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NEW: CUNA Launches Round 2 Of 'Don't Tax' Campaign

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WASHINGTON (9/5/13, UPDATED 2:42 p.m. ET)--With Congress returning to Washington early next week, the Credit Union National Association and state credit union leagues have refocused their national grassroots efforts on tax reform.
 
Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways & Means Committee Chairman Dave Camp (R-Mich.) remain committed to comprehensive tax reform, having spent the August recess touring the country in support of tax reform, and hoping to have legislation drafted by late September. In response CUNA has planned a number of initiatives in September to keep the "Don't Tax My Credit Union" message before Congress.

Building on the success of the first #DontTaxTuesday campaign, CUNA members will welcome back Congress on Sept. 10 with another #DontTaxTuesday promotion. The campaign will include a large social media push, in which credit union members and advocates nationwide will Tweet their lawmakers or post on their Facebook page a "Don't Tax My Credit Union" message. Advocates wishing to participate should visit www.DontTaxMyCreditUnion.org starting on Sept. 10, where they will be able to post directly to their lawmaker's Twitter and Facebook accounts.
 
At a rally today at Credit Union House on Capitol Hill, John Bratsakis, CEO of Maryland and District of Columbia Credit Union Association, encouraged assembled credit unions to add their voices to the Don't Tax My Credit Union message and generate thousands of contacts next week. Round 2 of the Don't Tax My Credit Union campaign provides yet another opportunity to engage credit union staff, volunteers and members, and to let Congress and Washington know that a tax on credit unions is a tax on 96 million members, Bratsakis said.
 
Credit unions are "of our members, by our members, we're governed by our members, and we exist to serve our members," he emphasized. Representatives from HEW FCU, Alexandria, Va., Money One FCU, Largo, Md., and PAHO/WHO FCU, Washington, D.C., were among the more than 60 individuals at the rally.
 
The latest advocacy push will also engage Latino and Spanish-speaking credit union members with "No Le Cobren Impuestos a mi Credit Union," the Spanish-language version of the Don't Tax My Credit Union campaign, which will be available online soon. Included will be a Spanish-language toolkit, video message, action center, and special materials for the toolkit. 

CUNA has also helped organize a massive in-person Hike the Hill presence in Washington, with 20 leagues representing 28 states carrying the Don't Tax My Credit Union message to Capitol Hill in September and October.
 
Coupled with online advertising targeted at likely credit union member activists, the renewed effort is expected to generate many new contacts to federal lawmakers and their staffs. It will also build support for CUNA's National Virtual Rally, planned for Wednesday, Oct. 2. Rather than rallying supporters at the National Mall--like so many campaigns do--this movement will rally tens of thousands of credit union members nationwide online. Emphasis will be placed on social media and a renewed  www.DontTaxMyCreditUnion.org to encourage and generate new contacts.

Judge Upholds, Dismisses Some NCUA JP Morgan Claims

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KANSAS CITY, Kan. (9/5/13)--The National Credit Union Administration's (NCUA) case against JP Morgan and related defendants, one of many cases in which the agency alleges financial firms oversold the value of certain mortgage backed securities (MBS), can move forward. U.S. District Court for the District of Kansas Judge John Lungstrum this week dismissed some charges filed by the agency, while upholding others.

"These decisions were not unexpected, and we are pleased that all four cases are proceeding," the NCUA said. JP Morgan is being charged as a successor-in-interest to Washington Mutual Bank, and WaMu Capital Corp., Long Beach Securities Corp., and WaMu Asset Acceptance Corp. are also named in the JP Morgan suit.

Lungstrum in his opinion denied a defendant motion to dismiss the NCUA's claims against them, and their request to vacate some claims due to a lack of subject matter jurisdiction. However, the court upheld defendant requests that some NCUA claims be dismissed due to statute of limitations issues.

