2007 CUNA Comment Letters

CUNA Raises Serious Concerns Regarding Proposed Garnishment Guidance
November 27, 2007
CUNA's comment letter recommends that rather than placing the burden on financial institutions to police garnishment order that seek to include exempt federal benefit funds, the federal regulators should work the states to encourage model statutory language the directs state courts to provide adequate notice regarding garnishment exemptions and other information for debtors that are involved in garnishment proceedings. The letter responded to a request from NCUA for comments on proposal guidance that established nine beset practices financial institutions should adopt in dealing with garnishment orders that are directed to accounts that include exempt federal benefit funds. CUNA's letter notes that several of the proposed practices do not take into consideration practical limitations on credit union operations. The letter was developed under the auspices of the CUNA Federal Credit union and Consumer Protection Subcommittees.

FCU and Corporate Credit Union Foreign Currency Investments
October 29, 2007
CUNA submits comments to NCUA on its proposal to permit Federal credit unions and corporate credit unions to invest foreign currency in deposits and instruments in federally insured, U.S.-domiciled banks and corporates and in the debt obligations of U.S. government sponsored enterprises. CUNA believes credit unions engaging in foreign currency activities will face new issues and obstacles, many of which would be better addressed on a case-by-case basis as part of an investment and lending pilot program than with an inflexible rule promulgated without industry experience. A pilot program will give credit unions and NCUA valuable experience to use in promulgating a rule on foreign currency investments and loans should one prove necessary. As OCC and OTS have proven, specific regulations tailored to foreign currency investment are not necessary when the institution proposing to engage in foreign currency activities develops its own written policies and goals and is able to justify those policies to the appropriate regulator.

Subprime Loan Disclosures
October 12, 2007
In our comment letter to NCUA in response to proposed subprime loan disclosures, CUNA emphasizes that credit unions are providing valuable assistance to subprime loan borrowers who have been experiencing difficulties meeting their repayment obligations under these types of loans. The letter also suggests improvements to the proposed disclosures.

Eligible Obligations
August 24, 2007
In response to NCUA's proposal to include a conflict of interest provision in the eligible obligations rule, similar to the provision currently included in the general lending rules, CUNA opposes this proposal because NCUA has not provided any information in the Supplementary Information or elsewhere to support the need for this new rule. Although NCUA indicated that the recommendation for it resulted from its 2006 review of regulations, the agency does not discuss why the recommendation was made or what problems it sought to address.

NCUA’s Proposed Rule to Reincorporate the Bylaws and Make Certain Changes to the Bylaws for Federal Credit Unions
August 20, 2007
CUNA comments on the National Credit Union Administration Board’s proposal to reincorporate the FCU Bylaws into the agency’s regulations and to make other changes to the federal bylaws. CUNA supports the agency’s decision to bring bylaw enforcement issues to the forefront, but urges the Board to withdraw the rulemaking and instead, make changes to the Introduction to the FCU Bylaws to clarify the agency’s role in addressing bylaw disputes. CUNA supports the proposed bylaw amendments, with recommended revisions, regarding the role of the supervisory committee to assume board functions when all board positions become vacant simultaneously.

CUNA Guidelines for the NCUA Board on the Enforcement of Federal Credit Union Bylaws

Chartering and Field of Membership Manual
August 6, 2007
CUNA submits comments to the NCUA Board’s proposed rule to amend its Chartering and Field of Membership Manual for federal credit unions, which encompasses the agency’s policy on field of membership issues under 12 CFR 701. In our comment letter to NCUA, we support the objectives to improve the application process for community chartered credit unions as well as the agency, but we urge the Board to make a number of critically important changes before adopting the rule in final form.

