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CFPB toolkit helps low-income consumers with financial decisions

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WASHINGTON (8/1/14)--In a new partnership with national and local organizations across the country, the Consumer Financial Protection Bureau (CFPB) will help to train social services staff to provide financial education and tools to clients with low-to-moderate incomes.

As part of that partnership, the CFPB Wednesday unveiled a new online toolkit called "Your Money, Your Goals." 

The bureau bills it as a comprehensive guide to help consumers make empowered financial decisions, and it addresses topics like budgeting daily expenses, managing debt, and avoiding financial tricks and traps.

Credit unions are mentioned throughout the tool and are included in the section to select financial services products and providers. The resource is available online in English and Spanish and includes information, checklists, and worksheets consumers can use in their everyday lives.  

Use the resource link to read more.

New bill would push CFPB supervision trigger to $50B

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WASHINGTON (8/1/14)--Sens. Pat Toomey (R-Pa.) and Joe Donnelly (D-Ind.) have introduced a bill that would raise the credit union threshold for supervision by the Consumer Financial Protection Bureau (CFPB) to $50 billion in assets, up from the current $10 billion. If passed, the bill would exempt all but one credit union from direct CFPB supervision.

"Our thanks to Sens. Toomey and Donnelly for introducing this legislation, which would ease the regulatory burden facing credit unions affected by direct CFPB supervision," said John Magill, executive vice president of government relations for the Credit Union National Association.

"While this bill is a welcome development, CUNA continues to urge the CFPB to use its broad exemption authority for credit unions more extensively, as we strongly believe there is more CFPB can and should do on its own to exempt credit unions from unnecessary regulations," Magill added.

Former congressman and House Banking Committee Chair Barney Frank, a Democrat from Massachsetts,  testified at a House Financial Services Committee hearing last week that the examination threshold should be raised.

Top Financial Services Dem weighs in on RBC

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WASHINGTON (8/1/14)--The ranking Democrat of the House Financial Services Committee, Rep. Maxine Waters of California, met recently with National Credit Union Administration Chair Debbie Matz to discuss the agency's risk-based capital (RBC) plan. She followed up with a letter Thursday asking the NCUA to make every effort to ensure credit unions and banks are regulated equally in this area.

Waters noted her support of the NCUA's effort to revise credit union capital rules, as required under Dodd-Frank Act, so that "lessons learned from the (financial) crisis are not forgotten." However, Waters added that it is "also important that those rules retain the strengths of the current examination process without unintentionally forcing examiners or credit unions to merely check boxes, especially with regard to concentration and interest rate risks."

"Although the statute dictates that NCUA's regulations must address concentration and interest-rate risks, the current proposal does not allow for examiners to impose capital requirements on credit unions that are tailored to the individual risks of the credit union's portfolio"

Waters asks the NCUA leader to revisit the RBC proposal, particularly with an eye to dislodging unintended consequences that could adversely affect certain credit unions.

Proposed rule eliminates 5% fixed-asset cap

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ALEXANDRIA, Va. (8/1/14)--Credit unions would be able to manage their fixed assets without waivers or permissions from the National Credit Union Administration under a proposed rule issued by the agency board Thursday.

The rule, which applies to credit unions with more than $1 million in assets, would allow credit unions to exceed the 5% limit without prior NCUA approval, provided it is done by establishing and following a fixed-asset management policy. It would also simplify the partial occupancy requirement for premises acquired for future expansion.

Board member Rick Metsger said that the NCUA's review of fixed assets demonstrated that many factors, including net worth, delinquency ratios and CAMELS rating were not significantly different for credit unions with fixed assets above 5% against those that are below 5%.

"[Our analysis] also demonstrated that investments in fixed assets were not a major contributor to losses for the Nation Credit Union Share Insurance Fund," he said. "Quite the contrary, investment in fixed assets correlates to positive asset growth, share growth and membership growth."

In March 2013, the NCUA issued proposed amendments to the rule to further clarify the rule, but without any changes to the regulatory requirements. During that proposal's comment period the Credit Union National Association was among those suggesting elimination of the fixed-asset cap.

CUNA advocated for the removal of the cap, and suggested the agency replace it with requirements that credit unions have written policies that set parameters for ownership of fixed assets. CUNA also noted that the policies and their implementation should be subject to examiners review. Each of those items are contained in the NCUA's proposed rule.

Metsger said that reforming the fixed-asset cap has been a priority since he took office in 2013, and NCUA Chair Debbie Matz credited him for initiating the effort to change the rule. Metsger called the proposal a "positive regulatory relief measure" that would help both credit unions and agency staff.

Matz said the proposal will move the agency away from micromanaging credit unions' business decisions that have no impact on safety and soundness.

"Rather than spending hours writing a waiver application, credit unions could better devote their time to developing a fixed-assets management program under this proposed rule," she said.

The proposal would apply to more than 3,500 credit unions, Matz said.

The comment period for the proposed rule is open for 60 days after it is published in the Federal Register .

Use the resource link below for more information.

NCUA: No corporate assessment (but no refunds either)

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ALEXANDRIA, Va. (8/1/14)--Credit unions will not face an assessment this year for the Corporate Credit Union Stabilization Fund, the National Credit Union Administration confirmed at its board meeting Thursday. Future assessments are unlikely as well.

Larry Fazio, NCUA director of examination and insurance, said the improvements to the fund are due to the performance of the NCUA Guaranteed Notes (NGN) program and recent corporate credit union litigation settlements totaling more than $1.75 billion.

Net projected remaining assessments in the Stabilization Fund range from -$2 billion to -$0.6 billion. NCUA Chair Debbie Matz said the double negative projected assessment range is "positive news" for credit unions.

