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Reg Advocacy Report Digs Deeper On QRM Proposal

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WASHINGTON (9/4/13)--Credit Union National Association staff dig deeper into a joint federal financial agency revised proposed rule on credit risk retention in this week's edition of the Regulatory Advocacy Report.

The joint agency release proposes a definition of the term "qualified residential mortgage (QRM)" for purposes of creating an exemption from the risk retention requirements under the Dodd-Frank Act. The definition of QRM would be revised to be the same as the Consumer Financial Protection Bureau's definition of a qualified mortgage. This is a development that CUNA had urged.

CUNA has asked interested credit unions to comment on the proposal (See Sept. 3 News Now story: CUNA Seeks CU Comment Call On Revised QRM Rule.)

The Regulatory Advocacy Report provides extra details on the alternative "QM-Plus" definition outlined in the joint agency proposal.

The QM-Plus definition would serve as a more stringent alternative to the proposed QRM definition. The proposed QM-Plus requirements are:
  • QRMs must meet the CFPB's core criteria for QM;
  • QRM treatment would only be available for loans secured by one-to-four family properties that are the principle dwelling of the borrower;
  • QRMs must be first-lien mortgages; and
  • Originators would need to ensure that a given borrower is not 30 or more days overdue on any debt obligation, and had not been 60 or more days late on a payment within the past two years.
Bankruptcy and loan-to-value requirements are also outlined in the QM-Plus proposed definition.

This week's Regulatory Advocacy Report also includes:
  • An update on ongoing interchange litigation;
  • CUNA comments on a proposed National Credit Union Administration e-filing regulation; and
  • Details on a recent cybersecurity meeting attended by CUNA.
A resource chart with information on current CUNA comment calls is also provided in the Report. The Regulatory Advocacy Report also includes updated regulatory advocacy resource charts with comprehensive information on proposed and final CFPB rulemakings, and the more than 150 updated federal regulations that impact credit unions.

For this week's Regulatory Advocacy Report, use the resource link.

Cordray Reaffirms CFPB Authority

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WASHINGTON (9/4/13)--Consumer Financial Protection Bureau Director Richard Cordray recently reaffirmed his authority over the agency, saying the actions he took while serving as a recess appointee "were legally authorized and entirely proper."

"To avoid any possible uncertainty, however, I hereby affirm and ratify any and all actions I took during that period," Cordray added in a statement published in the Federal Register.

Cordray was first nominated to lead the CFPB in July 2011, and had served as director since January 2012, when President Barack Obama placed him in the position as a recess appointment. Cordray was officially confirmed as CFPB Director on July 16, when the U.S. Senate approved his nomination by a 66 to 34 vote. He is currently serving a five-year term as head of the agency.

Many Senate Republicans had vowed to oppose any nominee unless the CFPB's funding and leadership structure were changed. They also questioned the validity of many agency actions, noting Cordray's longtime status as a recess appointee that was not officially confirmed by Congress.

House Financial Services Sets Early Sept. Agenda

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WASHINGTON (9/4/13)--Federal housing programs, the history of the Federal Reserve, and Director Richard Cordray's semiannual update on Consumer Financial Protection Bureau (CFPB) activities are on the early September agenda as the U.S. House Financial Services Committee returns from August recess.

Items currently on the September schedule include:
  • A Sept. 10 oversight and investigations subcommittee hearing on reducing waste, fraud and abuse in housing programs, and the U.S. Department of Housing and Urban Development recommendations for addressing these issues;
  • A Sept. 11 monetary policy and trade subcommittee hearing on the history of the Federal Reserve;
  • A Sept. 12 full committee hearing on Cordray's semiannual report;
  • A Sept. 18 capital markets and government sponsored enterprises subcommittee hearing on money market mutual fund regulations proposed by the Securities and Exchange Commission; and
  • A Sept. 19 full committee hearing on the Terrorism Risk Insurance Act.
The hearing schedule is tentative. All hearings are scheduled to be held in Room 2128 of the Rayburn House Office Building.

FDIC Files Brief To Back NCUA In RMBS Case

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WASHINGTON (9/4/13)--The Federal Deposit Insurance Corp. has entered the fray in the National Credit Union Administration's suit against Barclays Capital, supporting an NCUA appeal and arguing that the statute of limitations had not expired when the agency filed suit against the financial firm in September 2012.

U.S. District Judge John W. Lungstrum in Wichita, Kan., dismissed the agency's $550 million claim against Barclays in July, stating that they were time-barred and NCUA hadn't filed the case in time. The judge at that time claimed a tolling agreement NCUA had entered into with the defendants, and which NCUA had argued extended the time allowed to file the lawsuits, was "not effective in extending the applicable three-year limitations period under the Extender Statute." A tolling agreement allows more time in which to file a lawsuit after the statute of limitations time expires.

The NCUA appealed this decision this summer.

The FDIC in its brief echoed elements of the NCUA appeal, saying that Lungstrum erred when he misread the extender statute. The extender statute, the FDIC said, does not prohibit tolling agreements. This argument is also upheld by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the FDIC said, arguing that a contrary ruling could limit the FDIC's ability to apply its own statute of limitations extender provisions in suits related to failed banks.

"There is simply nothing in the structure, purposes, goals, relevant case law, or legislative history of FIRREA to support the District Court's conclusion that the Extender Statute precludes the use of tolling agreements," the FDIC said. FIRREA "was intended by Congress to stabilize the banking system by protecting depositors and creditors of failed banks and the public generally," the FDIC added.

The NCUA Barclays suit is one of many filed by the agency in a bid to reclaim losses stemming from residential mortgage-backed securities (RMBS) sold to corporate credit unions.

The U.S. 10th Circuit Court of Appeals last week ruled that the agency may move forward with lawsuits against Barclays and 11 other firms. That decision related to a separate NCUA case against RBS Securities. There was no mention of tolling agreements in that case.

NCUA has also filed suit against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, UBS Securities, Wachovia, Washington Mutual, and Bear Stearns alleging violations of federal and state securities laws in the sale of mortgage-backed securities to the five corporate credit unions.

In related actions, the agency has reached $335 million in settlements with Bank of America, Citigroup, Deutsche Bank Securities and HSBC.