downturn, Cheney noted, adding that new sources of capital would be a tool that would help credit unions better serve their members.
 
Under current law, a credit union's net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets.  
 
Also at the briefing, Rep. Peter King (R-N.Y.) called the current statute that limits credit union capital to retained earnings a "quirk" in the law.
 
"As the economy is trying to rebound, the last thing we need is quirks in the law to hurt on of our mainstays" in the financial services arena, he said.
 
King has introduced legislation that would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings. CUNA supports the "Capital Access for Small Business and Jobs Act" (H.R. 719).
 
"We are going to push this bill. It is not going to be easy. The banks are opposed. We are going to tie it to a larger regulatory relief bill," King told the gathering.
 
Rep. Brad Sherman (D-Calif.), King's chief co-sponsor, told the Hill staffers that, "With supplemental capital, credit unions will be strong and be in a position to do more small business loans."
 
He also backed greater authority for credit unions to make member business loans (MBLs) as proposed in pending legislation that would lift the MBL cap to 27.5% of assets, up from the current 12.25% limit. He said the pending legislation also would help create new jobs--all without costing the government any money.
 
Credit Union Association of New York President/CEO Bill Mellin, also participating in the briefing, noted supplemental capital does not change the credit union structure: "It doesn't change who owns and runs the credit union. We remain cooperative and member-owned; one member, one vote. We are very different from banks."
 
And Linda Armyn, of Bethpage FCU in Long Island, N.Y., shared a cautionary tale. Armyn said that credit unions in her state had to slow branch growth because new deposits lowered capital ratio.
 
"There is a negative effect on the community when credit unions have to slow growth," she noted.
 

NEW: CUNA Underscores Need Of Supp. Cap. For Hill Staffers

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WASHINGTON (7/18/13, UPDATED 12:54 p.m. ET)--At a briefing today for Capitol Hill staffers on issues surrounding the need for credit unions to have access to supplemental forms of capital, Credit Union National Association President/CEO Bill Cheney said every credit union "can benefit from the option of supplemental capital."
 
Twenty percent of credit unions saw their capital decline 2% during the economic downturn, Cheney noted, adding that new sources of capital would be a tool that would help credit unions better serve their members.
 
Under current law, a credit union's net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets.  
 
Also at the briefing, Rep. Peter King (R-N.Y.) called the current stature that limits credit union capital to retained earnings a "quirk" in the law.
 
"As the economy is trying to rebound, the last thing we need is quirks in the law to hurt on of our mainstays" in the financial services arena, he said.
 
King has introduced legislation that would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings. CUNA supports the their "Capital Access for Small Business and Jobs Act" (H.R. 719).
 
"We are going to push this bill. It is not going to be easy. The banks are opposed. We are going to tie it to a larger regulatory relief bill," King told the gathering.
 
The head of the Credit Union Association of New York, Bill Mellin, also participating in the briefing, noted supplemental capital does not change the credit union structure: "It doesn't change who owns and runs the credit union. We remain cooperative and member-owned; one member, one vote. We are very different from banks."
 
And Linda Armyn, of Bethpage FCU in Long Island, N.Y., shared a cautionary tale. Armyn said that credit unions in her state had to slow branch growth because new deposits lowered capital ratio.
 
"There is a negative effect on the community when credit unions have to slow growth," she noted.

NEW: Senate Banking Clears Metsger Nomination For Senate Vote

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WASHINGTON (7/18/13, UPDATED 12:11 p.m. ET)--Voting by voice vote, the Senate Banking Committee has cleared the nomination of Richard Metsger to move forward to the full Senate floor for a confirmation vote.

Although there is no definitive word yet on timing, Metsger's nomination is not considered to be controversial and could get a full Senate vote  before the U.S. Congress breaks in August for its Summer District Work Session.  

The committee also voted to move forward the nominations of Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency, Jason Furman, to be a member and chairman of the Council of Economic Advisers; Kara Stein, Michael Piwowar, and Mary Jo White, to be members of the Securities and Exchange Commission.

Capitol Hill Staffers To Be Briefed By CUNA, Others On CU Supp Cap

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WASHINGTON (7/18/13)--The Credit Union National Association will participate today in a briefing for Capitol Hill staffers on issues surrounding the need for credit unions to have access to supplemental forms of capital.
 
CUNA President/CEO Bill Cheney will describe the need for new laws to support well-capitalized credit unions and their members.
 
Under current law, a credit union's net worth ratio is determined solely on the basis of retained earnings as a percentage of total assets.  
 
As a consequence, a credit union that is successful in serving its members and attracting new shares runs the risk of diluting its regulatory capital ratio, triggering non-discretionary capital-based supervisory actions under prompt corrective action (PCA) rules. Healthy credit unions may be forced to turn away deposits and to restrict lending to satisfy rigid regulatory capital requirements.
 
CUNA supports pending legislation that would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings.
 
The bill also has National Credit Union Administration support. NCUA Chair Debbie Matz pledged in a May 2 letter to the bill's chief sponsors, Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.), that if the U.S. Congress enacts their "Capital Access for Small Business and Jobs Act"  (H.R. 719), her agency will "promptly propose the necessary rule changes required for implementation."

CUNA: CUs Need Relief Found In PATH Act Draft

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WASHINGTON (7/18/13)--Credit unions strongly support the regulatory relief provisions found in a new draft bill on housing policy reform unveiled last week by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), and also back many other positive aspects of the legislation, according to the Credit Union National Association.
 
In a statement submitted today for the record of a hearing on that bill, called the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013," CUNA President/CEO Bill Cheney wrote that credit unions' strong support includes a provision to delay the mandatory implementation of all Dodd-Frank Act mortgage rules for an additional year.
 
"The compliance obligations imposed by the mortgage rules are simply overwhelming to many credit unions, especially America's smallest credit unions, and the tight timeframe for compliance puts the availability of mortgage credit--and thus America's nascent housing recovery--at risk. 
 
"Another year would ensure that mortgage credit remains available to millions of credit union members while credit unions all over the country continue to understand how to implement the most sweeping regulatory changes to mortgage lending in U.S. history, and would be welcome relief to credit unions," the CUNA leader wrote.
 
Cheney also said credit unions appreciate that the PATH Act recognizes that portfolio lending should not be treated the same for purposes of designing a regulatory framework for a housing finance system, a recognition that would provide "extraordinary relief for credit unions." Historically, credit unions have been portfolio lenders, holding 60%-75% of the mortgages they write on the books in most years prior to the financial crisis. 
 
The PATH Act would exempt any residential mortgage held on the balance sheet of the originating creditor from the Home Mortgage Disclosure Act, eliminate the requirement to set up an escrow account for higher-priced mortgage loans held in portfolio, and relieve credit union portfolio loans of many of the requirements of the Dodd-Frank Act that will be very burdensome and costly to implement. This importantly includes the ability-to-repay and Qualified Mortgage requirements. 
 
However, Cheney added, CUNA does have preliminary concerns on behalf of credit unions regarding some provisions of the PATH Act. For example, CUNA has serious concerns that the PATH Act may not provide credit union members with a sustainable secondary market that can provide the necessary liquidity and structure that will ensure the continuation of long-term fixed-rate mortgage products.
This is of particular concern for credit unions because more than 83% of credit union mortgages issued since 2008 have been fixed-rate mortgages; this signifies particularly strong member demand for a fixed-rate mortgage product. 
 
The PATH Act hearing starts at 1 p.m. (ET) July 18. In general, the bill seeks to minimize government involvement in the secondary market, limit taxpayer liability, foster innovation and allow for more private-sector capital in the marketplace. Additionally, the bill strives to provide equal access to all financial institutions regardless of asset size. 
 
Use the resource links to access the CUNA letter when it is posted to the CUNA website and to read more about today's hearing.

Merchants Must Be Held To Higher Data Breach Standards: CUNA

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WASHINGTON (7/18/13)--Merchants must be held to the same high data security standards that are required of credit unions if the nation is to make any progress in the fight to shore up personal financial data, the Credit Union National Association will tell lawmakers today.
 
In a statement submitted for the record of an 11 a.m. (ET) House Energy and Commerce subcommittee hearing entitled "Reporting Data Breaches: Is Federal Legislation Needed to Protect Consumers," CUNA urges lawmakers to make two important statutory changes.
 
First, CUNA says, the nation's laws must impose higher merchant data security standards. Second, credit unions and other financial institutions must be allowed to disclose the source of data breaches affecting their members or customers.
 
CUNA also urges that merchants be required to reimburse consumers and financial institutions for the costs associated with data breaches.     
 
"The chain of data security is only as strong as its weakest link. A data breach can occur anywhere along the payments transaction, from the merchant, to the merchant bank, the issuing card bank, and ultimately the financial institutions," the letter from CUNA President/CEO Bill Cheney notes.  The letter reminds lawmakers of the "very high data security standards" required of credit unions and other financial institutions under the Gramm-Leach Bliley Act of 1999.
 
The letter underscores that merchants benefit greatly from the electronic payments system, especially through the elimination of risk they would otherwise have to assume if the transaction were paid with cash (theft risk, handling and security costs) or a check (bounce risk, which includes non-payment and collection expenses). Merchants also benefit from streamlined accounting, reduced credit risk, faster check-out and increased purchase amounts compared to checks or cash.
 
However, merchants are not required to follow the GLBA standards, and until they are held to the same standard, consumers will remain vulnerable to a system that does not protect their information, Cheney warns.
 
"Until there are consequences to these bad actions, voluntary standards will not be sufficient to protect consumers ...To protect consumers, Congress should require merchants to be regulated to at least the same extent that financial institutions are when it comes to data security," the CUNA letter says.

When posted to the CUNA website, the hearing statement will be available through the resource link below.

NEW: NCUA To Re-align Regional Supervisory Authority In 2014

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ALEXANDRIA, Va. (7/19/13, UPDATED 11:42 a.m. ET )--To maximize operational efficiency, the National Credit Union Administration says it will re-align its regional supervision of federally insured credit unions in nine states, effective Jan. 1, 2014.
 
Under the new divisions:
  • Federally insured credit unions in Colorado, Montana, New Mexico and Wyoming will be moved to Region IV from Region V;
  • Louisiana and Arkansas supervisory responsibilities will move to Region III from Region IV;
  • Wisconsin will be covered by Region I, no longer Region IV;
  • Ohio will come under Region II, moving from Region III; and
  • California will return to the supervision of Region V, not Region II.
"We continually monitor our regional workload and, when necessary, make adjustments to distribute exam hours proportionally," NCUA Chair Debbie Matz said announcing the upcoming changes.
 
"Several years ago, NCUA moved California, Nevada and several individual credit unions, for supervision purposes, to different regions.
 
"Now that the economic downturn has ended, with the economy gaining strength and with the credit union industry generally performing well, we are reconfiguring our regions to create geographically compact districts that better balance workload, improve efficiency and reduce travel costs by more than $900,000 per year," she added.
 
Also starting in 2014 and announced earlier this year, a newly created Office of National Examinations and Supervision will begin supervising the nation's largest consumer credit unions. The NCUA notes that the new office was created by the re-allocation of existing resources.

Free Training Available For New C-note Security

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WASHINGTON (7/18/13)--While U.S. consumers certainly will not need any training on how to spend the newly re-designed  $100 notes that
Click to view larger image Click for larger view
will begin circulating on Oct. 8, the Federal Reserve is offering training for those responsible for screening the bill's new security features to determine the authenticity of the currency.
 
The Fed has created a variety of training materials and they are available free--and even in multiple languages.
 
The new $100 notes have two new security features incorporated in the design; a three-dimensional security ribbon and a bell-in-the-inkwell graphic.
 
The Fed says its training materials also include an overview of previously redesigned denominations and are accompanied by a training script "for easy reference."
 
See the resource links below for more.

CUNA To Testify July 23 On Housing Reform In Senate

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WASHINGTON (7/18/13)--Bill Hampel, chief economist of the Credit Union National Association, is scheduled to testify July 23 before a Senate Banking subcommittee on the topic of  "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions."
 
The hearing, called by the subcommittee on securities, insurance and investment, is scheduled for 90 minutes starting at 3 p.m. (ET).
 
There will be two sets of witnesses.  The first panel includes a single witness:  Sandra Thompson, deputy director, Division of Housing Mission and Goals, Federal Housing Finance Agency.
 
In addition to CUNA's Hampel, the second panel is expected to include : Jack A. Hartings, president/CEO, The Peoples Bank Company on behalf of the Independent Community Bankers of America; Andrew J. Jetter, president/CEO, Federal Home Loan Bank of Topeka; and Michael Middleton, chairman/CEO of Community Bank of Tri-County, on behalf of the American Bankers Association.
 
CUNA has told housing policy makers, through letters to the Obama administration and in earlier congressional testimony, that the needs of credit unions and other small mortgage lenders must be considered as the country moves forward on needed reforms.

NEW: CUNA: CUs Need Relief Found In PATH Act Draft

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WASHINGTON (7/17/13, UPDATED 1:55 p.m. ET)--Credit unions strongly support the regulatory relief provisions found in a new draft bill on housing policy reform unveiled last week by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), and also back many other positive aspects of the legislation, according to the Credit Union National Association.
 
In a statement to be submitted Thursday for a hearing on that bill, called the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013," CUNA President/CEO Bill Cheney wrote that credit unions' strong support includes a provision to delay the mandatory implementation of all Dodd-Frank Act mortgage rules for an additional year.
 
"The compliance obligations imposed by the mortgage rules are simply overwhelming to many credit unions, especially America's smallest credit unions, and the tight timeframe for compliance puts the availability of mortgage credit--and thus America's nascent housing recovery--at risk. 
 
"Another year would ensure that mortgage credit remains available to millions of credit union members while credit unions all over the country continue to understand how to implement the most sweeping regulatory changes to mortgage lending in U.S. history, and would be welcome relief to credit unions," the CUNA leader wrote.
 
Cheney also said credit unions appreciate that the PATH Act recognizes that portfolio lending should not be treated the same for purposes of designing a regulatory framework for a housing finance system, a recognition that would provide "extraordinary relief for credit unions." Historically, credit unions have been portfolio lenders, holding 60-75% of the mortgages they write on the books in most years prior to the financial crisis. 
 
The PATH Act would exempt any residential mortgage held on the balance sheet of the originating creditor from the Home Mortgage Disclosure Act, eliminate the requirement to set up an escrow account for higher-priced mortgage loans held in portfolio, and relieve credit union portfolio loans of many of the requirements of the Dodd-Frank Act that will be very burdensome and costly to implement. This importantly includes the ability-to-repay and Qualified Mortgage requirements. 
 
However, Cheney added, CUNA does have preliminary concerns on behalf of credit unions regarding some provisions of the PATH Act. For example, CUNA has serious concerns that the PATH Act may not provide credit union members with a sustainable secondary market that can provide the necessary liquidity and structure which will ensure the continuation of long term fixed rate mortgage products.
This is of particular concern for credit unions because more than 83% of credit union mortgages issued since 2008 have been fixed-rate mortgages; this signifies particularly strong member demand for a fixed-rate mortgage product. 
 
