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B of A debit fee no surprise post-interchange Cheney

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WASHINGTON (10/3/11)--The higher debit card fees planned by Bank of America and other large banks are “no surprise,” but consumers can avoid these and other potential fees that may follow this past weekend’s implementation of the debit interchange fee cap by joining a credit union, Credit Union National Association (CUNA) President/CEO Bill Cheney said. The debit interchange fee cap regulations, which became effective on Saturday, limit debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allow an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap. “Consumers should give credit unions a close look and take advantage of credit unions’ emphasis on service to members over profits, typically with no or lower fees overall,” Cheney added. Potential credit union members can learn about credit unions nonprofit structure, the credit union system, and where their nearest credit union is located at aSmarterChoice.org, he added. The CUNA CEO said at least 80% of credit unions surveyed by CUNA provide at least one free checking account with no minimum balance requirement and no maintenance or activity fees. The Los Angeles Times and the New York Times are two media outlets that are focusing on consumer dissatisfaction with Bank of America’s announcement that it will charge $5 per month to many debit card accountholders. A story in the Los Angeles Times focused on University of Southern California medical school employee Guadalupe Garcia, whose dissatisfaction with Bank of America led her to an on-campus credit union. Garcia said she felt a “social responsibility” to leave BofA after its debit card policy change, which will impact many of the bank’s lower-income customers, was announced last week. The New York Times told a story of small business owner Patrick Shields, who left Citibank after he “realized he could do better at a credit union.” Shields told the Times that the credit union opened his business and personal checking accounts “free of charges, which Citi could not and would not do.”

Inside Washington (09/30/2011)

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* WASHINGTON (10/3/11)--The U.S. Department of Homeland Security pledged to keep stakeholders informed of the status of National Flood Insurance Program (NFIP) reauthorization. The NFIP authority to issue new policies, more coverage on existing policies, or renewal policies was to expire at midnight on Friday. The department said that as interested parties await congressional reauthorization of NFIP, they should refer to this new guidance. NFIP is administered by the department’s Federal Emergency Management Agency--known as FEMA. The NFIP could be temporarily extended to Tuesday under a temporary measure that was up for vote late Friday. Under a continuing resolution set to be taken up in Congress this week, the program could be given a reprieve until Oct. 18 … * WASHINGTON (10/3/11)--Boston Federal Reserve Bank President Eric Rosengren last week called for the Federal Housing Finance Agency (FHFA) to bolster existing refinance programs to alleviate housing market problems. The market’s slow recovery is in part due to the uncharacteristically muted response by consumers to historically low interest rates, Rosengren said at an economic outlook seminar in Sweden. “Not only has residential investment been unusually weak, but to add insult to injury, consumption, business formation and employment have also been affected by problems in the housing sector,” Rosengren said. He called for the FHFA to enhance the Home Affordable Refinancing Program by making it available to Fannie Mae and Freddie Mac mortgage holders who owe more on their loans than the value of their homes. He suggested that the FHFA reduce or eliminate loan-level price adjustments on mortgages from the government-sponsored enterprises. The adjustments raise interest rates for many borrowers and reduce the benefit of refinancing, Rosengren said … * WASHINGTON (10/3/11)--The performance of first-lien mortgages serviced by large national banks and federal savings associations declined slightly during the second quarter. About 88% of the 32.7 million loans were current and performing at the end of the second quarter, down from 88.6% at the end of the first quarter, but up from 87.3% a year earlier, according to the quarterly Office of Comptroller of Currency (OCC) Mortgage Metrics Report. The OCC attributed the drop to an increase in early stage delinquencies--mortgages 30 to 59 days delinquent--which increased 0.4% from the previous quarter to represent 3% of the servicing portfolio. Mortgages in the process of foreclosure remained steady at 4%. Although completed foreclosures decreased by more than 30% from a year earlier and increased only 1.2% from the previous quarter, completed foreclosures may continue to increase in future quarters as a more foreclosures work through the process and alternatives to modification are exhausted, the OCC said … * WASHINGTON (10/3/11)--The domestic monetary policy and technology subcommittee, chaired by U.S. Rep. Ron Paul (R-Texas), will hold a hearing on auditing the Federal Reserve and the need for transparency at the central bank. The subcommittee will hear testimony from the Government Accountability Office (GAO) on its procedural audit and report, issued in July, of the Federal Reserve’s emergency lending facilities. The hearing also will examine the history of Federal Reserve audit legislation and the adequacy of existing Fed audit and data disclosure requirements. Paul has re-introduced the “Federal Reserve Transparency Act,” which calls for a full and complete audit of the Federal Reserve by the GAO …

CUNA to Fed Increase interchange fraud prevention fee

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WASHINGTON (10/3/11)—The Credit Union National Association (CUNA) is urging the Federal Reserve to increase the amount of per transaction fees that debit card issuers receive to cover their costs associated with fraud prevention. Though the Fed’s approach to add the fraud coverage charge is a positive development, CUNA recommended in a joint comment letter that the Fed allow four or five cents per transaction for fraud rather than the one cent that the agency proposed. That adjustment would better cover costs that are incurred when financial institutions investigate the source of a data breach or theft, attempt to stop any instances of fraud, and deal with the aftermath of the theft or data breach. The increased fraud prevention adjustment would also help protect smaller issuers whose fraud prevention costs often represent a larger portion of their total debt card program costs. The current level of one cent “acts as a disincentive for all issuers to develop and apply new technologies that require significant costs upfront but have the potential for substantial long-term reductions in fraud losses, because there is no guarantee that the [Fed] will later revise the adjustment amount or permit compensation for past expenditures,” the letter added. CUNA also recommended that the Fed periodically revisit the fraud prevention cost issue to see if the costs have changed and whether any future adjustments are necessary. The Fed is required to study and report on how the debit interchange fee cap has impacted merchants, consumers and financial institutions within the next two years. The letter was cosigned by CUNA, the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable, the Independent Community Bankers of America, the National Association of Federal Credit Unions, the Midsize Bank Coalition of America, the Clearing House Association, and the Clearing House Payments Company. It was sent to Fed Chairman Ben Bernanke, U.S. Treasury Secretary Tim Geithner, National Credit Union Administration Chairman Debbie Matz, and several other leaders of federal finance agencies. The Fed’s final interchange rule, which became effective over the weekend, sets a debit interchange fee cap of 21 cents and allows an additional five basis points of the value of the transaction to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with Fed-established fraud prevention standards. Credit unions and other institutions with under $10 billion in assets are exempt from the rate cap provisions of the rule. For the full comment letter, use the resource link.

CFPB Help available for soldiers facing foreclosure

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WASHINGTON (10/3/11)--The Consumer Financial Protection Bureau's (CFPB) Office of Servicemember Affairs leader Holly Petraeus last week praised the U.S. Treasury for extending the terms of its Home Affordable Foreclosure Alternatives (HAFA) Program to aid military families that are facing mortgage difficulties due to relocation. Petraeus noted that relocation orders that are given to families that owe more than their home is worth have forced some military families into foreclosure or “into the costly and stressful situation of maintaining two households, with the family remaining behind while the servicemember moves alone.” She added that many servicemembers that have asked their lenders to help with a loan modification or a short sale have been told that they must be delinquent “in order to be considered as having a qualifying financial hardship.” Under new guidance, “servicemembers who cite a [permanent change of station (PCS)] order as the basis for their financial hardship when asking for help under HAFA will now be eligible even if their income has not decreased,” Petraeus said in a blog post. HAFA, according to Fannie Mae, provides financial incentives to servicers and borrowers who utilize a short sale or a deed-in-lieu of foreclosure to avoid a foreclosure on eligible loans. This helps preserve the condition and value of the property by minimizing the time a property is vacant and subject to vandalism and deterioration, Fannie Mae added. Petraeus in her blog post encouraged legislators, regulators and financial institutions to do more to help military families. The Credit Union National Association (CUNA) recently called on the CFPB to "minimize compliance burdens on credit unions that provide important and reasonably priced products and services" to servicemembers and their families. CUNA plans to work with the CFPB on its servicemember protection endeavors, and has encouraged the CFPB to work with credit union leagues, the Defense Credit Union Council, and individual credit unions to further support the CFPB’s pro-servicemember efforts.

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, TreasuryDirect.com. 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 www.treasurydirect.gov 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 …

NCUA failed to address securities risks before Southwest Corp. conservatorship OIG says

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ALEXANDRIA, Va. (9/29/11)--The National Credit Union Administration’s (NCUA) Office of Corporate Credit Unions (OCCU) failed to identify or address risks caused by Southwest Corporate FCU's exposure to privately issued residential-backed securities before that corporate's conservatorship, the agency's inspector general has found. The agency estimated losses from this corporate failure would total $141 million. The OIG report specifically found that OCCU staff did not “take exception with Southwest’s increasing and significant concentrations of RMBS early on.” The report further noted that the NCUA did not prepare its own full analysis of the credit union’s credit risk, but instead analyzed Southwest management's understanding of its own credit risk. The credit union’s understanding of its own risk was limited by its own “tools and decision processes,” the OIG said. As a result, the agency lacked a full understanding of the corporate’s concentration of RMBS’s or the credit, market and liquidity risks posed by those securities. However, the report did not only fault NCUA examiners. The report found that NCUA regulations “focused on investment ratings and only required corporates to address concentrations of credit risk in their respective policies, leaving it up to each corporate to determine its risk levels/limits.” The OIG said this “loosely worded requirement” limited the OCCU’s ability to mitigate the conditions that led to Southwest’s high concentrations of securities, a move that could have prevented the conservatorship and liquidation of the credit union and reduced the losses to the corporate stabilization fund. For the full OIG report, use the resource link.

Udall backs MBL lift in Denver Post editorial

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WASHINGTON (9/29/11)--Setting a higher credit union member business lending (MBL) cap “is just one way to give businesses the fuel to rev up our economic engine and create permanent job opportunities in Colorado,” Sen. Mark Udall (D-Colo.) said in an editorial published this week in the Denver Post. Udall noted in the editorial that Colorado small-business owners have told him they need “fewer regulations and more access to capital to expand and hire.” He said that his legislation to lift the MBL cap “would responsibly loosen government restrictions on credit unions and help small businesses create more than 100,000 jobs at no cost to taxpayers.” The senator is the author of S. 509, which would increase the MBL cap to 27.5% of assets, up from 12.25%. The Credit Union National Association (CUNA) has estimated that lifting the cap to 27.5% of assets would inject $13 billion in new funds into the economy and create 140,000 new jobs, at no cost to taxpayers. Udall’s bill has a total of 21 co-sponsors. A House version of the MBL legislation, which was introduced by Rep. Ed Royce (R-Calif.), has a total of 80 co-sponsors. A hearing on the House bill is scheduled to take place before the House Financial Services subcommittee on financial institutions and consumer credit at 2 p.m. (ET) on Oct. 12. For more on the House Financial Services Committee's upcoming schedule, see Friday's edition of News Now.

Mortgage-related SARs spike in 2Q FinCEN

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WASHINGTON (9/29/11)--The Financial Crimes Enforcement Network (FinCEN) Monday reported that the number of suspicious activity reports (SAR) involving mortgage loan fraud (MLF) increased between the first and second quarters of 2011, totaling 29,558 at the midpoint of 2011. The 2011 number nearly doubles the total of 15,727 MLF SARs that were filed in the second quarter of 2010. FinCEN in its report noted that the majority of MLF SARs examined in the second quarter “involved mortgages closed during the height of the real estate bubble,” and said the drastic uptick during the second quarter “is directly attributable to mortgage repurchase demands and special filings generated by several institutions.” A total of 81% of MLF SARs filed in the second quarter involved suspicious activities that took place before 2008, and 63% of the SARs filed related to events that took place more than four years ago. FinCEN Director James Freis said financial institutions are “uncovering fraud as they sift through defaulted mortgages," but also noted that FinCEN has also found evidence of ongoing mortgage scams. Debt relief scams were cited in 19% of the SARs filed, and 30% of the SARs filed detailed misrepresentations of income, employment, occupancy, assets and/or liabilities. MLF SARs accounted for 15% of all SARs filed in the second quarter. More than 80% of the mortgage-related reports involved sums under $500,000, and most of the MFL SARs filed came from California or Florida, two of the states that have been hard hit by housing market troubles. For the full FinCEN report, use the resource link.

Two blocked from financial institutions work

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ALEXANDRIA, Va. (9/29/11)--The National Credit Union Administration (NCUA) issued two prohibition orders Wednesday blocking former federal credit union employees from participating in the affairs of any federally insured financial institution. The orders involve the following individuals:
* Rebecca Poe, a former employee of N&W POCA Division FCU, Bluefield, W.Va., who was convicted of aiding and abetting bank fraud. Poe was sentenced to 51 months in prison, three years supervised probation and ordered to pay restitution in the amount of $2,406,804; and, * Lori J. Smith, a former employee of MSA Employees FCU, Murrysville, Pa., who pleaded guilty to theft by unlawful taking. Smith was sentenced to five years intermediate punishment with 12 months electronic home monitoring and two years supervised probation, and ordered to pay restitution and join gamblers anonymous.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link to access all NCUA prohibition orders.

Inside Washington (09/28/2011)

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* WASHINGTON (9/29/11)--Nine Minnesota credit union representatives traveled to Washington, D.C., Sept. 20-22 for the Minnesota Credit Union Network’s (MnCUN) annual Hike the Hill event. During the trip, attendees discussed hot topics with Minnesota’s federal legislators, focusing on member business lending (MBL), supplemental capital and credit unions’ role in housing finance reform. Attendees continued to urge endorsement of legislation supporting credit unions in meetings at National Credit Union Administration (NCUA) headquarters with NCUA Chairman Deborah Matz and Board Member Michael Fryzel. The group also shared regulatory concerns with the NCUA officials, focusing on a proposed rule requiring credit union service organizations to file financial statements with the NCUA and the burden it could place on CUSO operations. While in Washington the credit union representatives attended a legislative and regulatory briefing with the Credit Union National Association and visited the offices of all Minnesota’s federal elected officials. Those visits included meetings with Sen. Al Franken (D) and Reps. Keith Ellison (D), Colin Peterson (D), Chip Cravaack (R), and Erik Paulsen (R). Pictured are representatives meeting with Paulsen (left). (Photo provided by Minnesota Credit Union Network.) CUNA and credit unions are pressing Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said … * WASHINGTON (9/29/11)--Relief for community banks is among the policy priorities outlined by acting Federal Deposit Insurance Corp. (FDIC) Chairman Martin Gruenberg. Addressing to American Banker’s Regulatory Symposium in his first speech as acting chairman, Gruenberg listed three priorities for the FDIC: the implementation of the Dodd-Frank Act, the future of community banks, and economic inclusion and access to mainstream banking services. Gruenberg cited the toll the financial crisis and recession have taken on community banks. Of the 395 FDIC-insured institutions that have failed during the crisis, more than 300 have been community banks. The FDIC will hold a conference early next year on the future of community banking, Gruenberg said. Prior to the conference, FDIC’s research division will trace the evolution of community banks during the past 20 years, including changes in business models and cost structures, and make suggestions for the future. Other issues to be addressed include raising capital, keeping up with technology, attracting qualified personnel, and meeting regulatory obligations. “We are looking at our own risk-management and compliance-supervision practices to see if there are ways to make the process more efficient,” Gruenberg said … * WASHINGTON (9/29/11)--Judith E. Dupre has been appointed executive secretary of the Federal Financial Institutions Examination Council (FFIEC). Dupre’s principal responsibilities will be to manage operations and to coordinate interaction of interagency staff task forces. She most recently served as a senior international adviser with the Federal Deposit Insurance Corp. (FDIC), coordinating international banking activities with a focus on building relationships with foreign bank regulators and deposit insurers. Earlier, she served as a senior program administrator in the FFIEC’s examiner education office …

Condoleezza Rice Woodward and Bernstein to headline at CUNAs 2012 GAC

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WASHINGTON (9/29/11)--Former U.S. Secretary of State Condoleezza Rice and Americas iconic journalistic duo, Bob Woodward and Carl Bernstein, will headline the Credit Union National Associations 2012 Governmental Affairs Conference (GAC), March 18-22 at the Washington Convention Center. Registration and housing lines are now open (use the resource links below). Rice is scheduled to address a Monday, March 19 session of the

GAC.

As the 66th U.S. secretary of state, Rice was a prominent member of the President George W. Bushs Cabinet. She also served as Bushs national security advisor during his first term as president. She currently teaches Political Economy in the Graduate School of Business at Stanford.

Another 2012 GAC highlight will be a presentation by Woodward and Bernstein as they reunite on stage to mark the 40th anniversary of their first Watergate-scandal headline and share the stories behind their newspaper work and books, and offer a personal tour of politics and Washington. They also will address GAC participants on March 19.

CUNA's GAC is the credit union movement's premier political event and its largest national conference, each year providing more than 4,000 credit union executives and board members an opportunity to hear influential leaders from the U.S. Congress, the administration and the federal regulatory agencies.

Capitol Hill visits, in which GAC attendees meet face-to-face with their members of Congress and staff to discuss issues that concern the credit union movement, will take place the afternoon of Wednesday, March 21, and the morning of Thursday, March 22.

"This years GAC theme, Powerful Cause, Positive Effect, sums up precisely what the Governmental Affairs Conference is all about," said Bill Cheney, president/CEO of CUNA. "Our powerful cause, backed by 93 million working Americans who rely on credit unions every day, needs representation in Washington.

"At the GAC, credit union leaders from around the country will have the opportunity to meet one-on-one with their members of Congress and effect positive change for the credit union movement. We need the support of every credit union leader in the movement to accomplish our political goals in the year ahead, to champion the credit union issues of today and usher in a brighter future for credit unions tomorrow."

Recognized as the key conference to attend for political impact, credit union networking and industry updates, the GAC also offers a wide array of educational breakout sessions, the industry's largest exhibitor showcase, guest/family programs to tour Washington's sights, and special entertainment including an opening concert and the closing Gala Reception and Dance. Additional speakers and session topics will be announced in the weeks to come.

For more information and to register use the resource link below or go to gac.cuna.org.

CUNA Shelby bill could cut reg burden for CUs

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WASHINGTON (9/29/11)--The Financial Regulatory Responsibility Act of 2011 (S. 1615), introduced by Sen. Richard Shelby (R-Ala.), “could prove to be beneficial to credit unions if enacted,” Credit Union National Association (CUNA) Senior Vice President for Legislative Affairs Ryan Donovan said Wednesday. Donovan reiterated that reducing regulatory burden for credit unions is a top CUNA priority and added that the Shelby bill proposes significant changes to the rulemaking process. However, Donovan noted, the long-term prospects of the bill are uncertain. The bill would require the National Credit Union Administration, the Consumer Financial Protection Bureau, and other federal financial regulators to report the economic impact of the rules, including their effects on growth and net job creation, before those rules could become law (News Now Sept. 28) The legislation would substantially revise the Administrative Procedure Act to require agencies to consider the costs and benefits of new rules and other actions and to conduct public hearings for most rules that the Office of Management and Budget determines would have an industry impact of $1 billion or more. Shelby in a release said the legislation would hold financial regulators “accountable for rigorous, consistent economic analysis on every new rule they propose” and would require them to provide “clear justification for the rules.” Shelby also said the bill also “improves the transparency and accountability of the regulatory process and reduces the burdens of existing regulations.” “CUNA is going to keep a close eye on this bill in the coming months,” Donovan said. The bill is co-sponsored by Shelby’s fellow Senate Banking Committee Republicans, Sens. Bob Corker (Tenn.), Michael Crapo (Idaho), Jim DeMint (S.C.), Mike Johanns (Neb.), Mark Kirk (Ill.), Jerry Moran (Kan.), Patrick Toomey (Pa.), David Vitter (La.) and Roger Wicker (Miss.). Shelby has requested that the Senate Banking Committee conduct a hearing on the bill, but that hearing has not yet been scheduled.

Flood insurance may get temporary reprieve loan limits pending

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WASHINGTON (9/28/11)--Congress appears ready to give the National Flood Insurance Program (NFIP) another temporary reprieve, this time until November 18, after a Senate agreement to continue to fund the government was reached earlier this week. The NFIP extension is part of a Senate bill that provides billions in additional funding to cover Federal Emergency Management Administration disaster relief and to continue funding the government. Speaker of the House John Boehner (R-Ohio) will reportedly back the bill, which is scheduled to be taken up when the House returns to session next week. Legislation that would fund the government until the House returns will be considered by a voice vote later this week. A voice vote does not require all members to be present to be taken. The NFIP is set to expire on Sept. 30, and separate pieces of legislation that would extend coverage for another five years have been approved by both the Senate and the House. However, there are differences between the House and Senate bills, and representatives of the two congressional bodies have not worked out differences between their respective bills. Another item of interest to credit unions is set to expire on Sept. 30: Language that allows the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac to guarantee mortgages up to $729,750, or 125% of single family homes. Legislation that would extend these loan limits until Dec. 31, 2013, was offered earlier this year, but is not part of the funding bill at this time. The maximum guaranteed loan amount would drop to $625,500, or 115% of local median home prices, if the extension is not approved. However, loans guaranteed by the Veterans Administration will continue to have the increased $729,750, or 125% of single family homes, loan limit until the end of this year.

NASCUS urges NCUA to hone CUSO proposal

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WASHINGTON (9/28/11)--The National Association of State Credit Union Supervisors (NASCUS) has urged the National Credit Union Administration (NCUA) to reconsider its proposed additions to rules governing credit union service organizations (CUSOs) and adopt a more targeted approach to CUSO oversight. In a comment letter to the agency, NASCUS said that instead of adopting its proposed rule, the NCUA should work with state regulators “to enhance supervision by improving existing authority and monitoring programs, and minimize regulatory burden by adopting a targeted approach to CUSO oversight.” The NASCUS letter mirrored some of the key points made in a similar letter by the Credit Union National Association (CUNA) recently. CUNA also urged a more targeted approach to CUSO governance than that proposed by the agency and also argued the NCUA should implement “existing requirements, such as due diligence." The NCUA's proposal, released in July, would require CUSOs and their subsidiaries to directly file their financial statements with the NCUA. Financial reports would also need to be forwarded to appropriate state supervisors under the rule. The agency has argued that the proposal, if enacted, would "enhance protections to consumers, credit unions and the National Credit Union Share Insurance Fund." The NASCUS comment letter said that complying with these requirements would “unnecessarily drain the resources of both regulators and the industry by capturing information from CUSOs engaged in non-financial services which may have minimal balance sheet safety and soundness implications.” Rather than focusing on supervisory oversight of CUSOs, state and federal credit union regulators “should focus on the credit union's relationship with its CUSO,” NASCUS suggested. One way this relationship could be evaluated is by paying greater attention to credit union due diligence during regulators’ routine credit union examinations. Examiners could then work to unearth additional information on a credit union’s relationship with its CUSO if any potential issues are exposed. Overall, existing rules and regulations that apply directly to federally insured credit unions “provide ample authority to review relevant information” on the credit union/CUSO relationship, NASCUS said. The association added it is “confident that NCUA and state regulators can develop a targeted CUSO supervision program that addresses legitimate regulatory concerns while preserving the benefits CUSOs provide the credit union system.” CUNA, in its letter, said the NCUA should withdraw--or at least substantially modify--the CUSO rule because CUSOs do not pose a risk to the credit union system nor do they pose overall concerns to the National Credit Union Share Insurance Fund. For the NASCUS and CUNA comment letters, use the resource links.

