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C-Plant FCU assumes IBEW Local 816 FCU shares after liquidation

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ALEXANDRIA, Va. (8/15/14)--C-Plant FCU, of Paducah, Ky. with $178 million in assets, has completed the purchase and assumption of IBEW Local 816 FCU, also of Paducah, the National Credit Union Administration announced Thursday.

IBEW Local 816, which had $6 million in assets, was liquidated by the NCUA July 10 after the agency determined the credit union was insolvent and had no prospect for restoring viable operations. Former IBEW 816 members are now members of C-Plant, and the credit union has purchased the majority of IBEW's loan portfolio.

Originally chartered in 1951, C-Plant is a federally insured, community-chartered credit union with 15,062 members. C-Plant serves people who live, work, worship or attend school in Ballard, Graves, Livingston or McCracken counties in Kentucky.

Call report focus of new CUNA survey

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WASHINGTON (8/15/14)--The Credit Union National Association has sent a survey to credit union officials asking for opinion on the National Credit Union Administration's 5300 Call Reports. The survey aims to gather information on credit unions' experiences with the call reports and completing and submitting the required data.

The survey was developed by CUNA interim Chief Economist Mike Schenk, and asks respondents to answer on a five-point scale how much they agree or disagree with 21 statements. The statements involve topics from the ease of submission to what changes could reduce regulatory burden. 

CUNA interim President/CEO Bill Hampel said in the e-mail to credit unions that the survey will "enable us to better identify the issues and challenges our nation's credit unions may be facing with respect to the Call Report requirements, and how CUNA can best help address credit unions' needs in this area."

The survey, which should take about five minutes to complete, will be analyzed by CUNA staff confidentially, with only the combined results being reported to CUNA.

Use the resource link to access the survey.

N.Y. fraud prosecution leads to $5.4M recovery for NCUA

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ALEXANDRIA, Va. (8/15/14)--A fraud prosecution by the U.S. Attorney's office of the Northern District of New York has resulted in the National Credit Union Administration receiving a restitution of almost $5.4 million.

The prosecution followed the 2011 liquidation of BCT FCU, Binghamton, N.Y., with $41.3 million in assets, which was purchased by $3.2 billion-asset Visions FCU, Endicott, N.Y.

The recovery followed the seizure of bank accounts and property of Laura Conarton and her son, Scott Lonzinski, both from Pennsylvania. The two provided false documents to BCT FCU to obtain approximately $14 million in loans, which BCT was required to write off.

"An alert NCUA examiner uncovered this fraud, and diligent work by the U.S. Attorney's office and NCUA's Asset Management and Assistance Center made this recovery possible," NCUA Chair Debbie Matz said. "None of BCT's former members suffered losses on their insured shares."

The two pleaded guilty in U.S. District Court in August 2012 to bank/financial institution fraud, and both are serving federal prison sentences.

U.S. Attorney Richard Hartunian said while much of the fraudulently obtained money cannot be recovered, his office seized a total of seven vehicles, three bank accounts, two real estate properties and cash.

The total recovery was $5,391,641, which will be returned to the National Credit Union Share Insurance Fund.

HMDA, fixed-assets proposal now loaded on PowerComment

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WASHINGTON (8/15/14)--The Credit Union National Association has released the first two comment calls with PowerComment, a new online regulatory advocacy resource.
This week, CUNA added proposals on the National Credit Union Administration's (NCUA) FCU ownership of fixed assets proposal and the Consumer Financial Protection Bureau's (CFPB) regulation of Home Mortgage Disclosure Act Regulation C.
CUNA also is soliciting comments on another five proposals currently listed on PowerComment. Credit unions have the ability to email regulators directly through PowerComment.
The site, which is exclusive to CUNA-affiliated credit unions, counts down the number of days left in the comment period, which regulator proposed the regulation, the regulation's publish date and the progress of any letters a credit union has started in the system.
PowerComment also includes a discussion board for each rule to give credit union staff the ability to talk about the rules with other credit unions.
Users can access PowerComment with their username and password.
CUNA and California and Nevada Credit Union Leagues partnered to develop the tool, which helps users efficiently generate and submit letters to regulatory agencies, including the NCUA and CFPB.
In announcing the compliance tool at CUNA's Governmental Affairs Conference in February, CUNA General Counsel Eric Richard said, "We know credit unions feel like the onslaught of regulation in recent years is one of the greatest headwinds facing the future of our movement. And we know credit unions want to do what they can to help shape the regulations. PowerComment will help credit unions take action in the regulatory arena" (News Now Feb. 25).