The PATH Act hearing start at 1 p.m. (ET) July 18. In general, the bill seeks to minimize government involvement in the secondary market, limit taxpayer liability, foster innovation and allow for more private-sector capital in the marketplace.  Additionally, the bill strives to provide equal access to all financial institutions regardless of asset size. 
 
Use the resource links to access the CUNA letter when it is posted to the CUNA website and to read more about today's hearing.

NEW: CUNA To Testify July 23 On Housing Reform In Senate

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WASHINGTON (7/17/13, UPDATED 9:04 a.m. ET)--Bill Hampel, chief economist of the Credit Union National Association, is scheduled to testify July 23 before a Senate Banking subcommittee on the topic of  "Creating a Housing Finance System Built to Last: Ensuring Access for Community Institutions."
 
The hearing, called by the subcommittee on securities, insurance and investment, is scheduled for 90 minutes starting at 3 p.m. (ET).
 
There will be two sets of witnesses.  The first panel includes a single witness:  Sandra Thompson, deputy director, Division of Housing Mission and Goals, Federal Housing Finance Agency.
 
In addition to CUNA's Hampel, the second panel is expected to include : Jack A. Hartings, president/CEO, The Peoples Bank Company on behalf of the Independent Community Bankers of America; Andrew J. Jetter, president/CEO, Federal Home Loan Bank of Topeka; and Michael Middleton, chairman/CEO of Community Bank of Tri-County, on behalf of the American Bankers Association.
 
CUNA has told housing policy makers, through letters to the Obama administration and in earlier congressional testimony, that the needs of credit unions and other small mortgage lenders must be considered as the country moves forward on needed reforms.

CUNA Offers Detailed ATR/QM Webinar On July 18

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WASHINGTON (7/17/13)--A July 18 Credit Union National Association webinar on the Ability-to-Repay rule and its associated Qualified Mortgage rule will reach well beyond an overview and help credit unions understand the "fine print" of the new Consumer Financial Protection Bureau requirements.

The two-hour session that starts at 2 p.m. (ET) will also detail the rules' practical implementations, its "points and fees" issue, and more.

The CFPB's finalized corrections, clarifications, and amendments to its Ability-to-Repay and mortgage servicing rules, issued July 10, will also be covered during the webinar.

Use the resource link for more information or to register.
 

CUNA Urges Congress To Get Tough On Patent 'Trolls'

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WASHINGTON (7/17/13)--The Credit Union National Association says there is a deep need for patent reforms due to the growing impact of abusive litigation, and the group has signed on to a letter to Congress supported by 42 trade associations in Washington, D.C., urging statutory changes.
 
"We are concerned with the issue because credit unions have become a target of patent trolls," CUNA Deputy General Counsel Mary Dunn said Tuesday. "The past year has seen an increase in litigation and demands involving low-quality patents in an effort to extract settlements from credit unions.  This is an abuse of the patent system.  Credit unions aren't out there stealing someone's ideas--they are buying technologies from vendors in order to better serve their members. They should not be sued for doing that." 
 
The volume of lawsuits against credit unions related to patents is on the rise.  For example, four Texas credit unions were sued in late May over certain check processing technologies by a company that has spent years targeting the nation's largest banks (News Now May 30).  Last year, credit unions were sued over certain Internet security technologies for mobile transactions on smartphones (News Now July 13, 2012). 

CUNA is aware that many more credit unions have received demand letters, Dunn said.  These letters will claim that the credit union has infringed a patent, and offer a credit union the opportunity to settle, threatening litigation if the credit union doesn't agree.  CUNA is aware of demands against credit unions for patents ranging from ATMs to WiFi offered to members in a credit union's lobby.

The joint trade group letter shares some disturbing statistics:
  • Since 2005, the number of defendants sued by patent trolls has quadrupled;
  • Last year, patent trolls sued more than 7,000 defendants and sent thousands more threat letters;
  • The activity cost the U.S. economy $80 billion in 2011, and productive companies made $29 billion in direct payouts; and
  • Moreover, trolls no longer sue only large tech corporations. Small and medium-sized businesses of all types, including start-ups, are now the most frequent targets.
The trades said they are pleased to see bills that have been introduced in Congress to address the problem, but warned "(t)here is no single solution to this complex question."
 
In addition to CUNA, the joint letter was signed by the Financial Services Roundtable, American Bankers Association, the Independent Community Bankers Association, and groups as diverse as the American Gaming Association, Food Marketing Institute, Motion Picture Association of America, National Retail Federation, and Retail Industry Leaders Association.

Senate Confirms Cordray For Five-year Term

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WASHINGTON (7/17/13)--It is official: the U.S. Senate voted last night 66 to 34 to confirm Richard Cordray to be the director of the Consumer Financial Protection Bureau for a five-year term.

Cordray was first nominated in July 2011 and has been serving as director since President Obama placed him in the position as a recess appointment in January 2012.
 
The president took that route after many Senate Republicans vowed they would oppose any nominee unless the CFPB's funding and leadership structure were changed.  However, the vote went forward Tuesday after the GOP agreed to allow a vote as part of a broader Senate deal on other pending nominations.
 
In a letter to the director, Credit Union National Association President/CEO Bill Cheney immediately congratulated Cordray on his confirmation and noted that CUNA and credit unions look forward to continue working with him and his senior staff to protect consumers while minimizing credit unions' regulatory burdens.  

In a statement  Cheney added, however, "We remain very concerned about the impact that a number of the Consumer Financial Protection Bureau's regulations and proposals will have on credit unions, which were never the focus for the creation of the agency in the first place."

He added, "Director Cordray has proven himself to be receptive to credit unions and particularly our concerns about the impact of the actions on our cooperative financial institutions. In fact, on a number of occasions, he has been willing to make positive rule changes even after a regulation has been adopted--a very rare occurrence for a regulator.

"Nevertheless, we urge the CFPB to utilize its broad exemption authority for credit unions given that 'we didn't cause the problem,' and recommend to Congress that it support broad exemption authority for credit unions."

Magill: No Bankers' Holiday On CU Attacks

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WASHINGTON (7/17/13)--The banks will not take a holiday from their attacks on the credit union tax status as the July 26 deadline for all suggestions for tax reform legislation nears, and their fervor, says John Magill, who heads up the Credit Union National Association's government affairs department, must be more than met by credit union advocates who understand the public policy value of the tax exemption.

CUNA sent a letter to all senators Tuesday to keep up the steady hum of voices that urge "Don't tax my credit union." CUNA and the state credit union leagues launched an advocacy campaign of that name in May and it has sparked more than 340,000 Capitol Hill contacts by credit union supporters to date.

"Credit unions and their members must keep up this momentum on the tax issue because the banks will turn themselves inside out trying to get traction at this critical time," Magill said Tuesday. He noted that the American Bankers Association sent another screed to lawmakers just this week.

"Although the banks' anti-credit union rhetoric may be seen as time-worn, weary, and debunked by many, it is up to credit unions and their members to make sure every policymaker sees clearly that a tax on credit unions would be a tax on 96 million Americans who belong to credit unions."

Magill emphasized that the tax treatment of credit unions continues to serve the purpose for which it was created--promoting financial choices for consumers and small businesses. Credit unions return any benefits to members through higher returns on savings, lower rate on loans, and most importantly, low or no fees.

"These benefits, combined, can result in more than $8 billion in direct financial benefits each year to the 96 million Americans who belong to credit unions and others who derive benefits due to the competitive force credit unions provide in the financial market place," Magill reminded.

The CUNA letter sent Tuesday, which made all the points above, also underscored to lawmakers that while the benefits of the credit union tax status to American taxpayers is great, taxing credit unions would only account for 0.06% of this year's deficit.

In other words, CUNA wrote, it would take 1,600 other such sources of a similar size to eliminate the deficit: It would fund the federal government for barely more than one hour.

House, Senate Keep Housing-GSE Reform As Hot Topic

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WASHINGTON (7/17/13)--The chairman and the ranking member of the Senate Banking Committee have released a discussion draft of a bill intended to ensure stability in the nation's mortgage market and protect taxpayers.
 
Also in the housing-policy reform arena, legislation that would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and make other changes to the housing finance system has been introduced in the U.S. Senate, and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) unveiled a similar House bill late last week.
 
A hearing on the Hensarling bill is scheduled today.
 
Sens. Tim Johnson's (D-S.D.) and Mike Crapo's (R-Idaho) new draft bill is titled the Federal Housing Administration Solvency Act of 2013.
 
When he released the discussion draft Tuesday, Johnson said in a release, "Our bill will give the FHA the tools it needs to get back on stable footing and strengthen a program important to many Americans."
 
The Johnson-Crapo bill seeks to give the Federal Housing Administration (FHA) tools to improve its financial condition, including strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA's reverse mortgage program.

The bill also would:
  • Create a higher minimum capital reserve requirement for the Mutual Mortgage Insurance Fund of 3%. If certain targets are not met as the ratio builds, the FHA's parent agency, the Department of Housing and Urban Development (HUD), would be required to take immediate action to address the shortfall while keeping Congress fully informed;
  • Require that minimum annual mortgage insurance premiums improve the long-term solvency of the FHA program by covering FHA loans' expected risk and maintain the capital reserve ratio; and
  • Require HUD to evaluate and revise as needed underwriting standards using criteria similar to the Consumer Financial Protection Bureau's Qualified Mortgage rule.

Metsger Nomination Vote Moved To Thursday

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WASHINGTON (7/17/13)--Senate Banking Committee staff have confirmed that the panel moved yesterday's expected vote on the nomination of Richard Metsger to be a member of the National Credit Union Administration to Thursday. 

Also on that day's agenda are the nomination votes for Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency, Jason Furman, to be a member and chairman of the Council of Economic Advisers; Kara Stein, Michael Piwowar, and Mary Jo White, to be members of the Securities and Exchange Commission.

Lawmakers To Consider NCUA Nomination Today, Monetary Policy This Week

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WASHINGTON (7/16/13)--The Senate Banking Committee is scheduled to vote today on the nominations of Richard Metsger to be a member of the National Credit Union Administration, Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency, and several others of interest to the financial services industry (News Now July 2).
 
The other nominees are Jason Furman, to be a member and chairman of the Council of Economic Advisers; Kara Stein, Michael Piwowar, and Mary Jo White, to be members of the Securities and Exchange Commission.

Also on the week's agenda:
  • The House Financial Services Committee will hold a full committee hearing Wednesday on "Monetary Policy and the State of the Economy."  Federal Reserve Board Chairman Ben Bernanke will testify;
  • Also on Wednesday, the Senate Banking subcommittee on financial institutions and consumer will hold a hearing on "Shining a Light on the Consumer Debt Industry";
  • On Thursday, the House Energy and Commerce subcommittee on commerce, manufacturing, and trade will hold a hearing on "Reporting Data Breaches: Is Federal Legislation Needed to Protect Consumers";
  • The House Oversight and Government Reform subcommittee on economic growth, job creation, and regulatory affairs will conduct a hearing on "Regulatory Burdens: The Impact of Dodd-Frank on Community Banking," also on Thursday. The Credit Union National Association will submit a statement for the record of this hearing;
  • The House Financial Services Committee will hold a hearing on "A Legislative Proposal to Protect American Taxpayers and Homeowners by Creating a Sustainable Housing Finance System." The focus of this session will be the new bill of the committee chairman, Rep. Jeb Hensarling (R-Texas), to reform housing finance. CUNA will submit a statement for the record of this hearing also; and
  • Finally, the Senate Banking Committee will hold a full committee hearing on "The Semiannual Monetary Policy Report to the Congress."  Federal Reserve Board Chairman Ben Bernanke will testify.

Biliouris Named Deputy Director Of NCUA's Office Of Consumer Protection

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ALEXANDRIA, Va. (7/16/13)--Matthew Biliouris has been chosen to fill the new National Credit Union Administration position of deputy director of the Office of Consumer Protection, NCUA Chairman Debbie Matz announced Monday. He will assume the post on Aug. 11.

Matz said Biliouris has considerable knowledge of NCUA's operations and the agency's examination program and has solid experience dealing with the policy issues affecting credit unions, and will therefore "hit the ground running to solve problems and produce results.

"He will be an important asset to this consumer-focused office that is central to our mission," Matz added.

Credit Union National Association Deputy General Counsel Mary Dunn said CUNA welcomes the announcement. "CUNA and credit unions appreciate the reasonable approach Matt takes in listening to concerns and we look forward to working with him in this new position," she said.

Biliouris joined NCUA in 1992 as an examiner in Portland, Maine. He also has served as special assistant to NCUA's executive director, where he was charged with handling key policy and strategic matters. Before that he served as a supervision analyst, information systems officer and program officer.

Biliouris is also known to credit unions for completing several other details, notably among them a year-long assignment as special assistant to former NCUA chairman and current board member Michael Fryzel.

Cordray Nomination Is In the Spotlight

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WASHINGTON (7/16/13)--Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan Monday alerted credit unions that they may be in for "one of the more significant weeks in recent U.S. Senate history" as that body prepares to move forward on several nominations put forward by the Obama administration--including that of Richard Cordray to formally become director of the Consumer Financial Protection Bureau.
 
The Cordray nomination is a partisan wrangling point.  While Democrats generally support his appointment, 43 Republicans have demanded changes to the CFPB structure--broadening it to a five-member board rather than a single directorship--meaning it could be all but impossible to get the 60 votes needed to confirm Cordray as CFPB head.
 
Late last week, Senate Majority Leader Harry Reid (D-Nev.) moved cloture on several nominations, including Cordray's, meaning he invoked a parliamentary procedure that aims to bring a quick end to debate. But more notably the majority leader also announced his intention to pursue a controversial Senate rule change that would limit the filibuster opportunities for certain presidential nominations--the so-called "nuclear option."
 
Late Monday, the Senate held a rare bi-partisan caucus meeting in the Old Senate Chamber to discuss how to proceed on the issue of presidential nominations.

In addition to the CFPB nomination, the Senate is expected to vote this week on the nominations of:
  • Thomas Perez for secretary of the U.S. Labor Department;
  • Gina McCarthy for administrator of the Environmental Protection Agency;
  • Mark Gaston Pearce, Richard F. Griffin Jr., and Sharon Block for the National Labor Relations Board; and
  • Fred Hochberg for president of the Export-Import Bank of the United States.

Hyland Says Relationships Will Help Build NCUF Success

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WASHINGTON (7/16/13)--When she takes her new position Aug. 26 as executive director of the National Credit Union Foundation, Gigi Hyland says she is eager to leverage her relationships in the financial services, philanthropic and policy arenas to raise awareness of the foundation, its reach, and its great potential.

She said it is the breadth and strength of those relationships that also will help her raise the resources necessary to fuel innovation and disseminate programs that work.

The foundation supports credit unions' shared values and unique philosophy of "people helping people," through such programs as REAL Solutions, Credit Union Development Education (DE), Biz Kid$, grants, and CUAid, for disaster relief. Through NCUF grants and programs, credit unions provide widespread financial education, create greater access to affordable financial services, and empower more consumers to save, build assets, and own homes.