But Fazio emphasized that the negative assessment range does not mean there are funds available to provide refunds to credit unions now, as the improving values of legacy assets are used to secure the NGN. The NCUA also owes $2.6 billion borrowed from the U.S. Treasury. The agency did indicate that some rebate to federally insured credit unions in 2021 might be possible, but only after all obligations, including those to Treasury, have been met.

The board also provided a quarterly update on the status of the National Credit Union Share Insurance Fund (NCUSIF). The fund has an equity rate of 1.29% as of June 30, and reserves are approximately $176.1 million, $8.1 million of which are for specific credit unions.

According to the NCUA, there are 295 CAMEL 4 and 5 credit unions, representing 1.46% of insured shares, or approximately $13.2 billion. The number of CAMEL 4 and 5 credit unions is on the decline. There are 1,466 CAMEL 3 credit unions, representing 10.46% of insured shares, or $94.5 billion. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent only 11.92% of total insured shares.

There have been eight credit union failures so far this year. In 2013 there were 17 total failures.

The NCUA board also approved a community charter expansion for Call FCU, based in Richmond, Va. with $360 million in assets. The credit union was chartered in 1962 to serve the employees of Philip Morris Tobacco Company, also based in Richmond, and converted to a community charter in July 2010, serving approximately 100 select groups and two underserved areas.

The expansion of the charter means approximately 1.3 million people are now in Call FCU's field of membership.

Use the resource links below for more information.

CFPB says debit, ATM overdraft services still raise concerns

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WASHINGTON (8/1/14)--The Consumer Financial Protection Bureau said Thursday that it has studied the effect of a 2010 "opt-in" requirement that depository institutions obtain a consumer's consent before charging fees for allowing overdrafts on most ATM and debit card transactions and found it lacking.
The bureau noted it is weighing what additional consumer protections may be necessary for overdraft and related services.
A new CFPB report indicated that the majority of debit card overdraft fees are incurred on transactions of $24 or less and that the majority of overdrafts are repaid within three days. "Put in lending terms, if a consumer borrowed $24 for three days and paid the median overdraft fee of $34, such a loan would carry a 17,000 percent annual percentage rate," the CFPB said in a release.
The  study was based on data from a set of large banks supervised by the CFPB. It found also that  among the banks studied, overdraft and Not-Sufficient-Funds (NSF) fees represent more than half of the fee income on consumer checking accounts. The study found that about 8% of accounts incur the majority of overdraft fees.
The CFPB acknowledged that some credit unions and banks do not charge an overdraft fee if the consumer overdraws an account by a small amount; some also cap the number of overdraft and NSF fees they will charge on an account on a single day.

In a related story this week, a Moebs Services study released Tuesday includes information that describes how credit unions remain the most reasonable financial institutions in forgiving members for overdrafts ( News Now July 30).
Use the resource link to read the complete CFPB release and to access the study.

$1.1M trimmed from NCUA budget; less than past mid-year cuts

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ALEXANDRIA, Va. (8/1/14)--Approximately $1.1 million has been trimmed from the National Credit Union Administration's budget this year, according to the agency's mid-year operating budget report Thursday. The reduction in costs for the year ending Dec. 31 will bring the revised NCUA budget to $266,920,296.

The majority of unused budgetary funds, $1.525 million, is a result of vacant staff positions. Pay and benefits account for 73% of the NCUA's total operating budget.

"For the fifth straight year our mid-year budget review has yielded more than $1 million in savings, which will be returned to credit unions," said NCUA Chair Debbie Matz.

She also noted that while this year's reduction is less than it has been in years past, the difference is due to the agency entering this year with 15 vacancies, as opposed to the close to 40 in years past.

Another $90,000 in savings comes from a reduction in the monthly transit subsidy reimbursement, which was lowered to $130 from $245 by Congress after the initial budget was passed.

Other changes in the mid-year budget include:
  • Reduction of $289,000 in travel costs due to updated program and training requirements, expenses from the 2014 National Training Conference coming in under budget and realignment of existing travel dollars among two regions;

  • Increase of $63,000 for an unplanned, unbudgeted real estate brokerage fee due to an early five-year lease negotiation for one of the retail tenants in the agency's Alexandria space. By renegotiating the lease before it was required in 2015, the NCUA has ensured uninterrupted rental income for this tenant through 2019;

  • Increase of $143,000 to support a new license agreement for the agency's Incident Management system, software warranty extension, e-mail software;

  • Increase of $238,000 for prioritized projects recommended by the Information Technology Prioritization Council and to meet growing demand for specialized audio and video expertise for webinars, video conferences and special events; and

  • Increase of $270,000 for compliance with new high-level security requirements mandates by the federal government.
The NCUA also announced that a portion of its retail space in Alexandria will be re-purposed into a dedicated training facility for the agency's exam program. This will result in capital costs of an estimated $200,000 for building renovations and information technology infrastructure updates. According to the NCUA, these costs will be funded from existing NCUA resources.

Use the resource links below for more information.

Former Penn. CU employee prohibited from work at FIs

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ALEXANDRIA, Va. (8/1/14)--Melissa Rosing, a former employee of Southwest Communities FCU, based in Carnegie, Pa. with $15 million in assets, has been prohibited from participating in the affairs of any federally insured financial institution. The National Credit Union Administration issued the prohibition order in July.

Rosing pleaded guilty to charges of theft, theft by deception, forgery, receiving stolen property and bad checks. She was sentenced to five years of probation and ordered to pay restitution in the amount of $25,046.50.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million, according to the NCUA.