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Washington

NCUA proposes some relief CUNA urges more

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ALEXANDRIA, Va. (9/21/12)—A series of regulatory relief proposals that could potentially benefit credit unions were approved by the National Credit Union Administration (NCUA) on Thursday, including proposals that would expand definitions of small credit unions and rural areas, and give credit unions greater investment authority.

Click to view larger image NCUA board members hear a staff presentation during Thursday's open board meeting. The September open board meeting will likely be the last for Board Member Gigi Hyland, right, who announced she will leave the board on Oct. 5. (See News Now story: Hyland sets Oct. 5 as exit date) (CUNA Photo)
The agency during the meeting also approved an advanced notice of proposed rulemaking that seeks public comment on its payday loan alternative program.

NCUA Chairman Debbie Matz said all four of these agenda items address issues raised by credit unions during the agency's recent listening sessions. "As we begin the second year of our regulatory modernization initiative, we will continue to listen to credit unions and other stakeholders to identify further opportunities to provide regulatory relief while protecting safety and soundness," she added.

The small credit union proposal, which was unanimously approved by the NCUA board, would triple the asset test that defines a "small" credit union--to $30 million in assets, up from the current $10 million threshold. Agency staff said they considered a range of new asset thresholds before settling on the $30 million limit.

Credit Union National Association (CUNA) President/CEO Bill Cheney following the meeting said CUNA appreciates the NCUA's decision to increase this threshold, "but we are convinced that it would be more beneficial--and realistic--for the board ultimately to go higher than that threshold."

The proposal will be released for a 30-day comment period, and NCUA Board Member Michael Fryzel encouraged credit unions that believe the threshold should be higher to state their case in their comments. "We fully intend to do just that," Cheney said.

If approved, the small credit union definition expansion would provide additional regulatory compliance relief for small credit unions in current and future regulations, such as risk-based net worth requirements and a pending interest rate risk final rule.

These newly added small credit unions would also have access to support services provided by the NCUA's Office of Small Credit Union Initiatives (OSCUI), and OSCUI Director William Myers said his staff is changing some training and consulting methods to broaden the scope of its work, but would not add new staff to help deal with the increased number of small credit unions. Rather, OSCUI would extend its reach by using technology and increasing efficiency in other areas.

The agency will reexamine its small credit union threshold every three years, if a new threshold is approved.

Matz said the agency wants to move the small credit union proposal quickly through the approval process. "To help more small credit unions remain viable, we need to provide greater resources and impose fewer burdens," she added.

The NCUA also approved:

  • A proposal that would allow credit unions to invest in Treasury Inflation Protection Securities (TIPS), which are government-issued securities that are repriced to reflect inflation and deflation, with the adjusted or original principal being paid out at maturity; and
  • A proposed rule that would expand the agency's definition of "rural district" for fields of membership to geographic areas with 200,000 or fewer inhabitants or less than 3% of a given state's population.
NCUA staff said the TIPS investment authority will provide credit unions with an additional investment portfolio risk management tool that can be useful in inflationary economies.

Cheney said CUNA supports both the TIPS investment authority and the "rural district" definition changes, but also urges the agency to consider expanding both proposals to cover state chartered credit unions.

The TIPS and rural district proposals will both be released for 60-day comment periods.

The NCUA on Thursday also released an advanced notice of proposed rulemaking (ANPR) seeking comment on how the agency could improve its Payday-Alternative Loan (PAL) rule, formerly known as short-term, small amount loans.

Federal credit unions are currently allowed to offer PAL loans to their members as an alternative to predatory payday loans that are offered by other financial service providers. 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 NCUA ANPR asks if the agency should consider alterations to the permissible short-term loan rate, loan range, loan maturity length, and other loan requirements. The agency also asked for details on any viable payday-alternative products credit unions are currently offering their members.

The PAL ANPR will be open for public comment for 30 days.

For more on the Thursday NCUA meeting, use the resource link.

CFPB to address credit access issues this year

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WASHINGTON (9/21/12)--A long-awaited draft of proposed rules that would address credit access issues faced by stay-at-home spouses will likely be released before the U.S. Congress returns from its upcoming election recess, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray said during a Thursday House Financial Services Committee hearing.

Legislators last year contacted the CFPB, noting that the ability-to-repay rules, which require card issuers to consider a consumer's independent ability to make required payments on a credit card account before opening a new card account or increasing the credit limit on an existing account, have in some cases limited the ability of stay-at-home spouses to secure new lines of credit.

