2004 CUNA Comment Letters

Notice and Request for Comments on Proposed Changes to NCUA’s FCU Bylaws and Related Issues
(November 29, 2004)
In our comment letter to NCUA, CUNA submits a number of regulatory suggestions regarding the proposed changes to NCUA's Bylaws.

Conversion of Insured Credit Unions to Mutual Savings Banks
(October 1, 2004)
CUNA supports NCUA's new proposal regarding new disclosure requirements for federal credit unions seeking to convert to mutual savings banks and offers some further suggestions for the Board’s consideration.

Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA)
(October 5, 2004)
CUNA submits a number of regulatory and statutory suggestions regarding consumer protection laws and regulations. This is in response to a proposal from NCUA requesting such suggestions as part of the long-term effort to identify outdated and burdensome laws and regulations, as required under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) of 1996.

CUNA Opposes NCUA Proposal on Private Insurance
(September 27, 2004)
CUNA's comments address concerns with NCUA's proposal to impose new disclosures and other requirements on credit unions merging with a privately insured credit union or converting to private insurance.

Prior Notice for Change in Executive for New or Troubled Credit Unions
(August 30, 2004)
CUNA commends the NCUA Board for its ongoing efforts to review its regulations and propose changes to help relieve the regulatory burden on credit unions. However, CUNA recommends NCUA not change the current language (allowing an individual to serve while being reviewed by NCUA) due to concern that the proposal might force credit unions to leave key management positions vacant for a longer period of time than would be the case under the current rule.

MBL Rule Revision to Enable CUs to Participate More Fully in SBA Loans
(August 30, 2004)
CUNA strongly endorses NCUA's proposal to amend the agency's Member Business Loan Rule to facilitate the ability of credit unions to make loans guaranteed by the Small Business Administration and urges its adoption. Under the new proposal, federally insured credit unions would be able to make SBA guaranteed loans under SBA's less restrictive lending requirements, rather than under NCUA's more restrictive MBL lending requirements. Specifically, the MBL rule’s collateral and security requirements would not apply to MBLs made as part of a SBA guaranteed loan program. CUNA encourages NCUA to make it clear that the new authority applies to SBA’s 504 and 7(a) Loan Programs.

NCUA FACT Act Affiliate Marketing Rule
(August 13, 2004)
CUNA comments on the proposed rule implementing provisions of the Fair and Accurate Credit Transactions Act that will provide consumers with the opportunity to “opt-out” before information is shared between federal credit unions and affiliates, namely CUSOs, for purposes of marketing products or services. CUNA offers suggestions regarding the "opt-out" process that members may use regarding the information sharing and requests that the mandatory compliance date be delayed to facilitate including the opt-out notifications with the annual privacy notices.

Overdraft Protection Guidance
(August 6, 2004)
CUNA supports the goal of the overdraft protection guidance, but has concerns regarding certain of the operational issues, such as the provisions on 30-day charge-offs for unpaid overdraft balances and the provisions regarding net worth treatment of the overdraft amounts.

FACT Act Disposal Rule
(July 9, 2004)
"CUNA generally supports the substantive provisions of the proposed rule regarding the disposal of consumer information. We believe, overall, that the proposal adequately balances the concerns of consumers and the industry."

Authority for FCUs to Serve as HSA Trustees/Custodians
(June 25, 2004)
CUNA commends NCUA for issuing this timely proposal to provide FCUs the authority to offer these innovative accounts. With the authority in place, FCUs will be able to offer their members a vehicle to save for qualified medical and retiree health expenses on a tax-free basis. No change is needed to the agency’s regulations to allow for FCUs as employers to provide this benefit to their employees.

Changes to Calculation of Fixed Assets & Fixed Asset Waivers
(June 21, 2004)
In our comment letter to NCUA, CUNA supports the amendments to the fixed asset rule that would reduce the likelihood that a credit union overestimates its assets and would help credit unions comply with the waiver and occupancy requirements.

CUNA Letter on FACT Act Medical Information Proposed Rule
(May 27, 2004)
The exceptions outlined in the proposed rule to the restrictions contained in the Fair and Accurate Credit Transaction Act on using and obtaining medical information do not appear to apply to state- chartered credit unions. Because state-chartered credit unions will not be covered under exceptions granted by any other federal or state regulator, we are urging NCUA to extend the exceptions to state-chartered credit unions or support a legislative solution. Otherwise, we generally support the exceptions, although there should be additional flexibility in the area of information used with the member’s consent and the types of information that can be considered medical information. We also suggest an alternative for defining the term "medical information."

