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NCUA guidance helps with Savings Bond changes

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ALEXANDRIA, Va. (9/30/11)--The National Credit Union Administration (NCUA) has issued a Letter to Credit Unions (11-CU-15) to provide guidance in answering members’ questions that might be sparked by upcoming changes to the U.S. Savings Bond program. After 75 years of regular sales, savings bonds will no longer be sold at credit unions and other financial institutions as of Jan. 1, 2012, the U.S. Treasury has announced (News Now July 14). Series EE and I savings bonds will still be made available for purchase via the U.S. Treasury Department's online purchase platform, Consumers can also use the Treasury's online platform to convert existing paper bonds into electronic bonds and to purchase savings bonds via a payroll savings plan. Treasury estimates that the move from paper to electronic bonds will save $70 million in taxpayer funds over five years. The NCUA letter advises credit unions that “(a)s a trusted source of information about savings bonds, your credit union will likely receive questions about these changes.” It asks credit unions that, as they respond to member questions and assist them through this transition, to consider the following:
* Educate members about the upcoming changes. Let members know they will no longer be able to buy paper savings bonds at your credit union or by mail order. Refer members to where they can purchase, manage, and redeem electronic savings bonds online. * Stop accepting applications for savings bonds after Dec. 31. Members have until the close of business on that date to submit a final purchase applications and funds. Final applications mailed directly to the Federal Reserve by members must be received by Dec. 31. * Continue to redeem savings bonds. Consumers currently hold more than 670 million paper bonds worth $181 billion. Continue redeeming paper bonds on behalf of your members. Also, inform members that paper bonds that have not matured but are lost, stolen, or destroyed, can be reissued in paper or electronic form.
The Treasury Department is offering a free toolkit to help communicate changes to consumers (News Now Sept. 8) Use the resource links below to read the complete NCUA letter and to access the Treasury information on its toolkit.

BoA debit fee shows interchange cap a blow to consumers CUNA

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WASHINGTON (9/30/11)--As most credit unions continue to offer free debit card services, banks are just beginning to apply sometimes hefty fees to the popular service. It was widely reported Thursday that Bank of America has plans to begin charging a $5 monthly fee to some debit-card users—-in an attempt to recoup lost revenues caused by the implementation of a statutory cap on debit interchange fees. The fee cap, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, set a limit of 21 cents for debit card fees and allows an additional five basis points of the value of the transaction to cover fraud losses. The law, however, does not apply to most credit unions because of an exemption for card issuers with assets of less than $10 billion. The Credit Union National Association (CUNA) and other financial trade groups waged a heated battle trying to get the U.S. Congress to “stop, study, and start over” on the interchange cap that CUNA argued was hastily added to the large financial reform bill without adequate study of its consequences. Merchants claimed consumers would benefit from lower prices if interchange fees were capped but balked at having any provisions in the bill that would require them to share any savings with their customers. No such provision was added. CUNA and the other financial groups warned lawmakers that without such a requirement, the fee cap was anti-consumer as it would force debit card issuers to charge a monthly fee for what had almost universally been a free service--one very popular with consumers without requiring an offset from the merchants. “This is precisely what we warned would happen,” Ryan Donovan, CUNA senior vice president of legislative affairs, said Thursday. “As the interchange regulation goes into effect, it is quite possible that others will follow suit and set fees.” Donovan said that throughout the legislative and regulatory process proponents of the interchange fee cap claimed consumers not only would not be harmed by the debit interchange law, they would benefit from it. “It should be clear to everyone now that the debit interchange law adversely impacts consumers,” Donovan said. “The silver lining, to the extent that there is any, is that the new fees imposed by Bank of America and others could prompt more consumers to join credit unions for lower rates and better service,” Donovan said. In fact, a USA Today article published earlier this week said the gap between the historically low rates credit unions offer their members and the higher rates big banks charge their customers could become even wider as a result of the new debit interchange fee cap regulations. (News Now 9/29/11). CUNA continues to pursue all avenues to assure the creation of a two-tier interchange systems to preserve credit unions’ debit card interchange fee revenue.