National composite mortgage rate is 4.52 FHFA reports

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WASHINGTON (9/28/11)--The national average contract rate on the composite of all fixed- and adjustable-rate mortgages decreased to 4.52% in August, a three-basis point decrease below the previous month's total, the Federal Housing Finance Agency (FHFA) reported on Tuesday.
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The FHFA reported that the interest rate for conventional 30-year fixed-rate mortgages was 4.63% in August, down six basis points from 4.70% in January. The FHFA reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders was 4.56% in August, the FHFA added. That rate is used as an index in some adjustable-rate-mortgage (ARM) contracts, the FHFA said. The FHFA did not include separate information on ARMs. Mortgage totals averaged $214,300 during August, a $500 increase from July's total. One-time fees and other mortgage origination charges accounted for an average of 0.9% of the balance of all mortgage loans, and the average term of these mortgages was 27.6 years. The average loan-to-price ratio was 77.2%, the FHFA added. The FHFA rate survey reflects loans that closed between Aug. 25 and Aug. 31.

CFPB has mortgage rules on its near-term agenda

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WASHINGTON (9/28/11)--The Consumer Financial Protection Bureau (CFPB) will soon take on mortgage rules, and plans to publish those mortgage regulations alongside simplified homebuyer disclosure forms next July, according to CFPB Assistant Director for Mortgage and Home Equity Markets Pat McCoy. McCoy said the agency will begin developing the new mortgage rules as soon as the ongoing mortgage disclosure form revision project is completed. McCoy made her remarks before a Mortgage Bankers Association conference, Bloomberg reported Tuesday. Reuters last week reported that de facto CFPB leader Raj Date said the new standards will require lenders to ensure their borrowers will have the ability to repay their mortgages. The mortgage disclosure project is scheduled to undergo its final revision later this year. The project, which started earlier this year, seeks to produce a combined form for Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures. The most recent draft is the fourth of five planned draft disclosure releases, and that draft asks finance industry insiders and consumers to compare two different types of loan products using the same version of the revised mortgage form. For more on the CFPB mortgage disclosure project, use the resource link.

Inside Washington (09/27/2011)

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* WASHINGTON (9/28/11)--Sen. Richard Shelby (R-Ala.) recently introduced the Financial Regulatory Responsibility Act of 2011 (S. 1615), a bill that would force federal financial regulators, including the National Credit Union Administration, to provide a “rigorous, consistent economic analysis” of new regulations they propose. The economic impact of the rules, “including their effects on growth and net job creation,” would also need to be reported, according to a release. Reducing credit union regulatory burden is a Credit Union National Association (CUNA) priority and will be providing further analysis of this bill. … * WASHINGTON (9/28/11)--The Treasury Department’s Office of Inspector General (OIG) is attributing lack of regulatory control on the part of the Office of Thrift Supervision for many recent thrift failures. The reviews indicate how Treasury envisions the role of the Office of Comptroller of Currency (OCC), which took over the regulation of thrifts in late July (American Banker Sept. 27). In 18 of 23 material-loss reviews of failed thrifts through Sept. 20, the OIG cited regulatory inadequacy as the primary reason for failure. The most-cited issue was the time OTS took to enforce a formal action after identifying a problem. In comparision, one of the 13 reviews of failed thrifts regulated by the OCC mentions a lack of timeliness from the regulator, according the Banker … * WASHINGTON (9/28/11)--Freddie Mac used a faulty loan review process to generate data for its landmark settlement with Bank of America Corp. (BofA), the Federal Housing Finance Agency’s (FHFA) inspector general said Monday (American Banker Sept. 27). Freddie’s failure to properly evaluate the underwriting of interest only and option adjustable-rate mortgages underwritten by Countrywide--now a part of BofA--are cited in a report. Although Freddie was warned it was not accounting for defaults that would likely follow the expiration of the mortgages’ teaser rates, the government-sponsored enterprise still made the $1.35 billion settlement with the FHFA’s approval. The settlement was “appropriate and reasonable” FHFA said in its written response to the inspector general’s report. … * WASHINGTON (9/28/11)--Following Hike the Hill visits from the League of Southeastern Credit Unions (LSCU), Reps. Allen West (R-Fla.) and Kathy Castor (D-Fla.) became the sixth and seventh representatives from Florida to co-sponsor HR 1418, legislation to raise the member-business lending (MBL) cap to 27.5% of assets from 12.25%. The other co-sponsors from Florida include Reps. Gus Bilirakis, Jeff Miller, Bill Posey, Dennis Ross and Bill Young, all Republicans. The league is following up on all of its visits to make sure those that would like to co-sponsor the bill are well informed. House Financial Services Committee Chairman Spencer Bachus (R-Ala.) told credit unions that there will be a sub-committee hearing on HR 1418 on Oct. 12 at 2 p.m. Sen. Bill Nelson (D-Fla.) is one of 20 co-sponsors for the Senate version of the same legislation. The Credit Union National Association estimates that lifting the MBL cap would inject more than $13 billion in new funding into the economy, at no cost to taxpayers. These funds could create 140,000 new jobs in the first year after enactment. Pictured, from left, are: John Deese, CEO, PBC CU, West Palm Beach, Fla.; Art Wood, CEO, Railroad and Industrial CU, Tampa, Fla.; Mary Wood, CEO, Florida West Coast CU, Brandon, Fla.; West; Pat Mason, CEO, Sun CU, Hollywood, Fla.; and Patrick La Pine, CEO, LSCU. (Photo provided by League of Southeastern Credit Unions). …

Federation offers streamlining advice to CDFI Fund

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WASHINGTON (9/28/11)--The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund could limit burdens on credit unions and other institutions by making its certification of CDFI Fund approved institutions permanent, the National Federation of Community Development Credit Unions has said. The federation recommended that certifications remain permanent unless they are withdrawn by the fund. “The CDFI Fund could ensure continued eligibility as a Certified CDFI more efficiently through an updated, electronic Material Events form coupled with a simple annual data report, and customary monitoring of compliance” through the periodic collection of certain types of data. If this data shows a credit union or institution is no longer meeting CDFI certification requirements, appropriate corrective action, including decertification,” could be taken as needed, the federation said. The comments came in response to the CDFI Fund’s recently request for public comment on ways the agency could reduce burden and ease the certification process. The CDFI Fund could eliminate paperwork by automating several aspects of its registration and certification processes. The federation also recommended the CDFI Fund examine its certification process to determine if the value of the documentation required for each certification test “justifies the cost of collection, preparation, submission and review.” “CDFI certification is a valuable asset and, although we agree that certification applications must be carefully evaluated, we also believe that credit unions applying for certification deserve a timely response,” the Federation added. The federation is confident that the CDFI Fund can streamline its certification process, reduce its administrative burden, and meet the needs of CDCUs looking to qualify for this important designation. The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community. CDFI Fund distributions are merit-based, and a total of $25.7 million in funds were awarded to 25 credit unions under the fiscal year 2011 round of the CDFI Fund Program.

Inside Washington (09/26/2011)

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* WASHINGTON (9/27/11)--Consumer Financial Protection Bureau (CFPB) Assistant Director of Credit Unions and Community Banks Elizabeth Vale last week met with the Ohio Credit Union League and other Ohio credit union representatives as part of the Credit Union National Association’s 2011 Hike the Hill.
Ohio credit union representatives meet with the CFPB’s Elizabeth Vale (lower center, left). (Ohio Credit Union League photo)
The Ohio league reported that the main topics of discussion included financial education, compliance, and non-regulated competition, as well as the general role of the CFPB in financial markets (eLumination Newsletter Sept. 21). Potential CFPB leader Richard Cordray, who is a former Ohio attorney general, also met with the Ohio-based group. Cordray said the CFPB would continue its dialogue with credit unions and would work with them to write more practical regulations. The CFPB was also covered during a meeting with Sen. Rob Portman (R). The Ohio group also urged several other members of Congress to back lifting the member business lending cap… * WASHINGTON (9/27/11)--Standard & Poor’s positive 2007 rating of collateralized debt offerings that arguably contributed to the financial crisis could result in legal action by the Securities and Exchange Commission, the New York Times reported. The legal actions could include civil money penalties, fee disgorgements, or other actions, the Times added. Official action has not been taken, but the SEC last week delivered a Wells notice, which warns of potential enforcement actions…

Oct. 12 is MBL hearing date

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WASHINGTON (9/27/11)--The House Financial Services subcommittee on financial institutions and consumer credit’s upcoming hearing on credit union member business lending now has a definite date: Oct. 12. The Credit Union National Association (CUNA) has repeatedly emphasized the potential benefits that lifting the MBL cap could provide for an ailing economy in several ways, including ads in local newspapers and direct contact with legislators in letters and in the form of Capitol Hill visits during CUNA’s 2011 Hike the Hill. H.R. 1418, which was introduced by Rep. Ed Royce (R-Calif.), has a total of 80 co-sponsors, according to www.govtrack.us. Similar Senate legislation (S. 509) has also been introduced by Mark Udall (D-Colo.). That bill has 20 cosponsors. Although members of the House are in their home districts this week, CUNA continues to look for legislative vehicles for MBL cap lift legislation. CUNA has suggested MBL cap lift bills in the House and Senate should be added to the Obama administration's larger plan to reinvigorate the ailing economy. CUNA President/CEO Bill Cheney this month also encouraged members of the House Financial Services subcommittee on capital markets and government-sponsored enterprises to add lifting the credit union member business lending cap to any discussion on capital creation. “You can’t credibly talk about the issue of job creation without also talking about MBLs,” Richard Gose, CUNA senior president of political affairs, said on Monday. Congress has to do something about the larger economic picture, he added. CUNA estimates that lifting the MBL cap to 27.5% of assets, up from the current 12.25% of assets restriction, would inject more than $13 billion in new funding into the economy, at no cost to taxpayers. These funds could create 140,000 new jobs in the first year after enactment.

TCCUSF payments due today

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ALEXANDRIA, Va. (9/27/11)--Payments for 2011 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessments are due today. Semi-annual National Credit Union Share Insurance Fund (NCUSIF) 1% capitalization deposit adjustments must also be made by the end of today. The National Credit Union Administration (NCUA) last month assessed a 25 basis point (bp) TCCUSF premium for 2011. The premium, which is expected to bring in $1.96 billion in funds to help cover the costs of corporate credit union stabilization, should be expensed by credit unions in September. Credit unions should report the full expense on their Sept. 30 call reports, the NCUA said. The agency has said electronic payments will be automatically collected today. Payments may also be made via pay.gov, the electronic payment portal. The NCUA earlier this year said there is "no anticipated need" for an NCUSIF premium to be charged in 2011, and an NCUSIF premium "will not be necessary in 2012" if the number of credit union failures maintains its current pace. NCUA Chairman Debbie Matz during last week's open board meeting requested that her staff provide the board with their "best possible estimate" of the year-end ratio of the NCUSIF at the upcoming November board meeting.

CUNA backs remittance rule change

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WASHINGTON (9/27/11)--The Credit Union National Association (CUNA) in a comment letter said it agrees with the National Credit Union Administration’s (NCUA) interim-final rule implementing Dodd-Frank Act amendments to the Federal Credit Union Act that added remittance transfers as an example of international electronic fund transfer services that may be offered to persons in a federal credit union’s field of membership. The Dodd-Frank Act, however, did not make substantive changes to authorized federal credit union business activities because federal credit unions were already authorized to provide international electronic funds transfers to persons in their field of membership. Section 1073 of the Dodd-Frank Act amended a portion of the Federal Credit Union Act to add “remittance transfers, as defined in section 919 of the Electronic Fund Transfer Act” as an example of international electronic fund transfer services that may be provided by a federal credit union to persons within its field of membership. CUNA noted that this amendment to the Federal Credit Union Act was only technical in nature, and did not have a substantive effect. For the full CUNA comment letter, use the resource link.

NCUA places Chetco FCU into conservatorship

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ALEXANDRIA, Va. (9/26/11)--Chetco FCU, of Harbor, Ore., is now operating under National Credit Union Administration (NCUA) management after the agency assumed control Friday. The NCUA will continue normal services to the credit union's 32,435 members and will work to resolve issues affecting the institution. Chetco FCU is community-chartered and held $333 million in assets as of June 30. The credit union serves residents of Coos County and Curry County in Oregon and Del Norte County in California. The NCUA said in a release announcing its supervisory action that the decision to conserve a credit union enables the institution to continue regular operations with expert management in place, correcting previous service and operational weaknesses. During conservatorship, members may therefore continue to conduct business at the credit union. For the NCUA’s release, use the resource link.

Treasurys Wolin CUNA meet on key CU issues

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WASHINGTON (9/26/11)--U.S. Treasury Deputy Secretary Neal Wolin met with Credit Union National Association (CUNA) President/CEO Bill Cheney and CUNA senior staff Friday to discuss a number of credit union priority issues, such as an increase in credit union member business lending (MBL) authority, the tax exempt status of federal credit unions, and access to supplemental capital. During the meeting, CUNA thanked Wolin for Treasury’s continued support of a statutory increase that would allow credit unions to devote up to 27.5% of assets to MBLs, up from the current cap of 12.25%. Bills are pending action in the U.S. House (H.R. 1418) and Senate (S. 509). At the Treasury meeting, CUNA also emphasized the need to protect the tax-exempt status of federal credit unions; CUNA will follow up with Treasury staff who are developing proposals for the administration to revise the U.S. tax code. CUNA also raised the issue of supplemental capital for credit unions and the importance of revisions to current rules, which would allow credit unions to boost their capital and to improve the capital scheme under which federally insured credit unions operate. CUNA also discussed the Consumer Financial Protection Bureau (CFPB) and its regulatory role. CUNA noted that while credit unions are concerned about regulatory burden overload , CUNA commends the approach the CFPB has taken to date to include credit unions in discussions and to consider credit unions’ regulatory burden concerns. Before the meeting’s conclusion, CUNA also told Wolin that the group looks forward to working with a new Treasury Assistant Secretary for Financial Institutions once the nominee is confirmed. Cyrus Amir-Mokri has been nominated by the Obama administration for that position. The Treasury's Assistant Secretary for Financial Institutions is charged with developing and coordinating Treasury's policies on legislative and regulatory issues affecting financial institutions. In addition to Cheney, CUNA officials who participated in the meeting with Wolin were Executive Vice President for Government Affairs and Special Assistant to the CUNA President John Magill, General Counsel Eric Richard, and Deputy General Counsel Mary Dunn, and Vice President of Economics Mike Schenk.

Inside Washington (09/23/2011)

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* WASHINGTON (9/26/11)--The percentage of refinanced mortgages in the U.S. sold to Fannie Mae and Freddie Mac is greater than previously estimated, according to a report released Thursday by the Federal Reserve Board. The report presented findings from a review of data that mortgage lending institutions reported for 2010 under the Home Mortgage Disclosure Act. About 55% of owner occupied homes refinanced in 2010 were sold to the government-sponsored enterprises (GSEs), an increase from the central bank’s original estimate of 39.6% earlier this year. Initial estimates fell short because mortgages guaranteed by Fannie and Freddie are identified that way only if they are sold directly to the GSEs or placed in a pool during the same year as origination. Therefore, loans originated in the fourth quarter and later sold were not originally included … * WASHINGTON (9/26/11)--The Federal Housing Finance Agency’s (FHFA) Office of the Inspector General (OIG) in a report found significant faults in the agency’s handling of Fannie Mae, saying last week that the FHFA failed to force Fannie Mae to establish “an acceptable and effective operational risk management program despite outstanding requirements to do so.” The FHFA also did not use its broad authority over the government-sponsored entity to “compel Fannie Mae to create and administer an operational risk management program.” The OIG warned that the FHFA “must exercise maximum diligence and take forceful action” to ensure that Fannie Mae properly monitors its own risks. “Otherwise, FHFA’s safety and soundness examination program, as well as its delegated approach to conservatorship management, may be adversely affected,” the OIG said. A separate OIG analysis found faults in the FHFA’s examination coverage, “particularly in the areas of Real Estate Owned and default-related legal services,” and also noted that the agency lacks the examiners needed “to ensure the efficiency and effectiveness of its examination program ...”

NCUA workers rank agency as a good employer

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ALEXANDRIA, Va. (9/26/11)--The National Credit Union Administration (NCUA) received high marks from its employees for its talent management, results-oriented performance culture, and overall employee satisfaction in a U.S. Office of Personnel Management’s (OPM) 2011 Employee Viewpoint Survey. The agency came in fourth place in the OPM’s performance culture rankings, finished sixth in talent management, and tied for fifth place in overall employee satisfaction. The agency in a release said the results of the survey “showed that NCUA employees feel their work is important, feel accountable for achieving results, and know how their work relates to their agency's goals and priorities.” The NCUA did not rank in the top 10 for its leadership and knowledge management, but showed a marked improvement over last year’s ranking. NCUA Chairman Debbie Matz said having the agency “recognized as an employer of choice” was a top goal when she returned to the NCUA in 2009. Matz added that the NCUA’s “extraordinarily talented, dedicated and hardworking” employees are “the agency’s greatest asset.” “The fact that most employees recommend NCUA as a good place to work is a testament to management’s efforts to improve communications at all levels,” Matz added. For the full NCUA release, use the resource link.

Trio of data security bills pass out of Senate committee

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WASHINGTON (9/26/11)--S. 1151, the Personal Data Privacy and Security Act, S. 1408, the Data Breach Notification Act, and S. 1535, the Personal Data Protection and Breach Accountability Act, are likely moving on for consideration in the full Senate after they were passed out of the Senate Judiciary Committee late last week. All three bills passed on separate 10 to 8 votes. S. 1151 would establish national standards for data security and data breach notification, and S. 1408 would establish a data breach notification standard similar to the requirements of S. 1151. S. 1535 addresses many of the same concerns. An amendment that would exempt credit unions and other financial institutions that are in compliance with Gramm-Leach-Bliley notification requirements from portions of S. 1151 that address data breach notification was successfully added to the bill before it moved out of committee. The Credit Union National Association (CUNA) in a letter sent earlier this month warned judiciary panel leaders that S. 1151, and a similar pending bill S. 1408, could create an unnecessary duplicative regulatory burden for credit unions. CUNA in the letter also noted the role credit unions take in protecting their members' personal financial information, saying that "credit unions often absorb not only the actual costs, but also the reputational costs, associated with data breaches caused by merchants and other entities, notifying the member that a breach has occurred, canceling and reissuing debit and credit cards exposed during the breach, and monitoring accounts for fraudulent activity that may have occurred as a result of the breach."

CUNA seeks comment on agency corporate changes

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WASHINGTON (9/26/11)--The Credit Union National Association (CUNA) is accepting credit union comment on recently proposed National Credit Union Administration (NCUA) technical amendments and clarifying changes to its corporate credit union rule, Part 704. The proposed changes amend NCUA regulations to exclude Central Liquidity Facility (CLF) stock subscriptions from the definition of net assets. The proposal also clarifies that violations of the weighted average life of a corporate's assets are not subject to capital category reclassification. The proposal would require the preparation of investment action plans for such violations. These changes were made to "relieve regulatory burden where warranted" and ease access to liquidity, the NCUA has said. CUNA in its comment call asks for comment on several aspects of the technical changes, including specific changes to the “net asset” definition and the inclusion of credit rating alternatives. CUNA is accepting comments until Sept. 30. For the full comment call, use the resource link.

MBL bill to get House subcommittee hearing next month

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WASHINGTON (9/26/11)--Credit union member business lending, and the potential benefits that lifting the MBL cap could provide for an ailing economy, will be front and center at a scheduled October hearing before the House Financial Services subcommittee on financial institutions and consumer credit. The Credit Union National Association (CUNA) has emphasized lifting the MBL cap to 27.5% of assets as another way that business owners could access the money needed to hire new workers and expand their businesses. Lifting the credit union MBL cap from the current 12.25% of assets restriction would inject more than $13 billion in new funding into the economy, at no cost to taxpayers, creating 140,000 new jobs in the first year after enactment. CUNA and credit unions continue the push to garner additional support for H.R. 1418 and S. 509, both of which would lift the MBL cap to 27.5% of assets. The MBL cap lift bills have been suggested as one small piece that could be added to the Obama administration's larger plan to reinvigorate the ailing economy. CUNA President/CEO Bill Cheney this month also encouraged members of the House Financial Services subcommittee on capital markets and government-sponsored enterprises to add lifting the credit union member business lending cap to any discussion on capital creation. H.R. 1418, which was introduced by Rep. Ed Royce (R-Calif.), has a total of 61 co-sponsors. The Senate bill, S. 509, was introduced by Sen. Mark Udall (D-Colo.) and has the backing of 21 senators. Credit union leagues and representatives from individual credit unions are working to gather even more congressional backing for the MBL cap lift during CUNA’s 2011 Hike the Hill, which continues into next month. Around 450 credit union representatives from more than 20 states are taking part in this year’s hikes.

NEW NCUA announces Western Bridge bidders teleconference

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ALEXANDRIA, Va. (UPDATE 9/22/11, 3:07 p.m. ET)—Following a similar announcement involving U.S. Central Bridge Corporate FCU by a few hours, the National Credit Union Administration (NCUA) has announced it will host a teleconference at 1:00 P.M. (ET) on Wednesday, Oct. 5, for corporate credit unions that are interested in acquiring Western Bridge Corporate FCU’s (Western Bridge) operations. A letter from NCUA Office of Corporate Credit Unions (OCCU) Director Scott Hunt said the agency’s primary goal as it goes forward with contingency plans to Western Bridge is to find a solution that minimizes disruption to Western Bridge’s members. “Our preference is to seek an acquirer that can absorb the operations in whole while also minimizing costs to the stabilization fund,” Hunt wrote. NCUA previously announced subscriptions raised to capitalize the proposed United Resources Federal Credit Union fell short of member-driven goal. To participate in the bidder’s teleconference, interested parties must agree to a confidentiality agreement with the NCUA no later than 12 p.m. Oct. 4. To request an introductory information packet, including the required agreement, contact OCCU at OCCUmail@ncua.gov. Calling instructions for the teleconference will be provided to the list of attendees prior to the date of the meeting. Earlier today NCUA announced that parties wishing to acquire U.S. Central Bridge Corporate FCU operations will have an opportunity to learn about the corporate's operations, and the overall process for submitting a proposal to acquire those operations, in a meeting with the NCUA at 1:00 p.m. (CT) on Oct. 3. The NCUA has tentatively set that meeting to take place in the Kansas City, Mo., area.

