Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

Washington Archive

Washington

State Leagues Add 'Boots' Presence To Virtual CU Tax Rally

 Permanent link
WASHINGTON (9/27/13)--Credit union advocates from 10 states are preparing to again bring their positive message to Capitol Hill early next month, and these early October visits will coincide with an Oct. 2 national virtual rally in support of the "Don't Tax My Credit Union" campaign.

League and credit union representatives from Illinois, Iowa, Kansas, Maine, Michigan, Missouri, Minnesota, Montana, Nebraska and Ohio will join together in Washington between the first and third of the month.

John Murphy, president of the Maine Credit Union League, told News Now his group's hike "comes at a critical time." The Maine delegation of around 20 members will focus on highlighting the importance and value of the credit union tax exemption, and speak with members of Congress in greater depth on this issue. The group will deliver the message "that the structure and cooperative principles of the credit union tax exemption is as relevant today as it was back in the 1930s when Congress first granted it," Murphy said.

David Adams, CEO of the Michigan Credit Union League and Affiliates, told News Now his group will feature "25 credit union leaders in Washington thanking our congressional delegation for their unanimous support of the credit union industry and our tax exemption, and asking them to provide credit unions and their members with a voice and a strong defense as tax reform efforts move forward."
 
The Missouri credit union group, which will feature a mix of 13 credit union staff members and volunteers, "will be able to explain why the credit union tax status is important for consumers in the district and how removing it would hurt the people back home," Missouri Credit Union Association Senior Vice President, Advocacy Amy McLard said.

She also noted the Missouri credit union visit comes at a key time: "We also have the Missouri Bankers Association coming to Washington at the same time as our visit, so it will be very timely to have these conversations with lawmakers and be able to directly refute banker inaccuracies about the credit union tax status when meeting with our delegation," McLard added.
 
Credit union representatives back in Missouri will also do their part while their compatriots are in Washington. McLard said MCUA developed a social media calendar and distributed "Don't Tax My Credit Union" signs to every credit union branch in the state, and will have credit union members statewide "making calls, sending messages, taking photos and videos with the signs and sharing them all with lawmakers the week of Hike the Hill." Her group is also excited to be on hand as the Oct. 2 national virtual rally is held.
 
CUNA is expecting tens of thousands of supporters to be in virtual attendance for the rally, and an accompanying physical rally at Credit Union House in Washington, D.C., between 2 p.m. and 3 p.m. (ET). The credit union house event will be live streamed at www.DontTaxMyCreditUnion.org.

Rally participants will be encouraged to use the various Take Action tools at www.DontTaxMyCreditUnion.org to show their support via tweets, pictures, vine videos, and e-mails to their members of Congress, all with the #DontTaxMyCU hashtag. (See Sept. 24 News Now item: Oct. 2 Is Virtual Rally On 'Don't Tax My CU'.) Advocates will also be asked to use the "Tweet Congress" tool on the site to tweet their lawmakers--and ask that lawmakers tweet back with a response showing their support of credit unions.

CUNA's Don't Tax My Credit Union initiative urges lawmakers as part of any final tax reform plan to preserve the federal tax exemption credit unions receive as not-for-profit, member-owned cooperatives. To date, the campaign has generated over 900,000 messages to members of Congress--15,000 of which have come via social media.

NCUA Files with OMB to Renew Ongoing Data Collections

 Permanent link
WASHINGTON (9/27/13)--The National Credit Union Administration is seeking U.S. Office of Management and Budget approval for a series of data collection projects.

The NCUA is required under the Paperwork Reduction Act to renew its ongoing information collection efforts. The information requests are published to obtain public comment on whether OMB should approve the data collection requests. CUNA is reviewing them and as it has in the past will weigh in with the OMB as appropriate.

Areas highlighted in the NCUA requests include:
  • The circumstances and conditions under which federal credit union members may inspect and copy their credit union's books, records, and minutes of meetings;
  • Credit unions that serve predominately low-income members and seek a low-income designation from NCUA so they may benefit from certain statutory relief and receive assistance from the Community Development Revolving Loan Fund;
  • Supervisory committee audit and verification requirements;
  • The NCUA's regulation on nondiscrimination requirements in real estate-related lending;
  • Certain Truth in Savings Act disclosures;
  • Federal credit union reimbursement policies;
  • Electronic funds transfer information; and
  • Credit union service organization lending and investment authorities.

Some SBA 7(a) Fees To Drop On Oct. 1

 Permanent link
WASHINGTON (9/27/13)--The U.S. Small Business Administration (SBA) this week said some 7(a) loan program fees will be reduced, beginning on Oct. 1.

According to the agency, a yearly fee of 0.52% of the guaranteed portion of the outstanding balance of the loan will be assessed for 7(a) loans of $150,000 or more that are approved in the 2014 fiscal year. The SBA currently charges a service fee of 0.55% of the outstanding balance of the guaranteed portion of the loan.

Yearly fees and guaranty fees will not be charged on 7(a) loans of $150,000 or less that are approved in that year, the SBA added.

Credit unions may participate in 7(a) loans, and the SBA-guaranteed portion of a 7(a) loan is not counted against a credit union's business lending (MBL) cap. There were 347 credit unions with over 8,100 SBA loans outstanding, totaling $921 million in funds, at the end of 2012.

The Credit Union National Association earlier this year urged the SBA to facilitate credit union loans to small businesses by supporting legislation that would increase the 12.25%-of-assets member business lending (MBL) cap. Separate House (H.R. 688) and Senate (S. 968) MBL bills were introduced earlier this year. Both bills would increase the MBL cap from 12.25% of assets to 27.5%. CUNA has estimated that lifting the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers.

H.R. 688 has 115 House co-sponsors, and S. 968 is co-sponsored by 17 senators.

FHFA Requires GSE, FHLBank Stress Tests

 Permanent link
WASHINGTON (9/27/13)--The Federal Housing Finance Agency (FHFA) has ordered Fannie Mae, Freddie Mac and Federal Home Loan Banks to conduct annual stress tests to determine whether the companies have the capital necessary to absorb losses as a result of adverse economic conditions, according to the Sept. 26 edition of the Federal Register.

Only FHLBs with more than $10 billion in consolidated assets will need to meet the terms of the order. The Dodd-Frank Act requires certain financial firms with more than $10 billion in assets to conduct annual stress tests.

National Credit Union Administration Chairman Debbie Matz this month said stress testing is just as important for credit unions of comparable size, and said the agency's Office of National Examinations and Supervision is drafting a requirement for annual stress tests at credit unions with assets exceeding $10 billion.

Matz said stress testing would be part of the NCUA's "coordinated approach" to supervision of a changing industry with asset growth concentrated in large credit unions. Stress testing of federally insured credit unions with state charters would be conducted in consultation with the state regulator.

The shocks used in the stress testing would be based on scenarios issued annually by the Federal Reserve, with adjustments for differences between banks and credit unions, Matz said.

A credit union that fails a stress test would be required to revise its capital plan to demonstrate how it would meet minimum stress test capital ratios, an agency release said. A credit union that passes the test would benefit from the analysis by identifying potential improvements in its enterprise risk management system. (See Sept. 19 News Now story: Matz Announces NCUA Will Propose Stress Testing Rule.)

'Inside Exchange' Gives State Advocacy Insights

 Permanent link
WASHINGTON (9/26/13)--The Credit Union National Association and state leagues continue to address top issues like the credit union tax status when bills are introduced at the state level, and they often coordinate their advocacy efforts with varied state-by-state legislative schedules. In the latest edition of CUNA's "Inside Exchange" video series, Pat Sowick, CUNA senior vice president of league relations, details the resources that her department provides to help credit union leagues in these efforts.

"The leagues developing relationships at the state level is very important, because almost half of state legislators are sitting up the Hill right now, on Capitol Hill, as members of Congress. So fostering those relationships really benefits credit unions in the long run. If they can start in Congress with some type of knowledge about credit unions, and appreciation for credit unions, we're going to do a lot better here in D.C., too," Sowick said in the latest "Inside Exchange" video segment.
 
This latest video, hosted by CUNA Executive Vice President of Communications Paul Gentile,  is part of CUNA's "Inside Exchange" series, which offers periodic, topical videos on issues important to credit unions. CUNA suggest members can use this resource for education purposes and as a great tool to keep staff and board informed on important issues.

Mortgage Market, Employment Issues Detailed In NCUA Update

 Permanent link
ALEXANDRIA, Va. (9/26/13)--Upward interest rate pressure could impact credit unions by reducing the market value of some long-term, fixed-rate assets and altering mortgage market conditions, National Credit Union Administration Chief Economist John Worth said in a new agency YouTube video.

The interest rate increases are tied to recent moderate economic growth and Federal Reserve statements, Worth noted. These increases helped to reduce total credit union unrealized gains by more than $3 billion in the second quarter of this year, he said.



General interest rate changes are also reducing the total number of mortgage refinance applications, and Worth said this change may have an immediate impact on fee income at some credit unions and depress real-estate loan growth for the rest of 2013.

The NCUA video also takes on labor market improvements and the NCUA's quarterly U.S. map review.

The video is the latest in a series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The videos can also be viewed on the NCUA's YouTube page by using the resource link below.

MBL Underwriting, Microlending Potential Highlighted In NCUA Webinar

 Permanent link
ALEXANDRIA, Va. (9/26/13)--Credit unions developing a new member business loan (MBL) program should keep it simple, National Credit Union Administration staff said during a Wednesday webinar that touched on MBL underwriting, microlending, and other business lending topics.

Click to view larger image The above Filene Research Institute graphic was used to demonstrate how credit unions and their members can benefit from member business lending. Click the magnifying glass symbol to the left of the image for a larger view.
The webinar was presented in part by staff from NCUA's Office of Small Credit Union Initiatives and NCUA Region IV's division of special actions.

MBLs offer credit unions a chance to increase their own loan and fee income, and give them a chance to deepen community relationships, the agency presenters noted. According to NCUA statistics, a total of 2,125 credit unions have reported making MBLs, with an average portfolio size of $19 million. The average MBL is $128,000, and the average delinquency rate on MBLs is a low 1.76%.

Credit unions that are entering the MBL market must be ruthless in sticking to their chosen area and size of lending, NCUA staff said. Recognize that a credit union "cannot be everything to everyone," and do not make your credit union the lender of last resort, the agency hosts added.

Another presenter, Jerilee Beaudoin, director of commercial services for SEFCU, Albany, N.Y., outlined the underwriting standards her credit union has established for its own lending program. An MBL program must list specific goals and identify program limits and restrictions, including aggregate MBL program limits, geographic area restrictions, and industry and loan type limits, she said. The credit union should also address how program weaknesses and limitations will be satisfactorily addressed going forward, and establish a timeline and budget for the MBL program.

While most credit unions do some type of microlending right now, Dave Grace, managing partner of Dave Grace & Associates, encouraged credit unions to increase this practice and enter what is a growing field. Eighty-eight percent of all U.S. businesses are considered microbusiness, and they employ 25% of the U.S. work force. Access to capital is the largest growth barrier for these businesses, and there is limited competition in this area, he said.

Further, microbusiness loans of $50,000 or less are exempt from the MBL cap under NCUA regulations. Grace said that microbusiness loans that are made now can grow into larger MBLs later on as businesses grow.

To make successful microloans, Grace suggested credit unions should:
  • Price the loans accordingly;
  • Start borrowers on short loan cycles;
  • Start with smaller amounts; and
  • Collect on these loans as soon as they go bad or before problems start.
Credit unions can also consider offering business development services for microloan borrowers, and offering different types of business accounts, tax preparation services, and other benefits to these borrowers.

Credit unions may need to develop alternative underwriting methods for microloans, and should price and provision for larger loan losses, he said.

An archived, closed-captioned version of the MBL talk will be posted on the NCUA home page within two weeks.

Cordray: Fin. Lit. Is Fundamental

 Permanent link
MADISON, Wis. (9/26/13)--"Financial education should be as fundamental as the education we are all required to receive in U.S. history and government," Consumer Financial Protection Bureau Director Richard Cordray said at a Wednesday Financial Literacy and Education Commission Field Hearing hosted by the University of Wisconsin--Madison.

"Within the framework of our republic, we have built the greatest system of economic liberty in the history of mankind. Yet it will only endure if we take the steps necessary to strengthen that system from the bottom up, starting with the individual. The financial services marketplace is constantly evolving in complex ways, and managing one's finances is a lifelong endeavor," he added.

Lois Kitsch, national program director for the National Credit Union Foundation, and Jennifer Block, representing Royal CU, Eau Claire, Wis., took part in a panel discussion entitled "Building youth financial capability through experiential learning." Kitsch presented the NCUF's own programs during the panel.

Credit unions provide financial counseling to more than 1.5 million consumers each year, according to a National Credit Union Foundation report entitled "Credit Unions: Focused on Financial Capability across the Nation." Early-age financial literacy efforts are a key part of this counseling, as credit unions hold nearly 25,000 annual educational presentations for more than 600,000 students, the NCUF wrote.

Cordray in his remarks told the more than 100 attendees that teaching children about money and their finances "should not be reserved to a few games of family-night 'Monopoly,' where children are taught the benefits of buying up Boardwalk and Park Place."

Parents, he said, need to be engaged as their children are learning to master the concepts of personal financial management. Americans must also work to fill the financial literacy gap by pursuing greater financial education in the school system.

To improve in-school financial literacy efforts, the CFPB said integrated curriculum must be developed so, for instance, the benefits of compound interest are understood in math class, economic costs and risks are taught in social studies class, and English class essays include topics involving money. Cordray added that:
  • Financial education must start early and must be continuous;
  • Financial concepts must be incorporated into standardized tests that states already administer;
  • Teachers and schools must be supported with the necessary training to deliver sound financial instruction to students.
On-campus credit union branches held more than $34 million in funds from 111,500 student members as of 2010. Nearly 5,000 student workers received on-the-job training experiences at those 1,400 in-school credit union branches.

In total, credit unions invested more than $140 million in financial literacy efforts in 2010.

(For another story involving financial literacy, see: 44% Of Wisconsin School Districts Require Fin Lit Course.)

113 Small, Mid-sized Banks Still Owe $2.7B in TARP, WSJ Reports

 Permanent link
WASHINGTON (9/25/13)--More than 113 small- and mid-sized banks that received taxpayer funds through the U.S. Treasury's Troubled Asset Relief Program (TARP) are still on the hook for $2.7 billion in borrowed government money, the Wall Street Journal reported this week.

This debt is creating issues for the Treasury, which is looking to offload the stakes it took up in these small institutions. According to the Treasury, 79 of these banks are behind on their payments to the government, and 63 of those banks have missed 10 payments or more. In some cases, troubled banks are filing for bankruptcy, a move that wipes out any taxpayer-held equity when they fold.

As many banks continue to hold out on repaying their debts, and lending to their small business-owning customers, credit unions, which received no TARP funding, continue to advocate for measures that would help them increase their lending activities in surrounding communities.

Separate House (H.R. 688) and Senate (S. 968) member business lending (MBL) bills were introduced earlier this year. Both bills would increase the MBL cap from 12.25% of assets to 27.5%. The Credit Union National Association has estimated that lifting the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers. Both bills enjoy bipartisan support.

H.R. 688 has 115 House co-sponsors, and S. 968 is co-sponsored by 17 senators.

NCUA, Fed Agencies Unite On Elder Abuse Prevention, Guidance

 Permanent link
ALEXANDRIA, Va. (9/25/13)--National Credit Union Administration Chairman Debbie Matz in a letter to credit unions (13-CU-08) strongly encouraged them to ensure their staff members are "trained on the potential signs that might trigger a report of elder abuse or financial exploitation."

"Elder abuse involves the illegal or improper use of an older adult's funds, property or assets. Older adults can become targets of financial exploitation by family members, caregivers, financial advisors, home repair contractors, and scam artists. If you or your staff know the older adults in your membership, you may be able to spot irregular behavior or account activity," Matz wrote.

She also urged credit unions to review their own policies and procedures "to ensure they are consistent with state law and the interagency guidance regarding reporting requirements when a financial institution suspects elder abuse or financial exploitation."

The letter follows Tuesday's release of joint federal financial regulatory guidance which clarifies that financial institutions may report suspected elder financial abuse to appropriate authorities.

This reporting authority is provided under the Gramm-Leach-Bliley Act, the agencies said in a release. The NCUA and others emphasized that financial institution employees can report suspected irregular transactions, account activity, or other behavior that signals financial abuse. Suspected elder financial abuse may be reported to local, state or federal agencies, they said.

"Older adults can be attractive targets for financial exploitation and may be taken advantage of by scam artists, financial advisers, family members, caregivers, or home repair contractors," and recent studies have shown that a small number of financial abuse acts are in fact reported, the agencies noted.

The Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., Federal Trade Commission, Office of the Comptroller of the Currency and the Commodity Futures Trading Commission joined the NCUA in issuing guidance.

The NCUA on Tuesday also released new financial literacy resources page on their website.

For the letter to credit unions, the joint agency guidance, and the NCUA financial literacy resources, use the resource links.

CUNA's Richard: What Three Things 'Scare' CUs The Most?

 Permanent link
WASHINGTON (9/25/13)--With Halloween approaching next month, there will soon be many scary things in the air, but Credit Union National Association General Counsel Eric Richard told the CUNA's 2013 Attorney's Conference Tuesday to forget witches--"the three things credit unions are most scared about are compliance, litigation and enforcement."

Overall, Richard said, regulatory complexity continues to increase, creating more and more emerging issues for credit unions. "CUNA will continue our efforts, working with credit unions and leagues, to ensure that these developments do not have unintended consequences for the credit union system or impose unnecessary regulatory burdens on your clients," he said.

"The good news is that, for credit unions, the worst of [the Consumer Financial Protection Bureau's mortgage rule writing]--and the uncertainty this creates--seems to be behind us," Richard said. The bad news, he said, is that credit unions now have to figure out how to live in the new world with new ability-to-repay, mortgage escrow, high-cost mortgage lending, home ownership counseling, mortgage servicing rules, mortgage loan originator compensation, and appraisal rules, and others, forever.

"This compliance obligation is no easy task for even the most sophisticated of America's financial institutions. It can be a killer for community-based institutions like credit unions," he said.

He urged the assembled crowd to help spread this message: "compliance is unavoidable, and the time for compliance is now. If credit unions are not ready in January, they face many litigation and enforcement risks that may harm the institutions and the way they serve their members."

The bottom line is that, for most credit unions, compliance is the most important legal task they face this year, Richard said.

Ongoing litigation is also creating uncertainty about other rules. Proposed amendments have come out over and over again in 2013, and sometimes final rules that have already been implemented "face a collateral attack in court," Richard said. One such rule is the Federal Reserve's interchange regulation, which is currently being discussed as part of a legal challenge from merchants.

The Fed is appealing the merchant challenge, and CUNA is doing everything it can to ensure the D.C. Circuit Court of Appeals is aware of credit union concerns as the case moves forward, Richard emphasized.

And then, there is enforcement: A potentially very significant development in regulatory enforcement came from the CFPB this year when it brought a case using the "abusive" prong of unfair, deceptive or abusive acts or practices (UDAAP) enforcement authority. The challenge credit unions face is that UDAAP is not clear, Richard said. UDAAP itself is vague, and the CFPB has not provided guidance. "Lots of uncertainty remains over UDAAP authority, and this is an area to watch over the coming years," he said.

CDFI Fund Gives $21M To 35 LICUs, Out Of $150M Awarded

 Permanent link
WASHINGTON (9/25/13)--More than $21 million in funds will be released to 35 low-income credit unions through the U.S. Department of the Treasury's Community Development Financial Institutions Fund (CDFI Fund).

"The fiscal year 2013 round of the CDFI Program provides more awards than any other round in the CDFI Fund's history," said CDFI Fund Director Donna Gambrell. In total, $150,289,499 in Financial Assistance and Technical Assistance awards will be provided to 148 awardees.

"By expanding the reach and impact of this program to more organizations, the CDFI Fund is supporting more economic development efforts than ever before to bring new life to struggling communities," Gambrell added.

Overall, Fiscal Year 2013 CDFI program applicants requested a total of $410.8 million, which was a $15 million jump over last year's requests of nearly $395.7 million. Credit unions made 73 requests for a total of around $77 million in funds.

The CDFI fund helps locally based financial institutions--including credit unions--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.

The credit unions that received funds are: 1st Bergen FCU, Hackensack, N.J.; Alliance CU, Fenton, Mo.; ASI FCU, Harahan, La.; Cascade Forest Products CU, Vancouver, Wash.; Choices FCU, St. Louis, Mo.; East River Development Alliance FCU, Long Island City, N.Y.; Electro Savings CU, St. Louis, Mo.; Express CU, Seattle, Wash.; First Light FCU, El Paso, Texas; FM Financial CU, Flint, Mich.; GECU, El Paso, Texas; Greater Abbeville FCU, Abbeville, S.C.; GTE FCU, Tampa, Fla.; and Guadalupe CU, Santa Fe, N.M.

Others include Gulf Coast Community FCU, Gulfport, Miss.; Hope FCU, Jackson, Miss.; Jefferson Financial CU, Metairie, La.; Joplin Metro CU, Joplin, Mo.; KC Terminal Employees/Guadalupe Center FCU; Kansas City, Mo.; Latino Community CU, Durham, N.C.; New York University FCU, New York, N.Y.; North Coast CU, Rocky River, Ohio; Nueva Esperanza Community CU, Toledo, Ohio; Opportunities CU, Winooski, Vt.; Poplar Bluff FCU, Poplar Bluff, Mo.; Santa Cruz Community CU, Santa Cruz, Calif.; Self-Help FCU, Durham, N.C.; Shreveport FCU, Shreveport, La.; South Central Missouri CU, Willow Springs, Mo.; St. Louis Community CU, St. Louis, Mo.; Syracuse Cooperative FCU, Syracuse, N.Y.; TMH FCU, Tallahassee, Fla.; Unite Burlington CU, St. Louis, Mo.; and United CU, Mexico, Mo.

For more on this year's CDFI Fund awards, use the resource link.

Stiff BSA Violation Penalties Handed Out To Two Banks

 Permanent link
VIENNA, Va. (9/25/13)--A $4.1 million civil money penalty against Saddle River Valley Bank in Saddle River, N.J., was announced by the Financial Crimes Enforcement Network (FinCEN) Tuesday. The penalty was assessed, according to FinCEN, after it was determined that the bank violated several provisions of the Bank Secrecy Act (BSA) from 2009 through May 2011.
 
The FinCEN announcement noted the bank consented to the assessment.
 
FinCEN worked with the Office of the Comptroller of the Currency (OCC) and the U.S. Attorney's Office for the District of New Jersey and concluded that the bank "willfully violated aspects of the BSA's program, recordkeeping, and reporting requirements" by:
  • Lacking an effective anti-money laundering (AML) program reasonably designed to manage the risks of money laundering and other illicit activity;
  • Failing to conduct adequate due diligence on foreign correspondent accounts; and
  • Failing to detect and adequately report in a timely manner suspicious activities in the accounts of foreign money exchange houses, also known as casas de cambio.
Saddle River Valley Bank, according to FinCEN, executed $1.5 billion worth of inadequately monitored transactions on behalf of Mexican and Dominican casas de cambio despite publicly available information, such as a FinCEN advisory, that "provided ample notice of the heightened risks of dealing with these institutions."
 