"I could not be more honored to continue serving the credit union system through the foundation," Hyland told News Now Monday. "The program successes--Biz Kid$, REAL Solutions, the DE Program, targeted grants and the April Financial Literacy Campaign--have been tremendous, but there is so much potential to do more.

"Working with a dedicated board and staff, as well as generous donors, together we will lift the foundation to even higher levels of achievement."

Prior to the new post, Hyland was most recently a member of the three-person National Credit Union Administration Board. She served from 2005 until October 2012. Before the NCUA, Hyland was senior vice president and general counsel of Empire Corporate FCU, now Members United Corporate FCU.

National Credit Union Foundation Chairman Laida Garcia said of Hyland, "Gigi brings a wealth of credit union experience and an understanding of the non-profit sector that will serve the Foundation well."           
 
Credit Union National Association President/CEO Bill Cheney, who also serves as NCUF president, said Monday, "Gigi's extensive insights to the philosophy and mission of credit unions will serve the entire movement well in this position."

Although the job is new, Hyland will find some things familiar as she moves into her new position. She will work from CUNA's Washington, D.C. office, where she has worked previously. Hyland was CUNA's vice president of Corporate Credit Union Relations and executive director of the Association of Corporate Credit Unions from 1997 to 2002.

"The foundation is well-positioned to continue to be a leader in financial literacy and education, which has never been more important for consumers and remains as one of the core missions of the credit union system," Hyland said.

Hyland succeeds Bucky Sebastian, who announced in May that he would retire on June 30 after three years as head of the foundation. At the time of that announcement, both Garcia and Cheney lauded Sebastian for "an outstanding job" of directing the foundation to focus its efforts on financial education and a number of key initiatives to benefit the credit union movement.

New Senior Staff At CFPB

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WASHINGTON (7/16/13)--There have been several senior staff additions at the Consumer Financial Protection Bureau (CFPB).  The bureau announced Monday that Sartaj Alag is returning to the CFPB and will serve as chief operating officer, and shared the names of those who soon will fill the positions of chief of staff, assistant director for the Office of Older Americans, and the program manager for Servicing and Securitization Markets.

When previously at CFPB, Alag was in charge of starting up and managing the Office of Consumer Response. And prior to his time at the bureau,  he worked at Capital One for nearly 10 years and spent part of his tenure there as president of Capital One's Canadian subsidiary.

Christopher D'Angelo will serve as the CFPB chief of staff. He has been at CFPB since June 2011, serving first as an attorney in the Office of Enforcement and then most recently as senior adviser to Director Richard Cordray.  D'Angelo came to the bureau from the U.S. Treasury Department where he was senior adviser to the undersecretary for Domestic Finance and worked on financial regulation policy.

Also joining the CFPB:
  • Nora Dowd Eisenhower will serve as assistant director for the Office of Older Americans. Prior to joining the CFPB, Eisenhower served on the National Council on Aging, where she was the director of the National Center for Benefits Outreach and Enrollment, then as the senior vice president of Economic Security; and
  • Laurie Maggiano is joining the CFPB as program manager for Servicing and Securitization Markets in the Division of Research, Markets and Regulations.  She also comes from the Treasury Department, where she served as the director of policy in the Office of Homeownership Preservation.

Ohio Regulator Closes Taupa Lithuanian CU

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ALEXANDRIA, Va. (7/16/13)--The Ohio Division of Financial Institutions liquidated the Taupa Lithuanian CU of Cleveland Monday and appointed the National Credit Union Administration as liquidating agent.

The Ohio regulator decided to close the $23.6 million-asset credit union and discontinue its operations after determining the credit union had no prospect for restoring viable operations. Member deposits are federally insured by the National Credit Union Share Insurance Fund up to $250,000. 

Taupa Lithuanian had served 1,154 members and was chartered in 1984 to serve the Lithuanian community of Cleveland and Northeast Ohio.

NCUA's Asset Management and Assistance Center will issue correspondence to individuals holding verified share accounts in the credit union within one week. 

Taupa Lithuanian CU is the 11th federally insured credit union liquidation in 2013.

CUNA's Student Loan Working Group Holds Initial Meeting

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WASHINGTON (7/16/13)--As the nation's students look on anxiously to see if the federal government acts to restore the federal student loan rate to 3.4% after it ballooned to 6.8% recently, the Credit Union National Association has formed a student loan working group to explore current issues related to credit unions' offering private student loans to members, CUNA's Regulatory Advocacy Report informs readers this week.

The working group met for the first time last week to discuss current and possible future issues confronting credit union offering private student loans.

The group's focus will be to develop best practices for credit union student loans and to monitor related regulatory activity at the Consumer Financial Protection Bureau (CFPB) and the National Credit Union Administration.

The NCUA has told the CUNA regulatory team that the agency will be releasing examiners' guidance on private student loans in the near future. The guidance will then be shared with credit unions.

To see those named to the student loan working group, CUNA members can use the resource link below to access the RAR.

Also in the newest issue, CUNA takes a look at CFPB's newest clarifications to mortgage rules, NCUA's derivatives proposal, a payments system update, and many more hot regulatory topics.

NEW: Metsger Nomination Vote Moved To Thursday

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WASHINGTON (7/16/13,  UPDATED 12:14 p.m. ET)--Senate Banking Committee staff have confirmed that the panel has moved today's expected vote on the nomination of Richard Metsger to be a member of the National Credit Union Administration to Thursday. 
 
Also on that day's agenda are the nomination votes for Rep. Mel Watt (D-N.C.) to be director of the Federal Housing Finance Agency, Jason Furman, to be a member and chairman of the Council of Economic Advisers; Kara Stein, Michael Piwowar, and Mary Jo White, to be members of the Securities and Exchange Commission.

NEW: Senate Moves Forward To Place Cordray As Official CFPB Head

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WASHINGTON (7/16/14, UPDATE 11:45 a.m. ET)--The U.S. Senate just voted 71-29 to end the filibuster against Richard Cordray, whose nomination to officially head the Consumer Financial Protection Bureau has been pending since late 2011. 

The vote for final passage is all but certain at this point, and will allow Cordray to officially take on the post he has filled since Elizabeth Warren left the bureau.  Warren is now a U.S. senator from Massachusetts.
 
Cordray, a former Ohio attorney general, started at the CFPB as its enforcement director. His nomination has drawn strong opposition from many Republicans, who said they would oppose any nominee unless the CFPB's funding and leadership structures were changed.

'Inside Exchange' Says CUs' Tax Message Hitting Its Mark

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WASHINGTON (7/15/13)--Calendar pages are turning quickly toward the July 26 deadline set by U.S. Congress tax policy leaders who want all suggestions for tax reform legislation by that date. The Credit Union National Association's latest "Inside Exchange" video, featuring President/CEO Bill Cheney, underscores the importance of credit unions and their members contacting federal lawmakers directly--and now--to say, "Don't tax my credit union."

"Even though credit unions are delivering the message--in ever-increasing numbers--they must "keep up the contacts" to ensure the credit union tax exemption remains intact, Cheney emphasizes in the video.

CUNA continues to engage members of Congress and staff on this crucial tax reform issue, and Cheney notes that credit unions' positive, strong message is being received in the halls of Congress in this week's edition of The Cheney Report.



CUNA created the "Inside Exchange" video series as a new way to directly communicate to member credit unions, and to provide detailed insights into what's happening in Washington, D.C., in the legislative, regulatory and political arenas.

The "Inside Exchange" videos can also be found by clicking on the "stay informed" section of the gray menu bar at the top of the cuna.org homepage and scrolling down to the "Inside Exchange" pane.

For more on this new video, and The Cheney Report, use the resource links.

Gentile: 'Don't Tax' Campaign Also Drives Home Value Of Membership

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WASHINGTON (7/15/13)--The Credit Union National Association's groundbreaking "Don't Tax My Credit Union" advocacy campaign reinforces the value of credit union membership, Paul Gentile, CUNA executive vice president of communications and strategic messaging, wrote in a new CUinsight.com piece.

"It is quite simply a killer campaign" that "engages social/digital media as well as our more traditional lobbying efforts," Gentile added.

More than 336,000 separate congressional contacts have been made since mid-May as part of this CUNA/state credit union league advocacy effort. Credit unions and their members are using CUNA and the state credit union leagues' resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!" This pro-credit union message is also being shared through Twitter feeds, CUNA's Twitter handle @CUNAadvocacy and the hashtag, #DontTaxMyCU.

For those that have not yet joined this effort, "all the reasons to participate are there," Gentile said.

The "Don't Tax My Credit Union!" campaign could serve as a wakeup call for newer members of Congress that have not seen the strength of large-scale credit union grassroots efforts, and to many credit union members that value credit union products and services, but may not be experts on the structural differences between credit unions and banks, he noted.

Key facts such as for every $1 in tax benefit, credit unions give $10 back in member value, both communicate why the tax exemption is vital but also reinforces the value of credit union membership. "You may wake up some members to what in many ways is a true privilege ...Banking with a cooperative that is all about serving them. No shareholders, no profit motives," Gentile wrote.

Further, he said, promoting Don't Tax My Credit Union is another way credit unions can Unite for Good and join CUNA's vision in which "Americans Choose Credit Unions As Their Best Financial Partner."

For more on CUNA advocacy efforts and Unite for Good, use the resource links.

CUNA Suggests Enhancements To Loan Participation Rule

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WASHINGTON (7/15/13)--The Credit Union National Association in a letter Friday commended "the substantial improvements" that were made to the National Credit Union Administration's loan participation rule, but urged the agency to give credit unions latitude as they comply with the rule changes. The rule goes into effect Sept. 23.
 
CUNA President/CEO Bill Cheney also urged the agency to make the waiver process for the rule's single-originator limit and limits to one borrower meaningful. Cheney, writing to NCUA Chairman Debbie Matz and board member Michael Fryzel, said, "A slow or ineffective process for credit unions seeking to exceed the 100% of net worth limit on loan participations from one originator, or the 15% of net worth ceiling for loan participations involving one borrower, will produce inappropriate results in particular credit union cases and will undermine the current consensus that the overall rule emerged with reasonable terms."
 
The final rule's limit on loans from one originator of 100% of a credit union's net worth was increased from a proposed 25% of net worth cap, an improvement urged by CUNA.
 
Cheney also noted, "As you know, we did not support the rule as originally proposed and were active in encouraging credit unions to provide comments. We appreciate the major revisions that were included in the final rule and the opportunity to provide input as part of the process."
 
He said the delayed effective date of Sept. 23, pushed back from July 25, will facilitate compliance, but added that "credit unions should be given reasonable latitude during their first examination after the rule takes effect if they are making good faith efforts to meet the rule's requirements." The CUNA letter also encouraged the NCUA to post examiner directives regarding this rule on its website and to ensure examiners are well-trained before the changes take effect.
 
The CUNA letter urged the NCUA to work closely with state regulators in shaping waiver procedures. Any waiver process changes must minimize procedural burdens and maximize positive outcomes, Cheney wrote.
 
The loan participation rule imposes federal restrictions on state institutions, and CUNA advised the agency that such a situation should not be a standard practice. The NCUA must be mindful of the rights and obligations of state regulators to establish standards for the credit unions they oversee under state law, Cheney said.
 
CUNA plans to work with credit unions and credit union service organizations (CUSOs) if they have issues with the final rule to discuss how their concerns can be addressed by the NCUA.
 
Some credit unions have told CUNA the changes made to the final rule "will allow their loan participation programs, in most cases, to remain an important element of their overall lending operations." They were concerned that would not have been the case under the proposal, he noted.
 
CUSO representatives also said the loan participation rule "will preserve, in most cases, their ability to work with their members to support credit unions' use of loan participations, both as loan originators and participation purchasers," Cheney told the regulators.

Gigi Hyland Named Executive Director Of the National CU Foundation

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WASHINGTON (7/15/13)--The National Credit Union Foundation has named Gigi Hyland as its new executive director, effective Aug. 26.
 
Hyland was most recently a member of the three-person National Credit Union Administration board, serving from 2005 until October 2012. "Gigi brings a wealth of credit union experience and an understanding of the non-profit sector that will serve the Foundation well," said National Credit Union Foundation Chairman Laida Garcia.
           
Prior to the NCUA, Hyland was senior vice president and general counsel of Empire Corporate FCU, now Members United Corporate FCU.
 
Hyland will operate from the Credit Union National Association's Washington, D.C. office, where she has worked previously. Hyland was CUNA's vice president of Corporate Credit Union Relations and executive director of the Association of Corporate Credit Unions from 1997 to 2002.
 
"I am excited about this opportunity and anxious to begin working with the great team and board that we have at the Foundation, as well as its many credit union supporters," said Hyland. "The Foundation is well-positioned to continue to be a leader in financial literacy and education, which has never been more important for consumers and remains as one of the core missions of the credit union system," Hyland said.
 
Hyland succeeds Bucky Sebastian, who recently announced his retirement.   
           

NCUA Plans For Risk-Based Capital Changes

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ALEXANDRIA, Va. (7/15/13)--The National Credit Union Administration will build a "new risk-based capital framework" to protect credit unions and consumers from losses, and replace the "outdated and insufficient" one-size-fits-all capital requirement, NCUA Chairman Debbie Matz told credit unions last week.

The NCUA plan could result in higher capital levels for credit unions with high concentrations of risky assets, she said. The current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, Matz said, credit unions with assets of $50 million and above could be subject to improved risk-based capital requirements to better correlate required capital levels to risk.

The current 7% leverage capital standard "was really just a best guess" at future requirements, she emphasized. That standard was set in 1998. Recent financial crisis and industry changes require a newer approach, Matz said. However, Matz reaffirmed that Basel III is not right for the credit union industry.

"For many, if not most, credit unions, seven percent of assets may still be appropriate. For higher-risk credit unions, it can be a prescription for disaster when the next crisis hits. We need a flexible, forward-looking standard that makes sense for today and tomorrow," Matz said.

"Job one is preventing another crisis...Our challenge is to make sure that, in the future, credit unions that choose to take on higher risks will be required to meet higher capital standards," she added.

"CUNA has called for risk-based capital standard changes, and has also been urging the agency to adopt a more productive approach to rulemaking that focuses on problem areas rather than issuing rules with blanket applicability, regardless of the credit unions level of risk," CUNA Deputy General Counsel Mary Dunn said.

"This is a very important issue and our Examination and Supervision Subcommittee met with NCUA officials on this issue in June. The subcommittee is meeting again shortly to follow up with NCUA," she added.

For the full NCUA release, use the resource link.

NEW: Cheney Urges CUs To Keep Up 'Don't Tax My CU' Efforts

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WASHINGTON (7/15/13)--Calendar pages are turning quickly toward the July 26 deadline set by U.S. Congress tax policy leaders who want all suggestions for tax reform legislation by that date. The Credit Union National Association's latest "Inside Exchange" video, featuring President/CEO Bill Cheney, underscores the importance of credit unions and their members contacting federal lawmakers directly--and now--to say, "Don't tax my credit union."

