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Compliance Credit report concerns addressed by CUNA

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WASHINGTON (9/24/10)--Dozens of questions pour into the Credit Union National Association’s (CUNA’s) inboxes each month seeking guidance on the Fair Credit Reporting Act (FCRA). They range from “do I need a member’s signature to pull a credit report,” to more complex questions regarding the new risk-based pricing regulations. Most recently, new questions are arising about what changes are coming in 2011 as a result of the Dodd-Frank financial reform law. These and many other questions will be addressed in a series of four CUNA webinars to be held this fall:
* Sept. 27: Consumer Reports & Basics Every Credit Union Needs to Know * Oct. 4: Furnishing Information to a Credit Reporting Agency * Oct. 25: Rules Addressing Fraud & Identity Theft * Nov. 1: Risk Based Pricing Notices
The first program scheduled for next Monday, Sept. 27 will cover what every credit union needs to know about:
* What constitutes a permissible purpose for pulling a credit report? * What can you do with the information once you get it? * When should you provide an adverse action notice? * What are the rules for pulling credit reports on employees?
Monday’s webinar will provide valuable information for any credit union's compliance, lending and operations staff. Use the resource link for more information or to register for any or all of these sessions. CUNA FCRA Webinars

Inside Washington (09/23/2010)

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* WASHINGTON (9/24/10)--The Federal Deposit Insurance Corp. (FDIC) is pressing ahead with a May 11 proposal that would require a living will from about 40 companies within six months of the rule’s adoption (American Banker Sept. 23). Michael Krimminger, deputy to the FDIC chairman for policy, said the agency plans to move ahead with the rule. There is a need to make sure the agency can protect the Deposit Insurance Fund, he added. Before the regulatory reform bill was signed into law in July, FDIC proposed requiring insured depository institutions with $10 billion in assets that are controlled by holding companies with $100 billion in assets to submit a living will. Some had suggested the FDIC withdraw the proposal, since the Dodd-Frank Act had a broader mandate ... * WASHINGTON (9/24/10)--Creating new financial products, such as reloadable prepaid debit cards, will be the key to shifting low-income individuals into the financial system, said Michael Barr, Treasury assistant secretary for financial institutions, during a recent conference. Financial institutions can generate revenues while also offering affordable and safe accounts for the low-wealth. Mobile applications, like texting, can convey account information or facilitate remote check deposits (American Banker Sept. 23). These applications are growing and have the potential to reduce costs. Earlier this month, Treasury announced that it is launching a program that would allow some U.S. workers’ tax refunds to be directly deposited into a low-cost bank account ... * WASHINGTON (9/24/10)--A new day of financial products and regulation is coming, according to Elizabeth Warren, who has been tapped by the Obama administration to lead the proposed Consumer Financial Protection Bureau (American Banker Sept. 23). Speaking Wednesday in her first speech as assistant to the president and special adviser to Treasury Secretary Timothy Geithner, she said the financial system has become “out of whack” and encouraged greater transparency. Bankers are nervous about upcoming changes, but Warren said she thinks a “new world” of regulations for the credit markets and consumers is coming ... * WASHINGTON (9/24/10)--Herb Allison, head of the Troubled Asset Relief Program, is stepping down (American Banker Sept. 23). Allison announced his departure on Wednesday from the program, where he has been two years. He previously was president of Fannie Mae. Tim Massad, chief counsel and chief reporting officer of the Office of Financial Stability, will succeed Allison ...