NEW NCUA to hold Oct. 3 meeting on U.S. Central acquisition

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ALEXANDRIA, Va. (UPDATED: 10:45 A.M. ET, 9/31/11)--Parties that wish to acquire U.S. Central Bridge Corporate FCU operations will have the opportunity to learn about the corporate’s operations, and the overall process for submitting a proposal to acquire those operations, in a meeting with the National Credit Union Administration (NCUA) on 1:00 p.m. CT on Oct. 3. The NCUA has tentatively set the meeting to take place in the Kansas City, Mo., area. NCUA Office of Corporate Credit Unions Director Scott Hunt said the meeting “is an important first step” for potential acquirers. Hunt added that the agency is seeking “a solution that minimizes disruption to U.S. Central Bridge members and their downstream credit union members, while minimizing costs to the Corporate Stabilization Fund.” For more on the meeting, use the resource link.

Hearing on underserved sparks FOM request from NCUA

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WASHINGTON (9/23/11)--Easing some credit union membership criteria and increasing funding to the Community Development Revolving Loan Fund (CDRLF) are two ways that Congress can help credit unions increase their work in unbanked and underbanked communities, National Credit Union Administration Executive Director David Marquis testified on Thursday before the House Financial Services subcommittee on financial institutions and consumer credit. Thursday’s hearing focused on the availability of credit products for consumers who may not have access to services provided by traditional financial institutions. Marquis in prepared testimony cited NCUA research that estimates there are 9 million unbanked and 21 million underbanked U.S. households, totaling 60 million unbanked or underbanked adults. A key goal of credit unions is serving these populations, and Marquis emphasized that credit unions are not in the financial services business to make a profit. Marquis specifically recommended that Congress allow credit unions to help these unbanked and underbanked households by allowing single common-bond credit unions and community-chartered credit unions to add underserved areas to their respective fields of membership. Doing so, Marquis said, would open up credit union access to many more potential members and could allow more credit unions to participate in CDRLF-related programs, “thus increasing the availability of credit and savings options in the distressed areas where credit unions operate.” The NCUA official also called on Congress to increase resources for the CDRLF, which would allow that fund to provide more technical assistance grants and loans to low-income credit unions (LICUs). The demand for these grants and loans often exceeds available funding, and increased funding could be provided through potential public-private partnerships or other private-sector support, “rather than providing funding through traditional means like increased appropriations,” Marquis suggested. Marquis added that the agency is working on its own to increase access to financial services through financial literacy initiatives and is promoting awareness of the LICU designation among credit unions. The NCUA is also providing assistance to credit unions that are seeking a LICU designation, he said. During his testimony, Marquis also took the opportunity to tout the benefits of lifting the credit union member business lending cap and promote H.R. 1418, the Small Business Lending Enhancement Act. This bill, Marquis said, “features appropriate safeguards to ensure responsible lending and expand access to credit” and would “prudently allow credit unions to diversify their risks and portfolios.” The Credit Union National Association (CUNA) estimates that lifting the MBL cap to 27.5% of assets would inject more than $13 billion in new funding into the economy, at no cost to taxpayers, creating 140,000 new jobs in the first year after enactment.

NCUA OKs new corporate CU office authorities

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ALEXANDRIA, Va. (9/23/11)—The National Credit Union Administration (NCUA) expanded the authority of its Office of Corporate Credit Unions (OCCU) director by adding seven new items to the list of actions that its director may approve or disapprove. The new authority is tied to the agency’s corporate credit union rule changes that were made in September 2010. Specifically, the changes relate to prompt corrective action notices and a corporates treatment of capital. Under the new rule, approved unanimously by the board during Thursday’s open board meeting, the OCCU director will be allowed to approve or disapprove a given corporate credit union’s retained earnings accumulation plan and whether a corporate credit union may release non-perpetual capital accounts (NCAs) to facilitate the payout of shares in a liquidation. The OCCU director will also have the ability to approve or disapprove a corporate’s establishment of individual minimum capital requirements and any actions it wishes to take regarding capital restoration plans. According to the NCUA, the director will also have authority over:
* Whether a corporate credit union may redeem NCAs before they reach maturity or before the end of the notice period; * Whether a corporate credit union may release perpetual contributed capital (PCC) instruments to facilitate the payout of shares in a liquidation; and * Whether a corporate credit union may call PCC instruments.
The NCUA said these changes would “enhance the effectiveness” of its corporate credit union rule, increase the timeliness of OCCU responses, and reduce the regulatory burden for credit unions. For more on the NCUA meeting, use the resource link.

Equity ratio net worth changes passed by NCUA

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ALEXANDRIA, Va. (9/23/11)--Amendments to the Federal Credit Union Act’s definitions of the National Credit Union Share Insurance Fund’s (NCUSIF) definitions of equity ratio and credit union net worth were unanimously approved by the National Credit Union Administration (NCUA) board on Thursday. The Credit Union National Association (CUNA) following the meeting said it strongly opposes an provision that requires credit unions to deduct the amount of any bargain purchase gain from the net worth of a target credit union before a merger, adding following the meeting that this change “could result in a lower post-merger net worth, potentially discouraging mergers.” NCUA Chairman Debbie Matz during the meeting said the agency did not intend for these changes to discourage mergers or to negatively impact credit unions that have merged. The bargain purchase gain changes will not apply to mergers that have already begun or already have been approved. The changes are set to become effective thirty days after the final rule is published in the Federal Register. However, agency staff hinted that the effective date may be pushed closer to the end of 2011, as some changes to call reports cannot be made within thirty days. The equity ratio changes clarify that the NCUSIF’s equity ratio must be based solely on the financial statements of the NCUSIF alone, without consolidation with other statements such as those of conserved credit unions. Under the changes, section 208 assistance provided to troubled credit unions will soon qualify as regulatory net worth for natural-person credit unions under NCUA's Prompt Corrective Action authority. Board Member Gigi Hyland asked whether a line detailing any section 208 assistance could be added to a credit union’s call report, but NCUA staff said such a line should not be added. The NCUA’s Office of General Counsel was concerned that adding that extra detail could negatively impact credit unions that receive section 208 assistance, NCUA staff explained. For more on the NCUA meeting, use the resource link and see today’s NewsNow coverage.

2010 HMDA data now available from FFIEC

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WASHINGTON (9/23/11)--Data on the mortgage applications, originations, purchases, and denials that were filed by credit unions and other Home Mortgage Disclosure Act (HMDA) -covered financial institutions in 2010 are now available, the Federal Financial Institutions Examination Council reported on Thursday. The mortgage data covers transactions at 7,923 financial institutions. The data includes disclosure statements, aggregate data for metropolitan statistical areas, nationwide summary statistics of lending patterns, and Loan/Application Registers, the FFIEC said in a release. This data covers 12.9 million mortgage applications, 3.2 million mortgage purchases, and 165,000 denied preapproval requests. The data is further broken down by loan type, loan purpose, loan amount, property type, property location, applicant background, and census tract characteristics. The FFIEC noted that the data shows “a continued heavy reliance on loans backed by Federal Housing Agency insurance,” a trend “that began with the emergence of the recent mortgage market difficulties.” The FHA’s total share of first-lien loans fell slightly to 36% in 2010, below 2009’s total of 37%, but well above the 7% total reported in 2007. For more on the FFIEC report, use the resource link. The FFIEC is comprised of the leaders of the National Credit Union Administration (NCUA), the Federal Reserve Board, the office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corp. (FDIC), and the newest member, the Consumer Financial Protection Bureau. NCUA Chairman Debbie Matz succeeded FDIC Chairman Sheila Bair as head of the FFIEC on March 4. She is serving a two-year term.

NCUSIF reserves being appropriately lowered NCUA

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ALEXANDRIA, Va. (9/23/11)--The National Credit Union Share Insurance Fund’s equity ratio stood at 1.31% as of August, and National Credit Union Administration (NCUA) Chairman Debbie Matz during Thursday’s open board meeting requested that her staff provide the board with their “best possible estimate” of the year-end ratio of the NCUSIF at the upcoming November board meeting.
Click to view larger image NCUA board member Michael Fryzel Far right)views this month's NCUSIF/TCCUSF report during Thursday's open board meeting. (CUNA Photo)
NCUA Chief Financial Officer Mary Ann Woodson said the current year-end equity ratio estimate is between 1.28% and 1.32%. Woodson during her presentation of monthly insurance fund statistics told Board Member Gigi Hyland that if the equity ratio is above its 1.3% normal operating level at the end of the year, any excess funds would be transferred to the Temporary Corporate Credit Union Stabilization Fund. NCUSIF reserves totaled $1 billion, and Hyland noted that this reserve level is being lowered “appropriately.” CAMEL Code credit unions were also covered during the report, and Woodson noted that the total number of CAMEL 3, 4 and 5 credit unions fell between July and August. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 18% of total insured shares, with those shares totaling $162 billion in funds. Hyland remarked it was good to see the number of CAMEL rated credit unions dropping bit by bit, and Matz said, in general, that it was good to hear “some good news.” For more on the NCUA meeting, see related NewsNow coverage and use the resource link.

Inside Washington (09/22/2011)

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SBA website
* WASHINGTON (9/23/11)--The question of whether too big to fail still exists was up for debate this week, a little more than a year after the enactment of the Dodd Frank Wall Street Reform and Consumer Protection Act was enacted (American Banker Sept. 22). Moodys Investor Services provided a strong case Wednesday for those who argue the era of bailouts is over by downgrading the long-term rating of Bank of America Corp. and Wells Fargo & Co., and the short-term rating of Citigroup Inc. In making the downgrades Moodys cited the probability that regulators would let banks fail. U.S. Rep. Barney Frank (D-Mass.), whose namesake bill comes under constant attack for both going too far and not going far enough, had this to say about the downgrade: "I can't comment on the absolute value of Moodys ratings, but I am pleased that the rating agency recognizes that such large institutions are not too big to fail." On Tuesday at a public hearing on the pending merger of Capital One and ING Direct USA, the Independent Community Bankers of America argued regulators should block any merger that would create a firm with more than $100 billion of assets because the government were not have the ability to unwind such a large firm. The too big to fail issue also was debated during American Bankers Regulatory Symposium this week. Tom Hoenig, the president of the Federal Reserve Bank of Kansas City, said the interconnectedness that exists between large institutions and the financial system will cause any Treasury secretary to ultimately bail out troubled large firms during a financial crisis. Rodgin Cohen, a partner with the law firm Sullivan and Cromwell, said new resolution powers for the Federal Deposit Insurance Corp. and higher capital and liquidity standards have eliminated too big to fail

* WASHINGTON (9/23/11)--Phae Howard, executive director of the National Center for the Prevention of Home Improvement Fraud, and Michael Mitravich of the Small Business Associations (SBA) Office of Disaster Assistance will host the SBAs September web chat on Disaster Recovery for Business Owners: An Inside View at 1 p.m. (ET) Thursday. This months web chat will focus on what homeowners and businesses need to know after a disaster. Howard and Mitravich will answer questions for one hour. Web chat participants can post questions online in advance and join the live web chat through the WASHINGTON (9/23/11)--The Obama administration Thursday announced the winners of the $37 million Jobs and Innovation Accelerator Challenge, a multi-agency competition that supports the advancement of 20 high-growth, regional industry clusters. Investments from three federal agencies and technical assistance from 13 additional agencies will promote development in areas such as advanced manufacturing, information technology, aerospace and clean technology, in rural and urban regions in 21 states. Projects are driven by local communities that identify the economic strengths of their areas, with funding awarded to the best proposals. The public-private partnerships are expected to create more than 4,800 jobs and 300 new businesses and retain another 2,400 jobs and train about 4,000 workers for careers in high-growth industries, according to estimates by grantees. Each of the 20 awards average about $1.8 million per project, and winning clusters will contribute another $13 million in total matching funds. ...

Money laundering conviction prompts prohibition order

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ALEXANDRIA, Va. (9/22/11)--The National Credit Union Administration (NCUA) on Wednesday prohibited former Orange County Employees FCU, Orange, Texas, President and Treasurer Sandra Cooper from future work at any federally insured financial institution following her recent conviction on money laundering charges. Cooper is set to serve 63 months in prison and three years of supervised probation, and will pay around $1.18 million in restitution following her conviction. Cooper, who was one of two employees of the credit union, embezzled around $1.16 million in funds from the credit union over a four and half year period, according to the U.S. Department of Justice. She was indicted by a federal grand jury in December of 2010, and plead guilty in late February 2011. The credit union, which held $1.7 million in assets and served 1,000 members, was liquidated by the NCUA last year. The credit union was shuttered by the Texas Credit Union Department due to its deteriorating financial condition, and its assets and members were taken on by Orange, Texas' Sabine FCU. The agency noted that violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Interchange steering informant site launched by CUNA

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WASHINGTON (9/22/11)--New debit interchange fee cap regulations, which become effective on Oct. 1, prohibit merchants from discriminating against credit union issued cards, and the Credit Union National Association (CUNA) is helping credit unions report any instances of discrimination—generally referred to as “steering”-- through a new website. The site, which was added to the members-only section of cuna.org, allows credit unions to report any instances of merchants tampering with the purchase process, or favoring other forms of payment over credit union debit cards. A website submission form provides space for credit unions to record the name and location of the merchant in question, the type of card involved, the name and location of the credit union affected, and any comments on the merchant/consumer interaction, among other things. Any information reported to CUNA on the site will remain confidential, and the names of the credit unions involved will not be disclosed, but relevant portions of the reports may be shared with state credit union leagues and depending on the problem, may also be reported to the National Credit Union Administration or state regulators. Reports will also be used in CUNA discussions with the Federal Reserve about the impact the agency’s interchange rules has on credit unions. In addition to reporting to CUNA, affected credit unions should also report instances of discrimination involving Visa or MasterCard, directly to those networks through online forms provided by each network. Once a credit union has submitted its report to CUNA, CUNA’s website will direct the user to the web address for the appropriate network’s complaint form. CUNA on the site reminds credit unions that new interchange regulations do not allow merchants to steer their customers toward using certain cards or to refuse to accept, or frustrate the acceptance of debit cards due to the fact they were issued by credit unions or small issuers not subject to the debit interchange transaction fee cap. However, CUNA notes, merchants may provide discounts to consumers based on how they pay for a good or service, such as by cash, debit card or credit card. The site adds that CUNA has not heard of any evidence that any merchants are disfavoring credit union debit cards or that they plan to do so in the future. CUNA also continues to work with the networks in an effort to insure credit unions’ debit card interchange fee income is preserved, as much as possible. For the members-only site, use the resource link.

Vale CFPB wants to cut reg burden for good guys like CUs

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WASHINGTON (9/22/11)--Minimizing the regulatory burden on “good guys” like credit unions, while making sure that the market is not harmed by the actions of others, is a key goal of the Consumer Financial Protection Bureau (CFPB), CFPB Assistant Director for Community Banks and Credit Unions Elizabeth Vale said during a Credit Union National Association (CUNA) Hike the Hill event in Washington, D.C. on Wednesday.
CFPB official Elizabeth Vale covered that agency’s current and future work on behalf of credit unions and consumers in remarks delivered Wednesday before credit union groups from across the country. (CUNA Photo)
Vale spoke before a group of credit union advocates from Idaho, Wisconsin, Kentucky, Florida, Alabama, Kansas, and Minnesota. Bart Shapiro, the senior adviser for the CFPB’s Office of Community Banks & Credit Unions, also appeared before the group. Citing the CFPB’s great working relationship with CUNA, Vale said that she and the agency are well aware of the regulatory burdens faced by credit unions, and that the CFPB should hear directly from credit unions "early and often" so regulatory problems can be averted before they need to be corrected. She added that the CFPB is looking for ways to eliminate or modify some current troublesome regulations, and wants to use the same process used in the ongoing revisions of Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) as other regulations are revised. The CFPB is working to combine TILA and RESPA mortgage disclosures into one single document. That work began earlier this year when the agency released the first of several drafts of a combined mortgage form, and is scheduled to be completed later this year. The CFPB has relied heavily on the input of consumers, financial institutions and other professionals and has published each version of its combined form on its homepage for comment.

Net worth equity ratio revisions on todays NCUA agenda

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ALEXANDRIA, Va. (9/22/11)--The National Credit Union Administration’s (NCUA) final rule on net worth and equity ratio definitions will be the lead discussion item when it meets later today. The NCUA in March proposed amending the Federal Credit Union Act's definition of "net worth" for natural-person credit unions under NCUA's Prompt Corrective Action authorities to allow the NCUA's Section 208 Assistance made to troubled credit unions to qualify as regulatory net worth. The NCUA proposal also included a "technical correction" to its regulatory definition of "net worth." This technical correction would generally decrease the amount of a combined credit union's "net worth" in a credit union merger. The agency also proposed equity ratio changes that clarify that the National Credit Union Share Insurance Fund's (NCUSIF) equity ratio must be based solely on the financial statements of the NCUSIF alone, without consolidation with other statements such as those of conserved credit unions. These changes were scheduled to be discussed at the NCUA's July open board meeting. However, the changes were removed from the agenda shortly before the meeting took place. The Credit Union National Association (CUNA) supported some of these changes, but also strongly opposed the bargain purchase gain changes. CUNA was concerned that the proposal would result in a decrease in the combined credit union's net worth. CUNA and its Accounting Subcommittee, which is chaired by Patelco CU CFO Scott Waite, have worked with credit union accountants on the bargain purchase gain issue. The NCUA during the meeting is also set to discuss delegations of agency authority, and the customary monthly insurance fund report is scheduled to be presented. The closed portion of the NCUA's meeting will feature a charter and merger request as well as an appeal under Section 701.4 and Part 747, Subpart J of the NCUA's regulations. Supervisory activities and personnel issues will also be covered during the closed meeting. For the full NCUA agenda, use the resource link.

Fryzel CUs have grown to be best mortgage biz lenders

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WASHINGTON (9/22/11)—National Credit Union Administration (NCUA) board member Michael Fryzel Wednesday reiterated his agency’s support for a higher member business lending (MBL) cap and alternative sources of capital for credit unions. Fryzel said that over the last 30 years credit unions have “grown to being arguably the best writers of mortgages and best business lenders in America.” “Given this record, should credit unions not be allowed to make even more business loans and to grow by means of alternative or risk-based capital,” Fryzel asked during an address to the National Association of Federal Credit Union’s Congressional Caucus. “A hundred years ago, many ordinary Americans were not getting the kind of credit or the kind of financial services they deserved,” he said. “Credit unions were seen as an idea that could help these people. “Now credit unions help 91 million Americans. They give efficient, effective and sound financial services and adequate credit to ordinary Americans from coast to coast with nothing else in mind than helping the persons who come for that education.” He said the U.S. Congress should be reminded that not one dollar of taxpayer money has gone to save a credit union or to pay for an insured savings account. The National Credit Union Share Insurance Fund is funded by credit unions. Fryzel referenced current pending legislation and NCUA’s support to increase member business lending above the current statutory cap of 12.25% of assets, allowing credit unions to grow through alternative or risk-based capital. Bills are pending action in the House (H.R. 1418) and Senate (S. 509) to increase the cap to 27.5%. The House bill, introduced by Rep. Ed Royce (R-Calif.), has a total of 61 co-sponsors. The Senate bill, introduced by Sen. Mark Udall (D-Utah), has 21 senators backing it.

Inside Washington (09/21/2011)

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* WASHINGTON (9/22/11)--Misaligned incentives were a primary reason behind the pervasive problems within the mortgage servicing industry, Raj Date, the de facto head of the Consumer Financial Protection Bureau, said Tuesday (American Banker Sept 21). Date, speaking before the American Banker Regulatory Symposium, said consumers do not choose their mortgage servicers as they do their lenders, which reduces the incentive for servicers to treat borrowers properly. Servicing a delinquent loan costs dramatically more than servicing a performing loan because of the one-on-one contact with borrowers, collection efforts and specialized staff required, Date said. Instead of investing in the necessary resources to properly service delinquent loans, many servicers illegally cut corners and loosened operating protocols. “A comprehensive approach to servicing that protects consumers, investors, the financial sector, and the housing market requires the coordinated action of many federal regulators,” Date said. “With that in mind, the bureau is working with other federal agencies to develop common-sense national servicing standards” … * WASHINGTON (9/22/11)--U.S. Rep. Shelley Moore Capito (R-W. Va.), a member of the House Financial Services Committee, said Tuesday she is disappointed that Republicans have not been able to resolve the future of Fannie Mae and Freddie Mac since taking control of the House in January (American Banker Sept 21). Capito, speaking before the American Banker Regulatory Symposium, said she was surprised the GOP had not accomplished more in regard to the government-sponsored enterprises. Capito, who chairs the House financial institutions and consumer credit subcommittee, said a split among Republicans about how to wind down Freddie and Fannie has contributed to the delay. She said she is not among those in favor of dissolving the government-sponsored enterprises … * WASHINGTON (9/22/11)--The Fourth District Court of Appeals ruled that computer records are “inadmissible hearsay” in foreclosure proceedings, a decistion that could make it more difficult for mortgage servicers to use computer records as evidence without additional verification. The Florida court ruled that Ralph Orsini, an employee at mortgage servicer Home Loan Services Inc., could not rely on computer records to verify the mortgage debt of a delinquent homeowner. The computer records were compiled by the previous servicer of the mortgage, Litton Loan Servicing LLC. Orsini did not verify the information in any other manner. The ruling could have sweeping implications in the lending and loan servicing industries, said Michele Stocker, chair of the financial services litigation practice group at Greenberg Traurig LLP …

NCUA to testify Thursday on underserved consumers

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WASHINGTON (9/21/11)-- National Credit Union Administration (NCUA) Executive Director David Marquis is scheduled to testify Thursday at 9:30 a.m. (ET) before the House Financial Services subcommittee on financial institutions and consumer credit. The topic: “An Examination of the Availability of Credit for Consumers.” Marquis is part of a first panel of witnesses, which also will include Barry Wides, deputy comptroller for community affairs, Office of the Comptroller of the Currency, and Robert Mooney, deputy director for consumer protection and community affairs, Federal Deposit Insurance Corp. A second panel of witness is expected to include Gerri Guzman, executive director, Consumer Rights Coalition, Melissa Koide, vice president of policy, Center for Financial Services Innovation, Ryan Gilbert, CEO of Bill Float, Michael Grant, president, National Bankers Association, and Dr. Kimberly Manturuk, research associate, University of North Carolina Center for Community Capital. Also on the calendar for Thursday, the NCUA is scheduled to vote on its final rule on “Net Worth and Equity Ratio Definitions.” In March, the agency proposed amending the Federal Credit Union Act's definition of net worth for natural-person credit unions under NCUA's Prompt Corrective Action authorities to allow the NCUA's Section 208 Assistance made to troubled credit unions to qualify as regulatory net worth.