"It's pretty remarkable that a small community bank in suburban New Jersey was attracting more than a billion dollars in transactions with customers in Mexico and the Dominican Republic, and nobody thought it was too good to be true," FinCEN Director Jennifer Shasky Calvery said.
 
"Banks of all sizes, in any part of the country, may be tempted by such lucrative ventures. However, banks must use common sense in evaluating customer risk or seemingly lucrative business could become quite the opposite,"  she advised.
 
FinCEN's penalty is concurrent with a $4.1 million civil money penalty assessed by the OCC, and will be satisfied by one payment of $4.1 million to the U.S. Department of the Treasury. In addition, the U.S. Attorney's Office for the District of New Jersey will collect $4.1 million from the bank through civil asset forfeiture. The bank ceased operations in 2012 and the combined collection amount of $8.2 million represents the majority of its remaining assets.
 
In a related story, TD Bank NA Monday consented to pay $57.5 million to settle allegations by the U.S. Securities and Exchange Commission, FinCEN, and the OCC that the bank from April 2008 to September 2009 failed to file suspicious activity reports--or SARs--on activity in accounts belonging to Rothstein Rosenfeldt Adler, P.A., the Fort Lauderdale, Fla.  law firm, the OCC noted, through which Scott Rothstein ran a $1.2 billion Ponzi scheme.

House Financial Services Sets Early Oct. Agenda

 Permanent link
WASHINGTON (9/25/13)--Flood insurance, Consumer Financial Protection Bureau accountability and providing financial services access to unserved and underserved communities are some of the items on the early October U.S. House Financial Services Committee agenda.

The specific schedule for these hearings is as follows:
  • An Oct. 1 financial institutions and consumer credit subcommittee hearing to discuss legislative proposals to bring more accountability, reform and transparency to the CFPB;
  • An Oct. 9 capital markets and government sponsored enterprises subcommittee hearing on legislation to further reduce impediments to capital formation;
  • An Oct. 10 monetary policy and trade subcommittee hearing on international central banking models; and
  • An Oct. 10 financial institutions and consumer credit subcommittee hearing focused on unbanked and under-banked areas.
The hearing schedule is tentative. All hearings are scheduled to be held in Room 2128 of the Rayburn House Office Building.

FHFA Reaches Out To More HARP-eligible Homeowners

 Permanent link
WASHINGTON (9/24/13)--HGTV personality and star of "Power Broker" Mike Aubrey has signed on with the Federal Housing Finance Agency to help spotlight the agency's nationwide effort to better educate underwater homeowners about the mortgage relief that may be sought through the Home Affordable Refinance Program (HARP).
 
"To date, more than 2.8 million homeowners have refinanced through HARP," said FHFA Acting Director Edward J. DeMarco. "With the launch of this campaign we look forward to reaching those homeowners who may not know about the program or understand the eligibility criteria to take advantage of today's low interest rates by refinancing through HARP."
 
As part of this campaign, FHFA has launched a new website, www.HARP.gov, and is working with mortgage companies across the U.S.


To be eligible for a HARP refinance, homeowners must meet the following criteria:
  • The loan must be owned or guaranteed by Fannie Mae or Freddie Mac;
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009;
  • The current loan-to-value (LTV) ratio must be greater than 80%; and
  • The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months.
The FHFA and the U.S. Department of the Treasury introduced HARP in early 2009 as part of the Making Home Affordable program.

NEW: NCUA, Fed Agencies Release Elder Abuse Prevention Guidance

 Permanent link
WASHINGTON (9/24/13, UPDATED: 12:35 P.M. ET)--The National Credit Union Administration today joined six other federal financial regulators to clarify that financial institutions may report suspected elder financial abuse to appropriate authorities.

This reporting authority is provided under the Gramm-Leach-Bliley Act, the agencies said in a release. The NCUA and others emphasized that financial institution employees can report suspected irregular transactions, account activity, or other behavior that signals financial abuse. Suspected elder financial abuse may be reported to local, state or federal agencies, they said.

"Older adults can be attractive targets for financial exploitation and may be taken advantage of by scam artists, financial advisors, family members, caregivers, or home repair contractors," and recent studies have shown that a small number of financial abuse acts are in fact reported, the agencies noted.

The Federal Reserve, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Trade Commission, Office of the Comptroller of the Currency and the Commodity Futures Trading Commission joined the NCUA in issuing guidance.

For more, see Wednesday's News Now.

This Week In Congress: TRIA, Continuing Resolution

 Permanent link
WASHINGTON (9/24/13)--The Senate Banking Committee has scheduled a hearing on "Reauthorizing TRIA (Terrorism Risk Insurance Act): The State of the Terrorism Risk Insurance Market" for Wednesday at 10 a.m. (ET).
 
TRIA, which requires property and casualty insurers to offer coverage for foreign acts of terrorism on U.S. soil and provides a federal backstop for that coverage, is scheduled to expire at the end of 2014. The Senate panel hearing follows one last week by the House Financial Services Committee on the same topic. 
 
The Credit Union National Association also will be following these other committee sessions this week:
  • A Senate Budget Committee hearing on "The Impact of Political Uncertainty on Jobs and the Economy"  today;
  • A Senate subcommittee on national security and international trade and finance hearing on "Assessing the Investment Climate and Improving Market Access in Financial Services in India" on Wednesday; and
  • A House Budget Committee hearing on "The Congressional Budget Office's (CBO) Long-Term Budget Outlook" Thursday.
Of course the scheduled committee actions occur to a back drop of debate on a continuing resolution to fund government agencies in lieu of a formal appropriations bill. A continuing resolution must be enacted before Oct. 1 to avoid a shutdown of the federal government.

NCUA Sues Morgan Stanley and Eight Others Over Faulty Securities

 Permanent link
ALEXANDRIA, Va. (9/24/13)--Morgan Stanley & Co. Inc. and eight other institutions were the subjects of nine lawsuits filed Monday by the National Credit Union Administration in federal district court in New York. The lawsuits were over the sale of nearly $2.4 billion in mortgage-backed securities to Southwest and Members United corporate credit unions.
 
The agency also filed suit in federal district court in Kansas Monday against 13 international banks, including J.P. Morgan Chase. That suit alleges violations of federal and state anti-trust laws transacted by manipulation of interest rates through the London Interbank Offered Rate--LIBOR--system. (See related story: NCUA Sues 13 Alleging LIBOR Manipulation.)
 
Both actions, said NCUA Chairman Debbie Matz in releases announcing the suits, reflect the agency's responsibility to pursue recoveries against those whom the NCUA charges caused billions of dollars of losses to credit unions.
 
"All the credit unions we supervise and insure are sharing those costs. The people who are responsible should be required to shoulder that burden, as well," Matz said.
 
According to the NCUA, in all, five corporate credit unions failed as a result of the purchase of faulty mortgage-backed securities. The agency said the defendants in the cases file in New York--Morgan Stanley & Co., Inc. and Morgan Stanley Capital I Inc., Barclays, J.P Morgan/Bear Stearns, Credit Suisse, Royal Bank of Scotland and UBS--sold faulty securities to both corporate credit unions. And Goldman Sachs, Wachovia and Residential Funding Securities LLC, now Ally Securities, sold faulty securities to Southwest. The suits make claims under either federal or state securities laws. 
 
Southwest and Members United corporate credit unions paid more than $416 million for the securities in question in the Morgan Stanley suit and more than $1.9 billion for securities sold by the other defendants, the NCUA said.
 
The agency said its suits allege the firms made misrepresentations in connection with the underwriting and subsequent sale of the mortgage-backed securities. The corporate credit unions became insolvent, were subsequently placed into NCUA conservatorship and later liquidated as a result of losses from these faulty securities. These failures subsequently caused significant losses to the credit union system.
 
NCUA's complaints allege the offering documents of the securities sold to the failed corporate credit unions contained statements that were not true or omitted material facts. The originators systematically abandoned the stated underwriting guidelines in the offering documents, according to the complaints, with the result that the securities were significantly riskier than represented.
 
NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions. The agency has settled claims worth more than $335 million with Citigroup, Deutsche Bank Securities, HSBC, and Bank of American. 

The NCUA said that as liquidating agent for Southwest and Members United corporate credit unions, it has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.

The Credit Union National Association strongly commends the agency's aggressive, leading efforts to pursue those that irresponsibly sold mortgage-backed securities. The agency has had a good record of wins in the cases it already has been suing, CUNA said.

'Inside Exchange': How To Debunk Bankers On CU Tax Issue

 Permanent link
WASHINGTON (9/26/13)--The Credit Union National Association and state leagues continue to address top issues like the credit union tax status when bills are introduced at the state level, and they often coordinate their advocacy efforts with varied state-by-state legislative schedules. In the latest edition of CUNA's "Inside Exchange" video series, Pat Sowick, CUNA senior vice president of league relations, details the resources that her department provides to help credit union leagues in these efforts.



"The leagues developing relationships at the state level is very important, because almost half of state legislators are sitting up the Hill right now, on Capitol Hill, as members of Congress. So fostering those relationships really benefits credit unions in the long run. If they can start in Congress with some type of knowledge about credit unions, and appreciation for credit unions, we're going to do a lot better here in D.C., too," Sowick said in the latest "Inside Exchange" video segment.
 
This latest video, hosted by CUNA Executive Vice President of Communications Paul Gentile,  is part of CUNA's "Inside Exchange" series, which offers periodic, topical videos on issues important to credit unions. CUNA suggest members can use this resource for education purposes and as a great tool to keep staff and board informed on important issues.

Myra Toeppe To Be Region III Director

 Permanent link
ALEXANDRIA, Va. (9/24/13)--Myra Toeppe will replace Region III Director Herb Yolles when he retires at the end of this year, the National Credit Union Administration reported today.

Toeppe is the NCUA's current acting director of supervision in the Office of Examination and Insurance. She joined the NCUA in 2011 as associate regional director for operations in Region III. She has also served at the Office of Thrift Supervision and the Federal Home Loan Bank of Atlanta during her 25-year government career.

NCUA Chairman Debbie Matz said Toeppe is "a highly experienced financial services regulator" who "has quickly established herself as a leader and a problem solver." Her skills and experience, combined with a dedication to excellence, will make her a terrific regional director, Matz added.

New NCUA board member Rick Metsger noted he and Toeppe "have both taken new positions at NCUA during a time of opportunity and challenge for the industry. "I'm confident that Myra will bring new ideas, a fresh set of eyes and a balanced approach to address the problems facing federally insured credit unions in Region III," he said.

The agency also thanked Yolles for his 35 years of service to the NCUA. He has worked with every NCUA board member since Congress created the NCUA Board in 1978, the agency noted.

"During more than three decades at NCUA and especially the last three-and-a-half years in Region III, Herb has truly seen it all and practically done it all. To ensure continued access to affordable financial services for millions of Americans, Herb has been tireless in his efforts to make the credit union industry safe and sound," Matz said.

NCUA Sues 13 Alleging LIBOR Manipulation

 Permanent link
ALEXANDRIA, Va. (9/24/13)--The National Credit Union Administration Monday filed suit in federal district court in Kansas against 13 international banks, including J.P. Morgan Chase. The suit alleges violations of federal and state anti-trust laws transacted by manipulation of interest rates through the London Interbank Offered Rate (LIBOR) system.
 
The NCUA said in a release that manipulation of LIBOR, the benchmark for setting interest rates around the globe, resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution.  
 
"We have a responsibility to pursue recoveries through every available avenue against those who caused billions of dollars in losses to credit unions," NCUA Chairman Debbie Matz said, announcing the suit. "Some firms were manipulating international interest rates in a way that cost the five corporates to lose millions of dollars. Just as we are doing in our other suits, we are seeking to hold responsible parties accountable for their actions."
 
NCUA claims the defendants in today's action individually and collectively gave false interest-rate information through the LIBOR rate-setting process "to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled." The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying, the NCUA said.
 
The agency said that although more than 40 suits have been filed in relation to the LIBOR manipulation, the  CUA is one of the first federal financial regulators to sue in this area.  
 
LIBOR is the average daily interest rate a group of leading financial institutions pay when they borrow from one another. The rate is set daily for 10 currencies around the world and affects interest rates on trillions of dollars of financial transactions of various kinds.
 
Recoveries from NCUA's legal actions will further reduce the total losses resulting from the failure of the corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. All federally insured credit unions repay expenditures from the stabilization fund through assessments, so any recoveries would help reduce future assessments on credit unions, the NCUA noted.
 
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or "natural persons." Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.

See related story: NCUA Sues Morgan Stanley and Eight Others over Faulty Securities.
 
Use the resource link to access the NCUA website.

CUNA Seeks Comment On Charitable Accounts Proposal

 Permanent link
WASHINGTON  (9/24/13)--Credit unions can now comment on the National Credit Union Administration's proposal to allow federal credit unions to invest in charitable donation accounts (CDA) while creating safeguards to ensure the donations are used for their intended charitable purposes.
 
The NCUA plan would limit total investment in CDAs to 3% of the credit union's net worth for the duration of the accounts. A minimum of 51% of the total return from such an account would have to be distributed to one or more qualified charities. Distributions could be made to qualified charities no less frequently than every five years.
 
The National Credit Union Foundation is one of these approved charities, the Credit Union National Association noted.

CUNA in a Comment Call asks credit unions to comment on whether:
  • NCUA should consider reducing the minimum donation requirement of the investment proceeds;
  • The agency should require trust companies regulated by the Office of the Comptroller of the Currency to be investment advisors registered with the Securities and Exchange Commission; and
  • The proposed 3% net worth limitation should be increased. 
Credit unions that believe this threshold should be increased should suggest an appropriate level that would ensure safety and soundness.
 
CUNA supports the NCUA proposal and has commended the agency for its willingness to create a novel structure to facilitate credit unions engaging in charitable activities. These engagements benefit the credit union system and their local communities, CUNA said.
 
The NCUA proposal was released for public comment at the September open board meeting.
 
Use the resource link to access the CUNA Comment Call. Comments are due to CUNA Oct. 15 and to NCUA Oct. 21.

CUNA Analysis Details CFPB Mortgage Amendments

 Permanent link
WASHINGTON (9/24/13)--Details of the Consumer Financial Protection Bureau's (CFPB's) final rule that amends its Ability-to-Repay, Mortgage Servicing and Mortgage Loan Originator Rules are laid out in a new Credit Union National Association Final Rule Analysis.
 
The CFPB amended and clairified parts of the mortgage rules to ensure a smoother implementation process in 2014.

 Topics outlined in the final rule analysis include:
  • The small creditor exemptions;
  • How credit insurance premiums are "financed" by a creditor when the creditor allows the consumer to defer payment of the premium past the month in which it is due;
  • Specific procedures for servicers to follow if they fail to identify and inform a borrower upon an initial review that certain information is missing from a borrower's loss mitigation application;
  • Modifications that make it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need only temporary relief without going through a full loss mitigation evaluation process. Servicers, upon reviewing an incomplete loss mitigation application, may provide a 6-month forbearance to a borrower who is suffering a short-term, temporary hardship; and
  • The circumstances under which a loan originator's or creditor's administrative staff acts as loan originators.
For the full CUNA analysis of the CFPB final rule, use the resource link.
 
CUNA members can also access a compilation of CUNA compliance resources available to help credit unions work through all the regulations' requirements.

Oct. 2 Is Virtual Rally On 'Don't Tax My CU'

 Permanent link
WASHINGTON (9/24/13)--A national virtual rally--where credit union members and advocates from across the country will light up social media in support of the "Don't Tax My Credit Union" campaign via Twitter and Facebook--has been announced by the Credit Union National Association for Oct. 2.

There will be an accompanying physical rally at Credit Union House in Washington, D.C., between 2 p.m. and 3 p.m. (ET), and that event will be live streamed at www.DontTaxMyCreditUnion.org and on The Hill newspaper website.

CUNA is expecting tens of thousands of supporters to be in virtual attendance. "Rather than rallying supporters at the National Mall--like so many campaigns do--this movement will rally tens of thousands of credit union members nationwide online," said Bill Cheney, president/CEO of CUNA.  CUNA and the state credit union leagues launched the Don't Tax My Credit Union Advocacy campaign in May, across the backdrop of national political debate on revising the country's tax code.

Participants will be encouraged to use the various Take Action tools at www.DontTaxMyCreditUnion.org to show their support via  tweets, pictures, vine videos, and e-mails to their members of Congress, all with the #DontTaxMyCU hashtag. The physical rally at Credit Union House will feature several speakers, including Steve Pociask of the American Consumer Institute.

The event will be moderated by Paul Berry, an award-winning journalist and radio and television personality in the Washington, D.C., area--and long-time Govermental Affairs Conference MC--and also will feature remarks by Cheney, Paul Gentile, Bill Hampel, John Magill, and Ryan Donovan of CUNA. Other participants, speakers and interviews from all over the country will join in remotely using video conferencing.

The initiative urges lawmakers as part of any final tax reform plan to preserve the federal tax exemption credit unions receive as not-for-profit, member-owned cooperatives. To date, the campaign has generated over 900,000 messages to members of Congress--15,000 of which have come via social media.

NEW: NCUA Sues 13 Alleging LIBOR Manipulation

 Permanent link
ALEXANDRIA, Va. (9/23/13, UPDATED, 6:44 p.m. ET)--The National Credit Union Administration today filed suit in federal district court in Kansas against 13 international banks, including J.P. Morgan Chase. The suit alleges violations of federal and state anti-trust laws transacted by manipulation of interest rates through the London Interbank Offered Rate (LIBOR) system.
 
The NCUA said in a release that manipulation of LIBOR, the benchmark for setting interest rates around the globe, resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution.  
 
"We have a responsibility to pursue recoveries through every available avenue against those who caused billions of dollars in losses to credit unions," NCUA Chairman Debbie Matz said, announcing the suit. "Some firms were manipulating international interest rates in a way that cost the five corporates to lose millions of dollars. Just as we are doing in our other suits, we are seeking to hold responsible parties accountable for their actions."
 
NCUA claims the defendants in today's action individually and collectively gave false interest-rate information through the LIBOR rate-setting process "to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled." The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying, the NCUA said.
 
The agency said that although there have been more than 40 suits have been filed in relation to the LIBOR manipulation, the CUA is one of the first federal financial regulators to sue in this area.  
 
LIBOR is the average daily interest rate a group of leading financial institutions pay when they borrow from one another. The rate is set daily for 10 currencies around the world and affects interest rates on trillions of dollars of financial transactions of various kinds.
 
Recoveries from NCUA's legal actions will further reduce the total losses resulting from the failure of the corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. All federally insured credit unions repay expenditures from the stabilization fund through assessments, so any recoveries would help reduce future assessments on credit unions, the NCUA noted.
 
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or "natural persons." Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
 
Use the resource link to access the NCUA website.

Cheney Report: 'Stress Test' Proposal Worth Close Scrutiny

 Permanent link
WASHINGTON (9/23/13)--The National Credit Union Administration put credit unions on notice last week that the agency plans to propose "stress testing" for large credit unions--those with more than $10 billion in assets. That announcement gives the credit union system "reason to pause," Credit Union National Association President/CEO Bill Cheney wrote in the latest The Cheney Report.
 
Cheney made it clear that CUNA doesn't take issue with the NCUA taking appropriate steps to protect the federal share insurance fund in the interests of all credit unions that it insures. And CUNA appreciates that the agency is still weighing whether to make the results of such tests public.
 
"But we are pondering whether this sort of approach is necessary for credit unions, with their relatively low-risk profile, even for very large credit unions.
 
"Further, the specter of the 'creeping crisis of complexity' comes into play, as it appears that the agency will propose a threshold of $10 billion for the program--meaning as credit unions grow over the next several years, more and more will be subject to the testing, and the associated regulatory burden," he warned.
 
Cheney assured that CUNA intends to give any stress test proposal "very careful scrutiny," to include such actions as collecting more information from the agency about its intentions, and data from credit unions about the likely impact, in the short and long terms.
 
Also in The Cheney Report:
  • Interchange rules remain in force; 'expedited' appeal accepted;
  • NCUA urged to weigh in on FASB 'business entity' accounting proposal;
  • Regulatory relief efforts active in Congress;
  • And more.
Use the resource link to read the latest in The Cheney Report.

CUNA Urges CUs To Take CFPB Mortgage Compliance Survey

 Permanent link
WASHINGTON (9/23/13)--Credit unions need to take the time to complete a compliance survey on the 2014 Consumer Financial Protection Bureau's mortgage lending rules, urges Kathy Thompson, Credit Union National Association senior vice president for compliance and legislative analysis, to aid the trade group in assessing the full impact on credit unions of the new CFPB rules.
 
"We really need you to provide some input in this CUNA survey--and we've moved the response date from Sept. 23 to Sept. 27--this Friday--to give you time to weigh in," Thompson said in CUNA's CompBlog Friday.  Moreover, if a credit union only can fill in parts of the survey, Thompson suggests which questions are most important to CUNA.
 
"In words it uses regularly, the CFPB is a 'data-driven' agency, so please give us data that might help us to persuade the agency to postpone the 'compliance date' of the mortgage regs," Thompson urged. 
 
While the agency will be unlikely to move the January 2014 "effective dates" of the mass of new regulations, Thompson explained that the Federal Reserve Board, which formerly regulated the consumer protection laws now under the CFPB's jurisdiction, often authorized a later "compliance date" in recognition of the practical operational considerations to comply.

Thompson said the more information a credit union can provide on the survey, the better, but she asked respondents at least to answer the following questions:
  • Number 8: Are you relying on a vendor to help with compliance?
  • Number 9: If so, when do you expect your vendor to provide all of the necessary changes?
  • Number 10: After your vendor has made the necessary changes, how long will your credit union need to test and implement the changes?
  • Number 11: How long will your credit union need to train staff on the vendor's changes?
  • Number 15: What is your credit union's asset size?
CFPB Director Richard Cordray earlier this month said that the bureau "will be sensitive to...good faith efforts to come into substantial compliance" by January 2014.

At CUNA's Compliance School last week, the NCUA said that the agency will start looking at how compliance is coming along after the regulations go into effect, but won't start writing up credit unions up until "summertime."  Thompson says the better approach than a vague "good faith effort" is for the CFPB to declare a formal "compliance date" next fall.
 
Use the resource link below to access the CUNA survey and to read Thompson's CompBlog entry.

Cheney: Interchange Rule Stay Will Keep Order

 Permanent link
WASHINGTON (9/24/13)--Credit Union National Association President/CEO Bill Cheney said a Friday court decision to allow existing debit interchange fee cap rules to stay in place during an appeals means there will be an order in place that will provide certainty, at least for now.

The existing Federal Reserve rules implementing the debit interchange fee cap and network exclusivity provisions required by the Durbin Amendment will stay in place throughout an appeals process as the Fed seeks to overturn a July court ruling that declared those rules illegal. 
 