The ability-to-repay rule, as currently written, does not currently specifically address joint accounts or checking accounts, instead only advising card issuers to take into account assets such as savings accounts when it determines an individual's creditworthiness.

Cordray's announcement was prompted by a question from Rep. Carolyn Maloney (D-N.Y.), who is one of several House members that has asked the CFPB to conduct an extensive review of the impact that ability-to-pay rules are having on credit availability. Maloney, who helped write the ability-to-repay rules, said on Thursday that it was not her intention to create these credit issues, and noted that this credit access problem is both a consumer and a women's rights issue. These issues are the reason Congress moved to create the CFPB in the first place, she added.

In a letter sent to the CFPB late last year, Maloney and other members of Congress noted that the ability to repay standards were resulting in average lines of credit assigned to women that were well below the average assigned to men, and low approval rates for women in certain age groups, "especially for those 62 and over, who may be particularly likely to rely on the income of other household members."

Inside Washington (09/20/2012)

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  • WASHINGTON (9/21/12)--The Financial Services Roundtable named former Minnesota Gov. Tim Pawlenty as its new president/CEO, effective Nov. 1.  Pawlenty will take over for long-time CEO Steve Bartlett, who announced his retirement earlier this year. Pawlenty, 51, served as governor of Minnesota from 2003 to 2011 and before that was a member of the state's House of Representatives from 1993 to 2003, where he served two terms as Majority Leader. From 2007 to 2008, he chaired the bipartisan National Governors Association. The Financial Services Roundtable is a bipartisan organization …
  • WASHINGTON (9/21/12)--Federal Deposit Insurance Corp. board member Thomas Hoenig said bankers do not understand the public's dissatisfaction with their industry or the competitive advantage banks hold in the marketplace.  "It is alarming that CEOs of some financial firms fail to grasp why they are trusted so little nor appreciate the reputational damage they caused their industry," Hoenig said in a speech delivered to the Exchequer Club in Washington. "They acknowledge very little offense in taking a public subsidy and squandering it in a series of actions that place billions of taxpayer dollars at risk.  They fail to appreciate how in so many ways it seems that the game is fixed in favor of a privileged few. The public is aware that there seems to be no accounting for the enormous damage inflicted on our economy." Despite the addition of hundreds of regulations, the incentives facilitating the excesses leading to the crisis remain largely unchanged, Hoenig added …
  • WASHINGTON (9/21/12)--A group of Republican state attorneys general is refusing to sign cooperation agreements with the Consumer Financial Protection Bureau (CFPB). Only 12 states--all but one with Democratic attorneys general (AGs)--have signed the memorandum, which is designed to protect confidential information shared among states and the bureau (American Banker Sept 20). CFPB Director Richard Cordray asked all 50 states in March to sign the memorandum. The Republican AGs refusal to sign the documents is part Republican protest against the CFPB that began in the U.S. Congress, according to the article. Oklahoma AG Scott Pruitt said he is declining to sign the agreement because of legal objections to the Dodd-Frank Act, which created the CFPB …

Treasury launches new training for small CDFIs

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WASHINGTON (9/21/12)--The U.S. Treasury Department has announced new training under its Community Development Financial Institutions Fund (CDFI Fund) intended to strengthen small and emerging CDFIs, especially those serving specific regions of persistent poverty that are traditionally underserved by financial institutions.

The new training series is called "Strengthening Small and Emerging CDFIs" and will provide training and technical assistance, including "comprehensive capacity building services and resources…tailored to CDFI needs and the communities they serve."

The goal of training is to fill gaps in CDFI coverage in underserved communities across the country, the announcement said.  Opportunity Finance Network (OFN) is  the selected provider of the series.

OFN will also identify underserved areas, including areas of persistent poverty such as Appalachia, the Colonias along the U.S.-Mexico border, and the Mississippi Delta, and provide specific, proactive suggestions for filling gaps of services through product development and collaborations with strategic partners.

CDFI Fund Director Donna J. Gambrell said, "The targeted training and technical assistance that we're providing through this series will ultimately enable these CDFIs to increase their impact and bring quality financial products and services to communities across the country."

In August, Treasury announced it awarded a total of $186,853,456 to 210 CDFI organizations serving low-income communities, including credit unions or credit union organizations, as it closed it fiscal year 2012 grants and awards program.

Hyland sets Oct. 5 as exit date

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ALEXANDRIA, Va. (9/21/12)--Noting the announcement of National Credit Union Administration (NCUA) board member Christiane "Gigi" Hyland that she will resign from the board as of Oct. 5, Credit Union National Association President/CEO Bill Cheney said, "Gigi Hyland has given seven strong and substantive years of service to both credit unions and the agency" during her years on the board.