CUNA Serious talks on access to capital must include MBLs

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WASHINGTON (9/21/11)--Noting that “one of the crippling blows to economic recovery over the last few years has been the significant decline in business lending by large and community banks,” the Credit Union National Association (CUNA) encouraged the House Financial Services subcommittee on capital markets and government-sponsored enterprises to add lifting the credit union member business lending cap to any discussion on capital creation. The letter was sent to subcommittee chairman Scott Garrett (R-N.J.) and ranking member Maxine Waters (D-Calif.) ahead of today’s hearing on "Legislative Proposals to Facilitate Small Business Capital Formation and Job Creation." CUNA in the letter said that while banks have blamed their reduced business lending portfolios on regulator and examiner pressures, a lack of capital, and reduced demand, “a lack of demand has not been an issue for credit unions, many of which have former bank customers seeking business loans after having lines of credit withdrawn by the banks.” In fact, many credit unions have experienced growth in their own business lending portfolios after banks have turned their backs on many small business customers. Some credit unions are being forced to curtail their lending practices as they near the 12.25% of assets cap on credit union member business lending. CUNA estimates that lifting the MBL cap to 27.5% of assets would inject more than $13 billion in new funding into the economy, at no cost to taxpayers, creating 140,000 new jobs in the first year after enactment. The only obstacle to further credit union business loan growth is banker opposition to lifting the MBL cap, the letter notes. The CUNA letter notes that credit unions have been engaging in safe and sound business lending since their inception in the United States more than 100 years ago, and adds that some of the first loans credit unions ever made were for business purposes. For the full letter, use the resource link.

New Arrowhead Central CU CEO named by NCUA

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ALEXANDRIA, Va. (9/21/11)--Darin Woinarowicz has been named permanent CEO of San Bernardino, Calif.-based Arrowhead Central CU, a credit union that recently showed an improved financial results but remains under National Credit Union Administration (NCUA) conservatorship. The $681 million-in-assets credit union, which was founded in 1949, has been held under NCUA conservatorship since June 2010. The agency took control of the credit union on June 25, 2010, and fired then-CEO Larry Sharp and three other senior-level employees. These moves were made due to the credit union’s declining financial condition. The credit union as of June 30, reported net income of $11.3 million and improved its net worth to 5.06% of assets, up from 3.44% at Dec. 31, 2010. Total assets at the end of the second quarter were $681 million compared to $808 million for the same period last year. NCUA Region II Director Jane Walters said “the placement of a permanent CEO is another key accomplishment in the credit union’s complete recovery and lays the groundwork for its continued health and safety and soundness.” The selection of Woinarowicz, who is currently CEO of Bakersfield, Calif.’s Kern Schools FCU, will ensure that Arrowhead Central “has sound strategic processes, a member-oriented focus, and the strong risk management and oversight necessary to rebuild and prosper,” Walters added. Woinarowicz played a “vital role” in Kern Schools FCU’s restructuring and financial turnaround, the NCUA said. Kern Schools FCU in early 2010 announced it lost $40 million in 2009 from borrowers who had difficulties paying their auto loans and mortgage payments as the recession intensified.

NCUA website issues appear to be resolved

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WASHINGTON (9/21/11)—The National Credit Union Administration’s (NCUA) homepage and its internet connection, which were down for most of Tuesday, were up and running late yesterday. Agency staff told News Now that the website outage was caused by a cable issue--someone, likely a utility company, accidentally cutting a communication line. In the evening, the agency's public affairs office sent a communications asking parties, "If you emailed NCUA today, please ensure the recipient received your email." The NCUA's September open board meeting is scheduled to take place tomorrow.

CFPB must minimize CU burden as it aids servicemembers CUNA

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WASHINGTON (9/21/11)--The Consumer Financial Protection Bureau’s (CFPB) Office of Servicemember Affairs must “minimize compliance burdens on credit unions that provide important and reasonably priced products and services” to servicemembers and their families, the Credit Union National Association (CUNA) said in a comment letter. The CFPB earlier this month asked credit unions and other financial institutions for general information on products, services, programs, policies, or practices that are tailored to the unique financial needs of servicemembers and their families, or marketed to them. The agency also asked for more specific information on any assistance institutions offer to servicemembers who are distressed homeowners and their families and information on any servicemember-specific short-term lending products. The CUNA letter noted that credit unions “offer a broad range of financial products and services well-tailored to the needs of the nation’s servicemembers, veterans, and their families, fully support sufficient financial disclosures to servicemembers and their families so they can make informed, sound consumer finance decisions, and back efforts to eliminate abusive financial practices that harm the servicemember community.” CUNA added that it supports CFPB efforts to empower and educate servicemembers and their families to make informed consumer finance decisions, and encouraged the CFPB’s servicemember affairs office “to coordinate consumer protection efforts with other federal and state regulators to minimize all compliance burdens and duplicative requirements placed on credit unions. Additional information and details will be provided to CFPB staff soon, and CUNA plans to work with the CFPB on this servicemember protection endeavor. CUNA also encouraged the CFPB to work with credit union leagues, the Defense Credit Union Council, and individual credit unions to further support the CFPB effort.

Inside Washington (09/20/2011)

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* WASHINGTON (9/21/11)--Foreclosed borrowers will be able to have their cases reviewed for errors and misrepresentations on the part of servicers and may be eligible for restitution, John Walsh, the acting comptroller of the currency said Monday (American Banker Sept. 20). The review process is part of consent orders issued against the 14 top mortgage servicers. Cases will be reviewed by an independent consultant who may require servicers to develop a remediation plans, said Walsh, speaking at American Banker’s regulatory symposium. Borrowers with a foreclosure either pending or completed between Jan. 1, 2009, and Dec. 31, 2010 will be contacted through direct mailings, Walsh said. Individuals seeking a review will be able to go to a website and either file a request for review online or ask for a form that can be filled out and submitted by mail. “As we explored the best means of ensuring that injured homeowners had the opportunity to seek relief, it became clear that what was needed was a robust, transparent and accessible complaint process that will give borrowers the opportunity to request an independent foreclosure review,” Walsh was reported to have said … * WASHINGTON (9/21/11)--The Dodd Frank Wall Street Reform and Consumer Protection Act did not address many of significant problems created by the financial crisis, Robert G. Wilmers, chairman and chief executive officer of M&T Bank Corp. said Monday (American Banker Sept. 20). Wilmers, in remarks to American Banker’s regulatory symposium, specifically cited credit rating agencies, government-sponsored enterprises Freddie Mac and Frannie Mae and large bank holding companies as entities that continue to operate with government protection. Credit rating agency assessments were inaccurate leading up to the financial crisis, creating a false sense of confidence on the part of investors, Wilmer said. Wilmer called for new entrants to the credit ratings market and a more competitive, accurate ratings system. Despite the losses that Fannie Mae and Freddie Mac subjected American taxpayers to during the crisis, the percentage of American households owning homes did not, on net, increase as the housing bubble inflated, and eventually burst, between 2000 and 2009. Still, no action has been taken to resolve the question of how to restructure Fannie Mae and Freddie Mac, Wilmer said. Also, Dodd-Frank did not address the increased concentration of financial service providers that deal in speculative investments rather than traditional banking practices. “The major bank holding companies who engage in and rely on trading revenue can continue to do so with the protection of the FDIC system--established to protect depositors, not speculators,” Wilmer said. “It is a system in which a number took refuge in the wake of the 2008 financial crisis and in which they remain” ...

Matz says new rules should target risk not CUs

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WASHINGTON (9/20/11)--Chairman Debbie Matz of the National Credit Union Administration (NCUA) said Monday that as the agency moves to modernize its regulatory regime, it is any risks associated with evolving products, services, tools and relationships that should be targeted in rulemaking, not credit unions themselves. Matz said her preferred, targeted approach would affect only those behaviors most likely to cause losses, which would ultimately be borne by credit unions through their funding of the National Credit Union Share Insurance Fund. The Credit Union National Associatin (CUNA) noted that this approach could be positive for the agency and credit unions. CUNA has been urging the agency to adopt a more productive approach to rulemaking that focuses on problem areas rather than issuing rules with blanket applicability, regardless of the credit union’s level of risk. In announcing her “Regulatory Modernization Initiative, ” Matz said the plan will balance two key principles:
* Safety and soundness--strengthening regulations necessary to protect the 91 million credit union members and the NCUSIF; and * Regulatory relief--stripping away regulations that limit flexibility and growth, without jeopardizing safety and soundness.
“For rules which NCUA can control, we will ensure that they are in sync with the modern marketplace, clearly written, and targeted to areas of risk,” Matz said during an address to the National Association of Federal Credit Unions’ Congressional Caucus. “Regulatory modernization means effective regulation, not excessive regulation,” Matz concluded. The NCUA has said it is planning to modernize four main rules to strengthen safety and soundness by addressing marketplace practices and emerging risks. They are:
* A new loan participation protection rule covering both originators and buyers to require originators to retain some of the original loan risk on their balance sheets, and require buyers to do due diligence not just at origination, but on-going, just as they would for loans they originated in-house; * A new investment concentration exposure rule to limit concentrations in the riskiest investments, similar to the new investment standards for corporate credit unions; * A revised Credit Union Service Organization (CUSO) risk transparency rule, proposed in July, to provide a clearer picture of the off-balance sheet risks at CUSOs that sell high-risk services to credit unions (see resource link to read the Credit Union National Association’s comment letter); and * A targeted interest rate risk management rule to require credit unions over certain asset sizes and risk thresholds to have an appropriate policy to manage their risk.
CUNA is concerned, however, that some of these proposals, for example the CUSO and IRR proposal, are not sufficiently targeted to problem areas and will have a negative effect on credit union innovation. The association hopes to work with the agency to encourage senior agency officials to consider changes to those and other proposals that will address concerns without imposing regulatory overkill on the credit union system. The NCUA board has also prosed introduced proposals intended to reduce credit unions’ compliance burdens, such as:
* Allowing credit unions to use simple derivatives as an interest rate hedge; * Allowing credit unions to count subordinated debt toward risk-based net worth and to assign zero-risk weights to most U.S. Treasury securities; * Extending six of the seven remaining RegFlex provisions to all federal credit unions; and * Supporting legislative efforts to lift restrictions on member business lending and supplemental capital for credit unions.
Reducing credit unions’ regulatory burden is a key issue for CUNA and is among top topics to be broached as CUNA, the state leauges and credit unions launch their Hike the Hill events this month. Delegations from Alabama, Florida, Wisconsin, Ohio, Kentucky, Arizona, Colorado, Wyoming, Idaho, Illinois and Kansas are in town this week to visit their federal lawmakers on this issue, as well member business lending, alternative capital, and credit unions' tax status. Also speaking Monday, NCUA board member Gigi Hyland underscored how credit unions are a part of the current national conversation. She said credit unions are “multi-faceted and multi-relevant” to the current federal debate on how best to stimulate job creation and the economy. Credit unions, in my opinion, need to be part of the debate on how to create jobs and stir our nation’s economic recovery,” she said, adding that she hopes the U.S. Congress sees the jobs-creating opportunity—at no cost to the taxpayer—of raising the member business lending cap.

Data security bill improved by CUNA-backed amendment

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WASHINGTON (9/20/11)--The Senate Judiciary Committee adopted an amendment late last week to exempt credit unions and other financial institutions that are in compliance with Gramm-Leach-Bliley notification requirements from the data breach notification provisions of a Senate data security bill. That bill, the Personal Data Privacy and Security Act (S. 1151), proposes to establish national standards for data security and data breach notification and already exempted Graham-Leach-Bliley compliant institutions from data security requirements contained in the bill. In advance of the amendment vote, CUNA wrote to the judiciary panel’s leadership and warned, in part, that S. 1151, and a similar pending bill S. 1408, could create an unnecessary duplicative regulatory burden for credit unions. “As you know, credit unions are already subject to very robust data security and data breach notification requirements under the Gramm-Leach-Bliley Act, subject to the supervision and enforcement of the National Credit Union Administration (NCUA) or the state supervisory agencies,” CUNA President CEO/Bill Cheney wrote. “We are concerned that neither S. 1151 nor S. 1408 extends a similar exemption to the bills’ data breach notification requirements. These requirements, if applied to credit unions, would be largely duplicative of current regulatory requirements and increase the cost of compliance to the detriment of credit unions and their members,” the CUNA leader added. Use the resource link to read CUNA’s complete letter.

Congress this week Deficit talks return data security jobs more

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WASHINGTON (9/20/11)—In Washington, D.C., the U.S. House and Senate are back in session this week and looking forward to a pretty packed schedule of hearings among panels of key interest to credit unions before adjourning next week for another district work session. The Credit Union National Association (CUNA) will be monitoring such hearings as today’s Senate Budget Committee session entitled, “Promoting Job Creation in the United States.” CUNA, the state leagues, and credit unions support a statutory increase to the credit union member business lending cap as a way to infuse $13 billion in new funds into the economy, creating 140,000 new jobs in the first year after enactment--at no cost to the U.S. taxpayer. Bills to increase the MBL cap to 27.5%, up from 12.25%, have bi-partisan support in both the House and Senate. In today’s hearing, former Federal Reserve Vice Chairman Alice Rivlin is among those scheduled to testify. In addition to the Budget Committee hearing, CUNA will be following hearings today in the Senate Banking Committee and the Joint Economic Committee. A hearing called by the banking panel’s subcommittee on housing, transportation and urban development is slated to study, "New Ideas to Address the Glut of Foreclosed Properties." Allan Dechert, president of the New Jersey Association of Realtors, and Bob Nielsen, chairman of the board of the National Association of Homebuilders, are expected to testify. The Joint Economic Committee has scheduled a hearing on the effects that the federal debt on the U.S. economy and a panel of distinguished academics comprise the expected witness panel. On Wednesday’s radar:
* The House Financial Services subcommittee on capital markets and government-sponsored enterprises, similar to the Senate’s budget committee on Tuesday, intends to conduct a hearing on "Legislative Proposals to Facilitate Small Business Capital Formation and Job Creation." * A House Ways and Means Committee hearing will focus on the variety of economic models used by the Joint Committee on Taxation to analyze and score tax reform legislation. * And, the Senate Energy and Commerce Committee is expected to markup pending legislation, including S. 1207, the Data Security and Breach Notification Act.
The country’s tax code is on the dissecting table at the continuing hearings of the Joint Committee on Deficit Reduction, which isexpected to conduct a hearing Thursday entitled, “Overview: Revenue Options and Reforming the Tax Code." Thomas Barthold, chief of staff of the Joint Committee on Taxation, is expected to testify. Also on the Thursday agenda, the Senate Banking Committee will hold confirmation hearings on the nominations of Alan Krueger to be a member of the Council of Economic Advisers; David Montoya to be inspector general of the Housing and Urban Development Department; and Cyrus Amir-Mokri to be U.S. Treasury assistant secretary for financial institutions. Amir-Mokri would replace Michael Barr, who left Treasury last year to return to the University of Michigan. The nominees are expected to testify. Also of note, the House Financial Services subcommittee on financial institutions and consumer credit has scheduled a Thursday hearing on the availability of credit products for consumers who may not have access to services provided by traditional financial institutions. And, finally, the Senate Judiciary Committee is expected to resume consideration of pending legislation, including S. 1151, the Personal Data Privacy and Security Act, S. 1408, the Data Breach Notification Act, and S. 1535, the Personal Data Protection and Breach Accountability Act. (See related story: Data security bill improved by CUNA-backed amendment.)

Inside Washington (09/19/2011)

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* WASHINGTON (9/20/11)--The Obama administration’s foreclosure-to-rental program has proved difficult to implement (American Banker Sept. 19). The government is seeking to rent out foreclosed properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration until the housing market stabilizes. But several obstacles to the program’s success have emerged. Goals have yet to be established for the program. The Federal Housing Finance Agency, which oversees Fannie and Freddie, hopes to stabilize neighborhoods and home values, but consumer groups believe the program should also serve affordable housing and energy efficiency goals. The program’s structure also has yet to be determined. One approach is for the government to hire contractors to renovate the foreclosed properties and then rent out the units before selling them. Under another strategy, the government could sell the properties with the contingency that the buyers will renovate them. In a third approach, the government would jointly purchase the properties with buyers, and share in any price appreciation. The government must also be sure buyers have an understanding of local housing markets. Although a large number of institutional investors are waiting to purchase foreclosed homes, the housing market is a very localized business, said Ivy Zelman, the chief executive of Zelman & Associates ... * WASHINGTON (9/20/11)--Fannie Mae and Freddie Mac are raising the guarantee fees they charge mortgage lenders and the government-sponsored enterprises may end the volume discounts they give big banks, Ed DeMarco, acting director of the Federal Housing Finance Agency, said Monday (American Banker Sept. 19). The volume discounts may be phased out because they were based on competition between Fannie and Freddie to gain market share, said DeMarco, speaking before a conference in Raleigh, N.C. Because Fannie and Freddie are operating under conservatorship, they no longer compete with each other’s business from big banks. Both government-sponsored enterprises began raising guarantee fees earlier this year and will continue doing so through 2012, DeMarco said ...

Fryzel comments on NCUA reg agenda

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CHICAGO, Ill. (9/19/11)--Ensuring the safety and soundness of credit unions should be the “single focus” on the National Credit Union Administration (NCUA), board member Michael Fryzel said in a Friday speech to the National Association of State Credit Union Supervisors (NASCUS) State System Summit. The summit was held in Chicago, Illinois. Citing the great Chicago fire as an example, Fryzel said not to wait for a disaster to overhaul regulation. “Instead, take a hard look at present conditions and present regulations.” Fryzel noted the NCUA’s own policy of reviewing one-third of its regulations each year is “reasonable” and “provides a good balance between expending resources to keep the regulations updated and reviewing them too hastily.” “There has been talk in some circles of not creating a new regulation without at the same time eliminating another,” Fryzel said. He added: “A one-for-one mathematical formula sounds pleasing at first but, it uses a butcher’s knife when it is really a scalpel that is called for. Each regulation was created for a purpose. If the environment has changed so that the regulation is not doing its intended work then thoughtful reflection should alter or eliminate it.” The NCUA board member also addressed the Obama Administration’s recent request for federal agencies to design cost-effective, evidence-based regulations, and to increase their own transparency and accountability. Fryzel claimed that the NCUA has been, and is, in compliance with this executive order. He added that the agency would “try to become even more proactive in publicizing what regulations will be considered in any year, the time of year they will be reviewed, and how persons can comment on regulations under review.” The Credit Union National Association has urged the NCUA and other independent agencies to consider the "principles and basic approach to regulation" reflected in Obama’s executive order when reviewing current regulations. For the full Fryzel speech, use the resource link.

Obama signs patent changes into law

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WASHINGTON (9/19/11)--President Barack Obama signed the Leahy-Smith America Invents Act (H.R. 1249) into law Friday, and credit unions and other businesses will now be protected from outside claims on some of their specific customer service, payment and marketing practices. These types of patent challenges, which are often brought by non-practicing entities, can become expensive for credit unions and others if they are heard in court. The presidential signing ceremony took place at Alexandria, Virginia’s Thomas Jefferson High School for Science & Technology. Obama was joined by Sen. Patrick Leahy (D-Vt.) and Reps. Lamar Smith (R-Texas), Bob Goodlatte (R-Va.), Jim Moran (D-Va.), and Mel Watt (D-N.C.). The White House in a statement said the bipartisan guest list, and the bill signing, “shows that strong bipartisan cooperation is possible” and that “Congress can come together on behalf of the American economy and American innovation.” H.R. 1249 will alter the patent application system by awarding a patent to the first inventor to file a given application. The legislation also provides greater time for the public to provide input on a patent and changes the rules under which an existing patent may be challenged. The Credit Union National Association was one of several trade groups that backed the legislation, and sought senate support ahead of this month’s vote through a letter to members of congress.

Paul Hazen longtime NCBA leader announces resignation

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WASHINGTON (9/19/11)--National Cooperative Business Association (NCBA) President/CEO Paul Hazen announced on Friday that he would soon end his quarter-century tenure at NCBA—twelve years of which have been spent leading of the association—and resign in 2012. Hazen said that after 25 years with NCBA, he believes it is time for the organization to have new leadership. Hazen said in a release that he has enjoyed his work for NCBA and the cooperative movement, and has found the greatest benefit to that work has been getting to know the people of the cooperative movement and their stories. “I have learned that cooperators all over the world -- whether in the U.S., Brazil, or in Zambia -- are all united because of the same cooperative principles and values. That is our greatest strength,” Hazen said. Hazen is expected to leave his position in early 2012, but he will stay on until a replacement is found. The NCBA’s board of directors will lead the search for his replacement. Hazen said he hopes to “remain active in the cooperative movement.” Credit Union National Association (CUNA) President/CEO Bill Cheney said Friday that CUNA “appreciated Paul’s willingness and ability to marshal the larger cooperative community in support of credit unions when needed, whether it was co-op participation in our successful fight to enact the Credit Union Membership Access Act in 1998 or, more recently, our advocacy for legislation to raise the statutory cap that limits credit unions’ small business lending.” “Paul’s passion for co-ops and his belief in the positive benefits they confer on society are an inspiration to us all, and we at CUNA thank him for his service at NCBA and wish him the very best in the next stage of his career,” Cheney added.

Pres. candidate Perry backs MBLs reduced regs in Iowa speech

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DES MOINES, Iowa (9/19/11)--Credit unions that serve small businesses need to be freed up to help revive Main Street, and need to see the member business lending cap raised, Texas Governor and current Republican presidential nomination candidate Rick Perry said on Friday.
Click to view larger imageTexas Governor Rick Perry (left), who is currently a top Republican presidential nomination candidate, is greeted by Iowa Credit Union League (ICUL) President Pat Jury (right) as Perry takes the stage to speak to 250 attendees of the ICUL's 2011 Convention. Perry noted that small business owners are “being strangled” by tight credit as small businesses continue to have a hard time getting credit from large national banks. (ICUL Photo)
The governor’s remarks came as his fellow contender for the Republican nomination, Mitt Romney, discussed MBLs with a credit union leader at an Arizona business roundtable. Perry spoke before 250 attendees of the Iowa Credit Union League’s 2011 Convention. In his remarks, Perry noted that business owners are “being strangled” by tight credit as small businesses continue to have a hard time getting credit from large national banks. Perry also addressed his support of credit unions in his home state, noting that Texas credit unions “generate three-quarters of a billion dollars in salaries, employ 18,000 workers and provide billions of dollars in capital for families and businesses.” Protecting credit unions’ tax status is vital to “protecting their important economic investments,” Perry added. The governor also said he supports and end to financial “overregulation.” “Do we need protections? Yes. But overregulation has to end,” he said, adding that repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act is high on his list of priorities. Iowa Credit Union League President/CEO Patrick Jury said the league was “very pleased to hear Governor Perry's support for raising the member business lending cap,” and added that MBL cap lift legislation “is a common sense solution that should be advanced by this Congress. “Hopefully, the attention provided to the issue by Governor Perry today will aid in growing bi-partisan support for the issue,” he added. Another Republican presidential contender, former Massachusetts Governor Mitt Romney, recently said he would look into the MBL issue himself. The Arizona Credit Union League reported that Romney discussed the MBL issue with Vantage West CU President/CEO Bob Ramirez at a local business roundtable held last week in Tucson, Ariz. The Credit Union National Association (CUNA) has estimated that lifting the 12.25% of assets cap on credit union member business lending to 27.5% of assets would inject $13 billion in new funds into the economy, creating 140,000 new jobs in the first year after enactment. House and Senate bills that would lift the cap remain active, and CUNA and legislators have urged President Barack Obama to include an MBL cap lift in his job creation plans.