MBL increase would aid small biz Heartland says

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WASHINGTON (9/30/11)--Chicago-based think tank The Heartland Institute again stood up to support increasing the credit union member business lending (MBL) cap, saying this week that with small businesses still struggling to access funding, “efforts need to be made to get credit flowing where it is needed and best utilized.” In a release published this week, the Heartland Institute noted that small- and medium-sized businesses “are a key engine of the economy” and create between 60% and 80% of all new jobs. “New sources of lending outside the traditional banking sector may present a new source of money for these businesses. One of these alternatives is member business lending by credit unions,” the release said. The release also cites Credit Union National Association (CUNA) estimates that predict that increasing the cap to 27.5% of assets, from the current 12.25% cap, would create more than 140,000 new jobs. CUNA has said that this cap lift would inject $13 billion in new funds into the economy, at no cost to taxpayers. Heartland Institute Vice President Eli Lehrer earlier this year called an MBL cap hike "a step in the right direction," adding that "current rules preventing credit unions from lending more than 12.25% of their assets to businesses make no sense." Heartland has supported several credit union issues. A pair of similar bills, H.R. 1418 and S. 509, would increase the MBL cap. Support on the Hill for H.R. 1418 has grown substantially in recent weeks, increasing from 61 co-sponsors to 80. Throughout September, more than 450 representatives from credit unions, CUNA, and the state leagues have visited the halls of Congress to meet with federal lawmakers and urge support for increased MBL authority.

2012 NCUA board meeting schedule released

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ALEXANDRIA, Va. (9/30/11)--The National Credit Union Administration (NCUA) Thursday released the monthly open board meeting schedule for 2012. The dates for the NCUA's 2012 board meetings are:
* Jan. 26; * Feb. 16; * March 15; * April 12; * May 24; * June 21; * July 19; * Sept. 20; * Oct. 18; * Nov. 15; and * Dec. 13.
The agency does not usually schedule a board meeting for the dog days of August, although this year the agency scheduled a special open meeting for that month to discuss the corporate credit union fund assessment. The 2012 board meeting schedule is subject to change.

30- 15-year mortgages reach all-time lows

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WASHINGTON (8/12/11)--Average rates on 30- and 15-year fixed rate mortgages fell to all-time lows this week, totaling 4.01% and 3.28%, respectively, Freddie Mac reported. Thirty-year mortgages averaged 4.09% last week and 4.32% this time last year. Fifteen-year mortgages averaged 3.29% last week and 3.75% this time last year. Freddie Mac Chief Economist Frank Nothaft said the record low fixed rates were partly due to the Federal Reserve’s recent decision to purchase billions in Treasury securities. However, Nothaft noted, interest rates for adjustable-rate mortgages (ARMs) “were nearly unchanged” due to this news, as short-term Treasury securities “serve as benchmarks for many ARMs.” Five-year Treasury indexed hybrid ARMs averaged 3.02%, equal to last week’s total. One-year Treasury-indexed ARMs averaged 2.83% this week, slightly up from the 2.82% total reported last week. These mortgages averaged 3.52% and 3.48%, respectively, this time last year. For the full release, use the resource link.

Inside Washington (09/29/2011)

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* WASHINGTON (9/30/11)--The Federal Housing Finance Agency offered two new mortgage servicing compensation plans for comment, narrowing the options from four proposed earlier this year. Both plans were outlined in a discussion paper released Tuesday (American Banker Sept. 29). One option would be a modest change from the current compensation model and would establish a minimum serving fee of 20% coupled with a reserve account structure if a disproportionate number of loans pool become nonperforming. It is similar to a plan proposed by the Mortgage Bankers Association and The Clearing House Association. The other plan would differ fundamentally from the current servicing model by replacing the traditional 0.25 percentage point annual fee with a fee-for-service model and unspecified financial incentives … * WASHINGTON (9/30/11)--The Federal Trade Commission (FTC) is investigating several residential mortgage servicing firms for illicit practices, associate director Joel Winston said this week. Addressing the Mortgage Bankers Association regulatory compliance conference this week, Winston said the agency continues to be “active” in the mortgage servicing area (American Banker Sept. 29). He would not provide the names or number of firms the FTC is pursuing. In March it was disclosed that the agency was investigating Ocwen Financial Corp., a specialty/subprime servicer based in West Palm Beach, Fla. Winston said the FTC has contacted the firms targeted … * WASHINGTON (9/30/11)--A federal judge in Iowa ruled last week that the Dodd-Frank Act did not materially change the federal pre-emption standard for national banks, the second such court decision this year. The rulings seem to indicate that the courts are not supporting claims by regulators that Dodd-Frank forces national banks to comply with state consumer protection laws (American Banker Sept. 29). In the Iowa case, a district court judge ruled that national banks do not have to comply with a state law that restricts ATM service providers. Industry observers say the two cases have provided legal backing to the Office of the Comptroller of the Currency’s rule--made over the Treasury Department’s objections--that said preemption was for the most part unaffected by Dodd-Frank. Earlier this year, a Florida judge reaffirmed a lower court’s decision preempting a state law that prohibited banks from charging check-cashing service fees on non-accountholders …