CUNA Letter on NCUA Proposal Regarding Student Credit Unions
(May 21, 2004)
In our comment letter to NCUA, CUNA supports the proposal to make student credit unions eligible to apply for low interest loans and technical assistance within the Community Development Revolving Loan Program (CDRLP). This would allow student credit unions eligible to apply for CDLRP funds so that they could help their communities. CUNA also supports this proposal becuase the number of these credit unions has dramatically declined, while CDLRP has grown.

Economic Growth and Regulatory Paperwork Reduction Act
(May 4, 2004)
CUNA submits a number of regulatory and statutory suggestions regarding consumer protection laws and regulations. This is in response to a proposal from NCUA requesting such suggestions as part of the long-term effort to identify outdated and burdensome laws and regulations, as required under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) of 1996.

Share Insurance Expanded
(April 26, 2004)
In our comment letter to NCUA, CUNA supports the interim rule that extends separate share insurance coverage to qualified beneficiaries in certain cases. The rule allows separate insurance coverage, when the interest of a qualified beneficiary (spouse, child, grandchild, parent, or sibling of the grantor) is subject to a condition that has to be fulfilled under the trust agreement before the beneficiary can receive funds. CUNA supports this expansion of insurance coverage because it protects credit unions and their members.

Exchangeable Collateralized Mortgage Obligations
(April 2, 2004)
CUNA generally supports NCUA's proposal to allow federal credit unions to invest in exchangeable collateralized mortgage obligations representing interests in one or more stripped mortgage-backed securities.

Interagency Proposal on Privacy Notices
(March 26, 2004)
In our comment letter to NCUA, CUNA realizes that although privacy notices from other types of financial institutions have been criticized as overly complex, we do not believe this applies to credit union notices, which are relatively short. For this reason, we do not at this time support the proposed changes to the privacy notice requirements. CUNA does suggest, however, that the requirement to deliver privacy notices in their current form on an annual basis is unnecessary, especially for credit unions that are not required to provide "opt-out" rights to their members.

GSE Housing Goals – Advance Notice of Proposed Rulemaking
(December 22, 2004)
CUNA comments on the issue of how single-family refinance mortgages should be treated in connection with the Fannie Mae and Freddie Mac affordable housing goals in those years in which single-family refinances are particularly high. This letter is submitted in response to the Department of Housing and Urban Development's (HUD's) request for comments on this issue and as a result of CUNA's participation in a December 9th meeting with HUD and others in which this issue was discussed.

Proposed Revisions to Regulation E
(November 19, 2004)
In our letter to the Federal Reserve Board, CUNA generally supports the proposed revisions to Regulation E, which provide additional guidance regarding the rights, liabilities and responsibilities of parties that are engaged in electronic check conversion (ECK) transactions. However, CUNA disagrees with the revision to the regulation that would include payroll card accounts as "accounts" that are covered under Regulation E.

Amendments to Regulation DD, the Truth in Savings Act
(August 6, 2004)
CUNA supports the proposed revisions to Regulation DD, the Truth in Savings Act, as it pertains to overdraft protection programs but has concerns regarding the cumulative disclosure of overdraft and returned item fees on periodic statements.

Policy Statement on Payments System Risk
(July 26, 2004)
In our comment letter to the Federal Reserve Board, CUNA generally supports the proposed revisions to the policy, which would update the policy in light of current industry and supervisory risk management approaches and new international risk management standards for payments and securities settlement systems.

Regulation J: Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers Through Fedwire
(July 26, 2004)
In our comment letter to the Federal Reserve Board, CUNA supports the amendment that would explicitly extend the coverage of Regulation J, so that it covers electronic items as well as paper checks. CUNA supports the amendments that would incorporate into Regulation J the substitute check warranties and indemnities that the Federal Reserve Banks and other banks will make under Check 21 and Regulation CC when handling a substitute check or a paper or electronic representation of a substitute check. However, CUNA would like clarification in proposed Regulation J that the Reserve Banks will be liable on the same basis as any other financial institution for any flaws in the substitute checks that the Reserve Banks make when they receive acceptable images sent to them by other financial institutions. In addition, CUNA seeks clarification that the Reserve Banks will be subject to Check 21, like any other financial institution, and that they will honor the expedited recredit procedure mandated for financial institutions by Check 21. Finally, CUNA requests that the Federal Reserve clarify that the information associated with an electronic item must reflect the MICR line of the original check at the time of truncation, and not the MICR line when the original check was issued.

