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Washington

Today Show: CUs a Fix For Consumers Burdened By Bank Fees

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WASHINGTON (9/30/13)--In a piece that strongly criticized banks for assessing unneeded fees on their customers, NBC's Today Show offered credit unions as an alternative for consumers.

Today Show anchors were surprised at the lengths banks go to to collect fees, and CNBC's Kayla Tausch touted credit unions as an answer to consumer distress over those increasing bank fees.
Dozens of not-so-standard fees are popping up, leaving customers surprised in many cases, CNBC's Kayla Tausch reported.

The NBC piece cited PNC Bank policies that mean customers with "Virtual Wallet" accounts could see a $7 monthly fee if they bank in a branch. Among the ways to waive the $7 charge: be a student, hold a minimum balance of $500, or pledge to bank only online, by mobile or at an ATM.

Wells Fargo's move to charge a fee to customers that elect to receive paper statements is also highlighted in the report.

All in all, the average checking account can have 30 to 50 fees built in, Tausch said. Banks will bring in around $41 billion in fee income this year, she said.

Bank fees ignited the grassroots movement Bank Transfer Day, Nov. 5, 2011, which helped prompt a gain of 2.2 million new member accounts at credit unions (News Now Feb. 27).

A 2013-2014 Fees Report generated by CUNA's Market Research Department details just how much credit union members save when compared to fees and charges levied on bank customers.

More than 80% of credit unions with checking services still offer free checking, compared to 39% of banks. Only 18% of credit unions overall charge maintenance fees on non-interest bearing checking accounts. Half of those credit unions (9%) levy a general maintenance fee. The other 9% of credit unions charged fees only when a minimum balance fell below a certain threshold.

The median overdraft protection fee at credit unions is $25, compared to median fees of $30 at banks and $35 at larger banks, CUNA reported.

As for ATMs: The average nonmember credit union ATM fee, for those that charge them, is $2.10. Banks on average charge non-customer fees of $2.50 per transaction. (See Sept. 11 News Now story: Bank Survey Shows Customers Fed Up With Fees.)

Cheney Report Spotlights CUNA Tax-status Talking Points

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WASHINGTON (9/30/13)--This week's edition of The Cheney Report turns the spotlight on a new tool credit unions can use to fight bank attacks: A recent "Inside Exchange" video in which John Magill, the Credit Union National Association's executive vice president of governmental affairs, offers strong responses to questions being circulated by banks on Capitol Hill about the credit union tax exemption.

In the discussion between Magill and Paul Gentile, CUNA executive vice president of strategic communications and engagement, Magill notes that banks continue to make the same tired, hackneyed points they have unsuccessfully posed for years. The credit union exemption from federal income tax, Magill reminds, is determined by the credit union cooperative structure, not by the services and products they offer.
 


The video is, essentially, a training piece to help credit union executives, staff, and board members they work with lawmakers in defending the credit union tax exemption, CUNA President/CEO Bill Cheney wrote in The Cheney Report. It provides "a terrific coaching prospect" for CUNA members, "who can use the banker questions to build key responses," Cheney said. "I encourage everyone to take a look at it, note the key points, and share it around your credit unions so we may all be on the same page as we successfully advocate on behalf of credit unions," he added.
 
The Cheney Report also noted Northwest Credit Union Association President/CEO Troy Stang's defense of the credit union tax exemption, which came during an appearance on Fox Business News. (See Sept. 25 News Now story: NWCUA Touts CU Difference, Defends Tax Status On Fox Business.)
 
The Report also discusses what leagues, credit unions and CUNA are doing to prepare for an Oct. 2 nationwide, on-line virtual "Don't Tax My Credit Union" rally.
 
The Cheney Report also features:
  • CUNA comments to the Financial Accounting Standards Board on the definition of a "non-public business entity;"
  • News on two new NCUA lawsuits against some of the world's largest banks and securities trading firms over transactions with corporate credit unions; and
  • How credit unions can respond in the event of a federal government shutdown.
Use the resource link to read the latest in The Cheney Report.

Metsger: NCUA Can Regulate Responsibly, Reduce Burdens

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WASHINGTON (9/30/13)--The National Credit Union Administration can meet its regulatory responsibilities "while working to not unduly burden well-meaning credit unions," board member Richard Metsger said during a recent meeting of the Northwest Credit Union Association's Mt. Hood (Ore.) Chapter of Credit Unions.

"What the NCUA can do is avoid duplication of effort wherever possible and not create an unnecessary level of compliance. We can make rules clearer and more understandable," he said  (Anthem Sept. 27)

Metsger, who is the first person from the Pacific Northwest to serve at the NCUA, said he hopes his distinctively Northwest perspective provides "a different prism that will add to the conversation" in Washington. In the Northwest, "you have a lot of small- to mid-size communities where smaller, local institutions thrive," he said.

