Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

Washington Archive

Washington

Inside Washington (08/31/2012)

 Permanent link
WASHINGTON (9/4/12)--The Federal Deposit Insurance Corp. (FDIC) Friday released a list of financial institutions that will undergo Community Reinvestment Act (CRA) examinations in the fourth quarter of 2012. The agency noted that its CRA examination schedule is subject to change ...

CUNA leagues arrive in Charlotte to advocate for CUs at DNC

 Permanent link
CHARLOTTE, N.C. (9/4/12)--The Democratic National Convention (DNC) kicked off Monday with a day of family-oriented activities prior to the launch of official convention events, and credit union representatives, including staff from the Credit Union National Association (CUNA) and the state credit union leagues, are here to raise the profile of credit unions and credit union issues during this convention week.

Click for slide showThe nation observed Labor Day Monday and the Democratic National Convention organized a family-oriented event in Charlotte, N.C. to serve as a kind of "soft launch" to official convention events that start today.
Credit union participation in the Monday through Thursday DNC, as well as last week's Republican National Convention (RNC) in Tampa, Fla., follows a long tradition, started in 1988, of keeping credit unions and the credit union philosophy of "people helping people" in the national spotlight at the political conventions.

This week's credit union activities come on the heels of a successful RNC presence, which included the participation of Ann Romney--wife of Republican presidential candidate Mitt Romney--participating in a CUNA- and league-sponsored event. 

Ann Romney helped CUNA President/CEO Bill Cheney and representatives from CUNA, the Southeastern Credit Union Foundation, the League of Southeastern Credit Unions, the National Journal Group, CUNA Mutual Group, CO-OP Financial Services and  others at a ribbon cutting ceremony for a new therapeutic playground at All Children's Hospital in St. Petersburg, Fla. 

At the top of her remarks at the ribbon cutting ceremony, Romney thanked credit unions for their fundraising efforts that made the playground project possible.

A comparable "leave-behind" project will be a credit union highlight this week in Charlotte when, on Wednesday, credit unions will unveil a renovated rooftop playground for young patients at Levine Children's Hospital--a project that has been in the design and creation process for many months. Assistant House Democratic Leader Jim Clyburn (D-S.C.), will join CUNA CEO Bill Cheney and National Journal Editor-in-Chief Ron Fournier in cutting the ribbon on the playground.

This year's Charlotte playground renovation efforts received extensive local media coverage, as demonstrated here, in a group shot with volunteers and a local news reporter. (Photo provided by the North Carolina Credit Union League)


Also during the convention, CUNA is a sponsor of the National Journal's Convention Daily Briefings, which will feature party newsmakers here, as it did in Tampa.

The on-site events feature moderators such as Ron Brownstein, a two-time finalist for the Pulitzer Prize for his coverage of presidential campaigns and National Journal Group's editorial director;Chuck Todd, the chief White House correspondent for NBC News; Good Morning America co-host George Stephanopoulos; and NBC correspondent Chelsea Clinton, as well as speakers and panelists such as Rep. Nancy Pelosi (D-Calif.) and former Republican senator from Mississippi Trent Lott.

On Wednesday, CUNA, CUNA Mutual Group, state credit union leagues, and credit unions will host an event to honor all delegates attending the convention at the Aria Tuscan Grill Restaurant. In addition to delegates, every Democratic member of the U.S. Congress has been invited and as of late last week more than 200 total invitees had accepted the initiation.

This, and a similar event at the RNA in Tampa, serve to draw convention dignitaries to a credit union-sponsored event to highlight credit unions, their operating  philosophy of "people helping people," and  credit union issues.

Trey Hawkins, CUNA vice president of political affairs, says CUNA participation in the national conventions overall is "an opportunity to continue to develop our political brand."  Hawkins adds, "The conventions are an opportunity to talk to and communicate with all of the policy and media and political elites in one place. That's an opportunity we want to take on behalf of credit unions."

Watch CUNA's News Now and its Twitter-fed updates on NewsNowLiveWire for up-to-the-minute coverage of credit union involvement at the DNC this week.

CFPB extends finance charge mortgage test comment deadline

 Permanent link
WASHINGTON (9/4/12)--The comment period for potential changes to the Consumer Financial Protection Bureau's (CFPB) definition of "finance charge" as it relates to mortgage loans and the agency's high-cost mortgage coverage test under the Home Owners Equity Protection Act has been extended until Nov. 6, the CFPB said on Friday.

The agency was scheduled to end the comment period for these proposed changes on Sept. 7.

"Stakeholders, including credit unions, leagues and CUNA will appreciate the additional time to review and consider how the proposals affect credit union operations," Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said following the announcement.

Under the CFPB's finance charge proposal, lenders would be required to include most up-front costs associated with a mortgage in the finance charge disclosed to borrowers. Loan charges or fees would need to be included in the finance charge, but late fees, delinquency or default charges, seller's points, some escrow payments and most insurance premiums would not need to be included.

The CFPB said it wants the APR "to be a more accurate reflection of the overall cost of credit."

CUNA in a July comment call asked credit unions which fees should be removed from or added into the proposed finance charge structure, and whether the proposed changes to the finance charge structure would create financial or compliance burdens for credit unions. For the comment call, use the resource link.

The CFPB's high-cost mortgage rulemaking would alter the coverage test for high-cost mortgages to account for the higher APRs that could be caused by the finance definition changes.

Both of these proposed changes are part of the CFPB's ongoing mortgage reform efforts, which include a project that would combine Truth in Lending Act and Real Estate Settlement Procedures Act disclosures into a single document.

"Last week, CFPB Director Richard Cordray told a CUNA audio conference that the agency wants to be mindful of concerns credit unions raise about the impact of their rulemakings, and the decision to delay the comment deadline is a small but positive step in that direction," Dunn added.

Membership loan increases good news for economy CUNA

 Permanent link
WASHINGTON (9/4/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney said the addition of 1.3 million new members in the first half of 2012, as reported in National Credit Union Administration (NCUA) statistics released Friday, shows "more and more consumers are eager to take advantage of the financial benefits they can realize at credit unions."

The addition of 1.3 million members in just the first half of this year is more than credit unions realized in full-year 2010 and 2011 combined, and is the second-highest increase in the past decade. "Needless to say, 'Bank Transfer Day' seems to continue to have an impact," Cheney added.

The agency also reported a membership increase of 643,322 during the second quarter of 2012, and the 93.1 million credit union members nationwide deposited an additional $2.7 billion in savings into their credit unions, the NCUA added.

Total loan balances increased by 1.7% in the second quarter of 2012, bringing the amount of outstanding loans held by credit unions to $581.7 billion, the NCUA reported. This increase, the largest recorded since the fall of 2008, shows that credit unions "are playing an important role in efforts to create jobs, stimulate small businesses, and revitalize communities," NCUA Chairman Debbie Matz said Friday. 

First mortgage loans increased by 1.7%, new and used auto loans each rose by 2.8%, member business lending grew by 1.2%, and short-term small-amount loans increased by 23.9% during the quarter, the NCUA added.

This is the fifth straight quarter the NCUA has reported positive loan growth at credit unions. Moreover, first-half 2012 credit union loan originations topped $155 billion -- a $35 billion, 29% increase compared to same-period results in 2011. The total 2012 first quarter credit union loan originations set records on several fronts: The total granted, and the increases -- both in dollar and percentage terms -- far surpassed any results reported over the past 20 years, CUNA senior economist Mike Schenk said.

"With lending on the rise, it's also clear that credit unions are helping consumers and small businesses dig out of the great recession and help our nation's economy recover," Cheney said.

The credit union industry's overall performance grew stronger in almost every category during the quarter. "Assets, earnings, and net worth rose, as charge-offs, bankruptcy filings, and loan loss reserves declined," Matz said.

The agency reported:

  • Credit union net worth grew 2.1% to $102.4 billion;
  • Credit union industry total assets increased 0.6% to $1.007 trillion;
  • Total savings increased 0.3% to $868.8 billion; and
  • Credit union net income increased by 2.9% to $2.13 billion.
The overall credit union delinquency ratio fell by 24 basis points (bp), totaling 1.2% at the end of the second quarter. Credit unions' net charge-off ratio declined by 3 bp, totaling 0.75% at the end of the quarter, and new bankruptcy filings fell by 17.3% when compared to the previous quarter's total. However, the agency reported, the percentage of loans that were charged off due to bankruptcy increased to 21.4%. Bankruptcy-related charge-offs accounted for 20.8% of charged-off loans reported in the previous quarter, according to the NCUA.

For the full NCUA release, use the resource link.

CUNA doc updates CFPB priorities

 Permanent link
WASHINGTON (9/4/12)--The latest information on the Consumer Financial Protection Bureau's (CFPB) mortgage, remittance and general supervisory work is covered in a new Credit Union National Association (CUNA) regulatory update on that agency's projects.

The CUNA document reports on many CFPB priorities, including the agency's recent work regarding ability to repay mortgage rules, appraisals, mortgage origination and servicing standards, remittance transfers, and the Home Mortgage Disclosure Act. Details and links to documents addressing the CFPB's ongoing project to combine Truth in Lending Act and Real Estate Settlement Procedures Act disclosures into a single document are also provided in the release.

The document is current as of Aug. 31.

For the full release, use the resource link.

NEW NCUA notes loan membership increases in 2012 2Q

 Permanent link
ALEXANDRIA, Va. (UPDATED: 12:45 p.m. ET, 8/31/12)--The total amount of loans made by credit unions increased by 1.7% in the second quarter of 2012, bringing the total amount of outstanding loans held by credit unions to $581.7 billion, the National Credit Union Administration (NCUA) reported. This increase, the largest recorded since the fall of 2008, shows that credit unions "are playing an important role in efforts to create jobs, stimulate small businesses, and revitalize communities," NCUA Chairman Debbie Matz said today.

This is the fifth straight quarter the NCUA has reported positive loan growth at credit unions.

Matz in an NCUA release noted the credit union industry's overall performance grew stronger in almost every category during the quarter. "Assets, earnings, and net worth rose, as charge-offs, bankruptcy filings, and loan loss reserves declined," she said.

The agency reported:

  • Credit union net worth grew 2.1% to $102.4 billion;
  • Credit union industry total assets increased 0.6% to $1.007 trillion;
  • Total savings increased 0.3% to $868.8 billion; and
  • Credit union net income increased by 2.9% to $2.13 trillion.
The agency also reported a membership increase of 643,322 during the quarter, and the 93.1 million credit union members nationwide deposited an additional $2.7 billion in savings into their credit unions.

The Credit Union National Association's (CUNA) economics and statistics staff continues to comb through these NCUA numbers, and a CUNA analysis will be featured in Tuesday's issue of News Now.

Inside Washington (08/30/2012)

 Permanent link
  • TAMPA, Fla. (8/31/12)--Real estate and mortgage industry insiders are seeking an audience with legislators at this week's Republican National Convention, and will be doing the same at next week's Democratic gathering in Charlotte, N.C. And the insiders are discussing key issues as they meet with lawmakers (American Banker, Aug. 30). Potential elimination of the mortgage interest tax deduction, and the impact of the Dodd-Frank Wall Street Reform Act, are among the topics being discussed. The housing industry representatives are working to convince lawmakers to leave mortgage deduction changes out of any future tax solutions, noting that a strong real estate market would help along the ongoing economic recovery. Dodd-Frank risk-retention regulations have also been discussed …

CUNA releases remittance amendment analysis

 Permanent link
WASHINGTON (8/31/12)--The Credit Union National Association (CUNA) has released a final rule analysis of the Consumer Financial Protection Bureau's (CFPB) recent amendments to a remittance transfer rule that was issued in February.

The bureau's new remittance disclosure rule will take effect Feb. 7. This final rule addresses only  safe harbor and preauthorized transfers. It affects international wires and international automated clearinghouse (ACH) transfers.

Under the rule, disclosures must generally be provided when the consumer first requests a transfer and again when payment is made. The rule also provides consumers with error resolution and cancellation rights.

One of the amendments would create a safe harbor from these rules for financial institutions that provide 100 or fewer transfers per year. The amendments also specify other changes regarding disclosures for transfers that are scheduled in advance, including preauthorized transfers that are authorized in advance to recur at substantially regular intervals.

For the final rule analysis, use the resource link.

Republican National Convention Thursday highlights

 Permanent link
TAMPA, Fla. (8/31/12)--With 2,286 delegates and 2,125 alternate delegates, representing all 50 states, the District of Columbia and five U.S. territories, gathered to participate in the Republican National Convention (RNC) here this week, it became official last night: Mitt Romney, in a televised speech, accepted his party's nomination to be Republican candidate for the presidential race to be voted in November.

Activities on the convention floor last night, held at the Tampa Bay Times Forum and leading up to the culminating Romney acceptance speech, included a call to order by House Speaker John Boehner of Ohio and convention addresses by Republican figures such as Rep. Connie Mack of Florida, former Speaker of the House Newt Gingrich and his wife, Callista, former Florida Governor Jeb Bush, and Sen. Marco Rubio of Florida.

The program also prominently featured a video on the legacy of former President Ronald Reagan.

The RNC Thursday also unveiled three "These Hands" videos profiling small business owners in Colorado, Nevada and Ohio.

And to wrap up the night's event, musician and former American Idol star Taylor Hicks performed at the forum. Hicks performed earlier this year at the kickoff concert for the Credit Union National Association's CUNA's 2012 Governmental Affairs Conference in Washington, D.C.

Cheney CUs note reg burdens in CFPB call

 Permanent link
WASHINGTON (8/31/12)--Credit union callers and Credit Union National Association (CUNA) President/CEO Bill Cheney noted the growing concerns about the regulatory burdens faced by credit unions in a Thursday audio conference with Consumer Financial Protection Bureau (CFPB) Director Richard Cordray.

During the call, Cheney noted that, in his travels among credit unions and to their gatherings, many have told him they are overwhelmed by regulations. He said that credit unions operated differently from other financials before, during, and after the financial crisis and that "nobody needs to protect consumers from credit unions."

To that end, the CUNA president urged the CFPB director to help credit unions avoid any unneeded regulations, where possible. He pointed out that, while many of the rules written by the CFPB are mandated by the Dodd-Frank Wall Street Reform Act, the agency also has broad authority to exempt credit unions and other financial institutions from resulting regulations.

Credit union representatives who participated in the call also discussed their own issues with the CFPB director. One credit union representative said the CFPB does not directly notify regulated entities when a new proposed regulation has been released, and asked if the CFPB could reach out to institutions electronically.

He noted that some federal regulators provide information on their regulatory proposals to e-mail list recipients, and said that the CFPB could help credit unions and their compliance officers by taking similar actions.

Another call participant said earlier notification of proposed rule releases would help give credit unions the time needed to fully formulate their thoughts on a given proposal before the comment deadline passes. While many regulators tie open comment deadline dates to the date that their new rules are published in the Federal Register, that is not currently the CFPB's practice.

The CFPB's work with the National Credit Union Administration and other regulators, and the agency's pending mortgage regulation changes, were also topics of discussion during the call. Participants also called on the CFPB to take additional actions to gauge a given regulation's short- and long-term impacts on consumers and financial institutions alike.

The CFPB will again be the central topic at a Sept. 6 CUNA webinar. That webinar, which will feature CUNA Deputy General Counsel Mary Dunn, CUNA Senior Assistant General Counsel Jared Ihrig and Andrea Stritzke, vice president of regulatory compliance for PolicyWorks, will address the CFPB's proposed mortgage rules. This webinar will also focus on the agency's proposed "higher-risk" mortgage appraisal rule and the recently approved Regulation B appraisal proposal.

To register for the Sept. 6 webinar, use the resource link.

Convention wraps CUs involved to the end

 Permanent link
TAMPA, Fla. (8/31/12)--Credit Union National Association (CUNA), state credit union league, and credit union involvement at the Republican National Convention (RNC) continued Thursday, even after the climatic events a day earlier that included Ann Romney helping to launch the credit union-supported therapeutic playground project at All Children's Hospital and a separate, Tampa-flavored CUNA gathering to honor convention delegates and members of the U.S. Congress.

CUNA senior officials, including President/CEO Bill Cheney, continued to have a presence at the Tampa Bay Times Forum convention venue and attended the Thursday night acceptance speech of Mitt Romney to become the Republican candidate for president.

Earlier in the day, CUNA, as it had done all week, sponsored the National Journal Group morning convention briefing Thursday. The final session was called "View from the Top: A Conversation with Campaign Managers and Senior Strategists" and included panelists: John Brabender of Brabender Cox; Terry Nelson of FP1 Strategies; and Sara Fagen of DDC Advocacy. CUNA is sponsoring similar National Journal Group briefings all next week at the Democratic National Convention in Charlotte, N.C.

Credit unions have had a strong presence at the RNC all week.  Leagues represented here have included:

  • League of Southeastern Credit Unions;
  • California and Nevada Credit Union League;
  • Mountain West Credit Union Association;
  • North Carolina Credit Union League;
  • Credit Union Association of New Mexico;
  • Michigan Credit Union League.
Credit union events here culminated Wednesday when Ann Romney, wife of Republican presidential nominee--now candidate--Mitt Romney, helped CUNA, the League of Southeastern Credit Unions and other credit union and hospital representatives open a new therapeutic playground at the hospital in nearby St. Petersburg in a ribbon cutting ceremony. (See Aug. 30 News Now: Ann Romney praises CU RNC effort to enrich Tampa community.)

At the beginning of her remarks there, Romney thanked credit unions for their fundraising efforts that made the playground project possible.

Later Wednesday, CUNA sponsored an event to honor delegates and lawmakers participating in the RNC. Working with Arturo Fuente Jr., the head of a 100-year-old Tampa-based family business--Tampa Sweetheart Cigars, which makes and sells famous cigars, as well as distributes to other cigar shops--CUNA hosted about 300 RNC delegates at a reception, which included about two dozen federal and state lawmakers.

The reception was held on the grounds of GTE Financial, a credit union in Tampa. Fuente is a board member at GTE Financial.

CUNAs Cheney meets with Republican leadership at RNC events

 Permanent link
TAMPA, Fla. (8/31/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney Wednesday night was able to engage in spontaneous meetings with top Republican leadership, including Senate Minority Leader Mitch McConnell of Kentucky, as he attended Republican National Convention (RNC) events and addresses at the Tampa Bay Times Forum, the RNC venue here.

Cheney and GOP leaders discussed the economy, election issues and more, and Cheney shared the credit union perspective with Senate and House Republicans.

Cheney and other top CUNA and league officials continued the credit union presence at the RNC last night as Mitt Romney accepted his party's nomination to be its presidential candidate.

CUNA, the state credit union leagues, and credit unions have been active all week in RNC events.

Next week in Charlotte, N.C., the credit union representatives will blanket the Democratic National Convention to establish a presence there, also.

Ann Romney praises CU RNC effort to enrich Tampa community

 Permanent link
TAMPA, Fla. (8/30/12)--Ann Romney, wife of Republican presidential nominee Mitt Romney, helped Credit Union National Association (CUNA) President/CEO Bill Cheney and other credit union and hospital representatives open a new therapeutic playground at All Children's Hospital in St. Petersburg Wednesday.

At the beginning of her remarks at the ribbon cutting ceremony to open the playground facility for use, Romney thanked credit unions for their fundraising efforts that made the playground project possible.

Click for slide showAnn Romney, wife of the GOP nominee for president, Mitt Romney, greets CUNA President/CEO Bill Cheney as she arrives at the ribbon cutting ceremony marking the end of many months of work by CUNA, the state credit union leagues, credit unions and others (see story text for more project sponsors). The ceremony also marks the beginning of a new therapeutic playground for young patients at All Children's Hospital in St. Petersburg. Romney praised the fundraising efforts of the state leagues and credit unions to fund this "wonderful" playground. (CUNA Photo)

[Click for larger view]
Romney joined Cheney and representatives from CUNA, the Southeastern Credit Union Foundation, the League of Southeastern Credit Unions and the National Journal Group, CUNA Mutual Group and others at the ribbon cutting ceremony for the playground, saying the project was one way to help "make people's lives better."

The new play space will serve All Children's Hospital and patients in the area, and features special play equipment designed for the rehabilitation process. New plants were brought in and a retaining wall was constructed as part of the playground renovation process.

Cheney said the playground project is emblematic of the credit union philosophy of "people helping people."

"This newly revitalized playground will provide a beautiful place for healing and play--a place where children undergoing treatment here can have the joy of just being able to climb, swing, and pretend," Cheney said in prepared remarks. "Sometimes, as I think all the parents here would agree, that can be the best medicine of all."

He noted that hundreds of man hours, as well as hundreds of thousands of dollars in charitable contributions, have been dedicated by credit unions in the Tampa Bay area and across the country in support of the project. Cheney also offered special thanks to Patrick La Pine, CEO, and Mary Wood, member of the board, of the League of Southeastern Credit Unions, and the Southeastern Credit Union Foundation, as well as recognized the strong support of CUNA Mutual Group and CO-OP Financial Services.

The charitable "leave behind" project is in honor of the 2012 Republican National Convention, which began Monday in Tampa and is scheduled to continue through Thursday.

A similar project to renovate a rooftop playground is also underway at Levine Children's Hospital in Charlotte, N.C. The Charlotte renovation project will honor the 2012 Democratic National Convention. That convention begins next week.

CUNA honors RNC delegates the Tampa way

 Permanent link
TAMPA, Fla. (8/30/12)--The Credit Union National Association (CUNA) Wednesday afternoon sponsored an event to honor delegates participating in the Republican National Convention (RNC) being held here this week, and the event highlighted a product for which Tampa is well-known--quality cigars.

Click to view larger imageJoann Sordellini (left), CUNA's director of political affairs and special projects, poses with Arturo Fuente Jr., in a shop of his 100-year-old, family-owned business, Tampa Sweetheart Cigars, after the two discuss final details of a CUNA event to honor RNC delegates, which featured Fuente's product. (CUNA Photo)
Working with Arturo Fuente Jr., the head of a 100-year-old Tampa-based family business--Tampa Sweetheart Cigars, which makes and sells famous cigars, as well as distributes to other cigar shops--CUNA hosted about 300 RNC delegates at a reception.  

The reception was held on the grounds of GTE Financial, a credit union in Tampa.  Fuente is a board member at GTE Financial.

The CUNA reception for delegates also drew RSVPs from almost two dozen Republican members of the U.S. Congress. Their attendance provided a wealth of opportunity for CUNA and state credit union league representatives to represent the credit union movement at this important national political scene and even address legislative priority issues, such as increased member business lending authority and alternate sources of capital for credit unions.

Click to view larger imageTampa Sweethearts Cigar Shop. (CUNA Photo)
Another topic of conversation at the reception was the day's earlier credit union event, in which CUNA, the state league, and credit unions joined with partners to unveil a therapeutic playground for young patients at nearby All Children's Hospital.

There was a ribbon cutting ceremony--at which GOP presidential nominee Mitt Romney's wife, Ann, participated and praised credit union efforts. (See related story: Ann Romney praises CU RNC effort to enrich Tampa community.)

Republican National Convention Wed. highlights

 Permanent link
TAMPA, Fla. (8/30/12)--Convention delegates on Wednesday eagerly anticipated Rep. Paul Ryan's (R-Wis.,) acceptance of the GOP nomination to be its vice presidential candidate on a day that also saw Ann Romney join the Credit Union National Association (CUNA), state credit union league and credit union representatives for the unveiling of credit unions' "leave behind" project at All Children's Hospital near Tampa.

Ann Romney attends CU "leave behind" event: After wowing the convention hall in her speech the night before, Ann Romney on Wednesday morning attending the ribbon cutting ceremony unveiling the therapeutic playground at All Children's Hospital in St. Petersburg. The wife of GOP presidential nominee Mitt Romney thanked credit unions for their fundraising efforts that made the "leave behind" project possible. Similarly, in his comments, CUNA President /CEO Bill Cheney noted that, "Hundreds of man hours, as well as hundreds of thousands of dollars in charitable contributions, have been dedicated by credit unions in the Tampa Bay area and across the country to have this convention's leave behind project come to fruition." (See full story: Ann Romney praises CU RNC effort to enrich Tampa community.)

Paul Ryan's acceptance speech:  The acceptance speech by Mitt Romney's vice presidential pick, Paul Ryan, was the Republican party highlight of the day's convention activities. Ryan discussed the nation's economy and  GOP's efforts to help the middle class.

Remarks from other GOP luminaries: Throughout the day, delegates gathered at the Tampa Bay Times Forum heard from such party notables as Sens. Mitch McConnell and Rand Paul of Kentucky; Arizona Sen.  John McCain; Ohio Sen. Rob Portman; former Minnesota Gov. Tim Pawlenty; former Arkansas Gov. Mike Huckabee; former Secretary of State Condoleezza Rice; and New Mexico Gov. Susana Martinez.

CUNA-sponsored Daily Briefings:  CUNA is also a sponsor of a morning daily convention briefing organized by the National Journal Group. The Wednesday program was called "Down Ballot: The Top Senate and House Races for the Cycle" and brought together Rep. Pete Sessions (R-Texas) and David Wasserman, House editor for The Cook Political Report, to predict which party will win a majority in each chamber of Congress.

See the rest of today's News Now for more reports on credit union activities related to the convention

Inside Washington (08/29/2012)

 Permanent link
WASHINGTON (8/30/12)--The National Credit Union Administration has released an archived version of its Aug. 14 webinar. That webinar featured discussion of low-income credit union issues, Central Liquidity Facility changes and the agency's new proposed rule on credit union access to emergency liquidity ...

Disaster relief activated by NCUA in Isaacs wake

 Permanent link
ALEXANDRIA, Va. (8/30/12)--The National Credit Union Administration (NCUA) has activated its disaster relief policy to help credit unions, members and others in affected areas of the Gulf Coast cope in the aftermath of Hurricane Isaac, which is now a tropical storm.

The disaster relief policy helps to ensure the continuity of credit union services in storm-impacted areas.

The agency in a release reminded credit unions and members that the National Credit Union Share Insurance Fund (NCUSIF) is always backed by the full faith and credit of the U.S. government, and said member share accounts are insured up to $250,000.

The NCUA said credit unions in impacted areas should do what they prudently can to recognize financial disruptions for both individuals and businesses, and can take actions to ensure credit is available to those in need.

Those actions can include:

  • Extending the terms of loan repayments;
  • Making loans with special terms or reduced documentation standards available to members;
  • Restructuring a borrowers debt obligations; and
  • Easing credit terms for new loans to certain borrowers, consistent with prudent practices.
NCUA examiners will soon survey credit unions in storm-impacted areas, and may reschedule examinations for impacted credit unions, if needed.

The agency alert also reminds federal credit unions that they may also provide assistance to other credit unions, their members and non-members in areas affected by the disaster, under certain conditions. They include:

  • Emergency financial services for non-members, including check cashing, access to ATM networks, or other services to meet short-term emergency needs of individuals. These services can be provided under the authority to engage in charitable activities. Federal credit unions providing services on this charitable basis may not impose charges for services that exceed their direct costs; and
  • Services to other credit unions that a credit union is authorized to perform for its own members or as part of its operations. This activity is part of a federal credit union's incidental powers, so it may impose charges for these services.
Isaac made landfall as a hurricane at 6:45 p.m. Tuesday but was downgraded back to tropical storm status on Wednesday afternoon. The weakening storm continued to rake Louisiana and Mississippi with heavy rains and high winds as it slowly moved through those states Wednesday. Storm surges and flooding have posed the greatest threats so far, with intense flooding reported in many areas. (See related News Now story: Isaac stalls, while CUs wait it out)

For the full NCUA release, use the resource link.

NCUA sets Sept. 20 TDR webinar

 Permanent link
ALEXANDRIA, Va. (8/30/12)--Loan workouts, nonaccrual policies and troubled debt restructured (TDR) loan reporting will be the top topics at a Sept. 20 National Credit Union Administration (NCUA) webinar.

The webinar, which is scheduled to begin at 2:30 p.m. ET, will be moderated by NCUA Office of Examination & Insurance Program Officer Lisa Dolin and will feature insight from NCUA Region III Specialized Lending Examiner Jeff Marshall, NCUA Office of Examination and Insurance Chief Accountant Karen Kelbly, and Sydney Garmong and Mark Taylor of consulting firm Crowe Horwath.

Recent NCUA supervisory guidance will be the focus of the webinar.

New NCUA TDR rules, which were released this spring, allow credit unions to modify TDR loans without having to immediately classify those loans as delinquent. The rules also set consistent standards for the management of loan workout arrangements that assist borrowers, and eliminate confusion between TDRs and other loan modifications.

Under the rules, credit unions need to establish their own written policies for management loan workout arrangements. These written loan workout policies must be completed by Oct. 1.