Consumer Disclosures for Debit Card Fees
(July 23, 2004)
In our comment letter to the Federal Reserve Board, CUNA supports the existing debit card PIN fee disclosures, which allow a consumer to make informed choices. CUNA believes additional disclosures for the periodic statement and at the point-of-sale would burden financial institutions and provide little benefit to consumers.

Check Clearing for the 21st Century Act (“Check 21”)
(May 17, 2004)
The Credit Union National Association (“CUNA”) thanks the Federal Reserve Board for extending an invitation to CUNA to participate in a meeting on May 3d to discuss MICR line issues that relate to the proposed regulation implementing the Check Clearing for the 21st Century Act (“Check 21”). At the meeting, Federal Reserve staff invited participants to submit additional written comments, and CUNA appreciates the opportunity to supplement our original response. CUNA, a national trade association, represents more than 90 percent of the nation's more than 9,600 state and federal chartered credit unions.

Proposed Model Form for Furnishing Negative Information to Nationwide Consumer Reporting Agencies
(May 9, 2004)
CUNA supports the use of a model form that financial institutions may use in order to provide “clear and conspicuous” written notice when negative information is provided to nationwide consumer reporting agencies. In our comment letter to the Federal Reserve Board, we suggested a change in the proposed language to indicate that additional types of information may be disclosed and also suggested that additional models should be included, some that may mirror language already used by the industry.

Revised Formats for Public Disclosure of Lending Data Reported Pursuant to the Home Mortgage Disclosure Act
(May 10, 2004)
CUNA supports the revised formats for public disclosure statements of lending data that are reported pursuant to the Home Mortgage Disclosure Act (HMDA). These revisions reflect recent changes to HMDA and Regulation C, which require the reporting of additional information and the use of standards for collection of data on race and ethnicity that are used by the Office of Management and Budget.

CUNA Supports Check 21 Recommended Changes
(March 11, 2004)
CUNA submits extensive comments on the rule implementing the Check 21 Act that will become effective on October 28, 2004. CUNA comments on when substitute checks (machine readable paper copies of e-checks) should be the legal equivalent of other checks; how liability should be allotted in the regulation; how consumer disclosures should conform to the E-Sign Act and be made shorter and more consumer friendly. CUNA also comments extensively on the technical aspects of the amendments, which implement the rule for Check 21 and affect other unrelated provisions in Regulation CC.

Proposed revisions to Regulation Z, the Truth in Lending Act (TILA), Regulation B, the Equal Credit Opportunity Act (ECOA), Regulation E, the Electronic Fund Transfers Act (EFTA), Regulation M, the Consumer Leasing Act (CLA), and Regulation DD, the Truth in Savings Act
(January 30, 2004)
CUNA does not support the proposed revisions that would alter the standard for providing “clear and conspicuous” disclosures. The proposed standard would be uniform among these regulations and would be consistent with the standard currently included in the rules adopted by the federal financial institution regulators in 2000 with regard to annual privacy notices. However, the federal regulators are now considering amending the rules with regard to privacy notices, and we do not believe that disclosure requirements with regard to Regulations Z, B, E, M, and DD should conform to a standard that may be subject to change. Any such changes should be proposed after any changes have been made to the privacy rules and after careful consideration as to whether the standard under those rules is appropriate for Regulations Z, B, E, M, and DD.

FACT Act Effective Dates
(January 13, 2004)
CUNA supports the proposal from the Federal Reserve Board and the Federal Trade Commission regarding the effective dates for various provisions of the Fair and Accurate Credit Transactions Act, which is the law passed last year that permanently extends the preemption provisions of the Fair Credit Reporting Act and creates new identity theft protections. The proposal will establish March 31, 2004 as the effective date for a number of provisions that will not require significant changes to business practices and establish December 1, 2004 as the effective date for provisions that will require substantial changes.

Network Return Entry Fees
(November 30, 2004)
CUNA's comments address concerns with NACHA's proposed revisions on Network Return Entry Fees. The proposed revisions would assess a fee to the Originating Depository Financial Institution (ODFI) for processing ACH debits that are returned as unauthorized. If this system were established, fees would automatically be assessed to ODFIs for all unauthorized ACH debit return entries and these fees would be distributed to receiving depository financial institutions (RDFIs).