Five senators urge Commerce chief to improve patent system

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WASHINGTON (8/15/14)--Five senators have written to the U.S. Department of Commerce Patent and Trademark Office urging it to reduce abusive "patent troll" lawsuits. The letter, signed by Sens. Mark Warner (D-Va.), Jeff Merkley (D-Ore.), Mark Begich (D-Alaska), Martin Heinrich (D-N.M.) and Tom Udall (D-N.M.),  pushes for the office to improve the patent process by limiting low-quality, vague patents.
"While it is important that our legal system uphold the rights of intellectual property owners to enforce those rights in court, abusive litigation raises questions about whether too many illegitimate patents are being issued, whether vague patents are being stretched to cover ideas never envisioned by the patent holder and whether more can be done to protect our intellectual property regime from being misused," the senators wrote.
The lawmakers expressed appreciation for the Patent and Trademark office renewed focus on improving patent quality over the past year and encouraged the office to use its other tools to prevent low-quality patents.
The letter suggests the Patent and Trademark Office should:
  • Continually review and assess the operation examiner management system and performance metrics already in place to ensure they incentivize quality over quantity, and that examiner evaluation is not improperly incentivizing approval of low-quality patents;
  • Direct examiners how to ensure complete applications records so any ambiguity in the initial process is documented and resolved. Applications files should provide a clear history of clarified terms and original intent so an approved patent cannot later be twisted to cover future inventions;
  • Determine whether the functional claiming measures are addressing concerns that functional claiming provides a loophole from definite, precise claims and that not all functional claims are held to the relevant standards;
  • Expand the use of crowdsourcing and data analysis to identify types of patents and specific characteristics that are most likely to give rise to ambiguity and produce litigation risk. These areas should be specifically targeted for stronger measures; and
  • Ensure public access to information about patents and their histories, especially the publicly searchable information on the Patent and Trademark Office's website.
The legislators say the overall goal is to address abusive legal actions, while "continuing to encourage innovation and technological advancement."
The Credit Union National Association has urged lawmakers to act to curb the patent system abuses, saying reforms are desperately needed. CUNA and the state credit union leagues have been active on every level urging lawmakers and the Obama administration address patent reform.
Use the resource link below to access the full letter.

Matz to Ohio's Stivers: Risk weights will be refined

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ALEXANDRIA, Va. (8/15/14)--National Credit Union Administration Chair Debbie Matz responded to a letter from Rep. Steve Stivers (R-Ohio) Thursday regarding the agency's risk-based capital (RBC) proposal. Stivers, a member of the House Financial Services Committee, wrote to Matz Aug. 8 questioning the proposal's risk weights, effect on credit unions and the justification for the change.

The Credit Union National Association raised a number of concerns about the risk weights in its comment letter and in follow-up meetings with the NCUA.  Matz has previously pledged that the proposed risk weights would be adjusted in the final rule, and pledged in her letter to Stivers that the agency will "continue to remain mindful" of the trade-offs between the benefits and impacts of the regulation.

According to the NCUA, 2,200 credit unions would be subject to the new rule. Of those 2,200, Matz said half would see an improvement in their capital levels relative to their risks, and would not be required to raise additional capital in order to reduce risk.

"NCUA estimates that under the proposed rule the 201 credit unions downgraded as a result of the proposed rule would need to collectively hold an addition $633 million in capital (equivalent to 0.8% of their combined assets of $80 billion) to reach the well-capitalized level, but only if all 201 choose to maintain their balance sheets' current risk exposures," Matz wrote.