TDR loans, which have very specific accounting and reporting requirements, include certain loan modifications where a credit union or other lender grants a concession--often involving modification to the terms of a loan--to a borrower that it would not have otherwise provided based on the borrower's financial situation. The financial statement and call report treatment of TDRs are also unique.

To register for the free NCUA webinar, use the resource link.

CU-supported candidates see primary gains

 Permanent link
WASHINGTON (8/30/12)--A trio of credit union-supported candidates fared well in their respective Arizona and Oklahoma primary contests Tuesday.

Current U.S. House member Rep. Jeff Flake (R-Ariz.), who has the support of the Credit Union National Association's (CUNA) Credit Union Legislative Action Council (CULAC), defeated businessman Wil Cardon on Tuesday. Flake will serve as the Republican nominee for a U.S. Senate seat after winning 70% of the primary vote, and will face Democratic candidate and former U.S. Surgeon General Richard Carmona in November.

Another CULAC-supported House incumbent, Rep. Ron Barber (D-Ariz.), will fight to retain his seat for a full term this fall after he won his own Tuesday primary contest by a 65-precentage-point margin. Barber, who took on the seat held by now-retired Rep. Gabrielle Giffords after he won a special election this summer, will face Republican nominee and former Air Force Colonel Martha McSally this fall.

Former Arizona State House speaker Kirk Adams (R), a consistent credit union supporter and Arizona Credit Union League legislator of the year, was defeated in his Republican House primary contest by former Congressman Matt Salmon. Salmon won 54% of the total vote to Adams' 46%.

In Oklahoma, CULAC- and Credit Union Association of Oklahoma-backed candidate Markwayne Mullin won his Republican nomination contest, gaining nearly 57% of the total vote. He will face Democrat Rob Wallace in November for the right to replace retiring Rep. David Boren (D) in the House.

Lakota FCU charter approved by NCUA

 Permanent link
ALEXANDRIA, Va. (8/30/12)--Lakota FCU, a newly chartered low-income federal credit union, will begin serving the 40,000 people that live, work, worship, volunteer, attend school and transact business in South Dakota's Pine Ridge Reservation in November, the National Credit Union Administration (NCUA) said in a Wednesday release.

The agency said around 40,000 people will be able to access financial services through the credit union.

Noting that many Native Americans who live on reservations have access only to predatory lenders, NCUA Chairman Debbie Matz said the credit union "has the potential to play an important role on a 2.2 million-acre reservation that has no other access to federally insured financial services."

The credit union, which will be sponsored by Lakota Funds, a 26-year-old non-profit Community Development Financial Institution located in Kyle, S.D., plans to offer a number of financial options to its members. Those products include regular shares, share certificates, unsecured loans, share secured loans, auto loans, money orders, cashier checks, direct deposits, wire transfers, and check cashing, the NCUA said. Financial literacy and membership education initiatives will also be key elements of the credit union's mission.

Credit Union Association of the Dakotas President/CEO Robbie Thompson said Lakota Funds "has worked very hard at getting their new charter and getting this credit union up and running.

"They are in one of the poorest areas of the country and the people there will greatly benefit from having a credit union. Our Association is excited for them and the services that a credit union will bring to the reservation, and we look forward to supporting them any way we can," he added.

Lakota FCU is the second low-income federal credit union to be chartered in the past week. The NCUA last Friday approved the charter of New Brunswick, N.J.'s Internet Archive FCU. That credit union is scheduled to open in October and will offer regular share accounts, share secured loans and signature loans to members. (See Aug. 27 News Now story: 2012 sees its first new FCU charter)

NEW Ann Romney helps CUNA CUs open renovated play space

 Permanent link
TAMPA, Fla. (UPDATED: 12:15 P.M. ET, 8/29/12)—Ann Romney, wife of Republican presidential nominee Mitt Romney, helped Credit Union National Association (CUNA) President/CEO Bill Cheney and other credit union and hospital representatives open a new therapeutic playground at All Children's Hospital today.

Click to view larger image CUNA President/CEO Bill Cheney and Ann Romney, center, are joined, from the left, by RNC Committee on Arrangements Chairman Alec Poitevent, Romney's granddaughter Chloe, and Maggie Reilly of Tampa's All Children's Hospital.
Romney joined Cheney and representatives from CUNA, the Southeastern Credit Union Foundation, the League of Southeastern Credit Unions and the National Journal Group, CUNA Mutual Group and others at the ribbon cutting ceremony for the playground, saying the project was one way to help "make people's lives better." She also thanked credit unions for their fundraising efforts.

The renovated play space will serve All Children's Hospital and patients in the area, and features special play equipment designed for the rehabilitation process. New plants were brought in and a retaining wall was constructed as part of the playground renovation process.

Cheney said the playground project is emblematic of the credit union philosophy of "people helping people.

"This newly revitalized play ground will provide a beautiful place for healing and play—a place where children undergoing treatment here can have the joy of just being able to climb, swing, and pretend," Cheney said in prepared remarks. "Sometimes, as I think all the parents here would agree, that can be the best medicine of all."

He noted that hundreds of man hours, as well as hundreds of thousands of dollars in charitable contributions, have been dedicated by credit unions in the Tampa Bay area and across the country in support of the project. Cheney also offered special thanks to Patrick La Pine; CEO and Mary Ott Wood, chairman of the League of Southeastern Credit Unions, and the Southeastern Credit Union Foundation, as well as recognizing the strong support of CUNA Mutual Group and CO-OP Financial Services.

The charitable "leave behind" project is in honor of the 2012 Republican National Convention, which began Monday in Tampa and is scheduled to continue through Thursday.

A similar project to build a rooftop playground is also underway at Levine Children's Hospital in Charlotte, N.C. The Charlotte renovation project will honor the 2012 Democratic National Convention. That convention begins next week.

See News Now Thursday for more details about Romney and this CUNA leave-behind project.

GOP convention overview CUNA leagues busy with events

 Permanent link
TAMPA, Fla. (8/29/12)--Representatives from the Credit Union National Association (CUNA), the state leagues and credit unions took full advantage yesterday of the opportunity to interact with key policy makers on the first full day of the Republican National Convention (RNC).  Here is an overview of the activity:

  • Junior Achievement/Financial Literacy: CUNA Executive Vice President John Magill, League of Southeastern Credit Unions League Vice President of Governmental Affairs Jared Ross, and the league's director of governmental affairs, Jason Cochran, represented credit unions at an event in nearby St. Petersburg honoring Junior Achievement.  The session highlighted JA's work to promote financial literacy among the nation's youth. Financial literacy is a top priority issue for the nation's credit unions.  Key legislators who addressed the session included Rep. Ed Royce (R-Calif.), chief sponsor of House legislation to raise the cap on CU member business lending.
  • National Journal Daily Briefing: CUNA was prominent at the National Journal Group's Tuesday briefing program, entitled, "The Election in Numbers: A conversation with Leading Pollsters." CUNA is a sponsor of the daily briefings and the CUNA logo is featured each day, with other sponsors', behind the speakers and before the TV cameras.
  • Tampa Bay Times Forum: CUNA and state credit union league, and credit union representatives were on the Tampa Bay Times Forum floor Tuesday when the RNC event schedule got to launch in earnest. Mitt Romney was nominated to be the GOP presidential candidate.
  • State Roll Call: The state roll call to formally nominate Mitt Romney as the Republican party's candidate for president.
  • Ann Romney, Chris Christie Prime Time Speeches: Prime time remarks by New Jersey Governor Chris Christie and by Ann Romney, who is scheduled to appear this morning at the ribbon cutting for this year's credit union "leave behind" project, a therapeutic playground at All Children's Hospital.
  • Remarks from noted GOP officials: Floor speeches earlier in the evening by House Speaker John Boehner, former U.S. Senator Rick Santorum, U.S. Sen. Kelly Ayotte of New Hampshire; Ohio Gov. John Kasich; Oklahoma Gov. Mary Fallin; Wisconsin Gov. Scott Walker;  Nevada Gov. Brian Sandoval; South Carolina Gov. Nikki Haley; and First lady of Puerto Rico Lucé Vela Gutierrez.
See the rest of today's News Now for more detailed coverage of these events and CUNA/league/credit union activities.

CUNA leagues busy with RNC schedule

 Permanent link
TAMPA, Fla. (8/29/12)--Official Republican National Convention (RNC) events started at 2 p.m. Tuesday at the Tampa Bay Times Forum, but Credit Union National Association (CUNA) and state league staff spread out to represent credit unions at events beginning early morning.

Click for slide showCUNA Executive Vice President John Magill (left) attends an RNC event to honor Junior Achievement's long service to promoting youth financial literacy, an issue near and dear to the hearts of credit unions across the nation and to CUNA and the state credit union leagues, as well. Sponsored by the Financial Services Roundtable, whose Scott Talbot is shown with Magill, the event drew many, including two members of the U.S. House Financial Services Committee. (CUNA Photo)
For instance, in nearby St. Petersburg at an event sponsored by the Financial Services Roundtable to honor Junior Achievement (JA), CUNA Executive Vice President John Magill, League of Southeastern Credit Unions League Vice President of Governmental Affairs Jared Ross, and the league's director of governmental affairs, Jason Cochran, represented credit unions at the session to highlight JA's work to promote financial literacy among the nation's youth.  Financial literacy is a top priority issue for the nation's credit unions.

Rep. Ed Royce (R-Calif.), a long-time supporter of credit union issues and a sponsor of legislation to increase the credit union business lending cap, attended and addressed the event. Royce, a high-ranking member of the House Financial Services Committee, was joined at the Roundtable event by fellow committee member, Rep. Bill Huizenga, a freshman congressman from Michigan.

Also, CUNA was prominent at the National Journal Group's Tuesday briefing program, entitled, "The Election in Numbers: A conversation with Leading Pollsters." CUNA is a sponsor of the daily briefings and the CUNA logo is featured each day, with other sponsors', behind the speakers and before the TV cameras.

Tuesday's National Journal Group session featured Ron Kaufman, senior adviser of the Romney Campaign, who was interviewed by Ron Fournier of National Journal and John Dickerson of CBS.

That interview was followed by a panel scheduled to include:
  • Kellyanne Conway, founder and president, the polling company inc./WomenTrend;
  • Whit Ayres, North Star Opinion Research; and.
  • Ed Goeas, The Tarrance Group.
CUNA and the leagues also had coveted passes for the Tampa Bay Times Forum, the RNC venue, to be in attendance for the day's activities. While the convention opened Monday, the real action moved to Tuesday when at 2 p.m. there were opening procedural steps, appointment of convention committees, and remarks by RNC Chairman Reince Priebus.

The day's speakers list was extensive, combining the names of those postponed--when Monday's activities were abbreviated to a simple calling to order and adjournment because of storm Isaac concerns at the time--with those already scheduled for this day.

Also on Tuesday there was a roll call to nominate the party's candidate for president of the United States and for his vice presidential running mate. Mitt Romney and Rep. Paul Ryan of Wisconsin, as expected, secured the nominations.  They are expected to accept today.

Also, Tuesday's speaker lineup included:

  •  House Speaker John Boehner;
  • Former U.S. Sen. Rick Santorum;
  • U.S. Sen. Kelly Ayotte of New Hampshire;
  • Ohio Gov. John Kasich;
  • Oklahoma Gov. Mary Fallin;
  • Wisconsin Gov. Scott Walker;
  • Nevada Gov. Brian Sandoval;
  • South Carolina Gov. Nikki Haley; and,
  • First lady of Puerto Rico Lucé Vela Gutierrez.
And in the prime time, 10 p.m., hour were:

• Ann Romney; and,

• New Jersey Gov. Chris Christie.

CUNARNC playground project launches today

 Permanent link
TAMPA, Fla. (8/29/12)--At 10 a.m. (ET) today, Ann Romney, wife of Republican presidential candidate Mitt Romney, is scheduled to join the Credit Union National Association (CUNA), the League of Southeastern Credit Unions and National Journal Group at the official opening of a charitable "leave behind" project in the Tampa-St. Petersburg area.

Click for slide showThis spring, credit union representatives broke ground on a renovation project to benefit All Children's Hospital in St. Petersburg, Fla. Shown above: (L to R): Brendan Garrison; Beth Reinhard of National Journal; Patrick La Pine, president/CEO, League of Southeastern Credit Unions; Cynthia Scott-Butler; Rep. C.W. Bill Young (R-Fla.); Riley Christian; Mike Mercer, CUNA chair and president /CEO, Georgia Credit Union League & Affiliates; Dr. Jonathan Ellen, Interim president/CEO of All Children's; St. Petersburg Mayor Bill Foster; and Caden Riley. (CUNA Photo)
With partners such as CUNA Mutual Group and CO-OP Financial Services, CUNA and the leagues and credit union volunteers broke ground on the project earlier this year, and have worked for months to complete a therapeutic playground.

The playground, which will serve All Children's Hospital and young patients in the area, contains special play equipment and was designed and built to enhance the rehabilitation process.

On Monday, Ann Romney announced that she would attend the ribbon cutting ceremony in St. Petersburg.

A similar project to build a rooftop playground is also underway at Levine Children's Hospital in Charlotte, N.C. The Charlotte renovation project will honor the 2012 Democratic National Convention, which kicks off next week.

CUNA President/CEO Bill Cheney has observed, "Credit unions see both projects as an opportunity to leave something positive behind that will continue to benefit the Charlotte and Tampa communities long after the balloons have dropped and the conventions ended." (See related News Now story: "CUs do conventions with a 'difference,' says.)

CUs politics front and center for alt. RNC delegate

 Permanent link
TAMPA, Fla. (8/29/12)--With 50,000 to 100,000 predicted to attend events here this week--and with 2,286 of them convention delegates and an equal number of alternates--credit unions are working a very crowded scene to see, be seen and be heard at events organized by and for the Republican National Convention (RNC).

Click to view larger image Arthur Wood and Mary Wood (left) pose with Rep. Dennis Ross (R-Fla.) and Cindy Ross. (CUNA Photo)
Among them are Arthur Wood and Mary Wood, a husband-wife team very engaged in the credit union movement and in the political scene. For the Woods, that means the Republican political scene. In fact, Art Wood, along with being president/CEO of Railroad & Industrial FCU here, is also chairman of the Hillsborough County Republican Executive Committee.

Mary, in addition to being involved along with Art in political campaigning--including fundraising--is president/CEO of Florida West Coast CU, as well as a member of the board of the League of Southeastern Credit Unions. She also serves on a number of credit union committees, such as the Credit Union National Association's (CUNA's) Government Affairs Committee.

Art this week is an alternate delegate for his congressional district. He and Mary, shortly in advance of this week's activities, talked to CUNA's News Now about their strong belief in political activism and how their two worlds--Republican politics and the credit union movement--do and do not intersect.

For the Woods, politics is personal: They back candidates they regard as principled conservatives. The Woods said they decided to get involved when they were dismayed with the direction of the Clinton administration. "That was our 'off-the-couch' moment," remembers Art, "We decided we could no longer sit on the sidelines."

The Woods said that as they became more and more politically involved, they realized that what they do in their business lives--running credit unions--mirrors the skills needed to run a campaign.

They started out slowly and just kept building their involvement, eventually even to include fundraising--a job they say few want to take on. Mary is even volunteer treasurer to some campaigns.

By rolling up their sleeves, the Woods say, they build important relationships and they build credibility and trust.

"Being politically engaged gives you a chance to be involved with high-level people that we might not be able to meet with if we were 'just' credit union people.

"Our political involvement is huge for access on credit unions' issues--on both federal and state levels. It gets me on the list to meet with the lawmaker," Art says.

Mary concurs. "Unless you have worked hard for the candidate, it can be hard to get your foot in the door."

Further, she says, "Art and I, on a personal level, feel connected to these candidates. And we feel fortunate to be connected to credit unions. Our involvements help both sides of the equation."

When appropriate, the Woods talk to the people they meet, including candidates, about credit union membership. "And it is important to us that a candidate be well-educated about credit unions. We help with that," Mary says with a smile in her voice.

The Woods also emphasize that as they work on a campaign, they are working alongside people with hopes for jobs with the candidates. With the candidate's success comes relationships with high-level staff members.

But there can be conflicts, too. On both sides of the equation, there can be times that the "other life" has to stay in the background.

Now about being an alternate delegate at this year's RNC? Art said he just wanted to do that for the experience.

"Despite our political involvement, I'm not normally a political animal," Art says. "But this was in our backyard. It was a one-time opportunity."

CUs do conventions with a difference says Dorety

 Permanent link
TAMPA, Fla. (8/29/12)--Tom Dorety, president/CEO of Florida's largest credit union and a former chairman of the Credit Union National Association (CUNA), the Filene Research Institute, and National CEO Roundtable--among other notable positions--and a 2012 winner of a Herb Wegner Memorial Award for Lifetime Achievement, believes in the benefit of credit union involvement in national political conventions, particularly through leave-behind projects that benefit the community.



CUNA, the state credit union leagues, credit unions and the National Journal Group teamed up this year to honor the Republican and Democratic National Conventions by restoring, refreshing and revitalizing therapeutic playgrounds at All Children's Hospital, in St. Petersburg, Fla., and Levine Children's Hospital in Charlotte, N.C.

Dorety, as leader of $5 billion-asset Suncoast Schools FCU, has a long-term relationship with All Children's, having had a role in credit union projects that raised millions for the hospital.

For instance, Suncoast was one of 14 local credit unions to pledge a $1.5-million gift in 2011 that will help All Children's to establish a comprehensive center for children with autism and related disorders.

Says Dorety of credit union involvement in the conventions and the leave-behind project: "I am very pleased that the credit union community is participating in this leave-behind project in a bipartisan fashion.

"Most importantly, the playground project helps make life better for some children who deserve some fun and diversion during a difficult time in their lives.

"The project has the added benefit of showcasing our commitment to improving our communities on a national stage. It enhances our image of doing the right thing for the right reasons.

"Whether Republican, Democrat or Independent, we can all be proud of what we're doing for the kids at All Children's' Hospital," Dorety says.

CUNA Senior Vice President of Political Affairs Richard Gose agrees. "The leave-behind events are perfect for credit unions because they serve the community and credit union members every day. The projects give credit unions and their staffs a chance to interact with elected and political officials for months leading up to the actual ribbon cutting. It's an educational experience for both sides."

Use the resource link to read more about credit unions and the All Children's autism center.

Inside Washington (08/28/2012)

 Permanent link
  • WASHINGTON (8/29/12)--The Federal Trade Commission this week announced it will extend until Sept. 24 the deadline for commenting on additional proposed modifications to the Children's Online Privacy Protection Act (COPPA) Rule. That rule gives parents control over what information websites and online services may collect from children under 13. The original deadline was Sept. 10 ...
  • WASHINGTON (8/29/12)--The national average contract mortgage rate in July was 3.66%, a 0.01% decrease from the previous month's total, the Federal Housing Finance Agency (FHFA) reported. The agency also reported an average interest rate of 3.84% for conventional, 30-year fixed-rate mortgages and a 3.65% composite fixed- and adjustable-rate mortgage average for July. July's effective interest rate, which includes the amortization of initial fees and charges, was 3.78%, the FHFA added …

NCUAs OSCUI advises CUs on grant applications

 Permanent link
ALEXANDRIA, Va. (8/29/12)--The National Credit Union Administration (NCUA) received a record 331 Community Development Revolving Loan Fund (CDRLF) grant requests this year, and the agency's Office of Small Credit Union Initiatives (OSCUI) has advised credit unions on how they can better tailor their grant requests to help their chances of receiving funds in the future.

While the 311 applicants requested more than $5 million, combined, in funds, the agency was able to award only $1.4 million in technical assistance grants to just over 100 small credit unions.

This year's CDRLF grant disbursements will be used by credit unions to improve their service, train their staff, expand their community outreach efforts, provide ATMs in underserved areas, increase some marketing efforts at in-school branches and increase awareness of the payday loan alternatives offered at their credit union. Financial literacy and education at in-school credit union branches, and internships and staff training efforts, also will be funded by the grant money.

The NCUA's OSCUI in the August edition of its FOCUS e-newsletter said that "preparing a grant application is similar to preparing a job application." It noted that approaching a grant application in a similar manner "will increase a credit union's chances of receiving funding."

Credit unions, the agency said, should try to demonstrate why they are ideal grant recipients. They can do so by showing how their grant request and qualifications align with the requirements in the guidelines of the grant initiative, the NCUA recommended.

As an example, the NCUA said an application for a new product/service development initiative grant should include:

  • A clear project description outlining the new product or service the credit union will offer; and
  • A statement of impact explaining how the product or service will enable the credit union to better serve the community.
OSCUI also warned that a credit union's grant request could be harmed by:
  • Omission of any required documentation listed in the funding guidelines, including bids, quotes, partner letters, and other supporting documents;
  • Incomplete details about the project/proposed use of grant funds;
  • A use that is expected to have minimal impact on the credit union's existing members, potential members, or community;
  • A request that does not show progression from a similar award funded previously;
  • Bids or quotes that are inconsistent with the project description;
  • Funding requests for prohibited expenses such as staff salaries and travel;
  • Funding requests solely for general-use computer hardware and equipment upgrades; and
  • Applying for funding for an item or service that has already been purchased or contracted.
For this month's OSCUI FOCUS e-newsletter, use the resource link.

CUNA seeks costs burdens caused by CFPB mortgage changes

 Permanent link
WASHINGTON (8/29/12)--Details on any additional costs, compliance issues and operational changes the Consumer Financial Protection Bureau's (CFPB) planned mortgage disclosure changes would create for credit unions can be provided in a new Credit Union National Association (CUNA) comment call.

The comment call is the second released by CUNA on the CFPB's recently proposed simplified mortgage disclosure form and rules that implement the mortgage form changes. The proposed rules amend Regulation Z, which implements the Truth in Lending Act (TILA), and Regulation X, which implements the Real Estate Settlement Procedures Act (RESPA). The regulations back up the changes made to the TILA and RESPA forms that homebuyers are given when they apply for and close a mortgage.

The proposed rule would require a new loan estimate form to replace current good faith estimate forms. The loan estimate form would need to be delivered within three business days after the consumer applies for a mortgage loan. The CFPB proposal would also require new closing disclosure forms to replace the existing HUD-1 Settlement Statement and the final Truth in Lending Disclosure. This form would need to be delivered no later than three business days before the consumer closes on the mortgage loan.

The mortgage form and proposed rules are scheduled to be finalized in January. Credit unions can address how much time they would need to comply with the pending regulatory changes and incorporate the new combined mortgage forms into their business practices.

CUNA is also seeking credit union comment on the CFPB's proposed changes to the definitions of "application" for purposes of delivering the loan estimate, and also to the term "business day." The "business day" redefinition has caused confusion in credit unions the past several years as Regulation Z has been amended multiple times, CUNA noted.

The proposed rule requires creditors to disclose whether a given loan is meant to fund a purchase, refinance, construction or home equity loan. Credit unions can suggest other loan  purposes that could be added to this list. Credit unions can also state whether they believe minimum finance charges should be included as examples of prepayment penalties, and whether loan guarantee fees should be excluded from the prepayment penalty definition.

Potential changes to the proposal's definition of balloon payment can also be addressed in the comment call response.

CUNA has also asked for general comments on any advantages and disadvantages that may be created by requiring a standard form for the closing disclosure for federally related mortgage loans and model forms for other credit transactions. It also asked more technical questions regarding the CFPB's planned changes to loan calculation disclosures.

CUNA will accept comment until Oct. 12. The CFPB's comment deadline is Nov. 6.

For the full CUNA comment call, use the resource link.

CFPB announces staff changes

 Permanent link
WASHINGTON (8/29/12)--The Consumer Financial Protection Bureau (CFPB) has moved Kelly Thompson Cochran into the position of acting assistant director for regulations after the recent departure of Leonard Chanin, who has returned to the private sector.

CFPB Director Richard Cordray in a release thanked Chanin for his guidance in building the CFPB and for furthering the agency's mission to make markets work for consumers.

Cochran as acting director will oversee the agency's Dodd-Frank Wall Street Reform Act rulewriting. She previously served as CFPB deputy assistant director for regulations. In that position, she worked on many Dodd-Frank Act priorities, including mortgage servicing, disclosures, and remittances.

The CFPB also hired Chris Lipsett to serve as senior counsel to Cordray and promoted Stephen Van Meter to the position of deputy general counsel.

Delicia Reynolds Hand has been hired to oversee the CFPB's Consumer Advisory Board, Community Bank Advisory Board and Credit Union Advisory Board. She also will work with senior advisory board staff to set priorities, objectives and policies for the board.

Cordray said he looked forward to welcoming the new agency additions as the CFPB continues its work on behalf of the American consumer.

For the CFPB release, use the resource link.

Fed regulators may delay bank stress test date

 Permanent link
WASHINGTON (8/28/12)--The implementation of regulations that would require holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in assets to perform yearly, company-run stress tests could be delayed until September 2013, the Federal Reserve said on Monday.

The stress tests, required by the Dodd-Frank Wall Street Reform Act, are scheduled to go into effect when the stress test final rule, now in the proposed stage, is made final.

Banks have pressed the Fed to rework the stress test regulations. Some banks in comment letters said some of the stress tests overlapped with those of other regulators. They also took issue with the scheduling and disclosure of stress test results.

The Fed in a release said many commenters questioned whether their financial institutions would have the resources, readiness, and ability to conduct stress tests, given the likely short period between publication of a final rule and the start of the stress testing process.

"The delay under consideration would help ensure that these companies have sufficient time to develop high-quality stress testing programs," the Fed said.

The agency added it has discussed the potential stress test delay with representatives from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

For the full Fed release, use the resource link.

CFPBs Cordray to join CUNA conference this week

 Permanent link
WASHINGTON (8/28/12)--Consumer Financial Protection Bureau (CFPB) Director Richard Cordray will join Credit Union National Association (CUNA) President/CEO Bill Cheney and CUNA staff to discuss CFPB rulemaking initiatives in an audio conference Thursday.

Attendees of the conference, which is scheduled to start at 2 p.m.  ET, will have the chance to discuss the CFPB's upcoming plans and what they could mean for credit unions directly with Cordray and Cheney.

CUNA Deputy General Counsel Mary Dunn, CUNA Senior Assistant General Counsel Jared Ihrig and Andrea Stritzke, vice president of regulatory compliance for PolicyWorks, will discuss the CFPB's proposed mortgage rules in a Sept. 6. webinar. This webinar will also focus on the agency's proposed "higher-risk" mortgage appraisal rule and the recently approved Regulation B appraisal proposal.

The audio conference and webinar are being offered separately and as a package deal.

To register for the Thursday audio and the Sept. 6 webinar, use the resource link.

RNC delays dont slow CU convention work

 Permanent link
TAMPA, Fla. (8/28/12)--Although Tampa dodged the bullet in terms of bearing the brunt of Tropical Storm Isaac, which is expected to become a hurricane today, the storm's threat managed to delay convention events by a day and presented other challenges for GOP organizers, points out Credit Union National Association (CUNA) Executive Vice President John Magill at the Republican National Convention (RNC) here Monday.

"The storm also is having some impact on news stories the convention organizers--as all organizers do--hope to generate to create buzz for the man they will nominate as their presidential candidate," he said. In this case, that is Mitt Romney, the presumptive Republican candidate for the nation's highest political office. His running mate is certain to be Rep. Paul Ryan of Wisconsin.

Click for slide showWhile Tampa is still expecting bad weather into today, this host city of the Republican National Convention (RNC) here this week was spared the brunt of Tropical Storm Isaac. However, the storm forced convention activity delays and has been quite a competitor for news attention that convention organizers would prefer stay focused on presumptive Republican presidential candidate Mitt Romney and his assumed running mate Rep. Paul Ryan of Wisconsin. (CUNA Photo)
At 2 p.m. (ET) the RNC chairman Reince Priebus called to order the political convention and then at around 2:10 p.m. adjourned until Tuesday at the same time. Republican organizers have sent out a message repeatedly that people's safety must take precedence above all else.

"Convention organizers are accomplished at meeting each and every challenge that comes their way--and often they have to do it on the fly. But having the threat of Isaac's approach to the convention city--well, that is unusual if not unique to this convention," Magill observed.

RNC organizers want the media to be entirely focused tightly on RNC events. Isaac has, to say the least, distracted some of that focus, Magill observed.

Although the city is decked out with "Welcome Republican National Convention" banners and signs from the airport to local eateries and shops, the airwaves here on Sunday and Monday were dominated by Isaac. And while news reports predicted that anywhere from 50,000, 70,000 or more than 100,000 people might flood the city for the convention, it is difficult to know how many decided to stay away because of the unsettled weather outlook.

"There is no 'normal' for a political convention," Magill said Monday. "But this storm goes beyond the 'normal' excitement and controlled chaos and brings an element all its own."

Although the convention has suffered delays, the work surrounding the event goes on, and CUNA and the leagues have hit the ground running to represent credit unions here, Magill noted. "Our thoughts are certainly with those who are now more possibly in the storm's path. But we will do everything to represent credit unions at this important national political venue," he said.