2007 Regulatory Review
August 1, 2007
CUNA responds to NCUA’s request for comments to identify outdated, unnecessary or burdensome regulatory requirements imposed on federally insured credit unions as required under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). CUNA urges NCUA to redouble its efforts to work with the other regulators to identify ways to reduce BSA regulatory burdens and improve the BSA examination process and recommends the elimination of the one percent limit on FCU investments in CUSOs as well as the one percent limit on loans from FCUs to CUSOs. In addition, CUNA believes credit unions should determine for themselves whether obtaining a full assignment in leases is necessary to protect their interests.

NCUA’s Proposed Changes to 12 CFR 701, Member Inspection of Credit Union Books, Records, and Minutes
June 21, 2007
CUNA's comment letter to NCUA on the agencies' proposal regarding member access to books, records and minutes strongly opposes the proposal and make s a number of recommendations the agency should consider before proceeding in this area.

Disclosure of Merger Related Compensation
June 13, 2007
CUNA submits comments to NCUA on the agency’s proposal to require all federally insured credit unions to disclose a “material” increase in direct or indirect compensation or benefits offered to board members or the senior staff of a credit union by another credit union as part of a merger between the two institutions. CUNA is strongly opposed to this proposal and urges the agency not to proceed with it as drafted. Our position is based on extensive discussions with the CUNA Federal Credit Union Subcommittee and the CUNA Governmental Affairs Committee, and on comments we have received from leagues and credit unions.

Rule Part 716 – Model Form for Privacy Notices
May 25, 2007
In our comment letter to NCUA on the proposed model privacy notices, CUNA stresses that although the current privacy notices issued by certain types of financial institutions have been criticized as overly complex and have not proven useful for consumers, we believe such criticisms do not apply to the privacy notices issued by credit unions. For this reason, we believe credit unions and other financial institutions should continue to be allowed to use their current notices if they otherwise comply with the current privacy rules.

Records Preservation Program and Appendixes – Record Retention Guidelines; Catastrophic Act Preparedness Guidelines
May 11, 2007
CUNA submits comments on the National Credit Union Administration Board’s proposal to amend its regulations on records preservation requirements for federally insured credit unions. CUNA generally supports efforts to clarify regulations and some illumination of records preservation requirements could be useful to credit unions and facilitate their ability to resume operations following a disaster. It could also be helpful to examiners so that they have a better understanding of what the agency is expecting of credit unions.

Subprime Mortgage Lending Statement
May 7, 2007
CUNA generally supports the protections outlined in NCUA's proposed Subprime Mortgage Lending Statement. Although credit unions do not offer the riskier loans that are the subject of the Statement, they do offer products to help the underserved, such as the Home Loan Payment Relief Program that was initiated by CUNA in 2005. Credit unions could and are prepared to do more, but NCUA has been forced to limit credit unions’ ability to reach out to these areas as a result of litigation from the American Bankers Association.

Share Insurance Appeals and Clarification of Enforcement Authority of
NCUA Board
January 23, 2007
CUNA agrees with the decision to move judicial venue to appeal a final board decision regarding share insurance coverage to the appropriate U.S. District Court. CUNA supports the rule’s revised language expanding the conditions under which the Board may terminate insurance status “in connection with any action on an appeal [or] ‘notice,’ … by … institution-affiliated party.” CUNA requests NCUA provide more examples or guidance with respect to what violations would lead to termination of insurance coverage versus an alternate disciplinary action. CUNA has no concerns with the provision clarifying the Board’s suspension, prohibition and removal authority with regard to institution-affiliated parties provided the appropriate judicial steps are taken and the individual’s due process rights are preserved at the administrative and/or federal court level.

Prohibition on Funding of Unlawful Internet Gambling
December 12, 2007
CUNA strongly opposes the internet gambling enforcement proposal. CUNA's letter supports a moratorium on the proposal and raises a number of major concerns with the proposal which is unworkable

Comments to Treasury on its Request for Comments on Restructuring the Financial Services Industry.
November 21, 2007
CUNA's letter strongly supports an independent NCUA and NCUSIF, the tax exemption for credit unions, PCA reform and the ability of institutions to innovate within the confines of safety and soundness. The letter also urges Treasury to work with credit unions and others to develop Bank Secrecy Act improvements.