CUNA has raised concerns with NCUA that the impact of the proposal will be far more negative than the agency has indicated.

In providing justification for the new rule, Matz cited several factors, including new Basel capital accounting, the recommendations of the Government Accountability Office and the NCUA's Inspector General and the issuance of new RBC rules last year by the other federal regulators.

Use the resource link below for more information.

Retailer required to refund $350K to scammed servicemembers

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WASHINGTON (8/15/14)--The Consumer Financial Protection Bureau (CFPB) has ordered an end to a company's tactics that are responsible for tricking thousands of servicemembers into paying fees and obtaining legal protections.

USA Discounters Ltd. will repay more than $350,000 in refunds and an additional $50,000 civil penalty for what CFPB Director Richard Cordray called a "scam that was designed to exploit unsuspecting servicemembers."

USA Discounters, based in Norfolk, Va., operates a chain of retail stores selling furniture, electronics, bedding and appliances. Most of the company's stores are located within a few miles of military bases, and USA Discounters uses standardized contracts tailored to members of the U.S. armed forces when dealing with active-duty servicemembers.

Active-duty servicemembers had to agree in a contract with USA Discounters to pay a $5 fee for a company called SCRA Specialists LLC to be represent their rights under the Servicemembers Civil Relief Act (SCRA).

The SCRA provides certain legal protections to active-duty servicemembers, including delaying debt collection lawsuits filed against a servicemember if the court finds that the servicemember's military duty requirements hinder his or her ability to defend himself or herself.

USA Discounters portrayed SCRA Specialists as an independent representative that would perform services characterized as a benefit to servicemembers. Instead, SCRA Specialists helped USA Discounters sue servicemembers and did not perform many of the services that were promised.

The retailer also misrepresented SCRA Specialists as an independent company working on servicemembers' behalf, when in fact SCRA Specialists' sole source of revenue was USA Discounters' customers. USA Discounters gave $4.50 of each $5 fee to SCRA Specialists. The fee was charged in more than 70,000 contracts and generated more than $350,000 since 2009.

According to a report from the investigative journalism website ProPublica, USA Discounters has filed 13,470 lawsuits against servicemembers since 2006.

The CFPB's enforcement action requires the retailer to end its marketing of such contracts to servicemembers and stop charging SCRA fees, in addition to the $350,000 in refunds and $50,000 penalty.

Use the resource links below for more information.

IRS warns of phony payment demands

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WASHINGTON (8/15/14)--Despite tax day being four months ago, taxpayers are still receiving fraudulent phone calls from individuals demanding money while claiming to represent the Internal Revenue Service (IRS).
The IRS reported that, based on the 90,000 complaints that the Treasury Inspector General for Tax Administration (TIGTA) has received, about 1,100 victims have lost $5 million to scammers.
"There are clear warning signs about these scams, which continue at high levels throughout the nation," IRS Commissioner John Koskinen said. "Taxpayers should remember their first contact with the IRS will not be a call from out of the blue, but through official correspondence sent through the mail. A big red flag for these scams are angry, threatening calls from people who say they are from the IRS and urging immediate payment. This is not how we operate. People should hang up immediately and contact TIGTA or the IRS."
Potential victims may receive calls that tell them they owe money that must be paid immediately to the IRS or that they are entitled to big refunds. When unsuccessful the first time, sometimes phone scammers call back trying a new strategy.
The IRS reminds consumers that it:
  • Never asks for credit card, debit card or prepaid card information over the telephone;
  • Never insists that taxpayers use a specific payment method to pay tax obligations; and
  • Never requests immediate payment over the telephone and will not take enforcement action immediately following a phone conversation. Taxpayers usually receive prior notification of IRS enforcement action involving IRS tax liens or levies.
Taxpayers should be aware that there are other unrelated scams (such as a lottery sweepstakes) and solicitations (such as debt relief) that fraudulently claim to be from the IRS.