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Important exception extended under new CFPB remittance rule

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WASHINGTON (8/25/14)--A final rule issued by the Consumer Financial Protection Bureau (CFPB) Friday extends a temporary exception to its remittance transfer rule, one which allows credit unions and other depository institutions to estimate certain remittance pricing disclosures when specific pricing information is not available.
A remittance generally is a transfer of money by a worker to an individual in his or her home country.
The CFPB rule extends the temporary exception by five years, until July 21, 2020. The Credit Union National Association strongly supported this and other changes to the bureau's existing rules on remittance transfers.
The CFPB explained that an extension of the exception is currently needed because in an open network, under which insured providers like depository institutions operate,  the provider typically does not have control over, or a relationship with, all of the participants in the remittance transfer.
This lack of control can make it difficult to learn all of the potential fees and, in some cases, the exchange rate. During the proposal comment period CUNA and other entities warned that without an extension financial institutions would have been unable to send some transfers to certain parts of the world that they currently serve.
The CFPB makes note, however, that under the Dodd-Frank statute the regulator may not extend the exception beyond the 2020 date.  The bureau said it will be working with credit unions and other affected remittance providers for a "more sustainable solution to this problem."
The new remittance final rule also makes a number of technical and clarifying changes related to error resolution procedures and permissible methods of delivering disclosures. Further, the rule clarifies that U.S. military installations abroad are considered to be located in a state for purposes of the remittance rule. The changes in these areas generally reflect requests CUNA made in its comment letter.
Also, the CFPB released a revised version of its compliance guide to reflect the changes finalized in today's rule.
Use the resource links to access the text of the new rule and the new compliance information.


NEW: John Magill to leave CUNA Sept. 5

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WASHINGTON (8/25/14 12:05 p.m. ET)--Credit Union National Association interim President/CEO Bill Hampel announced this morning that John Magill, executive vice president for government affairs and special assistant to the president, will be leaving his position at CUNA on Sept. 5.
"John Magill has been a significant leader in CUNA's advocacy team for almost nine years, and we wish him well," Hampel said, adding," John will be sorely missed."
Magill, a 30-year veteran of Capitol Hill, joined CUNA in May 2006 as senior vice president of legislative affairs. He was promoted to the executive vice president post in September 2011.
"It's been a fulfilling, rewarding experience and an important part of my life," Magill said of his time at CUNA.  He noted that it is expected that a new CUNA president/CEO will be named in the next few weeks.
"So the timing is right for me to step into my next challenge in our nation's capital, where so many of us are fortunate to work and call home."
As executive vice president for government affairs and special assistant to the president, Magill provided strategic counsel on legislative and political issues while overseeing the day to day operations of those key advocacy areas. He also handled a number of administrative and other related matters inherent in the daily operations of the CUNA Washington office.

Regulatory forecast, deadlines featured at CUNA conference

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BOSTON (8/25/14)--The Credit Union National Association provided a regulatory forecast for the next several months during its Economics and Investment Conference in Boston last week.

Jared Ihrig, CUNA's associate general counsel for regulatory affairs, offered a glimpse into regulations coming from the National Credit Union Administration, Consumer Financial Protection Bureau (CFPB), Federal Financial Institutions Examination Council (FFIEC) and more.

The three-day conference featured a number of speakers and an audience of economists, accountants and other credit union regulatory and compliance staff.

The main topics were:
  • Interest-rate risk: The NCUA called interest-rate risk "the most significant risk the credit union industry faces right now" in a January letter to credit unions. Regulations require at least an annual review or policy to be in place;

  • Cybersecurity: The FFIEC announced a pilot program which will be conducted as part of regular examinations by state and federal regulators. The program, which will feature approximately 250 credit unions, will assess preparedness to identify, manage and control cyberrisks;

  • Member business lending: The NCUA is expected to propose revisions to its member business lending regulations later this year. Despite the promise of bills that would increase the current cap of 12.25% of assets, no congressional action is expected this year on CUNA-supported legislation;

  • Liquidity risks: New liquidity policies applicable to all federally insured credit unions became effective March 31. Credit unions with less than $50 million in assets must maintain a basic written liquidity policy, credit unions with more than $50 million must also have a contingency funding plan featuring strategies for dealing with shortfalls and credit unions with more than $250 million in assets must establish access to at least one contingent federal liquidity source;

  • Fair lending: The CFPB has introduced new Home Mortgage Disclosure Act rules, which require more reporting than the already-increased standards required by Dodd-Frank. CUNA believed the increased requirements will cause hardships for some credit unions. Comments on this proposal are due Oct. 22; and

