WASHINGTON (8/18/08)—With the country’s financial markets in turmoil, more and more Americans are asking questions about federal share insurance coverage to determine if their money is safe. The Credit Union National Association’s (CUNA’s) August Compliance Challenge poses several questions that deepen credit unions’ understanding of how insurance works. For instance, the Challenge notes in one question that there is no “qualified beneficiary” distinction for irrevocable trust account beneficiaries. Such beneficiaries do not have to be a spouse, child, grandchild, parent or sibling. Another question clarifies that the National Credit Union Administration (NCUA) has adopted the definition of “marriage” and “spouse” found in the Defense of Marriage Act (HR 3396). Under the Act, “marriage” is defined as a legal union between one man and one woman and “spouse” refers only to individuals of the opposite gender. Therefore, the Challenge notes, same-sex partners united in states permitting same-gender unions may not be named as a ”qualified account beneficiary” who would thereby be entitled to separate share insurance coverage up to $100,000. And in a third related question, the CUNA compliance experts ask (and answer): How should account cards be titled to ensure proper share insurance coverage for “Payable on Death” (POD) and Living Trust Accounts? The answer: In the case of POD accounts, if the POD line or lines are filled in on the account card, the account is insured separately as a “revocable trust” with each qualified beneficiary, as defined above, being entitled to share insurance coverage up to $100,000. The account doesn’t have to be specifically titled as a “POD” and no trustees would be listed. In the case of a living trust account, the NCUA’s ‘How Your Accounts Are Insured” booklet states: “Credit unions can establish a common revocable trust payable-on-death (POD) account without additional documentation; however, some trusts require additional, valid documentation to qualify for coverage.” For more information on this issue, the above questions, and many other challenges in the compliance world, use the resource link below to visit CUNA’s Compliance Challenge.
WASHINGTON (8/18/08)--The Credit Union National Association (CUNA) has suggested a series of questions with specific relevance to credit unions that should be explored as part of a Government Accountability Office (GAO) study on interchange fees that was requested recently by three U.S. Senators. “These questions focus on the challenges small card-issuing financial institutions face in working with the card networks to ensure interchange is balanced to support their continued administration of card programs,” explained CUNA President/ CEO Dan Mica in a letter to Sens. Tom Harkin (D-Iowa), Benjamin Cardin (D-Md.) and Olympia Snowe (R-Maine). Last month the three senators asked the GAO to study the interchange issue to help them better assess pending legislation that would regulate interchange rates. Questions that CUNA suggested the GAO consider include:
* How small institutions, such as credit unions, would offset costs if interchange were capped by regulation or legislation; * How new restrictions would affect small institutions’ ability to offer credit and debit cards; * What options do small financial institutions have to increase the interchange fee associated with merchant card acceptance; and * How the ability of merchants to negotiate interchange affect card acceptance and competitive balance in the marketplace?
The Credit Card Fair Fee Act (H.R. 5546) has passed the House Judiciary Committee and a companion bill, S. 3086, has been introduced in the Senate. CUNA opposes the legislation, saying it would adversely affect consumer options, competition and technology innovation. Use the resource link below for the full text of CUNA’s Aug. 14 letter.