"Even though credit unions are delivering the message--in ever-increasing numbers--they must "keep up the contacts" to ensure the credit union tax exemption remains intact, Cheney emphasizes.



CUNA created the "Inside Exchange" video series as a new way to directly communicate to member credit unions, and to provide detailed insights into what's happening in Washington, D.C., in the legislative, regulatory and political arenas. For more on this new video, and previous videos featuring CUNA comments on credit union advocacy efforts, use the resource link.

The "Inside Exchange" videos can also be found by clicking on the "stay informed" section of the gray menu bar at the top of the cuna.org homepage and scrolling down to the "Inside Exchange" pane.

GSE Reform Bill Unveiled In House

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WASHINGTON (7/12/13)--The chairman of the House Financial Services Committee, Rep. Jeb Hensarling (R-Texas), and others of the committee's leadership unveiled a bill Thursday they say is intended to "create a sustainable housing finance system."
 
Credit Union National Association President/CEO Bill Cheney said the new bill "gives credit unions hope for their future in the housing finance market."
 
The Protecting American Taxpayers and Homeowners--or PATH--Act would:
  • Phase out government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac within five years;
  • Increase competition by ending the federal government's domination of the housing finance market; and
  • Give consumers more choices in determining which mortgage product best suits their needs.
"This is a positive approach toward establishing a sustainable housing market, and ensuring credit unions have access to a functioning, well-regulated secondary market," Cheney said. " Legislation that will transform today's system must ensure credit unions can continue to provide mortgage liquidity to their members.
 
"House Financial Services Committee Chairman Jeb Hensarling clearly understands the importance of credit unions in the housing finance sector, and we appreciate that the legislation takes into consideration many of our concerns. We look forward to working with Chairman Hensarling and others to achieve a secondary market that allows credit unions to continue meeting the mortgage finance needs of their members."
 
Hensarling also announced Thursday that the Financial Services Committee will meet on Thursday, July 18 to hold a hearing on the PATH Act.

On the Senate side last month, several senators co-sponsored bipartisan legislation that would wind down Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor, the Federal Mortgage Insurance Corporation (FMIC). 

It was introduced by Sens. Bob Corker (R-Tenn.), Mark Warner (D-Va.), Mike Johanns (R-Neb.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.) and Kay Hagan (D-N.C.).

Cheney Writes Key Administration Officials On CU Tax Status

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WASHINGTON (7/12/13)--The Credit Union National Association is making the case for maintaining the credit union tax status with lawmakers and administration officials alike, and these efforts continued on Thursday as CUNA President/CEO Bill Cheney wrote to U.S. Treasury Secretary Jack Lew and National Economic Council Director Gene Sperling.

Cheney urged both agency heads to support the continuation of the credit union tax status, and asked them to meet with CUNA on the tax issue at their convenience. The tax treatment of credit unions continues to serve the purpose for which it was created--promoting financial choices for consumers and small businesses, he emphasized.

"Annual tax revenues on credit unions would be barely enough to fund the federal government for one hour," Cheney noted in separate letters to both policymakers.

The Joint Committee on Taxation estimated that the credit union tax "expenditure" is $0.5 billion in 2012 and 2013, and an average annual cost of $0.8 billion between 2013 and 2017. However, Cheney added, the benefits credit unions provide to their members and others totaled $8 billion in 2012. And, he said, consumers are catching on to the benefits of joining a credit union: More than two million Americans joined credit unions in 2012.

"Because the substantial benefits of the exemption to the public far exceed its costs, credit unions' tax status continues to reflect good public policy," Cheney said.

"A tax on credit unions would reflect very poor public policy," he added. The loss of the tax exemption would seriously restrict the ability of credit unions to offer financial service options to consumers and small businesses and could result in a significant, rapid reduction in the number of credit unions that can continue to serve their communities, Cheney explained.

CUNA and the leagues are also involving members in direct tax status advocacy efforts. More than 300,000 separate congressional contacts have been made since mid-May as part of a groundbreaking CUNA/state credit union league advocacy effort. Credit unions and their members are using CUNA and the state credit union leagues' resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!" This pro-credit union message is also being shared through Twitter feeds, CUNA's Twitter handle @CUNAadvocacy and the hashtag, #DontTaxMyCU.

For more on CUNA advocacy efforts, use the resource links.

Senate Banking To Vote On Metsger NCUA Nomination July 16

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WASHINGTON (7/12/13)--The nomination of Richard Metsger to become a member of the National Credit Union Administration board is scheduled to be voted on July 16 by the Senate Banking Committee. The panel will meet in executive session at 10 a.m. (ET).
 
The former Oregon State Sen. Rick Metsger (D) was named as a candidate by the president in June and a hearing on his nomination was conducted June 27.  At that hearing Metsger said, "updating, simplifying, eliminating and clarifying existing rules to ensure that they are effective, but not excessive, consistent with safety and soundness," will be a focus if he is confirmed to serve the agency.
 
If the Senate Banking Committee approves his nomination and it is next confirmed by the U.S. Senate, Metsger will fill the seat vacated late last year after the term of board member Gigi Hyland expired.
 
Metsger served as Oregon state senator from 1999 to 2011, where he chaired the Oregon Senate committee that heard all financial institution legislation. He was a member of the board of directors at Portland Teachers CU from 1993 to 2001 and has also been a board member of Financial Beginnings, a nonprofit focused on increasing students' financial literacy.
 
"If confirmed, I will add a fresh set of eyes to policies old and new to reflect that diversity [of experience]," Metsger pledged during the nomination hearing.
 
Also on Senate Banking's July 16 is consideration of the nominations of Rep. Melvin L. Watt (D-N.C.) to be director of the Federal Housing Finance Agency; Dr. Jason Furman, of New York, to be a member and chairman of the Council of Economic Advisers; Kara M. Stein of Maryland, to be a member of the Securities and Exchange Commission; and Dr. Michael S. Piwowar of Virginia, to be a member of the Securities and Exchange Commission.

Duke Will Leave Fed Aug. 31

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WASHINGTON (7/12/13)--Elizabeth Duke, a member of the Federal Reserve Board since Aug. 5, 2008, submitted her resignation yesterday, effective Aug. 31.

In her resignation letter, Duke noted that her five years on the board witnessed "some of the most challenging conditions ever encountered by the Federal Reserve" including the "massive overhaul" of financial system regulation required by the Dodd-Frank Wall Street Reform Act and "informed by lessons learned during the financial crisis."

Fed Chairman Ben Bernanke said of Duke's service: ""Betsy has made invaluable contributions to the Federal Reserve and to the country during her five years at the board. She brought fresh ideas grounded in her deep knowledge of the banking industry and the real-world dynamic between borrowers and lenders. I wish her the best in her future endeavors."

Before joining the Fed, Duke was senior executive vice president and chief operating officer of TowneBank, a Virginia-based community bank. Prior to that, she served as an executive vice president at Wachovia Bank and as an executive vice president at SouthTrust Bank. Duke has also served as president/CEO of Bank of Tidewater, based in Virginia Beach, Va.

Use the resource link to read her resignation letter.

July 31 Is NCUA Secondary Capital Webinar For LICUs

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ALEXANDRIA, Va. (7/12/13)--The basics of the National Credit Union Administration's secondary capital requirements, and practical tips on how eligible low-income designated credit unions (LICUs) can best use their secondary capital authority, will be discussed in an upcoming agency webinar.

The agency on Thursday also announced it has moved its scheduled July closed board meeting forward by one day, to July 24, and released a released a video highlighting the information offered on two NCUA consumer websites, MyCreditUnion.gov and Pocket Cents. Use the resource links for more on these items.

The free NCUA webinar, entitled "Will Secondary Capital Work for You?," is scheduled to take place on Wednesday, July 31 at 2 p.m. ET. NCUA Office of Small Credit Union Initiatives (OSCUI) staff and NCUA Region III Division of Supervision officials will present the webinar.

A credit union manager will also detail how his credit union utilizes secondary capital to supplement its net worth and to better serve its low-income field of membership.

The NCUA said webinar participants may submit questions in advance by sending an e-mail to WebinarQuestions@ncua.gov. The subject line of the e-mail should read, "Secondary Capital Webinar."

To register for the NCUA webinar, use the resource link.
 
The LICU designation brings benefits that include the ability to offer and accept secondary capital accounts. The secondary capital must take the form of subordinated debt--a borrowing transaction that must be repaid over time, if the funds are not used to cover operating losses, according to the NCUA.

Eligible LICUs are subject to borrowing limitations and capitalization requirements, and their secondary capital plans must be approved by the NCUA.

CUs, Leagues Meet With CFPB Director After Maine Hearing

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WASHINGTON (7/12/13)--Following a debt-collection field hearing in Portland, Maine, on July 10, Consumer Financial Protection Bureau Director Richard Cordray held a separate meeting with credit union members and top-level representatives of the Maine, New Hampshire and Vermont credit union leagues on key credit union topics, including regulatory burden.

Click to view larger image Pictured, from left to right, are Association of Vermont Credit Unions President/CEO Joseph Bergeron, CFPB Director Richard Cordray, Maine Credit Union League President John Murphy and Dan Egan, president of the Massachusetts Credit Union League, New Hampshire Credit Union League, and the Credit Union Association of Rhode Island. (Photo provided by the Maine Credit Union League)
Overdraft protection plans, student loans, and mortgage rule concerns, including exemption levels and foreclosure issues, were among the top items covered during the conversation, according to Dan Egan, president of the Massachusetts Credit Union League, New Hampshire Credit Union League, and the Credit Union Association of Rhode Island.

Maine Credit Union League President/CEO John G. Murphy also emphasized the regulatory burden that credit unions face today during the meeting.

"The burden is significant, and we would like to see the agency use its authority to exempt credit unions from a number of requirements. Credit unions didn't cause the financial crises and broader exemptions would limit the burden on credit unions without undermining consumer protection," Murphy told News Now.

Credit unions are also concerned about what the agency may impose on credit unions for ongoing data collection requirements, and what plan B is for the bureau if it is determined the agency acted without due authority when it issued rules under the Dodd-Frank Act, Murphy added.

Michael L'Ecuyer, CEO of Bellweather Community CU, Manchester, N.H., and a member of the Credit Union National Association's Board of Directors, also asked the CFPB to take into consideration the implementation of its provisions. "It is important for the CFPB to have adequate training and clear procedures to assist examiners in conducting examinations and in providing a public road map for implementation. The meeting confirmed that the CFPB is sensitive to the volume and timing of new mortgage rules and the impact on compliance," he said.

Also participating was Association of Vermont Credit Unions President/CEO Joseph Bergeron.

CUNA Deputy General Counsel Mary Dunn noted this week that CUNA, the state leagues and credit unions have worked diligently to pursue a number of improvements in CFPB rules, which the agency has acted upon.

Such improvements include:
  • Limited liability for credit unions under the remittances rule;
  • Allowing certain loans to be considered as qualified mortgages even if they don't meet all of the QM requirements;
  • Delaying the effective date of the prohibition on financing of single premium insurance;
  • Loss mitigation processing improvements for small servicers; and
  • Avoiding licensing requirements under the mortgage loan originator rule.
Dunn added that CUNA continues to emphasize to the CFPB growing concerns about the regulatory burdens faced by credit unions and that credit unions should be exempt from a number of CFPB requirements.

The CFPB's debt-collection event featured remarks from Cordray, as well as testimony from consumer groups, industry representatives, and members of the public.

For more on the CFPB event, use the resource link.

New: House GSE Reform Bill Is Unveiled

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WASHINGTON (7/11/13, UPDATE 12:34 P.M. ET)--The chairman of the House Financial Services Committee, Rep. Jeb Hensarling (R-Texas), and others of the committee's leadership unveiled a bill today they say is intended to "create a sustainable housing finance system."

The Protecting American Taxpayers and Homeowners--or PATH--Act would:
  • Phase out government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac within five years;
  • Increase competition by ending the federal government's domination of the housing finance market; and
  • Give consumers more choices in determining which mortgage product best suits their needs.
Hensarling also announced today the Financial Services Committee will meet on Thursday, July 18 to hold a hearing on the PATH Act.

On the Senate side last month, several senators co-sponsored bipartisan legislation that would wind down Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor, the Federal Mortgage Insurance Corporation (FMIC). 

It was introduced by Sens. Bob Corker (R-Tenn.), Mark Warner (D-Va.), Mike Johanns (R-Neb.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.) and Kay Hagan (D-N.C.).

Watch News Now Friday for more on the bill.

April Clarifications To CFPB Mortgage Rules Made Final

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WASHINGTON (7/11/13)--The Consumer Financial Protection Bureau (CFPB) Wednesday finalized corrections, clarifications, and amendments to its Ability-to-Repay and mortgage servicing rules that were proposed in April.

The clarifications are meant to address questions that have been posed in the months since the rules were first issued in January.

CFPB Director Richard Cordray said in a release, "We know that effective implementation helps our rules deliver their intended value to consumer. We are listening closely to feedback on our rules, and today's clarifications show our willingness to make appropriate adjustments to achieve that goal."

The final rule:
  • Clarifies how to determine a consumer's debt-to-income (DTI) ratio;
  • Explains that CFPB's Real Estate Settlement Procedures Act (RESPA) rule does not preempt the field of servicing regulation by states;
  • Establishes which mortgage loans to consider in determining small servicer status for an exemption from some requirements; and
  • Clarifies the eligibility standard of the temporary Qualified Mortgage  provision under the Ability-to-Repay rule.
Use the resource link below for details on the CFPB's corrections, clarifications, and amendments.

More plain language compliance resources and updates of official regulatory interpretations, examination procedures and other materials addressing CFPB mortgage regulations will be unveiled in the coming months, the CFPB has said.

CFPB Fights Harmful Debt Collection Practices

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WASHINGTON (7/11/13)--Look out harmful-debt-collection-practitioners, the Consumer Financial Protection Bureau has you in its sights. On Tuesday,  the CFPB issued two bulletins putting companies on notice about harmful debt collection practices, released new consumer tools to deal with problem debt collectors, and started taking complaints about debt-collection problems related to any consumer debt, including credit cards, mortgages and student loans.
 
In its first bulletin, the bureau explains that under the Dodd-Frank Wall Street Reform and Consumer Protection Act, debt collectors are statutorily prohibited from committing unfair, deceptive, or abusive acts or practices. The bulletin serves to clarify what such practices are.
 
The second bulletin serves as guidance to creditors, debt buyers, and third-party collectors about compliance with the Fair Debt Collection Practices Act  and sections of the Dodd-Frank Act  "when making representations about the impact that payments on debts in collection may have on credit reports and credit scores."
 
The CFPB also released a new tool to help consumers faced with debt-collection woes--a compilation  of five letters they can use when replying to collectors: The letters may help consumers get valuable information about claims being made against them, or may help them protect themselves from "inappropriate or unwanted collection activities."
 
Use the resource link for more details of the CFPB's actions.

