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September 19, 2014

NCUA's McWatters says new RBC comment period is needed

WASHINGTON (9/19/14)--National Credit Union Administration board member J. Mark McWatters, in a meeting with senior Credit Union National Association staff Thursday, confirmed that he would not vote in favor of any risk-based capital (RBC) proposal if it does not include a second comment period.

CUNA interim President/CEO Bill Hampel, along with General Counsel Eric Richard and Deputy General Counsel Mary Dunn, met with McWatters after the NCUA's monthly board meeting today.

McWatters, who joined the NCUA board in August, told the CUNA officers that he supports a second comment period for the agency's RBC proposal out of respect for the credit union industry and because of the bipartisan support given credit union concerns by members of the U.S. Congress.

The Thursday meeting was the latest in CUNA's advocacy efforts regarding the risk-based capital proposal. CUNA staff also met with NCUA board member Rick Metsger on the subject yesterday.  One of CUNA's top priorities is to see a second comment period for a revised version of the rule, a version that takes into account concerns raised by the more than 2,000 comment letters submitted to the NCUA.

CUNA's efforts have included:
  • Filing a 47-page comprehensive comment letter with the agency May 28, detailing the many concerns CUNA has with the proposal;
  • Advocating for changes, including the second comment period, in individual meetings between CUNA staff and NCUA chair Debbie Matz, board members Rick Metsger and McWatters and past board member Michael Fryzel;
  • Meeting with NCUA senior staff to express the same concerns;
  • Testifying before the House Financial Services committee July 17 and the Senate Banking Committee Sept. 16;
  • Discussing the need for a second comment period with members of Congress, who in turn have included it in their letters to the agency. More than 350 members of Congress have signed or written a letter to the NCUA regarding the risk-based capital proposal; and,
  • Addressing the need for a second comment period in in CUNA briefings of credit union league Hike the Hill visits and in league briefings before the three agency Listening Sessions during the summer.

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Fed plans no debit fee cap change

WASHINGTON (9/19/14)--The Federal Reserve Board Thursday said it will not propose any changes to its cap on debit card interchange fees. The Fed said the decision is based on results of its survey of costs associated with debit card transactions, a survey it executes every two years.
This most recent survey, based on 2013 data, indicates that 64% of card issuers covered by the Fed's interchange fee rules had an average cost for authorizing, clearing and settling (ACS) transactions that fell below the Fed's cap.
Implementing a provision of the 2010 Dodd-Frank Act, the Fed set a cap on debit interchange fees for issuers with assets of $10 billion or more at 21 cents, and allows certain other charges to cover fraud losses and fraud prevention.

The 64% is "slightly lower than the 66% of covered issuers with average ACS costs below the maximum interchange fee in 2011," the Fed noted in Thursday's release. "Covered issuers with average ACS costs below the maximum interchange fee in 2013 processed over 99% of all reported covered transactions, the same proportion as in 2011."

Also in the report, the Fed estimates that debit-card fraud losses to all parties--merchants, cardholders, and issuers--was $1.57 billion in 2013, with an average loss of approximately 8 basis points as a share of transaction value. That was up slightly from 2011.

Use the resource link to access the Fed release and access the survey. ReadMore

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TCCUSF update, tech amendments approved by NCUA

ALEXANDRIA, Va. (9/19/14)--A light agenda greeted new National Credit Union Administration board member J. Mark McWatters Thusday for his first monthly board meeting.

The meeting consisted of a report on the Temporary Corporate Credit Union Corporate Stabilization Fund, during which NCUA again stated there will be no assessment this year and future assessments are also highly unlikely, some technical amendments and the approval of a community charter expansion.

The Corporate Stabilization Fund currently stands at $51.2 million, a $91.6 million improvement from the $40.4 million deficit at the end of the first quarter. This is the first positive balance for the fund.

Mary Ann Woodson, chief financial officer of the NCUA, said the improvements to the fund are due primarily legacy assets from the agency's Guaranteed Notes Program, as well as recent corporate credit union litigation settlements.
Click to view larger image New NCUA board member J. Mark McWatters listens to a presentation from NCUA Associate General Counsel Frank Kressman at the board's monthly meeting Thursday. (CUNA Photo)

"Based on information we have at this time, the fund remains stable and is acting consistent with our expectations," Woodson said.

NCUA Chair Debbie Matz added that rebate possibilities cannot be addressed until final accounting on the fund is done, which would likely be in 2020 or 2021.

The board unanimously approved technical amendments to parts 701, 706 and 790 of the agency's rules and regulations.