So said Judge Richard Leon of the U.S. District Court for the District of Columbia who is also the judge that ruled the Fed did an inadequate job of implementing the Dodd-Frank interchange rule in 2011.  Leon criticized the Fed for going beyond congressional intent when writing the rule by including too many items considered to be costs for card issuers.
 
Cheney said, "For credit unions, keeping the existing rules in place pending the appeal limits potentially needless compliance obligations, given the Fed's existing rules could ultimately be upheld. 
 
"While many believe that lowering these caps will help consumers, there is simply no evidence that's true.  Studies have shown merchants aren't passing on the money they are saving under the Fed's rule to consumers.  The Fed's rule is a multi-billion dollar windfall for merchants, plain and simple. 
 
"CUNA looks forward to telling this important story as it advocates for 97 million credit union members before the D.C. Circuit."
 
CUNA, with its coalition partners, had filed a brief with the court calling on Leon to maintain current interchange regulations as the case moves forward. To do otherwise, CUNA noted, would "harm all affected interests, including consumers, and threaten the effective functioning, stability, and security of the electronic debit-card payments system."
 
The defendant Federal Reserve and plaintiff merchants coalition also urged the court to keep the current rule during the Fed appeals process.
 
The Fed, at that time, said a stay "will preserve the status quo in the debit card industry while the board's appeal proceeds, will prevent irreparable injury to plaintiffs in the form of a likely steep increase in interchange fees should the market return to its largely unregulated state prior to the rule, and will avoid mooting the board's appeal."
 
Credit unions under $10 billion are exempt from the fee cap rule, but not the network exclusivity provisions. If Leon's ruling stands on appeal, those provisions would require two unaffiliated PIN and two unaffiliated signature networks not only for each card, but for each transaction. 
 
As to the fee cap, the current Fed rule limits debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allows 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.
 
CUNA maintains all credit unions, including those under $10 billion in assets, are negatively affected by these price controls in the marketplace.
 
Also last week,the U.S. Court of Appeals for the District of Columbia Circuit approved a request from both parties of NACS v. Board of Governors of the Federal Reserve System for expedited action on the Fed's appeal.
 
Use the resource link to read the related story.

NEW: CUs To Hold Virtual Rally On Oct 2

 Permanent link
WASHINGTON (9/23/13, UPDATED 1:30 p.m. ET)--A national virtual rally--where credit union members and advocates from across the country will light up social media in support of the "Don't Tax My Credit Union" campaign via Twitter and Facebook--has been announced by the Credit Union National Association for Oct. 2.

There will be an accompanying physical rally at Credit Union House in Washington, D.C. between 2 p.m. and 3 p.m. (ET), and that event will be live streamed at www.DontTaxMyCreditUnion.org and on The Hill newspaper website.

CUNA is expecting tens of thousands of supporters to be in virtual attendance. "Rather than rallying supporters at the National Mall--like so many campaigns do--this movement will rally tens of thousands of credit union members nationwide online," said Bill Cheney, president/CEO of CUNA.  CUNA and the state credit union leagues launched the Don't Tax My Credit Union Advocacy campaign in May, across the backdrop of national political debate on revising the country's tax code.

Participants will be encouraged to use the various Take Action tools at www.DontTaxMyCreditUnion.org to show their support via  tweets, pictures, vine videos, and emails to their members of Congress, all with the #DontTaxMyCU hashtag. The physical rally at Credit Union House will feature several speakers, including Steve Pociask of the American Consumer Institute.

The event will be moderated by Paul Berry, an award-winning journalist and radio and television personality in the Washington D.C. area--and long-time Govermental Affairs Conference MC--and also will feature remarks by Cheney, Paul Gentile, Bill Hampel, John Magill, and Ryan Donovan of CUNA. Other participates, speakers and interviews from all over the country will join in remotely using video conferencing.

The initiative urges lawmakers as part of any final tax reform plan to preserve the federal tax exemption credit unions receive as not-for-profit, member-owned cooperatives. To date, the campaign has generated over 900,000 messages to members of Congress--15,000 of which have come via social media.

NEW: NCUA Names New Region III Director

 Permanent link
ALEXANDRIA, Va. (9/23/13, UPDATED: 11:25 A.M. ET)--Myra Toeppe will replace Region III Director Herb Yolles when he retires at the end of this year, the National Credit Union Administration reported today.

Toeppe is the NCUA's current acting director of supervision in the Office of Examination and Insurance. She joined the NCUA in 2011 as associate regional director for Operations in Region III. She has also served at the Office of Thrift Supervision and the Federal Home Loan Bank of Atlanta during her 25-year government career.

NCUA Chairman Debbie Matz said Toeppe is "a highly experienced financial services regulator" who "has quickly established herself as a leader and a problem solver." Her skills and experience, combined with a dedication to excellence, will make her a terrific regional director, Matz added.

New NCUA board member Rick Metsger noted he and Toeppe "have both taken new positions at NCUA during a time of opportunity and challenge for the industry. "I'm confident that Myra will bring new ideas, a fresh set of eyes and a balanced approach to address the problems facing federally insured credit unions in Region III," he said.

The agency also thanked Yolles for his 35 years of service to the NCUA. He has worked with every NCUA board member since Congress created the NCUA Board in 1978, the agency noted.

"During more than three decades at NCUA and especially the last three-and-a-half years in Region III, Herb has truly seen it all and practically done it all. To ensure continued access to affordable financial services for millions of Americans, Herb has been tireless in his efforts to make the credit union industry safe and sound," Matz said.

CFPB Extends Consumer Complaint Hotline Pilot

 Permanent link
WASHINGTON (9/23/13)--The Consumer Financial Protection Bureau (CFPB) has expanded the reach of its pilot program intended to help consumers more easily have their financial product questions or complaints answered by the bureau's Office of Consumer Response. The CFPB has partnered with the City of Jackson, Miss., so Jackson consumers can now dial 311 to be connected with the bureau when they have financial issues.
 
The CFPB launched the hotline pilot in Newark, N.J., in February.  Consumers there can dial 4311 for quick access to the agency's consumer response team.
 
In Jackson, the 311 hotline is a non-emergency line connecting residents to city services.
 
"We understand the challenges that Jacksonians face on a daily basis when it comes to financial services such as loans, debt collection, and mortgages," said city Mayor Chokwe Lumumba. "We want to help our citizens become more aware of the financial options and services that are available to them, and what better way than to connect the City's 311 system with the CFPB."
 
"Our mission at the CFPB is to make it easier for consumers to navigate the complex consumer financial markets," said CFPB Director Richard Cordray, who added the agency is always looking for new ways to connect with consumers.
 
For consumers outside of the hotline areas,  the consumer response team can be reached by :
  • Visiting consumerfinance.gov/Complaint;
  • Calling the toll-free phone number at 855-411-CFPB (2372) or TTY/TDD phone number at 855-729-CFPB (2372);
  • Faxing the CFPB at 855-237-2392; or
  • Mailing a letter to P.O. Box 4503, Iowa City, Iowa 52244.

New Supervisory Report On GSEs Launched

 Permanent link
WASHINGTON (9/20/13)--The Federal Housing Finance Agency has broadened its reporting arsenal for reporting on its charges: Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
 
The FHFA announced Thursday that it has a new FHFA Quarterly Performance Report of the Housing GSEs, which provides a summary of data available in Fannie Mae, Freddie Mac and the FHLBanks' individual public filings, including some combined trends.
 
The inaugural issue was released yesterday and it covers the second quarter of 2013. It takes a look at key market drivers such as house prices, average interest rates and swap rates.  It also includes a quarterly update on the conservatorships of Fannie Mae and Freddie Mac.
 
As its name implies, the new report will be produced quarterly. The FHFA Conservator's Report will continue on an annual basis.
 
Use the link to access the newest publication.

NEW: Existing Fed Interchange Fee Cap Rules Will Stay Through Appeals Process

 Permanent link
WASHINGTON (9/20/13, UPDATED 9:54 a.m. ET)--The existing Federal Reserve rules implementing the interchange fee cap and network exclusivity provisions required by the Durbin Amendment will stay in place throughout an appeals process as the Fed seeks to overturn a July court ruling that declared those rules illegal. 
 
So says Judge Richard Leon of the U.S. District Court for the District of Columbia who, of course, is also the judge that ruled the Fed did an inadequate job of implementing the Dodd-Frank interchange rule in 2011.  Leon criticized the Fed for going beyond congressional intent when writing the rule by including too many items considered to be costs for card issuers.
 
Credit Union National Association President/CEO Bill Cheney said of today's decision, "CUNA continues to believe that the Fed's existing rules are far from perfect for credit unions, but in striking down the rule this summer, Judge Leon injected extreme uncertainty into the payment card system, which needs to continue efficiently serving merchants and consumers pending the outcome of this appeal.
 
"CUNA is relieved that there is an order in place that will provide that certainty for now. For credit unions, keeping the existing rules in place pending the appeal limits potentially needless compliance obligations, given the Fed's existing rules could ultimately be upheld. CUNA will now move forward in strong advocacy for credit union interests as the appeal is heard before the D.C. Circuit."
 
CUNA, with its coalition partners, filed a brief with the court calling on Leon to maintain current interchange regulations as the case moves forward. To do otherwise, CUNA noted, would "harm all affected interests, including consumers, and threaten the effective functioning, stability, and security of the electronic debit-card payments system."
 
The defendant Federal Reserve and plaintiff merchants coalition also urged the court to keep the current rule during the Fed appeals process.
 
The Fed, at that time, said a stay "will preserve the status quo in the debit card industry while the board's appeal proceeds, will prevent irreparable injury to plaintiffs in the form of a likely steep increase in interchange fees should the market return to its largely unregulated state prior to the rule, and will avoid mooting the board's appeal."
 
Credit unions under $10 billion are exempt from the fee cap rule, but not the network exclusivity provisions. If Leon's ruling stands on appeal, those provisions would require two unaffiliated PIN and two unaffiliated signature networks not only for each card, but for each transaction. 
 
As to the fee cap, the current Fed rule limits debit interchange fees for issuers with assets of $10 billion or more to 21 cents, and allows 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.
 
CUNA maintains all credit unions, including those under $10 billion in assets, are negatively affected by these price controls in the marketplace.

Two CUs Among Native CDFI Program Awardees

 Permanent link
WASHINGTON (9/20/13)--Lakota FCU of Kyle, S.D., and The Queens FCU, Honolulu, Hawaii, are among the 35 organizations awarded a total of $12.4 million under the Treasury Department's Native American CDFI Assistance Program (NACA Program), according to an announcement Thursday.
 
Lakota is to receive $150,000 and The Queens is to receive $659,000.
 
The funds are intended to help awardees increase lending and financial services in Native American, Alaska native, and native Hawaiian communities throughout the United States.
 
"The Native American CDFI Assistance Program is providing critically needed funds for distressed Native and tribal areas, many of which lack traditional banking services," said Don Graves, Treasury Deputy Assistant Secretary for Small Business, Community Development and Housing Policy. "This latest round of awards will expand the capacity of native financial institutions to develop innovative economic development solutions for the businesses and individuals in their communities."       
 
The awardees, all certified Native Community Development Financial Institutions (Native CDFIs) or organizations looking to become or create Native CDFIs, will receive a collective total of $12,451,015 in Financial Assistance and Technical Assistance awards.
 
Eighteen Native CDFIs will receive Financial Assistance awards, which are primarily used for financing capital. Seventeen organizations will receive Technical Assistance grants, which are usually used to acquire products or services, staff training, professional services, or other support.
 
Use the resource link to read more about the grants and technical assistance.

Fed, Merchants Get Expedited Court Action On Interchange Appeal

 Permanent link
WASHINGTON (9/20/13)--The U.S. Court of Appeals for the District of Columbia Circuit moved quickly to approve a request for expedited action on the Federal Reserve Board's appeal in the case known as NACS v. Board of Governors of the Federal Reserve System. The court's approval was issued yesterday--the same day the request was filed.
 
On Thursday, the merchant plaintiffs in the debit card interchange lawsuit and the defendant Fed filed jointly an emergency motion asking the appeals court for quick action in the case. Specifically, the parties asked the D.C. circuit to move on the Fed's appeal that attempts to overturn a lower court ruling that the regulator's implementation of the Dodd-Frank Act debit card interchange fee was faulty and should be scrapped.
 
In the emergency motion the merchants asserted that every day the existing final rule is left in place potentially causes merchants "irreparable injury" because the cap is too high.
 
The Fed argued that expedited treatment is necessary because to vacate the existing rule before a resolution of the appeal "would eliminate the existing regulatory limits on the amount of fees that merchants can be required to pay in connection with each debit card transaction subject to the rule and thus allow the unrestrained imposition of fees by card networks and issuers on the businesses that accept debit cards--precisely the practice that the statute sought to prevent."  The Fed further claimed that expedited treatment is necessary to provide "timely guidance and certainty about the rules and procedures governing the millions of debit card transactions being conducted every day--a matter of unusual public interest." 

The Fed said it could not adopt an interim regulation while the appeal is pending without mooting the appeal. A decision is expected soon from the district judge regarding whether he will leave the stay in place throughout the appeal, a request the Fed, merchants, and financial institutions all have told the judge is the right step.
 
The circuit court approved the following expedited calendar for the appeal:
  • Brief for Federal Reserve 10/21/13;
  • Joint brief for amici in support of Federal Reserve 10/21/13;
  • Joint brief for merchants 11/20/13;
  •  Brief(s) for amici in support of merchants 11/20/13; and
  • Reply brief for Federal Reserve 12/04/13.
Robin Cook, assistant general counsel for special projects for the Credit Union National Association, observed Thursday that based on this schedule, oral arguments likely will be held this spring, with a decision as soon as this summer.  CUNA will be joining a coalition of financial institution trade associations in filing an amicus brief before the D.C. Circuit, and stressed Thursday that the case continues to be a top advocacy priority.

Small Business Leaders Call On Congress To Increase Their Access To Capital

 Permanent link
WASHINGTON D.C. (9/20/13)--With the opportunity to create over 140,000 jobs, small business owners' primary concern is gaining access to additional capital to grow their businesses. During The Hill's Policy Briefing Panel on Small Business, Credit Union National Association Senior Vice President and Chief Economist, Bill Hampel, along with other industry leaders, discussed what small businesses need from the U.S. Congress to be successful.

The main message was simple: remove the barriers that prevent small
Click to view larger image The Hill's policy briefing entitled "Small Business Voices" was live streamed on the publication's website.  Shown here, Credit Union National Association Chief Economist Bill Hampel notes that credit unions and small banks have increased their small business lending by 50% since the beginning of the recession. (CUNA Photo)
 businesses from growing by allowing them more access to capital, and don't hurt small business by destroying consumer confidence with unnecessary drama over the looming federal debt ceiling.

Panelists Mike Roach and Anne Zimmerman, small business owners from Oregon and Ohio, both suggested that passing the Credit Union Small Business Jobs Creation Act, which would eliminate the artificial cap on how much credit unions can lend to small businesses, would be a good start to helping small businesses gain access to additional capital.

Zimmerman was rejected by big banks when she went to purchase the building she runs her business in and had to rely on credit unions and community banks to fund her acquisition. Her story reflects the same message that many small business owners shared during CUNA's National Small Business Hike the Hill Day in 2012.

"Credit unions and small banks have increased their small business lending by 50% since the beginning of the recession," said CUNA's Hampel. This type of growth, even during the recessionary period, demonstrates that credit unions have the capital and means to help small businesses succeed and could do even more if Congress were to lift the artificial cap on their lending capabilities.

The panel also expressed concern about the government's looming budget debates this fall. Business owners are just beginning to win consumers' trust back and a government shut down or failure to raise the debt ceiling would only hinder consumer spending and weaken consumer, ultimately hurting the growth of small businesses, they observed.

The long-term federal debt outlook is another major concern for small business owners. Hampel indicated that although the federal debt ratio is in a stable place right now, if Congress doesn't address the explosive growth of entitlement spending, primarily Social Security and Medicare over the coming few decades, the country would indeed face a fiscal crisis.  

The panel's conclusive suggestion for Congress to help small businesses was to work to eliminate the barriers that hold them back from growing. Rather than Congress being a negative force, find positive ways to help small business and thus the economy by passing legislation such as the Credit Union Small Business Jobs Creation Act, which would increase the credit union member lending business cap to 27.5% of assets, up from 12.25%.  The panel stressed that the legislation would not cost taxpayers any money but it would reap huge benefits for consumers and small businesses alike.

Rep. Larson Pledges His Continued Protection Of CU Tax Status

 Permanent link
WASHINGTON (9/20/13)--Credit unions by their very nature, says Rep. John Larson, are a key part of the communities they serve and that, in part, is why the Connecticut Democrat supports protecting the credit union tax status, Larson said in a public statement.
 
"As institutions owned by and for their members, credit unions stepped up in the aftermath of the financial crisis and throughout our economic recovery to help the communities they serve through challenging times.
 
"Credit unions are an important source of capital for our communities and that's why I have consistently supported protecting their tax-exempt status in the past and will continue to do so moving forward," Larson said in a statement sent to the Credit Union League of Connecticut.
 
Larson's support adds to the growing body of federal lawmakers who have publicly backed the credit union tax status as public policy debate centers on tax reform.  A growing list of lawmakers--from diverse regions, from both on sides of the aisle, and including members of key tax-writing congressional committees--have weighed in to back credit unions in the debate.
 
The Credit Union National Association, the state credit union leagues, and credit unions have since May been running a massive social media advocacy campaign under the banner, "Don't Tax My Credit Union." The campaign uses Twitter, Facebook, as well as CUNA's own DontTaxMyCreditUnion.org websites--in Spanish and English--to generate tweets, Facebook posts and e-mails to lawmakers.
 
Overall, more than three million Twitter users potentially have been exposed to the #DontTaxMyCU campaign. In one day alone, the Sept. 10 "Don't Tax Tuesday" push around 4,800 tweets were specifically aimed at the Twitter accounts of members of Congress. That total was double the result seen during the first #DontTaxTuesday campaign held in July.
 
Use the resource link for more on CUNA's "Don't Tax My Credit Union" campaign.

NCUA Issues Guidance On Loan Participation Rule

 Permanent link
WASHINGTON (9/20/13)--The effective date for the National Credit Union Administration's new loan participation regulation is almost at hand--Sept. 23--and the agency today issued supervisory guidance on the rule.
 
In Letter to Credit Unions 13-CU-07, the agency stated, "Loan participations strengthen the credit union industry by providing a useful way for credit unions to diversify their loan portfolios, improve earnings, distribute liquidity across the industry, and balance loan demand.  However, as with any loans generated by third parties that are not federally guaranteed, loan participations come with risks."
 
In addition to the intention of the rule, the letter describes its reach and its provisions.  It also noted that NCUA examiners this week received supervisory guidance on the revised rule--including the process by which credit unions may obtain waivers.
 
The new loan participation rule features many improvements suggested by the Credit Union National Association even though CUNA did not support any new loan participation rule at this time. For instance, the original effective date was July 25, but CUNA strongly urged the agency to give credit unions more time to adequately prepare for the rule's changes.
 
The final rule sets a limit on loans from one originator of 100% of a credit union's net worth. This is up from a proposed 25% of net worth cap. Also very significant, the federal regulator approved an expanded waiver process for the single-originator limit and limits to one borrower.

CUNA urged such changes and the CUNA board emphasized credit union concerns as it worked to make the rule more practicable.

CUNA Supports FASB Plan That Could Bring CU Financial Reporting Relief

 Permanent link
WASHINGTON (9/20/13)--A proposed definition from the Financial Accounting Standards Board (FASB) of "public business entity" (PBE)  should be adopted, the Credit Union National Association's Deputy General Counsel Mary Dunn said in a letter filed with FASB yesterday.
 
The letter strongly commends FASB's efforts to consider whether some differences in generally accepted accounting principles (GAAP) should be allowed for private companies, such as credit unions,  that don't meet the definition of a PBE. A PBE is an entity that is regulated by the Securities and Exchange Commission, has securities that are unrestricted, and is required to produce GAAP compliant financial statements; or meets other criteria generally in connection with the issuance of securities, which do not apply to credit unions.    
 
The CUNA letter notes that FASB is developing a guide for private companies that could result in accounting and reporting requirements for credit unions that are more reflective of their purpose, democratic control and structure than some current requirements are.   
 
"Credit unions are not driven by the motivation to reward stockholders, but to serve the needs of their members with attractive rates and services and should not be subject to the same requirements that apply to publicly traded companies,"  the letter notes. The proposed PBE definition "will be of critical importance in determining which institutions are covered by the guide and thus eligible for alternatives that still qualify as GAAP," Dunn wrote.  Other types of financial institutions and organizations that do not meet the PBE definition could also be eligible for any GAAP alternatives FASB develops that apply to them.
 
"Allowing accounting principles and requirements to vary on a reasonable basis, depending on the type of entity, will result in standards that are more precisely tailored to the needs of stakeholders of differing organizations and produce financial reporting that is more transparent and accurate," CUNA emphasized.  CUNA also urged FASB to coordinate with prudential regulators in the development of alternative GAAP standards "to ensure regulators will accept their use" when alternative principles are adopted by FASB.
 
CUNA will continue to weigh in with FASB on the development of alternative GAAP standards and how credit unions could be affected by the use of such alternatives. CUNA's letter was developed with the CUNA Accounting Subcommittee and CUNA CFO Council members.
 
Use the resource link to access this and all recent CUNA Comment Letters.

Chase USA, JPMorgan Chase Must Refund Millions For Illegal Card Practices

 Permanent link
WASHINGTON (9/20/13)--The Consumer Financial Protection Bureau (CFPB) Thursday announced it has ordered Chase Bank USA, N.A. and JPMorgan Chase Bank, N.A. to refund an estimated $309 million to more than 2.1 million customers for illegal credit card practices.

The Office of the Comptroller of the Currency (OCC) announced earlier in the day that it was executing an enforcement action against the banks for "unsafe or unsound practices in connection with the bank's non-home loan debt collection litigation practices and the bank's non-home loan compliance with the Servicemembers Civil Relief Act (SCRA)." The CFPB enforcement action is the result of work started by the OCC, which the CFPB joined last year.

The agencies found that Chase engaged in unfair billing practices for certain credit card "add-on products" by charging consumers for credit monitoring services that they did not receive.

"At the core of our mission is a duty to identify and root out unfair, deceptive, and abusive practices in financial markets that harm consumers," said CFPB Director Richard Cordray. "This order takes action against such practices and requires Chase to fully refund more than $300 million to consumers who were charged illegal fees."
 
According to the CFPB order, Chase enrolled consumers in credit card "add-on" products that promised to monitor customer credit and alert consumers to potentially fraudulent activity. In order for consumers to obtain credit monitoring services, consumers generally must provide written authorization. Chase, however, charged many consumers for these products without or before having the written authorization necessary to perform the monitoring services. Chase charged customers as soon as they enrolled in these products even if they were not actually receiving the services yet.
 
The agencies found that Chase engaged in these practices between October 2005, when Chase first offered the products, and June 2012, when Chase stopped billing consumers who were not receiving the promised benefits.
 
Use the resource link to read more on what the CFPB said occurred as a result of unfair billing tactics and to read the terms of the enforcement action.

