WASHINGTON (8/27/13)--The Credit Union National Association said it supports two proposed Financial Accounting Standards Board's (FASB) accounting changes, and reminded the agency that, in both cases, it must understand the unique nature of credit unions, which are member-owned, not-for-profit financial cooperatives, as it continues its work.
FASB should be particularly mindful of areas where "the associated costs outweigh the benefits to the reporting entity and the users of their financial statements," CUNA Senior Assistant General Counsel Luke Martone wrote in a pair of comment letters.
"Financial statement users of a credit union are so very different from those of a bank, including both public and private," he emphasized.
The primary users of credit unions' financial statements are the National Credit Union Administration--the prudential regulator of federally chartered credit unions and insurer of most state and all federally chartered credit unions--and state credit union regulators, Martone noted.
The comment letters were in reference to two separate proposals from FASB's Private Company Council. Following a review of public comments, the council will consider changes to the proposals before submitting them to FASB for a final decision on endorsement.
One proposal, accounting for Goodwill Subsequent to a Business Combination (PCC Issue No. 13-01B), would permit amortization of goodwill (the residual asset recognized in a business combination after recognizing all other identifiable assets acquired and liabilities assumed) and a simplified goodwill impairment model. The proposal is intended to address private-company stakeholder concerns raised about the relevance and complexity of U.S. Generally Accepted Accounting Principles.
Another proposal, Accounting for Identifiable Intangible Assets in a Business Combination (PCC Issue No. 13-01A), would modify the requirement for private companies to separately recognize fewer intangible assets acquired in a business combination.
For more on both comment letters, use the resource links.
ALEXANDRIA, Va. (8/27/13, UPDATED 7:10 p.m. ET)--The U.S. 10th Circuit Court of Appeals issued a ruling Tuesday that will allow the National Credit Union Administration to move forward with its lawsuit against 12 firms, including RBS Securities, which claims losses stemming from residential mortgage-backed securities (RMBS) sold to corporate credit unions.
The agency asked the court on July 31 to expedite its review of an earlier Kansas federal court's ruling that dismissed the claims against Barclays Capital on the grounds they were time-barred and the NCUA hadn't filed the case in time.
NCUA Chair Debbie Matz Tuesday evening issued this statement: "We're pleased with the court's decision. We will continue to pursue our claims against firms that sold faulty mortgage-backed securities to corporate credit unions. As liquidating agent for the corporate credit unions, NCUA has a duty to maximize recoveries from responsible parties in order to limit losses to federally insured credit unions."
As noted, the NCUA filed the lawsuit as the liquidating agent for the corporates. Its lawsuits claim that the brokers' offering documents for the RMBS had material misrepresentations about the underlying loans that backed the securities.
NCUA has filed lawsuits against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual, and Bear Stearns alleging violations of federal and state securities laws in the sale of mortgage-backed securities to the five corporate credit unions.
In related actions, the agency has reached $335 million in settlements with Bank of America, Citigroup, Deutsche Bank Securities and HSBC.
ALEXANDRIA, Va. (8/27/13)--The 15-year-old, one-size-fits-all credit union capital regime "is outdated and insufficient," and is "simply not enough to protect the credit union industry during a serious crisis," National Credit Union Administration Chairman Debbie Matz reiterated in the August edition of The NCUA Report.
The NCUA editorial mirrors remarks Matz made in July, when she said credit unions "need a flexible, forward-looking standard that makes sense for today and tomorrow."
The current 7% leverage capital standard was set in 1998, and recent financial crisis and industry changes mean a newer approach is needed, she said.
So, what's the right amount of capital then, credit unions may ask? The answer, Matz said, is complicated. "The answer will vary from credit union to credit union. But just because it's complicated doesn't mean we should shrink away from finding a solution. On the contrary, it underscores just how important it is to build a new risk-based capital framework for credit unions," Matz wrote.
A developing NCUA plan could result in higher capital levels for credit unions with high concentrations of risky assets. The current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, Matz said, credit unions with assets of $50 million and above could be subject to improved risk-based capital requirements to better correlate required capital levels to risk.
As it moves toward a final rule, the NCUA will give credit unions and other stakeholders plenty of time to comment on the proposed changes. "It's important for us to get it right. With your help, we will. And with your help, the entire credit union industry will be stronger," Matz added.
The Credit Union National Association has supported net worth standard changes that reflect risk better than the present approach but that will not simply add net worth requirements to the current system. CUNA has also been urging the agency to adopt a more productive approach to rulemaking that focuses on problem areas rather than issuing rules with blanket applicability, regardless of the credit unions level of risk. CUNA's Examination and Supervision Subcommittee, which has met with NCUA officials on the capital ratio issue, will be talking again today via telephone conference call on risk based net worth.
For the full NCUA Report, use the resource link.
WASHINGTON (8/27/13, UPDATED 11:25 A.M. ET)--The Federal Reserve Board has filed a consent motion for a stay of U.S. District Court for the District of Columbia Judge Richard Leon's July 31 interchange decision, pending appeal.
This motion was filed with the consent of merchant representatives, who are the plaintiffs in this case. The Fed and merchant representatives have both said they support a longer stay of Leon's order, pending a resolution of the Fed's appeal, Credit Union National Association General Counsel Eric Richard said last week.