"At times we have had our differences over policy, but we have always respected her views and knew that she innately had the best interests of credit unions at the core of her positions," Cheney said, and
NCUA board member Gigi Hyland, shown here addressing the 2012 CUNA Governmental Affairs Conference, said she will leave her position at the agency on Oct. 5. (CUNA Photo)
added, We wish her the very best, and we are certain that we will have more opportunities to work with her, in another capacity, somewhere down the road."

Hyland was sworn in as an NCUA board member on Nov. 18, 2005 for a six-year term, which ended Aug. 2, 2011. Prior to her time on the board, Hyland's credit union career included work as a credit union attorney and advocate for more than 14 years. She was a Credit Union National Association vice president for five years.

NCUA Board Chairman Debbie Matz said of Hyland's tenure at the NCUA, "Gigi has been an exemplary public servant. The credit union industry and the agency have been the beneficiaries of her intellect, tenacity and dedication to a safe and sound system."

Matz noted Hyland's initiative of updating the rules to raise the small credit union asset threshold, as proposed at today's NCUA open board meeting, as one of her most important.

Fellow board member Michael Fryzel said Hyland has been an "outstanding" NCUA board member. "She has brought knowledge, integrity and common sense in making tough decisions during troubled economic times."

Fryzel added, "Her ideas, collaboration and cooperation during the credit union crisis of 2008 to 2009, when I was chairman, were invaluable and for which I am sincerely grateful. I wish her all the best on her career path and know she will succeed at whatever she chooses to do."

Hyland, in her resignation announcement concluded, "It has been an honor to serve our country to protect the safety and soundness of nearly 7,000 federally insured credit unions and over 93 million credit union members."

After Oct. 5, Hyland says she plans to take time off before considering future professional opportunities.

NEW Hyland to leave NCUA Oct. 5

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ALEXANDRIA, Va. (9/20/12, UPDATED 1:25 p.m. ET))--National Credit Union Administration (NCUA) board member Christiane "Gigi" Hyland today announced her resignation, effective Oct. 5.

Hyland was sworn in as an NCUA board member on Nov. 18, 2005 for a six-year term, which ended Aug. 2, 2011. Prior to her time on the board, Hyland's credit union career included work as a credit union attorney and advocate for more than 14 years.

NCUA Chairman Debbie Matz said of Hyland's tenure at the NCUA, "Gigi has been an exemplary public servant. The credit union industry and the agency have been the beneficiaries of her intellect, tenacity and dedication to a safe and sound system."

Matz noted Hyland's initiative of updating the rules to raise the small credit union asset threshold, as proposed at today's NCUA open board meeting, as one of her most important.

Fellow board member Michael Fryzel said Hyland has been an "outstanding" NCUA board member. "She has brought knowledge, integrity and common sense in making tough decisions during troubled economic times."

Fryzel added, "Her ideas, collaboration and cooperation during the credit union crisis of 2008 to 2009, when I was chairman, were invaluable and for which I am sincerely grateful. I wish her all the best on her career path and know she will succeed at whatever she chooses to do."

Hyland, in her resignation announcement concluded, "It has been an honor to serve our country to protect the safety and soundness of nearly 7,000 federally insured credit unions and over 93 million credit union members."

After Oct. 5, Hyland says she plans to take time off before considering future professional opportunities.

See News Now Friday edition for more.

NEW NCUA proposes 30M as small CU definition

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ALEXANDRIA, Va. (9/20/12, UPDATED 10:50 a.m. ET)—The National Credit Union Administration (NCUA) this morning proposed to triple the asset test that defines a "small" credit union—to $30 million in assets, up from the current $10 million.

Regulatory burden is an issue for credit unions of all sizes, but NCUA Director of Examinations and Insurance Larry Fazio has noted that regulatory burdens can be exponentially more difficult for small credit unions to deal with, since they must comply with essentially all the same regulations as larger credit unions.

When making regulatory changes, the NCUA takes a special look at how a rule change will impact small credit unions, and so the new definition will gather more credit unions under the umbrella.

Also, this morning the NCUA issued a proposal that would allow credit unions to invest in Treasury Inflation Protection Securities (TIPS), another topic that was highlighted in the NCUA 2012 'listening sessions." TIPS are government-issued securities that are repriced to reflect inflation and deflation, while the adjusted or original principal is paid at maturity.

Also on today's open board meeting agenda:

  • 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.
See tomorrow's News Now for full coverage.