The new board member said he wants to frequently meet with credit unions across the country "to hear what's really going on...Going around the country, dropping into credit unions, seeing how they're being impacted on the ground--that's important."

It is crucial, he said, "to have a good working understanding of the burden our rules place on large and small institutions that have differing abilities to handle compliance issues. In the regulatory environment, you have to be aware of that. And I think our board has shown that it is."

He said the agency's policy of reviewing one-third of its regulations each year is a "very progressive way of making sure that the regulations stay contemporary...Things change, and as a regulatory agency, the NCUA recognizes that."

Overall, job one for the NCUA is to make sure that credit unions can serve their members' financial needs "within the corral of the safety and soundness of the Share Insurance Fund." To meet this goal, credit unions should think of their regulators "not as the bad guys...but as partners who help them minimize risk by focusing on issues they might not have identified."

World Council Suggests Basel AML Guidance Changes

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WASHINGTON (9/30/13)--The World Council of Credit Unions on Friday urged the Basel Committee on Banking Supervision to clarify elements of its draft guidance on Anti-Money Laundering (AML) and Terrorist Financing to help limit regulatory burdens on credit unions, including with respect to financial inclusion and compliance software.

"The Basel proposal is relevant to U.S. credit unions because the Basel Committee's anti-money laundering rules are one of the international standards that influence U.S. credit unions' Bank Secrecy Act compliance requirements," World Council Chief Counsel Michael Edwards wrote.

The World Council's comment supported the Basel Committee's proposed "risk-based approach," which would allow credit unions to focus their AML compliance resources on the members and business activities that present the highest risk for money laundering or terrorist financing and depart from past "check-the-box" style AML compliance approaches.

World Council also asked for other changes to the proposal to help reduce regulatory burdens on credit unions, such as asking that the Basel Committee clarify that it is not mandatory for credit unions to use expensive vendor-created compliance software and lists, such as lists of Politically Exposed Persons (PEPs), when the cost of such systems outweighs the potential benefits based on the credit union's field of membership and AML risk profile.

The proposed Basel Committee guidance document would revise guidelines for combatting money laundering and financing of terrorism in several areas, including:
  • Essential requirements for a comprehensive anti-money laundering and combating the financing of terrorism (AML/CFT) program;
  • Risk assessments;
  • Customer Due Diligence (CDD) requirements;
  • CDD performed by third parties; and
  • Ongoing monitoring and reporting of suspicious activities and transactions.
Specifically, the World Council asked the Basel Committee to:
  • Make clear that financial inclusion of the "unbanked" remains important even when most members of the "general public" in a jurisdiction are not "financially or socially disadvantaged"; and
  • Clarify that it is not mandatory for credit unions to use expensive vendor-created compliance software and lists, such as PEPs lists and AML monitoring software, when the cost of such systems outweigh the potential benefits based on the institution's complexity and AML/CFT risk assessments.
For the full World Council comment letter, use the resource link.

NEW: Former Fin. Services Chairman Bachus Won't Seek Re-election

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WASHINGTON (9/30/13, UPDATED 9:14 a.m. ET)--Rep. Spencer Bachus (R-Ala.), a former chairman of the House Financial Services Committee, announced Monday morning on a Birmingham affiliate of  Fox that he will not seek another term in office.
 
Bachus, 65,  has 16 months left to his current term and noted he will continue working hard throughout.
 
Bachus currently serves on the Financial Services Committee as chairman emeritus. He chairs the House Judiciary Committee subcommittee on regulatory reform, commercial and antitrust law.
 

FHA To Borrow $1.7B From Treasury

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WASHINGTON (9/30/13)--The Federal Housing Administration (FHA) will need to borrow $1.7 billion in taxpayer funds from the U.S. Treasury to cover projected losses, the Obama Administration announced on Friday.
 
The funds are scheduled to be transferred today.

This total is nearly double the $943 million the agency said it may need to borrow earlier this year. The FHA has not required this type of appropriation from the Treasury in the past.

In a letter to the U.S. Congress, FHA Commissioner Carol Galante said the $1.7 billion total is higher than the Obama administration estimate "because of a decline in FHA endorsement volume in the last few months of the fiscal year--consistent with the trend in the broader housing market in response to higher interest rates."
 
Many in the U.S. Congress have called for serious reforms to the agency. Legislation that would strengthen the FHA and help ensure that agency's long-term solvency has been introduced this year, and the FHA itself earlier this year announced some of its own reforms that could help improve its financial condition and manage and protect its single-family insurance programs. The changes will also encourage the return of private capital to the housing market.
 
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) on Friday noted that the FHA's $1.7 billion bailout amounts to 10% of the revenue that agency collected in this fiscal year. "The FHA is clearly headed toward financial disaster and taking taxpayers along for the ride. Unless Congress enacts sustainable housing finance reform, it's possible taxpayers will be forced to write blank bailout checks to the FHA indefinitely," he wrote.