NCUA, Agencies Propose Mortgage Appraisal Exemption

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WASHINGTON (7/11/13)--Loans of $25,000 or less, certain "streamlined" refinancings, and certain loans secured by manufactured housing would be exempted from Dodd-Frank Act appraisal requirements for higher-priced mortgage loans under a proposed rule released by the National Credit Union Administration and fellow regulators on Wednesday.

"The proposed exemptions are intended to save borrowers time and money and to promote the safety and soundness of creditors," the NCUA, Consumer Financial Protection Bureau, Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint release.

Comments on the proposal will be accepted until Sept. 9. However, the agencies said comments regarding a related Paperwork Reduction Act analysis will be due 60 days after the rule is published in the Federal Register.

Under the terms of the higher-priced mortgage loan regulations, mortgage lenders will have to hire licensed appraisers to perform a physical inspection of a home's interior before making a loan that falls within the definition of a higher-priced mortgage loan. Lenders must provide homebuyers with a free copy of the resulting home appraisal report.

High-priced mortgages will be considered non-qualified residential mortgages that are secured by a principal dwelling with annual percentage rates that exceed the average prime offer rate by 1.5% for first-lien loans, 2.5% for first-lien jumbo loans, and 3.5% for junior lien loans.

The rule provides a safe harbor for compliance purposes, as well as exemptions for several types of transactions, including "qualified mortgages" and reverse mortgages. The higher-risk mortgage appraisal requirements will go into effect on Jan. 18, 2014.

For more on the joint agency proposed rule, use the resource link.

Data Privacy Scrutinized At House CFPB Hearing

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WASHINGTON (7/11/13)--As the data collection practices of the National Security Administration continue to come under broad-based scrutiny, the House Financial Services financial institutions and consumer credit subcommittee this week held a hearing to examine the Consumer Financial Protection Bureau's own consumer data collection practices.

Subcommittee Chairman Shelley Moore Capito (R-W.Va.) in her opening remarks cited news reports that indicated data on as many as 10 million Americans is held by the CFPB.

The CFPB maintains a database of consumer complaints related to credit cards, deposit accounts, mortgage loans, student loans and consumer loans, and plans to add consumer complaints on other types of financial products over time.

Steve Antonakes, the bureau's acting deputy director, in a prepared statement said access to data containing personal identifiers is sometimes necessary for the CFPB to fulfill its broader mission to protect consumers.

Moore Capito also said she is concerned about the use and storage of personally identifiable information when collecting consumer data files, noting that the U.S. Government Accountability Office and others have found serious deficiencies with the CFPB's systems and controls for the data the bureau and contracted entities are collecting.

"Despite the clear intent of Congress for the CFPB to not collect personally identifiable information, the CFPB acknowledged in a fall 2012 system of records notice that the agency will be collecting personally identifiable information that will be held indefinitely to match data files with other records in order to provide the CFPB with more comprehensive data sets to analyze...We simply do not know the extent to which the CFPB is collecting, storing, or having outside contractors collect and store consumers personally identifiable information," she added.

The Credit Union National Association has expressed concern that the public data release could have unintended consequences and has worked with the bureau to address concerns.

CUNA has warned that sensitive or confidential business or consumer information could be inadvertently disclosed when consumer complaints are filed in the database. "The bureau should take steps to minimize privacy risks and other unintended consequences," CUNA has said in a series of comment letters.

CUNA, World Council Back Bill To Repeal FATCA Provisions

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WASHINGTON (7/11/13)--Rep. Bill Posey's (R-Fla.) H.R. 2299, which would repeal the Internal Revenue Service's recent expansion of United States credit union and bank reporting rules with respect to interest on deposits paid to nonresident aliens, "would be instrumental in eliminating an unnecessary and unduly burdensome rule for credit unions," the Credit Union National Association and the World Council of Credit Unions wrote in a joint letter.

Posey's bill was introduced last month and has three co-sponsors.

CUNA President/CEO Bill Cheney and World Council President/CEO Brian Branch in the letter said they strongly oppose the IRS regulations that require U.S. financial institutions to report interest paid to nonresident aliens. This requirement, which is codified at 26 C.F.R. Sections 1.6049-4(b)(5), 1.6049-8, places an extraordinary burden on credit unions, the letter noted.

"Credit unions believe that while some reporting requirements can be justified, the IRS has not shown that this non-resident alien interest income reporting rule is necessary to implement any such statutory requirements, nor has it provided a compelling reason why the expanded reporting requirements are necessary," the credit union leaders wrote.

Posey noted the burdens that credit unions and banks would face thanks to this IRS requirement in a recent letter to Treasury Secretary Jack Lew. (See July 10 News Now story: House Member Pens Concerns Re: FATCA Compliance Cost, More.)

The legislator in his letter called for The Foreign Account Tax Compliance Act (FATCA) to be "either substantially amended or repealed, and replaced with a cooperative scheme that penalizes actual tax evasion without harming the innocent."

FATCA is designed to create a tax information reporting and withholding system for certain payments that are made to foreign financial institutions (FFIs) and other entities. Some provisions would apply to U.S. credit unions that make international payments. U.S. credit unions would also be required to identify and withhold on so-called "pass-thru payments" to FFIs involving transfers of U.S.-sourced investment or interest income an FFI that has not yet been subject to taxation.

Portions of FATCA that impact Form 1042-S filings are already in effect. Other provisions will be phased in between January 2014 and January 2017.

For the CUNA/World Council letter, use the resource link.

Autoland Service Purchased By Mission FCU

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WASHINGTON (7/11/13)--Mission FCU, San Diego, Calif., purchased national car-buying credit union service organization Autoland on Wednesday, the National Credit Union Administration announced.

The NCUA held an interest in Autoland due to its role as liquidating agent of the former Telesis Community CU. The agency had operated the Chatsworth, Calif.-based auto buying service since May 2012.

Autoland was founded in 1971 and currently serves more than 200 credit unions nationwide. The firm reported a 17% year-over-year increase in sales in the first quarter of 2013 as credit union members continued to take advantage of available credit to replace aging vehicles.

For the full NCUA release, use the resource link.

CUNA Analysis Covers NCUA Loan Participation Rule

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WASHINGTON (7/10/13)--The full details of the National Credit Union Administration's final rule on loan participations, which was approved at the agency's June open board meeting, are laid out in a new Credit Union National Association final rule analysis.

The rule features many improvements suggested by CUNA even though CUNA did not support any new loan participation rule at this time.

The original effective date was July 25, but CUNA strongly urged the agency to address the effective date to give credit unions flexibility to adequately prepare for the rule's changes. The new effective date for the final rule is Sept. 23.

The final rule sets a limit on loans from one originator of 100% of a credit union's net worth. This is up from a proposed 25% of net worth cap. Also very significant, the federal regulator approved an expanded waiver process for the single-originator limit and limits to one borrower.

CUNA urged such changes and the CUNA board emphasized credit union concerns as it worked to make the rule more practicable.

The agency also approved a provision so that credit unions pushed over the limit by new rule can move their loans into line: such credit unions would not have to sell loans immediately to come into compliance but can bring their participation activity into line in the ordinary course of business or seek a waiver.

For the full CUNA analysis, use the resource link.

CDRLF/CDFI Spending, CFPB Changes Proposed In House Bill

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WASHINGTON (7/10/13)--Funding for the National Credit Union Administration's Community Development Revolving Loan Fund (CDRLF) program would total $500,000 in 2014 under the House Financial Services and General Government Appropriations bill, released Tuesday. Funding for the Community Development Financial Institutions Fund and the Consumer Financial Protection Bureau are also addressed in the bill.

The Obama administration has requested $1.127 million in CDRLF funding in its own 2014 budget. A total of $1.144 million in CDRLF funding was approved in the 2013 budget. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions, as defined by NCUA regulations.

Last August, the NCUA awarded $1.4 million in technical assistance grants to just over 100 small credit unions through the CDRLF.

Funding for the U.S. Treasury's Community Development Financial Institutions (CDFI) fund, which helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit, would total $221 million under the House bill. The fund received $210 million in government backing for fiscal 2013, and the administration this year requested $224.9 million in funds for 2014.

The bill would also make CFPB funding subject to the appropriations process, and would require the bureau to file reports on its funding and activities with House and Senate appropriations committees, the House Financial Services Committee and the Senate Banking Committee.

Under the bill, the director of the Office of Management and Budget would also be required to detail Dodd-Frank Act implementation costs, including the estimated mandatory and discretionary obligations of funds through fiscal year 2018.

The bill is scheduled to be marked up by the House Appropriations financial services and general government subcommittee today.

CUNA Tax Status Advocacy Takes To N.H. Airwaves

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WASHINGTON (7/10/13)--D. Arnie Arnesen of WNHN 94.7FM, Concord, N.H., invited the Credit Union National Association's Paul Gentile to go on air Tuesday to discuss a BUZZFLASH.COM headline that recently blared, "Monopolistic Too-Big-to-Fail Banks Try to Crush Credit Unions as Competition by Removing Tax Exemption."
 
During a 30-minute segment of "Attitude with Arnie," Arensen asked Gentile to address claims by banks that the credit union tax exemption gives "unfair advantage" to "large" credit unions.
 
Gentile explained that credit unions find the charge "ridiculous." He put it into perspective for the radio audience by noting that of the nation's four largest banks, each one, individually, is greater in asset size than the entire credit union system. In fact, the credit union system represents 6% of the financial services marketplace.
 
"So portraying us as big-growth credit unions, taking over the marketplace, just is not true," Gentile said. He said the banks really are taking issue with competition.
 
"Wherever credit unions exist, we make banks more competitive--so even bank customers benefit" from the existence of credit unions' generally better rates and lower fees, he noted.

Gentile also made the points that:
  • Everyone can join a credit union, though not everyone can join every credit union;
  • Consumers should go to CUNA's consumer website, aSmarterChoice.org, to answer three simple questions to find a credit union they are eligible to join; and
  • Credit unions are financial cooperatives created to serve the credit and savings needs of their members. Being member-owned and not-for-profit means they are not driven by a need to provide profits for shareholders.
Gentile, who is CUNA's executive vice president for strategic communications and marketing, drove home the point that if the credit union tax exemption were to "go away, credit unions would go away" and consumers would lose.
 
Arensen noted that with the credit union tax exemption, it is the American "little guy" who benefits.
 
The leaders of the Senate Finance Committee, Sens. Max Baucus (D-Mont.) and Orrin Hatch (R-Utah), have asked their Senate colleagues to be ready to tackle a tax reform vote early this fall. The committee plans to take a "blank slate" approach to a bill, which would remove all tax expenditures from the code and would add back in those that make the grade.
 
All proposed language for a bill must be submitted for the committee's consideration by July 26.
 
Early this year, CUNA and the state credit union leagues launched a groundbreaking  'Don't Tax My Credit Union!' grassroots advocacy campaign to support the credit union tax status. It combines CUNA's traditional efforts of such things as email-writing drives, with new social media and online outreach efforts.
 
For more CUNA/league advocacy resources, use the resource links.

FSOC Makes First 'Systemically Important' Designations Of Nonbanks

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WASHINGTON (7/10/13)--Saying it was taking a "decisive step to address threats to U.S. financial stability and create a safer and more resilient financial system," the  Financial Stability Oversight Council (FSOC) Tuesday voted to designate two nonbank financial companies for "consolidated supervision and enhanced prudential standards."
 
Under authority granted by the Dodd-Frank Act, the FSOC named the following nonbank financial companies as "systemically important financial institutions":
  • American International Group Inc. and
  • General Electric Capital Corp. Inc. 
The designation does not constitute a determination that the companies are currently experiencing material financial distress. 
 
It does, however, subject them to supervision by the Federal Reserve Board and to enhanced prudential standards. 
 
The council determined that if material financial distress were to occur at either of these companies, it could pose a threat to U.S. financial stability. 
 
Use the resource link for more information on the process for the council's nonbank financial company designations and the council's resolutions and basis for its designations.

House Member Pens Concerns Re: FATCA Compliance Cost, More

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WASHINGTON (7/10/13)--A House Financial Services Committee member, Rep. Bill Posey (R-Fla.), said in a recent letter to Treasury Secretary Jack Lew that regulations that would require U.S. credit unions and banks to collect information on interest paid to nonresident aliens, and to report that information to regulators, would create burdensome compliance costs for those institutions.

Citing this and other issues, Posey called for The Foreign Account Tax Compliance Act (FATCA) to be "either substantially amended or repealed, and replaced with a cooperative scheme that penalizes actual tax evasion without harming the innocent."

Posey's concerns mirror those aired earlier this year by the Credit Union National Association.

FATCA is designed to create a tax information reporting and withholding system for certain payments that are made to foreign financial institutions (FFIs) and other entities. Some provisions would apply to U.S. credit unions that make international payments. U.S. credit unions would also be required to identify and withhold on so-called "pass-thru payments" to FFIs involving transfers of U.S.-sourced investment or interest income an FFI that has not yet been subject to taxation.

Portions of FATCA that impact Form 1042-S filings are already in effect. Other provisions will be phased in between January 2014 and January 2017.

To cope with the FATCA changes, credit unions would need to establish procedures and practices, including staff training, for ongoing identification of covered entities and transactions, and take additional steps to ensure they met their reporting and withholding compliance responsibilities when facing transactions that come under IRS regulations.

CUNA in a May letter to Congress said legislators did not appear to have U.S. credit unions nor banks in mind when it developed the FATCA provisions in 2010. "Yet U.S. financial institutions will be required to bear a large proportion of FATCA's compliance burdens," CUNA President/CEO Bill Cheney said.

World Council: IASB Changes Could Create CU Capital Issues

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WASHINGTON (7/10/13)--Credit unions are concerned that loan loss expenses created by the International Accounting Standards Board's proposal to transition to an expected loss model for loans and other financial instruments could substantially deplete some credit unions' regulatory capital levels, the World Council of Credit Unions wrote in a letter to IASB.

The letter follows the recent release of IASB's Financial Instruments: Expected Credit Losses exposure draft. The World Council opposes this exposure draft, as proposed, and urged the IASB to either retain an incurred credit loss model or make significant changes in the final version of the standard to address credit union concerns.

This depletion of regulatory capital that could occur in an expected loss model would likely increase credit unions' loan loss expenses, even though credit unions' underlying economic credit risk exposures, and total amount of reserves and allowances held to protect the institution and its members against losses, would not be changed as an economic matter, World Council Chief Counsel Michael Edwards wrote.

"Unlike joint-stock company banks, credit unions must rely primarily on earnings retention to build capital and have limited, if any, means of raising additional capital," Edwards explained. This capital level depletion could make impacted credit unions subject to mandatory supervisory remedial actions such as "Prompt Corrective Action" rules, he added.

Retaining an incurred loss approach, especially with respect to smaller, community financial institutions, could help remedy this potential regulatory capital issue, Edwards said.  If, however, the IASB decides the proceed with an expected credit loss approach, World Council supports the IASB's proposed "Stage 1" approach that limits expected credit losses to a 12 months lookout period until an instrument experiences "significant deterioration in credit quality" such as being in arrears for more than 30 days.