With an 8 a.m. daily organizational meeting to go over strategy, a daily 9:30 a.m. briefing by National Journal Group, for which CUNA is a sponsor, and issues meetings on such things as a new housing policy plan and member business lending strategy, as well as delegate events, and plans for the ribbon cutting at All Children's' Hospital in St Petersburg Wednesday, among many other responsibilities, CUNA officers and staff are deeply engaged, Magill said.

CUNA also attended the opening session of the convention, which was held in the Tampa Bay Times Forum.

Inside Washington (08/27/2012)

 Permanent link
  • WASHINGTON (8/28/12)--Final rules addressing swap dealer and major swap participant requirements were approved by the Commodity Futures Trading Commission (CFTC) on Monday. The rules, according to the CFTC, will improve the risk management procedures of swap dealers and major swap participants, and will highlight risk management concerns for swap dealers and other participants earlier. The rules, which were approved by a 5 to 0 vote, will become effective 60 days after they are published in the Federal Register. The CFTC last week proposed a rule that would exempt credit unions and other co-ops with $10 billion or more in assets from some swap-clearing requirements. Credit unions and other financial institutions with under $10 billion in assets are already exempt from the requirements under a separate CFTC proposal …
  • WASHINGTON (8/28/12)--A recent U.S. District Court for the Northern District of Georgia ruling that could prevent the Federal Deposit Insurance Corp. (FDIC) from pursuing simple negligence claims against the executives of failed banks will soon be re-examined by the U.S. Court of Appeals for the Eleventh Circuit. (American Banker, Aug. 27) The Georgia court ruling found that business judgment rules protected the directors and officers of Integrity Bank, which failed in 2008, against simple negligence claims. The FDIC has appealed this ruling. The FDIC may be forced to present stronger cases when it attempts to recover funds from bank directors if the Georgia ruling is upheld. The ruling could also make it more difficult for banks to find qualified directors and officers if the appeals court sides with the FDIC …

Ann Romney guest of honor at CUNARNC playground project

 Permanent link
TAMPA, Fla. (8/28/12)--Ann Romney, wife of presumptive Republican presidential candidate Mitt Romney, will join the Credit Union National Association (CUNA), the League of Southeastern Credit Unions and National Journal Group at this week's ribbon cutting ceremony for a charitable "leave behind" project in the Tampa-St. Petersburg area.

The ribbon cutting ceremony, which is scheduled for Wednesday at 10 a.m. ET, will unveil a recently completed therapeutic playground for All Children's Hospital. The playground, which will serve All Children's Hospital and patients in the area, contains special play equipment designed for the rehabilitation process. New plants were brought in and a retaining wall was constructed as part of the playground renovation process.

CUNA President/CEO Bill Cheney said, "America's credit unions are honored to have Mrs. Romney attend this important event that so vividly demonstrates credit unions' involvement in their communities and their philosophy of 'people helping people.'"

The Southeastern Credit Union Foundation led fundraising efforts for the playground project, and CUNA, which has a history of Republican and Democratic party convention leave-behind projects, also planned and raised funds for the project. The League of Southeastern Credit Unions also supported the project with its own fundraising efforts, and supplied volunteers to help construct the playground area.

National Journal Group has partnered with CUNA and credit union partners on past leave-behind projects.

The playground project, which has been in the works for months, is in honor of the 2012 Republican National Convention, which began Monday in Tampa and is scheduled to continue through Aug. 30.

A similar project to build a rooftop playground is also underway at Levine Children's Hospital in Charlotte, N.C. The Charlotte renovation project will honor the 2012 Democratic National Convention, which kicks off next week.

"Credit unions see both projects as an opportunity to leave something positive behind that will continue to benefit the Charlotte and Tampa communities long after the balloons have dropped and the convention ended," Cheney said.

NEW Ann Romney guest of honor at CUNARNC playground project

 Permanent link
TAMPA, Fla. (UPDATED: 3:30 P.M. ET, 8/27/12)--Ann Romney, wife of presumptive Republican presidential candidate Mitt Romney, will join the Credit Union National Association (CUNA), the League of Southeastern Credit Unions and National Journal Group at this week's ribbon cutting ceremony for a charitable "leave behind" project in the Tampa-St. Petersburg area.

The ribbon cutting ceremony, which is scheduled for Wednesday at 10:00 a.m. ET, will unveil a recently completed therapeutic playground for All Children's Hospital. The playground, which will serve All Children's Hospital and patients in the area, contains special play equipment designed for the rehabilitation process.

CUNA President/CEO Bill Cheney said "America's credit unions are honored to have Mrs. Romney attend this important event that so vividly demonstrates credit unions' involvement in their communities and their philosophy of 'people helping people.'"

The Southeastern Credit Union Foundation led fundraising efforts for the playground project, and CUNA, which has a history of Republican and Democratic party convention leave-behind projects, also planned and raised funds for the project. The League of Southeastern Credit Unions also supported the project with its own fundraising efforts, and supplied volunteers to help construct the playground area.

National Journal Group has also partnered with CUNA and credit union partners on past leave-behind projects.

The playground project, which has been in the works for months, is in honor of the 2012 Republican National Convention, which began today in Tampa and is scheduled to continue through Aug. 30.

CUNA's News Now will provide continuous coverage of the convention.

Housing health reflects more consumer confidence CUNA

 Permanent link
WASHINGTON (8/27/12)--Recent signs of recovery in the housing market bode well for credit unions and the economy in general, and indicate that consumers are generally more confident and willing to spend, Credit Union National Association (CUNA) senior economist Mike Schenk said last week.

The U.S. Department of Commerce this month reported that home starts in July increased by 21.5% and new home permits increased by 29.5% when compared to July 2011 numbers. Acting U.S. Commerce Secretary Rebecca Blank said the July 2012 numbers "show improvements for both the single- and multi-family housing sectors," and added that new home permits are at their highest level since 2008. She also noted that home prices and builder sentiment have improved nationwide.

The National Association of Realtors (NAR) last week reported that July sales of existing single-family homes, townhomes, condominiums and co-ops increased by 10.4% when compared to last year's numbers. The NAR said record low interest rates, combined with steadily increasing home rental rates, are helping to unleash pent-up homebuying demand. "However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions," NAR Chief Economist Lawrence Yun said.

Schenk noted that these year-over-year home sale increases follow a depressed 2011 home market, when government budget issues loomed large. However, today's economy is in a slightly better place today, he added.

He noted that credit unions are originating mortgages at high levels, but these new loans aren't significantly boosting overall loan growth, or interest income, at credit unions. "Interest rate risk concerns loom large, and credit unions don't want to be caught with huge unhedged portfolios of long-term fixed rate loans when market interest rates begin rising," he said.

Credit unions are benefitting from the home sale increases when they sell their mortgage loans on to the secondary market, Schenk said. They may also stand to benefit from the multiplier effect of home sales. Members are purchasing and taking out loans for a variety of home-related durable goods, including carpet, appliances, and other goods.

A recovering housing market may also create longer-term benefits for credit unions, CUNA Chief Economist Bill Hampel said. "The stronger the recovery in the housing market, the better the outlook for moderation in future National Credit Union Administration (NCUA) corporate stabilization assessments. The stronger the housing recovery, the lower the future losses on the legacy assets," he added.

"The recent strengthening in the housing market is probably not yet firm enough to cause major revisions in the loss estimates, but things are moving in the right direction. If the recovery in the housing market continues and strengthens, we're likely to see downward revisions in the legacy asset loss estimates," he said.

The NCUA this year charged credit unions a 2012 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment of 9.5 basis points (bp) of their insured shares as of June 30, and payment is required by Oct. 9.

Credit unions can expect between $1.9 billion and $5.2 billion in remaining assessments, and this total would be paid off between 2013 and 2021, according to the NCUA. Assuming the $3.6 billion mid-point of NCUA's published remaining assessment range, Hampel said credit unions would pay off the remaining costs in about four years at assessment rates similar to this year's. Three years of ten bp assessments, and an eight bp assessment in the fourth year, would cover the remaining corporate stabilization costs, he added.

2012 sees its first new FCU charter

 Permanent link
ALEXANDRIA, Va. (8/27/12)--Internet Archive FCU, a New Brunswick, N.J., low-income designated community credit union, became the first new federal credit union of 2012 after the National Credit Union Administration (NCUA) approved its charter Friday.

The credit union is scheduled to open in October and will offer regular share accounts, share secured loans and signature loans to members. The credit union also plans to add auto loans, share certificates, share drafts, debit cards, ATM cards, online banking, bill payment services and shared branching in the first year of operation. The credit union will also offer remittance transfers to Mexico through Directo a México, a Federal Reserve/Banco de México payment system.

The credit union will draw members from individuals living, working, worshiping, attending school, or participating in associations headquartered in New Brunswick and Highland Park, N.J. Individuals participating in programs to alleviate poverty or distress in that locale will also be eligible to become members, the NCUA said.

Incorporated and unincorporated organizations located in or maintaining a facility in the approved area, and organizations of such persons, will also be permitted to offer membership in the credit union, the NCUA added.

The credit union is sponsored by Internet Archive, a nonprofit organization funded in part by the Kahle/Austin Foundation. Internet Archive hosts a growing online library at archive.org.

NCUA Chairman Debbie Matz said the agency's Office of Small Credit Union Initiatives will offer assistance to the new credit union as it grows.

New Jersey Credit Union League President/CEO Paul Gentile said the league "has worked side by side with the organizers for the last few years, and quickly learned they were serious about not just charting a new federal credit union, but also about helping serve the low-income people in their field of membership." The league will "continue to provide assistance and help this credit union move forward," he added.

Internet Archive FCU is the second new credit union to be chartered in New Jersey over the past four years. The agency chartered one new federal credit union last year, Stepping Stones FCU of Wilmington, Delaware.

For the full NCUA release, use the resource link.

Assessments FSOC report highlight NCUA iYouTubei update

 Permanent link
ALEXANDRIA, Va. (8/27/12)--The Financial Stability Oversight Committee's (FSOC) 2012 annual report and how National Credit Union Administration (NCUA) stabilization fund assessments compare with Federal Deposit Insurance Corporation assessments are addressed in the NCUA's latest YouTube economic briefings.

The NCUA has previously presented the briefing as a single video, but this month decided to split the content into three separate sections.

NCUA Chief Economist John Worth also covers recent developments in the housing markets and employment sector, and emerging economic risks, in the videos.



The three videos is the latest in a series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The videos can also be viewed on the NCUA's YouTube page by using the resource link below.

Storm warning NCUA urges preparedness for Isaac

 Permanent link
ALEXANDRIA, Va. (8/27/12)--National Credit Union Administration (NCUA) Chairman Debbie Matz on Friday reminded Gulf Coast credit unions to "take prudent precautions" as Tropical Storm Isaac approached the Gulf of Mexico and Florida.

"Credit unions operating and people living in the Gulf Coast region know they need to prepare for serious storms," Matz said. She noted that the NCUA continues to protect deposits at federally insured credit unions during sunny days and after bad storms.

The agency in a release said it is prepared to activate emergency response plans, if needed, and will take steps to assist credit unions in maintaining normal operations or, in the event of a disruption, to restore those services as quickly as possible.

Portions of the storm hit the FLorida Keys and southern Florida on Sunday, and the storm could  enter the Gulf of Mexico, and strengthen, Monday. The storm could again make landfall anywhere between the Florida panhandle and Louisiana this week.

Tropical storm-like conditions were expected in the Tampa, Fla.-area, and the start of this year's Republican National Convention. Today's convention activities have been cancelled as a precaution.

News Now will cover the latest credit union and political news from the convention. Look for updates on Twitter too.

Inside Washington (08/24/2012)

 Permanent link
  • WASHINGTON (8/27/12)--The Federal Deposit Insurance Corp. (FDIC) will partner with Securities Investor Protection Corp. (SIPC)--a non-government agency--in winding down systematically important firms in the wake of the financial crisis. FDIC and the Securities and Exchange Commission are working on a proposal under which SIPC will serve as a trustee for liquidating broker-dealer subsidiaries of firms in receivership. SIPC has expertise in transferring a large number of customer brokerage accounts from giant failing financial firms to new acquirers. But SIPC must also work closely with FDIC to prevent large failures from damaging the economy, said Anita Ryan, general counsel for eSecLending, a securities financing company …

CUNA leagues plan to blanket RNC to advocate for CUs Start day postponed

 Permanent link
TAMPA, Fla. (8/27/12)--Credit union representatives, including staff from the Credit Union National Association and the state credit union leagues, will raise the profile of credit unions and credit union issues during this week's Republican National Convention that starts here this week.  Originally scheduled to kick off today, approachin storm Isaac changed the long-made plans.

Over the weekend, eyes and ears were fixed on weather reports and predictions of how approaching storm Isaac was going to affect Florida after it passed Haiti. While Isaac had an impact on some travel arrangements, the convention activities seemed to be proceeding as planned, but then there was one notable exception. Breaking a long-standing convention tradition, Republicans on Saturday announced they would hold their "roll call of states" to choose Mitt Romney as their presidential nominee today--the first day of the convention--rather than in the middle of the week. Later in the day, GOP officials concelled the first day of activities.

Click to view larger image The shovels may have been called ceremonial, but their blades were sharp and strong earlier this year at a groundbreaking ceremony at All Children's Hospital. Shown (L to R): Brendan Garrison; Beth Reinhard of National Journal; Patrick La Pine, president/CEO, League of Southeastern Credit Unions; Cynthia Scott-Butler; Rep. C.W. Bill Young (R-Fla.); Riley Christian; Mike Mercer, CUNA chair and president /CEO, Georgia Credit Union League & Affiliates; Dr. Jonathan Ellen, Interim president/CEO of All Children's; St. Petersburg Mayor Bill Foster; and Caden Riley. (CUNA Photo)
However the schedule unfolds, this year's credit union participation in the national political conventions follows a long tradition, started in 1988, of keeping credit unions and the credit union philosophy of "people helping people" in the national spotlight.

Trey Hawkins, CUNA vice president of political affairs, says CUNA participation in the national conventions is "an opportunity to continue to develop our political brand."  Hawkins adds, "The conventions are an opportunity to talk to and communicate with all of the policy and media and political elites in one place. That's an opportunity we want to take on behalf of credit unions."

Among the highlights of credit union involvement, CUNA, the League of Southeastern Credit Unions, the National Journal Group will honor the 2012 Republican National Convention, among others, with a "leave behind" project, which has retrofitted an existing playground at All Children's Hospital in nearby St. Petersburg with special play equipment for ill and injured children.

The renovated playground for young patients was made possible through funds raised with the help of credit unions.

Also during the convention, CUNA is a sponsor of the National Journal's Convention Daily Briefings, which will feature party newsmakers in both Tampa and Charlotte.

The on-site events, at both convention locations, plan to feature moderators such as Ron Brownstein, a two-time finalist for the Pulitzer Prize for his coverage of presidential campaigns and National Journal Group's editorial director, Chuck Todd, the chief White House correspondent for NBC News, Good Morning America co-host George Stephanopoulos, and NBC correspondent Chelsea Clinton, as well as speakers and panelists such as Rep. Nancy Pelosi (D-Calif.) and former Republican senator from Mississippi Trent Lott.

On Wednesday, CUNA and state credit union leagues, and credit unions will host an event to honor all delegates attending the convention. The gathering will feature a bit of local Tampa flavor, literally and figuratively, with local artists, sangria and tapas, and world-famous Tampa cigars from Arturo Fuente Jr., who owns the 100-year-old Tampa Sweetheart Cigars company and is a member of GTE Financial's Supervisory Committee.

This, and a similar event at the DNC in Charlotte, will draw convention dignitaries to a credit union-sponsored event to highlight credit unions, their philosophy, and issues.

Watch CUNA's News Now and its Twitter-fed updates on NewsNowLiveWire for up-to-the-minute coverage of credit union involvement at the two national political conventions this week and next.

TILARESPA proposal published in iFederal Registeri

 Permanent link
WASHINGTON (8/24/12)—With the comment period on key terms such as finance charges due Sept. 7, the Consumer Financial Protection Bureau (CFPB) Thursday published in the Federal Register its recently proposed amendments to Regulation Z, Truth in Lending Act (TILA), and Regulation X, Real Estate Settlement Procedures Act (RESPA), to combine certain home mortgage disclosures.

The CFPB proposed new mortgage disclosure form and the RESPA and TILA proposed changes last month.

The mortgage proposal would apply to the majority of consumer mortgages, but would not apply to home equity lines of credit, reverse mortgages, or mortgages that are secured by mobile homes or dwellings that are not attached to land. Creditors that process five or fewer mortgages per year would also not be subject to the rules.

The Credit Union National Association (CUNA) continues to review the 1,099 page proposal, and is concerned by a CFPB claim that the proposed mortgage changes would not increase the cost of mortgage lending. "A dollar spent on regulatory compliance is a dollar diverted from lending. So, in fact, some mortgage reforms in the Dodd-Frank Act do negatively impact access to mortgage credit for consumers," CUNA has said.

CUNA is also focusing on how the rule's proposed revision of the finance charge definition could impact credit unions.

CUNA has received credit union comments on how elements of the CFPB proposals, including a section that would require lenders to include most up-front costs associated with a mortgage in their finance charge, could be improved.

Additional CUNA comment calls and surveys on other aspects of the proposed mortgage rule are still under development.

The mortgage form and proposed rules are scheduled to be finalized in January.

However, CUNA has encouraged members of the U.S. Congress to support extending the compliance date for these pending mortgage rules, and to urge the CFPB to exempt credit unions from the mortgage rules where possible.

For the full CFPB release, as published in the Federal Register, use the resource link.

IRS responds to exemption revocation issues CUNA

 Permanent link
WASHINGTON (8/24/12)--In a letter from its national headquarters to the Credit Union National Association (CUNA) and other system players, the U.S. Internal Revenue Service (IRS) has spelled out the steps that state- and federally chartered credit unions whose tax exemptions have erroneously been revoked should take to reassert their exempt status.

CUNA, the National Association of State Credit Union Supervisors, CUNA Mutual and the American Association of Credit Union Leagues contacted the IRS after the agency last year notified several state-chartered credit unions, and some federally chartered credit unions, that they would lose their tax-exempt status for their alleged failure to file Form 990 tax returns for three consecutive years.

The letter addresses three separate groups of credit unions: State-chartered credit unions that previously had group Form 990 returns filed on their behalf, federal credit unions that recently converted from state charters, and federal credit unions that file Forms 990-T to claim health insurance premium tax credits.

"While individual credit unions have in some cases received similar responses from IRS regional officials, this letter is more authoritative because it comes from the top official of the IRS Exempt Oganizations Division. In that sense, this is a step forward," CUNA General Counsel Eric Richard said.

In a letter, IRS Director of Exempt Organizations Lois Lerner said the agency was wrong to revoke the beneficial tax status of some state-chartered credit unions it had contacted because their group filings had ceased. "Individual state credit unions in each state may continue to hold themselves out as a tax exempt under section 501(c)(14), as long as they continue to file required Forms 990 and otherwise comply with the applicable requirements for tax exemption under the Internal Revenue Code," Lerner said.

These credit unions will not need to apply for recognition of their exemptions with the IRS, but may "choose to do so," Lerner added.

Lerner in the letter said the tax exemptions of some federal credit unions may have also been wrongly revoked due to IRS recordkeeping discrepancies.

First, credit unions that have shifted from state to federal charters may also have similar tax exemption issues because the IRS was not notified of the conversion, and may have been contacted by the IRS, Lerner said. While some credit unions have moved to a federal charter, they are still listed on IRS records as state credit unions, and, thus, are being penalized for failing to file their Forms 990.

These federal credit unions should notify the IRS of their changed status by sending a request detailing:

  • The organization's name, address, and employer identification number;
  • Evidence that the credit union is supervised by the National Credit Union Administration; and
  • The name and title of the credit union officer signing the request.
Correspondence should be faxed to the IRS at 513-263-4330 or mailed to: IRS – TE/GE, Attn: Correspondence Unit, P.O. Box 2508, Cincinnati, OH 45021.

Second, federal credit unions that wish to claim health insurance premium tax credits are required to file Forms 990-T, but federal credit unions are exempt from filing Forms 990.  In some cases, the 990-T filings have resulted in an automated search for past Forms 990. When the IRS did not find previous Form 990 filings in their records, the credit union filing the Form 990-T was contacted and informed that its tax exempt status was in danger of being revoked.

Lerner said the agency is working to address this issue internally, and, in the meantime, said impacted credit unions could contact the agency directly by using the address and other contact information listed above. Credit unions in this situation should supply their name, employer identification number (EIN), and a letter detailing the problem.

Inside Washington (08/23/2012)

 Permanent link
  • WASHINGTON (8/24/12)--A whistleblower who helped the Securities and Exchange Commission (SEC) stop a multi-million dollar fraud attempt will receive nearly $50,000--the first payout from a new SEC program to reward people who provide evidence of securities fraud. The award represents 30% of the amount collected in an SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed by the whistleblower law. The award recipient, who does not wish to be identified, provided documents and other information that allowed the SEC to expedite the investigation and prevent the fraud from ensnaring additional victims. The whistleblower's assistance led to a court ordering more than $1 million in sanctions, of which about $150,000 has been collected so far. The court is considering whether to issue a final judgment against other defendants in the matter. Any increase in the sanctions ordered and collected will increase payments to the whistleblower …
  • WASHINGTON (8/24/12)--The Treasury Department is selling its holdings in preferred stock in banks rescued through the Troubled Asset Relief Program (TARP) at discounted prices--at the expense of American taxpayers, according to The New York Times (Aug. 23). For example, MetroCorp Bancshares of Houston bought back its own shares during a Fed auction this month at 98 cents on the dollar. Wilshire Bancorp of Los Angeles bought back its shares at 94 cents on the dollar. American taxpayers will bear the difference when the government doesn't get full price. But the government doesn't need to sell the shares now, or settle for less than full share price, the Times said. The TARP program has been profitable for taxpayers. The Treasury Department estimates that it will make nearly $22 billion from the program. The Obama administration appears willing to unwind the TARP program as quickly as possible, despite diminishing returns, according to Compass Point Research and Trading, a broker dealer firm …

Fixed mortgage rates continue to creep up

 Permanent link
WASHINGTON (8/24/12)--Average fixed mortgage rates have increased for the fourth consecutive week, with thirty-year fixed rate mortgages averaging 3.66% and fifteen-year fixed rate mortgages averaging 2.89% for the week ended Aug. 23, Freddie Mac reported Thursday.

Thirty-year fixed rate mortgages averaged 3.62% last week and 4.22% this time last year. Fifteen-year fixed rate mortgages averaged 2.88% last week and 3.44% this time last year.

Freddie Mac Vice President and Chief Economist Frank Nothaft said the fixed rate increases mirrored increases seen in other long-term yields.

Five-year adjustable rate mortgages averaged 2.80% this week, compared with 2.76% the previous week and 3.07% the same week last year.

The average one-year adjustable rate mortgage was 2.66%, down slightly from the 2.69% average reported last week. One-year adjustable rate mortgages averaged 2.93% this week last year.

CDFI Fund to get policy advice Sept. 12

 Permanent link
WASHINGTON (8/23/12)--The Community Development Advisory Board of the U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund will hold its next meeting on Sept. 12 in Washington.

The meeting is scheduled to take place between 2:00 and 3:30 p.m. (ET), via a conference call. The teleconference will be open to the public, and fifty members of the public can register to listen in to the call by emailing to AdvisoryBoard@cdfi.treas.gov .

However, the CDFI Fund in its release noted that discussions at the meeting would be limited to advisory board members, Treasury staff, and certain invited guests.

The Community Development Advisory Board makes broad policy recommendations to CDFI Fund Director Donna Gambrell. The CDFI Fund notes that the granting or denial of any particular application for monetary or non-monetary awards is not discussed during the meetings. The CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit.

The CDFI Fund this month awarded $186,853,456 in funds to 210 organizations serving low-income communities, including 22 credit unions.

The fiscal 2012 awards, provided through the CDFI Fund's Community Development Financial Institutions Program (CDFI Program) and the Native American CDFI Assistance Program (NACA Program), represent the largest single announcement of award dollars and award recipients in the CDFI Fund's history.

For more on the CDFI Fund, use the resource link.

CUNA reviewing MLO plan for impact on CUs

 Permanent link
WASHINGTON (8/23/12)--The mortgage lending industry is still analyzing how the Consumer Financial Protection Bureau's (CFPB) new mortgage origination proposal could impact their business practices and the Credit Union National Association's (CUNA) Consumer Protection Subcommittee, Lending Council and Housing Finance Reform Task Force will be asked to weigh in to help shape the association comments on the proposal.

The 369-page CFPB proposal, which addresses loan origination standards and compensation rules for mortgage loan officers (MLOs), was issued last week.

Under one part of the CFPB proposal, MLOs would be subject to federal character, fitness and financial responsibility screenings, and also be screened for felony convictions. The screening standards would require credit unions and other institutions to pull credit reports on employees before they are hired and perform criminal background checks to uncover any potential instances of dishonesty, money laundering or breach of trust, or other felony convictions that have been charged in the past seven years.

Credit unions will not be required to focus on an individual's credit score during the credit check, but rather on whether or not they have used credit in a responsible and honest fashion.

Overall, the CFPB proposal states that financial institutions will need to determine that their existing and incoming MLOs have demonstrated the financial responsibility and character to indicate that they will "operate honestly, fairly and efficiently" in their position.

The agency's proposed mortgage loan originator qualification and screening standards would replace varied state and federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) standards for loan originators working at credit unions, banks, thrifts, mortgage brokerage firms and nonprofit organizations with a single federal standard.

Financial institutions would also need to provide continuing education courses relating to mortgage loan origination to their MLOs that are not licensed under the SAFE Act. Training courses must cover applicable federal and state law requirements. Training may be provided online, and MLO training approved by the Nationwide Mortgage Licensing System and Registry would meet the potential CFPB training requirements.

Jared Ihrig, CUNA's senior assistant general counsel, said credit unions will more than likely satisfy these screening and training requirements by doing what they are, in most cases, already doing. However, CUNA is continuing to study the details of the proposed rule. Credit unions' training regimes will need to address federal and state law requirements that pertain to the actual MLO's activities.

He also noted that the CFPB proposal would not require registered MLOs to sit for and pass the same certification test that is required of licensed MLOs.

Part of the CFPB mortgage origination proposal also addresses how MLOs are compensated.

MLO bonuses based on the terms of loan transactions would still be banned, but financial institutions could compensate MLOs in certain circumstances utilizing mortgage loan revenues in some instances, such as credit unions' contributions to MLOs' qualified 401(k) plans, employee stock plans and other types of "qualified" deferred compensation plans if certain requirements are met.

Some of the proposed compensation elements of the rule would allow for compensation to MLOs in instances where the MLO has made five or fewer mortgage loan originations in the past year, and in other instances where financial institutions' revenues from mortgage loan origination activities do not exceed certain percentages of their total revenues. The CFPB has considered two different thresholds for this percentage: 25% and 50%.

The proposal will remain open for public comment until Oct. 16. A final version of the proposal will be released in January, according to the CFPB.

For more on the CFPB proposal, use the resource link.

FHFA announces new short sale guidelines

 Permanent link
WASHINGTON (8/23/12)--Pending mortgage servicing guidelines that will consolidate and coordinate existing short sale programs into a single standard short sale program could be beneficial to consumers and mortgage lenders, Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said.

The Federal Housing Finance Agency (FHFA) this week announced that Fannie Mae and Freddie Mac will soon issue new short sale guidelines that will help mortgage lenders and mortgage servicers speed up the short sale process. The new guidelines are scheduled to go into effect on Nov. 1.

The new guidelines will allow homeowners with Fannie- or Freddie-held mortgages that are current on their mortgage payments to sell their homes through the short sale process, provided they have an eligible hardship. The FHFA said mortgage servicers may expedite the short sale process for mortgageholders whose spouse or home co-owner has died. Divorce, disability and job relocations of 50 miles or more will also be considered eligible hardships under the new guidelines.

Additional approval from Fannie Mae or Freddie Mac will not be needed in these cases.

Military personnel who are being relocated due to Permanent Change of Station orders would also be automatically eligible for short sales, and would not be obligated to contribute funds to cover the shortfall between the outstanding loan balance and the sales price on their homes, under the new guidelines, the FHFA said.

The guidelines also streamline the short sale process for homeowners that have missed several mortgage payments or have low credit scores. Fannie Mae and Freddie Mac will also be permitted to offer as much as $6,000 to second lien holders to expedite short sale closings. The guidance will also clarify when applications and sales offers must be submitted for a home sale to be considered a short sale.

