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CUNA calls on NCUA to change CUSO governance plan

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WASHINGTON 9/14/11)--Credit union service organizations (CUSOs) do not pose a risk to the credit union system nor do they pose overall concerns to the National Credit Union Share Insurance Fund and the National Credit Union Administration should withdraw--or at least substantially modify--its recently proposed additions to rules governing CUSOs, the Credit Union National Association (CUNA) said in a comment letter. The NCUA’s proposal, released in July, would require CUSOs and their subsidiaries to directly file their financial statements with the NCUA. Financial reports would also need to be forwarded to appropriate state supervisors under the rule. The agency has argued that the proposal, if enacted, would "enhance protections to consumers, credit unions and the National Credit Union Share Insurance Fund." While some CUSOs have had issues, CUNA said that CUSOs “as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF.” The agency “has provided absolutely no data or analysis regarding current problems that could be used to substantiate the need for the proposal,” CUNA Deputy General Counsel Mary Dunn said in the comment letter. Dunn said that credit unions are extremely concerned about the proposed rule, and questioned whether the agency has the legal authority to take the steps presented in its proposed rule. “NCUA already has a number of options it can employ to ensure credit unions do not get into trouble by participating in a CUSO without having to adopt the CUSO oversight provisions in the proposal,” the CUNA letter stated. “Rather than issuing new requirements, the agency should focus on targeting problem areas and implementing existing requirements, such as due diligence,” the letter suggested. NCUA examiners should review 5300 reports and other documents from the credit union regarding its involvement with its CUSO, among other steps, the letter said. The CUNA letter was developed with CUNA's Examination and Supervision Subcommittee, Federal Credit Union Subcommittem and members of CUNA's Councils. For the full CUNA comment letter, use the resource link.

CFPB continues with mortgage form revisions

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WASHINGTON (9/14/11)--The Consumer Financial Protection Bureau (CFPB) has made a slight change in round four of its mortgage disclosure form revision project, asking commenters to “compare two different types of loan products using the same version” of the mortgage form. In recent months, the agency has released several drafts of a sample mortgage form that combines certain consumer disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into one document. In previous drafts of the form, the CFPB asked financial institutions and consumers to comment on two slightly different versions of the combined form. This time, the CFPB’s Assistant Director for Mortgage and Home Equity Markets Patricia McCoy said the agency “want[s] to make sure the disclosure actually helps consumers understand features of competing loan products, from the overall loan amount to estimates of taxes and insurance costs.” The CFPB in a release asks: “If you’re a consumer, which product would you choose? If your work puts you in a position to advise potential borrowers, which would you recommend?” The mortgage disclosure revisions, known as the "Know Before You Owe" project, is meant to make the disclosures concerning the costs and risks of mortgage loans clearer and to help consumers comparison shop for the best mortgage loan offer. The combined form is required under the Dodd-Frank Act, and the CFPB is required to publish rules and model disclosures for the new mortgage form by July 2012. The CFPB emphasized that this latest release is not the final version of the mortgage disclosure form. Credit Union National Association (CUNA) staff have met with the CFPB to discuss the mortgage disclosure revision project, and CUNA continues to be actively involved in roundtable discussions and other forums with CFPB personnel and others as the drafting and testing phases of the revision process moves forward. For the CFPB release, use the resource link.

Fed issues small entity routing and exclusivity guidance

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WASHINGTON (9/14/11)--The Federal Reserve Board Tuesday released compliance guidance on debit card interchange fees and routing, guidance that is targeted to credit unions and other “small entities.” The guidance on the Fed’s Regulation II is comprised of 14 compliance questions with their related answers. Regulation II implements the provisions of section 920 of the Electronic Funds Transfer Act that govern debit card interchange fees and network routing and exclusivity limitations. The section was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Topics in the compliance guide range from:
* What does section 920 of the Electronic Fund Transfer Act require? * Which issuers are not subject to the interchange fee standards?
To:
* What types of payment card networks may an issuer enable to satisfy the two-unaffiliated-networks requirement? * Is there more guidance on the provisions of Regulation II? * And more.
It was the Dodd-Frank Act, of course, that required the Fed to set a debit interchange fee cap. The Fed's final rule caps large issuer debit interchange fees at 21 cents, and allows an additional five basis points per transaction may be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with Fed established fraud prevention standards. Card issuers with less than $10 billion in assets--like most credit unions--are exempt from the fee cap. However, the routing and exclusivity rules apply to all debit card issuers regardless of asset size. On routing, Regulation II prohibits issuers and payment card networks from limiting merchants’ ability to choose the network through which a transaction is routed, effective Oct. 1. On exclusivity, Regulation II requires an issuer’s debit card can be processed by at least two unaffiliated card networks, such as one signature network and one unaffiliated PIN network. That goes into effect April 1, 2012. Use the resource link to access the Fed guidance.