Next CFPB Field Hearing Studies Credit Cards

 Permanent link
WASHINGTON (9/20/13)--The Consumer Financial Protection Bureau (CFPB) has announced a Chicago field hearing on credit cards for Oct. 2.
 
The session will be kicked off by CFPB Director Richard Cordray's remarks and the field hearing will gather testimony from consumer groups, credit card industry representatives, and members of the public.
 
While open to the public, attendance requires a reservation via this email address: cfpb.events@cfpb.gov. The communication should include full name and organizational affiliation, if any.
 
Making credit cards disclosures more consumer friendly has been a key
Click to view larger image In December 2011, the Consumer Financial Protection Bureau released a sample credit card disclosure form intended to help consumers understand the terms of a card agreement.
interest of the CFPB for years.
 
Late in 2011, under its "Know Before You Owe" initiative, the CFPB released a sample credit card disclosure, a two-page document the agency said "contains the key terms consumers need, clearly laid out and without fine print." The CFPB said its initiative will simplify contracts to help consumers better understand their credit cards while allowing card issuers to retain their freedom to design credit card products.

Also, the CFPB maintains a database of credit card agreements from more than 300 card issuers. Consumers can use a CFPB web-based tool to search for an agreement in one of two ways: by the name of the issuer, or by the text within the agreement.

Matz Announces NCUA Will Propose Stress Testing Rule

 Permanent link
COEUR D'ALENE, Idaho (9/19/13)--National Credit Union Administration Chairman Debbie Matz announced Wednesday that the agency's Office of National Examinations and Supervision is drafting a requirement for annual stress tests at credit unions with assets exceeding $10 billion.

Matz said stress testing would be part of the NCUA's "coordinated approach" to supervision of a changing industry with asset growth concentrated in large credit unions. Stress testing of federally insured credit unions with state charters would be conducted in consultation with the state regulator.

The shocks used in the stress testing would be based on scenarios issued annually by the Federal Reserve, with adjustments for differences between banks and credit unions, Matz said.

Speaking at the National Association of State Credit Union Supervisors' annual State System Summit, Matz noted that the agency is likely to issue the proposed rule for public comment before the end of the year.

"At NCUA, we need to utilize all the tools at our disposal to look ahead in order to protect the industry in the future," Matz said. "Stress tests are forward-looking measures. They're designed to determine whether an institution is holding an adequate capital cushion to survive adverse scenarios and to allow credit unions to make adjustments before a crisis hits."

Now that the agency has made public its plan to pursue a new rule in this area, the Credit Union National Association will be talking with affected credit unions and NCUA officials to minimize the impact and contain regulatory burdens.

The Dodd-Frank Act requires certain financial firms with more than $10 billion in assets to conduct annual stress tests. Matz noted that stress testing is just as important for credit unions of comparable size.

A credit union that fails a stress test would be required to revise its capital plan to demonstrate how it would meet minimum stress test capital ratios, an agency release said.  A credit union that passes the test would benefit from the analysis by identifying potential improvements in its enterprise risk management system.

Matz said one issue still being reviewed is whether stress test results would be publicly available. She noted banks are required to disclose their results, but banks are publicly traded entities, unlike credit unions.

She said public disclosure would enhance transparency to members but results could also be misinterpreted and lead to inaccurate conclusions about a credit union's current stability.

2014 CUNA GAC Is Feb. 23-27

 Permanent link
WASHINGTON (9/19/13)--The Credit Union National Association announced today that its 2014 Governmental Affairs Conference will be held in Washington, D.C. from Feb. 23-27 and registration is open. CUNA President/CEO Bill Cheney urged all member credit unions to use this one-year anniversary of CUNA's launch of the Unite for Good vision as a rallying point for the credit union system to accomplish an unprecedented "boots on the ground" presence in Washington.   It was at last year's GAC, considered the credit union movement's premier national
Click to view larger image Credit Union National Association President/CEO Bill Cheney launches "Unite for Good" at the CUNA 2013 GAC, a vision where Americans choose credit unions as their best financial partner and the credit union system works collaboratively to advance three broad goals: To remove barriers, raise awareness and foster service excellence. (CUNA Photo)
conference, that CUNA and the state credit union leagues presented a bold new, overarching strategic vision for the credit union movement: A vision in which "Americans choose credit unions as their best financial partner."
 
"We have great momentum behind our shared vision. In February we will continue the push forward," Cheney said.
 
He emphasized that with the credit union tax status in peril as Washington policymakers considered tax code reforms, and with banks executing attacks on credit unions at every chance, credit unions must take this opportunity to show their numbers to all members of the U.S. Congress.
 
"We need to rally the biggest GAC crowd yet to take part in Capitol Hill visits and share the story of the credit union difference. We need you to join your peers and Unite for Good," Cheney urged.
 
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.
 
Registration is now open and keynote and other speakers and session topics will be announced in the weeks to come. For more information, follow the @CUNA on Twitter and the hashtag #CUNAGAC, and watch News Now for details.
 
Use the resource link to register.

Nov. 18 Is Fixed-asset Rule Effective Date

 Permanent link
WASHINGTON (9/19/13)--Changes to the National Credit Union Administration's fixed-asset rule, adopted at its Sept. 12 open board meeting, will go into effect Nov. 18, according to a document published in the Wednesday Federal Register.
 
The Credit Union National Association supported the amendments to the regulation governing federal credit union ownership of fixed-assets.  Although the new final rule does not make any substantive changes to regulatory requirements, CUNA has said that the plain language revisions, new definitions and revised wording could help credit unions with their compliance efforts.
 
Overall, the rule allows federal credit unions to purchase, hold and dispose of property necessary or incidental to their operations. These fixed assets include office buildings, branch facilities, furniture, computer hardware and software, and ATMs.

The NCUA has said the rule changes will also offer greater flexibility to federal credit unions. "Those that receive a waiver from the 5% fixed-assets limit will have the ability to make multiple purchases of fixed assets within a 1% buffer above their approved waiver limit. This change is intended to eliminate the need for a federal credit union to make repeated waiver requests for minor acquisitions," the agency wrote in its proposal document.

Use the resource link to access the Federal Register document.

NEW: NCUA Issues Guidance On Loan Participation Rule

 Permanent link
WASHINGTON (9/19/13, UPDATED 5:32 p.m. ET)--The effective date for the National Credit Union Administration's new loan participation regulation is almost at hand--Sept. 23--and the agency today issued supervisory guidance on the rule.
 
In Letter to Credit Unions 13-CU-07, the agency stated, "Loan participations strengthen the credit union industry by providing a useful way for credit unions to diversify their loan portfolios, improve earnings, distribute liquidity across the industry, and balance loan demand.  However, as with any loans generated by third parties that are not federally guaranteed, loan participations come with risks."
 
In additions to the intention of the rule, the letter describes its reach and its provisions.  It also noted that NCUA examiners this week received supervisory guidance on the revised rule--including the process by which credit unions may obtain waivers.
 
The new loan participation rule features many improvements suggested by the Credit Union National Association even though CUNA did not support any new loan participation rule at this time. For instance, the original effective date was July 25, but CUNA strongly urged the agency to give credit unions more time to adequately prepare for the rule's changes.
 
The final rule sets a limit on loans from one originator of 100% of a credit union's net worth. This is up from a proposed 25% of net worth cap. Also very significant, the federal regulator approved an expanded waiver process for the single-originator limit and limits to one borrower.

CUNA urged such changes and the CUNA board emphasized credit union concerns as it worked to make the rule more practicable.

CUNA Says NACHA 'Reason Code' Plan Could Clear Confusion

 Permanent link
WASHINGTON (9/19/13)--The Credit Union National Association backs initiatives to minimize compliance costs for credit unions and other financial institutions, as well as clarifications to rules on the Automated Clearing House (ACH) network, and for those reasons supports an Electronic Payments Association (NACHA) proposal that would amend reason codes for returned entries.
 
The proposed changes would clarify that:
  • Receiving Depository Financial Institutions (RDFIs) should use Code R03 if they choose to return an entry because the receiver's name on the entry does not match the name on the account; and
  • RDFIs should use Code R04 if they choose to return an entry due to account number issues.
"We believe these technical changes would benefit ACH participants by reducing ambiguity currently associated with these return reason codes and improve processing efficiency for financial institutions," wrote Dennis Tsang, CUNA assistant general counsel, in a Sept. 17 CUNA Comment Letter.
 
"Some credit unions already use these return reason codes in a manner that is similar to the proposed rules," he noted.
 
In addition to reducing ambiguity, NACHA has said its proposed technical amendments also would improve processing efficiency for RDFIs and Originating Depository Financial Institutions.

The proposed changes, if adopted, will go into effect March 20, 2015. NACHA is accepting comment through Sept. 20.

Consumers Can Explore Annual HMDA Info Through New CFPB Tool

 Permanent link
WASHINGTON (9/19/13)--The Consumer Financial Protection Bureau (CFPB) announced yesterday a new Web-based tool that has been launched to help consumers easily navigate complex public mortgage data collected by the Home Mortgage Disclosure Act (HMDA).

It is the complexity of the information that inspired the tool's creation.
The Consumer Financial Protection Bureau's new Web-based tool for consumers helps draws a clearer picture of mortgage lending trends.

"Our tool addresses this reality by putting valuable information into the hands of the public in an accessible way, so they can understand what is actually happening in their local mortgage markets and over time they will be able to see trends and changes developing," said the director of the CFPB, Richard Cordray, in remarks prepared for the Wednesday CFPB Consumer Advisory Board meeting in Itta Bena, Miss.

The CFPB states the tool organizes the 18.7 million records from the 7,400 financial institutions that HDMA collects from and translates the data into an easily understood and simple form for consumers to use. (See related story: HMDA Report Shows 2012 Reporting Down, Mortgage Lending Up.)

"By helping get this valuable information into the hands of consumers in accessible formats, they will more easily understand what is happening in their communities, because, again, these markets can be so very different from one place to another," Cordray went on to say.

"We simply do not have one national real estate market in this country; nor do we have 50 state markets. Instead, we have a very large number of localized markets that may act quite differently from one another at any given time, for a variety of reasons that can be hard to identify and hard to explain." 
The data collected by the HDMA has always been public for consumers and lawmakers to read; however, the size and complexity of the information have been a deterrent for many to use the data to its full capacity. The new tool will take the figures and form it into digestible information that everyone can understand and use.

Use the resource link below to experience the new tool.

HMDA Report Shows 2012 Reporting Down, Mortgage Lending Up

 Permanent link
WASHINGTON (9/19/13)--The Federal Financial Institutions Examination Council (FFIEC) Wednesday released data on the mortgage applications, originations, purchases, and denials that were filed in 2012 by credit unions and other financial institutions under the Home Mortgage Disclosure Act (HMDA).

The FFIEC reported that the total number of reporting intuitions has fallen, while mortgage lending is up. The 7,400 reporting institutions for 2012 is a 3% drop from 2011,  a decline the regulators attributed to the result of mergers, acquisitions and failures.

The total number of originated loans of all types increased by about 2.7 million, or 38%, from 2011, and that jump was attributed, in part, to a 54% increase in the number of refinancing. Home purchase lending also increased, but by a more modest 13%.

The FFIEC report also noted:
  • Since 2006, homebuyers have continued to be reliant on government-backed mortgages, such as those insured by the Federal Housing Administration (FHA) or the Veterans Administration (VA);
  • Although the shares of FHA- and VA-backed loans in the refinance market are much smaller than conventional loans, they experienced more growth from 2011 to 2012; and
  • Among refinancings, conventional loans increased about 51% from 2011 to 2012, while those backed by FHA insurance increased 78% and VA guarantees increased 90%.

The 2012 HMDA data are the first to use population and housing characteristic estimates from the 2010 Census. With regard to race, similar to previous years, the latest data showed applications for conventional home-purchase loans in 2012 from black and Hispanic white applicants experienced higher denial rates than non-Hispanic white applicants, while denial rate for Asian applicants was virtually the same as non-Hispanic white applicants.

HMDA was passed in 1979 to help monitor if financial institutions are serving the housing needs of their communities and to identify any potential discriminatory mortgage lending practices.

Under HDMA, credit unions and other financial institutions with total assets of less than $42 million as of Dec. 31, 2012 will not need to collect and report the data in 2013.

The Credit Union National Association is reviewing the extensive HMDA data and its analysis will be available to News Now readers, likely next week.

The FFIEC is comprised of the heads of the National Credit Union Administration, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau, the Council's State Liaison Committee, and a member of the Federal Reserve Board.

Use the resource link below for the full disclosure of the HMDA data.

NEW: Court Acts On Fed, Merchant Interchange Request

 Permanent link
WASHINGTON (9/19/13, UPDATED 5:15 p.m. ET)--The U.S. Court of Appeals for the District of Columbia has moved quickly to approve the request for expedited action on the Federal Reserve Board's appeal in the case known as NACS v. Board of Governors of the Federal Reserve System. The motion was just filed today.
 
As background, the merchant plaintiffs and the defendant Federal Reserve Board had filed an emergency motion today asking the court of appeals for expedited action in the case.
 
Specifically, the merchants and Fed asked that the court to move quickly on the Fed's appeal that attempts to overturn a lower court ruling that the regulator's implementation of the Dodd-Frank Act debit card interchange fee was faulty and should be scrapped.
 
The calendar set by the court is as follows:
  • Brief for Federal Reserve 10/21/13;
  • Joint Brief for Amici in Support of Federal Reserve 10/21/13;
  • Joint Brief for Merchants 11/20/13;
  •  Brief(s) for Amici in Support of Merchants 11/20/13; and
  • Reply Brief for Federal Reserve 12/04/13.

NEW: Fed, Merchants Seek Expedited Court Action On Interchange Appeal

 Permanent link
WASHINGTON (9/19/13, UPDATED 3:49 p.m. ET)--The merchant plaintiffs in the debit card interchange lawsuit known as NACS v. Board of Governors of the Federal Reserve System and the defendant Fed have filed jointly an emergency motion asking the U.S. Court of Appeals for the District of Columbia Circuit to expedite action in the case.
 
Specifically, the parties are asking the D.C. Circuit court to move quickly on the Fed's appeal that attempts to overturn a lower court ruling that the regulator's implementation of the Dodd-Frank Act debit card interchange fee was faulty and should be scrapped.
 
In the emergency motion the merchants assert that every day that the existing final rule is left in place potentially causes merchants "irreparable injury" because the cap is too high.
 
The Fed argues that expedited treatment is necessary because to vacate the existing rule before a resolution of the appeal "would eliminate the existing regulatory limits on the amount of fees that merchants can be required to pay in connection with each debit card transaction subject to the rule and thus allow the unrestrained imposition of fees by card networks and issuers on the businesses that accept debit cards--precisely the practice that the statute sought to prevent."  The Fed further claims that expedited treatment is necessary to provide "timely guidance and certainty about the rules and procedures governing the millions of debit card transactions being conducted every day--a matter of unusual public interest." 

The Fed said it could not adopt an interim regulation while the appeal is pending without mooting the appeal. A decision is expected soon from the district judge regarding whether he will leave the stay in place throughout the appeal.

NEW: Matz Announces NCUA To Propose Stress Testing Rule

 Permanent link
COEUR D'ALENE, Idaho (9/18/13, UPDATED 12:20 p.m. ET)--National Credit Union Administration Chairman Debbie Matz announced this morning that the agency's Office of National Examinations and Supervision is drafting a requirement for annual stress tests at credit unions with assets exceeding $10 billion.

Speaking at the National Association of State Credit Union Supervisors' annual State System Summit, Matz noted that the agency is likely to issue the proposed rule for public comment before the end of the year.

"At NCUA, we need to utilize all the tools at our disposal to look ahead in order to protect the industry in the future," Matz said. "Stress tests are forward-looking measures. They're designed to determine whether an institution is holding an adequate capital cushion to survive adverse scenarios and to allow credit unions to make adjustments before a crisis hits."

Now that the agency has made public its plan to pursue a new rule in this area, the Credit Union National Association will be talking with affected credit unions and NCUA officials to minimize the impact and contain regulatory burdens.

The Dodd-Frank Act requires certain financial firms with more than $10 billion in assets to conduct annual stress tests. Matz noted that stress testing is just as important for credit unions of comparable size.

A credit union that fails a stress test would be required to revise its capital plan to demonstrate how it would meet minimum stress test capital ratios, an agency release said.  A credit union that passes the test would benefit from the analysis by identifying potential improvements in its enterprise risk management system.

Matz said one issue still being reviewed is whether stress test results would be publicly available. She noted banks are required to disclose their results, but banks are publicly traded entities, unlike credit unions.

She said public disclosure would enhance transparency to members but results could also be misinterpreted and lead to inaccurate conclusions about a credit union's current stability.

CFPB Lays Out Exam Guidelines For Payday Lenders To Servicemembers

 Permanent link
WASHINGTON (9/18/13)--Consumer Financial Protection Bureau (CFPB) examiners should be clear on how to identify consumer harm and risks related to Military Lending Act (MLA) violations when supervising payday lenders under new guidelines released Tuesday by that agency.

"Protecting servicemembers is a priority for the CFPB," said CFPB Director Richard Cordray. "We will use the authority Congress gave us to enforce the Military Lending Act and to safeguard our men and women in uniform from illegal payday loans." The act provides protections for military families, such as capping the annual percentage rates (APR) for short-term, small amount loans at 36%.

Because most payday loans are for several hundred dollars and have finance charges of $15 or $20 for each $100 borrowed, a typical two-week term can equate to an APR ranging from 391% to 521%, the CFPB noted.

Loans from federal credit unions are generally limited to an annual percentage rate of no more than 18%, although there is some flexibility under the National Credit Union Administration's short-term, small-amount loan program. That program permits federal credit unions to charge an interest rate that is a maximum of 10 percentage points above the established usury ceiling at that time. For now, this amounts to an interest rate ceiling of 28%.

A Department of Defense (DoD) report issued in 2006 concluded that predatory lending practices by payday lenders and other creditors near military bases were a threat to military personnel and their families. The next year, the U.S. Congress passed the MLA to help address the problem.
 
Under the law, lenders must follow certain requirements for all closed-end loans of $2,000 or less and with terms of 91 days or less. In addition to the 36% cap, these requirements include:
  • No rolling over of loans. Payday lenders are banned from rolling over loans for servicemembers, unless the new transaction results in more favorable terms for the servicemember;
  • No signing away of servicemember rights provided under the Servicemembers Civil Relief Act or other state or federal laws that provide consumer protections. The MLA also prohibits lenders from requiring servicemembers to waive their right to seek resolution of any legal claims in court; and
  • No requiring allotments to repay. The MLA bans lenders from requiring military members to pay by the allotment system and gives servicemembers control over how their income is spent. When servicemembers pay by allotment, they lose certain consumer protections as well as their flexibility to adjust their budget if a financial emergency comes up.
In general, the MLA shields active-duty military personnel, active National Guard or Reserve personnel, and their dependents. In 2012, Congress gave the CFPB MLA enforcement authority.

In a related event, last month, in response to a DoD request for information regarding limitations on terms of credit extended to servicemembers, the Credit Union National Association and the Defense Credit Union Council jointly filed a comment letter that included a list of 35 credit unions operating on military installations that currently offer small-dollar alternative loan products.

Sen. Judiciary Members Call For Patent Law Reforms

 Permanent link

WASHINGTON (9/18/13)--Sens. Patrick Leahy (D-Vt.) and Mike Lee (R-Utah) penned a recent opinion piece in <I>Politico.com</I> that stated in no uncertain terms their belief that abuse of the country's patent system must be addressed.

The senators announced they are working to craft bipartisan legislation to address abusive practices and restore confidence in the American patent system. They said their bill will "increase the transparency of patent ownership, protect the customer of a patented product when the manufacturer should really be the defendant and improve the process for reviewing patents at the U.S. Patent and Trademark Office.

"America's patent system, when operating as intended, is the envy of the world. It fuels the technological advances that invigorate our economy, create jobs and benefit American consumers," the senators wrote.

However, they warned, some patent holders are abusing the system and rather than incentivizing the creation of the next-generation of advancements, they are "misusing patents by suing unsuspecting consumers and extorting settlements."

It is a concern shared by the Credit Union National Association, which signed onto a joint letter to Congress in July that was supported by 42 trade associations in Washington, D.C. and which urged statutory changes.
 
At that time CUNA expressed deep concerns about the "patent troll" issue because credit unions have become a target of the abusive practices. CUNA Deputy General Counsel Mary Dunn said, "The past year has seen an increase in litigation and demands involving low-quality patents in an effort to extract settlements from credit unions.  This is an abuse of the patent system.  Credit unions aren't out there stealing someone's ideas--they are buying technologies from vendors in order to better serve their members. They should not be sued for doing that." 

Leahy and Lee are members of the Senate Judiciary Committee, tasked with overseeing issues involving patents, copyrights and trademarks.

New Resource Compiles CUNA Mortgage Compliance Tools

 Permanent link
WASHINGTON (9/18/13)--There is a new, one-stop compliance resource page to help all Credit Union National Association members with compliance issues related to the Consumer Financial Protection Bureau's 2013 mortgage rules.
 
Valerie Moss, CUNA senior director of compliance analysis, in unveiling the new resource noted that the CFPB has issued more than 5,000 pages of new regulatory requirements for mortgages, including its Qualified Residential Mortgage and Ability-to-Repay rules. They go into effect in January 2014.
 
"CUNA's compliance team has been working at a feverish pace over the past few months to provide credit unions with useful compliance information to help them make sense of the 5,000-plus pages of new regulatory requirements," Moss said. "CUNA members can now access all that information in a single location." (Use resource link.)

Notable resources available to credit unions on the new mortgage rules include:
  • CUNA's e-Guide, a dues-supported online compliance manual, which contains summaries, resources, latest developments and frequently asked questions on the rules;
  • CompBlog, CUNA's dues-supported compliance blog, which regularly covers the new rules among many other hot compliance topics;
  • CUNA's CompBlog Monthly Wrap Up newsletter, a compilation of the month's best compliance information;
  • Compliance articles in Credit Union Magazine exploring several of the new mortgage rules;
  • Compliance charts on the various regulations, complete with key dates;
  • Training opportunities available from CUNA's Center for Professional Development; and
  • CompNotes, CUNA's newest resource that breaks each rule down into more manageable pieces.
To access CUNA's new, one-stop compliance resource page, CUNA members can use the resource link below.

PPI In U.S. News: 'Don't Make CUs Die For Banks' Sins'

 Permanent link
WASHINGTON (9/18/13)--Jason Gold, senior fellow for financial markets policy for the Progressive Policy Institute--a Washington, D.C.-based "think tank" established in 1989--took to the pages of U.S. News and World Report this week to urge loud and clear, "Don't makes credit unions die for banks' sins."

In an article with that title, Gold draws attention to bank attacks on the federal credit union tax status and calls bank arguments "hollow."
 
Under federal law, credit unions are exempt from income tax because of their cooperative structure, but still pay property and sales taxes, and regulatory fees.
 
Gold notes in his article that now, five years after a "collapsing housing bubble plunged America into its worst financial crisis since the Depression," credit unions are "drawing fire from the banking industry for their not-for-profit tax status."
 