Other potential actions that could improve the IASB proposal for credit unions include:
  • Allowing a long transitional period for phase-in of the new standard so that credit unions have sufficient time to build up additional loan loss reserves;
  • Not requiring the discounting of expected future cash flows at the credit-adjusted effective interest rate; and
  • Allowing jurisdictional accounting authorities and/or regulators the option to establish simplified credit loss methodologies for small financial institutions, especially those in developing countries and/or those with limited staff resources, for whom full compliance with the proposed expected credit loss model would be an excessively burdensome compliance requirement.
For the full World Council letter, use the resource link.

FDIC, OCC Join Fed In Basel III Approval

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WASHINGTON (7/10/13)--The Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency on Tuesday approved interim final rules to implement Basel III regulatory capital reforms in the United States, joining the Federal Reserve, which approved its own final rules earlier this month.

The Basel III changes "will create a stronger, more resilient industry better able to withstand environments of economic stress in the future," FDIC Chairman Martin Gruenberg said.

The international bank rules, which will require banks to hold more capital as a buffer against future financial shocks, do not apply to credit unions in the United States. In general, the Basel III standards are intended to apply to "internationally active" banks, but can be applied to credit unions in other countries as well.

Basel III standards for banks in the United States will require common equity of 4.5%. Banks also must hold a 2.5% conservation buffer, which will be gradually introduced, and to increase their Tier 1 levels from 4% to 6%. The rule includes a minimum leverage ratio of 4% for all banking organizations.

The phase-in period for smaller, less complex banking organizations will not begin until January 2015 while the phase-in period for larger institutions begins in January 2014.

The FDIC also approved a joint interagency Notice of Proposed Rulemaking to strengthen the supplementary leverage requirements for large, systemically important financial institutions.

For more, use the resource link.

Readiness Guide For CFPB Mortgage Rules Available Now

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WASHINGTON (7/9/13)--Credit unions and other mortgage lenders got some help recently as they work to meet all the Consumer Financial Protection Bureau's new mortgage rules. The bureau on Monday released the first edition of its 2013 Dodd-Frank Mortgage Rules Readiness Guide, developed to help institutions of all sizes evaluate their readiness for the impending mortgage rule changes.

The guide provides high level topics that institutions should consider as they implement these rule changes, the CFPB added.

Topics covered in the document include key areas that may be closely examined during a review, and compliance management elements that may warrant review, modification, or other enhancement.

The CFPB said it plans to update the readiness guide as rule clarifications and amendments are finalized and new issues are identified.

Amendments to portions of the 2013 Mortgage Rules Under the Equal Credit Opportunity Act (Regulation B), Real Estate Settlement Procedures Act (Regulation X), and the Truth in Lending Act (Regulation Z) were published in the Federal Register last week, and the Credit Union National Association has asked credit unions for their thoughts on the changes in a new comment call.

Under the proposed amendments, the CFPB would move the effective date of certain portions of the final mortgage loan originator compensation rule forward to Jan. 1, 2014 from Jan. 10, 2014. Specifically, the record retention, definitions, scope, compensation, anti-steering, qualifications, and compliance policies and procedures sections of the final rule would be subject to the new effective date.

The amendments also would make it easier for mortgage servicers to offer short-term forbearance plans for delinquent borrowers without going through a full loss mitigation evaluation process. Small creditors that do not operate predominantly in rural or underserved counties would also be permitted to make high-cost mortgages with balloon payments as long as the loans meet certain restrictions.

In the CUNA call, credit unions can comment on whether or not they agree with the accelerated effective date, and can detail why they may or may not support the proposed changes to the loss mitigation requirements, points and fees definition revisions, and other changes and clarifications.

For the full CUNA comment call and the CFPB release, use the resource links.

CFPB Issues Rules Regarding Nonbank Risks To Consumers

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WASHINGTON (7/9/13)--The Consumer Financial Protection Bureau has issued final supervisory procedures to bring non-depository institutions that pose risks to consumers under its regulatory purview. The Credit Union National Association, in this week's edition of the Regulatory Advocacy Report, strongly supports the CFPB's continued efforts to scrutinize and regulate non-depository institution practices and urged rigorous oversight.

Nonbanks covered by the CFPB final rule, issued June 26, are companies that offer or provide consumer financial products or services; nonbanks do not include credit unions, banks, or thrifts. The agency is authorized to require reports from these nonbank entities, and conduct examinations of the firms.

"Non-depository institutions engaging or that have engaged in conduct that poses risks to consumers on financial products or services should be subject to the most rigorous consumer protection supervision, regulation, and enforcement, as contemplated by the Dodd-Frank Act," CUNA said in the Report.

Rulemakings to implement a supervisory program for certain nonbank entities are one of many items listed on the CFPB's near-term agenda released last week. (See July 5 News Now story: CFPB Releases Spring 2013 Rulemaking Update.)

Other items addressed in this week's Regulatory Advocacy Report include:
  • Details on the National Credit Union Administration's decision to extend the effective date of its loan participation rule to Sep. 23, 2013, which CUNA strongly supported;
  • An update on housing reform efforts, and recent CUNA comments on the process;
  • The Federal Reserve Board's approval of a Basel III rule for banks; and
  • The CFPB's release of a final 2014 list of rural & underserved counties.
Employees or volunteers of CUNA- and state credit union league-member credit unions can sign up below to receive the Regulatory Advocacy Report.

The Regulatory Advocacy Report is archived on cuna.org.

CU Tax Status, NCUA Nomination On CUs' Minds As Congress Returns

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WASHINGTON (7/9/13)--As members of the U.S. Congress return to Washington this week, the credit union tax status and Richard Metsger's nomination to join the National Credit Union Administration board remain top priorities for the Credit Union National Association and credit unions.

CUNA President/CEO Bill Cheney and CUNA staff this week will continue their ongoing meetings with members of Congress, discussing the importance of maintaining the credit union tax status in those meetings. CUNA will be making its third, and in some cases fourth, contacts with key policymakers on the key issue of the credit union tax status, CUNA Executive Vice President of Government Affairs John Magill noted Monday.

Advocacy efforts from credit unions and their supporters also remain strong, as more than 300,000 separate congressional contacts have been made since mid-May as part of a groundbreaking CUNA/state credit union league advocacy effort. (See related story: Postcards, Newsletters, More Aiding CU Tax Status Fight.) Credit unions and their members are using CUNA and the state credit union leagues' resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!" This pro-credit union message is also being shared through Twitter feeds, CUNA's Twitter handle @CUNAadvocacy and the hashtag, #DontTaxMyCU.

Key policymakers have made it clear they intend to move quickly on tax reforms, with Senate Finance Committee leaders Max Baucus (D-Mont.) and Orrin Hatch (R-Utah) last month advising lawmakers all proposed language for a comprehensive tax reform bill must be submitted for the committee's consideration by July 26. They have told their colleagues to plan for a tax reform vote early this fall.

Another key credit union priority is the progress of Metsger's NCUA nomination. The NCUA board nominee appeared before the Senate Banking Committee late last month, and his nomination must be approved by banking committee and Senate votes before he can join the agency.

The committee has not announced when it will take future actions on Metsger's nomination.

The House and Senate are both scheduled to remain in session until August 2.
Items on the House Financial Services Committee's agenda for this week include:
  • A July 9 financial institutions and consumer credit subcommittee hearing on the Consumer Financial Protection Bureau's safeguarding of consumer data;
  • A July 9 oversight and investigations subcommittee hearing on the constitutionality of sections of the Dodd-Frank Act that concern "Too Big to Fail" financial institutions;
  • A July 10 House Appropriations financial services and general government subcommittee markup of the fiscal 2014 Financial Services and General Government Appropriations Bill;
  • A July 10 capital markets and government sponsored enterprises subcommittee hearing on how government red tape hinders a healthier economy; and
  • A July 11 Senate Banking Committee hearing entitled "Mitigating Systemic Risk Through Wall Street Reforms."

FASB Issues Three Private-company GAAP Proposals

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NORWALK, Conn. (7/9/13)--Three new proposals were issued for public comment by the Financial Accounting Standards Board (FASB) and all three are intended to address private-company stakeholder concerns raised about the relevance and complexity of different aspects of U.S. Generally Accepted Accounting Principles (GAAP).

FASB Chairman Russell G. Golden, in a press release last week, said the proposals should reduce "the costs and complexity for preparers in valuing and accounting for intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps."

FASB's Private Company Council (PCC) is leading its efforts on these proposals, and unlike typical rule-makings, PCC's primary objective is to recommend to FASB whether to provide exemptions from or alternatives to existing GAAP standards, most of which credit unions already follow.  Before being incorporated into U.S. GAAP, PCC recommendations will be subject to a FASB endorsement process.

Comments on the three new FASB Exposure Drafts are due by Aug. 23. They address:
  • Accounting for Identifiable Intangible Assets in a Business Combination (PCC Issue No. 13-01A), which modifies the requirement for private companies to separately recognize fewer intangible assets acquired in a business combination;
  • Accounting for Goodwill Subsequent to a Business Combination (PCC Issue No. 13-01B), which would  permit amortization of goodwill (the residual asset recognized in a business combination after recognizing all other identifiable assets acquired and liabilities assumed) and a simplified goodwill impairment model; and
  • Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps (PCC Issue No. 13-03), which would give private companies, other than financial institutions, the option to use two simpler approaches to accounting for certain types of interest rate swaps that are entered into by a private company for the purpose of economically converting its variable-rate borrowing to a fixed-rate borrowing.
Comments can be submitted using the first resource link below.

We briefly discussed these proposals (which had not yet been released) with our Accounting Subcommittee on our May call; we will be analyzing these proposals and soliciting input through our Comment Call process.
 
Also from FASB, the newest edition of the FASB Accounting Standards Codification, four-volume bound edition of the all FASB online codifications as of Oct. 31, 2012, is now available. The volumes serve to organize thousands of U.S. GAAP pronouncements and include relevant Securities and Exchange Commission guidance that follow the same topical structure in separate sections in the codification.  See the second resource link for more information.

NCUA Reminds: CU Town Hall On July 18

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ALEXANDRIA, Va. (7/9/13)--The National Credit Union Administration's free town hall webinar, scheduled for July 18, is drawing near, the NCUA reminded on Monday, but there is still time to sign up.
 
Regulatory modernization efforts, credit union industry performance and emerging credit union system risks will be among the topics discussed when agency Chairman Debbie Matz hosts the webinar.
 
The webinar is scheduled to begin at 3 p.m. (ET). Other topics include:
  • NCUA's proposed rule on derivatives;
  • Low-income credit unions;
  • Emergency liquidity and the Central Liquidity Facility; and
  • Guidance on credit ratings and risk management.
Webinar questions can be sent in advance to WebinarQuestions@ncua.gov. The subject line of the email should read, "NCUA Town Hall."

To register for the webinar, use the resource link.

Compliance: Highlights Of Loan Participation Compliance Issues

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WASHINGTON (7/8/13)--Even before the National Credit Union Administration last week delayed the effective date for its final rule on loan participations until Sept. 23, the Credit Union National Association's compliance team was helping credit unions prepare for compliance by offering five key things credit unions should know about the rule in a CompBlog post.
 
The NCUA approved the loan participation rule at last month's open board meeting. The rule sets a limit on loans from one originator of 100% of a credit union's net worth, and provides an expanded waiver process for the single-originator limit and limits to one borrower.
 
The agency also approved a provision so that credit unions pushed over the limit by new rule can move their loans into line: such credit unions would not have to sell loans immediately to come into compliance but can bring their participation activity into line in the ordinary course of business or seek a waiver.
 
The original effective date was July 25. CUNA suggested many of the changes that made their way into the final rule and also urged the agency to delay the effective date.
 
In the CUNA CompBlog post, CUNA Senior Vice President for Compliance Kathy Thompson noted that the NCUA has expanded its requirements of what needs to be in loan participation policies. Under the new rule, the NCUA requires each federally insured credit union to establish limits on the amount of loan participations that may be purchased by each loan type. The agency also expects policies to cite the concentration limits in the regulation, or to set tighter limits, if the credit union so decides.
 
The new regulation specifies nine things that the loan participation agreement must address. Any loan participation consummated on or after the effective date will have to be based on an agreement that complies with the new regulation, Thompson wrote. "Probably much of what NCUA now requires is already in contracts," but those contracts should still be reviewed to ensure compliance ahead of time, she said.

Other key facts highlighted in CUNA's CompBlog post address
  • Risk retention requirements;
  • Concentration limits; and
  • Waivers.
CUNA also pointed out to NCUA the practical implementation issues that Thompson raised in this blog post.

For the full CompBlog post, use the resource link.

House Financial Services Sets Post-recess Schedule

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WASHINGTON (7/8/13)--House Financial Services Committee Chairman Rep. Jeb Hensarling has set the July agenda for his committee.

Items currently on the schedule include:
  • A July 9 financial institutions and consumer credit subcommittee hearing on the Consumer Financial Protection Bureau's safeguarding of consumer data;
  • A July 9 oversight and investigations subcommittee hearing on the constitutionality of sections of the Dodd-Frank Act that concern "Too Big to Fail" financial institutions;
  • A July 10 capital markets and government sponsored enterprises subcommittee hearing on how government red tape hinders a healthier economy; and
  • A July 17 full committee hearing on monetary policy and the state of the economy. Federal Reserve Chairman Ben Bernanke will be the sole witness at that hearing and will present the Fed's semi-annual Monetary Policy Report.
The hearing schedule is tentative. For more on the hearings, use the resource link.

Media Action On 'Don't Tax' Campaign Highlighted In Cheney Report

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WASHINGTON (7/8/13)--The atmosphere was electric, says Credit Union National Association President/CEO Bill Cheney in the latest issue of The Cheney Report, as more than 1,200 participants of CUNA's America's Credit Union Conference took every opportunity to tell the credit union story.
 
For those who missed the action, Cheney shares some of the highlights of how credit unions and CUNA used their time "in the media hub that is New York" to get out the message "Don't Tax My Credit Union."
 
CUNA held a number of meetings with national broadcast and print outlets, including Fox Business News and Bloomberg Radio.
 
"It was an excellent opportunity to deliver a strong message on tax reform. On the Fox Business segment, I stressed that credit unions not only provide value for credit union members but for all consumers. When credit unions are active in a market, banks have to offer better pricing," Cheney writes in the report.
 
Also driving the credit union message home, the headlines appearing under the video on-screen helped to tell the story. Some key headlines that appeared to the national audience included:
  • Credit unions want to stop talk of taxing credit unions right off the bat;
  • Every $1 in credit union tax wipes out $10 in tax savings;
  • It's not the credit unions that would be paying the taxes--it's 96 million Americans who would be paying the taxes.
Use the resource link below to access the full Cheney Report and to read more about the ACUC and other hot credit union topics.
 

NEW: CFPB Releases Mortgage Rule Readiness Guide

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WASHINGTON (UPDATED: 7/8/13, 1:20 P.M. ET)--The Consumer Financial Protection Bureau today released the first edition of its 2013 Dodd-Frank Mortgage Rules Readiness Guide.