Improving Financial Literacy in Schools
April 12, 2007
In this letter, CUNA responds to the Financial Literacy and Education Commission's request for comments on the subject of raising the financial literacy levels of kindergarten through postsecondary students. CUNA states that not-for-profit organizations can serve as a resource for privately sponsored financial education programs and materials and communicate their availability in their community. The letter focuses in detail on the 2006 CUNA National Financial Literacy Summit and the programs and materials targeted to youth and young adults that CUNA offers to credit unions.

Student Aid Programs
September 28, 2007
CUNA sumbits comments to the Department of Education's proposed Federal Student Aid Programs rules. CUNA believes the definition of "bank account" used in the proposed rule will have the unfortuante consequence of eliminating student access to credit union services; services upon which many university students rely.

Exemptions from Broker-Dealer Requirements.
March 26, 2007
In our comment letter to the Securities and Exchange Commission and the Federal Reserve Board regarding exceptions to the broker-dealer registration requirements that are being granted to banks and thrifts, CUNA urges that credit unions should be granted exceptions to the broker-dealer registration requirements for those activities that credit unions are now engaged. These include networking arrangements with broker dealers, sweep accounts, investments undertaken for the credit union's own account or as trustee or fiduciary, and for safekeeping and custodian activities. CUNA also requests that a process be in place to grant additional exceptions, as the need may arise in the future.

Prohibition on Funding of Unlawful Internet Gambling
December 12, 2007
CUNA strongly opposes the internet gambling enforcement proposal. CUNA's letter supports a moratorium on the proposal and raises a number of major concerns with the proposal which is unworkable

Regulation Z Open-end Credit Rules
October 11, 2007
The Credit Union National Association (CUNA) comments in response to the Federal Reserve Board's proposed changes to the open-end credit rules under Regulation Z, the Truth in Lending Act. These changes focus on open-end credit accounts that are not home secured, specifically general-purpose credit cards and merchant-specific credit plans. In the letter, CUNA strongly objects to proposed changes that will adversely affect multi-featured, open-end credit plans, such as LOANLINER. CUNA also provides a number of other comments in response to this proposal, including the elimination of the "effective" APR, which is the APR that incorporates certain fees, and supporting a change that would require a 30-day advance notice before changing certain terms of an open-end credit plan.

Home Equity Lending Hearings
August 7, 2007
In CUNA's comment letter that was submitted to the Federal Reserve Board in response to its latest hearing on home equity lending, CUNA supports additional restrictions on prepayment penalties, believes that escrow accounts for tax and insurance payments would be appropriate for subprime borrowers, while reduced documentation loans would not be appropriate for subprime borrowers.

Electronic Disclosures
June 28, 2007
CUNA generally supports these proposed rules on how financial institutions and others can electronically provide the written disclosures required under Regulation B (the Equal Credit Opportunity Act), Regulation E (the Electronic Fund Transfer Act), Regulation M (the Consumer Leasing Act), Regulation Z (the Truth in Lending Act), and Regulation DD (the Truth in Savings Act). CUNA especially appreciates the elimination of a number of timing and delivery requirements that were included in a previous version of this proposal.

Basel 1A Standards
March 26, 2007
CUNA commented on proposed Basel 1A, which would revise the existing risk-based capital framework applicable to banks, bank holding companies, and thrifts. Those institutions would be able to elect to adopt these proposed revisions or remain subject to the agencies’ existing risk-based capital rules. Basel 1A could potentially have an indirect impact on credit unions. If the 2007 CURIA bill were to pass, although NCUA would not be required to apply the same system in place for banks, NCUA will be guided by the Basel IA standards then in effect. CUNA makes suggestions on the following provisions of proposed Basel 1A: (1) simplicity vs. precision in risk evaluation; (2) improved risk evaluation of residential mortgage loans; (3) improved risk evaluation of consumer loans; (4) improved risk evaluation of small business loans; and (5) improved risk evaluation of business loans secured by non-residential real estate.