Dunn noted that the guidelines raise some questions, and CUNA plans to follow up with the FHFA and review the guidelines with the CUNA Housing Finance Reform Task Force.

The short sale changes are part of the FHFA's Servicing Alignment Initiative, which seeks to aid troubled homeowners by streamlining Fannie Mae and Freddie Mac short sale and foreclosure alternative programs.

For a full FHFA release, use the resource link.

Inside Washington (08/22/2012)

 Permanent link
  • WASHINGTON (8/23/12)--Legislation backed by Democrats that would help more Americans to refinance Freddie Mac and Fannie Mae mortgages has stalled in the Senate. Republicans in the Senate Banking Committee have sought to add amendments to the bill that would address the reform of Fannie Mae, Freddie Mac and the Federal Housing Administration, said the American Banker (Aug. 22). Another amendment would provide lenders a legal safe harbor if they meet the terms of a "qualified mortgage." The amendments are "outside the scope" of the refinancing bill, according to a senior Senate Democratic aide. The standoff could prevent President Barack Obama from achieving one of his top economic agenda items for 2012 …
  • WASHINGTON (8/23/12)--The Federal Deposit Insurance Corp. will release its Quarterly Banking Profile for the second quarter at 10 a.m. on Tuesday. The profile is a quarterly update on earnings, loan growth and other indicators for the entire banking industry (American Banker Aug. 22). In the first quarter, banks and thrifts reported $63 billion in noninterest income, an 8% increase from a year earlier. Net income was $35.3 billion, with loan volume decreasing 0.8%, compared with the previous quarter. Net operating revenue rose 3% to $170 billion …

Remittance rule changes covered in CUNA webinar

 Permanent link
WASHINGTON (8/22/12)--The Consumer Financial Protection Bureau's remittance rule changes are scheduled to go into effect on Feb. 7, 2013, and the Credit Union National Association (CUNA) is offering a Sept. 5 webinar to help prepare credit unions for this change.

The hour-and-a-half long webinar will include:

  • A summary of the remittance transfer rule
  • Requirements for credit unions
  • Next steps for complying with the rule; and
  • Outsourcing options as it relates to compliance.
The webinar is scheduled to begin at 11:00 A.M. CT.

MoneyGram International Vice President of Business Development Michael Daugherty and Andrea Stritzke, vice president of regulatory compliance for PolicyWorks, will lead discussion.

Under a new remittance rule adopted by the CFPB earlier this year, remittance transfer providers would be required to disclose the exchange rate, all fees associated with a transfer, and the amount of money that will be received on the other end. Remittance transfer providers will also be required to investigate disputes and fix mistakes.

The CFPB has provided a safe harbor exemption from the rule for remittance providers that transact 100 or fewer remittances per year. The agency has indicated at least 80% of credit unions that offer remittance services would be exempt, but CUNA remains very concerned about the safe harbor provisions and continues to encourage the CFPB to increase this safe harbor threshold.

CUNA details CU efforts to curb elder financial abuse

 Permanent link
WASHINGTON (8/22/12)--Credit unions, state credit union leagues and the Credit Union National Association (CUNA) have coordinated to curb elder financial abuse, and the positive steps taken by these groups are detailed in a new CUNA comment letter to the Consumer Financial Protection Bureau (CFPB).

Just over 14 million credit union members are age 62 or older, according to CUNA estimates. This represents 20% of all U.S. credit union members.

Credit unions provide a full range of financial services to these members and their families, including financial management, retirement planning, and credit counseling, CUNA Regulatory Counsel Dennis Tsang wrote. The CUNA comment letter also noted that many credit unions provide unique credit union accounts and services that are tailored to the needs of seniors, such as checking and savings accounts with favorable terms or rates, and additional customer service options. Many credit unions also provide elder abuse information and additional resources on their websites and account statements.

CUNA in the letter notes that CUNA and others in the system have shared vital compliance and training information on the topic of elder financial abuse. CUNA recently outlined steps credit unions can take to comply with state elder financial abuse laws, and how employees can identify potential cases of abuse, in a Credit Union Magazine article.

The elder abuse initiatives also extend beyond the credit union system, CUNA noted in the letter. CUNA said it is working with other partners and government entities to coordinate initiatives and share best practices for reducing elder financial abuse. One way noted by CUNA is its participation in the U.S. Treasury's Go Direct program. Go Direct encourages Americans receiving social security and other benefits to use direct deposit. Using direct deposit in this manner enhances safety and efficiency, Go Direct has said.

The CUNA comment letter is in response to the CFPB's request for information on any financial education, counseling, or tailored personal finance management programs that are offered by credit unions and other institutions. The CFPB has also asked for public comment on any fraudulent or deceptive practices that target elderly Americans and their families.

The CFPB last year established its Office of Older Americans, and that office has the authority to make legislative and regulatory recommendations to Congress on best practices for aiding senior financial literacy efforts.

CUNA said it supports efforts by the CFPB to help seniors avoid financial exploitation and to encourage responsible decisions regarding financial management. However, the CFPB should recognize and consider how to protect the needs of seniors, while minimizing additional compliance burdens on credit unions, CUNA said. "Credit unions must currently comply with applicable state elder financial abuse laws, which impose mandatory or permissive reporting, as well as privacy laws, the Bank Secrecy Act, and other requirements. While credit unions support the objectives to reduce elder abuse and must comply with applicable laws and regulations, they are nonetheless concerned that the laws and regulations they must comply with continue to expand, in number as well as in complexity," CUNA added.

In the comment letter, CUNA encouraged the CFPB to coordinate any elder abuse and consumer protection efforts it undertakes with various federal and state regulators to minimize compliance burdens for credit unions.

CUNA also encouraged the agency to continue to work with credit unions and state credit union leagues.

Signs of elder financial abuse can include:

  • Large, unexplained withdrawals from accounts, or transfers between accounts that the older person cannot explain;
  • Suspicious signatures on checks or other documents;
  • Missed appointments or unpaid bills;
  • Abrupt changes to a will or power of attorney; and
  • Unusual transfer of assets to others.
A recent Investor Protection Trust survey of financial planners, securities regulators, adult protective services workers, medical professionals, law enforcement officials, and others who deal with older Americans found that effectively all of those that responded (99%) are concerned by the potential for elder financial abuse.

The Financial Crimes Enforcement Network (FinCEN) in 2011 noted a sharp increase in the number of financial institutions that filed Suspicious Activity Reports (SARs) on elder financial abuse. The CFPB has noted that an estimated $2.9 billion was stolen from financially exploited senior citizens in 2010, and reported instances of financial theft from seniors grew by 12% between 2008 and 2010.

For the full CUNA comment letter, use the resource link.

CDFI Fund adds new foreclosure aid materials to site

 Permanent link
WASHINGTON (8/22/12)--The U.S. Treasury's Community Development Financial Institution (CDFI) Fund has added a new Foreclosure Solutions Resource Bank to its homepage.

The webpage includes reference materials and information on foreclosure prevention training for financial institution staff. The training resources include links to e-learning courses and government-run training programs.

The resources, which were compiled with the help of NeighborWorks America, will help financial institutions improve their understanding of foreclosure intervention counseling and learn how to effectively implement a counseling program in their communities, the CDFI Fund said.

The new page "will be an essential tool for CDFIs navigating the intricacies of foreclosure intervention," the CDFI Fund added in a release.

The CDFI Fund as part of its mission helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community. CDFI fund distributions are merit-based.

For the CDFI Fund release, use the resource link.

Inside Washington (08/21/2012)

 Permanent link
  • WASHINGTON (8/22/12)--President Barack Obama Monday again pressed Congress to pass legislation to help more Americans refinance their mortgages. After being asked about the prospects for more action from lawmakers to help create jobs and grow the economy, the president reiterated his call to help millions of responsible homeowners save hundreds of dollars each month. "We're going to be pushing Congress to see if they can pass a refinancing bill that puts $3,000 into the pockets of the average family who hasn't yet refinanced their mortgage. That's a big deal," the president told reporters. "That $3,000 can be used to strengthen the equity in that person's home, which would raise home values." The Obama administration's latest plan to help middle-class families refinance their homes would come with a cost of between $5 billion and $10 billion--paid for through a fee charged to the nation's largest banks (News Now Feb. 3). The Senate Banking Committee is considering three separate refinancing bills …

Jennifer Shasky Calvery named new FinCEN director

 Permanent link
WASHINGTON (8/21/12)—Jennifer Shasky Calvery will take over as director of the Financial Crimes Enforcement Network (FinCEN) next month, the U.S. Treasury announced on Monday.

Shasky Calvery will replace outgoing FinCEN Director James H. Freis. Freis was dismissed from his position in late May.

Treasury Under Secretary for Terrorism and Financial Intelligence David Cohen thanked Freis for his service, and said he is "delighted" to welcome Shasky Calvery to the Treasury. "Her proven record of leadership and strong working relationships with Treasury, law enforcement and the federal bank regulatory agencies will be enormous assets to us as we work together to chart a course for FinCEN's future," he said.

Shasky Calvery served as chief of the asset forfeiture and money laundering section of the U.S. Department of Justice since 2010. In that role, she oversaw the forfeiture of more than $1.5 billion in criminal assets each year. Those funds were used to compensate crime victims and support law enforcement efforts, the Treasury noted. She also combatted organized crime, corruption, Bank Secrecy Act violations and other forms of illicit financial activity.

She also prosecuted money laundering and international crime cases during her 15-year career with the DOJ.

The Credit Union National Association plans to meet with Shasky Calvery soon after she takes on her new post.

Heavy reg burdens harm CUs members CU exec testifies

 Permanent link
CHARLESTON, W. Va. (8/21/12)--Increased regulatory burdens and "the multitude of complex regulations" that credit unions must now address has been one of the "most significant changes" in his 27 years in the movement, Tom Brewer, president/CEO of People's FCU, Nitro, W. Va., told federal lawmakers Monday.

Brewer spoke during a House Financial Services financial institutions and consumer credit subcommittee field hearing in Charleston, W. Va..

Subcommittee leader Rep. Shelley Moore Capito (R-W. Va.) led the hearing, which focused on how financial regulations impact job growth.

Sen. Joe Manchin (D-W. Va.) also joined the subcommittee members in the discussion. Manchin and the subcommittee members acknowledged that credit unions and small institutions did not cause the financial crisis, but now have to live with increased regulations as a result.

The credit union CEO in a prepared statement said regulatory compliance is a top priority, and an expense, for his $95-million-in-asset, 11,000-member credit union.

Budgets are tight for credit unions, especially one with as small of a staff as his, and every dollar spent on compliance represents a dollar that could be spent on direct member service, he added.

"Most of the costs of compliance do not vary by [the size of an institution] and, therefore, are proportionately a much greater burden for smaller institutions," Brewer said. Around half of credit unions in West Virginia hold less than $10 million in assets, and regulatory burden is also a top issue for these credit unions. "Difficulties in maintaining high levels of member service in the face of increasing regulations is a key reason that some credit unions have merged into larger credit unions in recent years," he added.

Many members have noticed how regulatory issues can impact their own daily business at their credit unions, Brewer said. He noted that some repetitive regulations have confused consumers, and that members feel the disclosures they are provided for loans and deposit accounts are excessive.

The National Credit Union Administration, Federal Reserve Board and state regulatory agencies have steadily increased the number of regulations imposed on credit unions, and the regulatory burden could increase with the recent creation of the Consumer Financial Protection Bureau (CFPB), Brewer noted.

While evaluating risk management is a key part of regulatory examinations, and the examination process "works reasonably well," Brewer said there is inconsistency in how risk is evaluated in some cases.

He said approval of the Examination Fairness and Reform Act (H.R. 3461) would improve the exam process for financial institutions. That bill would make information gathered by financial regulatory examiners available to financial institutions, codify certain examination policy guidance, and establish an exam appeals process that would allow financial institutions to air grievances before an independent administrative law judge. Similar legislation has been introduced in the Senate (S. 2160), and both bills have been referred to their respective financial institution committees.

Overall, Brewer said, "there is nothing about the current climate of over-regulation that could be considered positive for economic growth in West Virginia." However, he noted one action that Congress could take to improve the economy in his state and nationwide: approving legislation that would increase the current 12.25%-of-assets credit union member business lending cap.

Increasing the MBL cap to 27.5% of assets, as proposed in separate House and Senate bills, would inject $13 billion in new capital into the economy and create an estimated 140,000 new jobs, at no cost to taxpayers. Brewer said increasing the MBL cap would mean $31 million in new credit union business loans, and 335 new jobs, for West Virginians.

City National Bank President Charles Hageboeck, Pendleton Community Bank President William Loving, Mountaineer Mobile Homes Owner John Wohlever, and Mountain State Justice Inc. Attorney Sarah Brown were also scheduled to testify at the hearing.

Inside Washington (08/20/2012)

 Permanent link
  • WASHINGTON (8/21/12)--As part of its ongoing efforts to wind down and recover its remaining Capital Purchase Program (CPP) investments under the Troubled Asset Relief Program (TARP), the Treasury Department Friday said it would sell its preferred stock positions in five banks: BNC Bancorp, High Point, N.C.; First Community Corp., Lexington, S.C.; First National Corp., Strasburg, Va.; Guaranty Federal Bancshares Inc., Springfield, Mo.; and Mackinac Financial Corp., Manistique, Mich. Treasury expects to begin the public offerings today. To date, Treasury has recovered $265 billion from TARP's bank programs through repayments, dividends, interest and other income--compared with the $245 billion initially invested. Treasury has remaining outstanding CPP investments in 304 banks …

Fryzel encourages CUs to hire more vets

 Permanent link
ALEXANDRIA, Va. (8/21/12)--National Credit Union Administration (NCUA) board member Michael Fryzel challenged credit unions to "lead the way in the veteran job creation effort" and help create 1,000 new jobs for military veterans.

"If you believe that every person who served this country deserves a chance of holding a job, then lead the way by helping our heroes and hiring a vet," Fryzel told attendees of the Defense Credit Union Council's 49th annual conference in Denver, Colo.

Fryzel noted that tens of thousands of veterans are set to complete their military service in the next few years. While some of the nation's more than 7,000 credit unions may not have the flexibility to add a new staff member, they can aid this credit union effort by writing loans that will help small businesses hire veterans, Fryzel said. The Credit Union National Association (CUNA) and credit unions are also working to do more to help small businesses and the economy by advocating for legislation to increase the current 12.25% of assets member business lending cap.

"Credit unions should lead the way in this veterans' job-creation effort--and not be modest about publicizing it," he said. He said defense credit unions can lead this charge. "Show the men and women who have served their country in uniform that no one cares more about them than you. Work to make sure that at least 1,000 of them find good jobs in a tough job market so they can settle back into civilian life, buy a home, raise a family and contribute to their communities. Let your motto be: Help Our Heroes – Hire a Vet," Fryzel said.

Recent U.S. Bureau of Labor Statistics (BLS) figures showed an unemployment rate for returning Iraq and Afghanistan veterans of 8.9% for July. While this rate is slightly higher than the 8.3% national unemployment rate, it represents a sharp decline from the 12.4% veteran unemployment rate recorded in July of 2011.

However, the unemployment rate for war veterans between 18 and 24 years of age was 29.1% in 2011, the BLS reported.

Sixty-nine percent of veterans that responded to a recent Prudential/Iraq and Afghanistan Veterans of America survey said finding a job in the civilian workforce was their greatest challenge post-deployment. Explaining how military skills translate into the civilian workforce presented a challenge to 60% of respondents. The survey also found that 24% of respondents believe that employers avoid hiring veterans.

The U.S. Chamber of Commerce is working with a number of businesses in a bid to hire 500,000 veterans and military spouses by 2014. The Transition Assistance Program, which assists veterans with educational and job training efforts, has also been recently revised by the Obama administration, and federal employers have also increased efforts to hire veterans. The U.S. Internal Revenue Service also provides tax breaks to employers that hire veterans through its Work Opportunity Tax Credit.

FDIC launches help for underserved in West Virginia

 Permanent link
WASHINGTON (8/21/12)--The Federal Deposit Insurance Corporation (FDIC) Monday launched an Alliance for Economic Inclusion (AEI) initiative in West Virginia, a move intended to improve the economic well being of low- and moderate-income individuals and families, including the unbanked and underserved.

The AEI is a national initiative to establish broad-based coalitions of financial institutions, community-based organizations and other partners. Efforts have been launched in several markets across the country, but the West Virginia Small and Micro Business AEI is the first AEI to focus specifically on building resources to further small and micro business formation and growth. The FDIC noted this focus was selected after consultations with the Appalachian Regional Commission and other local stakeholders.

The West Virginia program was launched in partnership with the Appalachian Regional Commission (ARC), other state and federal agencies, financial institutions, and community-based stakeholders.

Since 2007, the more than 1,300 have opened more than 400,000 accounts with financial institutions through the FDIC's AEI program.

Use the link to read more about the FDIC's initiative.

Dont use

 Permanent link
WASHINGTON (8/21/12)--September is national preparedness month and the U.S. Small Business Administration (SBA) is offering a series of free webinars to help credit unions and all other small businesses to prepare in case they are forced by a natural disaster to close their operations for a time.

"This summer millions of business across the country were forced to close their doors in the aftermath of power outages, approaching wildfires, and flooding caused by tropical storms.  Business interruptions, even if it lasts just a few hours, cost business owners greatly in terms of lost productivity and profits," the SBA said in a release announcing the webinars.

The series is being presented in collaboration with the Federal Emergency Management Agency's (FEMA) Ready Campaign. It is intended to help small businesses prepare for the well-being of the business operations, the safety of their employees, and the "sustenance of their local economies" by being prepared to rebound quickly from any kind of disaster.

The webinars, scheduled for each Wednesday in September at 2 p.m. (ET), are:
  • Sept. 5:   "10 Steps to Prepare Any Organization for Disaster" with an introduction from James Rivera, Associate Administrator for SBA's Office of Disaster Assistance.
  • Sept. 12: "Protecting Your Organization by Preparing Your Employees"
  • Sept. 19: "Utilization of Social Media During a Crisis"
  • Sept. 26: "Surviving a Crisis, Large or Small: Real Life Lessons Learned." Business owners who recovered from disasters discuss their proactive emergency planning.
 

A question and answer session will follow each of the presentations.

Use the resource links to register for the September webinars and to access past webinars on business continuity strategies through the "PrepareMyBusiness" website.

Inside Washington (08/17/2012)

 Permanent link
  • WASHINGTON (8/20/12)--The Federal Housing Finance Agency (FHFA) said it will pursue civil damage claims against lenders who sold "materially deficient" mortgages to Fannie Mae and Freddie Mac. FHFA auditors are in the process of identifying lenders who pose the highest risk to Fannie and Freddie, Health Wolfe, an assistant inspector general in FHFA's Office of the Inspector General, said. He spoke at the American Association of Residential Mortgage Regulators' annual conference (American Banker Aug. 17). Wolfe has met with the Department of Justice's (DOJ) Civil Division. He said he expects DOJ to sue for $3 on every dollar Fannie Mae and Fredde Mac paid out against lenders who violated the government-sponsored enterprises' lending requirements …
  • WASHINGTON (8/20/12)--With Fannie Mae and Freddie Mac's recent strong financial results, the future of the government-sponsored enterprises (GSEs) appears to hinge on the fees they charge lenders. A stabilization in housing prices has helped Fannie and Freddie avoid borrowing significant money from the Treasury, leaving their total bailout amount at around $190 million--far less than the best-case estimate of $202 million made by the Federal Housing Finance Agency (FHFA) in October (American Banker Aug. 17). Fannie and Freddie earn guarantee fees from lenders in exchange for assuming the credit risk on conforming loans. The cost is then passed through to borrowers. Rates are determined by the FHFA, the GSEs' conservator. A minor fee increase would suppress mortgage rates and keep the GSEs under the FHFA's conservatorship. Raising the rates high enough could help the private securitization market bounce back and shrink Fannie and Freddie. An in-between strategy could help Freddie and Fannie generate consistent income--barring another housing crash …
  • WASHINGTON (8/20/12)--The Consumer Financial Protection Bureau (CFPB) in the Federal Register said it is seeking public comment on the application of Maine and Tennessee unclaimed property laws to gift cards, and whether these laws provide greater consumer protections than federal laws. The CFPB has been asked to opine on whether provisions in the Electronic Funds Transfer Act and Regulation E that address gift card expiration dates would pre-empt unclaimed property law provisions in those states. Public comments will be analyzed before the agency releases its final opinion…

CUNACFPB audio conference to discuss reg priorities

 Permanent link
WASHINGTON (8/20/12)--Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, Credit Union National Association (CUNA) President/CEO Bill Cheney, and CUNA staff will give the latest news on CFPB rulemaking initiatives in a pair of upcoming audio conferences.

The first audio conference, set for Aug. 30, will feature a discussion between Cordray and Cheney. Attendees will be able to ask the CFPB head and CUNA CEO directly about the CFPB's upcoming plans and what they could mean for credit unions.

In a second Sept. 6. audio conference, CUNA Deputy General Counsel Mary Dunn, CUNA Senior Assistant General Counsel Jared Ihrig and Andrea Stritzke, vice president of regulatory compliance for PolicyWorks, will discuss how recent CFPB mortgage proposals could impact credit unions.

This conference will cover the current status of the CFPB's proposed mortgage rules, what credit unions can do to help influence the final rule, and how they can prepare for the final CFPB rule. This webinar will also focus on the agency's proposed "higher-risk" mortgage appraisal rule and the recently approved Regulation B appraisal proposal.

The two audio conferences are offered as a package. Both webinars are scheduled to begin at 1 p.m. CT.

To register for the webinars, use the resource link.

CUNA backs clearing exemption for some swaps

 Permanent link
WASHINGTON (8/20/12)--The Credit Union National Association (CUNA) in a Friday comment letter backed a Commodity Futures Trading Commission (CFTC) proposal that would provide credit unions and other cooperative businesses with a clearing exemption for certain swaps.

The CFTC proposal would permit credit unions and other co-ops with $10 billion or more in assets to avoid swap clearing requirements when loans that are originated for members are sold on to other entities. This exemption also would be extended to swap transactions that are used to hedge against risks associated with member loans.

The exemption would apply to cooperatives whose members are non-financial entities, financial entities to which the small financial institution exemption applies, and cooperatives. Credit unions and other financial institutions with under $10 billion in assets are already exempt under a separate CFTC proposal.

"As not-for-profit cooperatives, all well-managed credit unions, consistent with safety and soundness, should be able to elect not to clear swaps that are for the purpose of hedging interest rate risks," CUNA Deputy General Counsel Mary Dunn wrote in the comment letter. The proposed exemption would help minimize the additional costs and fees associated with mandatory clearing and provide flexibility for credit unions to use non-cleared swaps, she added.

CUNA in the letter also urged the CFTC to minimize any compliance burdens on credit unions and other cooperatives that elect the clearing exemption, under this proposal and the final rule on the end-user exception, including the notification requirements to the CFTC regarding how an exempt counterparty plans to meet its financial obligations associated with non-cleared swaps.

The CFTC earlier this year finalized definitions of swaps, security-based swaps and security-based swap agreements. The new swap definitions are currently in effect.

National Credit Union Administration regulations currently permit a limited number of federal credit unions to use certain derivatives, such as interest rate swaps and caps, to hedge or reduce their interest rate risks. Some state-chartered credit unions also have similar derivatives authority for risk management purposes. Relatively few credit unions use derivatives to hedge interest rate risk.

For the full CUNA comment letter, use the resource link.

CFPB could require option of no-point no-fee mortgages

 Permanent link
WASHINGTON (8/20/12)--After floating the concepts earlier this year, the Consumer Financial Protection Bureau (CFPB) last Friday took the next step and issued a 369-page proposal on new loan origination standards and compensation rules for mortgage loan officers.

The CFPB proposal would require mortgage lenders to make no-point, no-fee mortgage loans available to their prospective borrowers, unless the borrower is unlikely to qualify for such a loan. This option would help consumers who are buying or refinancing a home compare their various loan offers, the CFPB said.

Lenders would also need to provide mortgage borrowers who pay upfront points or fees on their mortgages with a certain minimum interest rate reduction.

The CFPB noted that the Dodd-Frank Wall Street Reform Act places certain restrictions on the points and fees offered with most mortgages as well as on the qualification and compensation of loan originators. The act would prohibit payment of upfront points and fees for most mortgages, absent this CFPB rulemaking.

"Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees," CFPB Director Richard Cordray said. The agency wants to "provide consumers with clearer options and enable them to choose the loan that they believe is right for them," he added.

The agency's proposed mortgage loan originator qualification and screening standards would replace varied state and federal Secure and Fair Enforcement for Mortgage Licensing Act standards for loan originators working at credit unions, banks, thrifts, mortgage brokerage firms and nonprofit organizations with a single federal standard.

Under the CFPB proposal, these loan originators would be subject to the same character, fitness and financial responsibility requirements, and be screened for felony convictions. They also would be required to take the same training courses.

The proposal would also clarify portions of the Dodd-Frank Act that prohibit payment of steering incentives to mortgage loan originators.

Portions of the Dodd-Frank Act that prohibit lenders from adding mandatory arbitration clauses and increasing loan amounts to cover credit insurance premiums would be implemented under the proposal, the CFPB said.

The Credit Union National Association (CUNA) is still reviewing this lengthy proposed rule. "While we initially see several positive elements--such as the CFPB's decision not to expand the certification test to cover registered mortgage loan origination employees--we remain concerned about the overall impact of this rule on credit unions. We will be analyzing the rule carefully with these concerns in mind," CUNA Deputy General Counsel Mary Dunn said.

The proposal will remain open for public comment until Oct. 16. A final version of the proposal will be released in January, the CFPB said.

Treasury steps up Fannie Freddie wind-down efforts

 Permanent link
WASHINGTON (8/20/12)--The gradual winding down of mortgage investment portfolios held by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac will be accelerated, the U.S. Treasury announced Friday.

Fannie and Freddie's investment portfolios would be wound down at an annual rate of 15% under the revised Treasury plan. The agency had previously set a 10% annual reduction rate, which would have reduced the amount of mortgage assets held by the GSEs to $250 billion by 2022. The increase to 15% will accelerate this process by four years, according to the Treasury.

All future profits earned by Fannie and Freddie will be paid directly to the Treasury under the new plan. This change will ensure that every dollar generated by the GSEs "will be used to benefit taxpayers for their investment in those firms," and will end "the circular practice of the Treasury advancing funds to the GSEs simply to pay dividends back to Treasury," the agency said.

Fannie and Freddie currently are making quarterly dividend payments to the federal government to repay funds that were used to bail out the two firms. Fannie and Freddie occasionally borrow money from the government if their profits have not been sufficient to cover these dividend payments.

The Treasury will also require the GSEs to submit plans detailing how they will reduce taxpayer exposure to mortgage credit risk on an annual basis.

"With today's announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac, while continuing to support the necessary process of repair and recovery in the housing market," Counselor to the Secretary of the Treasury for Housing Finance Policy Michael Stegman said Friday. "As we continue to work toward bi-partisan housing finance reform, we are committed to putting in place measures right now that support continued access to mortgage credit for American families, promote a responsible transition, and protect taxpayer interests," he added.

The Obama administration is considering a range of options for mortgage market reform, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Administration officials have said that each proposal would shrink the government's role in the mortgage market.

NCUA opinion addresses CU MFL plans

 Permanent link
ALEXANDRIA, Va. (8/17/12)--Federal credit unions may offer multi-featured loan (MFL) plans that use one umbrella loan agreement for multiple subaccounts with both open- and closed-end credit features, National Credit Union Administration (NCUA) Associate General Counsel Frank Kressman confirmed in a recent legal opinion letter.

The NCUA letter responded to a question from a Securian Financial Group/Minnesota Life Insurance Co. representative.

According to the letter, Securian offers a loan plan that is designed to provide federal credit unions with an alternative to multi-featured open-ended loan plans. These loan plans would include both open- and closed-end features.

"The plan, as a whole, is designed to be treated as open-end credit even though the plan has closed-end features," the NCUA letter noted.

Members would sign an umbrella loan agreement when they first agree to take part in the loan product. The loan products would allow credit unions to underwrite individual, closed-end advance requests where appropriate.

Borrowers can request open-end fund advances, such as lines of credit, or closed-end fund advances, such as auto loans, as needed, under the loan plans.

Open-ended credit lines may be suspended, or loan terms can be changed, if a borrower's creditworthiness deteriorates over the course of the loan agreement. In addition, borrowers must apply and be approved for any closed-end loans before funds can be disbursed.

Kressman said that these types of lending plans that combine open- and closed-end credit are not inconsistent with Regulation Z requirements, as long as proper disclosures are provided. However, he warned, some of these loan plans may not comply with certain state laws.

In those cases, such MFL plans "would not be a practical or legal option" for federal credit unions in given states.

For the full NCUA letter, use the resource link.

