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CUNA backs FHFA eminent domain concerns

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WASHINGTON (9/14/12)--The Credit Union National Association (CUNA) said it supports the Federal Housing Finance Agency's (FHFA) opposition to the proposed use of eminent domain to speed some mortgage refinances.

Last month, the FHFA said it would consider taking action against municipalities that used eminent domain to revise mortgage loans. The agency did not say which actions it would take, but sought public comment on the issue in a Federal Register release.

The agency release followed the June announcement that California's San Bernardino County and two of its city governments, Fontana and Ontario, could move to use their eminent domain powers to seize mortgage loans from private investors.

The FHFA 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, adding that such actions could "negatively affect the extension of credit to borrowers seeking to become homeowners and on investors that support the housing market."

In a comment letter to the FHFA, CUNA Deputy General Counsel Mary Dunn said CUNA has serious concerns about the use of eminent domain as a means to achieve relief for distressed home mortgage borrowers. CUNA does not believe this use of eminent domain "would provide the level of relief to affected homeowners, communities, and securitizers that some have predicted."

CUNA also noted that the proposed use of eminent domain would likely be challenged in court. This outcome could create issues for affected homeowners, as courts could struggle, perhaps for years, with issues created by the proposal. One such issue would be how to value the loans and properties involved so that 'just compensation' may be provided to homeowners whose homes have been seized by the government.

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

Fall Hikes kick off amid MBL press

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WASHINGTON (9/14/12)--While members of Congress will only be in Washington for a short time before they recess ahead of this fall's elections, the Credit Union National Association (CUNA), leagues and credit unions from several states will use this limited time to push for credit union priorities in Hike the Hill meetings.

Representatives from the League of Southeastern Credit Unions (LSCU), the Northwestern Credit Union Association, the Utah Credit Union Association, the Nebraska Credit Union League, the South Carolina Credit Union League and the West Virginia Credit Union League started the fall Hike the Hill season when they arrived in Washington this week. These leagues, along with credit union representatives from their respective states, held a mixture of in-office meetings with members of Congress and their staff, and informal receptions, to spread the credit union message.

The credit union groups were scheduled to meet with House and Senate members from their respective states, including House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and Sens. Joe Manchin (D-W. Va.), Ron Wyden (D-Ore.), and Marco Rubio (R-Fla.).

Julie Renderos, CFO of Suncoast Schools FCU, Tampa, Fla., traveled to Washington with the LSCU group. Renderos said this type of direct advocacy on behalf of credit unions and members is of the utmost importance. "I can't state enough how each time we visit with our lawmakers we are keeping our issues on the front burner. We know that our elected officials truly want to hear from their constituents and because of this I will always take the time to come to Washington and meet with our members of Congress," she said.

Renderos and her fellow hill hikers are seeking congressional support for member business lending (MBL) cap increase legislation, enhanced supplemental capital access, ATM fee disclosure fixes and other credit union priorities during their visits.

MBL cap increase legislation has been introduced in both chambers of Congress, and a Senate vote on MBL legislation has been promised. CUNA has estimated that lifting the MBL cap to 27.5% of assets, from 12.25%, would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment. Both benefits come at no cost to taxpayers.

The help an MBL cap increase could provide to a still recovering economy was highlighted at a Wednesday Capitol Hill event. The event, which was organized by CUNA and Washington political newspaper The Hill, featured MBL praise from House and Senate sponsors, Washington think tanks, credit unions, and small business owners. (See related Sept. 12 News Now story: Small biz, lawmakers underscore need for more CU biz credit at Hill event)

Credit union groups from Idaho, Kentucky, Vermont, Minnesota, Georgia, North Dakota and South Dakota are scheduled to visit Washington this month, and more visits are being planned for later in the fall.

For more on the Hike the Hill efforts, use the resource link.

NCUA agenda potentially positive for CUs

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ALEXANDRIA, Va. (9/14/12)--The National Credit Union Administration's (NCUA) September open meeting agenda, which was unveiled Thursday, "covers only items that are potentially positive for credit unions… as opposed to those that will impose undue burdens and create barriers for credit unions that divert their resources from member service," Credit Union National Association Deputy General Counsel Mary Dunn said.

Items on the open agenda include:

  • A proposed rule addressing regulatory relief for small credit unions;
  • A proposed rule that would permit credit unions to invest in Treasury Inflation Protected Securities;
  • A proposed rule that would expand the agency's definition of "rural district" for fields of membership; and
  • An Advanced Notice of Proposed Rulemaking related to payday-alternative loan regulations.
The NCUA in September of 2010 moved to allow federal credit unions to offer short-term, small amount loans to their members. The loans, which serve as alternatives to payday loans that are offered by other financial service providers, come with certain restrictions. Federal credit unions may charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. A $20 application fee may also be charged. The loans may total as high as $1,000 and may last for as long as six months, and the loans cannot be rolled over.

The open board meeting is scheduled to begin at 10 a.m. ET on Sept. 20.

A closed board meeting will take place before the open meeting at 8:30 a.m. ET. Creditor claim appeals and personnel issues will be on the agenda for the closed meeting.

For the full NCUA agenda, use the resource link.

Dodd-Frank could mean mortgage costs for CUs GAO

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WASHINGTON (9/14/12)--While the majority of the Dodd-Frank Wall Street Reform Act's regulatory changes is aimed at large, complex financial institutions, portions of the act addressing mortgage reforms "may impose additional requirements and, thus, costs" on credit unions and other financial institutions, the U.S. Government Accountability Office (GAO) has said.