Letter on ACH Rule
(May 17, 2004)
CUNA supports this proposal because it would allow credit unions that receive ACH entries against their member accounts a longer timeframe to return unauthorized ACH entries. Under the proposal, credit unions with a consumer statement attesting to the lack of authorization would have the sixty-days to return the accounts. This is the same amount of time that the credit union would have had if the item had been correctly coded.

CUNA Opposes ACH Return Fees
(January 9, 2004)
CUNA opposes charging fees to financial institutions that originate automated clearing house (ACH) items that are returned because the ACH items are sent to invalid accounts or unauthorized by consumers. NACHA presents this concept in which NACHA would set the fees after soliciting information from ACH participants. This process would impose burden on all ACH participants, when NACHA could address the problem by selectively working with the parties responsible for a disproportionate number of returns.

National Financial Literacy/Education Strategy
(November 1, 2004)
In response to the Financial Literacy and Education Commission’s (Commission’s) request for feedback on the development of a national strategy to promote the basic financial literacy and financial education of everyone in the United States, CUNA states that a wealth of financial education resources are currently available to the public and no additional financial education materials are needed at this time. CUNA recommends a multifaceted approach using existing materials, including the CUNA-backed NEFE high school financial planning program, to foster financial education. CUNA advises the commission of its vast array of financial education resources tailored specifically to the needs of credit unions and their members, both online and in print, which could be adapted by other organizations.

FACT Act Biometric Study
(March 26, 2004)
In our comment letter to Treasury, CUNA supports Treasury's proposal to seek public comments on biometrics before it presents its study to Congress. Any study done by the Treasury should weigh the costs and benefits of biometrics and the affects of these costs and benefits on institutions including small ones. The study should also address possible competitive issues such as whether and to what extent institutions would be affected in the marketplace by their choice to use or not to biometrics.

Draft Model HSA Trustee and Custodian Agreements
(July 26, 2004)
CUNA commends the IRS for expeditiously issuing the user-friendly model agreements for public comment. The model agreements will certainly provide a level of comfort for those credit unions that make the business decision to enter the new HSA marketplace. CUNA makes several recommendations, including the IRS clarify that HSA accountholders can build up the balance in an HSA with the only time limit being reaching age 65. For these agreements to be most useful for consumers, CUNA encourages the Service to revise Publication 969 on Medical Savings Accounts (MSAs) so it also explains HSAs in a user-friendly way.

Revisions to the ITIN Application Process
(June 15, 2004)
While CUNA supports the IRS' continued efforts to make the individual taxpayer identification number (ITIN) application process more efficient, we believe that the financial account exception (whereby an applicant can obtain an ITIN by providing proof of ownership of a financial account that generates income subject to information reporting or withholding requirements) should be modified. Further, CUNA urges the IRS to clarify that the ITIN may be considered a reliable form of documentation for purposes of complying with the PATRIOT Act member/customer identification and verification regulations.

Subchapter S Status
(April 26, 2004)
CUNA submits extensive comments regarding the agency's final rule on the Election, Revocation, Termination, and Tax Effect of Subchapter S Status. CUNA comments on whether billion-dollar banks should be the beneficiaries of Subchapter S status. CUNA also comments on the ownership of stock by Subchapter S banks and the purpose of Subchapter S treatment for banks.

Health Savings Accounts (HSAs)
(April 8, 2004)
CUNA makes recommendations on a number of issues for future HSA guidance to enable credit unions and other entities to offer these innovative medical savings vehicles, including: the content and delivery of HSA disclosures; information reporting requirements; corrective procedures for excess contributions and non-qualifying distributions; transition relief; integration of HSAs, health flexible spending arrangements (FSAs) and Health Reimbursement Arrangements (HRAs); the establishment of HSAs even if an individual's prescription drug benefits are not offered on an HDHP basis; and the definition of "preventive care."

FACTA Prescreen Rule
(October 26, 2004)
In response to the Federal Trade Commission's proposed rule that is intended to enhance the current disclosures that inform consumers of their right to "opt-out" of prescreened offers for credit or insurance, CUNA supports enhancement of these disclosures, but also offers suggestions so that credit unions will have the flexibility they need in order to achieve this goal.

CAN-SPAM Act Rulemaking
(September 13, 2004)
CUNA does not believe it is necessary to impose on membership organizations, such as credit unions, the proposed rule regarding the restrictions on sending commercial e-mails. The CAN- SPAM Act and the proposed rule are intended to address unwanted advertisements, which has not been a problem with regard to e-mail communications between credit unions and their members. However, If the Federal Trade Commission determines it is necessary to apply the rule to credit unions, we believe it should not apply to newsletters from membership organizations that are transmitted by e- mail to their members.