Proposed Amendments to Regulation E
January 30, 2007
CUNA supports the Federal Reserve Board’s proposal to create an exception from the terminal receipt requirements for electronic fund transfers for certain small dollar transactions. The proposed amendments to Regulation E will facilitate electronic transactions, especially in locations where receipt printing may be impracticable. With additional cashless options, consumers will have liability and error resolution protections that they would not have if paying by cash. We believe that the $15 threshold will not affect ATM transactions as most ATMs have a minimum cash withdrawal amount of $20 and believe raising the threshold to $25 will maintain consistency with industry standards.. We note, however, that there may be certain consumer segments, such as the elderly, that may prefer to receive receipts for every electronic transaction.

Transaction Origin Identification Proposal
July 24, 2007
In our comment letter to NACHA, CUNA generally supports NACHA’s proposal to readily identify Originators of ACH transactions and include an Originator’s customer service telephone number in the ACH record. In it's letter, CUNA requests that the Originator’s customer service telephone number be in the Company Batch Header Record rather than the Company Batch Control Record as proposed to maintain consistency and enable frontline staff to more easily access the number. Requiring the identification of Third-Party Senders involved in the origination of a transaction would help in NACHA’s risk monitoring efforts, but CUNA believes this would require significant program changes for certain credit unions that have no Third-Party senders.

NACHA Network Enforcement Proposal
April 23, 2007
In our comment letter to NACHA - The Electronic Payments Association regarding the recent proposal on expanding its enforcement procedures, CUNA generally supports NACHA's initiative to target the highest risk users as a prudent measure to reduce the number of unauthorized transactions with specific recommendations for change. The proposed stricter enforcement proceedings should be limited to those entities that violate rules relating to a return rate exceeding a specified threshold, rather than to all rule violations. Additionally, the thresholds that would trigger the Originating Depository Financial Institution reporting and enforcement procedures should be set through a rules process with a request for public comment. In its letter, CUNA also recommends that a request for comment be issued to address several issues that arise once an Originator or Third-Party Sender has been suspended from the ACH Network.

SBA 7(a) Loan Program
November 9, 2007
CUNA supports the SBA's efforts to improve the 7(a) loan application process including its current focus on smaller loans. Ensuring the agency's modifying the process in the most effective and efficient manner will entail soliciting information from lenders, which we support as long as information requests are reasonable and not burdensome to provide for either lenders or borrowers. Such initiatives not only facilitate the ability of more small businesses to pursue their dreams but also enhance the capabilities of credit unions and other lenders to support small businesses and their communities.

Federal Home Loan Bank Director Appointments
February 21, 2007
CUNA generally supports these new procedures that will now require the Federal Home Loan Banks (FHLBs) to identify potential candidates for their boards of directors as part of the process of appointing directors to the FHLBs. We believe this process can be further enhanced if the FHLBs were to publicize their efforts in identifying potential candidates for these vacancies, and CUNA would also welcome the opportunity to work with the Federal Housing Finance Board to facilitate credit union representation on these FHLB boards of directors.

SSNs in the Private Sector
September 4, 2007
In a letter to the Federal Trade Commission in response to a request for comments on Social Security Numbers (SSNs), CUNA outlines how credit unions use and safeguard the use of SSNs. The letter also urges that SSNs not be subject to further regulatory requirements as their use is subject to a number of restrictions already. The letter also emphasizes that eliminating the use of SSNs may not be feasible or effective, since any unique numbering system will be vulnerable to fraud, such as identity theft.

ID Workshop
March 23, 2007
In our comment letter to the Federal Trade Commission in response to an upcoming authentication workshop, CUNA emphasizes that the regulatory response to authentication should be balanced and should incorporate future technologies. CUNA also supports consumer education initiatives in the area of fraud and has been very active in this area.