He notes the banks claim the credit union exemption should be revoked because it gives credit unions an unfair competitive advantage over for-profit banks.
 
"Eliminating the tax exemption is a terrible idea that would deal a fatal blow to 6,815 credit unions that provide low-cost financial services to 93.8 million members nationwide. It would also eliminate one of the safest and soundest segments of the financial services industry that stewards more than $1 trillion," Gold writes.

Also to the banks' charges of unfair competition Gold says, "Last time I checked, there aren't any credit unions that maintain a profitable global derivatives business and an essential investment-banking unit that underwrites multi-billion dollar corporate mergers and acquisitions like some of his members."

Gold calls it "popular lore" that the misuse of exotic instruments like collateralized debt obligations and mortgage-backed securities were to blame for the financial crisis.  The fuse, he says, was the "concentration and perversion of a single underlying asset: the single-family mortgage."

"So how did the mortgages that the credit unions originated perform?" he asks. "In 2009, credit unions saw their delinquency for mortgage loans peak at 1.61% compared to 8.86% at the banks. Since 2009, credit unions' share of first mortgages has actually increased as a percentage of total loans by 3.3%. Those are some pretty eye-popping statistics considering the severity of the crisis."

Gold concludes by saying the country's economy needs financial institutions of all types and sizes to provide an array of different services: "Big banks play a crucial and indispensible role in an increasingly complex global economy."

"Nonetheless, credit unions have an established model that tens of millions of Americans find reliable and infinitely more accessible than the supranational banking behemoths. And credit unions don't have a mandate to lend and invest far out on the risk curve. That's for the banks, and a certain amount of risk-taking is not only appropriate, but also necessary."

Flood, Terrorism Insurance Laws Examined This Week

 Permanent link
WASHINGTON (9/17/13)--A Senate committee hearing on 2012 national flood insurance program changes Wednesday and a Thursday House committee hearing on the 2002 Terrorism Risk Insurance Act are among items of interest to credit unions this week on Capitol Hill.
 
Among the witnesses scheduled to testify at the Senate Banking Committee hearing entitled "Implementation of The Biggert-Waters Flood Insurance Act of 2012: One Year After Enactment" are Sens. David Vitter (R-La.) and Mary Landrieu (D-La.)--both of whom have introduced bills to reform the program--and Federal Emergency Management Agency Administrator William Craig Fugate.

In 2012, Biggert-Waters extended the National Flood Insurance Program for five years and allowed NFIP premiums to increase by 25% per year over a four-year period in a bid to phase out government-subsidized flood insurance. The premium increases do not impact NFIP policies on primary residences.
 
In the morning before the 2:30 p.m. (ET) flood insurance hearing, the banking panel will also be taking a look at progress of post-Superstorm Sandy recovery.

The House Financial Services Committee hearing Wednesday on the Terrorism Risk Insurance Act (TRIA) is scheduled for 10 a.m. (ET) and a witness list was not available Monday.  TRIA, which requires property and casualty insurers to offer coverage for foreign acts of terrorism on U.S. soil and provides a federal backstop for that coverage, is scheduled to expire at the end of 2014.

Also on the committee hearing agenda this week:
  • The House Ways and Means subcommittee on oversight will hold a hearing on "Internal Revenue Service's Exempt Organizations Division Post-TIGTA (Treasury Inspector General for Tax Administration) Audit" Wednesday at 2 p.m. (ET);
  • The House Financial Services subcommittee on capital markets and government-sponsored enterprises will hold a hearing on "Examining the Securities and Exchange Commission's (SEC) Money Market Fund Rule Proposal" Wednesday at 10 a.m. (ET); and
  • The House Small Business Committee will hold a full committee markup of H.R.2542, the "Regulatory Flexibility Improvements Act of 2013" at 1 p.m. (ET) Wednesday.
Although both House and Senate are scheduled to adjourn next week for a District Work period, buzz is circulating that unless the House makes substantial progress this week on a continuing resolution for the federal debt, that body will be back in session next week.

Fed Banks Issue Payment System Improvements Paper, Seek Comment

 Permanent link
WASHINGTON (9/17/13)--The Federal Reserve Banks recently conducted payment systems research and recently unveiled its findings in its "Payment System Improvement--Public Consultation Paper."  The Credit Union National Association met with the Fed regarding the study prior to its release. 

The paper is an important undertaking by the Federal Reserve Banks and CUNA is encouraging credit unions to read the report and develop a list of concerns regarding payments to share with CUNA and their state credit union league.  

The Fed Bank white paper notes some potential improvement areas; those areas included faster payments, closed payment communities, and international, mobile, and traditional payment channels.
 
Sandra Pianalto, president of the Cleveland Fed, stated the purpose of the paper is "to share Federal Reserve perspectives on the key gaps and opportunities in the U.S. payment system and identify the desired outcomes that close these gaps and capture these opportunities."
 
The Fed Banks seek comment from credit unions and all payment systems users on those issues, as well as on the role the Fed banks should play in payments. Comments are due by Dec. 13.
 
CUNA will be preparing a Regulatory Comment Call to summarize the Fed paper and to seek input from the credit union system.  CUNA is reviewing the paper with the CUNA Payments Subcommittee, the CUNA Councils, and others.
 
Watch News Now for future developments.

CUNA Survey Investigates Impact Of CFPB 2014 Mortgage Rules

 Permanent link
WASHINGTON (9/17/13)--The Credit Union National Association has just launched a survey of its members that will aid the trade group in assessing the full impact of new Consumer Financial Protection Bureau mortgage rules slated to take effect in January 2014.
 
In January of this year, the CFPB released a slew of final mortgage rules, many of which are scheduled to go into effect with the new year. 2014. The CFPB regulations address mortgage servicing, mortgage loan originator compensation, high-risk-mortgage appraisals, ability-to-repay requirements, escrow accounts and "high-cost" mortgages.
 
The CUNA survey is intended to obtain additional data from credit unions on the top five or six areas of concerns regarding implementation difficulties.  It also will provide better information on how many credit unions may consider altering the mortgage products and services offered to members as a result of the rules, whether credit unions are engaging consultants and vendors to assist with compliance, what the additional costs of compliance will be for credit unions, and the amount of time it will take to train credit union employees, among other things. The survey is featured in this week's Regulatory Advocacy Report (see resource link).
 
Mary Dunn, CUNA senior vice president of regulatory affairs and deputy general counsel, notes that, "While CUNA recognizes that it may be a heavy task to obtain a delay in the compliance date for the rules from the CFPB, CUNA is doing all we can to provide data to the agency that will demonstrate the difficulties and challenges that credit unions are experiencing in their attempts to comply by the January 2014 deadlines.
 
"We are asking all member credit unions to participate in this new survey because the responses will greatly help in our continuing efforts with the CFPB," she added.

For more on this and other key credit union regulatory topics, CUNA members can use the resource link below.

Lawmakers Thanks Cordray For Privacy Notice Remarks

 Permanent link
WASHINGTON (9/16/13)--Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) quickly followed up on Consumer Financial Protection Bureau Director Cordray's remarks during a hearing last week that his agency will work with legislators to address privacy notification issues through the regulatory process.
 
Cordray made his remarks as he presented his agency's semiannual report before a House Financial Services Committee hearing. (News Now Sept. 12) At that time in response to lawmakers' inquiries Cordray said, "…our sense is there's a lot we can do by regulation" regarding privacy notifications.
 
Leutkemeyer and Sherman, co-sponsors of a privacy notification bill (H.R. 749) that passed the House last March, also encouraged Cordray to urge the Senate to pass its version of privacy notice legislation (S. 635).
 
Both the House and Senate bills would eliminate a requirement that privacy notices be sent on an annual basis. The bills would allow the notices to be sent only when the privacy policy of a financial institution has changed.

In their Sept. 13 letter to Cordray, Leutkemeyer and Sherman thanked the CFPB director for his support of the "common sense" regulatory reforms. "We agree with your assertion that additional disclosures do not necessarily translate to benefits for consumers and greatly appreciate your willingness to provide relief on this front," the congressmen wrote.
 
The Credit Union National Association supports the privacy notification bills because they would streamline the regulatory burden on credit unions by reducing the credit union staff  time and resources diverted that could be used for more important services to members. The bills would ensure that when a consumer receives a privacy notification, it has significance and is not redundant, CUNA has noted.

Hike the Hill Visits Backed Online Advocacy Efforts Last Week

 Permanent link
WASHINGTON (9/16/13)--
Click to view larger image League  of Southeastern Credit Unions President/CEO Patrick La Pine, right, speaks during a group meeting with National Credit Union Administration board member Michael Fryzel. (Photo provided by the League of Southeastern Credit Unions)
While credit unions and members across the country made online credit union tax advocacy a priority last week, state credit union leagues representing Alabama, California, Florida, Nevada, North Carolina, Oregon, South Carolina, Washington and West Virginia were backing them up on the ground by taking part in the first round of the Credit Union National Association's Fall Hike the Hill campaign.

"Credit union members who were in town reported good news from their meetings, and many legislators said they were hearing the 'Don't Tax My Credit Union' message loud and clear," CUNA Grassroots Manager Kristen Prather said Friday.

The LSCU & Affiliates fall Hike the Hill included meeting with lawmakers and visiting the National Credit Union Administration headquarters. During meetings on the Hill, Alabama and Florida credit unions continually heard that the Don't Tax My Credit Union message is working and to keep it up.

Click to view larger image Sen. Joe Manchin (D-W.Va.) speaks before West Virginia credit unions during their Hike the Hill visit last week. West Virginia Credit Union League President Ken Watts, seated at front, right table, said this year's Hike took on added importance since it was taking place at a high point of the Don't Tax My Credit Union campaign. Manchin also acknowledged the good work credit unions do in their communities and strongly felt credit unions would be key to the country's further economic recovery, Watts told News Now. See related story, Grassroots At Work: N.J., W.Va. Lawmakers Speak Out For Tax Status. (Photo provided by the West Virginia Credit Union League)
The League of Southeastern Credit Unions reported that the meetings, which included talks with four senators and 34 representatives, were productive. A number of lawmakers told the league they are hearing credit unions loud and clear on the tax issue, and urged credit union supporters to keep up their grassroots efforts. Lawmakers also talked about their credit unions and their understanding of the role that credit unions play in their local communities. The Alabama and Florida group also met with NCUA board members Michael Fryzel and Richard Metsger during the week, discussing regulations and the Consumer Financial Protection Bureau.

"Quick, Focused, Efficient" was the mantra for Oregon and Washington credit union representatives as they hiked last week. (Anthem Sept. 10). Northwest Credit Union Association Vice President for Legislative Advocacy Jennifer Wagner noted that "advocacy is all about relationships," and the recent Hike the Hill trip gave Oregon and Washington credit unions another opportunity to nurture their relationships with members of Congress "and remind them about the needs and challenges of the credit unions in their districts and of our members, who are their constituents."

"Advocating at the federal level is a process, not an event," Wagner said, noting that legislators do make decisions that can have extraordinary implications for credit unions. "It is imperative that our senators and representatives understand the unique structure and needs of credit unions," she added.

All in all, 20 leagues representing 28 states are carrying the Don't Tax My Credit Union message to Capitol Hill in September and October. This week, Georgia, Kentucky and Idaho credit union representatives will be in town.

CUNA Urges NCUA To Speak Up On FASB Accounting Issue

 Permanent link
WASHINGTON (9/16/13)--The Credit Union National Association strongly supports a pending Financial Accounting Standards Board proposal to redefine "public business entities," and CUNA in a Friday letter to the National Credit Union Administration called on the agency to support this proposal "for all credit unions, regardless of size and charter type."

"We have been urging FASB to consider this issue for quite some time and are strongly supporting the proposal," CUNA President/CEO Bill Cheney wrote in the letter to the agency. "We believe this proposal indicates that FASB appreciates key distinctions between organizations such as credit unions and others that are publicly traded, and that [U.S. Generally Accepted Accounting Principles] GAAP reporting requirements can and should be tailored to reflect those differences,"

The proposal would allow credit unions and other nonpublic business entities to use accounting and reporting alternatives under GAAP. The proposal would define a public business entity as an organization that meets any one of five criteria, such as requiring  the entity to file financial statements with a regulator in preparation of sale of securities.  As proposed, credit unions would not be included within the definition of a public business entity, which is an aspect of the proposal that CUNA supports.

Overall, the FASB proposal could result in more flexible accounting requirements for nonpublic business entities.

The NCUA's views on this issue are very significant because under the proposal, prudential regulators such as NCUA would play a key role in permitting their regulated entities to modified standards that would still qualify as GAAP, the letter said.

For the full CUNA letter, use the resource link.

Cheney Report: Impressive CU Advocacy Efforts Must Continue

 Permanent link
WASHINGTON (9/16/13)--Last week's strong advocacy efforts, made on "Don't Tax Tuesday" Round Two, were impressive, but Credit Union National Association President/CEO Bill Cheney said credit unions must stay engaged and be relentless on the advocacy front to ensure the credit union tax status is not targeted in any draft legislation that would become the basis for all future tax reform discussion.
 
Last week's Don't Tax Tuesday efforts were particularly timely, Cheney wrote in the latest edition of The Cheney Report, "because the key lawmakers spearheading the reform effort continue to say that there will be a draft tax proposal this fall." House Ways and Means Committee Chairman Dave Camp (R-Mich.) has told his fellow lawmakers he is sticking with his tax reform timeline of "this year." And, Cheney noted, on the Senate side, recent media reports indicate the Finance Committee may approach tax reform in pieces, or as a white paper, rather than as a comprehensive bill.
 
Tuesday's major social media push used Twitter, Facebook, as well as CUNA's own DontTaxMyCreditUnion.org websites--in Spanish and English--to generate over 5,000 tweets, 600 Facebook posts and 8,000 e-mails to lawmakers. Overall, more than one million Twitter users were potentially exposed to the #DontTaxMyCU campaign yesterday, and 4,800 individual tweets were specifically aimed at the Twitter accounts of Members of Congress.
 
Credit unions will need to keep up this good work to repel bank attacks against their tax status. While bankers have tried to outmuscle and outmaneuver credit unions with paid advertising in Washington, D.C., papers, "those paid ads paled in comparison to our grassroots efforts," Cheney said.
 
"We cannot let the bankers, who are getting more active in attacking our exemption, out-message us on [Capitol Hill]," Cheney wrote. "I can assure you that with your support that will not happen," he said.
 
This week's edition of The Cheney Report also details:
  • The crucial role that states played in generating lawmaker support for credit unions;
  • The results of Thursday's National Credit Union Administration board meeting; and
  • The positive press coverage that CUNA's Women's Finance Survey has generated.
Each Friday, The Cheney Report provides a valuable window into CUNA's actions on behalf of member credit unions and reinforces the value of CUNA membership. To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

Past issues of The Cheney Report are also archived on cuna.org.

NCUA Activates Disaster Relief Policy after Colorado Flooding

 Permanent link
ALEXANDRIA, Va. (9/16/13)--The National Credit Union Administration is encouraging credit unions in areas distressed by severe flooding in Colorado to make prudent loans with special terms and reduced documentation for members affected by the disaster, among other things.
 
Modifications may include extending the terms of loan repayments, restructuring a borrower's debt obligations, and easing credit terms for new loans to certain borrowers, consistent with prudent practices.
 
The agency invoked its disaster policy over the weekend and in additions to encouraging special loan terms, the NCUA will, under the disaster policy and where necessary:
  • Reschedule routine examinations of affected credit unions, if necessary;
  • Guarantee lines of credit for credit unions through the Share Insurance Fund; and
  • Make loans to meet the liquidity needs of member credit unions through the Central Liquidity Facility.
The agency reminded that federal credit unions can extend their assistance beyond their own membership and may also provide assistance to other credit unions, their members, and non-members in the affected areas.  They may extend:
  • Emergency financial services for non-members, including check cashing, access to ATM networks or other services to meet short-term emergency needs of individuals in the affected areas can be provided under the authority to engage in charitable activities. Federal credit unions providing services on this charitable basis may not impose charges for services that exceed their direct costs; and

  • A federal credit union may provide services to other credit unions that it is authorized to perform for its own members or as part of its operations. This activity is part of a federal credit union's incidental powers, so it may impose charges for those services.
Credit unions in need of NCUA assistance dealing with members affected by the flooding should contact their primary supervisory official.
 
The NCUA in its weekend release also said its examiners are already surveying credit unions operating in affected areas. Some credit unions and branches in locations affected by the flooding may have curtailed hours or services, the agency noted, and added that credit union members in these areas should contact their credit unions or check their websites for the latest information.
 
Share deposits at federally insured credit unions remain protected up to $250,000 by the National Credit Union Share Insurance Fund. Administered by NCUA, the Share Insurance Fund is backed by the full faith and credit of the U.S. Government.
 
See News Now's related story, "Colorado CUs Closed In Flash Floods."

CFPB Releases Mortgage Final Rule Changes

 Permanent link
WASHINGTON (9/16/13)--The Consumer Financial Protection Bureau on Friday released another final rule amending its Ability-to-Repay, Mortgage Servicing and Mortgage Loan Originator Rules, which were originally finalized in January of this year.

The CFPB in a release said the changes answer questions that have been identified during the implementation process. The rule "amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers," CFPB Director Richard Cordray said.

A number of changes CUNA sought were addressed by the CFPB.  The agency said that the final rule changes:
  • Exempt all small creditors, even those that do not operate predominantly in rural or underserved counties, from the ban on high-cost balloon mortgages, as long as the loan meets certain restrictions;
  • Make it easier for certain small creditors to continue qualifying for an exemption from a requirement to maintain escrows on certain higher-priced mortgage loans;
  • Clarify that credit insurance premiums are "financed" by a creditor when the creditor allows the consumer to defer payment of the premium past the month in which it is due;
  • Explain how the rule applies to "level" or "levelized" premiums, where the monthly premium is the same each month rather than decreasing along with the loan balance;
  • State that servicers will be allowed to send certain early delinquency notices required under state law to borrowers that may provide beneficial information about legal aid, counseling, or other resources;
  • Outline specific procedures for servicers to follow if they fail to identify and inform a borrower upon an initial review that certain information is missing from a borrower's loss mitigation application;
  • Detail modifications that make it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need only temporary relief without going through a full loss mitigation evaluation process. Servicers, upon reviewing an incomplete loss mitigation application, may provide a 6-month forbearance to a borrower who is suffering a short-term, temporary hardship;
  • Provide more specific details on how to inform borrowers about the address for error resolution documents by listing it on certain documents, such as an initial notice and a periodic statement or coupon book, if applicable;
  • Clarify the circumstances under which a loan originator's or creditor's administrative staff acts as loan originators;
  • Clarify what compensation must be included in certain thresholds for points and fees under the Ability-to-Repay and high-cost mortgage rules for retailers of manufactured homes and their employees, and when such employees may be considered loan originators; and
  • Move the effective date for certain provisions of the Mortgage Loan Originator Compensation final rule from Jan. 10, 2014 to Jan. 1, 2014, in order to simplify compliance since compensation plans, training, and licensing and registration are often structured on an annual basis.
For a CFPB release on the final rule, use the resource link. CUNA members can access the last link for a compilation of CUNA resources available to help credit unions work through what all the regulations require of them.

NCUA Releases New Training Modules For CU Supervisors

 Permanent link
ALEXANDRIA, Va. (9/16/13)--Small and low-income credit union supervisory committee members have a new resource to help them better grasp the roles and responsibilities of their positions. The National Credit Union Administration last week released a series of online supervisory committee training modules.

The agency is "committed to providing training and support to small and low-income designated credit unions so they are able to continue to meet the needs of their members," NCUA Chairman Debbie Matz said in a release.

Matz said the NCUA chose supervisory committee members as a target audience because of the critical role these committee members play in ensuring the safety and soundness of the credit union. "Our intent is that by providing free, accessible training it will be easier to recruit volunteers and increase the effectiveness of committee members," Matz added.

The video series is broken up into six modules of 10 minutes or less.

Topics addressed include monitoring management activities, annual audits, verification of member accounts, and handling member complaints. The training resources were created by the NCUA's Office of Small Credit Union Initiatives.

More training modules will be released in 2014, the NCUA said.

CFPB Chief Plans To Aid Privacy Notification Progress

 Permanent link
WASHINGTON (9/13/13)--The Consumer Financial Protection Bureau will work with legislators to address privacy notification issues through the regulatory process, CFPB Director Richard Cordray said during testimony delivered on Thursday.

Cordray made his remarks as he presented his agency's semiannual report before a House Financial Services Committee hearing.

During that hearing, Reps. Blaine Luetkemeyer (R-Mo.) and Brad Sherman (D-Calif.) asked Cordray to urge the Senate to pass its own version of privacy notice legislation.

Leutkemeyer and Sherman are co-sponsors of a privacy notification bill (H.R. 749) that passed the U.S. House in March.

A Senate privacy notification bill (S. 635) was introduced by Senate Banking subcommittee on financial institutions Chairman Sherrod Brown (D-Ohio) and committee member Sen. Jerry Moran (R-Kan.). It has 28 co-sponsors.

Both the House and Senate bills would both eliminate a requirement that privacy notices be sent on an annual basis. The bills would allow the notices to be sent only when the privacy policy of a financial institution has changed.

However, there are some key differences between the bills: For instance, only the Senate bill would require credit unions and other financial institutions to make their privacy policy always accessible in some form in order to qualify for the bill's exemption from sending annual privacy notices.

The Credit Union National Association supports the privacy notification bills because they would streamline the regulatory burden on credit unions by reducing the amount of diverted time and resources that a credit union's staff could be using for more important services to its members. The bills would ensure that when a consumer receives a privacy notification, it has significance and is not redundant, CUNA has noted.

NCUA OKs Fixed-asset Reg Changes, Community Charter

 Permanent link
ALEXANDRIA, Va. (9/13/13)--The National Credit Union Administration on Thursday approved a final version of fixed-asset regulation changes that does not make any substantive changes to regulatory requirements. Rather, the revisions are intended to clarify the rule by improving its organization, structure, and "ease of use."

The changes include plain language revisions, new definitions and rewordings that impact the current fixed-assets rule, Section 701.36. That rule allows federal credit unions to purchase, hold and dispose of property necessary or incidental to their operations. These fixed assets include office buildings, branch facilities, furniture, computer hardware and software, and ATMs.

The regulation changes will become effective 60 days after they are published in the Federal Register.

The Credit Union National Association has spoken in support of these proposed fixed-asset rule changes and said on Thursday that the changes "may help with compliance."

The NCUA said the rule will also offer greater flexibility to federal credit unions. "Those that receive a waiver from the 5% fixed-assets limit will have the ability to make multiple purchases of fixed assets within a 1% buffer above their approved waiver limit. This change is intended to eliminate the need for a federal credit union to make repeated waiver requests for minor acquisitions," the agency wrote.

NCUA board member Michael Fryzel first suggested streamlining the fixed-assets regulations. "Through the changes approved today, credit unions should find the regulation easier to follow," NCUA Chairman Debbie Matz said during the open board meeting.

