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EMV task force update: 575M chip cards issued by 2015

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NEW YORK (8/14/14)--A group of electronic payment industry organizations have predicted more than 575 million chip-enabled credit and debit cards will be issued by the end of 2015.

The Payments Security Task Force (PST), made up of more than a dozen companies and organizations including the Credit Union National Association, announced this forecast Wednesday.

"The shift to EMV cards clearly has big momentum now within the financial community," said Eric Richard, CUNA general counsel/executive vice president for regulatory affairs. "There is still an issue about whether the merchant community will be prepared to facilitate the change on a full and timely basis.  And both sides will need to continue working on other security strategies to counteract the growing problem of data breaches."

Nine of the country's largest payment card issuers who participate in the task force developed the current forecast. The PST is focused on continuing the momentum of payment cards with Europay- MasterCard-Visa (EMV) technology.

EMV is a global standard that uses chips embedded within the card to authenticate purchases, similar to the current magnetic strip on payment cards. EMV cards are considered more secure against fraud with authentication provided by the use of a PIN and cryptographic algorithms.

In October 2015, parties that deploy EMV cards will be protected from financial liability from card-present counterfeit fraud losses.

The task force plans to update the issuer forecast regularly and expand it to include acquirer and merchant perspectives on EMV chip terminalization. Javelin Strategy and Research estimates that 52% of point-of-sale terminals will be EMV-enabled by the end of 2015.

Priorities include identifying a long-term roadmap to deliver a consistent level of security for payments in the digital and physical environments.

Internal CFPB report finds workplace challenges

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WASHINGTON (8/14/14)--A Consumer Financial Protection (CFPB) internal report outlines employee concerns ranging from a perceived lack of diversity and a lack of clarity around processes, according to Politico (Aug. 12).

The CFPB's Office of Minority and Women Inclusion prepared the report, which is based on 48 listening sessions conducted by the bureau between April and June.

The report "frequently mentioned frustrations with insufficiency in infrastructure, lack of transparency and communication, and perceived unfairness in application of practices and procedures which permeated throughout the various areas of concern they mentioned," according to Politico .

According to an Aug. 12 Reuters article, the report also found that staff believed their supervisors micro-managed projects, were unclear about priorities, lacked uniform standards for employee performance and had misunderstandings concerning the bureau's hiring, promotion and pay practices, which contributed to the impression those decisions were unfair.

The CFPB announced in May it would remove its performance system after lower scores and bonuses were given to older employees and minorities, an action that led to the series of listening sessions.

According to Reuters , the report said the bureau's rapid expansion and pressure to churn out rules "fostered a culture of aggressiveness and a pace that could not be sustained long-term."

The report recommends additional internal communications mechanisms, additional training and creation of a forum to assess workplace trends.

CFPB Director Richard Cordray said he "embraces the recommendations" made in the report, and would work to ensure they are implemented, according to Politico .

FHFA seeks comment on single security for Fannie, Freddie

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WASHINGTON (8/14/14)--The Federal Housing Finance Agency (FHFA) is seeking input on a proposed single security structure that would be issued by Fannie Mae or Freddie Mac--a proposal that  merits further study from stakeholders, according to the Credit Union National Association.

The FHFA listed in its strategic plan for the year a goal of developing a single mortgage-backed security (MBS) as part of its efforts to build a common securitization platform.

"Maintaining a highly liquid secondary mortgage market is a fundamental requirement for the success of the single security. In order to achieve maximum market liquidity, the proposed single security would leverage the enterprises' existing security structures," reads the FHFA's official request for input, published Tuesday.

The agency's stated goal for the proposed single security structure is for legacy Fannie Mae MBS and legacy Freddie Mac participation certificates to be mutually interchangeable with the single security for purposes of fulfilling to-be-announced contracts, allowing for maximum market liquidity. If necessary, investors would be offered an option to exchange a legacy participation certificate for a comparable single security.

"CUNA supports measures that improve the efficiency and liquidity of the mortgage market," said Eric Richard, CUNA general counsel/executive vice president for regulatory affairs. "However, we need to continue studying the implications of this proposal for its impact on the prices credit unions receive for the sales of their mortgages to the government-sponsored enterprises, as well as the proposal's potential impact on the values of existing MBS investments."

The FHFA is requesting input on all aspects of the proposal, with a focus on:
  • The transition from the current system to a single security;
  • To-be-announced contract eligibility;
  • Legacy Fannie Mae and Freddie Mac securities;
  • Potential industry impact of the single security initiative; and
  • Risk of market disruption.
All comments received will be made public and posted to the FHFA website.

Use the resource link below to access the full request for input.

FHA commissioner Galante steps down

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WASHINGTON (8/14/14)--Carol Galante, the commissioner of the Federal Housing Administration (FHA), announced this week she is leaving the government agency to teach at her alma mater, the University of California at Berkeley.
Galante started at the agency as interim commissioner in July 2011 and was confirmed Dec. 30, 2012. She led the agency as it sought $1.7 billion from the U.S. Treasury to cover losses from defaulted mortgages. The FHA doesn't make mortgages; rather it insures mortgage loans made by financial institutions.
The FHA became a critical cog in the market during the economic downturn, backing more than $330 billion in mortgages in fiscal year 2009 before easing down to $240 billion last fiscal year ( The Wall Street Journal Aug. 11).
Biniam Gebre, general deputy assistant secretary in the Department of Housing and Urban Development, will become acting commissioner after Galante departs, The Wall Street Journal noted.
On Jan. 1, Galante will be the I. Donald Terner Distinguished Professor in Affordable Housing and Urban Policy, according to the university. She also will be an adjunct professor in the department of city and regional planning and serve as director of the Berkeley Program on Housing and Urban Policy.

CU supporter Tom Emmer wins in Minn. Congressional primary

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MINNESOTA (8/14/14)--Credit union supporter Tom Emmer took another step closer to the U.S. House of Representatives with a victory in Minnesota's primary Tuesday. Emmer, a Republican running for the state's open 6th Congressional District seat, received 73.2% of the vote to his opponent Rhonda Sivarajah's 26.8%.

Emmer was endorsed by the Minnesota Credit Union Network (MnCUN) and received the maximum $5,000 contribution from the Credit Union Legislative Action Council.

"During his tenure in the state Legislature, Rep. Emmer consistently demonstrated his support for credit unions' continued ability to serve their members," said MnCUN Vice President of Governmental Affairs Mara Humphrey in a statement. "He has vowed to continue that support of credit unions in the 6th District and across the country if elected. Credit unions have a champion in Tom Emmer."

Emmer served in the Minnesota House from 2005 to 2011 and ran for governor in 2010, losing narrowly to current Gov. Tom Dayton. 

"Credit unions offer consumers and small businesses a great choice for local, Main Street-focused financial services," said Emmer. "I'm proud to have the support of the Minnesota Credit Union Network and--when serving in Washington, D.C.--will continue to work for a fair marketplace so that credit unions can continue to grow."

Emmer will face Democratic candidate Joe Perske and Independence Party candidate John Denney in November. The 6th District seat is open due to the retirement of current Rep. Michele Bachmann (R).
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