Inside Washington (09/16/2011)

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* WASHINGTON (9/19/11)--Only four of the 11 largest U.S mortgage servicers are on track to achieve an “at least median performance” for the first half of the year, according to a new ranking system from Fannie Mae (American Banker Sept. 16). Fannie’s Servicer Total Achievement and Rewards (STAR) Program measures the performance of servicers in helping homeowners avoid foreclosure. Fannie did not identify the underperforming servicers. It provided a list of “peer groups,” listing the servicers it assessed in each category. “The STAR program helps us evaluate and hold servicers accountable for measurable, consistent results in preventing foreclosure,” said Leslie Peeler, Fannie Mae’s vice president for servicer portfolio management. “Servicers who achieve the highest ratings are leading the way in providing assistance to homeowners who are having difficulty making their mortgage payments” … * WASHINGTON (9/19/11)--The Consumer Financial Protection Bureau (CFPB) will be fair but tough-minded in assessing practices harmful to consumers, an agency spokesman said Thursday (American Banker Sept. 16). The agency will take the necessary action to end unjustified practices, Raj Date, the special adviser to the secretary of the treasury for the CFPB told a group of bankers and consumer advocates in Philadelphia. The CFPB organized the event to mark the anniversary of the collapse of Lehman Brothers and the start of the financial crisis. Date discussed the lessons learned from the mortgage market meltdown and how those lessons can be applied to the consumer bureau’s work moving forward. Date specifically cited financial products that are outside the traditional banking sector and are targeted at consumers who have a short-term need for cash. The CFPB will ensure that such short-term credit is “fair, transparent and competitive,” Date said … * WASHINGTON (9/19/11)--The Federal Reserve would not stop a proposed merger only because it presents an increased risk to the financial system, Fed Gov. Dan Tarullo said Thursday (American Banker Sept. 16). “It is important to note that, while Congress instructed us to consider the extent to which a proposed acquisition would pose a greater risk to financial stability, it clearly did not instruct us to reject an acquisition simply because there would be any increase in such risks,” Tarullo said in a speech at a Fed conference on systemic risk. Tuesday the Fed will hold first of three hearings on Capital One Financial Corp.’s proposed $9 billion acquisition of ING Direct USA. The proposed deal, under review by the Fed, has been criticized by community groups and affordable housing advocates, who argue that it would create another too-big-to-fail financial institution … * WASHINGTON (9/19/11)--More than a dozen credit union advocates from North Carolina made their fall Hike the Hill trip to Washington, D.C., recently. The trip featured meetings with staff at the newly opened Consumer Financial Protection Bureau (CFPB), followed by visits with elected representatives. After brief welcoming remarks from Elizabeth Vale, who heads up the bureau’s Office of Community Banks and Credit Unions, the North Carolina visitors met with three CFPB staffers. “The CFPB representatives expressed sensitivity to the challenges of the regulatory process for financial institutions,” said Dan Schile, North Carolina Credit Union League senior vice president of association services. “One of their key objectives is to make forms and disclosures as simple as possible for credit unions to fill out and for their members to understand.” The trip concluded Thursday with meetings on the Hill. The focal point of the meetings was the ongoing member business lending (MBL) efforts, which may get a boost from President Obama’s recently announced job creation package. The Credit Union National Association (CUNA) and credit unions are pressing Congress to increase credit unions’ MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said. (Photo provided by North Carolina Credit Union League) …

CDFI Fund adds three CUs to approved institutions list

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WASHINGTON (9/16/11)--A trio of credit unions are among the latest additions to the list of Community Development Financial Institutions (CDFI) after the U.S. Treasury's CDFI Fund approved them in August. The credit unions are:
*Jefferson Financial CU, Metairie, La.; * Carville PHS Employees FCU, Carville, La.; and *HawaiiUSA FCU, Honolulu, Hawaii.
The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community. CDFI Fund distributions are merit-based, and a total of $25.7 million in funds were awarded to 25 credit unions under the fiscal year 2011 round of the CDFI Fund Program. Jefferson Financial, which holds $247 million in assets and has about 29,000 members, offers one-on-one financial counseling and broader budgeting, debt management, home purchase, credit and loan counseling to low income residents of Jefferson Parish, La., according to the CDFI Fund. The fund added that Carville PHS Employees FCU, which has $5 million in assets and 680 members, aids its community, which encompasses the parishes of Iberville and Ascension, by providing individual financial counseling. HawaiiUSA FCU offers financial education seminars, counseling, and youth- and student-specific financial literacy programs, the CDFI Fund said. The credit union, which holds around $1.3 billion in assets, serves 132,000 members and was also named as a certified Native CDFI last month. The CDFI Fund’s Native American CDFI Assistance (NACA) Program is designed to encourage the creation and strengthening of certified CDFIs that primarily serve Native American, Alaskan Native and Native Hawaiian communities. NACA funds may be used to finance capital or may be provided to financial institutions in the form of technical assistance grants. For the CDFI Fund's release, use the resource link.

Net worth equity ratio discussion leads NCUA meeting

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ALEXANDRIA, Va. (9/16/11)—The final regulation revising Parts 700, 701, 702, and 741 of the National Credit Union Administration’s (NCUA) Rules and Regulations on Net Worth and Equity Ratio Definitions will lead the day’s discussion when the NCUA meets for its September open board meeting next Thursday at 10 a.m. ET in Alexandria, Va. The NCUA in March proposed amending the Federal Credit Union Act's definition of "net worth" for natural-person credit unions under NCUA's Prompt Corrective Action authorities to allow the NCUA's Section 208 Assistance made to troubled credit unions to qualify as regulatory net worth. The NCUA proposal also included a "technical correction" to its regulatory definition of "net worth." This technical correction would generally decrease the amount of a combined credit union's "net worth" in a credit union merger. The agency also proposed equity ratio changes that clarify that the National Credit Union Share Insurance Fund's (NCUSIF) equity ratio must be based solely on the financial statements of the NCUSIF alone, without consolidation with other statements such as those of conserved credit unions. These changes were scheduled to be discussed at the NCUA’s July open board meeting. However, the changes were removed from the agenda shortly before the meeting took place. Although the Credit Union National Association (CUNA) supported some of these changes, CUNA also strongly opposed a provision that would have added language to the definition of a credit union's net worth to require "bargain purchase gains" be deducted from a target credit union’s net worth when it is merged with another credit union. CUNA was concerned that the proposal would result in a decrease in the combined credit union's net worth. CUNA and its Accounting Subcommittee, which is chaired by Patelco CU CFO Scott Waite, have worked with credit union accountants on the bargain purchase gain issue. During the meeting, the NCUA will also discuss delegations of agency authority, and the customary monthly insurance fund report is scheduled to be presented. The closed portion of the NCUA’s meeting will feature a charter and merger request as well as an appeal under Section 701.4 and Part 747, Subpart J of the NCUA's regulations. Supervisory activities and personnel issues will also be covered during the closed meeting. For the full NCUA agenda, use the resource link.

CUNA addressing IRS CU exemption error

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WASHINGTON (9/16/11)—An assertion by the U.S. Internal Revenue Service (IRS) that some credit unions are no longer tax-exempt is “completely wrong” and something that the Credit Union National Association (CUNA) will work on tirelessly to set the record straight, inside and outside the credit union movement, CUNA President/CEO Bill Cheney said Thursday. Cheney was reacting to recent action by the tax agency in which it notified several state-chartered credit unions, and some federally chartered credit unions, that they would lose their tax-exempt status after their respective regulators failed to file Form 990 tax returns on their behalf. Various state credit union regulators at one time filed Form 990 tax returns for all state-chartered credit unions under their jurisdiction, but that practice was stopped years ago. CUNA in a letter to IRS Commissioner Douglas Shulman and Director of Exempt Organizations Lois Lerner reminded the IRS officials that state-chartered credit unions, which now file their own returns, have met their annual filing requirements and should remain exempt. CUNA in the letter also emphasized that organizations that are tax exempt under Section 501(c)(1) of the Internal Revenue Code, such as federal credit unions, do not have to file 990 forms or make those forms available for inspection. Cheney said CUNA hopes the IRS issue “is simply a paperwork error.” However, he added, “if it’s not a paperwork error – and we are looking into this – we will not rest until this effort is ceased, its origins exposed, and the tax agency understands thoroughly that the credit union tax exemption comes from Congress and the individual charters of credit unions, not from the IRS.” CUNA General Counsel Eric Richard added that CUNA’s Regulatory Affairs staff “is on top of this development and pushing the IRS to correct its error as soon as possible.”

Inside Washington (09/15/2011)

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* WASHINGTON (9/16/11)--An additional 61 community banks received a total of $608 million through the Small Business Lending Fund (SBLF), the Treasury Department announced Wednesday. The SBLF, which was established as part of the Small Business Jobs Act that President Barack Obama signed into law, encourages community banks to increase their lending to small businesses, helping those companies expand their operations and create new jobs. With the announcement, 191 community banks have now received more than $2.4 billion in SBLF funding. Additional SBLF funding announcements will be made in the weeks ahead, Treasury said. The Credit Union National Association (CUNA) and credit unions are pressing Congress to increase credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said. … * WASHINGTON (9/16/11)--The American Bankers Association (ABA) has asked the Treasury Department for further explanation about rejected bank applications for the Small Business Lending Fund (SBLF) (American Banker Sept. 15). About 60% of applicants were denied for SBLF funds, primarily because they failed to meet the program’s minimum statutory requirements, Treasury said in a white paper last week. The ABA asked for more details on those denials and how banks can address those issues, in a letter from ABA President Frank Keating to Jason Tepperman, the head of the SBLF program. Keating said he was concerned the SBLF was failing to reach its potential … * WASHINGTON (9/16/11)--A more simple banking and regulatory environment would be a safer, Tom Hoenig, president of the Federal Reserve Bank of Kansas City, said in an interview with American Banker (Sept. 15). Hoenig, who will retire Sept. 30, said the current system subsidizes the high-risk activities of larger institutions, which he called a misallocation of resources. He suggested separating the roles within commercial banks between payments and intermediation, and higher-risk areas, such as investment banking, trading and hedge funds. Higher risk activities should be funded by private capital, while payments and intermediation should remain subsidized by the regulatory system, he said. Despite enhanced supervision since the 2008 financial fallout, the banking system is no easier to understand or enforce, Hoenig argued …

CUs candidates win one lose one in special elections

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WASHINGTON (9/15/11)--Credit union-backed candidates went one-for-two in House special elections held on Tuesday, as Nevada’s Mark Amodei (R) won, while New York’s Dave Weprin (D) fell to his Republican opponent.
Click to view larger image Nevada Credit Union League employees Jeremy Empol, left, Patty Salazar, Melissa Ameluxen, and Andrea Svoboda, along with Great Basin FCU CEO Dennis Flannigan, support new House member Mark Amodei by canvassing in his district. (Photo: California and Nevada Credit Union Leagues)
Amodei, who has a strong relationship with Nevada credit unions and was backed by credit union canvassers in his home precincts, defeated Democratic opponent Kate Marshall, winning 58% of total votes. The former Nevada state senator won the House seat that was vacated when Rep. Dean Heller (R) took on the Senate seat of scandal-plagued former Sen. John Ensign (R-Nev.). Amodei will need to run again in 2012 if he wishes to hold on to his newly won House seat. Amodei’s win was not shocking, as Nevada’s second district is largely Republican leaning. However, Tuesday’s New York result, which came in a special election to replace disgraced former House member Rep. Anthony Weiner, was a surprise to many. New York State Assemblyman Dave Weprin (D) was upset by Republican Bob Turner in their contest to represent New York’s ninth congressional district, which includes parts of Brooklyn and Queens. Turner won with around 54% of the vote, according to the Associated Press. Weprin has been a vocal credit union advocate and has repeatedly worked with the Credit Union Association of New York on credit union issues. Credit Union National Association (CUNA) Vice President of Political Affairs Trey Hawkins said the Credit Union Legislative Action Council (CULAC) "will continue to be in the game on behalf of credit union-friendly candidates, and will aggressively support credit union friends in the elections next year." The presidency, congressional seats, and state and local positions are all at stake in 2012.

NCUA prohibits five from future CU work

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ALEXANDRIA, Va. (9/15/11)--Five individuals have been the subject of recent prohibition orders issued by the National Credit Union Administration (NCUA) and are thereby prohibited from participating in the affairs of any federally insured financial institution. Four of the prohibition orders followed recent crime convictions. Former Lockheed FCU, Burbank, Calif., employee Milton Callan will serve a 41 month sentence, as well as five years of supervised probation, following an embezzlement conviction. He will also pay $831,763.91 in restitution. Three theft convictions were also tied to former Lockheed FCU employees. The NCUA has reported that:
* Varoujan John Daglian will serve three years of probation and pay $751 in restitution; * Lorraine Lopez will serve three years formal probation and pay $5,808.26 in restitution; and * Victor Jackmon will serve five years of probation and pay $14,263.66 in restitution.
The NCUA also reported that Rhonda Hitt, a former employee of Fort Worth, Texas-based Fort Worth Star-Telegram Employees FCU, consented to a prohibition order and a cease-and-desist order, without admitting or denying fault. Hitt will pay $4,383.49 in restitution as part of the deal. Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. For the full NCUA release, use the resource link.

FinCEN proposes to make BSA e-filing mandatory

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WASHINGTON (9/15/11)--The Financial Crimes Enforcement Network (FinCEN) is considering making electronic filing of all Bank Secrecy Act (BSA) reports mandatory, starting on June 30, 2012. FinCEN said the switch to all-electronic filing would “improve efficiency, reduce costs for the financial industry, and enhance the ability of investigators, analysts, and examiners to gain better and more timely access to important financial information.” Increased BSA E-Filing would also help FinCEN provide information relevant to money laundering and terrorist financing investigations to law enforcement “in the quickest manner possible,” shortening the lag time between when BSA reports are filed and when they can be accessed by authorities to two days. Criminal investigators and other officials are forced to wait two weeks to access new paper-filed BSA reports. FinCEN will accept comment on the proposal for 60 days after it is published in the Federal Register. BSA E-Filing, first developed in 2002, is a free, voluntary, Web-based system that is user-ID and password protected. Financial institutions subject to BSA reporting requirements use the system to electronically file a variety of BSA forms, either individually or in batches, through a FinCEN secure network. FinCEN noted that 85% of BSA filings already are made electronically. The following forms are currently available for BSA E-Filing:
*Currency Transaction Reports (CTRs); *Designations of Exempt Persons (DEPs); and *Suspicious Activity Reports (SARs).
Currency and Monetary Instrument Reports, which are usually filed by individuals crossing the border into the U.S., would be exempted from the E-filing obligation, FinCEN said. FinCEN this month provided technical specifications to help staff prepare their institutions for future large filings of SARs and CTRs, and FinCEN has also scheduled a webinar for Sept. 29. For FinCEN’s latest proposal and more on the technical specifications, use the resource links.

CUNA Merchants poor data security standards negligence cost CUs millions

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WASHINGTON (9/15/11)--Pending Senate data breach legislation may “create an unnecessary duplicative regulatory burden for credit unions,” the Credit Union National Association (CUNA) has warned in a letter sent to members of the Senate Judiciary Committee ahead of today’s scheduled markup session. The markup session will focus on S. 1151, which would establish national standards for data security and data breach notification, and S. 1408, which would establish a data breach notification standard similar to the requirements of S. 1151. CUNA in the letter noted that “credit unions are already subject to very robust data security and data breach notification requirements under the Gramm-Leach-Bliley Act, subject to the supervision and enforcement of the National Credit Union Administration or the state supervisory agencies.” The national standards proposed by S. 1151 and S. 1408 ”would be largely duplicative of current regulatory requirements and increase the cost of compliance to the detriment of credit unions and their members,” the letter adds. The role credit unions take in protecting their members’ personal financial information was also covered in the letter. “Credit unions often absorb not only the actual costs, but also the reputational costs, associated with data breaches caused by merchants and other entities, notifying the member that a breach has occurred, canceling and reissuing debit and credit cards exposed during the breach, and monitoring accounts for fraudulent activity that may have occurred as a result of the breach,” CUNA said. Noting that many of these actions are taken by credit unions to help their members deal with merchant mistakes or neglect, CUNA also encouraged the legislators to consider adding language that would require the entity that is subject to a data breach cover fraud and other costs associated with the data breach. “There may be no better enforcement mechanism to ensure merchant compliance with data security standards than to make it clear that they will pay the costs of those affected by their negligence, including credit unions and their members,” the letter said. For the full letter, use the resource link.

Inside Washington (09/14/2011)

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* WASHINGTON (9/15/11)--Three years after the government seized Fannie Mae and Freddie Mac, lawmakers do not appear close to a formal proposal for reforming the government-sponsored enterprises (American Banker Sept. 14). During a hearing on housing reform--the 10th such hearing since Fannie and Freddie’s seizure--Democrats and Republicans on the Senate Banking Committee spoke in broad outlines about their preferences for reform. U.S. Sen. Tim Johnson (D-S.D.) said he was concerned about the unintended consequences if a government role is eliminated completely from the housing market. U.S. Sen. Richard Shelby (R-Ala.) was critical of the taxpayer dollars that were put at risk and lost under the former system, but he stopped short of calling for a fully privatized solution. Although the meeting included similar disagreement, no comprehensive proposals were offered. The maximum size of loans guaranteed by Fannie, Freddie and the Federal Housing Administration will decrease unless Congress takes action this month … * WASHINGTON (9/15/11)--The final rule that requires the largest financial firms to provide “living wills” will give companies more time to complete their plans than initially proposed. Randy Guynn, a partner and head of Financial Institutions Group at Davis & Polk, said that in showing more flexibility the Federal Reserve Board and Federal Deposit Insurance Corp. (FDIC) listened to the concerns of large financial institutions during the comment process after the initial rule was proposed in April (American Banker Sept. 14). The FDIC voted 3-0 to approve the final rule on Tuesday. The Fed is expected to approve the rule later this month. Living wills are required as part of the Dodd-Frank Act. They are designed to give regulators an outline of how otherwise healthy firms would wind down if they failed. Under the initial proposal, firms would have been required to submit their resolutions plans no later than 180 days after the rule became effective. The final rule provides firms with staggered phase-in periods. The largest, most complex firms will be required to go first, to inform the process, the Banker said … * WASHINGTON (9/15/11)--The Federal Deposit Insurance Corp. (FDIC) Board on Tuesday adopted guidelines outlining the process it will use to make an adjustment to the score used to calculate the deposit insurance assessment rate for large banks. The guidelines apply to institutions with $10 billion or more in assets. The new methodology combines CAMELS ratings and financial measures to produce a score that is converted into an institution’s assessment rate. The FDIC is authorized to adjust an institution’s total score by 15 points. The FDIC said it will primarily consider two types of information in determining whether to make an adjustment: (1) a scorecard ratio or measure that exceeds the maximum cutoff value for that ratio or measure or is less than the minimum cutoff value, along with the degree to which the ratio or measure differs from the cutoff value; and (2) information not directly captured in the scorecard, including complementary quantitative risk measures and qualitative risk considerations …

CUNA calls on NCUA to change CUSO governance plan

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WASHINGTON 9/14/11)--Credit union service organizations (CUSOs) do not pose a risk to the credit union system nor do they pose overall concerns to the National Credit Union Share Insurance Fund and the National Credit Union Administration should withdraw--or at least substantially modify--its recently proposed additions to rules governing CUSOs, the Credit Union National Association (CUNA) said in a comment letter. The NCUA’s proposal, released in July, would require CUSOs and their subsidiaries to directly file their financial statements with the NCUA. Financial reports would also need to be forwarded to appropriate state supervisors under the rule. The agency has argued that the proposal, if enacted, would "enhance protections to consumers, credit unions and the National Credit Union Share Insurance Fund." While some CUSOs have had issues, CUNA said that CUSOs “as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF.” The agency “has provided absolutely no data or analysis regarding current problems that could be used to substantiate the need for the proposal,” CUNA Deputy General Counsel Mary Dunn said in the comment letter. Dunn said that credit unions are extremely concerned about the proposed rule, and questioned whether the agency has the legal authority to take the steps presented in its proposed rule. “NCUA already has a number of options it can employ to ensure credit unions do not get into trouble by participating in a CUSO without having to adopt the CUSO oversight provisions in the proposal,” the CUNA letter stated. “Rather than issuing new requirements, the agency should focus on targeting problem areas and implementing existing requirements, such as due diligence,” the letter suggested. NCUA examiners should review 5300 reports and other documents from the credit union regarding its involvement with its CUSO, among other steps, the letter said. The CUNA letter was developed with CUNA's Examination and Supervision Subcommittee, Federal Credit Union Subcommittem and members of CUNA's Councils. For the full CUNA comment letter, use the resource link.

CFPB continues with mortgage form revisions

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WASHINGTON (9/14/11)--The Consumer Financial Protection Bureau (CFPB) has made a slight change in round four of its mortgage disclosure form revision project, asking commenters to “compare two different types of loan products using the same version” of the mortgage form. In recent months, the agency has released several drafts of a sample mortgage form that combines certain consumer disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into one document. In previous drafts of the form, the CFPB asked financial institutions and consumers to comment on two slightly different versions of the combined form. This time, the CFPB’s Assistant Director for Mortgage and Home Equity Markets Patricia McCoy said the agency “want[s] to make sure the disclosure actually helps consumers understand features of competing loan products, from the overall loan amount to estimates of taxes and insurance costs.” The CFPB in a release asks: “If you’re a consumer, which product would you choose? If your work puts you in a position to advise potential borrowers, which would you recommend?” The mortgage disclosure revisions, known as the "Know Before You Owe" project, is meant to make the disclosures concerning the costs and risks of mortgage loans clearer and to help consumers comparison shop for the best mortgage loan offer. The combined form is required under the Dodd-Frank Act, and the CFPB is required to publish rules and model disclosures for the new mortgage form by July 2012. The CFPB emphasized that this latest release is not the final version of the mortgage disclosure form. Credit Union National Association (CUNA) staff have met with the CFPB to discuss the mortgage disclosure revision project, and CUNA continues to be actively involved in roundtable discussions and other forums with CFPB personnel and others as the drafting and testing phases of the revision process moves forward. For the CFPB release, use the resource link.