CUNA and other commenters encouraged the NCUA to eliminate the current regulatory limit imposed on the ownership of fixed assets, which is 5% of a federal credit union's shares. Others suggested the NCUA could eliminate the current requirement to fully occupy premises acquired for future expansion.

The NCUA said these changes were beyond the scope of the current rule, but could be taken up at a later date.

A community charter expansion request filed by Peoples Advantage FCU, Chester, Va., was also approved during the Thursday meeting.

Peoples Advantage FCU currently serves Prince George, Dinwiddie, Chesterfield, and Sussex Counties, and the cities of Petersburg, Hopewell, and Colonial Heights, Va., and holds $53.5 million in assets. The credit union has 7,491 members, but is looking to expand that membership base by serving persons "who live, work, worship or attend school in, and businesses and other legal entities in the Richmond, Va., Metropolitan Statistical Area."

Fryzel asked NCUA staff to report on the progress of the credit union, post-expansion, within the next year.

A proposed charitable donation regulation was the other item on the open agenda. See News Now for coverage.

The closed portion of the agency's board meeting followed the open session. NCUA supervisory activities were the lone item on the closed meeting agenda.

CUNA Backs NCUA Charitable Donation Proposal

 Permanent link
ALEXANDRIA, Va. (9/13/13)--The Credit Union National Association on Thursday said it strongly supports the concepts contained in the National Credit Union Administration's charitable donation accounts proposal, which was unveiled during the September open board meeting.

Click to view larger image Speaking at his first agency board meeting Thursday, National Credit Union Administration board member Richard Metsger, right, questions NCUA staff on the charitable donation accounts proposal. (CUNA Photo)
The proposed rule is intended to allow federal credit unions to invest in charitable donation accounts (CDA) while creating safeguards to ensure the donations are used for their intended charitable purposes.

"We want federal credit unions to have the ability to make charitable investments in a way that supports charitable work and is not used to prop up an income statement with potentially risky investments," NCUA Chairman Debbie Matz said as the agency board considered the rule.

The proposed rule would limit total investment in CDAs to 3% of a credit union's net worth for the full term of the accounts. A minimum of 51% of the total return from such an account would be required to be distributed to one or more qualified charities.  Distributions must be made to qualified charities no less frequently than every five years.  The National Credit Union Foundation is one of these approved charities.

The agency will accept comment on the proposal for 30 days after it is published in the Federal Register.

CUNA on Thursday noted the NCUA's willingness to create a novel structure to facilitate credit unions engaging in charitable activities, which benefits the credit union system and their local communities.

However, CUNA also noted some initial concerns regarding the proposal, including the 3% net worth limitation, which as currently worded would apply against the total value of the account, not the initial investment amount.

CUNA said that this could cause a credit union to need to prematurely reduce its holdings in its CDA in years in which the investments generate large gains, which would reduce the amount of benefit both to the charity and the credit union.

Thursday's open board meeting was new NCUA board member Richard Metsger's first. Following the meeting, Metsger responded to a News Now question, saying, "I would hope they would all go this well."

He said he was pleased with all the work done by agency staff ahead of the meeting, and noted the staff briefings clarified that all bases had all been covered on Thursday's issues. "That's what I would expect going forward as well," he said.

As for his own future plans for the NCUA board, Metsger told News Now there's a lot on the plate that he needs to continue to study up on right now. "I will certainly develop an agenda of items that I will then discuss with the chairman, and we'll see how those come forward. That will happen in the few months ahead," he said.

Rep. Bustos Offers Public Endorsement Of CU Tax Status

 Permanent link
WASHINGTON (9/13/13)--Rep. Cheri Bustos (D-Ill.) this week became the latest member of the U.S. Congress to support preserving the credit union tax exemption, noting that "taxing credit unions would do more harm than good to consumers who voluntarily join not-for-profit credit unions.

"As a 21-year credit union member, I believe credit unions should continue to operate as member-owned, not-for-profit cooperative financial institutions. A tax hike on credit unions could result in higher loan rates, lower dividend rates and perhaps a reduction in the basic services credit unions offer their members," Bustos said in an Illinois Credit Union League (ICUL) release.

Through her work experience and as a member of a local Illinois credit union, Bustos has gained a considerable appreciation for the not-for-profit industry, including credit unions, said the league. Bustos believes in the movement's "people helping people" philosophy and strongly supports maintaining the credit union member-owned, not-for-profit, cooperative structure, the league added.

The legislator, whose 17th congressional district contains more than 218,000 credit union members and 35 credit unions holding about $8.2 billion in assets, said credit unions are critical to the growth of communities. Bustos was elected to her seat for the first time in the 2012 election cycle, and she enjoyed strong support from ICUL, credit unions in Illinois, and CULAC.
 
Keith Sias, ICUL vice president of governmental affairs, said, "Illinois' credit unions are very appreciative of Congresswoman Bustos' support of maintaining the tax exempt status of credit unions. Her on-going public recognition of the key role credit unions play in the financial marketplace is very important as Congress considers the issues around tax reform."
 
On Sept. 10, CUNA and the state credit union leagues' Don't Tax Tuesday II directed thousands of pro-credit union messages to members of Congress. This major social media push used Twitter, Facebook, as well as CUNA's own DontTaxMyCreditUnion.org websites--in Spanish and English--to generate over 5,000 tweets, 600 Facebook posts and 8,000 e-mails to lawmakers.

Overall, more than one million Twitter users were potentially exposed to the #DontTaxMyCU campaign on Tuesday. (See Sept. 12 News Now story: CUs' 'Don't Tax Tuesday II' Ups Message Total To 850,000.)

In Texas, 38 House and Senate members have said they support credit unions, with 32 members specifically mentioning their support for credit unions' tax-exempt status. See News Now story: Texas 'Don't Tax' Efforts Put Advocacy In Limelight.)

NEW: CFPB Readies Mortgage Final Rule Changes

 Permanent link
WASHINGTON (9/13/13, UPDATED: 2 P.M. ET)--The Consumer Financial Protection Bureau this afternoon released some details of yet another final rule amending its Ability-to-Repay, Mortgage Servicing and Mortgage Loan Originator Rules, which were originally finalized in January of this year.

The CFPB in a release said the changes made today answer questions that have been identified during the implementation process. "Today's rule amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers," CFPB Director Richard Cordray said. The full final rule is scheduled to be released this afternoon. The Credit Union National Association will update this report and provide more details when the rule has been released.

A number of changes CUNA sought were addressed by the CFPB.  The agency said that the final rule changes:
  • Exempt all small creditors, even those that do not operate predominantly in rural or underserved counties, from the ban on high-cost balloon mortgages, as long as the loan meets certain restrictions;
  • Make it easier for certain small creditors to continue qualifying for an exemption from a requirement to maintain escrows on certain higher-priced mortgage loans;
  • Clarify that credit insurance premiums are "financed" by a creditor when the creditor allows the consumer to defer payment of the premium past the month in which it is due;
  • Explain how the rule applies to "level" or "levelized" premiums, where the monthly premium is the same each month rather than decreasing along with the loan balance;
  • State that servicers will be allowed to send certain early delinquency notices required under state law to borrowers that may provide beneficial information about legal aid, counseling, or other resources;
  • Outline specific procedures for servicers to follow if they fail to identify and inform a borrower upon an initial review that certain information is missing from a borrower's loss mitigation application;
  • Detail modifications that make it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need only temporary relief without going through a full loss mitigation evaluation process. Servicers, upon reviewing an incomplete loss mitigation application, may provide a 6-month forbearance to a borrower who is suffering a short-term, temporary hardship;
  • Provide more specific details on how to inform borrowers about the address for error resolution documents by listing it on certain documents, such as an initial notice and a periodic statement or coupon book, if applicable;
  • Clarify the circumstances under which a loan originator's or creditor's administrative staff acts as loan originators;
  • Clarify what compensation must be included in certain thresholds for points and fees under the Ability-to-Repay and high-cost mortgage rules for retailers of manufactured homes and their employees, and when such employees may be considered loan originators; and
  • Move the effective date for certain provisions of the Mortgage Loan Originator Compensation final rule from Jan. 10, 2014 to Jan. 1, 2014, in order to simplify compliance since compensation plans, training, and licensing and registration are often structured on an annual basis.
For a CFPB release on the final rule, use the resource link.

FHA Letter Informs Of Changes To Reverse Mortgage Program

 Permanent link
WASHINGTON (9/ 13/13)--The Federal Housing Administration (FHA) has sent out Mortgagee Letter 2013-27 informing lenders of changes to the Home Equity Conversion Mortgage (HECM) program required under the Reverse Mortgage Stabilization Act signed into law Aug. 9.
 
The new law is intended to help the FHA make quicker changes to its reverse mortgage program and reduce the lengthy 18-month regulatory process that has been in place to finalize a rule. HECMs are federally insured reverse mortgages backed by the FHA's parent agency, the U.S. Department of Housing and Urban Development.
 
In a 2012 report to Congress, the FHA reported substantial stress in the HECM program and projected the economic value of the program's portfolio to be negative $2.8 billion. That sparked Congress to enact the new law that authorizes the secretary of HUD to "establish, by notice or mortgagee letter, any additional or alternative requirements that the Secretary, in the Secretary's discretion determines are necessary to improve the fiscal safety and soundness of the program."
 
In a Federal Register document published Thursday, which mentions the mortgagee letter, HUD notes the new HECM requirements will take effect for case numbers assigned on or after Sept. 30, with the exception of new financial assessment requirements and funding requirements.  Those changes will take effect for case numbers assigned on or after Jan. 13, 2014.

The Federal Register notice solicits comment for a period of 30 days--ending Oct. 15--on the financial assessment requirements to be applied on or after Jan. 13, 2014.

The purpose of the financial assessment is to evaluate a mortgagor's willingness and capacity to meet their financial obligations and comply with the mortgage requirements.

The letter requires FHA-approved lenders to perform a financial assessment of all prospective mortgagors on all HECM transactions including traditional, refinance and purchase transactions. Key components of underwriting HECM loans include an analysis of  credit history, a cash flow/residual income analysis, an analysis of compensating factors and extenuating circumstances and finally a determination of whether the HECM applicant is eligible for the loan.

Use the resource link to access the Federal Register document.

Employers On Notice About Forcing Payroll Cards On Workers

 Permanent link
WASHINGTON (9/13/13)--Employers cannot mandate that their employees receive wages on payroll cards, and employees that do receive their wages on a payroll card are entitled to certain federal protections, Consumer Financial Protection Bureau Director Richard Cordray emphasized in a Thursday agency release.

The CFPB payroll card bulletin outlines federal consumer protections for payroll card recipients, including the right to fee disclosure, account history access and error resolution rights. Payroll card recipients also have limited liability for unauthorized use of their cards, the CFPB said.

The bulletin follows reports that employers in the retail, food service, and other industries have in some cases paid their workers solely through payroll cards. Some employees receiving wages on employer-sponsored payroll cards have complained of unexpected ATM, teller withdrawal and balance inquiry fees, the CFPB release added.

The bureau said it intends to use its enforcement authority to stop violations before they grow into systemic problems. The CFPB noted it will also maximize remediation to consumers and work to deter future payroll card violations, and will examine regulated entities that provide these cards to ensure they are in compliance with federal law.

For the full CFPB release, use the resource link.

CUs' 'Don't Tax Tuesday II' Ups Message Total To 850,000

 Permanent link
WASHINGTON (9/12/13)--The newest phase of a credit union social-media advocacy blitz targeted at Capitol Hill to deliver the message "Don't Tax My Credit Union" paid off big Tuesday. It brought the total numbers of hits to the Credit Union National Association's www.DontTaxMyCreditUnion.org site to over one million views since being launched in May and helped the campaign generate an overall total of 850,000 messages to members of Congress.

"This campaign was more successful than we could have anticipated," CUNA President/CEO Bill Cheney said Wednesday. "The level of engagement we saw on Don't Tax Tuesday is a testament to the power of social media and to the dedication of credit union members, who value their credit unions so much that they actually want to stand together and advocate for protecting that value with lawmakers," he added.

The major social media push used Twitter, Facebook, as well as CUNA's own DontTaxMyCreditUnion.org websites--in Spanish and English--to generate over 5,000 tweets, 600 Facebook posts and 8,000 e-mails to lawmakers.

Overall, more than one million Twitter users were potentially exposed to the #DontTaxMyCU campaign yesterday--bringing CUNA's campaign total to more than three million social media users on Facebook and Twitter. Around 4,800 of the tweets made on Sept. 10 were specifically aimed at the Twitter accounts of Members of Congress. This total is double the result seen during the first #DontTaxTuesday campaign held in July.

CUNA's DontTaxMyCreditUnion.org website saw more than 69,000 page views yesterday, nearly seven times the daily average. And 70% of the nearly 23,000 unique visitors were first time visitors to the site--credit union members newly engaged in CUNA's campaign.

Use the link for more on CUNA's Don't Tax My Credit Union campaign.

Cordray: CUs, Small Lenders Affected ATR Rule

 Permanent link
WASHINGTON (9/12/13)--The comments and concerns of smaller lenders, like credit unions, were credited by Richard Cordray with helping to shape the Consumer Financial Protection Bureau's Ability-to-Repay rule.
 
CFPB Director Cordray said Wednesday that the Ability-to-Repay rule illustrates how the CFPB is a "data-driven" agency, which conducts research and solicits input from all stakeholders--consumer advocates, industry members, and public officials--before finalizing a rule. He was addressing the American Mortgage Conference in Raleigh, N.C.
 
Through information provided by smaller creditors, Cordray said, the CFPB "came to recognize that most of their traditional lending practices should not be put into question by the Ability-to-Repay rule."
 
"Especially where smaller institutions make loans that they keep in their own portfolios, they have every incentive to pay close attention to the borrower's ability to repay the loan. They are more immediately subject to community norms, and their underwriting standards did not deteriorate in the heady days before the financial crisis; indeed, they often lost market share to those engaged in the more irresponsible lending practices of that era.
 
"So we avoided a 'one-size-fits-all' approach by proposing and then finalizing specific provisions to meet the special circumstances of smaller mortgage lenders," he told his mortgage lending audience.
 
Even in May, the CFPB added changes to the ATR rule effective in January, changes intended to make it easier for some credit unions and other small creditors to make mortgage credit available to their communities by exempting them from some provisions of the rule.
 
The CFPB noted that the amendments are intended to facilitate access to credit by creating the specific exemptions and modifications to its Ability-to-Repay rule for small creditors, community development lenders, and housing stabilization programs.
 
Credit Union National Association President/CEO Bill Cheney, who was contacted by Cordray personally before the amendments were announced, thanked the director for being responsive to concerns raised by CUNA, the state credit union leagues, and credit unions.

Third-Party Vendors, Risk Management Addressed In NCUA Report

 Permanent link
ALEXANDRIA, Va. (9/12/13)--Potential National Credit Union Administration actions to address third-party vendor issues and tips on understanding risk management are among the topics addressed in the latest edition of The NCUA Report.

In the Report, NCUA Chairman Debbie Matz reveals that the agency "will be asking Congress for authority over third-party vendors." Such vendors, she noted, could threaten credit unions' safety and soundness.

Matz in her monthly column recalled the situation that American International Group (AIG) faced during the economic crisis, when a small, unregulated division of that huge firm crashed the company. "Dangers to the credit union system could be lurking in such regulatory blind spots," Matz wrote.

Matz also highlighted other actions the NCUA is taking in the aftermath of the financial crisis. Those actions include:
  • Working to reduce concentration risks;
  • Addressing credit union due diligence standards; and
  • Strengthening risk-based capital requirements.
The NCUA and credit unions must also work to be forward-looking and anticipate emerging risks sooner, she emphasized.

Risk management was also the topic of the NCUA newsletter's Region III Report. In that article, the NCUA says it is developing guidance for examiners that discusses the objectives and benefits of using enterprise risk management (ERM) and its relationship to sound business practices that drive the overall risk management process.

The regulator says it does not consider ERM to be a regulatory requirement. Having a strong, internal control environment, combined with a comprehensive risk assessment process is regarded as sufficient, the NCUA wrote.

The Report notes that some credit unions have developed their own ERM programs internally, while others have hired outside consultants to help them implement policies and procedures.

"Either way, ERM should provide clear and concise risk information across the credit union and allow for prudent decision-making in a timely manner," the agency wrote.

Use the link for the full NCUA Report.

NCUA Wants To Attract More Vets In Its Work Force

 Permanent link
ALEXANDRIA, Va. (9/12/13)--The National Credit Union Administration Wednesday announced that the agency has joined forces with the Department of Veterans Affairs (VA) to create more employment opportunities for veterans. The partnership is also intended to promote "greater work force diversity" in the agency through the Feds for Vets program.
 
A memorandum of understanding signed today by the agencies launches the cooperative effort. The NCUA noted in a release that it is the first financial services regulatory agency to partner with the VA in the program, which is part of the Obama administration's national strategy aimed at increasing the number of veterans in the federal work force.

NCUA Chair Debbie Matz said, "America's servicemen and women have given so much of their time and talents to our nation, and they bring valuable skills and experiences to the workplace. We want to tap into this pool of eligible workers, who also have a deep commitment to public service. The Feds for Vets program will expedite the hiring process and find qualified employees for NCUA to hire."

Since November 2009, NCUA has hired 128 veterans, 22% of agency hires in that time period. Matz said the agency would "benefit tremendously" from the partnership with the VA in terms of greater efficiency in the hiring process and timely access to a large pool of job candidates, with the result that more veterans will join NCUA's workforce.

NCUA's responsibilities under the agreement include:
  • Using the VA for Vets website and promoting it through the agency's own websites;
  • Training staff in the veterans' hiring process and use of the VA for Vets website;
  • Providing links to agency job opportunities to the site; and
  • Tracking and reporting on marketing, outreach, recruitment and hiring goals.
VA's obligations include:
  • Providing consultation services, including providing training and tools for human resources staff, recruiters and hiring managers;
  • Providing targeted marketing and outreach through social media, service organizations, veterans' associations and other outlets; and
  • Developing and posting job announcements and matching veterans to opportunities at the NCUA.

NCUA Board Meeting Today Is Metsger's Debut

 Permanent link
ALEXANDRIA, Va. (9/12/13)--New National Credit Union Administration board member Richard Metsger will take part in his first agency board meeting today, and a final version of fixed-asset regulations will be the top item on the agenda.

NCUA board member Richard Metsger, right, speaks with (from left) Credit Union National Association Deputy General Counsel Mary Dunn, CUNA General Counsel Eric Richard and Northwest Credit Union Association President/CEO Troy Stang before his Senate confirmation hearing earlier this year. (CUNA Photo)
This will be the first board meeting held since Metsger was sworn in on Aug. 23. The NCUA did not hold an August board meeting.

 A proposed version of the fixed-asset rule changes included plain language revisions, new definitions and rewordings that impact the current fixed-assets rule, Section 701.36. That rule allows federal credit unions to purchase, hold and dispose of property necessary or incidental to their operations. These fixed assets include office buildings, branch facilities, furniture, computer hardware and software, and ATMs.

The Credit Union National Association has spoken in support of these proposed fixed-asset rule changes, noting the amendments would clarify the regulation by improving its organization, structure and ease of use. However, CUNA did suggest some improvements.

Other items on today's NCUA agenda include:
  • A community charter expansion request filed by Peoples Advantage FCU, Chester, Va.; and
  • A proposed rule addressing charitable donation authorizations.
The closed portion of the agency's board meeting is set to follow this morning's open session. NCUA supervisory activities are the lone item on that meeting agenda.

Watch CUNA News Now and the News Now twitter feed, @NewsNowLiveWire, for up-to-the-minute coverage of today's board meeting.

NEW: NCUA Approves Final Version Of Fixed Asset Reg Changes

 Permanent link
ALEXANDRIA, Va. (UPDATED: 9/12/13, 10:15 A.M. ET)--The National Credit Union Administration just minutes ago approved a final version of fixed-asset regulation changes.

The changes include plain language revisions, new definitions and rewordings that impact the current fixed-assets rule, Section 701.36. That rule allows federal credit unions to purchase, hold and dispose of property necessary or incidental to their operations. These fixed assets include office buildings, branch facilities, furniture, computer hardware and software, and ATMs.

The amendments do not make any substantive changes to regulatory requirements. Rather, they are intended to clarify the rule by improving its organization, structure, and "ease of use."

The Credit Union National Association has spoken in support of these proposed fixed-asset rule changes.

CUNA and other commenters encouraged the NCUA to eliminate the current regulatory limit imposed on the ownership of fixed assets, which is 5% of a federal credit union's shares. Others suggested the NCUA could eliminate the current requirement to fully occupy premises acquired for future expansion.

The NCUA said these changes were beyond the scope of the current rule, but could be taken up at a later date.

A community charter expansion request filed by Peoples Advantage FCU, Chester, Va., and a proposed rule addressing charitable donation authorizations are the other items on today's open board meeting agenda.

The closed portion of the agency's board meeting is set to follow this morning's open session. NCUA supervisory activities are the lone item on that meeting agenda.

Watch Friday News Now for more on today's board meeting.

FDIC Clarifies Coverage Rules For Foreign Depositors

 Permanent link
ARLINGTON, Va. (9/12/13)--The Federal Deposit Insurance Corp. (FDIC) adopted a rule this week to make it clear that its insurance fund does not cover deposit by foreigners in overseas branches of American banks.

The FDIC called its action a "clarification" and noted that it applies even if the deposits are also payable at an office within the United States.

The agency action was sparked by a pending proposal by the United Kingdom's Prudential Regulation Authority (U.K. PRA) that the FDIC said has made it more likely that large U.S. banks will change their U.K. foreign branch agreements give "dual payability," making their U.K. deposits payable in both the U.S. and U.K.

"This action (by the U.K. PRA) has the potential to expose the (FDIC's) Deposit Insurance Fund to expanded deposit insurance liability and create operational complexities if these types of deposits were treated as insured," the FDIC noted in its final rule.

The clarification will protect the DIF against the liability that it "would otherwise face as a potential global deposit insurer, preserve confidence in the FDIC deposit insurance system, and ensure that the FDIC can effectively carry out its critical deposit insurance functions," it also noted.

The final rule does not affect the operations of overseas military banking facilities, which are established under statutory authority separate from state and federal laws that govern the broader banking industry.

CUs, Members Pump Up Volume On #Don't Tax Tuesday Two

 Permanent link
WASHINGTON (9/11/13)--There was a credit union advocacy blitz targeted at Capitol Hill yesterday, as credit union supporters from across the country took part in round two of "Don't Tax My Credit Union Tuesday," the major social media push that used Twitter, Facebook and the Credit Union National Association's own DontTaxMyCreditUnion.org websites--in Spanish and English--to get a united message out to lawmakers.

Strong advocacy efforts were seen throughout the day, as individuals, credit unions, credit union leagues and CUNA pushed their tax-status fight online. The heavy participation even crashed the "Don't Tax My Credit Union" website for a brief period, and the #DontTaxMyCU hashtag became a Twitter trending topic in the Missouri area.
Click to view larger image Kristen Christian, who started Bank Transfer Day and continues to be a strong credit union advocate, posted the image above alongside a pro-credit union message on her Twitter feed on Tuesday.