CUNA seeks NCUA liquidity plan comment

 Permanent link
WASHINGTON (8/17/12)--Is the National Credit Union Administration's (NCUA) emergency liquidity proposal, released at last month's open board meeting, needed? If so, how could it be tweaked? Credit unions can answer these and other questions in a new Credit Union National Association (CUNA) comment call.

More than 6,000 natural person credit unions will lose access to the Central Liquidity Facility (CLF), which serves as a liquidity lender to credit unions in need of emergency funding, when U.S. Central Bridge Corporate CU closes in late October.

In anticipation of this closing, the NCUA has released a proposal that would require credit unions with less than $10 million in assets to maintain basic written emergency liquidity policies.

The proposal would also require federally insured credit unions (FICUs) with assets of $10 million or more to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations.

FICUs with assets of $100 million or more would be required to have access to a backup federal liquidity source for emergency situations. This backup liquidity could come from CLF membership or direct borrowing from the Federal Reserve's Discount Window.

In the comment call, credit unions can address  whether the Federal Home Loan Banks should be included as sources of emergency liquidity and whether the NCUA should add other potential sources of emergency liquidity to the list of sources in its current proposal.

CUNA also asks if the NCUA's proposed asset-category divisions are appropriate, and whether different methods such as emergency liquidity ratios could be used to determine appropriate levels of liquidity preparedness.

The comment call asks if the NCUA should continue to maintain the CLF, and, if so, whether the role of the CLF could be expanded to offer non-emergency credit to credit unions.

The NCUA is accepting comments on its emergency liquidity proposal until Sept. 28. Comments should be forwarded to CUNA by Sept. 14.

CU witness to speak at W. Va. field hearing

 Permanent link
WASHINGTON (8/17/12)--Tom Brewer, president of People's FCU, Nitro, W. Va., will address how financial services regulations have impacted his credit union's ability to lend and to serve its members during a Monday U.S. House Financial Services financial institutions and consumer credit subcommittee field hearing in Charleston, W. Va.

The hearing, which will be led by subcommittee leader Rep. Shelley Moore Capito (R-W. Va.), will focus on how regulations impact job growth. The subcommittee in a release said it also plans to explore the effects of excessively stringent federal bank examinations on the ongoing economic recovery.

Brewer will also discuss examination issues and how his credit union's compliance burden has grown during his time at the institution.

City National Bank President Charles Hageboeck, Pendleton Community Bank President William Loving, Mountaineer Mobile Homes Owner John Wohlever, and Mountain State Justice Inc. Attorney Sarah Brown are also scheduled to testify. The hearing is scheduled to begin at 11 a.m. ET.

The hearing is one of many held to gauge the local impact of federal financial regulations and federal regulator examinations. The subcommittee earlier this year held field hearings in San Antonio, Texas, and Cleveland, Ohio, on the impact of regulations and small financial institutions. Maria Martinez, president/CEO of Border FCU, Del Rio, Texas, and Robert Glenn, president/CEO of Air Force FCU, San Antonio, testified at the Texas hearing, and Stan Barnes, president/CEO of Canton, Ohio-based CSE FCU, testified in Cleveland.

Legislators join to urge remittance rule delay

 Permanent link
WASHINGTON (8/17/12)--A group of 32 legislators have urged Consumer Financial Protection Bureau (CFPB) Director Richard Cordray to delay remittance rule implementation until February 2015, and, in the meantime, to study how remittance regulation changes would impact consumers and financial institutions.

The CFPB's final remittance transfer rule, which is scheduled to take effect on Feb. 7, 2013, would require remittance transfer providers to disclose the exchange rate, all fees associated with a transfer, and the amount of money that will be received on the other end. Remittance transfer providers will also be required to investigate disputes and fix mistakes.

The Credit Union National Association (CUNA) and other finance industry groups joined Reps. Blaine Luetkemeyer (R-Mo.) and Yvette Clarke (D-N.Y.) last month to seek support for a remittance rule delay. House Financial Services Committee members David Schweikert (R-Ariz.), Bill Huizenga (R-Mich.), Francisco "Quico" Canseco (R-Texas), John Campbell (R-Calif.), Stevan Pearce (R-N.M.), Steve Stivers (R-Ohio), Frank Guinta (R-N.H.), Bill Posey (R-Fla.), Robert Hurt (R-Va.) and Randy Neugebauer (R-Texas) are among the 30 legislators that have joined Luetkemeyer and Clarke in urging the delay.

The legislators in the letter note that the CFPB's proposed remittance rules "are fundamentally misaligned with the primary way in which financial institutions conduct international transfers today." Consumer access to remittance transfers through credit unions, banks and broker dealers is "in serious jeopardy" as a result of the "nearly impossible compliance challenge that financial institutions must solve by next February," the letter added.

The CFPB's final remittance rules would "impose arbitrary and unworkable requirements" on international fund transfers, the legislators said. Any price certainty and transparency that is created by the remittance rule would come at the cost of higher prices, and reduced availability, they added. As a result, unbanked and underbanked individuals who use remittance services will be forced to rely on services provided by less-regulated financial entities. "Such an outcome is contrary to the important public policy goal of integrating these populations into the mainstream financial system," the letter noted.

The CFPB has provided a safe harbor exemption from the rule for remittance providers that transact 100 or fewer remittances per year.  The CFPB indicated at least 80% of credit unions that offer remittance services would be exempt.

CUNA remains very concerned about the safe harbor provisions and continues to encourage the CFPB to increase this safe harbor threshold. CUNA President/CEO Bill Cheney, in a recent discussion with Cordray, emphasized that the remittance rules have not taken effect yet and asked Cordray to discuss remittance concerns with credit unions.

Inside Washington (08/16/2012)

 Permanent link
  • WASHINGTON (8/17/12)--Small mortgage servicers would be hardest hit by the Consumer Financial Protection Bureau's proposed new rules for mortgage servicing, which were designed for the largest firms. The proposed nine rules were a product of the $25 billion mortgage settlement agreed to earlier this year between regulators and the five largest servicers, including Banking of America, JPMorgan, Wells Fargo, Citigroup and Ally Financial (American Banker Aug. 16). But smaller servicers have thinner margins and will have trouble absorbing the cost required to carry out the requirements, observers say. The rules don't distinguish between small and large servicers, said Ed Delgado, a former senior vice president at Wells Fargo and now the chief operating officer at Wingspan Portfolio Advisors, a Carrollton, Texas, specialty servicer. Among the chief concerns for small servicers is the proposed requirement that servicers send borrowers periodic statements on residential loans and advanced notices when rates reset on adjustable rate mortgages. Terry Ryan, the president of Multi Financial Services in Tallahassee, Fla., estimated that requirement could account for 15% of his company's gross income …

CU-backed candidates can prep for November

 Permanent link
WASHINGTON (8/16/12)--A trio of credit union-backed Senate candidates cruised through their primaries this week and can begin preparing in earnest for this November's general elections.

In Connecticut, current U.S. House member Chris Murphy (D) won the Democratic Party's Senate nomination, defeating Connecticut Secretary of State Susan Bysewicz by winning 68% of the total vote.

Murphy was supported in his primary campaign by the Credit Union National Association's (CUNA) Credit Union Legislative Action Council (CULAC) and the Credit Union League of Connecticut, and will face former World Wrestling Entertainment CEO Linda McMahon for the right to replace the retiring Sen. Joe Lieberman (I-Conn.).

Elisabeth Etsy won the Democratic nomination for Murphy's former House seat on Tuesday.

Current Minnesota Sen. Amy Klobuchar (D) easily won her own Tuesday primary, and is expected to defeat her opponent, high school economics teacher Kurt Bills (R), this November. Klobuchar is also supported by CULAC and the Minnesota Credit Union Network.

Former Wisconsin Gov. Tommy Thompson (R) will face another CULAC-backed candidate, Rep. Tammy Baldwin (D), this fall after Baldwin ran unopposed in Tuesday's Senate primary. The Thompson/Baldwin race is expected to be competitive.

CULAC backed state Rep. Kelda Roys in her bid to take on Baldwin's vacated U.S. House seat, but Roys was defeated in her Democratic primary by fellow state Rep. Mark Pocan. However, CUNA Vice President of Political Affairs Trey Hawkins said Pocan is also a strong credit union supporter.

Rep. Connie Mack (R) will face CULAC- and credit union-supported Senate incumbent Bill Nelson (D-Fla.) this fall. Some polls give Nelson a slight edge in what is expected to be another close November race.

Arizona will be the next state to hold a major contested primary. That primary election, which is scheduled for Aug. 28th, will feature an open U.S. Senate contest and several competitive House races.

NCUA releases 1.4M in small-CU grants

 Permanent link
ALEXANDRIA, Va. (8/16/12)--A combined $1.4 million in technical assistance grants will be disbursed to help more than 100 small credit unions improve their service, train their staff, and expand their community outreach efforts, the National Credit Union Administration (NCUA) said on Wednesday.

Grants of up to $25,000 are provided to these credit unions through the agency's Community Development Revolving Loan Fund (CDRLF). The agency received 331 grant applications in 2012, with credit unions requesting more than $5 million, combined, in funding. This is the largest total requested since the CDRLF was established.

NCUA Office of Small Credit Union Initiatives (OSCUI) Director William Myers said the agency "made a concerted effort this year to make it easier to apply for these grants" and saw a 77% increase in applications as a result. The 2012 CDRLF funding round was the first to use the NCUA's new automated online application process.

The increase in grant applications "shows the depth of commitment these credit unions have to their members and communities," Myers added.

Just over $1 million of the total funds awarded will go to new product and service development. The agency in a release added that credit unions intend to use the funds to provide ATMs in underserved areas, increase some marketing efforts at in-school branches and increase awareness of the payday loan alternatives offered at their credit union.

Financial literacy and education at in-school credit union branches, and internships and staff training efforts, also will be funded by the grant money.

"NCUA works hard to support America's small credit unions, and these grants are one way of giving them the essential tools they need to do their work," NCUA Chairman Debbie Matz said.

Agencies CFPB release mortgage appraisal proposals

 Permanent link
WASHINGTON (8/16/12)--Separate proposals that would create new appraisal requirements for "higher-risk" mortgage loans, and give homebuyers greater access to home value appraisals, were released by federal financial regulators on Wednesday.

The high-risk loan proposal was released by the National Credit Union Administration, Consumer Financial Protection Bureau (CFPB) and other federal financial regulators. The Truth in Lending Act defines higher-risk mortgages as mortgage loans secured by a principal dwelling with annual percentage rates that exceed the average prime offer rate by 1.5% for first-lien loans, 2.5% for first-lien jumbo loans, and 3.5% for subordinate-lien loans.

The proposal would require mortgage creditors offering these higher-risk mortgages to use licensed or certified appraisers who prepare written reports, based on physical inspections of a home's interior, when they determine the value of a given home.

Mortgage lenders would also be required to provide homebuyers with a free copy of the resulting home appraisal report.

If the seller of a given home has purchased the home for less than the current sale price within the last six months, an additional appraisal document would be provided to the homebuyer.

That document would detail the difference in sale prices, any changes in market conditions, and any improvements that have been made to the property since it was purchased by the current owner. "This requirement would address fraudulent property flipping by seeking to ensure that the value of the property being used as collateral for the loan legitimately increased," the agencies said in a release.

In its separate release, the CFPB has proposed requiring lenders to provide home appraisal and valuation data to all mortgage applicants. "When looking to buy a home or refinance a mortgage, consumers need the best available facts and data," CFPB Director Richard Cordray said. "This rule would guarantee consumers receive important disclosures on how a lender determines the value of the home, making it easier for loan applicants to make informed decisions."

Both proposals would require lenders to provide appraisal documents to borrowers at least three days before closing.

Public comment on both of these proposals will be accepted until Oct. 15.

The CFPB said a final rule on its home appraisal proposal is expected to be released in January.

For more on the proposals, use the resource links.

Cheney urges MBL-bill passage in multistate radio tour

 Permanent link
WASHINGTON (8/16/12)--With members of Congress back in their home states this month, Credit Union National Association (CUNA) President/CEO Bill Cheney took to the airwaves in a series of radio interviews on why Congress should enact legislation to raise the cap on credit union member business lending (MBL).

The radio tour consisted of 12 phone interviews with stations around the country.

CUNA President/CEO Bill Cheney took the credit union message nationwide in a series of Wednesday radio interviews. (CUNA Photo)
Cheney in the interviews emphasized that raising the MBL cap would enable credit unions to help more small businesses and create new jobs at no cost to taxpayers.  He noted credit unions have a long and successful track record of small business lending, but some of the credit unions that have been most successful now must curb or stop lending because they are hitting the arbitrary 12.25% of assets statutory cap. "They're having to turn people away--it makes no sense," Cheney said.

The CUNA leader urged credit union members and listeners who agree with the credit union position to contact their senators and U.S. House members and urge passage of two CUNA-backed bills that would raise the MBL cap to 27.5% of assets, S. 2231 and H.R. 1418.

"If people agree small businesses need more access to capital, not less, contact your members of Congress" and ask them to pass these bills, Cheney said.

Cheney's interviews included Fox News' national radio network and stations in Alabama, Arizona, Florida, Maryland/D.C., Mississippi, Nebraska and Virginia.

In a number of the interviews, Cheney also had the opportunity to discuss the value of credit union membership and direct listeners to aSmarterChoice.org, the website developed by CUNA and credit union leagues. That site informs users on the basics of credit unions and provides resources to help them find one they are eligible to join.

CUNAs Cheney CFPBs Cordray talk CU issues

 Permanent link
WASHINGTON (8/15/12)--Credit Union National Association (CUNA) CEO Bill Cheney discussed CUNA's concerns about the Consumer Financial Protection Bureau's (CFPB) remittances rule, qualified mortgage proposal, and regulation of overdrafts with CFPB Director Richard Cordray in a Tuesday conversation initiated by the CFPB.

The CFPB director regularly contacts Cheney to stay abreast of credit union viewpoints.

Cheney during the discussion noted that the implementation costs of the CFPB's remittances rule would make it untenable for some credit unions, possibly causing them to stop providing a valued service to their members.

The CFPB's final remittance transfer rule, which is scheduled to take effect on Feb. 7, would require remittance transfer providers to disclose the exchange rate, all fees associated with a transfer, and the amount of money that will be received on the other end. Remittance transfer providers also will be required to investigate disputes and correct errors.

The CFPB last week announced that financial institutions that provide 100 or fewer remittance transfers per year would be exempted from the terms of the rule. The CFPB has estimated that this exemption would protect 80% of credit unions, but credit unions that are not exempted are very concerned about the rules, Cheney said.

Cheney emphasized that the remittance rules have not taken effect yet, and asked Cordray to discuss remittance concerns with credit unions.

The CUNA CEO said CUNA is also developing a list of best overdraft practices and wants to work with the CFPB, but credit unions are concerned that reasonable overdraft programs will be overregulated.

Cheney also reiterated CUNA supports the safe harbor approach in the CFPB's pending qualified mortgage regulations. (See Aug. 14 News Now item: CUNA, CFPB discuss qualified mortgage concerns.)

Cordray indicated he would like to work with CUNA and credit unions on these issues going forward.

"We had a productive discussion, and I appreciate the outreach from the CFPB director," Cheney said afterward.

OCC chief counsel former acting comptroller to retire

 Permanent link
WASHINGTON (8/15/12)--Office of the Comptroller of the Currency (OCC) Chief Counsel Julie Williams, who twice served as Acting Comptroller of the Currency during her 19 years at the agency, will step down from her position on Sept. 30, the OCC announced this week.

Williams will retire from public service at the end of this year, the OCC added.

Williams briefly served as acting comptroller in 1998 and between October 2004 and August 2005, and served as chief counsel for four Comptrollers of the Currency.

The OCC in a release noted Williams' work to strengthen bank privacy policies and protections and her advocacy of extending the Federal Trade Commission Act's ban on unfair and deceptive practices to protect bank customers. Williams has also called for improved consumer disclosures and, more recently, has worked on several Dodd-Frank Wall Street Reform Act projects, the OCC release added.

Current Comptroller of the Currency Thomas Curry said Williams' "contributions to the agency and her role in the world of financial services regulation have been extraordinary."

Deputy Chief Counsel Daniel Stipano will serve as acting chief counsel between Oct. 1 and the end of the year. Deputy Chief Counsel Karen Solomon will take on the role of acting chief counsel on Jan. 1, and serve in that capacity until March 31, while the OCC searches for a full-time chief counsel.

CUNA seeks CU reverse-mortgage comments

 Permanent link
WASHINGTON (8/15/12)--Reverse mortgages could soon come under Consumer Financial Protection Bureau (CFPB) regulation. Credit unions that offer reverse mortgages can provide their own comments on what drives their members to choose reverse mortgage products and how those members use reverse mortgage proceeds, in a new Credit Union National Association (CUNA) comment call.

The CFPB in June asked for public comment on reverse mortgages, which allow homeowners over age 62 to cash out a portion of their home equity. While these products are not widely available at credit unions, CUNA has asked credit unions if they have comments or concerns that should be passed on to the CFPB.

In their comments, credit unions that offer reverse mortgages can also detail how employees who sell reverse mortgages are compensated and provide more general comments.

The agency has asked for information on how the decision to enter a reverse mortgage transaction can impact consumers' long-term finances, and  for any differences in market dynamics and business practices among the broker, correspondent, and retail channels for reverse mortgages.

The CFPB in a recent report called reverse mortgages "inherently complicated products that are not easy for the average consumer to understand." Federal disclosures and other tools provided to consumers "are insufficient to ensure that consumers are making good tradeoffs and decisions" when they take out reverse mortgages on their homes, the CFPB added.

While fewer than 3% of homeowners have taken out reverse mortgages on their homes, the CFPB noted that those who take out the reverse mortgages do so at younger ages. They also are taking out funds from their reverse mortgages sooner. These two factors may increase some of the financial risks associated with reverse mortgage products, CFPB said.

CUNA Senior Assistant General Counsel Jared Ihrig said the agency has the authority to regulate reverse mortgages, and the agency expects to undertake a project to integrate reverse mortgage Truth in Lending (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosure requirements in a future rulemaking. This project would be separate from the agency's current TILA/RESPA integration project, which addresses the forms that are provided in connection with most traditional forward mortgage closed-end credit transactions.

For the CUNA comment call, use the resource link.

CLF low-income CUs focus of NCUA webinar

 Permanent link
ALEXANDRIA, Va. (8/15/12)--Issues facing the National Credit Union Administration's (NCUA) Central Liquidity Facility (CLF) and low-income credit unions (LICUs) took center stage at a Tuesday NCUA webinar.

NCUA staff in the webinar stressed that more than 6,000 natural person credit unions will lose access to the CLF, which serves as a liquidity lender to credit unions in need of emergency funding, when U.S. Central Bridge Corporate CU closes in late October. This pending lack of backup liquidity could create significant issues if systemic financial issues arise, NCUA Division of Capital Markets Director and CLF President Owen Cole said.

In anticipation of this closing, the NCUA last month released a proposed rule that would require some credit unions to establish new sources of emergency liquidity through becoming CLF members or establishing direct borrowing access to the Federal Reserve's discount window.

Applying for regular CLF membership is a "very brief" and simple process, Cole said. Along with an application, copies of a credit union's balance sheet, income/expense statement, delinquent loan report, and a check for the calculated amount of the required capital stock subscription are all that is required. State-chartered credit unions must also provide a copy of their charter and bylaws, along with the application and other materials.

Cole said corporates can help those credit unions that may need some assistance signing up for their own CLF coverage.

Collateral requirements for CLF membership are "fairly broad," and Cole said the amount of stock that a credit union subscribes for when it signs up for CLF coverage does not determine the maximum amount of financial backing they would receive from the CLF if any issues arise.

CLF access for the 93 natural person credit unions that currently hold CLF stock will not change in late October, he said.

Whether a credit union picks the CLF or the Fed's discount window as its source of emergency liquidity is an individual choice for each credit union, and Coyle said he would not dissuade credit unions from doing both.

In a second webinar session, NCUA Office of Small Credit Union Initiatives Director Bill Myers and other NCUA staff said that credit unions that are interested in receiving a LICU designation, but were not contacted by the NCUA during a recent outreach effort, may still apply.

The NCUA earlier this month contacted nearly 1,000 credit unions to inform them that they are eligible for low-income designations. That designation brings benefits that include the ability to accept supplemental capital and an exemption from the small business lending cap under certain circumstances.

Myers said that credit unions that wish to apply for a LICU designation may need to undertake deeper examinations of their membership, including verifying some address information, examining loan data, generating statistically valid samples of member data, and performing a membership survey to see if they meet LICU criteria.

The NCUA can also work with state-chartered credit unions and their state regulators to determine their LICU status. Myers noted that credit unions are not required to have community charters to qualify for LICU status.

LICU designation eligibility will be updated by the agency quarterly, and credit unions may request the exact results of the NCUA's analysis of their LICU status.

Credit unions that lose their status will be notified by the NCUA, and those that are dropped from the NCUA's list of LICUs may attempt to requalify for five years. They will also be given five years to come into compliance with any new regulations that may impact them as a result of their loss of low-income status.

An audio version of the webinar, and a transcript, will be archived on the NCUA site in the near future.

Inside Washington (08/14/2012)

 Permanent link
  • WASHINGTON (8/15/12)--Ginnie Mae officials are hesitant to accept requests from mortgage banks to become issuers of its mortgage-backed securities (MBS) following refusals from large banks to purchase the loans. Bank of America, Ally Financial and MetLife have left the correspondent lending market (American Banker Aug. 14). In July, Wells Fargo refused to fund mortgages from independent mortgages through its wholesale channel. Many of the new requests are from mortgage banks that do not have the capital levels to share the risk of loan defaults. The agency said it may raise the minium net-worth requirements for its MBS issuers to strengthen the field of applicants …
  • WASHINGTON (8/15/12)--The 12 Federal Home Loan Banks (FHLB) earned a combined $552 million in the second quarter, an increase of $301 million compared with the same period in 2011, the FHLB's Office of Finance said Monday. The increase was driven by lower other-than-temporary-impairment charges and lower assessments. Net income for the six months ended June 30 was $1.285 million, an increase of $676 million compared to the same period last year. The banks suffered a loss of $113 million in noninterest income for the quarter; however, that was an improvement of $287 million compared with a year earlier …
  • WASHINGTON (8/15/12)--The Consumer Financial Protection Bureau (CFPB) has partnered with Cornell University to provide a new way for the public to learn of and comment on new financial regulatory initiatives.  The CFPB has posted its recent mortgage servicing proposal to the website, which is operated by Cornell students and staff. The site is part of a research project meant to explore how public participation in the rulemaking process can be increased. The CFPB said it wants to make it easier for consumers and small businesses to tell the agency what they think about the rules it is working on …

CUNA CFPB discuss qualified mortgage concerns

 Permanent link
WASHINGTON (8/14/12)--Key concerns about the Consumer Financial Protection Bureau's (CFPB) Ability-to-Repay Regulation Z proposal were the subject of a Monday meeting in Washington.

Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn, Senior Assistant General Counsel Jared Ihrig and Regulatory Counsel Dennis Tsang attended the Monday CFPB meeting in Washington. CUNA has met several times with agency officials to discuss the ability-to-repay proposal, which would define a "qualified mortgage."

Under the still developing ability-to-repay rule, mortgage originators would be required to consider a homebuyer's ability to repay the loan before a loan could be offered.

Dunn said one area of critical concern is how the agency should implement a provision in the Dodd-Frank Wall Street Reform Act that directs the CFPB to establish a "safe harbor" or "rebuttable presumption of compliance." The agency can only include one of the approaches in the final rule, she noted.

Based on how courts have treated safe harbors in the past, this approach would afford mortgage loan originators that follow the CFPB's qualified mortgage requirements certain protections from litigation. That is because, in general, under the safe harbor approach, the court would be confined to looking at whether the qualified mortgage requirements were met, Dunn said.

Dunn noted that the "rebuttable presumption" approach would provide more flexibility for consumers to sue lenders and allow them to assert their inability to repay a mortgage loan as an affirmative defense in a foreclosure proceeding. Lenders challenged in court would generally have the burden of proving they met the qualified mortgage standards, under the rebuttable presumption approach.

CUNA will continue advocating for the safe harbor approach, Dunn said. The final rule is not expected to be released until after this November's election, and must be in place by Jan. 21, 2013.

CUNA anticipates further discussions on the proposal.

WOCCU CU shares may be capital in Basel III

 Permanent link
WASHINGTON (8/14/12)--Credit union shares that are perpetual, nonwithdrawable and available to cover institutional losses may be considered "common equity" regulatory capital under guidelines offered by the Basel Committee on Banking Supervision's Basel III document, the World Council of Credit Unions (WOCCU) said in a white paper released on Monday.

Basel III standards will require banks to hold common equity of 4.5% by 2015. In addition, banks must hold a 2.5% conservation buffer, which will be gradually introduced by 2019, and increase Tier 1 levels from 4% to 6% by 2015. These international bank rules are intended to force banks to hold more capital as a buffer against future financial shocks.

Credit union shares with a high degree of permanence and the ability to absorb losses on a going-concern basis should qualify as the most desirable form of capital under Basel III, known as "Common Equity Tier 1 capital," the WOCCU white paper notes. However, the paper adds, credit union shares can qualify as other forms of Basel III regulatory capital even when they do not meet this "Common Equity Tier 1" capital definition.

"As the financial services system becomes more global, credit unions in more countries fall under the local authority application of Basel III guidelines," WOCCU President/CEO Brian Branch said in a release. "A clear understanding of the opportunities and obligations under Basel III is critical for growth and service to members," he added. WOCCU Chief Counsel/Vice President for Advocacy and Government Affairs Michael Edwards noted that while many credit union systems will not implement Basel III requirements, portions of Basel III that determine when credit union shares qualify as regulatory capital under Basel III will be critically important in jurisdictions that do implement Basel III for credit unions.

The WOCCU release said that Australia, Bolivia, Brazil, several Canadian provinces and Ecuador have enacted capital rules for credit unions based on Basel II, and are likely to do the same under Basel III. The Basel III rules do not apply to credit unions, but the debate and discussion that takes place as these new reforms are brought into practice by regulators could provide a new backdrop for and focus on a conversation about alternative capital for credit unions in the U.S.

For the full white paper, use the resource link.

CU-backed Hirono moves closer to Senate

 Permanent link
WASHINGTON (8/14/12)--Credit union-backed Democratic primary candidate and current U.S. House member Rep. Mazie Hirono (D-Hawaii) won her party's Senate nomination over the weekend, and will face former Governor Linda Lingle (R) this November in a race to replace retiring Sen. Daniel Akaka (D-Hawaii).

Hirono, who was supported by the Credit Union National Association's (CUNA) Credit Union Legislative Action Council (CULAC) and the Hawaii Credit Union League, defeated former Rep. Ed Case (D) by winning 58% of the vote.

CUNA Vice President of Political Affairs Trey Hawkins said Hirono is a strong credit union backer who "has signaled her support publicly on just about every issue facing credit unions during her time in Congress, including the member business lending cap, debit interchange fee changes and supplemental capital."

Hawaii National Guard Commander Tulsi Gabbard will be the Democratic nominee in this fall's contest to replace Hirono in the U.S. House. Gabbard will face Kawika Crowley this November.

Hirono and Gabbard are expected to win their contests in what has long been a "blue" state, although Republicans are hopeful that Lingle's candidacy will make the Senate seat more competitive.

Connecticut, Florida, Minnesota and Wisconsin primaries are being held today, and CULAC and credit unions are backing several Senate primary candidates, including incumbent Sen. Amy Klobuchar (D-Minn.) and current House members Chris Murphy (D-Conn.) and Tammy Baldwin (D-Wis.).

House nominations will also be contested in today's elections.

Bankers misrepresent LICU letters CUNA warns iWSJi

 Permanent link
WASHINGTON (8/14/12)--Some are mischaracterizing the National Credit Union Administration's (NCUA) recent move to streamline the process for federal credit unions to receive low-income designations, Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn told The Wall Street Journal last week.

The NCUA last week sent letters to 1,003 credit unions to alert them of their low income credit union (LICU) designations. The LICU designation brings benefits that include the ability to accept supplemental capital and an exemption from the small business lending cap under certain circumstances.

Credit unions that wish to receive a LICU designation from the regulator may simply reply to the NCUA letter, rather than filling out more substantial paperwork.

The NCUA's LICU notifications were incorporated into a larger Obama administration plan to aid states affected by this summer's drought-like conditions. Around half of the LICU-eligible institutions that received the recent NCUA notices are headquartered in states identified by the National Oceanic and Atmospheric Administration as having "extreme" drought conditions.