Fed issues small entity routing and exclusivity guidance

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WASHINGTON (9/14/11)--The Federal Reserve Board Tuesday released compliance guidance on debit card interchange fees and routing, guidance that is targeted to credit unions and other “small entities.” The guidance on the Fed’s Regulation II is comprised of 14 compliance questions with their related answers. Regulation II implements the provisions of section 920 of the Electronic Funds Transfer Act that govern debit card interchange fees and network routing and exclusivity limitations. The section was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Topics in the compliance guide range from:
* What does section 920 of the Electronic Fund Transfer Act require? * Which issuers are not subject to the interchange fee standards?
To:
* What types of payment card networks may an issuer enable to satisfy the two-unaffiliated-networks requirement? * Is there more guidance on the provisions of Regulation II? * And more.
It was the Dodd-Frank Act, of course, that required the Fed to set a debit interchange fee cap. The Fed's final rule caps large issuer debit interchange fees at 21 cents, and allows an additional five basis points per transaction may be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with Fed established fraud prevention standards. Card issuers with less than $10 billion in assets--like most credit unions--are exempt from the fee cap. However, the routing and exclusivity rules apply to all debit card issuers regardless of asset size. On routing, Regulation II prohibits issuers and payment card networks from limiting merchants’ ability to choose the network through which a transaction is routed, effective Oct. 1. On exclusivity, Regulation II requires an issuer’s debit card can be processed by at least two unaffiliated card networks, such as one signature network and one unaffiliated PIN network. That goes into effect April 1, 2012. Use the resource link to access the Fed guidance.

Search for new jobs should lead to MBL bills CUNA

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WASHINGTON (9/14/11)--The Credit Union National Association (CUNA) continues to advocate a member business lending (MBL) cap lift as one small piece that could be added to the Obama Administration’s larger plan to reinvigorate the ailing economy. Aside from a number of spending initiatives, the administration plan, known as the American Jobs Act, would provide payroll tax cuts for most businesses and “completely eliminate payroll taxes for firms that increase their payroll by adding new workers” or increasing the wages of current employees. Employers would also receive tax credits for hiring returning veterans and the unemployed, and the payroll taxes paid by individual employees would also be cut. The administration also proposes “reforms and regulatory reductions to help entrepreneurs and small businesses access capital.” CUNA has emphasized lifting the MBL cap to 27.5% of assets as another way that business owners could access the money needed to hire new workers and expand their businesses. Lifting the credit union MBL cap from the current 12.25% of assets restriction would inject more than $13 billion in new funding into the economy, at no cost to taxpayers, creating 140,000 new jobs in the first year after enactment. Among the spending priorities covered in the administration’s plan are:
*Renovating and modernizing public schools; *Infrastructure improvements aimed at repairing and modernizing roads, rails, airports and waterways; *Rehabilitating homes, businesses and communities; and *Expanding high-speed wireless internet access nationwide.
The plan also proposes some unemployment insurance reforms. Although the President urged Congress to pass his bill in its entirety when it was introduced late last week, the White House has reportedly said that Obama would sign portions of the bill separately.

New CUNA ads tout MBLs to Hill audience

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WASHINGTON (9/14/11)—Credit Union National Association (CUNA)-sponsored ads noting the economic promise, and bipartisan appeal, of lifting the credit union member business lending cap will begin running next week in Capitol Hill newspapers and the Washington regional edition of the Wall Street Journal.
Click to view larger image Click to download pdf
The ads, which are headlined “A jobs program both Republicans and Democrats can love” and “With 58 bills to create jobs pending in Congress, only S. 509 and H.R. 1418 would create 140,000 new jobs at no cost to taxpayers,” feature business borrowers from credit unions. The D.C.-based publications that the ad will run in include Roll Call, Politico, The Hill, Congress Daily AM, Congressional Quarterly (CQ), and National Journal. "With more than half of the states sending credit union delegations through their Leagues to Washington over the next six or seven weeks for ‘Hike the Hill’ visits, we have a significant opportunity to make a strong impact in support of these bills," said Richard Gose, CUNA senior president of political affairs. "The ads will work in tandem with the credit union representatives, as a reminder to members of Congress and their staff members of the importance of this legislation to credit unions." The ads will run in to the month of October. Sen. Mark Udall (D-Colo.) has introduced S. 509 in the Senate and Rep. Ed Royce (R-Calif.) has introduced H.R. 1418 in the House. Both bills would increase the MBL cap to 27.5% of assets, up from the current 12.25%. CUNA has estimated that lifting the cap to 27.5% of assets would inject $13 billion in new funds into the economy and create 140,000 new jobs, at no cost to taxpayers.

Inside Washington (09/13/2011)

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* WASHINGTON (9/14/11)--The Federal Deposit Insurance Corp.’s (FDIC) blanket coverage of no-interest deposits, a program started during the financial crisis, has created a quandary for large financial institutions. The coverage was initially created to provide stability, but after the Dodd-Frank Act extended the program until the end of 2012, many large banks have been left with the added costs of ultra-short term deposits from institutional investors. Banks can only invest or lend the money out on an overnight basis, said Ron Glancz, a partner at Venable LLP. They are paying the premiums without the advantage of increased deposits, he said. The coverage was intended primarily for small banks and to protect businesses from losses, but banks no longer have liquidity issues, said John Douglas, a partner at Davis Polk & Wardwell and a former FDIC general counsel … * WASHINGTON (9/14/11)--The Internal Revenue Service (IRS) seeks public comment on a proposed “affordability safe harbor” for employers under the shared responsibility provisions included in the Affordable Care Act. Under the act, which goes into effect in 2014, employers with 50 or more full-time employees that do not offer affordable health coverage to those employees may be required to make a shared-responsibility payment. IRS expects to propose a safe harbor permitting employers that offer coverage to their employees to measure the affordability of that coverage by using wages that the employer paid to an employee, instead of the employee’s household income. This contemplated safe harbor would only apply for purposes of the employer shared responsibility provision, and would not affect employees’ eligibility for health insurance premium tax credits. Notice 2011-73, posted Tuesday on IRS.gov, asks for comment on the proposed safe harbor …

Congress returns to consider debt taxes housing and cybercrime

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WASHINGTON (9/13/11)--The U.S. House and Senate are back in session this week and the Joint Select Committee on Deficit Reduction launches its inaugural hearing today to study the history and drivers of the national debt. Congressional Budget Office Director Douglas Elmendorf will testify during that hearing. Deficit reduction also will be the lead topic at a hearing today by the Senate Banking subcommittee on fiscal responsibility and economic growth on the role that tax reform could play in deficit reduction and U.S. fiscal policy. Former Federal Reserve Board Chairman Alan Greenspan and assorted academics are set to testify during that hearing. Today also will feature discussions on housing finance reform, as the Senate Banking Committee investigates, through the testimony of academics, whether a government guarantee is needed in housing finance. Housing-related discussions will continue on Wednesday as the panel’s subcommittee on housing, transportation and community development studies new ideas for mortgage refinancing and restructuring. Senate committees will remain busy on Thursday as the Senate Budget Committee and Senate Judiciary Committee address economic policy and data security, respectively. On the other side of the Hill, the House Financial Services subcommittee on financial institutions and consumer credit also will discuss data security during a Wednesday hearing entitled “Cybersecurity: Threats to the Financial Sector.” The House Budget Committee has also set a Wednesday hearing on “the Need for Pro-Growth Tax Reform.” A scheduled House Financial Services Committee hearing on the housing finance system in the global context, which was to take place on Thursday, has been postponed; the future date has not been announced.

CUNA encourages CU comment on CFPB servicemember plans

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WASHINGTON (9/13/11)--The Credit Union National Association (CUNA) is encouraging credit unions to respond to the Consumer Financial Protection Bureau's (CFPB) Office of Servicemember Affairs’ request for comment on the financial products and services they offer to members of the military community. The CFPB earlier this month asked credit unions and other financial institutions for general information on products, services, programs, policies, or practices that are tailored to the unique financial needs of servicemembers and their families, or marketed to them. The agency has also asked for more specific information on any assistance institutions offer to servicemembers who are distressed homeowners and their families. The CFPB also has sought information on any servicemember-specific short-term lending products. The agency is accepting comment until Sept. 20. For the CUNA comment call, use the resource link. The CFPB Office of Servicemember Affairs is led by Holly Petraeus, who previously served as the director of the Better Business Bureau (BBB) Military Line, a joint BBB/Department of Defense project that provides consumer education and advocacy for military families. She is the wife of General David Petraeus and the daughter of a former West Point superintendent. The office works to shield U.S. servicemembers and their families from abusive financial practices and monitors servicemember questions and complaints regarding consumer financial products and services. It also coordinates responses with CFPB staff and other federal and state agencies. CUNA representatives have met with Petraeus, and CUNA plans to work with this new office in the future.

Cheney named as a top D.C. association exec

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WASHINGTON (9/13/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney has been named as one of the Top Association CEOs of 2011 in CEO Update's latest list of influential executives. CEO Update, a Washington bi-weekly publication that reports on association and non-profit executive careers and people, drew its list from the leadership of many national associations that exist in the greater Washington, D.C., area. The publication notes that Cheney, who recently completed his first year as head of CUNA, has been credited by allies and adversaries alike “for nearly scoring a major upset in the debit-card swipe fee battle.” CEO Update added: “At a time when big banks were less popular than, say, Congress, Cheney's stepped up advocacy efforts, and huge grassroots mobilization of credit union members helped persuade many lawmakers who had supported the fee limit to vote in June to delay it.” While federal lawmakers ultimately did not delay the interchange fee cap implementation, CUNA's and credit unions' “show of strength among lawmakers and thousands of comments to the Fed likely influenced the central bank, which substantially raised the fee cap, essentially splitting the difference between what retailers and financial interests wanted,” CEO Update said. Cheney said of the listing that it is “a nice acknowledgement of CUNA’s focused team effort on behalf of our member credit unions.’” While Matt Shea, CEO of the National Retail Federation that was on the other side of the historic interchange battle also was noted as a “top CEO,” Cheney was the only representative of any financial services association on the CEO Updatelist.

Inside Washington (09/12/2011)

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*WASHINGTON (9/13/11)--The new congressional committee on deficit reduction is being pressured by President Barack Obama and the business community to set aside party differences and exceed its mandate of trimming $1.5 trillion from budget shortfall during the next decade. The president addressed the topic in his speech to a joint session of Congress on Thursday (The New York Times Sept. 12). He called for a deficit-reduction goal of at least $2 trillion. Much of the extra savings would offset his new $447 billion stimulus plan. A group of at least 57 prominent business executives and former government officials signed a petition, urging the committee to “go big” in achieving a greater deficit reduction. Among those who signed the petition, which was released on Monday, are former treasury secretaries, budget directors and economic advisers to eight presidents from Richard Nixon to Obama; former congressional leaders; and executives of top companies. The petition urges the committee to develop a large-scale debt-reduction package sufficient to stabilize the debt as a share of the economy. That level is estimated to be $4 trillion in deficit reductions over the next decade, savings that would increase in later years, according to the Times … * ALEXANDRIA, Va. (9/13/11)--Lara K. Rodríguez has been appointed as the National Credit Union Administration’s (NCUA) new deputy general counsel. Rodríguez succeeds Michael McKenna, who became general counsel last month. As deputy general counsel, Rodríguez manages the day-to-day operations of the office of general counsel. She oversees the three divisions within the office and also serves as the agency’s chief freedom of information officer. Rodríguez joins NCUA from the Federal Deposit Insurance Corp. after serving as a counsel in the special issues unit … * WASHINGTON (9/13/11)—Rep. Barney Frank (D-Mass.) Monday called for changes to the makeup of the Federal Reserve’s Federal Open Market Committee (FOMC) “for increased democratization” of that body. The FOMC oversees monetary policy by setting targets for interest rates. Currently, the voting membership of the committee is comprised of the seven members of the Federal Reserve Board of Governors, who are nominated by the president and subject to Senate confirmation, and five of the 12 presidents of the regional Federal Reserve Banks, who are chosen by regional Federal Reserve Bank directors. In a statement Frank claimed that this creates “a self-perpetuating group of private citizens who select each other and who are treated as equals in setting federal monetary policy with officials nominated by the president and confirmed by the Senate.” Earlier this year Frank introduced a bill that would remove the five members of the FOMC not subject to Senate confirmation. He announced Monday that in upcoming weeks, he intended to introduce new legislation, which would address also require the president to nominate four new FOMC members to represent the Federal Reserve Bank regions. Those four members would be “subject to Senate confirmation, but not otherwise employed by the Federal Reserve system” …

Inside Washington (09/09/2011)

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* WASHINGTON (9/12/11)--Elizabeth Warren, who organized the Consumer Financial Protection Bureau (CFPB) for the Obama administration and is now exploring a run for the U.S. Senate, is asking supporters to sign a petition that calls for the confirmation of the CFPB’s first director. President Barack Obama has nominated former Ohio Attorney General Richard Cordray to lead the bureau (American Banker Sept. 9). The petition appears on Warren’s website and is linked with her Facebook page. The website and Facebook page include the message, “Call on the Republicans on the Senate Banking Committee to protect the interests of middle class families, to confirm a director for the CFPB, and to let the agency do its work.” Republicans have threatened to block the confirmation of any director unless changes to CFPB’s structure are made … * WASHINGTON (9/12/11)--President Barack Obama’s American Jobs Act speech Thursday included two proposals that could influence the financial services industry. First, the legislation will include a national infrastructure bank (American Banker Sept. 9). Though Obama called for a national infrastructure bank, the idea has not been supported by Republicans in Congress. Banks oppose the idea, arguing that it would either subsidize projects that would otherwise be financed with private funds, or pay for economically unsound projects. Obama also vowed to take steps that would allow more Americans to refinance their mortgages. Although the speech included no specifics about the refinancing plan, Obama said it “could put more than $2,000 a year in a family’s pocket” … * WASHINGTON (9/12/11)--Freddie Mac said in a letter to investors it will not significantly discount its backlog of foreclosed homes in a letter to investors. Although steep discounts could help the government-sponsored enterprise relieve its backlog of foreclosed homes, they could also damage the housing market (American Banker Sept. 9). “We are extremely mindful of the impact in our approaches to pricing and how it affects the values of neighborhoods should a discounted sale occur,” Freddie stated in a letter sent to investors who are interested in acquiring properties in bulk through its real-estate owned sales unit HomeSteps. Freddie said it is selling above 90% of market value in most of its volume markets …

NCUA OIG Examiners could have eased Certified FCU losses

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ALEXANDRIA, Va. (9/12/11)--National Credit Union Administration (NCUA) examiners “could have prevented or reduced” losses to the National Credit Union Share Insurance Fund that were caused when Certified FCU failed in 2010 if “swift and appropriate administrative remedies” had been taken, the NCUA’s Office of the Inspector General (OIG) has determined. Certified FCU, which was based in Commerce, Calif., was closed due to its declining financial condition in May 2010. The credit union held $37.6 million in assets from 8,850 members when it was liquidated. The credit union’s members and assets were assumed by Vons FCU. An NCUA investigation of Certified’s books found “serious internal control weaknesses, including inadequate segregation of duties and untrained accounting staff.” These weaknesses “allowed the CEO to override internal controls, prepare erroneous account reconciliations from the general ledger to the subsidiary ledgers, and inaccurately report financial results,” resulting in the credit union overstating its financial condition. The credit union, according to the NCUA, also failed to properly book some loan sales, “erroneously recording the offsetting credit to income, rather than reducing loans receivable.” This error resulted in $8.8 million in losses for the credit union. The OIG said that the NCUA examiners’ and Region V management’s “failure to take decisive action” permitted the credit union’s CEO “to breach his fiduciary duty and remain in his position until he resigned in May 2010.” The NCUA said it is implementing a National Supervision Policy Manual and has improved some review processes to deal with these issues in the future. The agency also noted it has expanded its examiner procedures to “require examiners ensure amounts reported on the general ledger for all material accounts such as loans, member deposits, cash, and investments, reconcile to subsidiary ledgers” and the credit union’s call report. For the full OIG report, use the resource link.

CU execs must serve only one board NCUA says

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ALEXANDRIA, Va. (9/12/11)--The National Credit Union Administration’s (NCUA) management official interlocks rule prohibits members of a credit union’s management team from serving other nonaffiliated depository organizations, NCUA Associate General Counsel Hattie Ulan said in an agency legal opinion. The opinion responded to a question from Everence FCU President/CEO W. Kent Hartzler. Everence FCU, which is based in Lancaster, Pa., held $124 million in assets from more than 15,000 members as of March. The credit union’s membership is open to “everyone who is interested in practicing Christian stewardship,” according to its website. The institution and related organizations are tied to the Anabaptist Mennonite church. The credit union is tied to Everence Financial, a “variety of companies that provides insurance and financial products,” the NCUA said. The agency in its opinion said it was concerned that Everence FCU’s board “is improperly controlled by Everence Financial, particularly with regard to Everence Financial’s selection of the federal credit union's slate of candidates for its board of directors.” The president and chief executive officer of Everence Financial serve on the credit union’s board of directors, and also serve as board members for Everence’s thrift. According to the agency, the Interlocks Act and NCUA’s rule “generally prohibit an federal credit union's management official from simultaneously serving as a management official of another depository organization that has an office in the same city, town, or village unless the dual service qualifies for an exception or NCUA exempts a prohibited interlock.” This same rule is broadened to a “relevant metropolitan statistical area” if each institution has total assets of $50 million or more, the NCUA added. The Everence directors would be covered under these NCUA rules, as Everence FCU and the associated thrift each have offices in the same jurisdiction. However, Ulan suggested that the directors and their credit union could petition for an exemption with the agency. For the full opinion, use the resource link.

Agency reminds CUs TCCUSF payments due Sept. 27

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ALEXANDRIA, Va. (9/12/11)--The National Credit Union Administration (NCUA) late last week reminded credit unions that payments for their 2011 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) Assessments, as well as a semi-annual National Credit Union Share Insurance Fund (NCUSIF) 1% capitalization deposit adjustment, must be made by Sept. 27. The agency late last month assessed a 25 basis point (bp) TCCUSF premium for 2011, and that premium is expected to bring in $1.96 billion in funds to help cover the costs of corporate credit union stabilization. The NCUA said credit unions should expense the assessment in September and report the full expense on their Sept. 30 call reports. The agency during that meeting also said there is "no anticipated need" for an NCUSIF premium to be charged in 2011, and an NCUSIF premium "will not be necessary in 2012" if the number of credit union failures maintains its current pace. Payments may be made through the mail or via an electronic payment portal, pay.gov. Electronic payments will be automatically collected on Sept. 27. The agency added that credit unions that are overcapitalized will receive their refunds on Sept. 23. For the NCUA release, use the resource link.

Deficit panel adopts rules package

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WASHINGTON (9/8/11)—The Congressional Joint Select Committee on Deficit Reduction conducted its organizational meeting Thursday as planned and approved a rules package that will guide its actions in the coming months. The 12 panel members, including co-chairs Rep. Jeb Hensarling (R-Texas) and Sen. Patty Murray (D-Wash.), made opening statements that, in part, vowed to get the job done in the timeframe mandated by Congress. As Hensarling said of the panel’s daunting task of identifying areas or cost savings and revenue raising that will start to attack the country’s debt level, “I will not sit idly by and watch the American dream disappear for my 9-year-old daughter and my 7-year-old son," he said. "And I believe that is a sentiment shared by all of my colleagues." Co-chair Murray reminded her colleagues, who are split on the issue oof whether tax increases are on the table, that all member of the super committee must remain open to one all views and must be prepared to compromise. Credit Union National Association Senior Legislative Representative John Hildreth said after attending the committee’s initial meeting, "The panel members used the session primarily to pass a package of rules to govern the proceedings of the select committee, as well as to make opening statements to indicate their hopes for the panel and their shared desired outcome that the committee will produce a bill on time that will prevent the automatic sequestration requirements mandated by the Budget Control Act of 2011." The other members of the committee are:
* Democratic House members Xavier Becerra (D-Calif.), Chris Van Hollen (D-Md.), and James Clyburn (D-S.C.); * Republican House members Dave Camp (Mich.) and Fred Upton (Mich.); * Democratic Sens. Max Baucus (Mont.) and John Kerry (Mass.); and * Republican Sens. Jon Kyl (Ariz.), Pat Toomey (Pa.) and Rob Portman (Ohio).
Congressional committees must make their deficit-cutting recommendations to the committee by Oct. 14, and the deficit reduction committee must vote on its final reduction plan by Nov. 23. The committee's final report on deficit reduction, and related legislation, must be provided by Dec. 2, and that legislation must be voted on by Dec. 23.

Senate panel approves NFIP extension

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WASHINGTON (9/8/11)—The Senate Banking Committee Thursday approved by voice vote a bill to extend the National Flood Insurance Program (NFIP) for an another five years. The U.S. House last month overwhelmingly passed its version of a bill to extend the program, but before the extension can become law, the House and Senate must work out differences between their legislation. The House bill has a provision, backed by the Credit Union National Association, that would preserve the rights of credit unions to protect their collateral from flood hazards. The provision addresses situations where borrowers have allowed flood insurance to lapse, and clarifies that subsequent flood insurance purchased by a credit union, or other lender, would date back to the date the existing policy lapsed or became insufficient in coverage amount, including any premiums or fees incurred during the 45-day notification period. The Senate NFIP reform discussion draft, approved by the panel yesterday, includes a provision--opposed by CUNA--that would require all mortgage lenders to escrow for NFIP premiums. Current law only requires lenders that escrow for taxes and insurance to also escrow for NFIP premiums. CUNA has warned lawmakers the escrow requirement could drive some small mortgage lenders, including credit unions, out of the mortgage business because there is a significant cost involved with establishing escrow accounts, particularly for community banks, credit unions, and community-based lenders that have small lending volumes. CUNA Senior Vice President of Legislative Affairs Ryan Donovan said after the Senate committee vote Thursday that he expects there will be another temporary extension of NFIP before the House and Senate can resolve differences between their approaches to NFIP reform and approve a single bill for the president’s signature.