The impact of these mortgage reforms, though, depends on the results of future rulemakings, the GAO said. The GAO report, entitled "Community Banks and Credit Unions: Impact of the Dodd-Frank Act Depends Largely on Future Rule Makings," found that finance industry representatives are particularly concerned that Dodd-Frank regulatory changes imposed by the Consumer Financial Protection Bureau (CFPB) may force firms to exit certain lines of business.

The GAO report was compiled through data analysis, study reviews and interviews with credit unions, banks and state and federal regulators.

The additional time, resources, and effort it would take their institutions to address new regulatory requirements was a chief concern. Some also said the standardization of processes through CFPB regulations could reduce the ability of community banks and credit unions to offer differentiated products to better serve their communities.

The GAO noted that some regulators and industry representatives expected the potential cumulative effect of CFPB mortgage reforms to decrease lending practices. The mortgage reforms could also reduce community banks' and credit unions' advantages in rural communities and other niche markets.

However, some of these regulatory burdens could be relieved if the CFPB used its full exemption authority, the GAO said. In addition, several Dodd-Frank provisions, including deposit insurance reforms, Sarbanes-Oxley Act exemptions, and the CFPB's pending supervision of nonbanks, "could reduce costs and/or help level the playing field for community banks and credit unions," the GAO said.

Overall, the report noted, "it is too soon to determine the Dodd-Frank Act's overall impact on small business lending," as much of the work asked of the CFPB and other regulators has not been completed.

The CFPB and the National Credit Union Administration generally agreed with the report, the GAO said.

For more on the report, use the resource link.

Inside Washington (09/13/2012)

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  • WASHINGTON (9/14/12)--The Securities and Exchange Commission (SEC) pledged to continue its pursuit of a civil fraud case against IndyMac and ex-CEO Michael W. Perry after a judge upheld his own decision to pare down the government's charges. U.S. District Judge Manuel Real of California's Central District ruled Monday that IndyMac did not mislead investors when the bank failed to disclose a supplemental ratio for weighting subprime assets that it had previously reported to the Office of Thrift Supervision (OTS) (American Banker Sept. 13). Perry maintained that because the bank was well-capitalized, the OTS did not require IndyMac to provide the unfavorable ratio. Real's decision reaffirms a similar ruling he made in July. In May, the court dismissed several of the government's claims against Perry and ruled he would not have to return any gains that were allegedly unlawful. SEC spokesman John Nester said in a statement Tuesday the agency will consider its options regarding the portion of the case that was dismissed and continue to pursue its case against Perry, who the SEC accuses of backdating the capital contribution to make the bank appear to be well-capitalized …
  • WASHINGTON (9/14/12)--A bipartisan bill that would require independent government agencies, including the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the Securities and Exchange Commission and the Commodity Futures Trading Commission, to analyze the costs and benefits of new regulations and tailor new rules to minimize unnecessary burdens on the economy, could be gaining support in the Senate. (American Banker Sept. 12) The bill, which was introduced by Sens. Rob Portman (R-Ohio), Mark Warner (D-Va.) and Susan Collins (R-Me.) in August, would give the executive branch some authority over the activities of independent regulators. The bill is being considered by the Homeland Security and Governmental Affairs Committee, but has not received a hearing
  • WASHINGTON (9/14/12)--The Financial Crimes Enforcement Network--or FinCEN--has made public a summary of it July 31 public hearing on an advance notice of proposed rulemaking (ANPR) on customer due diligence requirements for financial institutions. The ANPR was published in the Federal Register on March 5 and the July session on its requirements was one of what FinCEN has said will be a series of public hearings. The general summary of the meeting also includes prepared remarks from the hearing. Interested individuals may also view a portion of the hearing in a recorded webcast. …

Bachus urges Senate to move on ATM bill

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WASHINGTON (9/14/12)--The U.S. House unanimously passed a bill that could "stem the tide of baseless, nuisance lawsuits that threaten consumers' access to automated teller machines (ATMs)" in July and now it is time for the Senate to approve the legislation, according to House Financial Services Committee Chairman Spencer Bachus (R-Ala.).

In a Sept. 12 letter to Senate Majority Leader Harry Reid (D-Nev.), Bachus wrote, "By taking up and passing H.R. 4367, the Senate would help eliminate the requirement that ATM operators affix unnecessary and outmoded fee notices to their machines."

H.R. 4367 would eliminate portions of Regulation E that require credit unions and other financial institutions that provide ATM services to display a physical notice on the ATM that a fee will be charged. Under the legislation, ATMs would only be required to display the ATM disclosures on a screen.

The current, duplicative ATM disclosure requirements are creating issues for credit unions and other financial institutions. In some cases, the Credit Union National Association (CUNA) has noted, outside notices on ATMs are being intentionally removed or destroyed, without the financial institution's knowledge, and then pictures are taken of the ATM to show noncompliance with disclosure rules.

Some ATM users have filed lawsuits using such photos as evidence of apparent noncompliance. CUNA has said the number of these lawsuits could be in the hundreds and many credit unions are settling the suits to avoid the cost of litigation.

In urging his colleagues in the Senate to approve the bill, Bachus noted that interests as diverse as convenience stores, community banks, credit unions, casinos and gas stations support the bill's passage.

"In fact, there is no meaningful opposition to the bill," the House chairman concluded.

CUNA has also urged the Senate to approve the ATM bill soon.