CUNA and credit unions also had a new tool in their tax advocacy kit this time around: A Spanish-language version of the Don't Tax site, www.NoImpuestosAMiCU.org, that told members of Congress "No Le Cobren Impuestos a mi Credit Union" and featured a video message and action center. A Spanish language toolkit is also posted on cuna.org.

Coopera, an Iowa firm that provides credit unions with tools to reach Hispanic markets across America, was one group that actively promoted the bilingual credit union tax advocacy site. One Coopera tweet said "Es tiempo de enviarle un mensaje fuerte al Congreso para proteger a las #creditunions No Le Cobren Impuestos A Mi Credit Union! #DontTaxMyCU" (It's time to send a strong message to Congress: Protect credit unions! Don't Tax My Credit Union!).

More on the bilingual pro-credit union tweets will be featured in Thursday's News Now.

The pro-credit union outreach effort also took on other forms: For instance, the Credit Union Association of New York developed its own Don't Tax My Credit Union video, and others used microvideo site Vine to make short pro-credit union tax status videos. Use the resource link for the CUANY YouTube video or click below.



The Michigan Credit Union League also made a powerful announcement on #DontTaxTuesday: Rep. Justin Amash (R-Mich.) added his name to complete the list of all Michigan legislators supporting credit unions, many of whom specifically backed the tax status. (See NewsNow story: Amash Endorsement Makes Michigan CU Support Unanimous.)

Online, Twitter messages ranged from Brittney Caravella's (@brit_nicole2135s) simple request of "#DontTaxMyCU yeah...just don't do it," to Courtney Lyn's (@koptnei37s) post, who wrote "We're not the same as banks; don't tax us like we are" and encouraged her followers to retweet if they belong to a credit union.

Other examples of members across the country that stood up to represent their credit unions include:
  • @fogunited35m said #Creditunions serve working families, small businesses & communities. #DontTaxMyCU to keep financial options available;
  • Clayton Root (@claytonroot24s) said not to tax his credit union "because it invests thousands of dollars each year into Fort Worth and surrounding communities";
  • Denise Losh (@DeniseLosh6m) in a tweet encouraged Sen. Roy Blunt (R-Mo.) to preserve financial choice for consumers. "Please #DontTaxMyCU @RoyBlunt and protect America's #creditunions!," she wrote; and
  • (@_MusicInMyMind_1m noted that "#SingleParents save easier in #creditunions" and encouraged Florida legislators Rep. Ander Crenshaw (R), Sen. Marco Rubio (R) and Sen. Bill Nelson (D) to help out their fellow US citizens.
State leagues also helped coordinate the efforts, providing lists of legislators' Twitter addresses and the #DontTaxMyCU and #DontTaxTuesday hashtags. Many of them also tweeted.

The League of Southeastern Credit Unions used Twitter to remind legislators that "Florida's 4.6 million members love their #creditunions," and the Northwest Credit Union Association wrote that "Credit Unions are rooted in communities with a mission to serve middle class and small businesses."

These two leagues are among those taking the credit union tax fight directly to Congress this week as part of CUNA's fall Hike the Hill activities. Credit union leagues from North and South Carolina, West Virginia, California and Nevada and Utah are also in town this week.

Watch News Now this week for more on credit union advocacy efforts.

FinCEN Offers FBAR E-filing Technical Overview

 Permanent link
VIENNA, Va. (9/11/13)--The Financial Crimes Enforcement Network (FinCEN) is offering a webinar on Thursday Sept. 19 to discuss technical specifications related to the electronic filing of the Report of Foreign Bank and Financial Accounts (FBAR).

FBAR forms are filed annually and are used to report a financial interest in, or signature or other authority over, bank accounts, securities, or other types of financial accounts in foreign countries. FBARs must be filed for accounts that hold over $10,000 in funds at any time during the year.

FinCEN launched a computer-based e-filing system for FBARs in July 2011 to provide a quicker, cheaper, more secure, and more reliable way for individuals to file the reports. Last year,  a high volume of FBAR e-filing created user issues with the e-filing system and e-filing telephone help desk, with both experiencing extremely high volume that resulted in some intermittent delays in submissions.

The 3 p.m. (ET) webinar Sept. 19 will provide participants with an overview of recent FBAR e-filing technical enhancements and other features of the electronic FBAR.  Also, FinCEN representatives will be available to answer technical questions about e-filing and batch filing after the presentation.

This webinar primarily is intended for software development professionals and third party service providers, such as attorneys or accountants.

NEW: NCUA Partners With VA To Increase Vets In Workforce

 Permanent link
ALEXANDRIA, Va. (9/11/13, UPDATED 10:20 a.m. ET)--The National Credit Union Administration announced this morning that it has joined forces with the Department of Veterans Affairs (VA) to create more employment opportunities for veterans. The partnership is also intended to promote "greater workforce diversity" at the credit union agency through the Feds for Vets program.
 
A memorandum of understanding signed today by the agencies launches the cooperative effort. The NCUA noted in a release that it is the first financial services regulatory agency to partner with the VA in the program, which is part of the Obama administration's national strategy aimed at increasing the number of veterans in the federal workforce.

NCUA Chair Debbie Matz said, "America's servicemen and women have given so much of their time and talents to our nation, and they bring valuable skills and experiences to the workplace. We want to tap into this pool of eligible workers, who also have a deep commitment to public service. The Feds for Vets program will expedite the hiring process and find qualified employees for NCUA to hire."

Since November 2009, NCUA has hired 128 veterans, 22% of agency hires in that time period. Matz said the agency would "benefit tremendously" from the partnership with the VA in terms of greater efficiency in the hiring process and timely access to a large pool of job candidates, with the result that more veterans will join NCUA's workforce.

NCUA's responsibilities under the agreement include:
  • Using the VA for Vets website and promoting it through the agency's own websites;
  • Training staff in the veterans' hiring process and use of the VA for Vets website;
  • Providing links to agency job opportunities to the site; and
  • Tracking and reporting on marketing, outreach, recruitment and hiring goals.
VA's obligations include:
  • Providing consultation services, including providing training and tools for human resources staff, recruiters and hiring managers;
  • Providing targeted marketing and outreach through social media, service organizations, veterans' associations and other outlets; and
  • Developing and posting job announcements and matching veterans to opportunities at the NCUA.

NEW: CUNA Don't Tax Tuesday Again Boosts Advocacy Efforts

 Permanent link
WASHINGTON (9/11/13, UPDATED: 3:10 P.M. ET)--The newest phase of a credit union social-media advocacy blitz targeted at Capitol Hill to deliver the message "Don't Tax My Credit Union" paid off big Tuesday. It brought the total numbers of hits to the Credit Union National Association's www.DontTaxMyCreditUnion.org site to over 1 million views since being launched in May and helped the campaign generate an overall total of 850,000 the messages to member of Congress.

"This campaign was more successful than we could have anticipated," CUNA President/CEO Bill Cheney said today. "The level of engagement we saw on Don't Tax Tuesday is a testament to the power of social media and to the dedication of credit union members, who value their credit unions so much that they actually want to stand together and advocate for protecting that value with lawmakers," he added.

The major social media push used Twitter, Facebook, as well as CUNA's own DontTaxMyCreditUnion.org websites--in Spanish and English--to generate over 5,000 tweets, 600 Facebook posts and 8,000 emails to lawmakers.

Overall, more than 1 million Twitter users were potentially exposed to the #DontTaxMyCU campaign yesterday--bringing CUNA's campaign total to more than 3 million social media users on Facebook and Twitter. Around 4,800 of the tweets made on Sept. 10 were specifically aimed at the Twitter accounts of Members of Congress. This total is double the result seen during the first #DontTaxTuesday campaign held in July.

CUNA's DontTaxMyCreditUnion.org website saw more than 69,000 page views yesterday, nearly seven times the daily average. And 70% of the nearly 23,000 unique visitors were first time visitors to the site--credit union members newly engaged in CUNA's campaign.

Use the link for more on CUNA's Don't Tax My Credit Union campaign.

Bank Survey Shows Customers Fed Up With Fees

 Permanent link
WASHINGTON (9/11/13)--A recent survey shows bank customers across the country are dissatisfied with the checking account fees they are being charged: 35% of respondents to an AngusReid Public Opinion/TD Bank survey said they have closed a primary checking account or left their bank due to checking account fees, and 36% said they'd likely change banks due to dissatisfaction with the fees they have been charged.

Just over one-fifth of the 3,000 respondents surveyed said their fees had gone up in the past year, and 14% said they had switched their primary financial institution as a result of fee increases. Nonbank ATM fees were particularly galling for 38% of respondents, while 27% said they were most annoyed by bank overdraft charges.

Credit Union National Association market research shows member-owned credit unions offer an alternative for these customers. A 2013-2014 Fees Report generated by CUNA's  Market Research Department details just how much credit union members save when compared to fees and charges levied on bank customers.

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

The median amount required to avoid this fee was $300, and the average minimum balance threshold was $534. The median and most charged checking maintenance fee reported was $5, and the average fee was $5.05. Most banks, CUNA found, charge a monthly fee as standard practice. That fee is 43 cents higher than the average credit union fee.

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

As for ATMs: The average nonmember credit union ATM fee, for those that charge them, is $2.10. Banks on average charge non-customer fees of $2.50 per transaction.

CUNA IDs FASB Proposal Concerns As Comment Deadline Nears

 Permanent link
WASHINGTON (9/11/13)--The Credit Union National Association continues to examine and analyze the Financial Accounting Standards Board's proposal that would allow credit unions and other nonpublic business entities to use accounting and reporting alternatives under U.S. Generally Accepted Accounting Principles (GAAP), and CUNA has highlighted two areas of credit union concern in what is largely an otherwise positive proposal.

The FASB proposal, which is out for public comment until Sept. 20, could result in more flexible accounting requirements for nonpublic business entities. However, FASB has acknowledged that whether a private entity is permitted to apply such alternative GAAP standards "may ultimately be determined by regulators."

The proposal would define a public business entity as an organization that meets any one of five criteria, such as that the entity is required to file financial statements with a regulator in preparation of sale of securities.  As proposed, credit unions would not be included within the definition of a public business entity, which is an aspect of the proposal that CUNA supports.

Further, CUNA supports the proposed criteria included in the definition. However, CUNA Senior Assistant General Counsel Luke Martone said, as the proposed definition would include as a PBE certain entities that hold "unrestricted" securities, we ask FASB to clarify exactly what this criteria would include, as well as to clarify that this is not intended to cover credit unions that may hold certain types of securities.

FASB and CUNA continue to accept public comment on this issue. For a CUNA comment call, use the resource link.

New Tools Fuel Today's 'Don't Tax Tuesday' Two

 Permanent link
WASHINGTON (9/10/13)--It's "Don't Tax Tuesday." Today credit union advocates welcome the U.S. Congress back to town, after a five-week District Work Session, by lighting up social media with a unified message to lawmakers: "Don't Tax My Credit Union."

Today's major online advocacy effort launches round two of the major social media push, which uses Twitter, Facebook and the Credit Union National Association's own DontTaxMyCreditUnion.org website to reach out to legislators.

"It is our hope that this campaign will keep pressure on Congress, as many key members of the House and Senate are committed to comprehensive tax reform," said Paul Gentile, Executive Vice President of Strategic Communications and Engagement at CUNA. "This is an important time for credit unions and we want to make sure our message is heard loud and clear."

CUNA is encouraging credit union supporters to create their own simple messages, incorporating the "hashtag" symbol #DontTaxMyCU.

The DontTaxMyCreditUnion.org site has also been enhanced with new functionality: Site users can access a plug-in that will allow credit unions and their supporters to enter their contact information, resulting in a pre-drafted tweet and Facebook post that will automatically fill in the handles of that user's lawmaker.

And, new to the advocacy campaign, CUNA has produced a Spanish-language version of the Don't Tax site, www.NoImpuestosAMiCU.org, to tell Congress "No Le Cobren Impuestos a mi Credit Union." Also, new on cuna.org is a Spanish language toolkit, video message, and action center.

#DontTaxTuesday is a part of CUNA's larger "Don't Tax My Credit Union" campaign. Since launching in late May, the CUNA site has received over 1 million hits and the campaign has generated over 810,000 messages to Congress. This effort also sparked a robust discussion on social media, including members of Congress voicing their support for credit unions in various forms. 

These continued online efforts are building support for CUNA's National Virtual Rally, planned for Wednesday, Oct. 2. Rather than rallying supporters at the National Mall--like so many campaigns do--this movement will rally tens of thousands of credit union members nationwide online.

CUNA and credit union leagues are also preparing for a massive in-person Hike the Hill presence in Washington, with 20 leagues representing 28 states carrying the Don't Tax My Credit Union message to Capitol Hill in September and October.

Tax, Housing Reform On Minds As Congress Returns

 Permanent link
WASHINGTON (9/10/13)--The U.S. Congress has officially returned to Washington for the fall session, and the Credit Union National Association expects progress to be made this month on tax and housing issues that could be taken up later in the year.

As tax discussions return to Washington this week, credit unions, state leagues and CUNA are preparing to welcome back Congress today by holding another #DontTaxTuesday. (See News Now story: New Tools Fuel Today's 'Don't Tax Tuesday' Two.)

The campaign will include a large social media push, in which credit union members and advocates nationwide will Tweet their lawmakers or post on their Facebook page a "Don't Tax My Credit Union" message.

CUNA has also been hard at work on the housing front, holding several meetings with legislators and their staff from both sides of the aisle. The Protecting American Taxpayers and Homeowner (PATH) Act of 2013 (H.R. 2767) was one of the topics covered in those meetings, and that bill could be discussed by the full U.S. House as early as October. (See resource link.)

"We expect changes to be made to the PATH Act between now and when it goes to the floor and we have identified several areas where the bill could be improved for small volume lenders like credit unions," CUNA Senior Vice President of Legislative Affairs Ryan Donovan said.

New housing reform measures are also being developed in the Senate.

Donovan said Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Committee Member Mike Crapo (R-Calif.) appear to be working together on a new housing finance bill that may closely resemble legislation introduced in the Senate by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.) last June. CUNA earlier this summer called that bill (S. 1217) a positive step towards creating a sustainable and affordable housing market. (See resource link.)

Johnson and Crapo will likely hold weekly hearings on housing issues throughout this month, Donovan said. The first of these hearings is scheduled for this Thursday. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) set the schedule for his committee. (See Sept. 4 News Now: House Financial Services Sets Early Sept. Agenda.)

Other Capitol Hill hearings scheduled for this week include:
  • A Tuesday Senate Banking Committee hearing on Export-Import Bank and U.S. Department of Housing and Urban Development nominations; and
  • A Wednesday Joint Economic Committee hearing entitled "The Economic Outlook."
The House will be in session this week and next week before recessing during the week of Sept. 23. The Senate is expected to remain in session that week.

CUNA: More CU Relief Needed From High-priced Mortgage Proposal

 Permanent link
WASHINGTON (9/10/13)--While many credit unions are not motivated to offer Higher-Priced Mortgage Loans (HPMLs) to their members, more and more of them are becoming subject to HPML regulations as a result of Dodd-Frank Act definition changes, and any additional regulatory relief that can be provided is welcome for covered credit unions, Credit Union National Association Senior Assistant General Counsel Luke Martone wrote.

Martone's comments came in a comment letter filed with the Consumer Financial Protection Bureau. The letter addressed a joint proposal that would provide additional exemptions from HPML appraisal requirements under Regulation Z. The proposal, which was issued by the CFPB, National Credit Union Administration, and other federal financial regulators, would exempt certain transactions from the appraisal requirements for HPMLs, as set forth in the joint final rule adopted in January of this year.

Martone said CUNA generally supports the proposal. However, the comment letter did make some suggestions to improve the proposal.

The final rule lays out certain appraisal requirements for loans that qualify as HPMLs, which the rule defines as a closed-end loan secured by the consumer's principal dwelling where the annual percentage rate exceeds the average prime offer rate by:
  • 1.5 percentage points for a first-lien non-jumbo loan;
  • 2.5 percentage points for a first-lien jumbo loan; or
  • 3.5 percentage points for a junior-lien loan.
The final rule exempts certain transactions from the appraisal requirements, such as qualified mortgages and reverse mortgages.

The proposal would provide additional exemptions from the HPML appraisal requirements, including:
  • Transactions secured by existing manufactured homes excluding land;
  • Certain streamlined refinancings; and
  • Transactions of $25,000 or less.
Improvements suggested by CUNA include increasing the $25,000 threshold to $50,000, and providing up to six months of additional compliance time to help covered credit unions implement changes required under the rule.

For the full comment letter, use the resource link.

North Dade CDFCU Subject Of NCUA C-and-D Order

 Permanent link
ALEXANDRIA, Va. (9/10/13)--The National Credit Union Administration has issued a cease and desist order to North Dade Community Development FCU, Miami Gardens, Fla., requiring 11 changes to operations. 

The agency said North Dade officials have consented to the order, which requires the following actions:
  • Cease and desist transacting all business activity for money services businesses not located within the credit union's geographic field of membership;
  • Suspend transacting business activity for all remaining member money services businesses until an adequate Bank Secrecy Act (BSA)/Anti-Money Laundering/Office of Foreign Assets Control program is developed and implemented;
  • Verify that all members are within the credit union's field of membership;
  • Identify all bank secrecy/anti-money laundering/foreign assets control compliance deficiencies;
  • Designate a BSA compliance officer;
  • Complete a comprehensive bank secrecy/anti-money laundering/foreign assets control risk assessment;
  • Revise and document board approval for all policies relating to bank secrecy, anti-money laundering, and foreign assets control;
  • Ensure staff and officials are adequately trained on all bank secrecy, anti-money laundering, and foreign assets control applicable laws and regulations;
  • Develop a system of internal controls to ensure ongoing compliance with all applicable bank secrecy, anti-money laundering, and foreign assets control laws and regulations;
  • Conduct bank secrecy, anti-money laundering, and foreign assets control compliance program testing; and
  • Ensure bank secrecy, anti-money laundering, and foreign assets control testing is complete and results are reported to the board of directors. 
North Dade Community Development FCU was chartered in 1997, has assets of $5.8 million, and serves 780 members, according to the credit union's most recent Call Report.

Data Security Standards, New FHA Homeowner Help In CUNA Reg Advo Report

 Permanent link
WASHINGTON (9/10/13)--Details on a trio of developments in the areas of credit reporting, mortgages, and data security are among the items highlighted in this week's edition of the Credit Union National Association's Regulatory Advocacy Report.

First, the credit reporting details: Last week, the Consumer Financial Protection Bureau released a new compliance bulletin that addresses credit providers obligations to "review all relevant information" they receive in connection with accountholder disputes that are forwarded to card issuers by credit reporting agencies.

CUNA Deputy General Counsel Mary Dunn in the Report encouraged credit unions to read and become familiar with this bulletin and other guidance documents, noting that financial regulatory examiners may begin studying the areas addressed in these documents more closely in credit union examinations going forward.

This week's Report also addresses the Federal Housing Administration's (FHA) new "Back to Work" program. The program, Dunn noted, could help borrowers that lost their jobs and homes during the recession to qualify for an FHA-insured mortgage.

To qualify for the program, potential borrowers will need to demonstrate that their financial hardships were tied to events beyond their control, and will also be required to complete counseling. They will also need to meet all FHA requirements. "It is likely lenders will need to make judgment calls when assessing whether the requirements for the Back to Work program have been met," Dunn wrote.

This week's Report also previews proposed changes to Version 3.0 of the PCI Data Security Standard (PCI DSS) and Payment Application Data Security Standard (PA-DSS). The security updates, which are expected to be released this November, are intended to:
  • Provide a stronger focus on business processes and controls;
  • Account for risk areas with different threats; and
  • Provide greater clarity for PCI requirements.
Other items in this week's Report include:
  • A Federal Reserve Bank of Atlanta update on Europay-MasterCard-Visa migration developments; and
  • CUNA comments on a joint proposal that would provide additional exemptions from Higher-Priced Mortgage Loan appraisal requirements.
A resource chart with information on current CUNA comment calls is also provided in the Report. The Regulatory Advocacy Report also includes updated regulatory advocacy resource charts with comprehensive information on proposed and final CFPB rulemakings, and the more than 150 updated federal regulations that impact credit unions.

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

CUInsight: Every Voice Counts On Don't Tax Tuesday

 Permanent link
WASHINGTON (9/7/13)--Credit unions, state leagues and the Credit Union National Association are preparing to welcome back the U.S. Congress by re-launching #DontTaxTuesday on Sept. 10, and Paul Gentile, CUNA executive vice president of strategic communications and engagement, emphasized that more and louder credit union voices will be vital to these efforts in a CUInsight.com piece.

The campaign will include a large social media push, in which credit union members and advocates nationwide will Tweet their lawmakers or post on their Facebook page a "Don't Tax My Credit Union" message.
"Every Tweet. Every Facebook post. Every Hill contact. They all matter," Gentile wrote.

Advocates that wish to take part should visit www.DontTaxMyCreditUnion.org starting on Sept. 10, where they will be able to post directly to their lawmaker's Twitter and Facebook accounts.

This is the second time such a one-day all-out online tax advocacy has been launched, and the initial effort, made in Spring of this year, garnered impressive results: More than 2,100 tweets told members of Congress "don't tax my credit union," and these and other messages on Facebook and other platforms exposed early 1.5 million Twitter and Facebook users to the pro-tax status message. "That created quite a buzz in Washington," and CUNA, the leagues and credit unions all heard from legislators and others about the impact that was made, Gentile wrote.

"Bottom line: It worked. Congress heard our message," he said.

The timing for this second big push is critical, Gentile noted. The Senate Finance Committee and House Ways and Means Committee are both developing comprehensive tax reform bills. These bills could be reported out of the committees later this fall, he added. "While we do not know yet what these bills will include (nor is it clear these bills will be enacted in this Congress), it is critical that the credit union tax exemption remains intact in any legislation moving out of congressional tax-writing committees. Doing so will go a long way to preserving the tax exemption in the long run," Gentile said.

For the full CUInsight.com piece, and more on Don't Tax My Credit Union efforts, use the resource links.

Cheney Report: Tax, Housing Policy Top Billing As Congress Returns

 Permanent link
WASHINGTON (9/9/13)--This week's edition of The Cheney Report focuses on two of the hottest topics as the U.S. Congress returns to Washington this week: Taxes and Housing. And, as these issues return to the forefront, strong advocacy efforts are needed more than ever.

As tax conversations return to the halls of Capitol Hill, the Credit Union National Association is readying another #DontTaxTuesday to launch on Sept. 10. "This event serves as a bookend to our first blitz, which we sponsored in late July just as Congress was getting ready to go out on its summer break," Cheney wrote.

Senate and House tax-writing committees may hold mark-ups on their respective tax reform plans, and credit unions must be part of the discussion, whether legislation is offered this fall or at a later date, he emphasized.

"Let Congress hear credit unions--again--loud and clear: Don't Tax My Credit Union." (See News Now story: CUInsight: Every Voice Counts On Don't Tax Tuesday.)

Meanwhile, Cheney said CUNA also expects housing finance reform to heat up in the coming weeks. "Leaders of the Senate Banking Committee, and the chairman of the House Financial Services Committee, have strongly indicated their desire to move legislation to the floor in their respective chambers by this fall," he wrote.