NCUA reveals final corp. CU rule

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NEW: ALEXANDRIA, Va. (9/24/10)—The National Credit Union Administration (NCUA) on Friday revealed the final corporate credit union rule. Credit Union National Association President/CEO Bill Cheney said that CUNA is “gratified” that the new corporate rule reflected many of the recommendations of CUNA’s Corporate Task Force. “We firmly believe it offers a solid model for corporate credit unions going forward,” Cheney added. Overall, the NCUA’s corporate credit union final rule mirrors the agency’s proposed rule, which was released earlier this year. The final corporate rule amends Part 704 of the NCUA's rules, adjusting the current corporate capital requirements by replacing the current 4% minimum total capital ratio with a 4% minimum leverage ratio, a 4% tier one risk-based capital ratio, and an 8% total risk-based capital ratio for adequately capitalized corporate credit unions. The new corporate rule will prohibit the purchase of private-label mortgage-backed securities or subordinated securities. So-called "golden parachute" executive compensation packages will not be allowed to be awarded to executives of troubled corporates, and all corporates will be required to disclose their executive compensation packages. Corporate boards must also be comprised of natural person credit union employees that have attained the level of CEO, CFO, or COO or treasurer/manager at their respective credit unions. The majority of the corporate rules will become effective 90 days after they are published in the Federal Register. However, the rules impacting capital requirements and the activities of Credit Union Service Organizations (CUSOs) will have delayed effective dates, the NCUA said. NCUA General Counsel Bob Fenner added that the NCUA would release additional refinements to its corporate rule in the future. The NCUA plans to address corporate membership fees, internal reporting, risk management, and other issues, he added. The NCUA also voted to delegate corporate credit union CUSO authority to the Director of the Office of Corporate Credit Unions (OCCU). The NCUA Board may also play a role in the approval or disapproval of a corporate credit union CUSO’s activities if those activities go “beyond the scope” of activities covered by section 712.5 of NCUA regulations. Potential guidelines for new corporate credit union charters were also released during the meeting. The guidelines will be open to public comment for thirty days. The NCUA also announced plans to bundle portions of the $50 billion in troubled assets currently held by U.S. Central Federal Credit Union, Western Corporate Federal Credit Union (WesCorp), and some other corporates into individual securities that could then be sold on the open market. (See related story: NCUA acts on Corp. CUs, legacy assets)

Small business bill gets final approval

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WASHINGTON (9/24/10)--Job creation legislation that will provide small banks with $30 billion in taxpayer funds to lend to small businesses should soon become law after the U.S. House on Thursday passed H.R. 5297 by a 237 to 187 vote. The small business job creation legislation, which passed the Senate by a 61 to 38 vote last week, also provides tax breaks to both small and larger businesses. Legislation that would lift the current credit union member business lending (MBL) cap to 27.5% of total assets was not added to the bill, but the Credit Union National Association (CUNA) continues to work to bring the MBL cap legislation to the House or Senate floors as stand-alone legislation or as an amendment to a future bill. CUNA has estimated that credit unions could infuse a new $10 billion in credit to small businesses--at no cost to the taxpayer--in the first year after a higher cap was enacted. Sen. Mark Udall (D-Colo.), the main sponsor of a Senate MBL bill, has estimated that lifting the cap could create $200 million in new small business funding in his state. CUNA has estimated that lifting the cap would inject $10.8 billion in new funding into the nation’s economy in the first year following enactment. These funds would help small business owners create over 100,000 new jobs, according to CUNA.

Matz fed regulators hold first FSOC meeting on Oct. 1

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WASHINGTON (9/24/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz will be among those in attendance when the U.S. Treasury hosts the first meeting of the new Financial Stability Oversight Council (FSOC) on Oct. 1. Treasury Secretary and FSOC Chairman Tim Geithner, Federal Reserve Chairman Ben Bernanke, Acting Comptroller of the Currency John Walsh, Securities and Exchange Commission Chairman Mary Schapiro, and Federal Deposit Insurance Corp. Chairman Sheila Bair will also be in attendance. Representatives from the Commodity Futures Trading Commission and the Federal Housing Finance Agency will also attend the meeting. All are members of the council. The oversight council, which was created when the Dodd-Frank financial reform package was signed into law, will provide a forum for discussion between various regulatory agencies and will oversee the resolution of troubled financial institutions. The council will monitor markets for disturbances, and will also promote market discipline by “eliminating expectations on the part of shareholders, creditors, and counterparties that the government will shield them from losses in the event of failure,” the Treasury added in a release. For the full Treasury release, use the resource link.