The bureau in a release said the guide was developed to help institutions of all sizes evaluate their readiness for the impending mortgage rule changes.

The guide provides high level topics that institutions should consider as they implement these rule changes, the CFPB added.

Topics covered in the document include key areas that may be closely examined during a review, and compliance management elements that may warrant review, modification, or other enhancement.

The CFPB said it plans to update the readiness guide as rule clarifications and amendments are finalized and new issues are identified.

For the full document, use the resource link.

Camp, Baucus Launch 'Tax-reform' Listening Tour

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MINNEAPOLIS-ST. PAUL, Minn. (7/8/13)--House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) kick off their "tax-reform" tour today visiting two businesses here.

"Over the past two years we've heard from hundreds of experts on how to fix the tax code to make it simpler for families and spark a more prosperous economy.  We want even more input and want to hear directly from the American people," the chairmen of the two tax-policy writing committees said in a release announcing the first stop in their nationwide tour.

Today the two lawmakers have scheduled visits with multinational corporation 3M Company and Baldinger Bakery, a family run business.  The 3M Company reports $30 billion in global sales, 88,000 employees worldwide, with operations in more than 70 countries. Baldinger Bakery is described in the release as a fourth generation, family-run businesses in St. Paul, founded in 1888 when Henry and Rebecca Baldinger left Eastern Europe and made their way to America, which today features a state-of-the-art facility that can produce about 65,000 buns per hour.

On their tax reform tour, the tax-writing chairmen will be talking to a range of Americans and businesses--from large multinational corporations to small, family-run businesses, and to individual taxpayers.

Tax policy leaders have said they will take a "blank slate" approach to reform legislation, which would remove all tax expenditures from the code and would add back in those that make the grade.

It is the scenario that the Credit Union National Association warned credit unions to expect and why CUNA and the state credit union leagues launched a groundbreaking 'Don't Tax My Credit Union' campaign over a month ago to defend against a tax threat.

Use the resource link to read more about the campaign.

CFPB Releases Spring 2013 Rulemaking Update

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WASHINGTON (7/5/13)--Mortgage regulations and nonbank supervision are two of many current Consumer Financial Protection Bureau priorities detailed in the bureau's semi-annual update of its rulemaking agenda.

In a release, the CFPB said it is "now focusing intensely" on supporting the implementation process for mortgage regulations that were released earlier this year, and releasing various amendments to those regulations. Amendments to portions of the 2013 Mortgage Rules Under the Equal Credit Opportunity Act (Regulation B), Real Estate Settlement Procedures Act (Regulation X), and the Truth in Lending Act (Regulation Z) were published in the Federal Register earlier this week.

The bureau is also continuing its work on a rule to integrate and streamline federal mortgage disclosures, and that rule is expected to be released this fall. "We would not expect any implementation work to begin until after the January 2014 effective date for the earlier mortgage rules," the CFPB added in a release.

Rulemakings to implement a supervisory program for certain nonbank entities are also being developed.

The CFPB said it is also considering debt collection actions and could develop a proposed rule to strengthen federal consumer protections for prepaid cards.
The agency also expects to issue a proposal regarding the notices that consumers receive each year from their financial institutions to explain the companies' information sharing practices.

Commenters had suggested that eliminating the annual privacy notices where there has been no change in policies would reduce unwanted paperwork for consumers and unnecessary regulatory burdens, at least where a financial institution limits the sharing of information with third-parties, the CFPB said.

For the full CFPB release, use the resource link.

NCUA Pushes Back Loan Participation Effective Date

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ALEXANDRIA, Va. (7/8/13)--There is now a new, later effective day for the National Credit Union Administration's final rule on loan participations: Sept. 23. The Credit Union National Association strongly urged the agency to address the effective date to give credit unions flexibility to adequately prepare for the rule's changes. The original effective date was July 25.

"NCUA's effective date change and the numerous key changes in the final rule are important indications that the board is responding to reasonable concerns without sacrificing safety and soundness, which is a commendable approach to regulation," CUNA Deputy General Counsel Mary Dunn noted when the effective date change was announced Wednesday.

The NCUA approved the loan participation rule at last month's open board meeting. The final features many improvements suggested by CUNA even though CUNA did not support any new loan participation rule at this time.

The rule sets a limit on loans from one originator of 100% of a credit union's net worth; and provides an expanded waiver process for the single-originator limit and limits to one borrower.

The NCUA also approved a provision so that credit unions pushed over the limit by new rule can move their loans into line: such credit unions would not have to sell loans immediately to come into compliance but can bring their participation activity into line in the ordinary course of business or seek a waiver.

For more on the loan participations rule, use the resource link.

Cheney on Bloomberg: CUs Serve All Americans

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WASHINGTON (7/5/13)--Credit Union National Association President/CEO Bill Cheney Wednesday made it perfectly clear in an interview on Bloomberg Radio's Taking Stock With Pimm Fox that credit unions are here to support Americans of all stripes, from the earliest stages of their work lives until later, and, hopefully, into more financially secure parts of their lives.

Cheney said credit unions are true cooperatives: Every member gets an equal vote and equal influence no matter how much they have deposited at the credit union. The bottom line is that the U.S. Congress created credit unions specifically so that they could compete with banks, because banks were marginalizing people of modest means, Cheney said.

"I was a college student when I joined at credit union and I have stayed with credit unions because they were looking out for my interests," Cheney told hosts Pimm Fox and Carol Maser.

Consumers still deserve a choice: "they should have a choice of a for profit bank if that's what they want to do, but they should also have the choice of a not-for-profit credit union," Cheney said, again noting that for-profit banks have a responsibility to earn money for their stockholders, while credit unions answer to their members.

Also in the interview, Cheney answered questions about the credit union tax status, and addressed what CUNA, the leagues, credit unions and their members are doing now to make sure the credit union tax status is maintained.

Taxing credit unions remove the $8 billion per year in benefits that are provided to credit union members and non-members alike through lower fees and competitive pressures on banks.

"Again, a tax on credit unions is going to be paid by the credit union members," and 96 million of them that don't want to pay another new tax, he emphasized.
To protect the credit union tax status, a large-scale, nationwide grassroots-mobilization campaign led by CUNA and the leagues continues to encourage 96 million credit union members nationwide to present a unified message to members of congress: Don't Tax My Credit Union!

Credit union advocates have delivered the message to members of Congress nearly 250,000 times since mid-May, with the help of CUNA/league communication tools. The innovative campaign also uses newer media vehicles such as Facebook, a Twitter handle @CUNAadvocacy, and hashtag, #DontTaxMyCU, and social media micro-video site Vine. Around 300,000 individuals have used Facebook and Twitter to spread the message through social media.

CUNA has also developed a reformatted version of its tax advocacy toolkit to help credit unions and their members spread this message.

Actively participating in credit union grassroots activities and the political process is one tenet of CUNA's Unite for Good. Through Unite for Good, CUNA has called on credit unions to rally together to help create a nation in which "Americans choose credit unions as their best financial partner."

For the full Bloomberg Radio interview, more CUNA/league advocacy resources, and information on Unite for Good, use the resource links.

Regulators Update Census Info For HMDA Reporting

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WASHINGTON (7/5/13)--Financial institutions, including credit unions, that are required to execute reporting requirements under the Home Mortgage Disclosure Act will want to know that regulators have issued updated census data to be used for the reports.
 
The Federal Financial Institutions Examination Council's updated data are also used as input for bank Community Reinvestment Act reporting. In announcing the updated information, the FFIEC noted that census data generally become available in the second quarter of the current year and that data through calendar year 2013 are now available.
 
The FFIEC notice also notes that a financial institution using an outside vendor to identify the tract location of its loan is, itself, responsible for the accuracy of the annual HMDA and CRA submissions, including use of correct geocoding information.
 
The FFIEC is comprised of all federal financial institution regulators, including the National Credit Union Administration and the Consumer Financial Protection Bureau, as well as state regulators.
 
Use the resource link to access the FFIEC information.

CFPB Issues 2014 List Of Rural And Underserved Counties

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WASHINGTON (7/3/12)--The Consumer Financial Protection Bureau has posted an updated list of counties determined to be "rural" or "underserved," for purposes of applying several regulatory provisions throughout the year. The first list covered 2013 and the updated list applies to 2014.

In a blog posting the bureau noted that several of its rules have provisions related to mortgage loans made by creditors which, during the preceding year, operated predominantly in 'rural' or 'underserved' counties or to mortgage loans made in 'rural' counties."

The CFPB said the following rules have provisions that relate to mortgage loans made by creditors operating predominantly in rural or underserved counties or made in rural counties:
  • CFPB escrow requirements under the Truth in Lending Act rule, which took effect on June 1, requires certain creditors to create escrow accounts for a minimum of five years for higher-priced mortgage loans (HPMLs). However, such loans made by certain small creditors that operate predominantly in rural or underserved counties are exempt from this requirement.
  • Under the January 2013 Ability-to-Repay and Qualified Mortgage (QM) standards under the Truth in Lending Act rule, effective Jan. 10, 2014, mortgage loans with balloon payments do not meet the QM standard in most cases. However, certain small creditors that operate predominantly in rural or underserved counties will be eligible to originate balloon-payment QMs.
The CFPB further noted that as part of the May 2013 Ability-to-Repay and QM standards, the bureau recently expanded this exemption to allow certain small creditors during the period from Jan.  10, 2014, to Jan. 10, 2016, to make balloon-payment qualified mortgages even if they do not operate predominantly in rural or underserved areas.

For more, use the resource link to read the CFPB blog post on the 2014 definitions.

Fed Approves Final Basel III Rules

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WASHINGTON (7/3/13)--Rules to implement Basel III regulatory capital reforms in the United States were approved by the Federal Reserve Tuesday.

The Fed said in a release the final rule "minimizes burden on smaller, less complex financial institutions."

The international bank rules, which will require banks to hold more capital as a buffer against future financial shocks, do not apply to credit unions in the United States. In general, the Basel III standards are intended to apply to "internationally active" banks, but some jurisdictions choose to apply Basel III to a wider range of banking institutions and/or credit unions. Australia, several Canadian provinces, and some Latin American countries apply Basel-based standards to credit unions.

The Fed intends the capital reforms to "help ensure banks maintain strong capital positions that will enable them to continue lending to creditworthy households and businesses even after unforeseen losses and during severe economic downturns."

Basel III standards for banks in the United States will require common equity of 4.5%.  Banks also must  hold a 2.5% conservation buffer, which will be gradually introduced, and to increase their Tier 1 levels from 4% to 6%. The rule includes a minimum leverage ratio of 4% for all banking organizations.

The phase-in period for smaller, less complex banking organizations will not begin until Jan. 2015 while the phase-in period for larger institutions begins in Jan. 2014, the Fed said.

For more on Basel III, use the resource link.

NEW: NCUA Loan Participation Rule Now Effective Sept. 23

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ALEXANDRIA, Va. (7/3/13, UPDATED: 1:05 P.M. ET)--There is now a new, later effective day for the National Credit Union Administration's final rule on loan participations:  Sept. 23. The Credit Union National Association strongly urged the agency to address the effective date to give credit unions flexibility to adequately prepare for the rule's changes. The original effective date was July 25.

"NCUA's effective date change and the numerous key changes in the final rule are important indications that the board is responding to reasonable concerns without sacrificing safety and soundness, which is a commendable approach to regulation," CUNA Deputy General Counsel Mary Dunn noted when the effective date change was announced today.

The NCUA approved the loan participation rule at last month's open board meeting. The final features many improvements suggested by CUNA even though CUNA did not support any new loan participation rule at this time.

The rule sets a limit on loans from one originator of 100% of a credit union's net worth; and provides an expanded waiver process for the single-originator limit and limits to one borrower.

The NCUA also approved a provision so that credit unions pushed over the limit by new rule can move their loans into line: such credit unions would not have to sell loans immediately to come into compliance but can bring their participation activity into line in the ordinary course of business or seek a waiver.

For more on the loan participations rule, use the resource link.

Fox Business Features CUNA's Cheney On CU Tax-status Advocacy

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NEW YORK, N.Y. (7/3/13)--Credit Union National Association President/CEO Bill Cheney told a nationwide audience in a Tuesday appearance on Fox Business Network's Markets Now that "consumers deserve a choice, that's why it's so important to preserve the [credit union tax status]."

Click to view larger image CUNA President/CEO Bill Cheney discussed the Don't Tax My Credit Union! campaign in his Fox Business Network interview. (CUNA Photo)
A tax on credit unions would be, in effect, a tax on 96 million Americans, Cheney noted. "If you tax credit unions, you eliminate credit unions, and I don't think anyone wants to see credit unions go away." The only people suggesting that credit unions should be taxed are banks, who don't want the competition, he explained.

In the interview, Cheney discussed the ongoing tax reform efforts in the U.S. Congress, how legislators are taking on the task of tax reform, and why it is vital that the credit union tax status is preserved.

He also discussed the benefits that the credit union tax status provides to members and non-members alike. Credit unions are a better deal, and it's not just because of the tax exemption, he said. Credit union members and bank customers both benefit, as banks are forced to lower their rates in some cases, Cheney added.

Credit unions and their supporters are already fighting to ensure the credit union tax status remains unchanged, and more than 230,000 separate congressional contacts have been made since mid-May as part of a groundbreaking CUNA/state credit union league advocacy effort. Members are using CUNA/league resources, social media sites including Facebook and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!" This pro-credit union message is also being shared through Twitter feeds, CUNA's Twitter handle @CUNAadvocacy and the hashtag, #DontTaxMyCU.

'We started early and we're going to ramp up our efforts and get credit union members involved," Cheney said.

"Credit union members support their credit union because they own the credit union, they're a part of the credit union family and they want to take action to protect their credit union," the CUNA CEO said in closing. Cheney was in New York for CUNA's America's Credit Union Conference, which ends today.

For the full interview and more on credit union tax advocacy efforts, use the resource links.

COPPA July 1 Effective Date Prompts FTC Guidance

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WASHINGTON (7/3/13)--Changes to the Federal Trade Commission's (FTC) Children's Online Privacy Protection Act (COPPA) rule took effect on July 1, and the FTC has followed up on that deadline by releasing two new sets of guidance.

The COPPA rules address the collection, use, and/or disclosure of personal information for children under 13 years old by websites and other online services, including credit unions that have websites and/or mobile banking applications.

The recent changes aim to strengthen children's privacy protections and give parents greater control over the personal information that websites and online services may collect from their young children.

The new guidance will help small businesses that operate child-directed websites, mobile applications and plug-ins ensure they are compliant with the rule changes.
The new resources include:
  • A six-step COPPA compliance document, "The Children's Online Privacy Protection Rule: A Six-Step Compliance Plan for Your Business," that aims to help companies determine if they are covered by COPPA, and what steps they are required to take to protect children's privacy; and
  • "Protecting Children's Privacy Under COPPA," a video that details the rule changes and explains business obligations under the rule.
The FTC in spring also released a series of frequently asked questions (FAQs) that addresses the basics of the COPPA rule, as well as more specific concerns.

For more on the COPPA resources, use the links.