  • Truth in Lending Act/Real Estate Settlement Procedures Act: New TILA/RESPA integrated disclosure rules will go into effect Aug. 15, 2015, and will consolidate existing mortgage disclosures required under TILA/RESPA into two integrated forms. The CFPB will host a webinar to answer questions about the new rule Tuesday, and will hold several more throughout the implementation process.
Ihrig reminded those in attendance that it is important every credit union ask itself three key questions:
  • What are the laws and regulations your credit unions is subject to across all jurisdictions in which you operate?
  • What is the level of confidence that the credit union is complying with all pertinent laws and regulations?
  • Can the credit unions prove compliance to critical parties, such as board members, investors, regulators and members?
Use the resource links below to access the latest News Now coverage on the above topics.

NCUA reports on impact of new 'small CU' definition

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ALEXANDRIA, Va. (8/25/14)--The National Credit Union Administration's Office of Small Credit Union Initiatives (OSCUI) has released a report on its impact since January 2013, when the agency's definition of "small credit union" changed. The new definition classified a small credit union as those with assets of less than $50 million, up from the previous level of $10 million in assets.

According to OSCUI Director Bill Myers, this change meant that two-thirds of federally insured credit unions now qualified as a small credit union.

"Remarkably, we grew each one of our program areas to meet the increased demand without an increase to our budget or staff. Serving a broader audience of credit unions with our existing resources meant being realistic about which credit unions we should focus on," Myers said in the latest OSCUI report. "We learned to say 'yes' only to credit unions that were most likely to survive. We allotted time for follow up to ensure that credit unions adopted the measures we helped them develop."

During the first year of the new definition, OSCUI:
  • Invested more than 11,000 hours in credit union consultations, the highest number ever;

  • Assisted 21 organizer groups with new charter requests;

  • Offered three grant rounds in one year for the first time, which increased the number of first-time grantees by 51%;

  • Nearly doubled its consulting capacity by introducing two enrollment periods per year;

  • Trained more than 20,000 credit union officials and volunteers; and

  • Reached more than 15,000 viewers with videos, attracted nearly 9,000 participants to monthly webinars and fielded more than 1,000 inquiries through the new online search tool FAQ+. This was done through its Partnerships and Outreach Program.
Use the resource link below to access OSCUI's monthly report.

Supervisory authority, not permissible acts, changed under Fed UDAP action

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WASHINGTON (8/25/14)--New guidance issued by federal regulators has been issued to clarify that while credit practices rules for financial institutions have been repealed, the deceptive acts or practices in the former regulations are still not permissible.

The National Credit Union Administration, along with the Office of the Comptroller of the Currency (OCC), Federal Reserve and Federal Deposit Insurance Corp., have repealed rules as required by the Dodd-Frank Act.

However, the agencies continue to have supervisory and enforcement authority regarding unfair or deceptive acts or practices, which could include ones described in the repealed rules. The agencies may still find that statutory violations exist, even in the absence of a specific regulation governing the conduct, according to a joint press release from the agencies.

In addition, the OCCs existing guidance concerning unfair or deceptive acts or practices remains in effect.

If credit unions and other financial institutions engage in the unfair or deceptive practices described in these former credit practices rules, such conduct may violate the prohibition against unfair or deceptive practices in Section 5 of the Federal Trade Commission Act, as well as several sections of the Dodd-Frank Act.

Use the resource link below to access the full text of the guidance.

Former Texans CU CEO barred from future FI work

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ALEXANDRIA, Va. (8/25/14)--The National Credit Union Administration has issued a cease and desist order to David Addison, former CEO of Texans CU, Richardson, Texas.

The order, to which Addison consented without admitting fault, requires that he not become an employee of, hold any office in or serve as a board member of any federally insured credit union or credit union service organization.

Addison served as CEO of  $1.4 billion-asset Texans CU from 2003 to 2009. The NCUA filed a complaint in federal district county Dec. 20, 2012, alleging Addison was "grossly negligent" in how he ran Texans, which included pursuing a high-risk business and investment strategy. Texans CU is currently under conservatorship.

According to NCUA's complaint, Addison's "gamble with TCU's funds in these high-risk, largely unstable businesses and investments is what caused TCU's ultimate downfall."

"Mr. Addison's actions were very costly to the credit union, and financial institution regulators have a responsibility to hold accountable those parties--institutions or individuals--when they undermine safety and soundness," NCUA Chair Debbie Matz said when the lawsuit was announced.

Since the Texans CU was placed into a conservatorship, TCU has improved operating efficiencies and risk-management strategies, according to the NCUA, and it earned more than $21 million in 2012.

Use the resource link below to access to cease and desist order.