Identity Theft Task Force
January 18, 2007
In our comment letter to the Federal Identity Theft Task Force, CUNA expressed support for the goals of the Task Force and emphasized that the focus of efforts in this area should be on addressing security breach vulnerabilities. CUNA also cautioned that any new requirements imposed in this area should take into consideration the significant regulatory requirements that have been imposed on financial institutions over the past several years, including the Gramm-Leach Bliley Act, the USA PATRIOT Act, and the Fair and Accurate Credit Transactions Act.

Form 990 Redesign
September 14, 2007
CUNA submits comments on the Internal Revenue Service’s proposal to redesign Form 990, Return of Organization Exempt from Income Tax. Form 990 has not been significantly modified since 1979 and CUNA expresses a number of concerns regarding the proposal and Form 990 reporting generally as it relates to state chartered credit unions.

Employer Comparable Contributions to Health Savings Accounts
August 30, 2007
CUNA sumbits comments to the IRS on it's proposed regulation regarding employer comparable contributions to Health Savings Accounts (HSAs). CUNA supports the proposal to provide employers with a safe harbor to the comparability rules on HSAs and believes that by granting employees additional time to establish an HSA, they will have an opportunity to search for an HSA provider that best meets their needs. CUNA also supports the ability of an employer to accelerate contributions for HSAs of eligible employees without violating the comparability rules.

Form 1099-OID
January 17, 2007
CUNA is submitting comments to the IRS on its submission to the OMB to continue collecting information on Form 1099-OID. CUNA requested that additional guidance be issued to determine when a financial institution is required to complete this form. Additionally, CUNA believes additional instructions specific to financial institutions on completing the form will be helpful to credit unions and other financial institutions.

Limitations on Terms of Consumer Credit Extended to Service members and Dependents
June 11, 2007
In a joint comment letter to the Department of Defense in response to the proposed rule that will implement the new restrictions on lending to military personnel, CUNA and DCUC generally support the targeted approach of applying these rules to closed-end payday loans, closed-end vehicle title loans, and closed-end tax refund anticipation loans. CUNA and DCUC do offer suggested changes, as well as express concern with the upcoming October 1 compliance date.

Regulations to Implement the Consumer Credit Provisions of the John Warner National Defense Authorization Act
February 5, 2007
In a second joint letter to the Defense Department regarding the new restrictions on lending to military personnel, CUNA and DCUC continue to offer a number of suggestions to ensure that the rules achieve the goal of protecting military servicemembers from predatory lending practices while ensuring that credit unions can continue to offer these servicemembers pro-consumer lending services.

Military Lending Restrictions
January 10, 2007
In a joint letter to the Defense Department regarding the new restrictions on lending to military personnel, CUNA and DCUC offer a number of suggestions to ensure that the rules achieve the goal of protecting military servicemembers from predatory lending practices while ensuring that credit unions can continue to offer these servicemembers pro-consumer lending services.

Valuation Guidance for Financial Reporting
April 12, 2007
CUNA supports valuation guidance specifically for financial reporting purposes. Valuation guidance may be conceptual and high-level in nature; however, detailed guidance, especially where reporting inconsistencies are evident, would be helpful in assisting preparers of financial statements. CUNA believes that FASB should continue to be the issuer of valuation guidance. CUNA suggests a new organization be formed, similar to the FASB Emerging Issues Task Force, with experts in fair (market) valuation measurement, that FASB can consult on emerging issues or when consensus of opinion is lacking. In any upcoming valuation guidance, CUNA urges FASB to address concerns of smaller entities such as credit unions. Due process is critical for any valuation guidance process that is adopted.

Permissible Activities of Savings and Loan Holding Companies
April 26, 2007
In our comment letter to the Office of Thrift Supervision (OTS) in response to a proposal to expand savings and loan holding company activities, CUNA urges OTS to ensure that these transactions be subject to sufficient transparencies so that all interested parties can be informed as to how OTS handles these types of transactions.

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