CUNA and credit unions do not think this move to facilitate the process for LICU eligiblity should be made "into something nefarious and evil," Dunn added in the Journal coverage. Opponents have claimed that the LICU changes are an attempt to bypass the current 12.25% of assets credit union member business lending (MBL) cap. However, Dunn on Monday emphasized that the NCUA's LICU changes do not give credit unions new powers. "There are real hard and fast criteria that credit unions need to meet to establish themselves as LICUs," she said.

To qualify as a LICU, a majority of a federal credit union's membership must meet low-income thresholds based on 2010 Census data. In addition to the exemption from the statutory 12.25% statutory MBL cap, other advantages derived from the LICU designation include:

  • Eligibility for Community Development Revolving Loan Fund grants and low-interest loans,
  • Ability to accept deposits from non-members, and
  • Authorization to obtain supplemental capital.
The NCUA has estimated that LICU streamlining could result in $250 million to $500 million in new loans to small-business-owning credit union members. The initiative could double the number of LICUs and increase their member business lending by nearly 75%. However, it is not clear how many eligible credit unions will become LICUs, and the NCUA's LICU changes do not impact state credit unions.

CUNA has concerns about mortgage servicer proposal

 Permanent link
WASHINGTON (8/13/12)--The Credit Union National Association (CUNA) has some serious concerns with the possible regulatory burden and added compliance costs of the proposed regulations for mortgage servicers that the Consumer Financial Protection Bureau (CFPB) issued on Friday.

The proposed rules, which are subject to a 60-day comment period ending on Oct. 9, implement some of the provisions of the Dodd-Frank Act on subjects such as simplifying billing statements, providing additional notice of rate changes and ensuring that consumers know all of their options to prevent foreclosures.

Many of the rules are aimed at addressing provisions of the Real Estate Settlement Procedures Act and the Truth in Lending Act.

CUNA President/CEO Bill Cheney said CUNA will be working with various key committees and member contacts within the association to determine how best to address those concerns and issues.

"Mortgage lending and servicing have become important services of credit unions to their members. In developing these services, credit unions have proven themselves to be careful lenders: We did not contribute to the sub-prime meltdown or the subsequent credit market crisis. Instead, the structural and operational differences of credit unions from other institutions translated into high asset quality at credit unions during and after the crisis," Cheney stated when the CFPB announced its proposal.

He added, "As Rep. Barney Frank (D- Mass.) -- ranking member and former chairman of the House Financial Services Committee--has said, 'If mortgages were only made by credit unions, we wouldn't be in this crisis.'

"He has also pointed out that, in drafting the landmark legislation which created the Consumer Financial Protection Bureau--the Dodd-Frank Act of 2010--lawmakers aimed to take the principles that credit unions operate under and apply them to all financial institutions.

"We intend to remind the CFPB of those views as these proposals work their way through the rulemaking process."

According to a CUNA summary of the CFPB plan, servicers would have to make a "good faith'' effort to notify consumers of loss mitigation options. If a borrower is 30 days late in making a payment the servicer would have to let them know of their options verbally. Written notification is required if the borrower is 40 days late.

Servicers would have to provide periodic billing statements that clearly break down charges. This wouldn't apply to fixed-rate loans if the servicer provides a coupon book or if the servicer services 1,000 or fewer mortgages. The exemption is only for mortgages originated by the servicer or where they retain servicing rights.

Servicers must provide 210 to 240 days notice prior to the first rate adjustment and subsequent notices to consumers 60 to 120 days before a payment change adjustment. Servicers wouldn't have to continue to provide an annual notice if a rate adjustment does not result in an increase in the monthly payment.

Under the proposed rules, servicers would have to promptly credit payments from borrowers, generally on the day of receipt. If a payment is less than the full amount, the payment may be held in a suspense account.

Servicers would not be permitted to charge a borrower for force-placed insurance coverage unless the servicer has a reasonable basis to believe the borrower has failed to maintain hazard insurance.

The rules would require certain procedural requirements for responding to information requests or complaints. Errors include an allegation by the borrower that the servicer

misapplied a payment or assessed an improper fee Servicers could designate a specific phone number and address for borrowers to use.

The CFPB is scheduled to issue final rules in January.

Inside Washington (08/10/2012)

 Permanent link
  • WASHINGTON (8/13/12)—The Federal Housing Administration (FHA) is working hard to paint itself as a turnaround story, but its critics say that picture is deceptive. FHA has $3 billion surplus, an improving credit profile and will not require a government bailout this year, but the agency has attempted to raise capital through settlements with major banks, sales of severely delinquent loans and higher insurance premiums for new borrowers (American Banker Aug. 10). The agency's reserves are in decline, delinquencies are on the rise and only foreclosure delays by large mortgage servicers have helped it avoid paying out new claims, according to FHA data. A billion-dollar settlement with large banks over bad loans was the primary reason FHA avoided a government bailout this year, said Isaac Boltansky, a policy analyst at Compass Point Research & Trading …
  • WASHINGTON (8/13/12)--The Federal Deposit Insurance Corp. (FDIC) in July used authority found under the Financial Institutions, Reform, Recovery and Enforcement Act of 1989 to recoup losses--and help replenish the Deposit Insurance Fund--by going after affiliated institutions (American Banker Aug. 10). The FDIC last month announced the terms of an agreement with $456 million asset Union Bank in Kansas City, Mo. Under the agreement, Union Bank will pay FDIC 85% of the proceeds of the bank's sale to Arvest Bank in Fayetteville, Ark. The agreement serves as a warning that banks should confirm with the Federal Reserve whether they have less than a majority position, says James J. McAlpin Jr., a partner at Bryan Cave in Atlanta. Banks can take advance steps to release themselves from a controlling position, McAlpin said …
  • WASHINGTON (8/13/12)--Force-placed insurance allows insurers to collect premiums and banks to earn lucrative fees even though the loss rates on such coverage tend to be lower than standard homeowners coverage, consumer advocates said at a hearing held by the National Association of Insurance Commissioners Thursday. Force-placed insurance is a type of property insurance policy that banks purchase when mortgage borrowers stop paying for homeowners insurance (American Banker Aug. 10). Banks receive a portion of the premiums through commissions, reinsurance deals and other payments from the specialty carriers that offer it. The inflated fees of force-placed insurance don't justify the risks, testified Peter Kochenberger, executive director of the Insurance Law Center at the University of Connecticut Law School. If the fees were so lucrative, more companies would offer the insurance, said Kevin McKechnie, the executive director of the American Bankers Insurance Association. Only two major specialty insurers--Assurant and QBE--offer force-placed insurance …
  • WASHINGTON (8/13/12)--Liberal groups Thursday pressured the Obama administration to replace Edward DeMarco as acting head of the Federal Housing Finance Agency (FHFA). Housing activists and consumer groups also requested that the Justice Department further investigate the origins of the housing crisis. Criticism of DeMarco has increased since he announced that the FHFA will not allow principal write-downs on Fannie Mae and Freddie Mac mortgages (American Banker Aug. 10). Observers believe the president is unlikely to replace Demarco because he leads an independent agency and Senate Republicans would block any nominee to replace him. Activists said Demarco's replacement could be filled through a recess appointment. There has been little progress made in investigating the fraud and abuse that led to the 2008 housing crisis, activists said. A complete investigation is among the obstacles standing in the way of a robust economic recovery, said Brian Kettenring of the Campaign for a Fair Settlement …

CUNA concerned about new mortgage servicer rules

 Permanent link
WASHINGTON (8/13/12)--The Credit Union National Association (CUNA) has some serious concerns with the possible regulatory burden and added compliance costs of the proposed regulations for mortgage servicers that the Consumer Financial Protection Bureau (CFPB) issued on Friday.

The proposed rules, which are subject to a 60-day comment period ending on Oct. 9, implement some of the provisions of the Dodd-Frank Act on subjects such as simplifying billing statements, providing additional notice of rate changes and ensuring that consumers know all of their options to prevent foreclosures.

Many of the rules are aimed at addressing provisions of the Real Estate Settlement Procedures Act and the Truth in Lending Act.

CUNA President/CEO Bill Cheney said CUNA will be working with various key committees and member contacts within the association to determine how best to address those concerns and issues.

"Mortgage lending and servicing have become important services of credit unions to their members. In developing these services, credit unions have proven themselves to be careful lenders: We did not contribute to the sub-prime meltdown or the subsequent credit market crisis. Instead, the structural and operational differences of credit unions from other institutions translated into high asset quality at credit unions during and after the crisis," Cheney stated when the CFPB announced its proposal.

He added, "As Rep. Barney Frank (D- Mass.) -- ranking member and former chairman of the House Financial Services Committee--has said, 'If mortgages were only made by credit unions, we wouldn't be in this crisis.'

"He has also pointed out that, in drafting the landmark legislation which created the Consumer Financial Protection Bureau--the Dodd-Frank Act of 2010--lawmakers aimed to take the principles that credit unions operate under and apply them to all financial institutions.

"We intend to remind the CFPB of those views as these proposals work their way through the rulemaking process."

According to a CUNA summary of the CFPB plan, servicers would have to make a "good faith'' effort to notify consumers of loss mitigation options. If a borrower is 30 days late in making a payment the servicer would have to let them know of their options verbally. Written notification is required if the borrower is 40 days late.

Servicers would have to provide periodic billing statements that clearly break down charges. This wouldn't apply to fixed-rate loans if the servicer provides a coupon book or if the servicer services 1,000 or fewer mortgages. The exemption is only for mortgages originated by the servicer or where they retain servicing rights.

Servicers must provide 210 to 240 days notice prior to the first rate adjustment   and subsequent notices to consumers 60 to 120 days before a payment change adjustment.  Servicers wouldn't have to continue to provide an annual notice if a rate adjustment does not result in an increase in the monthly payment. 

Under the proposed rules, servicers would have to promptly credit payments from borrowers, generally on the day of receipt.  If a payment is less than the full amount, the payment may be held in a suspense account.  

Servicers would not be permitted to charge a borrower for force-placed insurance coverage unless the servicer has a reasonable basis to believe the borrower has failed to maintain hazard insurance.

The rules would require certain procedural requirements for responding to information requests or complaints. Errors include an allegation by the borrower that the servicer

misapplied a payment or assessed an improper fee Servicers could designate a specific phone number and address for borrowers to use. 

The CFPB is scheduled to issue final rules in January.

CFPB advisory sparked by bank UDAP fine

 Permanent link
WASHINGTON (8/13/11)--Students who receive loan money transferred to debit cards should be aware of certain rights and options they have, according to an advisory issued by the Consumer Financial Protection Bureau.

Among its key points, the advisory:

  • Notes that students cannot be required to use a specific bank or card and all federal loans must come with a paper check or cash option;
  • Recommends that a student choose a financial institution before arriving at school; and
  • Recommends a student sign up for direct deposit if offered.
The advisory was issued on Friday, two days after the Federal Deposit Insurance Corp.'s announcement that Higher One Holdings Inc. agreed to return about $11 million to college students for overcharging them for fees on its debit cards.

The bank is also paying a $110,000 civil fine and Bancorp Bank, which issued the OneAccount debit card administered by Higher One, is paying a $172,000 fine.

To see the advisory, use the resource link.

NCUA adds LICU issues to Aug. 14 webinar topics

 Permanent link
ALEXANDRIA, Va. (8/13/12)--The National Credit Union Administration (NCUA) is adding Low-Income Credit Union (LICU) issues to the agenda of its already announced Aug. 14 webinar on pending Central Liquidity Facility (CLF) changes and the agency's new proposed rule on credit union access to emergency liquidity.

The agency last week sent letters to more than 1,000 credit unions indicating they are eligible for low-income designation.  While the letter confers no new abilities, it does streamline the process of becoming LICU-designated. That designation brings benefits that include the ability to accept supplemental capital and an exemption from the small business lending cap under certain circumstances.

Credit unions receiving letters may now opt-in with a simple reply that agrees to the LICU designation.

Tomorrow's webinar is scheduled to begin at 2 p.m. (ET) and will be hosted by NCUA Division of Capital Markets Director and CLF President Owen Cole. And Office of Small Credit Union Initiatives Director William Myers will discuss the recent LICU announcement.

The NCUA suggested that webinar participants review background information on the CLF before the webinar. Information on the CLF will be released to credit unions in an upcoming letter, the NCUA said.

As background on the CLF and liquidity portions of the webinar, more than 6,000 natural person credit unions will lose access to the CLF, which serves as a liquidity lender to credit unions in need of emergency funding, when U.S. Central Bridge Corporate CU closes in late October. In anticipation of this closing, the NCUA last month proposed a new emergency liquidity access rule.

Webinar participants may submit their questions for NCUA staff to WebinarQuestions@ncua.gov. The subject line should read "CLF and Your Credit Union's Contingent Liquidity," the agency has said.

To register for the webinar, use the resource link.

NEW CFPB proposes more rules on mortgage servicers

 Permanent link
WASHINGTON (UPDATE 8/10/11, 11:32 a.m. ET)--Credit unions and other mortgage servicers would have to provide clearer monthly statements and would have to take additional steps before foreclosing on a property, under proposed regulations unveiled today by the Consumer Financial Protection Bureau (CFPB).

Under the rules, which are open for comment through Oct.  9, servicers couldn't foreclose on a home until a homeowner is given the chance to apply for alternative ways to keep their homes.

In addition, the servicers must provide statements which break down payments by principal, interest, fees, and escrow; the amount of and due date of the next payment; recent transaction activity; and warnings about fees. Also, servicers would have to provide earlier warnings before any changes to adjustable rate mortgages.

"These proposed rules would offer consumers basic protections and put the 'service' back into mortgage servicing. The goal is to prevent mortgage servicers from giving their customers unwelcome surprises and runarounds,'' CFPB Director Richard Cordray said in a statement.

Credit Union National Association officials have met regularly with agency officials to make the regulations less onerous and will continue to do so until the final regulations are issued in January.

Read the Monday issue of CUNA's News Now for more.

iCU Magazinei McGraw Hill outlines ID theft prevention

 Permanent link
WASHINGTON (8/10/12)--McGraw Hill FCU has made a top priority of providing education and monitoring programs aimed at helping its members prevent identity theft, its chief sales and delivery office, Peter Van Houlten, shares in the August issue of Credit Union Magazine

With about 10 million Americans victimized each year according to the Federal Trade Commission, he said credit unions need to take a proactive approach to educate their members, their communities, and their business partners. McGraw-Hill has developed and presented its own seminar on ID theft.

"By taking this proactive approach, we're arming consumers with the tools to understand

how they're protected, to recognize if their identity has been compromised, and to take steps to restore their personal identity when it is compromised,'' said the executive of the $277 million-asset,  East Windsor, N.J.-based credit union.

Van Houlten noted that many transactions are handled via computer, and branch visits and calls are shifting to what he described as "value-added conversations and higher-level topics, such as the best deposit vehicles or 401(k) investment advice.'' This has forced the credit union to beef up its training programs.

He also said that to adapt to the changes in credit unions, executives must rely more heavily on hard data to guide their thinking because "relying on soft data

during a constantly evolving period can very easily lead us in the wrong  direction.''

How serioulsy does Van Houlton take financial literacy?

"I'm training for McGraw-Hill Federal's inaugural 'Ride For Financial Wellness,' in October. The ride is intended to raise awareness for financial wellness and literacy, and to raise money for our VOICE Foundation, which will donate the proceeds to Junior Achievement of New Jersey, The National Junior Tennis and Learning of Trenton, and the New Jersey Coalition for Financial Education.

"We're seeking participation from colleagues, business partners, and community leaders. The ride will start at our headquarters in East Windsor, and will culminate with a casual luncheon and ceremony on the credit union's front lawn," he notes in his article".

Credit Union National Association members can access the article using the resource link below.

Slight rise in average monthly mortgage rates

 Permanent link
WASHINGTON (8/10/12)--The average 30-year fixed-rate mortgage was 3.59% for the week that ended yesterday, an increase from 3.55% the previous week, according to a survey released by Freddie Mac.

During the same week last year the average rate was 4.22%, according to the mortgage buyer.

The average 15-year fixed rate mortgage was 2.86%, up from 2.83% the previous week and a decline from an average rate of 3.50%.

"Fixed mortgage rates inched up again this week following stronger-than-expected employment reports. The economy added 163,000 jobs in July, well above the market consensus forecast of 100,000, and the largest increase since February,'' said Freddie Mac Vice President Chief Economist Frank Nothaft.

The average five-year adjustable rate mortgage averaged 2.77% this week, compared with 2.75% the previous week and 3.13% the same week last year.

The average one-year adjustable rate mortgage was 2.65%, compared with 2.70% the previous week and 2.89% the same week last year.

NCUA Video tellers can be FCU service facilities

 Permanent link
WASHINGTON (8/10/12)--Federal credit unions can use video teller machines as service facilities both for select group additions and underserved areas, the National Credit Union Administration (NCUA) ruled in a legal opinion.

In recent meetings with the NCUA, the Credit Union National Association supported the legal interpretation.

The NCUA ruled that the machines must meet several criteria in order to comply with federal regulations. They must:
  • Provide real-time, face-to-face video access to live tellers at regularly scheduled weekly hours;
  • Use credit union employees or local shared branch employees as the on-screen tellers;
  • Allow members to conduct all the transactions he/she could if visiting any other facility; and,
  • Be in a physical location within an underserved a area or near the group being served for group additions.
A website is not considered a service facility for purposes of new membership groups, the opinion concluded.

And "an interest in a shared branching network, ATMs, and websites do not meet the criteria for a service facility in an underserved area,'' wrote NCUA Associate General Counsel Frank Kressman.

He added that the opinion "does not change the definition of service facility or affect previous opinions NCUA has issued in this regard. Rather, this simply clarifies NCUA's interpretation of the service facility portions of the Chartering Manual.''

To see the opinion letter, use the resource link below.

Tiny United Catholic CU is 2012s eighth liquidation

 Permanent link
ALEXANDRIA, Va. (8/10/12)--United Catholic CU (UCCU), with 200 members and about $303,000 in deposits, became the eighth federally insured credit union to be liquidated this year.  The Michigan Office of Financial Insurance Regulation (OFIR) appointed the National Credit Union Administration (NCUA) as liquidating agent when it closed the Temperance, Mich. credit union Thursday.

The NCUA's Asset Management and Assistance Center will issue checks to individuals holding verified share accounts in the credit union within one week. UCCU member deposits are federally insured by the National Credit Union Share Insurance Fund (NCUSIF) up to $250,000.

An OFIR examination found that UCCU was operating in an unsafe and unsound manner and was insolvent, according to an agency announcement.

UCCU, federally insured, state-chartered credit union, was chartered in 1961 and served members belonging to Catholic parishes in the Temperance/Erie area.  It had one branch.

Former UCCU members with questions about their insurance coverage may contact the NCUA's Consumer Service hotline toll-free at 800-755-1030, Monday through Friday between 8 a.m. and 5 p.m. (ET).  Individuals may also visit the MyCreditUnion.gov website for more information about NCUSIF insurance coverage.

Inside Washington (08/09/2012)

 Permanent link
  • WASHINGTON (8/10/12)--The Federal Housing Finance Agency (FHFA) said Wednesday it would consider taking action against municipalities that used eminent domain to revise mortgage loans (American Banker Aug. 9). The agency did not say what actions it would take, but expressed concern that losses resulting from such programs would ultimately be paid for by taxpayers. "FHFA has determined that action may be necessary on its part as conservator for the enterprises and as regulator for the banks to avoid a risk to safe and sound operations and to avoid taxpayer expense," the agency wrote in a notice. In June, California's San Bernardino County and two of its city governments, Fontana and Ontario, introduced a plan to use eminent domain powers to seize mortgage loans from private investors (News Now July 10) …
  • WASHINGTON (8/10/12)--Financial education supports not only individual well-being, but also the economic health of the nation, Federal Reserve Chairman Benjamin Bernanke said in a town hall meeting with teachers Wednesday.  "As the recent financial crisis illustrates, consumers who can make informed decisions about financial products and services not only serve their own best interests, but, collectively, they also help promote broader economic stability," Bernanke said. "Smart financial planning--such as budgeting, saving for emergencies, and preparing for retirement--can help households enjoy better lives while weathering financial shocks. Financial education can play a key role in getting to these outcomes." Students should be taught how to apply an economic way of thinking to their decisions, Bernanke suggested. Financial education also provides a context for students to develop skills that can be applied more broadly. Making good financial decisions requires that consumers seek out relevant information from trustworthy sources, and that they use critical thinking, quantitative reasoning and decision-making skills, he said …
  • WASHINGTON (8/10/12)--Sen. Bob Corker (R-Tenn.) reiterated his concerns about extending the Transaction Account Guarantee (TAG) program in a letter he wrote to Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corp. (FDIC) (American Banker Aug. 9). TAG was initiated by the FDIC as a voluntary program in 2008 during the financial crisis to address concerns that a large number of account holders might withdraw their uninsured account balances from financial institutions due to economic uncertainties. The program was meant to be temporary, Corker wrote in his letter. He asked Gruenberg if extending TAG was a moral hazard and if it would affect the payment of bank deposit insurance premiums …
  • WASHINGTON (8/10/12)--Sens. David Vitter (R-La.) and Sherrod Brown (D-Ohio) sent a bipartisan letter urging Federal Reserve Chairman Ben Bernanke to increase the capital requirements of big banks. "Placing higher capital requirements on megabanks is a common sense way to fix the dangers of too-big-to-fail, and Chairman Bernanke has even said this would make our financial system safer with limited impact on the economy," Vitter wrote. "The megabanks should bear their own risks so that taxpayers won't get hung out to dry with another Wall Street bailout." Research by the Federal Reserve and other regulators shows the tougher capital requirements will reduce the threat of another financial crisis, while doing little to limit economic growth, Vitter and Brown wrote in their letter. In December, the Fed issued a package of rules implementing Section 165 of the Dodd-Frank Act. The rules addressed issues such as risk-based capital requirements, leverage, resolution planning and concentration limits …
  • WASHINGTON (8/10/12)--The Federal Deposit Insurance Corp. (FDIC) has reached settlements with Higher One Inc., New Haven, Conn., and The Bancorp Bank, Wilmington, Del., over alleged unfair and deceptive practices by the banks. Higher One is an affiliate of The Bancorp Bank. Under the settlement, Higher One has agreed to provide restitution of roughly $11 million to about 60,000 students. In addition, the FDIC imposed civil money penalties of $110,000 for Higher One and $172,000 for The Bancorp Bank. The banks were allegedly charging student account holders multiple nonsufficient fund (NSF) fees from a single merchant transaction; allowing the accounts to remain in overdrawn status for extended periods, which accrued additional fees; and collecting the fees from subsequent deposits to the students' accounts, typically funds for tuition and other college expenses. Under the settlement terms, Higher One can no longer charge NSF fees to accounts that have been in a continuous negative balance for more than 60 days; cannot charge more than three NSF fees on any single day to a single account; and cannot charge more than one NSF fee for a single automated clearing house transaction that is returned unpaid within a 21-day period …

Inside Washington (08/08/2012)

 Permanent link
  • WASHINGTON (8/9/12)--Freddie Mac Tuesday reported net income of $3 billion for the second quarter of 2012, compared with $577 million in the first quarter. The company also reported income of $2.9 billion for the quarter ended June 30, compared with income of $1.8 billion for the quarter ended March 31. The increase in net income in the second quarter reflected a decline in the provision for credit losses due to positive trends in the housing market, the government-sponsored enterprise said. The second-quarter income primarily reflected higher net income, partially offset by higher fair value losses on non-agency available-for-sale (AFS) securities that resulted from spread widening. Freddie Mac does not require a draw from Treasury for the second quarter because the company had positive net worth as of June 30. The company's $1.1 billion net worth as of June 30, reflects second quarter comprehensive income of $2.9 billion, partially offset by the $1.8 billion quarterly dividend payment to Treasury on the company's 10% senior preferred stock …

State legislative group set to adopt dual system policy

 Permanent link
WASHINGTON (8/9/12)--A provision backed by the Credit Union National Association (CUNA) reinforcing support for a dual chartering system is a key provision of the Banking and Financial Services Policy Directive that the National Conference of State Legislatures (NCSL) is scheduled to adopt this week at its annual meeting in Chicago.

"NCSL believes that state credit union supervisors have the primary responsibility for assuring the safety and soundness of credit unions chartered by and operating under state law and regulation NCSL supports the authority of state governments to determine how state financial institutions must be insured and opposes any efforts by the federal government to preempt states' authority to govern state deposit insurance requirements,'' according to the policy statement, which is the result of a condensation and combination of existing policies.

The conference said it feels the need to take a strong stance because it is "concerned that Congress, the federal banking regulators, and the federal courts have sought to nationalize control of financial services in Washington, D.C."

The statement goes on to say that states must "provide a credible regulatory environment,'' so credit unions avoid practices that can threaten the National Credit Union Share Insurance Fund's  (NCUSIF) financial solvency.  It added that the National Credit Union Administration has a "legitimate role'' if state agencies don't do their job properly, but the federal agency's "regulations and policies should be crafted in a way that minimizes the preemption of state authority."

CUNA, which is sponsoring a booth at this week's NCSL convention, opposes any unnecessary restrictions on conversion from one system of credit union supervision to another. It favors having the NCUA and state supervisory authorities act cooperatively.

CUNA seeks CFPB clarity on card disclosure change

 Permanent link
WASHINGTON (8/9/12)--The Credit Union National Association (CUNA) has sought guidance with the Consumer Financial Protection Bureau (CFPB) to clarify whether a seemingly minor change in credit card account opening disclosure forms would trigger a whole new requirement for a 45-day advance notice of change in terms.

The question revolves around the transfer of Regulation Z authority to the CFPB from the Federal Reserve Board as required by the Dodd-Frank Act.

Certain changes to the bureau's version of the Open-End Model Forms require credit unions to modify their credit card applications and solicitations and their account-opening disclosures to refer to the CFPB and its website--rather than to the Fed and its website.

"Although that change may seem relatively minor," explains Mike McLain, CUNA senior compliance counsel, "such a change is defined in Reg Z as a 'significant change' and, if CFPB agreed, it would trigger a 45-day advance notice." Credit unions and other card issuers have until Jan. 1, 2013 to switch the website references in their card forms.

CUNA has clarified with the CFPB that the change should not trigger a need for a 45-day advance notice of change in terms.

"However, credit unions that want to reduce the risk of litigation may still want to send their credit card accounts a notice anyway," McLain says.

Komyathy named to NCUAs examinations office

 Permanent link
ALEXANDRIA, Va. (8/9/12)--JeanMarie Komyathy is the National Credit Union Administration's (NCUA) new director of risk management in its Office of Examination and Insurance (E&I), the agency announced Wednesday.

Komyathy assumes her new duties Sept. 3. She has been with the NCUA since 1995 starting her career as an examiner and most recently serving as director of special actions in NCUA's Region II, where she supervised a team of problem-case officers.

In 2007 and 2008, she served a detail at the U.S. Department of Justice to assist in the investigation and prosecution of Carol Aranjo, former chief executive of the D. Edward Wells FCU, who was convicted in 2008 of fraud.

NCUA Chairman Debbie Matz said Komyathy's experience make her "ideally suited" to her new post, adding that her expertise will complement "E&I's already strong management team."

CU-backed candidates fared well in primaries

 Permanent link
WASHINGTON (8/9/12)--Tuesday's primaries in Kansas, Michigan, Missouri and Washington provided more good news for credit union allies on Capitol Hill and state legislatures.

In Kansas' 33rd Senate district, state Rep. Mitch Holmes defeated state Sen. Ruth Teichman in the GOP primary. Teichman had been a vocal credit union opponent who led an effort several years ago to restrict the fields of membership of state-chartered credit unions in the Sunflower State.

The Kansas Credit Union League and local credit unions worked actively on behalf of Holmes, a credit union member and supporter, including providing volunteer support, fundraising, and sending endorsement letters to their membership.

In Missouri, Rep. Todd Akin, who had the backing of the Credit Union National Association's (CUNA) Credit Union Legislative Action Council (CULAC), was an upset victor in the Republican primary for U.S. Senate. Akin has co-sponsored legislation to raise the cap on credit union member business lending (MBL).

Akin won with 36% of the vote. In November, he will challenge incumbent Sen. Claire McCaskill, whom CULAC supported in her Democratic primary.

Because of redistricting, two credit union friends faced off in the Democratic primary in the 1st congressional district. Rep. Lacy Clay defeated Rep. Russ Carnahan (D) 62%-35%.

Clay is a member of the House Financial Services Committee and a co-sponsor of legislation to raise the cap on MBLs and supports allowing credit unions to access supplemental capital.

Carnahan is also a co-sponsor of the MBL legislation and supports access to supplemental capital.

CULAC contributed to both candidates this cycle, prior to their being redistricted together.

In Michigan's 14th congressional district, Rep. Gary Peters defeated Rep. Hansen Clarke 47%-35% in a Democratic primary caused by both of these credit union-supporting candidates being placed together in the same district because of redistricting.