Schumer backs CU MBLs as jobs initiative

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WASHINGTON (9/9/11)--In a significant action in support of credit union member business lending (MBL), Sen. Charles Schumer (D-N.Y.) yesterday publicly backed adding MBL cap lift language to a developing jobs bill. Schumer in a statement said that lifting the "job-killing" lending cap "would be a win" for small businesses. "In these difficult economic times, we must ensure that they have access to the credit they need to grow and create jobs," he added. The senator also noted "small businesses are job creators and the lifeblood of Long Island's economy." Long Island, N.Y.'s Bethpage FCU is close to reaching its MBL cap, and Bethpage CEO Kirk Kordeleski said that "since the financial crisis hit in 2008, credit unions have stepped up to the plate to serve main street business owners which has accelerated our timeline of reaching the cap. If it is not lifted it will limit our ability to lend, which is not what the economy needs at this time—another financial institution not lending." The Credit Union National Association (CUNA) also supports the addition of MBL legislation to an economic job stimulus package, and estimates 140,000 jobs would be created within the first year after enactment. Separate House (H.R. 1418) and Senate bills (S.509) would, in part, increase the MBL limit to 27.5% of assets, up from the current 12.25% restriction. Taking this action would inject more than $13 billion in new funding into the economy, at no cost to taxpayers. Credit Union National Association President/CEO Bill Cheney said the jobs discussions that will follow last night's unveiling of the Obama administration's jobs plan present a “tailor-made opportunity to push a member business lending (MBL) cap lift for credit unions as one of the many ways job creation can be kick-started.” (See related story: CUNA presses MBLs as president launches jobs plan)

Patent law changes pass Senate

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WASHINGTON (9/9/11)--The Senate yesterday approved by an 89-9 vote the Leahy-Smith America Invents Act (H.R. 1249), which, among other things, would protect credit unions and other businesses from outside claims that some specific customer service, payment and marketing practices have already been claimed under existing business method patents. These types of patent challenges, which are often brought by non-practicing entities, can become expensive for credit unions and others if they are heard in court. Overall, H.R. 1249, which is named for Sen. Patrick Leahy (D-Vt.) and Lamar Smith (R-Texas), would alter the patent application system by awarding a patent to the first inventor to file a given application. The legislation also provides greater time for the public to provide input on a patent and changes the rules under which an existing patent may be challenged. The Credit Union National Association was one of several trade groups that backed the legislation, and sought senate support earlier this week in a letter to congress. The legislation now only needs President Barack Obama’s signature to become law.

CUNA presses MBLs as president launches jobs plan

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WASHINGTON (9/9/11)--The discussions and deliberations that will follow last night’s release of President Barack Obama’s proposal for an economic and job market revival present a “tailor-made opportunity to push a member business lending (MBL) cap lift for credit unions as one of the many ways job creation can be kick-started,” Credit Union National Association (CUNA) President/CEO Bill Cheney said. “Especially now, when our country is experiencing zero job growth, we believe Congress and the administration will be drawn to a measure that will generate $13 billion in new lending to small business and create 140,000 new jobs without burdening taxpayers or adding to the national debt,” Cheney added. Pending legislation in both the House and Senate would lift the MBL cap to 27.5% of assets, up from 12.25%. The president himself said Thursday night that he does not "pretend" that the plan unveiled before the joint session of Congress "will solve all our problems." "It shouldn’t be, nor will it be, the last plan of action we propose. What’s guided us from the start of this crisis hasn’t been the search for a silver bullet. It’s been a commitment to stay at it--to be persistent--to keep trying every new idea that works, and listen to every good proposal, no matter which party comes up with it." Ahead of Obama’s Thursday night speech before a joint session of Congress, Cheney in an editorial published on political news blog The Daily Caller said that lifting the credit union member business loan cap could be one of many “smaller-sized but still helpful measures” aimed at growing the ailing economy. “Small though it may be in the grand scheme, this is one good and politically viable solution. Undoubtedly there are others. Helpful measures such as these should not get lost in the larger jobs debate to come,” he added. House and Senate members have backed an MBL cap lift in recent days, with Sen. Charles Schumer (D-N.Y.) yesterday saying that lifting the "job-killing" lending cap "would be a win" for small businesses. (See related story: Schumer backs CU MBLs as jobs initiative) Sen. Mark Udall (D-Colo.), who is the main sponsor of MBL cap lift bill S. 509, and Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.), who are co-sponsors of House MBL cap lift legislation, also urged Obama to add an MBL cap lift to his job creation package. About 450 credit union advocates are expected to visit Capitol Hill lawmakers during CUNA’s Hike the Hill, which begins on Sept. 14 and lasts through mid-October. The MBL cap is high on their list of priorities.

NCUA OIG Agency action could have prevented Corp. CU failure

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ALEXANDRIA, Va. (9/9/11)--The National Credit Union Administration (NCUA) “failed to adequately assess or timely identify key risks” related to the concentration of mortgage-backed securities held in now-liquidated Constitution Corporate FCU’s investment portfolios “until it was too late,” the NCUA’s Office of the Inspector General has found. Constitution was one of several corporates whose investments in risky mortgage-backed securities eventually led to troubles. Members United Bridge Corporate FCU assumed the assets of Constitution Corporate FCU late last year after Constitution was liquidated. Constitution held a total of $1.2 billion in marketable securities as of July 31, 2010, and the NCUA estimated that $238 million of that total was comprised of private label mortgage-backed securities, $21 million of that total was comprised of commercial mortgage-backed securities, and $93 million of that total was comprised of asset-backed securities. The Office of the Inspector General in a material loss review of Constitution Corporate said that “stronger, more-timely supervisory actions and restrictions on concentrations could have provided opportunities for reasonable divestiture of investment securities,” helping the credit union to avoid the losses that ultimately led to liquidation. The inspector also noted that the NCUA at that time did not impose “specific investment concentration limits” and other regulatory structures that could have helped address “Constitution’s concentration risk and increasing exposure to credit, market, and liquidity risks.” In the report, the Office of the Inspector General also found the lack of adequate and timely regulatory oversight “was partially attributable to [NCUA] corporate examiners not having the appropriate regulatory support, such as more specific investment concentration limits, to adequately address Constitution’s concentration risk and the exposure to credit, market, and liquidity risks.“ The NCUA in its response said that its new corporate credit union rules and its large-issuer working group will help prevent the issues faced by Constitution and other corporates in the future. The agency also noted the unprecedented nature of the economic issues faced by the corporates in recent years. The inspector general also noted that the NCUA was not the only one to blame in this case, as the failed corporate “relied heavily on ratings assigned to the securities” that it purchased and “did not establish prudent sector concentration limits to reduce the credit risk exposure related to the underlying assets of the mortgage-backed securities.” The corporate also failed to “properly identify and monitor credit risk exposure in the underlying mortgage loan collateral of the mortgage-backed securities held in the investment portfolio,” the report added. For the full report, use the resource link.

Inside Washington (09/08/2011)

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* WASHINGTON (9/9/11)--Republican presidential candidate Mitt Romney would repeal the Dodd-Frank Act and replace it with “a streamlined regulatory framework,” according to his economic plan, which was released Wednesday. Romney said some Dodd-Frank reforms “have a place,” including greater transparency for inter-bank relationships, enhanced capital requirements, and provisions to address new forms of complex financial transactions. But Romney said Dodd-Frank is “a massive overreach of the federal government into private markets.” His plan also would modify the Sarbanes-Oxley law, which was passed in the wake of the accounting scandals of the early 2000s as part of any financial reform. The requirements of Sarbanes-Oxley were designed for large companies but impose unnecessary burdens when applied to mid-size firms, Romney said … * WASHINGTON (9/9/11)--The Federal Housing Finance Agency (FHFA) clarified that losses suffered by Fannie Mae and Freddie Mac were the result of misrepresentation by banks selling the securities rather than a lack of sophistication on the part of the government-sponsored enterprises in making the investments. The FHFA, Freddie and Fannie’s conservator, filed lawsuits against 17 financial institutions for the lost investments. “At the heart of the suits is FHFA’s conclusion that the actual mortgages backing many of the securities had characteristics that differed in a material way from what had been represented in securities filings. Under the securities laws at issue here, it does not matter how ‘big’ or ‘sophisticated’ a security purchaser is, the seller has a legal responsibility to accurately represent the characteristics of the loans backing the securities being sold,” the FHFA said in a statement. The agency also disputed press reports that it is seeking nearly $200 billion in damages or recoveries. “Actual recoveries will be determined based on filings by the parties, evidence and judicial findings,” the statement said … * WASHINGTON (9/9/11)--One hundred nonprofit organizations from 44 states and the District of Columbia received grants under the Program for Investment in Microentrepreneurs Act (PRIME), the U. S. Small Business Administration (SBA) announced Thursday. Grants will be used to provide business-based training and technical assistance to low-income and very low-income entrepreneurs to help them start, operate or grow their small businesses. Grants used to better equip community-based nonprofit organizations to provide training. “In the midst of the economic downturn the country has been experiencing, SBA’s PRIME grants are an increasingly important tool in our toolbox to help small businesses,” said SBA Administrator Karen G. Mills. “With these grants to nonprofit organizations, more entrepreneurs will have access to the training and technical assistance they need to have their businesses grow, succeed, create jobs and promote stronger local economies.” PRIME grants are intended to help qualified community-based organizations provide training to small businesses with five or fewer employees and that are economically disadvantaged, and businesses owned by low-income individuals, including those who live on Indian reservations and tribal lands. The PRIME grants competition was open to all 50 states and territories, with about $7.9 million available for grants this year ...

NEW Schumer backs CU MBLs as jobs initiative

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WASHINGTON (UPDATED: 4:45 p.m. ET, 9/8/11)--In a significant action in support of credit union member business lending (MBL), Sen. Charles Schumer (D-N.Y.) has publicly backed adding MBL cap lift language to a developing jobs bill. Schumer in a statement said that lifting the “job-killing” lending cap “would be a win” for small businesses. “In these difficult economic times, we must ensure that they have access to the credit they need to grow and create jobs,” he added. The senator also noted "small businesses are job creators and the lifeblood of Long Island’s economy.” Long Island, N.Y.’s Bethpage FCU is close to reaching its MBL cap, and Bethpage CEO Kirk Kordeleski said that “since the financial crisis hit in 2008, credit unions have stepped up to the plate to serve main street business owners which has accelerated our timeline of reaching the cap. If it is not lifted it will limit our ability to lend, which is not what the economy needs at this time—another financial institution not lending.” The Credit Union National Association (CUNA) also supports the addition of MBL legislation to an economic job stimulus package, and estimates 140,000 jobs would be created within the first year after enactment. Separate House (H.R. 1418) and Senate bills (S.509) would, in part, increase the MBL limit to 27.5% of assets, up from the current 12.25% restriction. Taking this action would inject more than $13 billion in new funding into the economy, at no cost to taxpayers. "During this difficult time in our economy, many small businesses require capital to stay afloat, remain competitive, and ramp up hiring. By increasing the credit union cap, we can help fill this void and create job creation without spending additional tax dollars," Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.), who are co-sponsors of the House bill, said sent a joint letter sent to President Barack Obama yesterday. Sen. Mark Udall (D-Colo.) in a separate letter told the president that the Senate's bipartisan bill to "ease government restrictions on credit unions and help small businesses--at no cost to taxpayers--is a no-brainer and should be part of the (president's) proposal." President Obama has scheduled a speech for this evening before a joint session of Congress and strengthening small business in America will be front and center.

Obama taps CFTC counsel for Treasury post

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WASHINGTON (9/9/11)--President Barack Obama on Thursday nominated Cyrus Amir-Mokri to serve as the U.S. Treasury Department’s Assistant Secretary for Financial Institutions and as a member of the National Consumer Cooperative Bank’s board of directors. The Treasury’s Assistant Secretary for Financial Institutions is charged with developing and coordinating Treasury's policies on legislative and regulatory issues affecting financial institutions. The Credit Union National Association (CUNA) has worked closely with Treasury officials in this position. For instance, CUNA worked with former assistant secretary Michael Barr last year, as CUNA President/CEO Bill Cheney discussed the National Credit Union Administration’s corporate credit union legacy asset plans, increasing the credit union member business lending cap, and other credit union issues during meetings last November. Amir-Mokri recently worked in the Commodity Futures Trading Commission (CFTC), serving as senior counsel to the chairman. He was also the CFTC’s agency’s deputy representative to the Financial Stability Oversight Council. The Wall St. Journal reported that Amir-Mokri helped write portions of the Dodd-Frank Wall Street Reform Act that focused on derivatives regulations. The Tehran, Iran-born Amir-Mokri has also worked in the United States Court of Appeals for the First Circuit, and received his law degree from the University of Chicago Law School. He also holds a Ph.D. in History from the University of Chicago and an A.B. in Biochemistry from Harvard College, according to an administration release.

CUs can inform CFPB of work with military

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WASHINGTON (9/8/11)--The Consumer Financial Protection Bureau’s (CFPB) Office of Servicemember Affairs has asked for industry and public comment on “the products and services institutions currently offer that are specifically designed to benefit the military community.” The CFPB Office of Servicemember Affairs works to shield U.S. servicemembers and their families from abusive financial practices and monitors servicemember questions and complaints regarding consumer financial products and services. It also coordinates responses with CFPB staff and other federal and state agencies. The Servicemember Affairs division is led by Holly Petraeus, who has previously served as the director of the Better Business Bureau (BBB) Military Line, a joint BBB/Department of Defense project that provides consumer education and advocacy for military families. She is the wife of General David Petraeus and the daughter of a former West Point superintendent. Credit Union National Association (CUNA) staff have met with Petraeus, and plan to cover how credit unions serve their military members and their families in future discussions. CUNA is also planning to release a comment call on this CFPB initiative. CUNA President/CEO Bill Cheney has noted that Petraeus is a “strong supporter of credit unions,” and added that “CUNA looks forward to continuing our work with her.” Among the issues the CFPB specifically has asked for information on are:
*Any assistance offered to servicemembers that are distressed homeowners, including specific mortgage modifications, accommodations for servicemembers that receive permanent change of station orders, or alterations for wounded, ill or injured servicemembers, or surviving spouses of deceased servicemembers; *Short-term lending products that are tailored to the needs of servicemembers and their families; and *Any products, services, programs, policies, or practices that are tailored to the unique financial needs of servicemembers and their families, or marketed to these servicemembers and their families.
The CFPB noted that these services and programs may address deployments, permanent-change-of-station moves, overseas assignments, relocations, and other circumstances. The CFPB has also asked for details on how these beneficial services are marketed to servicemembers, and which types of marketing are most effective. The CFPB said the information provided will help the agency develop financial education and outreach initiatives for military families. Petraeus noted that “military families face unique challenges especially when it comes to their finances,” and said that "open dialogue is key to addressing these challenges." The CFPB is accepting comments until Sept. 20.

CUNA seeking Senate support for patent changes

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WASHINGTON (9/8/11)--The Credit Union National Association (CUNA) joined several trade associations in backing the Leahy-Smith America Invents Act (H.R. 1249) and sought support from all members of the Senate in a letter sent this week. H.R. 1249, which is named for Sen. Patrick Leahy (D-Vt.) and Lamar Smith (R-Texas), would alter the patent application system by awarding a patent to the first inventor to file a given application. The legislation also provides greater time for the public to provide input on a patent and changes the rules under which an existing patent may be challenged. Section 18 of the bill would protect credit unions and other businesses from outside claims that some specific customer service, payment and marketing practices have already been claimed under existing business method patents. These patent challenges, which are often brought by non-practicing entities, can become expensive for credit unions and others if they are heard in court. CUNA and others said they “strongly support Section 18 of the bill, which addresses the issue of poor-quality business-method patents,” and urged members of the Senate to “oppose any effort to strike or weaken this section.” Overall, the letter noted that enactment of H.R. 1249 “will spur innovation, creating jobs and ensure that the Patent and Trademark Office has the tools necessary to maintain our patent system as the best in the world.” The letter was cosigned by the American Bankers Association, the American Council of Life Insurers, the American Financial Services Association, the American Insurance Association, the Clearing House Association, the Consumer Bankers Association, the Financial Services Roundtable, the Independent Community Bankers of America, the Mortgage Bankers Association, the National Association of Mutual Insurance Companies, the Property Casualty Insurers Association of America, and the Securities Industry and Financial Markets Association. H.R. 1249 was approved for Senate discussion on Tuesday, and a final vote on the bill could come as soon as today. The bill passed the House by a 304 to 117 vote in late June, and similar legislation received nearly unanimous support in the Senate earlier this year.

Fox News CUNA weighs in on markets economy

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WASHINGTON (9/8/11)--Americans can expect a weak economy for the next three to four years, and a great deal of patience will be needed as the economic recovery continues to play out, Credit Union National Association Chief Economist Bill Hampel said in a Fox Business Channel interview.

Hampel noted that the economic recovery seems to have reached a flat point, with the weak growth of last year stalling. He added that no one really knows whether the economy is going to fall back into another recession or start growing again. While the slow pace of recovery may be trying, a slow recovery “is better than tanking,” he said. Stimulus, rather than austerity measures, could help the economy recover, but Hampel also noted that in the long run, the long-term growth of medicare and other programs must be addressed. In the short term, financial markets are reacting strongly to what happens in Washington, particularly to developments in fiscal and monetary policy, Hampel said.

Insightful lawmakers ask president to include MBLs in jobs stimulus

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WASHINGTON (9/8/11)—Three key lawmakers—two in the House and one in the Senate—contacted President Barack Obama Wednesday, encouraging him to include an increase in credit union member business lending (MBL) authority as he prepares to release a proposal to stimulate the economy and job creation. On the House side, Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) sent a joint letter, which stated, “During this difficult time in our economy, many small businesses require capital to stay afloat,remain competitive, and ramp up hiring. By increasing the credit union cap, we can help fill this void and create job creation without spending additional tax dollars." Sen. Mark Udall (D-Colo.) told the president that the Senate’s bipartisan bill to “ease government restrictions on credit unions and help small businesses--at no cost to taxpayers--is a no-brainer and should be part of the (president’s) proposal.” The Credit Union National Assocation (CUNA) responded immediately, stating that, “Credit unions sincerely thank these insightful lawmakers for supporting our national economic recovery through expanded business lending authority for credit unions.” CUNA supports legislation in the House (H.R. 1418), introduced by Royce and backed by McCarthy, and Senate (S. 509)--sponsored by Udall--that would, in part, increase the MBL limit to 27.5% of assets, up from the current 12.25% restriction. In thanking Udall, Royce, and McCarthy, CUNA Pesident/CEO Bill Cheney said, “Once their legislation becomes law, more than $13 billion will be pumped into the economy – creating 140,000 jobs – in just the first year. All at no cost to taxpayers. That’s a bargain for the American people. “Reps. Ed Royce and Carolyn McCarthy and Sen. Udall understand that our nation should seize this bargain with both hands, right now, and let credit unions do their part in getting our nation moving again. “With Sen. Udall weighing in with the chief House co-sponsors, credit unions are hopeful that the president will listen carefully and include expanded credit union business lending legislation in his economic and job growth package. The bicameral and bipartisan support makes it clear: This is an initiative supported by those who want an improving economy and more jobs for the American people; it’s non-partisan and common sense.” President Obama has scheduled a speech for this evening before a joint session of Congress and strengthening small business in America will be front and center.

Treasury offers toolkit on electronic savings bond delivery

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WASHINGTON (9/8/11)—On the heels of its recent announcement that over-the-counter (OTC) sales of paper U.S. Savings Bonds will end on Dec. 31, the U.S. Treasury Department has unveiled a free toolkit to help financial institutions communicate the change to members or customers. While paper bonds will no longer be sold at credit unions and other financial institutions, electronic savings bonds will remain available for purchase through TreasuryDirect.gov, a secure web-based system operated by the Bureau of the Public Debt. The Treasury’s toolkit for financial institutions includes:
* Fliers for consumers; * Short messages for account statements; * Frequently asked questions (FAQ) for employees; * Web banners; and * An article for employee newsletters or Intranet posting;
Treasury is encouraging financial institutions to help educate consumers about the changes to the delievery system for savings bonds and to continue redeeming the more than 670 million paper savings bonds worth $181 billion that are currently in the hands of the public. Treasury has said that discontinuing paper savings bond sales is expected to save taxpayers an estimated $70 million over the next five years. For more information, use the resource link below.

Inside Washington (09/07/2011)

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* WASHINGTON (9/8/11)--The Federal Deposit Insurance Corporation (FDIC) announced a new program Wednesday, one intended to encourage small investors and asset managers to partner with larger investors to participate in the FDIC's structured-transaction sales for loans and other assets from failed banks. Called “The Investor Match Program,” the FDIC is hopeful it will help facilitate partnerships in order to bring together sources of capital and expertise. FDIC’s stated goal is to expand opportunities for participation by smaller investors and asset managers, including minority and women-owned firms, in FDIC structured-sales transactions. The program has additional goals that include knowledge transfer and increased effectiveness of execution by small investors and asset managers via enhanced organizational competencies … * WASHINGTON (9/8/11)--U.S. Rep. Brad Miller (D-N.C.) applauded the efforts of the Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, for its lawsuits against some of the largest U.S. banks for allegedly misrepresenting the quality of loans they had assembled and sold as securities to investors and the agencies. Pending lawsuits against 17 financial institutions, including Bank of America, JPMorgan Chase, Goldman Sachs, Deutsche Bank and others allege that the banks failed to perform their due diligence to verify borrower income and property values that were often inflated or false. “Not pursuing those claims would be an indirect subsidy for an industry that has gotten too many subsidies already,” Miller said. “The American people should expect their government not to give the biggest banks a backdoor bailout” … * VIENNA, Va. (9/8/11)--The Financial Crimes Enforcement Network (FinCEN) announced Wednesday it has assessed a $5,000 civil money penalty against a Georgia-based money transmitter for a series of violations, including allowing its registration with FinCEN as a money transmitter to lapse for several years. Since 2001, the Bank Secrecy Act has required certain money transmitters to register with the FinCEN by filing a Registration of Money Services Business (RMSB) form, and renewing the registration every two years. According to FinCEN, on Nov. 15, 2006, Altima's owner, Babak Safarriyeh, a.k.a “Bobby Safari,” filed an initial RMSB form but did not renew Altima's money services business registration until Feb. 25, 2010, resulting in a lapse of registration lasting more than two years. Altima was dissolved on Sept. 6, 2010, and on Dec. 31, 2010, Altima's money transmitter license, issued by the Georgia’s Department of Banking and Finance, expired … * WASHINGTON (9/8/11)--The National Association of ATM ISOs and Operators (NAAIO) and the Alliance of Specialized Communications Providers (ASCP) have joined to form the National ATM Council (NAC). NAAIO and ASCP are combining to better represent the interests of the nation’s independent ATM operators, the two organizations said. NAC’s membership will include a majority of the independently owned (non-bank) ATMs in the U.S. Independent ATMs account for approximately one-half of the nation’s ATMs. In addition to promoting America’s independent ATM industry, NAC has also established three affiliated trade councils to advance the interests of the U.S. independent business sectors of correctional communications, public communications and air/vac/water services …

NEW Key House members urge president to include MBLs in job stimulus

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WASHINGTON (9/7/11 UPDATE 3:20 p.m. ET)--Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) sent a joint letter today encouraging President Barack Obama to include an increase in credit union member business lending (MBL) authority as he prepares to release a proposal to stimulate the economy and job creation. “During this difficult time in our economy, many small businesses require capital to stay afloat, remain competitive, and ramp up hiring. By increasing the credit union cap, we can help fill this void and create job creation without spending additional tax dollars,’ wrote the congressmen. The Credit Union National Assocation (CUNA) supports legislation in the House (H.R. 1418) and Senate (S. 509) that would, in part, increase the MBL limit to 27.5% of assets, up from the current 12.25% restriction. CUNA estimates that changing the law to allow more credit union small business lending could help employ more than 140,000 Americans and provide as much as $13 billion in new credit for small businesses in the first year after enactment. As the Royce-McCarthy letter noted, those increases would come at no cost to taxpayers. President Obama has scheduled a speech for tomorrow before a joint session of Congress and the topic of strengthening small business in America will be front and center.