Best Reward CU Assumes PEF FCU Members, Assets

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ALEXANDRIA, Va. (7/2/13)--PEF FCU, which was taken under conservatorship by the National Credit Union Administration late last month, has been liquidated.

Best Reward CU, Brook Park, Ohio, has assumed certain members, shares assets and liabilities from PEF. Best Reward CU holds $100 million in assets and has 12,700 members. The new Best Reward CU members will experience no interruption in services, NCUA said. Their accounts remain insured up to $250,000 by the National Credit Union Share Insurance Fund.

PEF, which had 2,974 members and held $31.3 million in assets, was placed under conservatorship to protect the credit union's financial stability and operations, NCUA said. However, the agency said Monday it later determined PEF FCU had no prospect for restoring viable operations.

The Highland Heights, Ohio, credit union was originally chartered in 1957 as Picker X-ray CU, and served those who live, work, worship or attend school in the eastern section of Cuyahoga County, Ohio.

PEF is the 11th credit union to be liquidated this year. ASI FCU of Harahan, La., assumed the members, deposits and loans of New Orleans, La.-based Ochsner Clinic FCU late last week. (See July 1 News Now story: ASI FCU Assumes Ochsner Clinic FCU Shares.)

For the full NCUA release, use the resource link.

On Tax Advocacy: 'Later May Be Too Late,' D.C. Insider Says

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WASHINGTON (7/2/13)--It would be a great mistake for any group with an interest in tax issues "to simply shrug their shoulders, turn their back," and say tax reform is not going to happen in the immediate future, Washington lobbyist and QGA Public Affairs Chairman/Co-founder Jack Quinn told Politico this week.

"Later may be too late...You really want to begin shaping public opinion now," Quinn added in the Politico piece, refuting those who have questioned whether the U.S. Congress will stick to a tight tax reform schedule.

Quinn's comments reinforce Credit Union National Association President/CEO Bill Cheney's recent request that credit union advocates ramp up their volume to protect the credit union tax status.

The leaders of the Senate Finance Committee, Sens. Max Baucus (D-Mont.) and Orrin Hatch (R-Utah), last week asked their Senate colleagues to be ready to tackle a tax reform vote early this fall. The committee plans to take a "blank slate" approach to its bill, which would remove all tax expenditures from the code and would add back in those that make the grade. All proposed language for a bill must be submitted for the committee's consideration by July 26.

In the face of these reform conversations, credit union and member tax advocacy efforts have remained strong. More than 230,000 separate congressional contacts have been made since mid-May, as citizens reach out to tell their legislators, "Don't Tax My Credit Union!"

The groundbreaking CUNA/state credit union league advocacy effort, Don't Tax My Credit Union, combines elements of traditional letter writing campaigns with new media methods to leverage the power of credit unions' 96 million members.

The outreach effort also continues to gain traction on social media: More than 300,000 credit union supporters have used the Don't Tax My Credit Union! Facebook page and their own Twitter feeds to share pro-credit union messages. CUNA's Twitter handle @CUNAadvocacy, and hashtag, #DontTaxMyCU, and social media micro-video site Vine have also seen heavy traffic.

CUNA also has developed a reformatted version of its tax advocacy toolkit to help credit unions and their members spread this message.

For more CUNA/league advocacy resources, use the resource links.

Citi To Pay $968M To Settle Fannie Mae Mortgage Issues

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WASHINGTON (7/2/13)--Citigroup has agreed to pay Fannie Mae $968 million to resolve mortgage origination issues, the bank announced on Monday.

In a press release, Citigroup said the payment relates to potential future repurchase claims for breaches of representations and warranties on 3.7 million residential first mortgage loans sold to the government-sponsored enterprise.

The agreement covers loans originated between 2000 and 2012 that were later sold to Fannie Mae.

Citi's agreement with Fannie Mae covers potential future origination-related representation and warranty claims on the covered loans.

Citi noted the agreement does not release its liability with respect to its servicing or other ongoing contractual obligations on the covered loans. Loans sold with a performance guaranty or under special credit enhancement programs are also not covered under the agreement, Citigroup added.

Citi has and will continue to work with Fannie Mae on the timely repurchase of any mortgage loans sold to Fannie Mae that do not meet Fannie Mae's requirements.

Fannie Mae Executive Vice President and General Counsel Bradley Lerman said the agreement "resolves legacy repurchase issues, compensates taxpayers for losses" and allows the two firms to move forward and strengthen their business relationship.

Fannie Mae said similar resolutions with other financial firms could be reached.

Student Lending Issues Featured In Regulatory Advocacy Report

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WASHINGTON (7/2/13)--The federal student loan rate, which was set at 3.4%, doubled for future loans to 6.8% on Monday. While the U.S. Congress did not take action to avert this increase, it can still address the problem when members return from the July 4 recess next week.

Student lending issues are on the minds of many, and details of a private Senate Banking Committee hearing on private student loans held last week are included in this week's edition of the Credit Union National Association's Regulatory Advocacy Report.

During that hearing, lawmakers told banking regulators they are concerned about access to student loans and mounting debt problems facing college students. A major point of contention was banks' ability to provide workouts for distressed borrowers and whether banks can offer flexible repayment options. The regulators indicated that banks were free to offer borrowers flexible repayment options.

However, the Regulatory Advocacy Report noted, accounting standards and a lack of regulator guidance prevent many credit unions and banks from offering robust repayment options.

The Federal Deposit Insurance Corp. has indicated that it will be releasing private student loan guidance soon. CUNA is hopeful that the National Credit Union Administration will also address issues of repayment modifications in the near future.

Other items addressed in this week's Regulatory Advocacy Report include:
  • NCUA board nominee Richard Metsger's nomination hearing testimony;
  • CUNA comments on third-party clarifications;
  • CUNA's participation in a Bank Secrecy Act Advisory Group meeting; and
  • An NCUA Inspector General communique to Congress.
Employees or volunteers of CUNA- and state credit union league-member credit unions can sign up below to receive the Regulatory Advocacy Report.

The Regulatory Advocacy Report is archived on cuna.org.

Hampel Lays Out Housing Reform Principles In Hill Event

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WASHINGTON (7/1/13)--The Credit Union National Association, participating in Rep. Maxine Waters' (D-Calif.) housing finance market reform policy discussion session Friday, made it clear that needed reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly, cooperative way.

Click to view larger image CUNA Cheif Economist Bill Hampel, left, facing camera, discusses housing reform with Rep. Maxine Waters (D-Calif.), far right, during Friday's Capitol Hill event. (U.S. House photo)
CUNA Chief Economist Bill Hampel represented CUNA at the session, which was the second in Waters' housing finance reform series. Waters is the ranking Democrat of the House Financial Services Committee.

In his opening remarks, Hampel noted that credit unions have been engaged in mortgage lending since the 1970s, and originated $123 billion in first-lien mortgage loans in 2012. Those loans accounted for 6.5% of total market share.

"Credit unions are now significant players in residential real estate finance," and "the fact that many loans will be held on credit unions' books makes them prudent lenders," he added.

"The fact that interest rate risk management often requires selling a significant portion of loans, means an effective and accessible secondary market is vital to credit unions." Equal access to the secondary market for lenders of all sizes is a must, he said. Hampel noted that the need to maintain space in the market for credit unions and other small financial institutions is referenced several times in the Housing Finance Reform and Taxpayer Protection Act of 2013, which was introduced in the Senate last week. (In the latest edition of The Cheney Report, CUNA President/CEO Bill Cheney notes that there are positive aspects of the bill. See News Now story: Cheney: CUNA Ready To Work Toward Housing Reforms.)

Most credit unions have plenty of excess funds to lend, but need a way to hedge interest rate risks and keep the loans on their books, Hampel said.

In his comments, he also outlined a series of principles that CUNA hopes a new housing market finance system will accommodate. Those principles include:
  • Ensuring that even in troubled economic times, mortgage loans will continue to be made to qualified borrowers;
  • Emphasizing consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • Maintaining consumer access to products that provide predictable, affordable mortgage payments to qualified borrowers, such as the 30-year fixed rate mortgage;
  • Setting reasonable conforming loan size limits that adequately take into consideration variations in local real estate costs; and
  • Allowing credit unions to continue to service their member mortgages.
Overall, he said, the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.

CUNA: Relief Bill A Good Step Toward CU Charter Modernization

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WASHINGTON (7/1/13)--Rep. Gary Miller's (R-Calif.) Regulatory Relief for Credit Unions Act (H.R. 2572), introduced on Friday, "is a good first step toward modernizing the credit union charter," Credit Union National Association President/CEO Bill Cheney said.

In a letter to Miller, Cheney said the bill "recognizes that while credit unions were created for the specific purpose of promoting thrift and providing access to credit for provident purposes, the statute and regulations that govern how credit unions operate are in desperate need of modernization."

Regulatory improvements included in Miller's bill include:

  • Updating credit union investment authorities;
  • Amplifying the National Credit Union Administration's authority to implement a risk-based capital regime;
  • Providing the agency with flexibility to adjust leverage requirements;
  • Allowing the NCUA to adjust capital requirements as needed; and
  • Clarifying the insurance coverage of funds held in trust accounts at credit unions.
The bill would also request the NCUA to perform a cost-benefit analysis of rules, past and present. The Government Accountability Office would also study the need for improvements and modernization to the Central Liquidity Facility under the terms of the bill.

"Credit unions wholeheartedly thank Rep. Miller for acting on their great need for regulatory relief so fewer resources are diverted from their true business of serving their members," Sam Whitfield, Credit Union National Association vice president of legislative affairs, said as CUNA welcomed the bill. He added CUNA's appreciation that Miller included CUNA in the development of his legislation.

Miller's bill will likely be joined by other regulatory relief legislative initiatives coming out of the financial services panel this year.

Other Financial Services Committee members are said to be preparing to offer bipartisan regulatory relief bills and are working to find for areas where credit union and community bank interests may intersect in a bill. CUNA has assured lawmakers that such areas exist; for instance, one such area is examination fairness legislation.

During a hearing in March, CUNA delivered a 35-point plan for credit union regulatory relief to federal lawmakers. Among changes promoted by CUNA are:

  • Increasing NCUA budget transparency;
  • Adjusting the treatment of non-owner occupied one- to four-family dwelling loans for credit unions from business loans to residential real estate loans;
  • Increasing the maturity limit for higher education loans made by federal credit unions; and
  • Expanding investment authority in credit union service organizations.

Cheney Report: CUNA Ready To Work Toward Housing Reforms

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WASHINGTON (6/29/13)--The Credit Union National Association is "ready to work with lawmakers to enact changes that will ensure smaller institutions, such as credit unions, will continue to have fair and affordable access to a vibrant, well-regulated and affordable housing market" as housing market reform efforts move forward, CUNA President/CEO Bill Cheney said Friday in the latest edition of The Cheney Report.

Several senators last week joined to cosponsor bipartisan legislation that would wind down government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor, the Federal Mortgage Insurance Corporation (FMIC). Cheney notes that there are positive aspects of the bill, known as the Housing Finance Reform and Taxpayer Protection Act of 2013.

The bill reflects a number of points that CUNA has worked for--"in particular, assuring access to all financial institutions, especially credit unions, to a functioning mortgage market," Cheney wrote. The CUNA CEO noted that "this is the beginning of what will likely be a long process," and noted that "other important housing finance legislation may soon be surfacing on the U.S. House side."

CUNA Chief Economist Bill Hampel discussed credit union priorities for housing finance market reform during a Friday panel discussion organized and moderated by Rep. Maxine Waters (D-Calif.), the ranking Democrat of the House Financial Services Committee. (See News Now story: Hampel Lays Out Housing Reform Principles In Hill Event)

This week's Cheney Report also includes:

  • Details on NCUA board nominee Richard Metsger's testimony before Congress;
  • An update on the Don't Tax My Credit Union! campaign; and
  • A preview of this week's America's Credit Union Conference.
Each Friday, The Cheney Report provides a valuable window into CUNA's actions on behalf of member credit unions and reinforces the value of CUNA membership. To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

Past issues of The Cheney Report are also archived on cuna.org.

ASI FCU Assumes Ochsner Clinic FCU Shares

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ALEXANDRIA, Va. (7/1/13)--The National Credit Union Administration has liquidated New Orleans, La.-based Ochsner Clinic FCU, the agency announced Friday.  ASI FCU of Harahan, La., has assumed Ochsner Clinic FCU's members, deposits and loans.

It is the 10th federally insured credit union liquidation in 2013, NCUA said.

NCUA said it decided to liquidate the $9.25 million asset credit union and discontinue operations after determining the credit union was insolvent, with no prospect of restoring viable operations.

The new ASI FCU members will experience no interruption in services, NCUA said. Their accounts remain insured up to $250,000 by the National Credit Union Share Insurance Fund.

Ochsner Clinic FCU, which was chartered in 1973, served a number of select group centered primarily in the medical profession in the New Orleans area.  It served 3,099 members.

Neither Ochsner Clinic Foundation nor Ochsner Health System owns, manages or oversees the credit union, which is an independent entity, said NCUA.

NCUA Bans 11 From CU Work

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ALEXANDRIA, Va. (7/1/13)--The National Credit Union Administration Friday issued prohibition orders banning eleven individuals from participating in the affairs of any federally insured financial institution.

The NCUA reported the orders involve the following former credit union employees and charges:

The NCUA reported the orders involve the following former credit union employees and charges:

  • Kaleigh Davis, a former employee of VyStar CU, Jacksonville, Fla., pleaded guilty to the charge of defrauding a financial institution;
  • Gabriel Escandon, a former vice president of operations for White Sands FCU, Las Cruces, N.M., and former CEO of Tip of Texas FCU, El Paso, Texas., consented to the issuance of a prohibition order to avoid the time, cost and expense of administrative litigation;
  • Linda Fite, a former employee of Cinco Family Financial Center CU, Cincinnati, Ohio, pleaded guilty to the charge of theft;
  • Tyrone Hunt, a former employee of County CU, Clayton, Mo., pleaded guilty to the charge of forgery;
  • Mary Kjersem, a former employee of United Neighbors FCU, Watertown, N.Y., pleaded guilty to the charge of grand larceny in the third degree;
  • George Kolias Jr., a former employee of Flag CU, Tallahassee, Fla., pleaded no contest to the charge of providing alcohol to a minor and aggravated assault with the intent to commit a felony;
  • Jody Kravat, a former employee of Security CU, Flint, Mich., pleaded guilty to the charge of embezzlement;
  • Anthony Loayza, a former employee of Gulf Coast Educators FCU, Corpus Christi, Texas, pleaded guilty to the charge of theft;
  • Ysnayana Carolina Patino, a former employee of Miami Firefighters FCU, Miami, Fla., was convicted of grand theft in the second degree;
  • Patricia Piscioneri, a former employee of North Adams M E FCU, North Adams, Mass., pleaded guilty to the charge of embezzlement and false entries; and
  • Betty Lou Williams, a former employee of VyStar CU, Jacksonville, Fla., pleaded guilty to the charge of defrauding a financial institution.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link for more information on the NCUA enforcement orders.