The consent motion, which was filed late Monday, follows last Wednesday's hearing in that court, at which Fed General Counsel Scott Alvarez said the board plans to appeal Leon's decision. Alvarez last week said the Fed wishes to bring this case to finality quickly, and would work expeditiously to address interchange case issues once the appeal is filed. The Fed is also planning to file a motion to expedite this appeal, which could bring the case to its conclusion within nine months to one year.
Leon late last month struck down the Fed's rules on debit interchange fees and routing procedures under the Durbin Amendment. He ruled at that time that the Fed did not follow narrow congressional intent when it implemented the cap and other changes imposed by what is known as the Durbin amendment.
The judge has instructed the Fed to rewrite and/or revise the regulations, which require a cap on fees card issuers may charge merchants for their debit transaction services. Briefs on whether the Fed should issue an potential interim interchange rule must be submitted by the Fed, plaintiffs representing merchants, and other interested parties by Aug. 28.
CUNA will join a coalition of financial trade groups in filing a brief.
WASHINGTON (8/27/13)--Modernizing Federal Credit Union Act bylaws to ensure they better reflect the current operating environment for credit unions is a Credit Union National Association priority, and CUNA in this week's Regulatory Advocacy Report
urged all federal credit unions and leagues to identify any current bylaws that are problematic, and forward details to CUNA regulatory staff.
The Federal Credit Union Act requires the National Credit Union Administration board to address and federal credit unions to maintain bylaws. As with other business entities, the bylaws address a broad range of matters concerning a credit union's organization and governance, the relationship of the credit union to its members, and the procedures and rules a credit union follows.
CUNA is currently reviewing NCUA's federal credit union bylaws. The present version contains requirements that are, at best, dated, CUNA noted in this week's RAR. The NCUA bylaws were last updated in 2007, CUNA Deputy General Counsel Mary Dunn said in the report.
"This is a very important effort and we want to work closely with credit unions and leagues to address bylaw concerns, including those that are cumbersome or that make it more difficult for credit unions to serve their members," Dunn noted. Changes that are forwarded to CUNA will be included in a list of recommendations for the NCUA, Dunn added.
Credit unions may also send any nonstandard bylaws that have been approved by NCUA as well as any nonstandard bylaws that have been rejected by NCUA. The rejected nonstandard bylaws will also help CUNA consider additional revisions that should be made to the standard bylaws, she wrote.
Other items addressed in this week's CUNA Regulatory Advocacy Report
The Federal Reserve interchange litigation;
The swearing-in of NCUA Board Member Richard Metsger; and
A Consumer Financial Protection Bureau report on supervisory issues, including those uncovered during mortgage examinations.
Employees or volunteers of CUNA- and state credit union league-member credit unions are invited to sign up below to receive the Regulatory Advocacy Report.
The Regulatory Advocacy Report
is archived on cuna.org
ALEXANDRIA, Va. (8/27/13)--National Credit Union Administration Chair Debbie Matz Monday morning welcomed Richard Metsger to the NCUA board in a special reception at the agency headquarters here.
Matz presented Metsger with his official name plaque as the newest member of the board. He will attend his first open meeting as an agency leader on Sept. 12.
Matz told Metsger, "It is a great honor to join this board. We welcome you and welcome having our full three-person board again."
Metsger responded, "We all share a common goal of having a strong credit union system. Why we are here is to ensure those 95 million Americans that are members can continue their trust of credit unions.
"At the end of the day, what is really important under Chairman Matz's leadership, is we will speak with one voice."
Metsger, who will serve as the 20th NCUA board member, was sworn in Friday by NCUA General Counsel Michael McKenna. He fills the seat vacated late last year after the term of board member Gigi Hyland expired.
Immediately following the swearing-in, Metsger attended a reception in his honor organized by the Northwest Credit Union Association at Credit Union House.
Use the resource link below to access the Metsger biography featured on the NCUA website.
WASHINGTON (8/27/13)--An updated version of Fannie Mae's Desktop Underwriter will be released on Nov. 16.
Changes in the upcoming program revision, Desktop Underwriter version 9.1, include:
The addition of information on Fannie Mae policy changes made to comply with ability to repay provisions of the Dodd-Frank Wall Street Reform Act;
The removal of an interest-only feature, 40-year loan terms, and expanded approval recommendations;
Updated qualifying rate requirements and area median income limits; and
Alterations to minimum credit score requirements.
A series of webinars on the changes began on Aug. 26.
Desktop Underwriter is an automated mortgage loan underwriting program that helps lenders begin the mortgage writing and approval process. The program can give mortgage loan officers an idea of whether a potential borrower would or would not qualify for a given mortgage loan early in the mortgage approval process.
However, Fannie Mae in a release emphasized that the program does not evaluate a loan's compliance with federal and state laws and regulations or whether it meets certain legal standards. The program also does not consider a loan's potential status as a qualified mortgage. Lenders bear sole responsibility for that determination and for compliance with applicable requirements, Fannie Mae wrote.
Fannie Mae is a CUNA Strategic Services provider.
For more on the webinars and the updated program, use the resource link.