FTC FACT Act Affiliate Marketing Rule
(August 13, 2004)
CUNA comments on the proposed rule implementing provisions of the Fair and Accurate Credit Transactions Act that will provide consumers with the opportunity to “opt-out” before information is shared between federal credit unions and affiliates, namely CUSOs, for purposes of marketing products or services. CUNA offers suggestions regarding the "opt-out" process that members may use regarding the information sharing and requests that the mandatory compliance date be delayed to facilitate including the opt-out notifications with the annual privacy notices.

FACTA Identity Theft Rule, Matter No. R411011
(June 15, 2004)
CUNA provides comments regarding the definition of "identity theft" and "identity theft report" that are used and implemented under the Fair and Accurate Credit Transactions Act. CUNA also believes that "active duty alerts," which military personnel may place on their credit report while they are away from home that requires creditors to require further identification, should be of a duration that corresponds to the time that they are away from home.

The FACT Act Disposal Rule, R-411007
(June 15, 2004)
The FTC's disposal of consumer information rule, which will apply to state-chartered and privately insured credit unions, is similar to the rule issued by NCUA, which will apply to federally- chartered credit unions. CUNA urges the FTC to allow state-chartered and privately insured credit unions to follow NCUA’s rule. This will give all credit unions the same rule to follow that is specifically based on the credit unions’ structure. Otherwise, CUNA generally supports the substantive provisions of this rule.

FACTA Free File Disclosures Proposed Rule
(April 16, 2004)
CUNA supports the provisions of the proposed rule regarding the process in which consumers may request one annual free credit report. We suggest that the rule should also impose a requirement that the consumer reporting agencies provide contact information which consumers may use in order to ask questions that will help them understand the information on their credit report.

FASB Draft Guidance on Calculation of Fair Value
(September 8, 2004)
CUNA commends FASB for its efforts to bring together existing guidance on fair value measurement from a range of FASB pronouncements and provide a framework to assist users in making fair value calculations. CUNA encourages FASB to provide more concrete guidance in measuring the fair value of the core deposits of financial institutions to improve consistency. However, CUNA does not support the proposed Statement’s expanded disclosures about the use of fair value.

FASB's Request for Information on Loan Participations
(May 10, 2004)
CUNA responds to the FASB Staff Request for Information concerning setoff rights related to isolation of transferred assets, specifically in the context of loan participations. CUNA strongly opposes any guidance from FASB that would render loan participations unusable and urges FASB not to move forward with contemplated changes to FASB Statement (FAS) No. 140, which governs the accounting treatment of loan participations.

Interim Rule re. Procedures for Handling Critical Infrastructure Information
(May 20, 2004)
CUNA tells DHS that credit unions want to continue their efforts to ensure critical infrastructure information (CII) is properly held, including partnering with the government by participating in the Protected CII Program. However, this interim rule should be modified to provide greater assurance to credit unions and other private sector entities submitting CII that their submissions will remain appropriately protected from unauthorized disclosure and only shared with other agencies and jurisdictions in a manner that preserves that confidentiality. In addition, DHS should publicize the Protected CII Program so that credit unions and other private sector entities understand what type of information DHS is seeking under the Program.

Proposal Grants Credit Unions Some Broker-Dealer Exemptions Given Banks
(September 1, 2004)
CUNA comments that the proposal represents a reasonable approach to the regulation of securities activities by credit unions and is consistent with the agency’s authority under the Securities Exchange Act. If the SEC does not adopt this regulatory approach, inequities will arise among different types of financial institutions offering brokerage services, and the regulatory burden for broker-dealers working with banks and credit unions will increase. In addition, CUNA agrees with the proposal that all credit unions, including those with private insurance, should be covered by the regulation. CUNA offers to work with SEC staff to develop a process under which future exemptions for additional activities could be considered for credit unions.

Stored Value Cards
(July 16, 2004)
In our comment letter to FDIC, CUNA opposes the proposed rule that would clarify whether the funds held at insured banks for stored value cards actually qualify as "deposits." This proposal does not address or disclose the legal implications on stored value products of making them deposits for purposes of several other banking laws, including Regulation D and Regulation E. CUNA suggests the FDIC study the implications of classifying stored value cards as deposits and either include these important considerations in a new proposal that undergoes public comment or decide to withhold premature regulation of stored value cards altogether.

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