JP Morgan issued and underwrote MBS's that were sold to U.S. Central FCU, Western Corporate FCU and other corporates from 2006 to 2007. The corporates collapsed in 2009, and NCUA, as their liquidating agent, sued a number of Wall Street banks who issued or underwrote the securities that contributed to the corporates' collapse.

NCUA's lawsuits, including the one against JP Morgan, allege the banks made numerous misrepresentations and omissions of material facts in the documents offered the failed corporates. The agency alleges systemic disregard of underwriting guidelines stated in the offering documents and says the alleged misrepresentations caused U.S. Central and WesCorp to believe the risk of loss on the investments was minimal, when in fact, the risk was substantial.

JP Morgan and its co-defendants have claimed that NCUA did not file these MBS cases early enough. The NCUA on Wednesday noted that these timing issues are currently being discussed in related cases in the Tenth Circuit Court of Appeals.

"This is lengthy and complex litigation, and NCUA intends to continue to aggressively pursue responsible parties," the agency added.

In addition to JP Morgan and RBS Securities, NCUA has filed lawsuits against Wachovia Capital Markets and Wells Fargo, Barclay's Capital Inc., Goldman Sachs, and UBS Securities. The agency has already settled claims of more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.

CFPB Names Antonakes To Permanant Deputy Director Spot

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WASHINGTON (9/5/13)--Steve Antonakes was officially named deputy director of the Consumer Financial Protection Bureau (CFPB) this week, the agency announced. Antonakes previously served as the CFPB's acting deputy director.

CFPB Director Richard Cordray said Antonakes "has adeptly led--and will continue to lead--[the CFPB's] supervision, enforcement, and fair lending teams. Antonakes will also continue responsibility for his duties as the associate director for supervision, enforcement, and fair lending at the CFPB.

His experience, knowledge, and judgment will prove vital in helping the CFPB achieve its mission "of fostering a thriving, sustainable marketplace for both consumers and responsible businesses," Cordray added.

Antonakes first joined the CFPB in November 2010, taking on the role of assistant director of large bank supervision. The Credit Union National Association has met with Antonakes on credit union topics.

During those meetings, he has noted that credit unions did not cause the financial crisis, and said credit unions served as a source of strength for their members during the economic recovery.

The CFPB this week also announced other additions to its leadership team:
  • Cheryl Parker Rose to serve as assistant director for the Office of Intergovernmental Affairs;
  • Christopher Carroll to serve as the assistant director and chief economist for the Office of Research;
  • Kathleen (Kitty) Ryan to serve as the deputy assistant director for the Office of Regulations; and
  • Elizabeth Ellis to serve as the deputy assistant director for the Office of Financial Institutions and Business Liaison.

NCUA IG: Management, Internal Control Issues Brought El Paso FCU's Demise

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ALEXANDRIA, Va. (9/5/13)--Following up on potential fraud risk factors, and more aggressive identification of excessive fee income, internal control and record keeping issues could have helped the National Credit Union Administration avoid National Credit Union Share Insurance Fund losses created by the failure of El Paso's FCU, El Paso, Texas.

These recommendations came in the form of a NCUA Office of the Inspector General (OIG) material loss review on the $5 million-in-assets, 1,035 member credit union.

El Paso's FCU was liquidated in fall 2012 when the NCUA determined the credit union had no prospect to restore operations.

The NCUA OIG examination of the credit union's practices found that senior management of the credit union "displayed a lack of integrity and did not manage the credit union in the best interest of its members." Some senior staff also lacked the competence needed for their positions, the NCUA said.

Fee income that far exceeded that of similar credit unions was one factor that the NCUA uncovered in its examination of the credit union. Other forms of mismanagement are listed in the OIG report, but they are redacted in the public version released by the agency.

NCUA examiners and an external accounting firm also "routinely reported poor internal controls, record keeping errors, and a lack of segregation of duties in critical areas," the OIG report added. However, the report said, "specific recurring issues related to errors in call reports, cash, and bank reconciliations were not identified by examiners as potential fraud risk indicators."