Peters is a member of the Financial Services Committee and backed credit union- friendly legislation such as raising the caps on MBLs and delaying the implementation of interchange regulations. Clarke held similar positions.

As with the Clay-Carnahan race in Missouri, CULAC contributed to both candidates prior to their being redistricted together.

In Washington's 1st congressional district, the CULAC-backed favorite candidate Steve Hobbs (D) failed to make the cut in a crowded field in the primary.  The general election will feature a race between John Koster (R) and Suzan Del Bene (D). The vacancy was created by the resignation of Rep. Jay Inslee (D), the Democratic nominee for governor.

CUNA Vice President of Political Affairs Trey Hawkins commended the credit union efforts in in Kansas, Michigan, Missouri and Washington saying, "Credit unions win politically when they become actively involved like this."

He added that CULAC "will continue to be in the game on behalf of credit union-friendly candidates, and will aggressively support credit union friends in this year's elections."

SCRA disclosure form expiration date extended

 Permanent link
WASHINGTON (8/9/12)--Credit unions and other mortgage lenders should note that the U.S. Department of Housing and Urban Development (HUD) has updated the expiration date on its HUD-92070, the form that spells out the legal rights and protections under the Servicemembers Civil Relief Act (SCRA).

The expiration date was pushed back by more than two years--to Nov. 30, 2014 from July 31 of this year.

HUD requires mortgage lenders to notify delinquent homeowners of the availability of homeownership counseling offered through the lender, if applicable, and through HUD-approved counseling organizations.

In addition, lenders must notify homeowners in default of the mortgage and foreclosure rights of servicemembers and their dependents under the SCRA, in case those rights apply to the borrower. This additional notice requirement became effective in late 2006. 

"The only change to the HUD-92070 form appears to be the expiration date," notes Credit Union National Association Director of Compliance Information Valerie Moss.  She adds a warning to compliance officers: The last form update contained some typos, so beware, since they may not have been corrected.

Use the resource link to download the SCRA notice. Also, CUNA members can visit the CUNA CompBlog for up-to-the-minute compliance tips.

Inside Washington (08/07/2012)

 Permanent link
  • WASHINGTON (8/8/2011) --The National Credit Union Administration (NCUA) should consolidate insurance rules, modify loan participation rules and make other changes, the National Association of State Credit Union Supervisors (NASCUS) wrote in a comment letter to the agency.  NASCUS Senior Vice President and General Counsel Brian Knight wrote that the agency should consolidate all share insurance rules applicable to federally insured state-chartered credit unions (FISCUs) into a single chapter or consecutive chapters. He said this change is needed because "identifying which rules incorporated by reference apply to (FISCUs) and which rules do not apply has caused confusion among credit unions and state and federal examiners.''  He also suggested the agency change the rule so that FISCUs don't have to get permission from their NCUA regional director approval before purchasing loans or assuming an assignment of deposits, shares, or liabilities from any entity other than another FISCU. Federal credit unions have fewer restrictions in this area, Knight noted. He also recommended that the NCUA change its rules to let states set thresholds acceptance of public deposits rather than require waivers. He added that state law should control whether FISCUs may issue secondary capital accounts. NASCUS  also recommended that the agency "defer to state rules governing FISCU conversion to federally insured non-credit union status and provide for an exemption under this provision."  The letter is the trade association's annual letter that is sent as part of NCUA's annual review of its Rules and Regulations. ...
  • WASHINGTON (8/8/12)--The Florida Office of Insurance Regulation is investigating the business practices of state force-placed insurance providers. Financial institutions purchase force-placed insurance when mortgage borrowers stop paying for homeowners insurance (American Banker Aug. 7). Although forced-place insurance is legal, investors and consumer advocates have charged that some banks charge a premium for the policies in exchange for kickbacks from insurance companies. Consumer advocates Birny Birnbaum and Robert Hunter allege that servicers and insurers inflate the price of force-placed policies and split the proceeds, creating a climate they call "reverse competition." In an interview Friday, Kevin McCarty, Florida's state insurance commissioner, said the growth of the marketplace has raised concerns in light of those allegations …
  • WASHINGTON (8/8/12)--The Office of Mortgage Settlement Oversight said Monday  it has selected five companies to oversee compliance by the five mortgage servicers that are subject to a $25 billion national mortgage servicing settlement. Joseph A. Smith Jr., monitor of the national mortgage servicing settlement, has selected BKD LLP, Baker Tilly Virchow Krause LLP, Crowe Horwath LLP, Grant Thornton LLP and McGladrey LLP to oversee the implementation of the settlement involving 49 states, the U.S. government and five of the nation's largest banks. The primary role of each firm is to assist the primary professional firm--BDO Consulting--by conducting the evaluation of one servicer that is party to the settlement. The five companies in the settlement are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Ally Financial …
  • WASHINGTON (8/8/12)--The National ATM Council (NAC), a trade group representing independent ATM providers, urged Senate leaders to support S. 3394, a bill to eliminate a requirement for a duplicative, external consumer fee disclosure on ATM machines. "The current fee sticker law provides no useful consumer protections and instead has only given rise to a deluge of frivolous litigation against ATM owners nationwide. It is harming a vital industry sector that provides ready access to the cash that helps make our economy tick," wrote NAC Executive Director Bruce Renard in a letter to Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky..) last week. The Credit Union National Association (CUNA) supports legislation to eliminate the dual ATM disclosure requirements.  CUNA has said that unless such legislation is enacted, credit unions and other ATM operators will continue to be required to expend resources documenting compliance with a regulatory requirement that is outdated and unnecessary, and will continue to be subject to lawsuits despite their efforts to comply.  A comparable House bill (H.R. 4367) to S. 3394 awaits action in that chamber  …

NCUA issues FAQ on Interest Rate Risk rule

 Permanent link
WASHINGTON (8/8/12)--Credit  unions have to comply with the new rule regarding interest rate risk policies by Sept. 30 and the National Credit Union Administration (NCUA) has issued a document answering frequency asked questions.

The agency notes that compliance with the rule will be one of the preconditions for federal deposit insurance and its examiners will "review the policy and asset liability management programs for effective identification, measuring, monitoring and control of interest rate risk. The objective is to implement the rule consistently while taking into account size and complexity differences among FICU's.''

Credit unions between $10 and $50 million in assets where the Supervisory Interest Rate Risk Ratio ( SIRRT) ratio is less than 100% are exempt as are credit unions with assets of less than $10 million.

"The SIRRT ratio is calculated from call report fields. Total First mortgages is added to Total investments 5 years and greater and then divided by total net-worth. The result of the calculation is a ratio,'' according to the NCUA document (Letter to Credit Unions 12-CU-11).

Its purpose is to "to reduce regulatory burden without adding new reporting requirements to the call report,'' according to the document.

Credit union boards must approve these plans. Among the items that must be part of these each plans are statements of direct actions to ensure that management identifies, measures and monitors interest rate risk and a plan for assessing the impact on interest rate risk before launching new products.

The letter supplements previous letters which dealt with specific sources of risk such as non-maturity shares, liquidity, real estate concentration and balance sheet risk.

Use the resource link to access the NCUA letter.

1000 CUs informed of LICU eligibility

 Permanent link
WASHINGTON (8/8/12)--As promised last month in Chicago at the American Association of Credit Union Leagues (AACUL) summer meeting, the National Credit Union Administration (NCUA) sent letters Tuesday to nearly 1,000 credit unions indicating they are eligible for low-income designation. That designation brings benefits that include the ability to accept supplemental capital and an exemption from the small business lending cap under certain circumstances.

The NCUA touted its initiative to streamline the process for federal credit unions to receive a low-income designation (LICU) as a way to bring more small businesses across America greater access to needed capital from federal credit unions. The greater access to credit, Matz said in the letter, should translate into job creation.

"Providing small businesses with the money needed to open their doors, create jobs, or expand operations will help our economy. This action is particularly timely for the 27 states devastated by this summer's historic drought," Matz said.

The NCUA said its initiative was incorporated into a relief and recovery package for drought-stricken states announced at the White House yesterday. Of the LICU-eligible institutions, 470 federal credit unions--representing 47% of potential new LICUs, 52% of potential new assets, and 54% of potential new members--are headquartered in states identified by the National Oceanic and Atmospheric Administration as having "extreme" drought conditions.

The NCUA projected this initiative could unlock between $250 million and half a billion dollars in new, near-term business lending if all qualified federal credit unions participate. The initiative could double the number of LICUs and increase their member business lending by nearly 75%.

"Rather than waiting for credit unions to complete the required paperwork to become a LICU, NCUA today contacted 1,003 credit unions alerting them of LICU eligibility. Credit unions receiving letters may now opt-in with a simple reply that agrees to the LICU designation," Matz noted when announcing the agency's action.

To qualify as a LICU, a majority of a federal credit union's membership must meet low-income thresholds based on 2010 Census data. In addition to the exemption from the 12.25% statutory cap on member business lending for credit unions, other advantages derived from the LICU designation include:

  • Eligibility for Community Development Revolving Loan Fund grants and low-interest loans,
  • Ability to accept deposits from non-members, and
  • Authorization to obtain supplemental capital.


"Member business lending by credit unions sensibly diversifies portfolios and fills a market need," concluded Matz. "Credit unions often make the small business loans that other lenders avoid. A 2011 Small Business Administration-commissioned study also found that more than 80 cents of every dollar in credit union member business lending is an entirely new source of capital not available in the market today."

The average member business loan for all credit unions is $223,000.

Access to liquidity questions answered by NCUA

 Permanent link
WASHINGTON (8/8/12)-- Because the role of the Central Liquidity Facility (CLF) as a liquidity provider  will change when U.S. Central Bridge FCU closes, the National Credit Union Administration (NCUA) has issued a FAQ letter to credit unions.

"Some corporate credit unions may choose to become agents by subscribing to CLF stock on behalf of their natural person credit union members. NCUA is working with corporate credit unions to allow for an orderly transfer of the corresponding portion of CLF capital stock now held by U.S. Central Bridge.

"When the existing agent-group arrangement with U.S. Central Bridge terminates, those natural person credit unions without regular (direct) membership will not have CLF access for contingent liquidity unless their corporate credit union has purchased stock on their behalf,'' according to the NCUA in a Letter to Credit Union (12-CU-10).

Credit unions are permitted to use the Federal Reserve Discount Window to meet contingent liquidity needs. However, only credit unions holding liabilities subject to reserve requirements may establish borrowing privileges at the Federal Reserve.

A credit union can be a direct member of the CLF if it subscribes to the capital stock of the CLF and complete certain documentation. The required stock subscription amount equals 1/2 of one percent of the credit union's paid-in and unimpaired capital and surplus.

Last month, the board sent out for a 60-day comment period a proposed rule requiring all FICUs with assets of $10 million or more to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations.

Credit unions with less than $10 million in assets would need to maintain a basic written emergency liquidity policy, but would not be required to take further action.

CUNA President/CEO Bill Cheney said CUNA has serious concerns about any new rule for credit unions, including in the area of liquidity. The CUNA CEO urged the agency to focus on the guidance the federal financial agencies have already produced on liquidity issues, rather than release new rules.

The NCUA has scheduled a webinar on the proposed rule and the status of the CLF on Aug. 14. The agency has also said it will have a webinar on the impact of U.S. Central's closing in October.

Upcoming comment deadlines cover range of issues

 Permanent link
WASHINGTON (8/13/12)--Congress is on recess until early September but there are several regulatory deadlines in the weeks ahead of which credit unions need to be aware.

They include:

  • The Commodity Futures Trading Commission: A proposed rule exempting certain swaps executed by cooperatives from the agency's swap-clearing requirement. The proposed rule allows cooperatives to be exempt if its members are non-financial entities or financial entities that are eligible for a small financial institutions' exemption. The rule would only allow the exemption to apply to swaps entered into with a member of the exempt cooperative in connection with originating loans for its members or swaps entered into to hedge or mitigate risk. Comments are due to the agency on Aug. 16.
  • Federal Deposit Insurance Corporation: A proposed rule that provides a list of the activities that would be considered in determining whether a company is predominantly engaged in financial activities for purposes of enforcing the Dodd-Frank Act. The proposed rule deals with activities such as extending credit, securitization, community development activities, and insurance. Comments are due to the agency on Aug. 17.
  • Consumer Financial Protection Bureau (CFPB): The bureau is seeking information regarding the programs and products that credit unions and other financial institutions have in place for senior citizens. It plans to use the information, combined with ongoing research, to develop goals for programs that provide financial literacy and counseling for senior citizens. The Credit Union National Association (CUNA) requests comment by Aug. 10. Comments are due to the bureau by Aug. 20.
  • CFPB: Combined Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) mortgage disclosure forms. This proposal describes the single form that credit unions and other lenders would have to give all persons to whom they are issuing mortgages. It combines the separate disclosure requirements mandated by RESPA and TILA and seeks to simplify the disclosure form and eliminate redundancies. In addition, the proposed rule would require most up-front costs associated with a closed-end mortgage secured by land or a dwelling to be included in the finance charge. The proposal would also require lenders to keep records relating to the new forms in a standard, "machine readable" electronic format which may be problematic for smaller institutions. Comments on the proposal are generally due Nov. 6. However, provisions regarding the finance charge and the annual percentage rate, as well as the delayed effective date of several of the new disclosures under the Dodd-Frank Act, are open for comment only through Sept. 7. CUNA asks credit union to submit their comments to CUNA by Aug. 10. Comments are due to the CFPB by Sept. 9.
  • CFPB: A proposed rule implementing changes on providing credit counseling information to people who take out high-cost mortgages. The proposal would mandate that lenders distribute a list of homeownership counselors or counseling organizations to consumers within a few days after applying for any mortgage loan. It implements provisions of the Dodd-Frank Wall Street Reform Act and makes changes to the Home Ownership and Equity Protection Act (HOEPA). The proposal also would implement a requirement that first-time borrowers receive homeownership counseling before taking out a negatively amortizing loan. According to the bureau, under the proposed rule "most types of mortgage loans secured by a consumer's principal dwelling, including purchase money mortgage loans, refinances, closed-end home-equity loans, and open-end credit plans (i.e., home-equity lines of credit, or HELOCs) are potentially subject to HOEPA coverage. Reverse mortgages would still be excluded.'' Comment due Sept. 7.
  • CFPB: Proposal on financial education practices. The agency is seeking information on what are the most effective financial education programs and how can the agency better disseminate financial literacy information. The agency asks respondents to answer questions, such as: In your experience, what are consumers' most common financial decision-making challenges? Is there a common set (or lack) of habits, attitudes, or practices, and if so, what are they?  Comments are due Oct. 31.
Use the links below to access the rules.

HARP refinances hit highest-ever level

 Permanent link
WASHINGTON (8/8/12)--In its just-released June Refinance Report, the Federal Housing Finance Agency (FHFA) said that one of every three refinances through Fannie Mae and Freddie Mac were made through the Home Affordable Refinance Program (HARP).  FHFA said that is the highest percentage claimed by the program since its inception in April 2009.

The FHFA attributed the HARP volume increase to record-low mortgage rates, as well as enhancement instituted to the program last fall.  Those changes included removal of the loan-to-value (LTV) ceiling for borrowers who refinance into fixed-rate loans and the elimination or reduction of fees for certain borrowers.

Also in the report, the FHFA reported that:

  • Through June of this year, Fannie Mae and Freddie Mac refinanced 422,969 loans through HARP, more than the total 400,024 HARP refinances for all of 2011;
  • HARP refinances for loans with LTV greater than 125% jumped to more than 40% of HARP volume in June as lenders began to sell Fannie Mae and Freddie Mac securities containing these loans June 1;
  • More than two-thirds of borrowers in Nevada, Arizona and Florida-- states hard-hit by the housing downturn--refinanced through HARP in June, compared with 33% nationwide;
  • Also in Nevada, Arizona and Florida, underwater borrowers (with LTV greater than 105%) represented more than 80% of HARP volume in June;
  • Since 2009, Fannie Mae and Freddie Mac refinanced more than 2.2 million loans through their existing programs and more than 1.4 million loans through HARP.

NCUA reminder 18 rate on loans by FCUs

 Permanent link
WASHINGTON (8/8/12)--Federal credit unions (FCUs) may charge no more than 18% on most of their loans, the NCUA reminded them in a letter (12-FCU-04).

"We must reconsider an approved rate over 15% at least every 18 months. The current established 18% percent rate ceiling expires on September 10, 2012. Our decision extends the 18% ceiling for 18 months beginning September 11, 2012 through March 10, 2014,'' NCUA Chairman Debbie Matz wrote.

She noted that the board extended the rate at its July meeting.

The 1980 Depository Institutions Deregulation and Monetary Control Act raised that ceiling to 15%, up from 12%, and authorized further increases--up to 21%--at NCUA board discretion for periods not-to-exceed 18 months provided.

The ceiling has been re-set at the current 18% level since May 1987.

The interest-rate ceiling applies to all federal credit union lending, except originations under the short-term small loan program. The current limit on short-term small loans is 28%.

Increases over the 15% cap may only occur if money market interest rates have risen in the last six months and disintermediation threatens the credit union system.

The NCUA staff discussed at the July meeting that a reduction in the ceiling could impact a large number of federal credit unions and their loans, since about 62% have some loans at rates above 15%.

In the letter, Matz said the decision also preserves the ability of FCUs to offer a payday loan alternative at a rate of 28% under NCUA's Short-Term Small Loan Program.

Use the resource link to read the NCUA's Letter to Federal Credit Unions.

CFPB sets exemptions to remittance disclosures

 Permanent link
WASHINGTON (8/8/12)--The Consumer Financial Protection Bureau (CFPB) Tuesday released its long-anticipated rule that will provide a safe harbor exemption for certain institutions from the requirements of the remittances rule issued previously by the CFPB that implements provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding new consumer disclosures for remittance transfers.

The Credit Union National Association (CUNA) had warned the bureau that its remittance transfer rule, as proposed, would impose unsustainably high compliance costs and legal liabilities that could force credit unions with relatively small volume international payments programs to eliminate such programs.

CUNA had urged the bureau to increase its proposed safe harbor exemption for small remittance issuers from 25 remittances per year to no fewer than 1,000 remittances a year.

Although the CFPB did increase the safe harbor exemption in the final rule, it extended it only to providers that transact 100 or fewer remittances per year.  The CFPB indicated at least 80% of credit unions that offer remittance services would be exempt.

In response to the CFPB announcement Tuesday, CUNA president/CEO Bill Cheney said CUNA remains very concerned about the safe harbor provisions.

"Together with state credit union leagues and associations, credit unions and other trade groups, we have advocated for meaningful relief from this requirement during the enactment of the Dodd-Frank Act and throughout the rulemaking process over the past two years.

"We are reviewing our options including appealing the rule with the Financial Stability Oversight Council (FSOC), which can overturn CFPB rules," the CUNA leader said.

The CFPB, in a release, said it concluded that those institutions that consistently conduct 100 or fewer remittance transfers per year do not provide transfers in the "normal course of business" and therefore are not subject to the new requirements.

Also, the CFPB said,  if a company that provided 100 or fewer remittance transfers in the previous year provides more than 100 remittance transfers in the current year, the rule provides a reasonable transition period to come into compliance

The bureau's new remittance disclosure rule will take effect Feb. 7, 2013. This final rule is only on the safe harbor and preauthorized transfers.  It affects international wires and international ACH transfers.

Disclosures must generally be provided when the consumer first requests a transfer and again when payment is made. The rule also provides consumers with error resolution and cancellation rights.

CUNA's Cheney is scheduled to discuss credit union issues with CFPB Director Richard Cordray on Aug. 14, and Cordray also will be the speaker on a CUNA webinar Aug.  30, with Cheney, to discuss credit union concerns and issues on a range of topics, including remittances.

Also, CUNA Deputy General Counsel Mary Dunn is one of three financial institution representatives who is addressing CFPB staff today at an agency conference.  She will be pointing out credit unions' many concerns with the CFPB, including those involving remittances rules. She will also address concerns that the CFPB is creating undue regulatory burdens for credit unions.

Use the resource links below to read the CFPB rule, and also to access CUNA's Comment Letters on the bureau's proposal.

Streamlined LICU eligible to help credit access NCUA

 Permanent link
WASHINGTON (8/8/12)--As promised last month in Chicago at the American Association of Credit Union Leagues (AACUL) summer meeting, the National Credit Union Administration (NCUA) sent letters Tuesday to nearly 1,000 credit unions indicating they are eligible for low-income designation. That designation brings benefits that include the ability to accept supplemental capital and an exemption from the small business lending cap under certain circumstances.

The NCUA touted its initiative to streamline the process for federal credit unions to receive a low-income designation (LICU) as a way to bring more small businesses across America greater access to needed capital from federal credit unions. The greater access to credit, Matz said in the letter, should translate into job creation.

"Providing small businesses with the money needed to open their doors, create jobs, or expand operations will help our economy. This action is particularly timely for the 27 states devastated by this summer's historic drought," Matz said.

Credit Union National Associaton (CUNA) President/CEO Bill Cheney said of the NCUA announcment, "The NCUA board clearly understands the pressing need for expanded authority in credit union member business lending to help spur the economy, and to give credit unions more flexibility to match their growth with supplemental capital. We appreciate the effort.

"The fact remains, however, there are thousands of credit unions that cannot win the LICU designation, for one reason or another. These credit unions can go no further in helping their members help their local economies--or to grow in order to match their members' needs--without changes in the law that limits credit union member business lending.

"We will continue to vigorously pursue those changes with Congress on behalf of our members."

The NCUA said its initiative was incorporated into a relief and recovery package for drought-stricken states announced at the White House yesterday. Of the LICU-eligible institutions, 470 federal credit unions--representing 47% of potential new LICUs, 52% of potential new assets, and 54% of potential new members--are headquartered in states identified by the National Oceanic and Atmospheric Administration as having "extreme" drought conditions.

The NCUA projected this initiative could unlock between $250 million and half a billion dollars in new, near-term business lending if all qualified federal credit unions participate. The initiative could double the number of LICUs and increase their member business lending by nearly 75%.

"Rather than waiting for credit unions to complete the required paperwork to become a LICU, NCUA today contacted 1,003 credit unions alerting them of LICU eligibility. Credit unions receiving letters may now opt-in with a simple reply that agrees to the LICU designation," Matz noted when announcing the agency's action.

To qualify as a LICU, a majority of a federal credit union's membership must meet low-income thresholds based on 2010 Census data. In addition to the exemption from the statutory 12.25% statutory cap on member business lending for credit unions, other advantages derived from the LICU designation include:

  • Eligibility for Community Development Revolving Loan Fund grants and low-interest loans,
  • Ability to accept deposits from non-members, and
  • Authorization to obtain supplemental capital.
"Member business lending by credit unions sensibly diversifies portfolios and fills a market need," Matz said.

She added, "Credit unions often make the small business loans that other lenders avoid. A 2011 Small Business Administration-commissioned study also found that more than 80 cents of every dollar in credit union member business lending is an entirely new source of capital not available in the market today."

The average member business loan for all credit unions is $223,000, according to the regulator.

NEW CFPB issues final rule on remittance disclosures

 Permanent link
WASHINGTON (UPDATED 8/7/12 4:05 p.m. ET )--The Consumer Financial Protection Bureau (CFPB) just released its long-anticipated rule implementing provisions under the Dodd-Frank Wall Street Reform and Consumer Protection Act that require remittance transfer providers to disclose fees upfront, as well as the exchange rate and the amount to be received by the recipient.

The Credit Union National Association (CUNA) had warned the bureau that its remittance transfer rule, as proposed, would impose unsustainably high compliance costs and legal liabilities that could force credit unions with relatively small volume international payments programs to eliminate such programs.

CUNA had urged the bureau to increase its proposed safe harbor exemption for small remittance issuers up from 25 remittances per year to no less than 1,000 remittances a year.

Although the CFPB did increase the safe harbor exemption in the final rule, it extended it only to providers that transact 100 or fewer remittances per year.

The bureau's final remittance rule will take effect Feb. 7, 2013.

Disclosures must generally be provided when the consumer first requests a transfer and again when payment is made. The rule also provides consumers with error resolution and cancellation rights.

This final rule is only on the safe harbor and preauthorized transfers.  It affects international wires and international ACH transfers.

Watch tomorrow's News Now for more detail.

CUs among record CDFI Fund awardees

 Permanent link
WASHINGTON (8/7/12)--The U.S. Treasury Department's Community Development Financial Institutions Fund (CDFI Fund) announced Monday that it awarded a total of $186,853,456 to 210 organizations serving low-income communities, including credit unions or credit union organizations, as it closed it fiscal year (FY) 2012 grants and awards program.

The FY 2012 awards, provided through the CDFI Fund's Community Development Financial Institutions Program (CDFI Program) and the Native American CDFI Assistance Program (NACA Program), represent the largest single announcement of award dollars and award recipients in the CDFI Fund's history.

Through the CDFI Program, 22 credit unions were among the 177 organizations to receive a total of $152,281,326 in Financial Assistance (FA) or Technical Assistance (TA) awards. A total of 144 FA and 33 TA awards were made to credit unions, loan funds, venture capital funds and depository institutions/holding companies.

In addition to the CDFI Program's Financial Assistance and Technical Assistance awards, the CDFI Fund also awarded additional funds to 12 organizations that requested and qualified for Healthy Food Financing Initiative Financial Assistance (HFFIFA). HFFIFA is an interagency initiative involving the CDFI Fund, the U.S. Department of Health and Human Services, and the U.S. Department of Agriculture and is intended to increase the supply of and demand for nutritious foods in low-income urban and rural areas in the U.S.

Under the NACA Program for FY 2012, 33 organizations--including four credit unions--received a total of $11,473,647 in awards, all of which were grants.  In addition to the credit unions, 28 loan funds and one bank or thrift received awards.

The NACA Program encourages the creation and strengthening of certified CDFIs that primarily serve Native American, Alaska Native, and Native Hawaiian communities.

Use the resource link to go to the CDFI Fund website to read more about the grants.

CUNA urges NCUA on new reg relief steps

 Permanent link
WASHINGTON (8/7/12)--Noting that the cumulative regulatory burden on credit unions is at an all-time high, the Credit Union National Association (CUNA) in a comment letter urged the National Credit Union Administration (NCUA) to develop a new advisory council to discuss developing problem areas and trends with the credit unions it regulates.

The advisory council could also identify barriers that prevent some credit unions from serving their members to the fullest extent possible, and discuss incentives that could help credit unions improve their member service. CUNA also suggested the advisory council could "serve as a useful sounding board as the agency develops proposals and directives for the credit union system."

The CUNA recommendations were included in the group's comments regarding the NCUA's annual request for comment on one-third of its rules, an ongoing effort by the agency to reduce redundancies and other burdens.

In that letter, CUNA also presented a series of regulatory relief recommendations that would help relieve credit unions while preserving legal requirements.

"There are many critical regulatory issues facing credit unions today and improving the regulatory environment for credit unions is absolutely essential for their sustainability and continued success in serving their members," CUNA said.

Another way the agency could improve the regulatory environment for credit unions, CUNA suggested, is shielding well-managed, well-capitalized credit unions from member business lending (MBL) regulatory requirements that are not specifically stated in the Federal Credit Union Act.

MBL rules that require credit unions to obtain personal guarantees from borrowers, and certain other rules addressing loan-to-value ratios, construction and development loan limits and appraisal requirements, are among those that could be eliminated for these credit unions, CUNA said.

CUNA also urged the agency to amend its policy regarding renting real estate owned (REO) properties. Under the NCUA's current policy, federal credit unions must commit to a plan to actively promote an REO property for sale and seek a buyer, with the expectation that it will collect on the sale within 12 months, even if the property has renting tenants.

CUNA suggested the NCUA could relax this policy, noting that "it is often more difficult to rent a property if the tenants are concerned the property is being marketed." Amending the NCUA's position on REOs as rentals could maintain property values and the quality of surrounding neighborhoods--the very neighborhoods in which the credit union may hold, service, or originate other mortgages," CUNA said.

In the letter, CUNA also addressed the NCUA's small credit definition and issues related to mergers and conversions, investment and deposit activities, chartering, and loan participations, among other issues.

CUNA urged the agency to work review the regulatory relief recommendations in a timely manner, and assemble a final package of regulatory relief measures that could be implemented this fall.

For the full letter, use the resource link.

FTC seeks comment on Web privacy for children

 Permanent link
WASHINGTON (8/7/12)--Credit unions that offer programs and products aimed at children--like an online savings club for kids--would have to take additional steps to get parental permission before obtaining information from the children, as a result of proposed rules issued for a 30-day comment period by the Federal Trade Commission (FTC).

The rule would clarify the definition of which entities would be required to obtain parental consent before collecting information about users under 13.  Its focus would be on third-party partners.