"There are many variables that could come into play, of course, for both of these issues. But CUNA and the Leagues are planning for all contingencies--and will be ready as action develops," Cheney wrote.

Actively participating in credit union grassroots activities and the political process is one tenet of CUNA's Unite for Good. Through Unite for Good, CUNA has called on credit unions to rally together to help create a nation in which "Americans choose credit unions as their best financial partner."

Cheney said this rallying cry will be heard again on Oct. 17, International Credit Union Day. "This year presents a golden opportunity to capture all the positive energy around our internal system efforts and share the message with credit union members," Cheney said.

Other topics touched on in this week's Cheney Report include:
  • Credit Union Magazine's special issue featuring credit union "rock stars" from across the country;
  • CUNA's latest edition of E-Scan; and
  • CUNA's concerns regarding a recent National Credit Union Administration letter addressing credit union membership advertising.
Each Friday, The Cheney Report provides a valuable window into CUNA's actions on behalf of member credit unions and reinforces the value of CUNA membership. To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

Past issues of The Cheney Report are also archived on cuna.org.

NCUA Internship Intros Students To CU System

 Permanent link
ALEXANDRIA, Va. (9/9/13)--Since its inception in June 2010, the National Credit Union Administration's Summer Intern Program has helped 47 college students experience the credit union difference first hand, and to learn about the credit union system by working from within.

The 2013 edition of the program is now complete, and this year's intern crop was the largest seen by the agency: 24 college students took on three-month internships.

The program, which draws interns from the National Association for Equal Opportunity in Higher Education, Washington Internships for Native Students, the Hispanic Association of Colleges and Universities, and the Conference on Asian Pacific American Leadership, has created four full-time NCUA employees and one full-time credit union employee.

The internship program is managed by the NCUA's Equal Opportunity Programs office. Office director S. Denise Hendricks said the program allows NCUA "to provide an opportunity to students who otherwise may not get one." The students "gain valuable experience that will help them succeed," she added.

For more on the internship program, use the resource link.

$24 Million-asset Craftsman CU Liquidated By NCUA

 Permanent link
ALEXANDRIA, Va. (9/9/13)--Craftsman CU, Detroit, has been liquidated by the Michigan Department of Insurance and Financial Services. Michigan authorities appointed the National Credit Union Administration as liquidating agent.

The credit union was liquidated after the Michigan Department of Insurance and Financial Services determined it was insolvent, and had no prospect for restoring viable operations. Craftsman CU members, deposits and some loans have been assumed by Security CU, Flint, Mich.

The new Security Credit Union members will experience no interruption in services, and their accounts remain federally insured by the National Credit Union Share Insurance Fund up to $250,000, the NCUA noted.

Security CU serves 49,277 members and holds $367 million in assets. Craftsman was chartered in 1947 and served select employee groups related to General Motors Corporation plants in Detroit. The credit union held $24.1 million in assets from 6,403 members when it was liquidated.

For the full NCUA release, use the resource link.

New Round Of 'Don't Tax' Advocacy To Launch Sept. 10

 Permanent link
WASHINGTON (9/6/13)--With Congress returning to Washington early next week, the Credit Union National Association and state credit union leagues have refocused their national grassroots efforts on tax reform.
 
Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways & Means Committee Chairman Dave Camp (R-Mich.) remain committed to comprehensive tax reform, having spent the August recess touring the country in support of tax reform, and hoping to have legislation drafted by late September. In response CUNA has planned a number of initiatives in September to keep the "Don't Tax My Credit Union" message before Congress.

Building on the success of the first #DontTaxTuesday campaign, CUNA
Click to view larger image Click for larger view
members will welcome back Congress on Sept. 10 with another #DontTaxTuesday promotion. The campaign will include a large social media push, in which credit union members and advocates nationwide will Tweet their lawmakers or post on their Facebook page a "Don't Tax My Credit Union" message. Advocates wishing to participate should visit www.DontTaxMyCreditUnion.org starting on Sept. 10, where they will be able to post directly to their lawmaker's Twitter and Facebook accounts.
 
The latest advocacy push will also engage Latino and Spanish-speaking credit union members with "No Le Cobren Impuestos a mi Credit Union," the Spanish-language version of the Don't Tax My Credit Union campaign, which will be available online soon. Included will be a Spanish-language toolkit, video message, action center, and special materials for the toolkit. 

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

(See related story: MD/DC CUs Rally At CU House For Don't Tax Campaign.)

NCUA State Map Data Show Loan, Membership Hot Spots And More

 Permanent link
ALEXANDRIA, Va. (9/6/13)--Idaho has distinguished itself this week: The National Credit Union Administration's newest analysis of state-level data for federally insured credit unions reveals that that state's credit union membership and credit union loan totals are surging ahead of those reported by other states.

Idaho led the way in membership growth in the second quarter of 2013, with an 8.8% increase over the total reported in the second quarter of 2012. Virginia was a close second, with a 7.9% membership increase.

Overall, the analysis shows, membership in federally insured credit unions rose 2.2% to 95.2 million within the past year. However, membership increases were not universal. The NCUA state-by-state figures show declines in 11 states, the Virgin Islands and Washington, D.C.; the worst membership experience was observed in Nevada with a decline of 4.5%.

Idaho's loan growth total of 13.4% also led the nation. Oklahoma came in a close second, posting loan gains of 12.1%. In total, loan growth nationwide stood at 5.5% in the year ending in the second quarter of 2013, the NCUA said. This overall total is an increase from the 3.2% year-over-year loan increase reported in the second quarter of 2012.

All-in-all, loan growth was reported in 48 of the 54 states detailed in the NCUA report.

Again, Nevada credit unions came in last in this category, with loan growth declining by 7%. Three other states, the U.S. Virgin Islands, and Washington, D.C. also reported identical loan growth rates.

Asset growth was strongest in Utah and Washington, with annualized returns on average assets of 150 basis points and 126 bp, respectively.

The national ROAA at federally insured credit unions was 85 bp, essentially unchanged from the total reported in the second quarter of 2012. The Virgin Islands was the only jurisdiction with negative annualized ROAA, reporting a 13 bp loss, according to the agency.

Share and deposit growth and delinquency rates are also addressed in the NCUA release.

For the NCUA maps and an agency release, use the resource link.

MD/DC CUs Rally At CU House For Don't Tax Campaign

 Permanent link
WASHINGTON (9/6/13)--Credit unions continue to work overtime to defend their tax status, and one of the latest efforts in the ongoing "Don't Tax My Credit Union" campaign came on Thursday as credit unions from the District of Columbia, Maryland and Virginia joined John Bratsakis, CEO of Maryland and District of Columbia Credit Union Association, in a rally held near Capitol Hill.

Click to view larger image Attendees of Thursday's Don't Tax My Credit Union rally pose in front of Credit Union House in Washington. (CUNA Photo)
Bratsakis speaking at the rally encouraged the assembled credit unions to add their voices to the Don't Tax My Credit Union message and generate thousands of contacts next week.

The rally came just before the Credit Union National Association and credit union leagues across the country are planning to welcome back Congress on Sept. 10 with another #DontTaxTuesday promotion. Round two of the Don't Tax My Credit Union campaign will provide yet another opportunity to engage credit union staff, volunteers and members, and to let Congress and Washington know that a tax on credit unions is a tax on 96 million members, Bratsakis said. (See News Now story: New Round Of Don't Tax Advocacy To Launch Sept. 10.)

Credit unions are "of our members, by our members, we're governed by our members, and we exist to serve our members," he emphasized.

Representatives from HEW FCU, Alexandria, Va., Money One FCU, Largo, Md., and PAHO/WHO FCU, Washington, D.C., were among the more than 60 individuals at the rally, which was held at Credit Union House.

CUNA Notes Right To CU Membership Through Association

 Permanent link
 WASHINGTON (9/6/13)--Following the National Credit Union Administration's Letter to Credit Unions on common bond advertising requirements, Credit Union National Association Deputy General Counsel Mary Dunn urged federal credit unions with associational memberships to review their policies and practices, as they do periodically, to ensure their continued compliance with federal regulation.
 
CUNA is currently working with the National Credit Union Administration to determine how many federal credit unions offer membership through an association.
 
On Wednesday, the NCUA reminded federal credit unions of their advertising requirements in a new letter titled, "Potential Violations of Common Bond Advertising Requirements" (13-FCU-03). The letter does not apply to state-chartered credit unions.
 
In the letter, the NCUA addressed:
  • Common bond requirements in the Federal Credit Union Act and NCUA rules;
  • Requirements for accuracy of advertising in NCUA rules; and
  • Consequences of failing to comply with these requirements.
"Upholding the membership standards of every federal credit union charter is essential to maintaining the integrity of the federal credit union system," the NCUA letter said. 
 
CUNA, however, underscores that consumers have a right to join associations and federal credit unions are authorized to serve association members.
 
"They have done so effectively under the law to ensure more consumers have access to credit union service, a fact that cannot be overlooked or ignored," Dunn added.
 
She said that, in response to the newest letter, CUNA is urging the NCUA not to undermine the ability of the vast majority of federal credit unions to continue serving associational members and to direct its examiners to act reasonably on the issue.
 
Use the resource link to read the complete NCUA letter.

Final Fixed-Assets Rule Leads NCUA Agenda

 Permanent link
ALEXANDRIA, Va. (9/6/13)--A final version of fixed asset regulations will lead the day when the National Credit Union Administration board holds its next open board meeting on Sept. 12.

The NCUA in March proposed plain language revisions to the agency's fixed-asset rule. New definitions and rewordings were also proposed at that time.

The changes would impact NCUA's current fixed-assets rule, Section 701.36, which allows federal credit unions to purchase, hold and dispose of property necessary or incidental to their operations. These fixed assets include office buildings, branch facilities, furniture, computer hardware and software, and ATMs.

The Credit Union National Association has spoken in support of these proposed fixed-asset rule changes, noting the amendments would clarify the regulation by improving its organization, structure and ease of use. However, CUNA also urged the agency to make greater improvements to the rule.

CUNA's recommendations for improving the fixed-assets rule include:
  • Eliminating the current regulatory limit imposed on the ownership of fixed assets, which is 5% of a federal credit union's shares, since it is not required under the Federal Credit Union Act;
  • Improving the rule's definition of "partially occupy" to clear up some credit union confusion;
  • If the cap is retained, using the blanket waiver concept to give credit unions additional flexibility under the fixed-assets rule;
  • Adding an appeal process to denied fixed-asset rule waiver requests; and
  • Issuing an annual report detailing fixed-asset rule waiver-request statistics from each region.
The NCUA will also discuss a community charter expansion request filed by Peoples Advantage FCU, Chester, Va.

A proposed rule addressing charitable donation authorizations is also on the open meeting agenda. The closed portion of the agency's board meeting is set to follow the open session. NCUA supervisory activities are the lone item on that meeting agenda.

The Thursday board meetings will be the first attended by new NCUA board member Richard Metsger, who was sworn in late last month in a private ceremony on Capitol Hill.

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

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

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

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

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

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

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

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

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

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

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

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

For the full report, use the resource link.

CFPB Lays Out Law For Consumer Report 'Furnishers'

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

'Inside Exchange' Examines Compliance Angle Of Participation Rule

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

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



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

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

CUNA Quickly Refutes New Report Full Of Tired Old Banker Claims

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

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

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

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

NEW: NCUA Identifies States With Greatest Membership Growth

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

CFPB Names Antonakes To Permanant Deputy Director Spot

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

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

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

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

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

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

Judge Upholds, Dismisses Some NCUA JP Morgan Claims

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

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

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

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

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

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

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

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

House Financial Services Sets Early Sept. Agenda

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

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

Cordray Reaffirms CFPB Authority

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

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

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

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

Reg Advocacy Report Digs Deeper On QRM Proposal

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

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

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

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

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

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

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

FDIC Files Brief To Back NCUA In RMBS Case

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

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

The NCUA appealed this decision this summer.

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

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

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

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

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

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

NCUA Files RMBS Suit Vs. Morgan Stanley

 Permanent link
ALEXANDRIA, Va. (9/3/13)--The National Credit Union Administration announced today it has filed a new residential mortgage-backed securities (RMBS) case--this one against Morgan Stanley and alleging such things as "systemic disregard of underwriting standards."

"Firms like Morgan Stanley sold securities that turned out to be faulty, triggering a crisis in the credit union industry that has been extremely expensive to contain and repair, and credit unions are still paying the tab," said NCUA Chair Debbie Matz announcing the suit. "All the credit unions we supervise and insure are sharing this burden. The people who are accountable, those who precipitated this crisis, should be required to shoulder that burden, as well."
 
This newest case is in the U.S.  District Court for the District of Kansas. The defendants are Morgan Stanley & Co., Inc., Morgan Stanley ABS Capital I Inc., Morgan Stanley Capital I Inc., and Saxon Asset Securities Co.

It alleges violations of federal and state securities laws in the sale of more than $566 million in mortgage-backed securities to the U.S. Central and WesCorp corporate credit unions, according to the NCUA.

The complaint alleges the offering documents of the securities sold to the failed corporate credit unions contained statements of material fact that were not true or omitted material facts. The originators systematically abandoned the stated underwriting guidelines in the offering documents and the securities were significantly riskier than represented, according to the complaint. The result, the complaint says, was that the securities were destined from inception to perform poorly.
 
Although filed Aug. 16, the NCUA announcement of the lawsuit filing comes just three days after the regulator received some good news from the U.S. 10th Circuit Court of Appeals.
 
That court overturned a lower court ruling that claimed the NCUA's RMBS case against RBS Securities was time-barred and should be dismissed.  By overturning that ruling, the appeals court enabled the regulator to proceed with its lawsuits against 12 firms, including RBS Securities, which claim losses stemming from residential mortgage-backed securities sold to corporate credit unions.
 
At the time of that decision, NCUA Chair Debbie Matz said the agency would "continue to pursue our claims against firms that sold faulty mortgage-backed securities to corporate credit unions. As liquidating agent for the corporate credit unions, NCUA has a duty to maximize recoveries from responsible parties in order to limit losses to federally insured credit unions."
 
As noted, the NCUA has filed the RMBS lawsuit as the liquidating agent for the corporate credit unions. Its lawsuits claim that the brokers' offering documents for the RMBS had material misrepresentations about the underlying loans that backed the securities.
 
NCUA has filed lawsuits against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual, and Bear Stearns alleging violations of federal and state securities laws in the sale of mortgage-backed securities to the five corporate credit unions.
 
Also, the NCUA has settled similar suits with Bank of America, Citigroup, Deutsche Bank Securities, and HSBC, bringing in more than $335 million in funds that were lost due to the corporate credit union investments. The NCUA has said that funds recovered through these cases will be used to help reduce the amount of future corporate stabilization assessments on credit unions.

Cheney Report: Growth Remains a Major CU Issue

 Permanent link
WASHINGTON (9/3/13)--Growth continues to be the top priority for credit unions on the business front, according to the Credit Union National Association's The Cheney Report
 
When CUNA quizzes credit unions on what their biggest issue is on the business side, "growth always tops the list," the Report states.  The National Credit Union Administration reported last week that credit unions are showing positive signs in increased lending, net worth and membership.  But some credit unions worries that they are not "catching the wave."
 
To support the momentum credit unions are gaining, CUNA is hosting the CUNA Community Credit Union and Growth Conference on Oct. 8-11 in Connecticut. This conference will give credit unions a chance to hear from experts, participate in impact-oriented breakout sessions and leave with ready-to-implement action plans. The Community Credit Union of the year award will also be announced.
 
CO-OP Financial is sponsoring up to 18 scholarships to attend the conference (see resource link). The application deadline is Sept. 6.
 
The conference will give credit unions the tools and knowledge they need to bring in new members and generate new business opportunities and ultimately help the credit union movement achieve their shared vision of becoming America's best financial partner.
 
In addition to highlighting the importance of credit union growth, The Cheney Report also covered:
  • Briefs Fly in Interchange Case; Fed Appeal Process is Underway;
  • Welcome Board Member Metsger;
  • CUNA-Backed Recommendations Make it Into QRM Revision; and
  • Home Cooking Working Well in Tax Battle.
Each Friday, The Cheney Report provides a valuable window into CUNA's actions on behalf of member credit unions and reinforces the value of CUNA membership. To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

Past issues of The Cheney Report are also archived on cuna.org.
 

CUNA Seeks CU Comment Call On Revised QRM Rule

 Permanent link
WASHINGTON (9/3/13)--The Credit Union National Association is encouraging interested credit unions to comment on a joint revised proposal on credit risk retention  issued this week by federal banking agencies. One aspect of the proposal is key for credit unions--a proposed definition of the term "qualified residential mortgage (QRM)" for purposes of creating an exemption from the risk retention requirements under the Dodd-Frank Act.
 
While few credit unions likely would be covered as securitizers of asset-backed securities, the proposal is important to credit unions because the secondary market will likely conform to qualified mortgage (QM) and QRM standards, CUNA noted in its request for comment.
 
CUNA is also concerned that examiners may insist credit unions confine their mortgage loans to QMs and QRMs.
 
Under the proposed rule, the definition of QRM would be revised to be the same as the Consumer Financial Protection Bureau's definition of a QM. This is a development that CUNA had urged.
 
Contrary to the original proposal, there would be no loan-to-value, down payment, credit history, mortgage servicing, or appraisal requirements for a mortgage loan to qualify as a QRM. However, home equity lines of credit, reverse mortgages, mortgages secured by timeshares and temporary or "bridge" loans of 12 months or less would not qualify for QRM status.
 
The proposed rule also differs from the original proposal as QRMs would now include any closed-end loan secured by a dwelling, not just principal dwellings secured by first liens that are securitized.  Subordinate liens would also be eligible for QRM status, as long as they meet the CFPB's definition of QM and are securitized.
 
Importantly, CUNA noted that as part of the re-proposed rule, the agencies are seeking comment on a much more stringent alternative to the proposed QRM definition, termed "QM-Plus" that does address underwriting criteria, such as a 30% down payment.
 
Comments are due to the agencies on the proposed rule by Oct. 30. CUNA, working with its Consumer Protection Subcommittee,
the Housing Finance Reform Task Force on related policy issues, the CUNA Lending Council, the state credit union leagues and credit unions, will be filing a strong comment letter with the agencies to argue against the alternative QM-Plus definition for QRMs.
 
Use the resource link for the CUNA Comment Call on the proposed plan.

CUNA Questions Need For New E-filing Rule

 Permanent link
WASHINGTON (9/3/13)--Rather than moving ahead with a proposal to require electronic filing by all credit unions, the National Credit Union Administration should instead encourage credit unions to move toward electronic filing in a reasonable time, with a new rule, the Credit Union National Association said in an Aug. 30 comment letter to the agency.
 
Comments are due to the agency Sept. 3.
 
Currently, credit unions can file reports manually or electronically.  At its July open board meeting, the NCUA proposed to drop the manual reporting option.
 
"It seems unlikely that the manual filings of 59 small credit unions place any kind of significant burden on NCUA's resources," CUNA wrote, adding that those 59 should be given time to come into conformity appropriate to their individual situations.       
 
As noted by CUNA's Deputy General Counsel Mary Dunn, "If a formal rule on this subject is truly necessary, however, it should be flexible enough to allow credit unions that cannot for good reason file electronic reports to continue filing manual reports for a reasonable period of time, say up to nine months."
 
CUNA also suggested that the agency's Office of Small Credit Union Initiatives, if it is not already doing so, work with the state credit union leagues to identify these small credit unions so that they can receive additional assistance to file reports electronically. 
 
Dunn backed a recommendation of Self-Help CU, endorsed by the North Carolina Credit Union League, that the NCUA change the required filing date for call reports to 30 days after quarter-end.
 
"We think this is a very sensible idea, and such a deadline would provide more flexibility for all insured credit unions," Dunn wrote.

Use the resource link to access this and other CUNA Comment Letters.

CUs Can Comment On NACHA Returned-Entries Proposal

 Permanent link
WASHINGTON (9/9/13)--Credit unions can provide the Electronic Payments Association (NACHA) with comment on a proposal that would amend reason codes for returned entries.
 
The proposed changes would clarify that:
  • Receiving Depository Financial Institutions should use Code R03 if they choose to return an entry because the receiver's name on the entry does not match the name on the account; and
  • Receiving Depository Financial Institutions should use Code R04 if they choose to return an entry due to account number issues.
CUNA is interested in how this proposal would affect credit union operations and compliance on the ACH network.
 
The proposed changes are intended to be technical amendments, and NACHA believes the changes would benefit ACH participants by eliminating ambiguity currently associated with the use of these return reason codes.
 
The changes would also improve processing efficiency for RDFIs and Originating Depository Financial Institutions, according to NACHA.
 
The proposed changes would be effective March 20, 2015.ents for the proposed rule are due to NACHA by Sept. 20. CUNA seeks comment by Sept. 9.
 

NCUA Releases August Orders Banning Seven From FI Work

 Permanent link
ALEXANDRIA, Va. (9/3/13)--The National Credit Union Administration has issued seven orders in August prohibiting individuals from Florida to Maine to Wisconsin from participating in the affairs of any federally insured financial institution.

The NCUA said the prohibited individuals are:
  • Colbert Bryan, an institution-affiliated party of Eastern Financial CU in Miramar, Fla., who consented to the issuance of a prohibition order to avoid the time, cost and expense of administrative litigation;
  • Autumn Rene Guillot, a former employee of CU of the Rockies in Golden, Colo., who pleaded guilty to the charge of theft. Guillot was sentenced to 60 months community corrections and ordered to pay restitution in the amount of $275,795;
  • Tania Jackson, a former employee of VyStar CU in Jacksonville, Fla., who pleaded guilty to the charge of defrauding a financial institution. Jackson was sentenced to 12 months in prison and ordered to pay court costs;
  • Kathleen Maheux, a former employee of Rainbow FCU in Lewiston, Maine. Maheux pleaded guilty to the charge of theft by unauthorized taking or transfer. She received two years deferred disposition and was ordered to complete 100 hours of public service;
  • Sharon Maston, a former employee of Sturdy CU in Attleboro, Mass. She was sentenced to one year in prison and five years of probation after pleading guilty to the charge of larceny and forgery of a check;
  • Johanna Mite, a former employee of UFCW Local 342 FCU in Mineola, N.Y., was found guilty of bank fraud. Mite was sentenced to time served, five years supervised release and ordered to pay restitution in the amount of $382,790; and
  • Laura Powers, a former employee of Parker Community CU in Janesville, Wis., was convicted of theft and unauthorized use of an individual's identity. Powers was sentenced to five years in prison, five years supervised release and ordered to pay restitution in the amount of $692,869.75.
Use the resource link to view NCUA enforcement orders online.  They also are available for inspection at NCUA's Office of General Counsel between 9 a.m. and 4 p.m. Monday through Friday. Copies may be ordered by mail from NCUA, 1775 Duke St., Alexandria, VA 22314-3428.

NCUA also makes available links to the enforcement actions of other federal regulators against other institutions or their affiliated parties. Use the second resource link to view those.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.