To better address these issues in the future, the OIG report recommended that the NCUA:
  • Implement a more comprehensive strategy for identifying and responding to fraud risk triggers;
  • Revise the Red Flag Questionnaire to capture emerging trends in credit union fraud as well as those that persist in the industry; and
  • Require third party confirmations for all accounts where the balance or activity is significant to the operations of the credit union.
The OIG report also encouraged NCUA examiners to attempt to identify root issues, and to not clear findings or document of resolution items until a credit union's management has corrected issues in a manner that provides lasting results. The agency should also monitor the effectiveness of NCUA final rule 701.4 to determine whether the rule is increasing the financial sophistication of directors, the OIG report added.

For the full report, use the resource link.

CUNA Quickly Refutes New Report Full Of Tired Old Banker Claims

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WASHINGTON (9/5/13)--While credit unions score with their grassroots "Don't Tax My Credit Union" campaign as federal policymakers debate tax code reform, the banks are re-circulating their dank and tired arguments to promote a new tax on credit unions and their 97 million members, Paul Gentile, Credit Union National Association executive vice president of strategic communications and engagement, pointed out Wednesday.

"A 'new' bank study on the issue just re-hashes tired arguments that credit unions have already refuted," Gentile said, and warned noted that report authors are "advocates of the big banks--and paid by bankers--which are at odds with credit unions."

Gentile suggested that any reader of the report should be aware of the following areas of misinformation:
  • The report targets credit union growth. However, in reality credit unions have maintained an approximate 6% market share of depository institution assets for the past few decades. Banks have $15 trillion in assets and their assets grew by more than $500 billion this past year. Each of the four largest banks have more assets than the entire credit union system.
  • The report alleges credit unions are focusing on "higher-income" consumers. In fact, while member growth as a percentage of population has been very strong (30%), credit union share of depository assets has stayed steady, indicating credit unions are certainly not catering to the wealthy as the report indicates. Nationwide, fully 42% of credit union branches are located in Community Development Financial Institution investment areas, compared to only 32% of bank branches in such areas.
  • While the report criticizes credit unions for competing "head-to-head" with banks, all consumers benefit from that competition with banks. Credit unions provide $6 billion annually in benefits to members by providing better rates and lower fees than banks. Even nonmembers benefit--to the tune of $2 billion annually--because in markets where credit unions are strong banks are forced to be more competitive.
  • While the report tries to argue that credit unions are "indistinguishable" from banks, credit unions are distinct by nature of their very structure. No matter the size of a credit union, the non-profit structure maintains the same: They are member-owned, democratically governed, not-for-profit cooperative financial institutions generally managed by volunteer boards of directors. They do not do not pay dividends to stockholders, generally do not compensate their directors, and do not compensate senior executives as highly as banks.
"One of the biggest things that the report tries to ignore is that their cries to tax credit unions is really a call to tax 97 million Americans and that would hurt those who can least afford it--hard-working Americans," Gentile pointed out.

He added, "While banks enjoy record profits year after year, credit unions are giving back to members everyday in the form of better rates and lower and fewer fees.

CFPB Lays Out Law For Consumer Report 'Furnishers'

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WASHINGTON (9/5/13)--Companies including financial institutions such as credit unions that supply information to credit rating companies are being reminded by the Consumer Financial Protection Bureau of their legal responsibilities when it comes to consumer disputes.
 
The CFPB announced Wednesday that it is issuing a bulletin targeted at these companies, called furnishers, making it clear that they are responsible for investigating consumer disputes forwarded by the consumer reporting companies.
 
The Credit Union National Association is talking with the CFPB about the bulletin and how associated regulatory burdens for credit unions can be minimized. 
 
Furnishers are also responsible for reviewing all relevant information provided with the disputes, including documents submitted by consumers, the CFPB bulletin points out.
 