Currently, websites aimed at children must receive parental permission before collecting identifiable information such as names and e-mail addresses.

The FTC said the 1998 Children's Online Privacy Protection Act, which mandated parental permission in many cases, "did not foresee how easy and commonplace it would become for child-directed services to integrate social networking and other personal information collection features into the content offered to their users, without maintaining ownership, control, or access to the personal data."

Written comments must be received by Sept. 10.

Use the resource link to read the complete FTC proposal.

Inside Washington (08/06/2012)

 Permanent link
  • WASHINGTON (8/7/12)--The Consumer Financial Protection Bureau (CFPB) has given little hint of how it plans to distribute funds it collects from penalties it levies (American Banker, Aug. 6). The funds, such as the $25 million that the agency collected from Capitol One, go into the bureau's Civil Penalty Fund. According to the Dodd-Frank Act, which set up the bureau, the agency can use the money to make payments to fraud victims and fund consumer education and financial literacy programs. The agency hasn't indicated its plans and some congressional Republicans have expressed concern that some of the money will be used for grants to consumer groups. Last month, the CFPB ordered Capital One to pay a $25 million penalty to the CFPB and refund $140 million to $150 million to its customers for having pressured or misled them into paying for payment protection and credit monitoring when they activated their cards. …
  • WASHINGTON (8/7/12)--House Financial Services Committee Chairman Spencer Bachus (R-Ala.) wants federal regulators to give financial institutions 90 additional days to comment on proposed changes to capital requirements. Last Thursday he wrote Federal Reserve Chairman Ben Bernanke that "the rule is extremely complex so additional time for commenting is certainly justified.'' Bachus added that extending the deadline, currently Sept. 7, will "lead to more substantive comments, which in turn will be more useful to reviewers.'' The proposed rules, issued by the Federal Reserve, the Federal Deposit Insurance Corp., and the Comptroller of the Currency, would place additional requirements on large financial institutions including increasing the capital requirements for those with assets of more than $500 million. …
  • WASHINGTON (8/7/12)--The U.S. Department of Housing and Urban Development (HUD) and the Treasury Department have released the latest edition of their "Housing Scorecard." The departments compile and release information each month on key housing market indicators and highlight the impact of the administration's housing recovery efforts, including assistance to homeowners through the Federal Housing Administration (FHA) and the Home Affordable Modification Program (HAMP). The full report is available online at www.hud.gov/scorecard ...

CUs must keep August heat on advocacy efforts CUNA

 Permanent link
WASHINGTON (8/6/12)--With the U.S. Congress's August recess beginning this week, the Credit Union National Association (CUNA) has called on credit unions to make sure credit union issues are at the forefront of legislators' minds as they campaign in their home districts.

All members of the U.S. House, and one-third of sitting Senate members are facing November reelection campaigns, and will have more on their minds, and schedules, than usual, CUNA Senior Vice President of Political Affairs Richard Gose said. Credit unions should make sure that any face time they can schedule with their legislators is time well spent, he added.

CUNA has counted around 150 scheduled town halls, spread among several states, and credit unions and leagues should keep an eye out for any meetings scheduled in their area. In-district meetings are also being held in several states.

Member business lending (MBL), supplemental capital access and examination fairness remain key concerns for credit unions.

Here is an update on the status of those concerns:

  • MBL cap increase bills in the U.S. House (H.R. 1418) and Senate (S. 2231) enjoy strong support from Democratic and Republican legislators. Both bills would increase the MBL cap to 27.5% of assets, from 12.25%. CUNA has estimated this increase would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment. Both benefits would come at no cost to taxpayers. Senate leadership remains committed to a floor vote on the MBL legislation;
  • House and Senate examination fairness bills (H.R. 3461 and S. 2160) would make information gathered by financial regulatory examiners available to financial institutions and codify certain examination policy guidance. The bills would also establish an ombudsman at the Federal Financial Institution Examination Council (FFIEC), and establish an exam appeals process that would allow financial institutions to air grievances before an independent administrative law judge. Both bills have been referred to their respective financial institution committees;
  • H.R. 3993, which would modify the definition of credit union net worth to include supplemental forms of capital for credit unions, has been referred to the House Financial Services subcommittee on financial institutions and consumer credit.


A bill that would help eliminate frivolous lawsuits by removing dual ATM disclosure requirements, H.R. 4367, passed the House last month, but the Senate has not yet acted on the legislation. CUNA continues to work with members of Congress to move the ATM legislation toward a vote.

The House and Senate are scheduled to return to Washington in early September.

Banks tax-status arguments absurd Cheney

 Permanent link
WASHINGTON (8/6/12)--When the bank lobby calls on Congress to tax credit unions, they are really demanding that Congress do away with credit unions, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a letter to the chairman and ranking member of the House Ways and Means subcommittee on oversight.

Cheney in the letter noted that the bank lobby "absolutely refuses" to accept the fact that the credit union tax status has always been a function of the ownership structure of credit unions.

"It has never been about the power or mission of the credit union," Cheney wrote to Chairman Charles Boustany (R-La.) and Ranking Member John Lewis (D-Ga.).

Cheney's letter came in response to an American Bankers Association (ABA) statement submitted for the record of a July 25 tax hearing. The ABA in the statement asserted credit unions were created to "service people of modest means," that credit unions are "complex," and that credit unions are "indistinguishable from banks."

Credit unions serve all of their members regardless of their means, Cheney said. "'One member, one vote' is a critical component not only to the membership structure but also to the credit union philosophy; a member of greater means has just as much right to the use of the credit union as a member of small means. It's because of this ownership structure that Congress granted the tax status and has reaffirmed it several times."

And, like other financial institutions--including banks--credit unions have evolved over time. "Indeed, if credit unions were not evolving to meet the needs and demands of their members in the 21st century, one might very well call into question whether they were fulfilling their mission."

Banks are squarely wrong to assert credit unions are indistinguishable from banks, he added. "For all of the evolution and development that has taken place over the last century, one thing that has remained the same is the credit unions' cooperative ownership structure and democratic governance. The members of the credit union own the credit union; a bank is owned by its shareholders. This means what motivates credit union leaders and bank executives is different, and it boils down to this: credit unions use members' money to help members; banks use customer's money to make money for shareholders."

Cheney added that there is irony in bank complaints that credit unions have evolved into "complex and full service financial institutions.

"[Banks] think they are making the point that credit unions are not fulfilling their mission," Cheney wrote. "But in reality, they are making the point that credit unions are. Congress provided a federal charter to credit unions to promote thrift and make credit available at a time when the banks were not doing that. They established credit unions to give people the ability to do business with a financial institution and also have a voice and a vote in how their money was to be used by the institution," he said.

For the full CUNA letter, use the resource link.

Cheney talks CUs economy on iBloomberg Radioi

 Permanent link
WASHINGTON (8/6/12)--With the day's economic news serving as a backdrop, Credit Union National Association (CUNA) President/CEO Bill Cheney discussed the financial state of the credit union system, and the push for job-creating member business lending (MBL)  legislation on Bloomberg Radio's "Taking Stock with Pimm Fox."

Recent data suggest a slow, painful economic recovery for the nation, but Cheney said that credit unions continue to thrive. Credit union lending portfolios are improving, with lower chargeoff rates and steadily declining delinquency rates.

While demand for some loans has slowed, there is still demand for small business loans, and credit unions want to do more to help small business owners, he added. However, the MBL cap, which stands at 12.25% of total assets, remains a barrier to some.

The U.S. Congress could remedy this by approving legislation to increase the MBL cap to 27.5% of assets. Doing so would create 140,000 jobs and inject $13 billion in new funds into the economy in the first year following enactment, at no cost to taxpayers.

Overall, Cheney said, credit unions continue to gain market share because credit unions "are a better deal" for consumers. Credit unions have seen the strongest membership growth rate in 26 years, he said.  Asked about federal deposit insurance for credit unions, Cheney explained that accounts insured by the National Credit Union Share Insurance Fund receive the same level of U.S. government guaranteed insurance backing, $250,000, as the Federal Deposit Insurance Corp. provides to bank accounts.

Inside Washington (08/03/2012)

 Permanent link
  • WASHINGTON (8/6/12)--During a U.S. Senate securities subcommittee hearing Thursday, Sen. Jack Reed (D-R.I.) pointed out that no single regulator oversees the financial market. Without a single regulator, none of the regulators are effectively in charge of the market, Reed said (American Banker Aug. 3). The hearing was called after the release last month of the Financial Stability Oversight Council's latest annual report, which warned about the slow pace of reform in the tri-party repo market. The tri-party repo market offers a short-term borrowing source for the financial industry. The report called for reform of the industry within the next year. Industry officials have advocated making the reforms over several years …
  • WASHINGTON (8/6/12)--House and Senate Republicans Thursday introduced measures that would prevent the spread of "too-big-to-fail" to non-bank financial institutions.  The bills would remove the government's authority to designate non-bank financial institutions as "systemically important financial institutions" as described in the Dodd-Frank Act. The House bill is being sponsored by Rep. Scott Garrett (R-N.J.). The Senate version was introduced by Sen. David Vitter (R-La.). "This 'too-big-to-fail' virus is now poised to spread beyond banks to other types of financial firms," Garrett said. "Not surprising, it is the government that is preparing to label other financial firms "too-big-to-fail" by designating them as systemically important and spreading these market distortions"  …
  • WASHINGTON (8/6/12)--The Consumer Financial Protection Bureau (CFPB) is investigating mortgage insurance deals between banks and several large insurers. Genworth Financial said in a public filing Friday that it had received a subpoena from the agency for information about captive mortgage reinsurance deals (The New York Times Aug. 3). American International Group and MGIC Investment Corp. earlier in the week made similar disclosures. In some instances, mortgage borrowers must buy private mortgage insurance to cover the lender's losses in case of a default. Some borrowers have accused mortgage insurers of paying banks millions for a share of the reinsurance market. The deals have resulted in lucrative kickbacks for banks, according to civil lawsuits filed by the borrowers …

Fryzel applauds African-American CU outreach

 Permanent link
CHARLESTON, S.C. (8/6/12)--National Credit Union Administration (NCUA) board member Michael Fryzel, addressing the 14th annual conference of the African-American Credit Union Coalition, highlighted the importance of credit unions' work to serve the nation's underserved populations.



"Your goals and objectives of increasing the number of minorities in the credit union industry, along with your outreach of the credit union movement in African countries and in the U.S. through credit union mentoring, providing scholarship programs and educational opportunities, are important efforts as economic struggles abound," he told the audience of credit union professionals, volunteers, and nonprofit member organizations of the coalition.

Fryzel commended the coalition members for their commitment to the credit union philosophy and charged the group to "learn from one another and leave Charleston with new energy."

"Use the credit union philosophy to bring America back home to its tried and tested values of work, achievement and helping others," said Fryzel.

The African-American Credit Union Coalition is a nonprofit organization of African-American and African descent professionals and volunteers in the credit union movement.

Rutherford confirmed for Treasury financial markets post

 Permanent link
WASHINGTON (8/6/12)--The U.S. Senate confirmed Matthew Rutherford to serve as the Treasury Department's assistant secretary for financial markets.

Rutherford will advise Treasury Secretary Timothy Geithner on matters of domestic finance, financial markets, federal, state and local finance, and federal government lending policies.  He also will be responsible for Treasury's management of the public debt.

The areas of responsibility will not be new to Rutherford, confirmed Aug. 2, because he has served at the Treasury since 2009 as deputy assistant secretary for federal finance, where he advised on issues involving Treasury financing, public debt management, federal regulation of financial markets, and related economic matters, including regulatory issues in the government securities markets and the futures markets.

Geithner, announcing the confirmation on Aug. 3, said Rutherford's "substantial experience and skill" will make him a strong asset in his expanded role.

Responsible reporting of elder financial abuse

 Permanent link
WASHINGTON (8/3/12)—While reporting laws differ from state to state, this month's edition of Credit Union Magazine noted that many states are passing laws targeting elder financial abuse and there is a growing trend toward requiring mandatory reporting of possible elder financial abuse cases.

Fairfax, Va. law partners David Reed and Bruce Jolly in their Credit Union Magazine article outlined some of the steps credit unions can take to help them identify instances of elder financial abuse and report them to the proper authorities.

Potential signs of elder financial abuse can include large ATM withdrawals, debit transactions that are not consistent with a customer or member's normal activities, and sudden non-sufficient fund activity. Credit unions and other financial service providers should also be aware of caregivers that take a sudden interest in a senior citizen's financial activities, caregivers that attempt to speak for the senior citizen, or caregivers that refuse to leave a senior citizen's side when they are discussing financial matters.

Reed and Jolly noted that Maryland law requires financial institution employees that have observed potential elder financial abuse to file a report with that state's office of adult protective services or law enforcement agencies. However, Virginia law is more permissive, merely stating that employees that observe potential abuse may report the incident to state authorities.

Reports should include basic information on the accountholder and the individual that is suspected of abuse, and details on the nature of the abuse. Credit unions can base their elder financial abuse reporting programs on their existing Bank Secrecy Act and Identity Theft Red Flag compliance programs, the article said.

Reporting forms can be developed independently, or based on existing state reporting forms. Credit unions should also identify who on their staff is responsible for identifying possible elder financial abuse incidents, who will report those incidents, and who will have access to any filed reports.

Some states require staff to be trained in elder financial abuse detection and prevention. The Credit Union Magazine article suggested that credit unions could first focus on complying with state training requirements, and then expand the scope of their training as needed.

Credit union employees that file elder abuse reports are protected from legal retaliation in many states, the article noted.

Recent Consumer Financial Protection Bureau (CFPB) efforts to address elder financial abuse were also addressed in the article. That agency has asked for information on any resources that are provided to help seniors vet financial advisors and planners they may hire. Information on how financial education, financial counseling and management programs can be tailored to meet the needs of senior citizens and those that care for them has also been requested by the CFPB.

Around $2.9 billion was stolen from financially exploited senior citizens in 2010, according to CFPB estimates. Reported instances of financial theft from seniors grew by 12% between 2008 and 2010, the agency said.

Inside Washington (08/02/2012)

 Permanent link
  • WASHINGTON (8/3/12)--In a letter to acting Federal Home Finance Director Edward DeMarco, Senate Banking Committee Chairman Tim Johnson requested that the agency "rerun" its analysis for principal reductions on Fannie Mae and Freddie Mac loans. On Tuesday, Demarco issued a memo to Johnson indicating he would not allow Fannie and Freddie to offer principal reductions to troubled borrowers, despite the Obama administration's support for such programs. "I request that you rerun your analysis to take into account the issues raised in the memo," Johnson wrote in his letter. "It is important that we look at all relevant analyses and facts presented to make the best decisions on how to help homeowners and protect taxpayers" …
  • WASHINGTON (8/3/12)--The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Thursday announced that the deadline for submitting requests for the independent foreclosure review has been extended to Dec. 31. Borrowers seeking a review of their mortgage foreclosures under the federal banking agencies' Independent Foreclosure Review will have additional time to request a review if they believe they suffered financial injury as a result of errors in foreclosure actions on their homes in 2009 or 2010 by one of the servicers covered by enforcement actions issued in April 2011. As part of those enforcement actions, the agencies required 14 large mortgage servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity in 2009 and 2010 to identify borrowers who may have been financially injured due to errors, misrepresentations, or other deficiencies in the foreclosure process. If the review finds that financial injury occurred, the borrower may receive remediation such as lump-sum payments, suspension or rescission of a foreclosure, a loan modification or other loss mitigation assistance, correction of credit reports, or correction of deficiency amounts and records …

iCompBlog Wrap-Upi reports on NCUA exam news more

 Permanent link
WASHINGTON (8/3/12)---In this month's edition of the Credit Union National Association's (CUNA) CompBlog Wrap-Up, CUNA Senior Vice President for Compliance Kathy Thompson takes note of the many recent National Credit Union Administration (NCUA) "announcements and pronouncements" that will affect credit union examinations.

As the CompBlog Wrap-Up notes, the NCUA has recently addressed:

  • Multi-featured open-end lending;
  • Servicemembers Civil Relief Act compliance concerns;
  • Fair lending exams;
  • Interest rate risk regulation;
  • Emergency liquidity sources; and
  • Small federal credit union examination programs.
The agency has also announced the development of a new Office of National Examination and Supervision, which will begin its work in January.

The August Wrap-Up also offers several compliance Q&As, reviews the new U.S. Internal Revenue Service reporting rule for nonresident aliens and highlights some common signs of elder financial abuse.

And as it does every month, the CompBlog Wrap-Up lists the upcoming effective dates of new regulations, important compliance articles and reports to read, as well as CUNA training programs.

For more of the CUNA CompBlog Wrap-Up, and other compliance gems, use the resource links.

Cybersecurity bill stalls out in Senate

 Permanent link
WASHINGTON (8/3/12)--The Cybersecurity Act of 2012 (S. 3414) Thursday did not get the votes it needed in the U.S. Senate to move the bill on its way to a final vote.

Sixty votes were necessary for lawmakers to invoke "cloture," a parliamentary procedure that means to close debate on a bill and move it to a vote.

A total of 52 senators agreed to hold a vote, while 46 opposed moving the bill forward.

S. 3414 would have established voluntary information protection standards for government agencies, utilities, and other public and private entities. The bill would also establish a National Cybersecurity Council, which would include appointed representatives from the Department of Commerce, Department of Defense, Department of Justice, the intelligence community, and various "sector-specific" federal agencies.

Congress is set to adjourn today for the traditional August recess and lawmakers are scheduled to return in early September. The bill could be brought up for a vote again once Congress returns.

The Credit Union National Association (CUNA) monitored the bill's progress, noting that some voluntary security standards could eventually become mandatory, thus imposing a new burden on financial institutions.

CUNA has repeatedly said that the data security standards followed by credit unions and other financial institutions are strong, and it remains committed to ensuring that any data security measure passed by Congress does not negatively impact credit unions.

Theft larceny prompt new NCUA prohibition orders

 Permanent link
ALEXANDRIA, Va. (8/2/12)--The National Credit Union Administration (NCUA) on Wednesday prohibited five individuals from participating in the affairs of any federally insured financial institution.

They are:

  • Former Primeway FCU, Houston, Texas, employee Ashley Lynne Jackson, who was convicted of theft. Jackson was sentenced to nine months in prison and three years of probation;
  • Former United Northwest FCU, Norton, Kan., manager Mark A. Keilig. Keilig consented to the prohibition order to avoid administrative litigation;
  • Former Pacific Advantage FCU, Burlingame, Calif., employee Norielyn Galbadores Bautista. Bautista was convicted of grand theft, unauthorized use of personal identifying information of another person, and forgery and counterfeiting. She was sentenced to four years and three months in prison and ordered to pay $451,198.67 in restitution;
  • Former Morton R. Lane State University FCU, Buffalo, N.Y., employee Wanda Hasbrouck, who was convicted of grand larceny. Hasbrouck was sentenced to five years probation and ordered to pay $23,350 in restitution; and
  • Former of Catholic and Community Credit Union, Shiloh, Ill., employee Stacy A. Mergelkamp. Mergelkamp was convicted of theft, embezzlement, and misapplication by credit union officer or employees. She was sentenced to six months in prison and five years of supervised release, and ordered to pay $38,120 in restitution.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. For the full NCUA release, use the resource link.

House Financial Services fills comittee subcommittee spots

 Permanent link
WASHINGTON (8/2/12)--The House Financial Services Committee on Wednesday filled committee and subcommittee vacancies created by the July resignation of former Rep. Thaddeus McCotter (R-Ohio).

Rep. Frank Guinta (R-N.H.) will take McCotter's committee slot and his seats in the House Financial Services financial institutions and consumer credit subcommittee and the House Financial Services subcommittee on international monetary policy and trade.

Rep. Francisco "Quico" Canseco (R-Texas) was also added to the House Financial Services capital markets and government sponsored enterprises subcommittee.

Canseco is also a member of the financial institutions and consumer credit and oversight and investigations subcommittees.

Free NCUA webinar to address liquidity CLF changes

 Permanent link
ALEXANDRIA, Va. (8/2/12)--Pending Central Liquidity Facility (CLF) changes and the National Credit Union Administration's (NCUA) new proposed rule on emergency liquidity access will be discussed at a free Aug. 14 NCUA webinar announced by the agency Wednesday.

The webinar is scheduled to begin at 2 p.m. (ET) and will be hosted by NCUA Division of Capital Markets Director and CLF President Owen Cole.

The NCUA suggested that webinar participants review background information on the CLF before the webinar. Information on the CLF will be released to credit unions in an upcoming letter, the NCUA said.

Webinar participants may submit their questions for NCUA staff to WebinarQuestions@ncua.gov. The subject line should read "CLF and Your Credit Union's Contingent Liquidity," the agency said.

To register for the webinar, use the resource link.

More than 6,000 natural person credit unions will lose access to the CLF, which serves as a liquidity lender to credit unions in need of emergency funding, when U.S. Central Bridge Corporate CU closes in late October. In anticipation of this closing, the NCUA last month proposed a new emergency liquidity access rule.

The new proposal, which will remain open to public comment until Sept. 28, would require credit unions with less than $10 million in assets to maintain basic written emergency liquidity policies.

Federally insured credit unions (FICUs) with assets of $10 million or more would be required to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations.

FICUs with assets of $100 million or more would be required to have access to a backup federal liquidity source for emergency situations.

The NCUA said these credit unions can ensure access to backup liquidity by:
  • Becoming a member of the CLF;
  • Becoming a CLF member through a CLF agent; or
  • Establishing direct borrowing access to the Federal Reserve's Discount Window.
The Credit Union National Association has urged the agency to use the guidance the federal financial agencies have already produced on liquidity issues, rather than release new rules. (See related July 25 News Now story: Troubled CU, liquidity rules 'unnecessary': CUNA)

Amendment would assign data security duties to retailers

 Permanent link
WASHINGTON (8/2/12)--Retailers, data brokers and government agencies would be required to protect sensitive information, investigate security breaches and notify consumers when identity theft or account fraud risks arise, under a bill introduced by Sens. Roy Blunt (R-Mo.) and Tom Carper (D-Del.) this week.

The senators offered the bill, known as the Data Security Act of 2012, as a potential amendment to Senate cybersecurity legislation. The larger bill, known as the Cybersecurity Act of 2012 (S. 3414), would establish voluntary cybersecurity standards in a bid to improve critical information protections.

In a release, Blunt and Carper noted that their amendment would increase consumer protections by replacing varied and sometimes conflicting state data protection regulations with a new national standard.

The amendment "builds on existing law to better ensure federal and state regulators comply with the law and to make sure that data security procedures are uniformly applied," the release added. "Although some state laws are similar, many have inconsistent and conflicting standards, forcing businesses to comply with multiple regulations, and leaving many consumers without proper recourse and protections," the senators said.

Financial establishments, retailers, federal agencies or other entities that find that their information may have been compromised would be required to investigate the scope of any data breach and determine the type of information that was compromised.

Regulators, law enforcement and consumer reporting agencies would need to be notified if more than 5,000 consumers would be harmed by the breach. All consumers that are affected by the breach would also need to be notified.

Blunt said the amendment is critically important to ensuring that businesses and government agencies have the tools they need to strengthen the nation's data security.

"The idea behind the Carper-Blunt amendment makes a lot of sense. Retailers and others would no longer be able to duck responsibility when they are involved in data security breaches.  It is an idea that has CUNA's full support," said Ryan Donovan, Credit Union National Association (CUNA) senior vice president of legislative affairs.

However, Donovan noted that the future of the underlying bill is in question. "Unless agreement is reached soon on which amendments to consider, it is unlikely that the Senate will be able to finalize consideration of this bill or any of the amendments before recessing at the end of this week," he said.

CUNA remains committed to ensuring that any data security measure passed by the U.S. Congress does not negatively impact credit unions.

Rep. Graves tells CFPB to consider reg burdens costs

 Permanent link
WASHINGTON (8/2/12)--Noting that "small businesses are often victims of unintended consequences of regulations," House Small Business Committee Chairman Sam Graves (R-Mo.) called on the Consumer Financial Protection Bureau (CFPB) to consider the costs and burdens that may be imposed on small businesses as it develops new rules.

Graves, who spoke during a Wednesday committee hearing entitled "Know Before You Regulate: The Impact of CFPB Regulations on Small Business," said he hopes to see the CFPB "emphasize the preservation of small businesses" going forward.

CFPB Director Richard Cordray, who was the lone witness at the Wednesday hearing, in a prepared statement said the agency understands the importance of integrating "direct input and advice from small businesses into the CFPB's decision-making process."

The CFPB has "actively and consciously designed a number of mechanisms to seek the input of small businesses to support its rulemaking, supervision, enforcement, consumer education, research, and reporting functions," he said.

The CFPB has held three Small Business Regulatory Enforcement Fairness Act (SBREFA) panel discussions this year to gather comments from small businesses and other entities. The first of these panels focused on the CFPB's project to combine separate Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures into a single form. Later panels have focused on pending mortgage servicing and mortgage loan origination proposals.

"We responded to every panel recommendation and every major concern raised by the small business participants, whether by adopting the recommendation, changing the proposal, seeking comment on a particular issue, or other action," Cordray said.

The CFPB director said the agency incorporated SBREFA panelist recommendations into the TILA/RESPA proposal, including clearer guidance on how to complete the integrated forms. The agency may also remove certain troublesome disclosures from the final versions of its TILA/RESPA forms, Cordray added.

The feedback the agency has received during discussions of its mortgage servicing and mortgage loan origination proposals has also helped the CFPB "think significantly about the basic premises of proposals under consideration and about alternatives and accommodations for small businesses," Cordray said.

SBREFA panels are "not a 'check the box' kind of exercise but rather a vitally important source of information," he added.

Regulatory burden is also a key concern for credit unions coping with the onslaught of CFPB regulations, and Doug Fecher, president/CEO of Wright-Patt CU, Fairborn, Ohio, recently warned that every dollar a credit union must spend complying with regulatory changes is a dollar it cannot spend to benefit its members.

Testifying on behalf of the Credit Union National Association (CUNA) and his credit union last month, Fecher asked members of the House Oversight and Government Reform Committee financial services subcommittee to "aggressively urge" the CFPB to use its exemption authority so the weight of compounding rules "that are intended for abusers and the largest financial institutions" does not overburden credit unions. (See related July 25 News Now story: Compliance dollars better spent on members, CUNA testifies)

Minnesota CU assumes A M Communitys members assets

 Permanent link
ALEXANDRIA, Va. (8/2/12)--TruStone Financial FCU, Plymouth, Minn., has purchased and assumed the members, deposits, core facilities, and consumer loans of A M Community CU, Kenosha, Wis., the National Credit Union Administration (NCUA) announced on Wednesday.

The Wisconsin Office of Credit Unions and NCUA moved to liquidate the Kenosha credit union after it failed to resolve its financial issues. The credit union was placed into NCUA conservatorship in February.

A M Community, which held $121.8 million in assets and served 15,993 members, was chartered in 1933 and served Chrysler Corporation employees and residents of Kenosha and Racine counties. It is the seventh federally insured credit union to be liquidated this year, the NCUA said.

Members of A M Community CU will now be served by TruStone Financial, and will receive no interruption in service. TruStone Financial holds $739 million in assets and has more than 60,000 members. The credit union serves members that live, work, worship, or go to school in the cities of Minneapolis and St. Paul, Minn., and other members of select employer groups.

Inside Washington (08/01/2012)

 Permanent link
  • WASHINGTON (8/2/12)--David Cohen, the Treasury undersecretary for terrorism and financial intelligence, Tuesday asked the financial industry to comment on a regulatory plan that would require institutions to identify beneficial ownership of their account holders. Regulators are sensitive to financial institutions' regulatory burden and committed to improving the quality of the U.S. anti-money launder efforts, Cohen said during a Financial Crimes Enforcement Network (FinCEN) hearing (American Banker Aug. 1). However, public engagement is "a must" if regulators are to assist financial institutions in managing risk, Cohen said. In its advanced notice of proposed rulemaking issued in February, FinCEN said beneficial ownership of accounts can pose heightened risks because it can allow individuals to shield the identity of the true owner of assets derived from criminal activity …
  • WASHINGTON (8/2/12)--The Consumer Financial Protection Bureau has filed its first civil enforcement action in federal court. The complaint charges lawyer Chance Gordon and his law offices of failing to assist consumers in making loan modifications after accepting upfront fees.  (The Wall Street Journal Aug. 1). Also named in the complaint are Chance's business partner, Abraham Pessar, and two of Pessar's companies, Division One Investment and Loan Inc. and Processing Division LLC. Gordon and Pessar allegedly duped consumers into believing they were affiliated with U.S. government programs designed to provide troubled mortgage borrowers with relief, according to the complaint. Gordon and Pessar used money obtained from homeowners to fund an opulent lifestyle, the bureau said in court documents …