Congress is back in session A busy week ahead

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WASHINGTON (9/7/11)--As the House and Senate return to session in Washington this week, both chambers will be busy with a full slate of scheduled hearings and a late week economic address by President Barack Obama. The House Financial Services Committee subcommittee on capital markets and government sponsored enterprises has scheduled a Wednesday New York City-based field hearing entitled "Facilitating Continued Investor Demand in the U.S. Mortgage Market Without a Government Guarantee.” Bills addressing data security and data breaches are slated for Senate Judiciary Committee markups on Thursday, and the House Financial Services Committee subcommittee on international monetary policy and trade has set its own hearing that day related to the U.S. housing finance system. Another House Financial Services subcommittee on Thursday will study the future roles of the Federal Housing Administration, the Rural Housing Service, and the Government National Mortgage Association. The Senate Banking Committee may also take up a bill that would reauthorize the National Flood Insurance Program on Thursday. The House and Senate are expected to be in session until a week-long break starting on Sept. 26, and both houses of Congress will take separate week-long breaks in October and then return until the Thanksgiving break. Congress’ targeted adjournment date for the year is currently Dec. 9, but the Credit Union National Association (CUNA) notes that Congress could remain in session until Dec. 23. The first meeting of the Congressional Joint Select Committee on Deficit Reduction is set for Thursday, and that group will meet to make opening statements and to consider proposed committee rules during that meeting. CUNA Vice President of Legislative Affairs Ryan Donovan said CUNA will be following the activity of this joint select committee closely because of the possibility, currently viewed as remote, that the credit union tax status could be discussed. Congressional committees must make their deficit-cutting recommendations to the committee by Oct. 14, and the deficit reduction committee must vote on its final reduction plan by Nov. 23. The committee’s final report on deficit reduction, and related legislation, must be provided by Dec. 2, and that legislation must be voted on by Dec. 23. For prior News Now coverage of the deficit committee, use the resource link.

Corporates future rests on reasoned approach CUNA to NCUA

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WASHINGTON (9/7/11)--The Credit Union National Association’s (CUNA) Corporate Credit Union Next Steps Working Group urged the National Credit Union Administration (NCUA) to work with credit unions to help ensure the best solutions for payment and settlement services for credit unions will continue during a recent meeting. The working group, which is chaired by VyStar CU President/CEO Terry West, met with NCUA Office of Corporate Credit Unions Director Scott Hunt, Director of Examination and Insurance Larry Fazio, and Senior Strategic Communications and External Relations Advisor Buddy Gill. The group raised a number of credit union concerns during the meeting, and said the meeting was productive. The NCUA during the meeting said that a top NCUA priority is providing uninterrupted service for natural person credit unions. The agency last week moved to implement contingency plans after the Payments Network FCU organizing council, which includes representatives from many of the nation's corporates, elected to continue working cooperatively to create partnerships that allow uninterrupted products and services to credit unions rather than charter a new corporate credit union to replace U.S. Central Bridge Corporate FCU. Western Bridge Corporate FCU will also continue its operations after its members’ attempt to reach the capital subscriptions goal of $200 million, which was required by the NCUA for the credit union to establish a new charter for replacement corporate United Resources FCU, fell short. The NCUA has said it has no immediate plans to shutter the operations of either corporate, and added it is committed to an orderly and timely resolution that ensures uninterrupted service to all member credit unions. For prior coverage of these corporate developments, use the resource links. CUNA Chief Economist Bill Hampel said that the majority of corporate credit unions did meet their recapitalization threshold, and added that credit unions that are members of the corporates that did not capitalize would retain the option of working either with a group solution developed by NCUA or any other vendor they chose.

Cordray hearing highlights hurdles ahead

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WASHINGTON (9/7/11)--Tuesday’s Consumer Financial Protection Bureau (CFPB) nomination hearing “was a formal step forward in the confirmation process” for potential agency director Richard Cordray, but Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan added that Cordray’s nomination “still faces several obstacles.” Cordray, who has been serving as the CFPB's assistant director for enforcement and has also served as the attorney general of Ohio and that state's treasurer, was questioned about his qualifications for the director’s position by members of the Senate Banking Committee on Tuesday. He was introduced by committee member Sen. Sherrod Brown (D-Ohio), and Ohio Credit Union League General Counsel John Koslowski was among Cordray’s guests at the hearing. In his opening statement, Cordray noted that the CFPB “will find many opportunities to streamline regulations and disclosures” and would remain accountable to Congress as it does its work, which includes rulemaking, market guidance, consumer education and empowerment, enforcement, and supervision and examination of large banks and many nonbank institutions. The committee’s ranking Republican member, Sen. Richard Shelby of Alabama, called the hearing “premature,” noting that changes needed to be made to the CFPB. However, committee chairman Tim Johnson (D-S.D.) said “the stability of our financial system” depended on having a CFPB director in place. CUNA’s Donovan said “it is not clear whether Cordray’s nomination will be approved by the Senate,” adding that “over 40 Senators have said they will not vote to confirm any CFPB nominee unless changes to the CFPB are enacted.” Those proposed changes include increasing CFPB leadership from a single director to a five-member commission, reforming some operational rules, and adjusting the voting threshold needed for the Financial Stability Oversight Council (FSOC) to set aside or stay a CFPB issued rule to a simple majority. Expanding the FSOC's review authority of CFPB rules has also been proposed. This CFPB related legislation passed on a bipartisan 241-173 House vote in late July, but the Senate prospects for the legislation are in doubt. CUNA has encouraged Cordray to "consider ways in which the bureau can help minimize regulatory requirements for credit unions and other financial institutions" and has also encouraged the CFPB to establish an Office of Regulatory Burden Monitoring to help the agency "track, consider, and help mitigate the cumulative regulatory burden under which credit unions and others must operate."

Inside Washington (09/06/2011)

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* WASHINGTON (9/7/11)--The Department of Housing and Urban Development (HUD) has completed its investigation of illicit foreclosure practices by mortgage servicers and provided the results to state attorneys general, a spokesman for Iowa Attorney General Tom Miller said. States and large mortgage servicers are negotiating charges that banks were robo signing---sign off on foreclosure documents without properly reviewing them--in the processing of thousands of mortgages (American Banker Sept. 6) . But state attorneys general do not know the full scope of the banks’ robo-signing practices, or how many homeowners were affected by the practices. Although neither HUD nor the attorneys general would discuss the report, Geoff Greenwood, a spokesman for Miller’s office said the findings were the key to the states’ negotiating position … * WASHINGTON (9/7/11)--The Credit Union National Association has released its analysis of the National Labor Relations Board’s (NLRB) final rule that would require most non-government employers to inform employees of their rights under the National Labor Relations Act (NLRA) through a poster mounted in the workplace. The NLRB said that the rule, which will become effective on Nov. 14, "will increase knowledge of the NLRA among employees, in order to better enable the exercise of rights under the statute." Credit unions will be subject to the rules, but CUNA staff added that credit unions that already comply with Labor Dept. posting requirements will be in compliance with the new NLRB rule… * WASHINGTON (9/7/11)--The term “abusive”--the standard in the Dodd-Frank Act under which Consumer Financial Protection Bureau (CPFB) can prohibit certain acts and practices by banks--has yet to be defined. Bankers and lawyers argue that the term gives the CFPB too much flexibility (American Banker Sept. 6). As described by Dodd Frank, the CFPB can determine a practice or product to be abusive if it “materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or takes unreasonable advantage of a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.” Bankers worry that the bureau will determine that certain products are inherently abusive, said Suzanne Garwood, a lawyer with Venable LLP …

CU reps Hike the Hill as Congress returns

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WASHINGTON (9/6/11)—Members of Congress returning to Washington this month will find around 450 credit union representatives from more than 20 states ready and eager to cover the credit union difference, and key issues, during the 2011 edition of the Credit Union National Association’s Hike the Hill. Credit union advocates from across the country will cover member business lending, alternative capital, the regulatory burdens faced by credit unions, credit unions’ tax status, and other related topics during these meetings, which will take place between Sept. 14 and Oct. 12. "Whether here in Washington or at home in their districts, it’s critical that lawmakers hear firsthand, and year-round, from their credit union constituents about credit union issues," CUNA Senior Vice President of Political Affairs Richard Gose said. "Hike the Hill plays an important role in this dialogue and we're excited to have such great participation this fall." Credit unions and the leagues have also launched an all-out effort during Congress’s August district work session to make contact on key credit union issues. The list of hikers is scheduled to include Alabama and Florida credit unions, accompanied by the League of Southeastern Credit Unions. League President/CEO Patrick La Pine said his delegation will cover “what credit unions are doing in the current economic conditions as well as real life examples of how credit unions are helping consumers, and helping small businesses. La Pine’s delegation is scheduled to visit with House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and Senate Banking Committee Ranking Minority Member Richard Shelby (R-Ala.), among others. “We will ask our members of Congress to allow credit unions to be a greater part of the economic recovery, specifically by increasing the MBL limit, which is a win-win for the economy that won’t cost taxpayers a dime while helping small businesses,” La Pine said. The Montana Credit Union Network will meet with another member of the Senate Banking Committee, Jon Tester (D-Mont.), and will thank Tester for his strong support of credit unions during this spring’s debit interchange fee cap debate. Ohio Credit Union League Vice President of Governmental Affairs John Florian said the D.C. visit gives his group an excellent opportunity to “firm up strong relationships with Ohio members of Congress,” including Sen. Sherrod Brown (D), Sen. Rob Portman, who is a member of the Congressional Joint Select Committee on Deficit Reduction, and Rep. Patrick Tiberi (R), who serves on the powerful House Ways and Means Committee. Aside from the standard credit union advocacy that comes with every year’s Hill hike, Dan Schline, North Carolina Credit Union League senior vice president of association services, said that this year presents a new opportunity for the many new staffers at the league. “This trip will be a good opportunity for them to develop relationships with some of the new Hill staffers handling financial services issues for our congressional members, and to educate those Hill staffers on the basics of credit unions and our issues,” he added. Credit union groups have also planned visits with the Consumer Financial Protection Bureau and the National Credit Union Administration. Leagues and credit union representatives from Arizona, Colorado, Georgia, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Missouri, New Hampshire, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Washington, West Virginia, Wisconsin and Wyoming are also scheduled to travel to D.C. by the time this year’s hike is over. For more on CUNA’s 2011 Hike the Hill, use the resource link.

Inside Washington (09/05/2011)

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* WASHINGTON (9/6/11)--Easing payments for homeowners will help pave the way to economic recovery, Federal Reserve Board Gov. Elizabeth Duke said Thursday. Speaking at a housing finance conference hosted by the Fed, Duke acknowledged that despite near-record-low interest rates, credit conditions remain tight for both consumers and real estate investors. “One way to reduce the flow of foreclosed homes is to ease the payment strain on borrowers, which can be accomplished by modifying loans that are past due or by refinancing performing loans at lower rates,” she said. Duke cited several reasons why the Obama administration's Home Affordable Refinancing Program has not been successful. These include loan-level pricing adjustments, which are upfront fees that are added to refinancing costs; putback risk; and junior lienholders who refuse to let their loans remain subordinate to a possible new refinance loan. She said policymakers have to find a way to make the refinancing process easier for consumers. “Finding different approaches to the policies that are hindering refinancing would likely provide some support to the economic recovery while improving the circumstances of homeowners and reducing the overall level of credit risk borne by the various holders of the risk,” she said … * WASHINGTON (9/6/11)--The Federal Reserve will require more time to release a package of Dodd-Frank-related rules, which were expected to be released by Labor Day. The rules, consider by many as the core of Dodd-Frank, include such issues as risk-based capital requirements, leverage, resolution planning and concentration limits (American Banker Sept 2). The proposals will provide a regulatory outline of how the Fed will oversee a system of interconnected financial institutions including banks and non-banks. They also will address related issues such as capital surcharges and how to unwind systemically important financial institutions. The regulations, which implement Section 165 of Dodd-Frank, are rumored to range between 1,000 to 2,000 pages …

Joint deficit committee sets up first meetings

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WASHINGTON (9/6/11)—The first meeting of the Congressional Joint Select Committee on Deficit Reduction will take place this week when that group meets to consider proposed committee rules in the Rayburn House Office Building at 10:30 a.m. ET on Thursday. A hearing has also been set for Tuesday, Sept. 13 at 10:30 a.m. ET. That hearing, which will take place in the Hart Senate Office Building, is entitled: “The History and Drivers of Our Nation’s Debt and Its Threats.” Both meetings will be open to the public. Rep. Jeb Hensarling (R-Texas) and Sen. Patty Murray (D-Wash.) will serve as co-chairs of the committee, which was created as part of an agreement to lift the debt ceiling while making some budget cuts, has been charged with creating more than $1 trillion in deficit reductions. Committee recommendations will be subject to votes in the House and Senate. If both congressional bodies fail to approve the cuts, automatic spending cuts will be made. The other members of the committee are:
*Democratic House members Xavier Becerra (D-Calif.), Chris Van Hollen (D-Md.), and James Clyburn (D-S.C.); *Republican House members Dave Camp (Mich.) and Fred Upton (Mich.); * Democratic senators Max Baucus (Mont.) and John Kerry (Mass.); and * Republican senators Jon Kyl (Ariz.), Pat Toomey (Pa.) and Rob Portman (Ohio).
Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan said CUNA will be following the activity of this joint select committee closely because of the possibility, currently viewed as remote, that the credit union tax status could come under scrutiny. "CUNA will continue to emphasize the positive impact that the credit unions have on the members and communities that they serve," he added.

CUNA launches Operation Comment for CUSO plan

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ALEXANDRIA, Va. (9/6/11)—A controversial proposal that would require credit union service organizations (CUSOs) to directly file their financial statements with the National Credit Union Administration (NCUA) has drawn the attention, and criticism, of credit unions nationwide, and the Credit Union National Association (CUNA) is encouraging those credit unions to make their thoughts known through its latest "Operation Comment." The NCUA’s proposal, released in July, would also subject subsidiaries of CUSOs to the same financial reporting standards. Financial reports would also need to be forwarded to appropriate state supervisors under the rule. CUNA strongly opposes many of the proposed provisions. The NCUA currently has the authority to inspect the books and records of some CUSOs, but that authority is not universal, and the agency works with natural person credit unions that obtain services from the CUSOs to provide the majority of financial information on CUSOs. The agency has said that this method is inefficient and restricts its ability to conduct offsite monitoring and evaluate systemic risks posed by CUSOs. Agency leaders in a release said that the proposal, if enacted, would "enhance protections to consumers, credit unions and the National Credit Union Share Insurance Fund." The NCUA is accepting comment on the proposal until Sept. 26. CUNA is also seeking credit union comment on the proposal through its own comment call, and will accept comments until Sept. 16. For more on Operation Comment, use the resource link.

Loan mods dip for 4th straight quarter

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WASHINGTON (9/2/11)--The total number of home loan modifications fell in the second quarter, the fourth straight quarter they have done so, the Federal Housing Finance Agency (FHFA) reported on Thursday. A total of 81,200 loan modifications were completed during the most recent quarter, down from 86,200 in the first quarter of 2011. Fannie Mae and Freddie Mac have completed just under 1.8 million foreclosure prevention actions since late 2008, and more than half of these actions have resulted in loan modifications, the FHFA said. The number of refinancings made through the Home Affordable Refinance Program (HARP) increased 11%, and now total 838,400, the agency added. The FHFA also noted that the number of new foreclosures dropped during the quarter, while completed third-party and foreclosure sales increased. For the full FHFA report, use the resource link. Federal Reserve Governor Elizabeth Duke on Thursday called on the Obama administration to modify HARP, saying that “given the potential savings to households, the relatively low take-up on this program warrants another look at the frictions that may be impeding these refinancing transactions.” Duke suggested limiting up-front fees that are added to borrowers’ refinancing costs as one way to increase the number of government-aided mortgage refinancings. “The fees can increase the cost of refinancing by thousands of dollars and thus discourage borrowers from participating in the HARP program,” she noted. Reuters has reported that the Obama administration may announce a mortgage relief program next week. Portions of the plan could allow some borrowers to refinance even if they owe more than their property’s value. (See related story: Inside Washington)

Slow growth for CUs in 2Q NCUA reports

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ALEXANDRIA, Va. (9/2/11)--The results of call reports from 7,239 federally insured credit unions “generally show stabilization and continued improvement,” but a weak economy continues to challenge credit unions, the National Credit Union Administration (NCUA) reported in its quarterly update on the credit union system. The year-to-date return on assets (ROA) ratio grew by three basis points (bp) during the quarter, totaling 77 bp. ROA totaled 51 bp at the end of 2010, and the NCUA said the 26 bp increase since that time “could be construed as a positive sign that credit unions are on the road to recovery from the recent recession.” Credit union membership is also improving, totaling 91 million, a 200,000 member increase from the prior quarter’s total. NCUA Chairman Debbie Matz said the second quarter financials “demonstrate the continued resilience of the credit union industry.” The NCUA also reported that:
• Net income increased by 10.7% over last quarter’s number, and totals $3.58 billion so far this year; • Net worth increased to $95.6 billion, a 2% increase over the $93.7 billion total reported last quarter; • Assets increased 0.3% to $942.5 billion; • Shares increased 0.1% to $812.2 billion; and • Investments, not including cash on deposit or cash equivalents, increased 0.8%, totaling $255.8 billion during the second quarter.
Loans also rose to $564 billion, a 0.7% increase over the first quarter total of $559.9 billion. Demand for short-term, small loans increased by 52% during the quarter, and credit cards and first mortgage real estate loans also “remain popular.” However, the agency noted that the number of new auto loans and other real estate loans fell during the quarter. Asset quality also continued to improve, with declines in both delinquency and net chargeoff ratios in the second quarter. Overall, 60-plus-day dollar delinquencies stood at 1.58% at mid-year--a five- basis-point improvement compared to previous-quarter results and net chargeoffs dropped by an identical amount to average 0.95% in that quarter. “The last time the net chargeoff rate was reported below 1% was the third quarter of 2008,” Credit Union National Association (CUNA) Vice President of Economics Mike Schenk said. Schenk added that balance sheet trends “continue to reflect developments in the macro economy. With a backdrop of uncertainty, slowly improving labor markets, and weak housing activity consumers continue to be cautious and remain focused on paying down debt. This translated into weak loan growth--with credit unions collectively logging only a 2.8% annualized increase in loan balances in the second quarter. “Of course the weak loan growth makes the movement’s asset quality improvements even more impressive,” as weak loan growth and fast payoffs can “tend to put upward pressure on delinquency and chargeoff ratios because they cause the denominator of these asset quality metrics to increase very slowly, or decline,” Schenk added. He noted that CUNA economists expect the total dollar amount of loans outstanding at credit unions to grow by just 2% this year, with improvements in asset quality coming “as labor markets slowly heal and incomes rise. “Further, NCUA’s recently announced plans for corporate stabilization charges suggest that the movement’s full-year earnings for 2011 will likely be in the neighborhood of 60 bp,” he said. For the NCUA release, use the resource link.

Inside Washington (09/01/2011)

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* WASHINGTON (9/2/11)--The Obama administration may announce a mortgage relief program next week, according to sources. The plan could include an initiative that allows some borrowers to refinance even if they owe more than their property’s value (Reuters Sept. 1). The administration’s aim is to help troubled homeowners take advantage of current low interest rates, which in turn would spur overall economic activity. The average rate of a 30-year fixed mortgage was 4.22% last week, a historically low level, according to Freddie Mac. Borrowers who are current with their mortgages would refinance through Fannie Mae, Freddie Mac and the Federal Housing Authority, which together account for more than 90% of the U.S. mortgage market … * WASHINGTON (9/2/11)--The Securities and Exchange Commission said Wednesday it will seek public comment on the use of derivatives by mutual funds and other investment companies regulated under the Investment Company Act. “The derivatives markets have undergone significant changes in recent years, and the commission is taking this opportunity to seek public comment and ensure that our regulatory approach and interpretations under the Investment Company Act remain current, relevant, and consistent with investor protection,” said SEC Chairman Mary L. Schapiro. The SEC is seeking public input through a concept release, which is a document that poses an idea or ideas to the public to get its views. The concept release is a continuation of the SEC’s ongoing review of mutual funds’ use of derivatives announced last year …

NCUA describes nominal in volunteer awards

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ALEXANDRIA, Va. (9/2/11)--A Volunteer Service Award recognizing an individual director’s or committee member’s substantial length of service is permissible under the National Credit Union Administration’s (NCUA) rule limiting compensation of officials (12 C.F.R. 701.33); just make sure the award is nominal in value and in proportion to the period of service it recognizes. So says an NCUA legal opinion letter (No. 11-0805) made public yesterday. The letter was written in response to a query by Patricia O’ Connell of Quartararo & Lois, PLLC in Fishkill, N.Y., asking if Hudson Valley FCU’s policy of awarding a $250 gift card is permissible under the rule. The compensation rule provides that only one board officer, if any, may be compensated as an officer of the board and that no other official may receive compensation for performing the duties or responsibilities of the board or committee position he or she holds, the opinion letter says in part. “Our view,” the letter signed by Hattie Ulan of the office of general counsel goes on to say, “is that a monetary award to individually recognize an official’s multiple years of volunteer service--as opposed to an award periodically given (e.g., annually or bi-annually) to all volunteers or to a class of volunteers (e.g., all directors) then-serving--would constitute an incentive to volunteerism, rather than proscribed ‘compensation,’ provided that the amount per year of service is nominal. “Based on our prior opinions, and adjusted for inflation, we would consider a maximum of $50 per year of service to be ‘nominal,’ Ulan wrote. Use the resource link to read the letter.