The bulletin is a follow up to a December 2012 CFPB report on an electronic system, known as "e-OSCAR," used by the three largest nationwide consumer reporting companies.
 
Equifax Information Services LLC, TransUnion LLC, and Experian Information Solutions, Inc. use e-OSCAR to send information relating to consumer disputes to furnishers. The CFPB report, however, highlighted the fact that the system did not provide a means for credit reporting companies to forward to furnishers any documents submitted by consumers.
 
The CFPB says that since its report, the electronic system has been upgraded so that the three companies can now send furnishers any relevant dispute documents mailed in by consumers. The CFPB pledges to continue to work to see that the capacity of the system is expanded further "in the near future."
 
The bulletin released yesterday notes that the CFPB expects each furnisher to fulfill its legal obligations by:
  • Receiving information and investigating disputes: When a consumer files a dispute about a credit report item, companies need to be able to receive information about the dispute and must investigate the consumer's concerns;
  • Providing investigation results: Furnishers must report the results of the investigation to the consumer reporting company that sent the dispute originally; and
  • Correcting inaccurate information: Furnishers are required to report the results of the investigation to nationwide consumer reporting companies if those companies may have received inaccurate or incomplete credit information. Furnishers also have to modify, delete, or permanently block disputed information that is incomplete, inaccurate, or cannot be verified.
If the CFPB determines that a furnisher has engaged in any acts or practices that violate the Fair Credit Reporting Act or other federal consumer financial laws, it will take appropriate supervisory and enforcement actions to address violations and seek all appropriate corrective measures, possibly including restitution to harmed consumers. The CFPB will continue to review furnishers' compliance with these requirements.

'Inside Exchange' Examines Compliance Angle Of Participation Rule

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WASHINGTON (09/5/13)--Kathy Thompson, the Credit Union National Association's senior vice president for compliance and legislative analysis, discussed compliance with new loan participation regulations on the latest version of  CUNA's "Inside Exchange" topical video series.

Beginning Sept. 23, all federally insured credit unions will have to comply with the National Credit Union Administration's loan participation rules. The effective date was pushed back from the original July 25 deadline, at CUNA's urging, to allow credit unions adequate time to review their policies and contracts as required by the revised regulation.



Thompson emphasized that, for the first time, state-chartered credit unions will be required to comply with this regulation,
 
Thanks to a working group that the NCUA put together of industry experts, important changes were made from the originally proposed regulation. The concentration limit by a single originator was increased from the proposed 25% of the credit union's net worth to the greater of $5 million or 100% of net worth. Thompson noted that the $5 million addition helps smaller credit unions remain active in the loan participations market.
 
For more detailed information on what your credit union can do to comply with the NCUA's loan participations regulation you can visit CUNA's e-Guide, which has details on the NCUA's loan participation rule. The NCUA has said that it will issue further guidance before Sept. 23 on how credit unions can seek waivers from the regulation's concentration limits.

News Now will cover any additional information the agency issues on the regulation.

NEW: NCUA Identifies States With Greatest Membership Growth

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ALEXANDRIA, Va. (9/5/13, UPDATED 10:25 a.m. ET)--The newest analysis of state-level data for federally insured credit unions was been released this morning by the National Credit Union Administration and among its revelations: Idaho and Virginia were the top states for membership growth in the year ending in the second quarter.
 
Overall, the analysis shows, membership in federally insured credit unions rose 2.2% to 95.2 million. While that pace was slightly slower than the year ending second quarter 2012, membership increased in 41 of the states and territories, with Idaho (8.8%) and Virginia (7.9 %) leading the way with the greatest growth.
 
Membership advance were not universal, however.  The NCUA state-by-state figures show declines in 11 states, the Virgin Islands and Washington, D.C.; the worst membership experience was observed in Nevada with a decline of 4.5%.
 
Read News Now Friday for more on the state-by-state report, such as where the greatest loan growth occurred.