Search for new jobs should lead to MBL bills CUNA

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WASHINGTON (9/14/11)--The Credit Union National Association (CUNA) continues to advocate a member business lending (MBL) cap lift as one small piece that could be added to the Obama Administration’s larger plan to reinvigorate the ailing economy. Aside from a number of spending initiatives, the administration plan, known as the American Jobs Act, would provide payroll tax cuts for most businesses and “completely eliminate payroll taxes for firms that increase their payroll by adding new workers” or increasing the wages of current employees. Employers would also receive tax credits for hiring returning veterans and the unemployed, and the payroll taxes paid by individual employees would also be cut. The administration also proposes “reforms and regulatory reductions to help entrepreneurs and small businesses access capital.” CUNA has emphasized lifting the MBL cap to 27.5% of assets as another way that business owners could access the money needed to hire new workers and expand their businesses. Lifting the credit union MBL cap from the current 12.25% of assets restriction would inject more than $13 billion in new funding into the economy, at no cost to taxpayers, creating 140,000 new jobs in the first year after enactment. Among the spending priorities covered in the administration’s plan are:
*Renovating and modernizing public schools; *Infrastructure improvements aimed at repairing and modernizing roads, rails, airports and waterways; *Rehabilitating homes, businesses and communities; and *Expanding high-speed wireless internet access nationwide.
The plan also proposes some unemployment insurance reforms. Although the President urged Congress to pass his bill in its entirety when it was introduced late last week, the White House has reportedly said that Obama would sign portions of the bill separately.

New CUNA ads tout MBLs to Hill audience

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WASHINGTON (9/14/11)—Credit Union National Association (CUNA)-sponsored ads noting the economic promise, and bipartisan appeal, of lifting the credit union member business lending cap will begin running next week in Capitol Hill newspapers and the Washington regional edition of the Wall Street Journal.
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The ads, which are headlined “A jobs program both Republicans and Democrats can love” and “With 58 bills to create jobs pending in Congress, only S. 509 and H.R. 1418 would create 140,000 new jobs at no cost to taxpayers,” feature business borrowers from credit unions. The D.C.-based publications that the ad will run in include Roll Call, Politico, The Hill, Congress Daily AM, Congressional Quarterly (CQ), and National Journal. "With more than half of the states sending credit union delegations through their Leagues to Washington over the next six or seven weeks for ‘Hike the Hill’ visits, we have a significant opportunity to make a strong impact in support of these bills," said Richard Gose, CUNA senior president of political affairs. "The ads will work in tandem with the credit union representatives, as a reminder to members of Congress and their staff members of the importance of this legislation to credit unions." The ads will run in to the month of October. Sen. Mark Udall (D-Colo.) has introduced S. 509 in the Senate and Rep. Ed Royce (R-Calif.) has introduced H.R. 1418 in the House. Both bills would increase the MBL cap to 27.5% of assets, up from the current 12.25%. CUNA has estimated that lifting the cap to 27.5% of assets would inject $13 billion in new funds into the economy and create 140,000 new jobs, at no cost to taxpayers.

Inside Washington (09/13/2011)

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* WASHINGTON (9/14/11)--The Federal Deposit Insurance Corp.’s (FDIC) blanket coverage of no-interest deposits, a program started during the financial crisis, has created a quandary for large financial institutions. The coverage was initially created to provide stability, but after the Dodd-Frank Act extended the program until the end of 2012, many large banks have been left with the added costs of ultra-short term deposits from institutional investors. Banks can only invest or lend the money out on an overnight basis, said Ron Glancz, a partner at Venable LLP. They are paying the premiums without the advantage of increased deposits, he said. The coverage was intended primarily for small banks and to protect businesses from losses, but banks no longer have liquidity issues, said John Douglas, a partner at Davis Polk & Wardwell and a former FDIC general counsel … * WASHINGTON (9/14/11)--The Internal Revenue Service (IRS) seeks public comment on a proposed “affordability safe harbor” for employers under the shared responsibility provisions included in the Affordable Care Act. Under the act, which goes into effect in 2014, employers with 50 or more full-time employees that do not offer affordable health coverage to those employees may be required to make a shared-responsibility payment. IRS expects to propose a safe harbor permitting employers that offer coverage to their employees to measure the affordability of that coverage by using wages that the employer paid to an employee, instead of the employee’s household income. This contemplated safe harbor would only apply for purposes of the employer shared responsibility provision, and would not affect employees’ eligibility for health insurance premium tax credits. Notice 2011-73, posted Tuesday on IRS.gov, asks for comment on the proposed safe harbor …