The changes are:
  • A repeal of the NCUA's rulemaking authority governing unfair or deceptive acts or practices, located in 12 CFR part 706, due to the Dodd-Frank Act;

  • An amendment to part 790 of the agency's rules and regulations, which conforms them to the NCUA's current central and field office structures; and

  • Amending the agency's payday alternative loans regulation to replace the terms "short-term, small amount loans" and "STS loans" with the terms "payday alternative loans" and "PAL loans."
Frank Kressman, associate general counsel for the NCUA, said because the rule is "non-substantive and technical," it is exempt from the notice and comment period provisions in the Administrative Procedures Act.

The rules will be considered final once they are published in the Federal Register .

The meeting also included approval of expansion of the community charter for First Service FCU, Groveport, Ohio, with $136 million in assets. The expansion will allow it to serve people who live, work, worship or regularly conduct business in Delaware, Fairfield, Franklin, Licking, Madison, Morrow, Pickaway and Union counties.

"Approval of this expansion would provide access to credit union services to an additional 115,000 people residing in 189 census tracts in underserved areas," said Leilani Stamper, NCUA consumer access analyst. "Members will benefit from the credit union's no monthly service fee checking account program, short-term loans, shared secured Visa and financial literacy and education programs."

First Service FCU was first chartered by the NCUA in 1956 as Lockbourne FCU, to serve Lockbourne Air Force Base. It converted to a community charter in 1984 to serve a portion of Columbus, Groveport, Canal, Winchester, Pickerington and Rickenbacker Industrial Park. In 1999, its charter was expanded to serve Franklin County, Ohio.

The NCUA also announced Thursday that the board unanimously voted to name Rick Metsger board vice chair. Mestger was first nominated for the NCUA board in May 2013, and his term will expire in August 2017.

Use the resource link below to access the board documents from Thursday's meeting. ReadMore

CFPB has mortgage scammers, nonbank auto lenders on radar

WASHINGTON (9/19/14)--The Consumer Financial Protection Bureau is proposing to oversee nonbank auto finance companies, and it also announced a lawsuit against an online payday lender this week.

The bureau also released a supervision report that details auto lending discrimination against banks, resulting in approximately $56 million in redress for as many as 190,000 consumers.

The proposed rule would allow the bureau to supervise nonbank auto finance companies that make, acquire or refinance 10,000 or more loans or leases in a year. The CFPB would be supervising them to ensure they are complying with federal consumer financial law.

According to CFPB estimates, about 38 auto finance companies would be subject to this new oversight. These companies originate around 90% of nonbank auto loans and leases, and in 2013 provided financing to approximately 6.8 million consumers.

Currently, the bureau supervises large banks making auto loans, but not nonbank auto finance companies. Under the Dodd-Frank Act, it has authority to supervise certain nonbanks the bureau defines through rulemaking as "larger participants" in a market.

The bureau's report details auto-lending discrimination uncovered at banks under CFPB supervision over the past two years.

Examiners found that these indirect auto lenders had discretionary pricing policies that resulted in discrimination against African-American, Hispanic, Asian and Pacific Islander borrowers. As a result, these borrowers paid more for their auto loans than similarly situated non-Hispanic white borrowers.

The CFPB announced in a separate statement that it is taking action to halt operations of an online payday lender. The bureau alleges that the Hydra Group is running an "illegal cash-grab scam," using information bought from online lead generators to access consumers' checking accounts to illegally deposit payday loans and withdraw fees without consent.

According to the CFPB, the Hydra Group then uses falsified loan documents to claim that the consumers had agreed to the phony online payday loans.

At the request of the bureau, a U.S. District Court judge has temporarily ordered a halt to the operation and frozen Hydra Group's assets. The lawsuit also seeks to return the ill-gotten gains to consumers and levy a fine on the company.

Use the resource links below for more information. ReadMore

Carolinas league asks for 2nd RBC comment period

RALEIGH, N.C. (9/19/14)--John Radebaugh, president/CEO of the Carolinas Credit Union League (CCUL), has written to the National Credit Union Administration to request a second comment period on the agency's risk-based capital (RBC) proposal.

In his letter, sent earlier this week, Radebaugh expressed CCUL's support of a more comprehensive RBC effort but said the current proposal could "negatively impact the credit union system by jeopardizing member access to competitive and safe financial products and services."

The letter cites the more than 2,000 comment letters received by the NCUA, including those from more than 350 members of Congress. It also mentions the agency's previously stated willingness to revise risk weightings, which could have an impact on credit unions' strategic planning.

"Through the comment period and beyond, the NCUA has responded to inquiries, acknowledged necessity of changes to the revised rule and participated in ongoing conversations with credit union stakeholders, actions that indicate NCUA's awareness that revisions to the RBC rule will have a significant impact on the industry," Radebaugh wrote. "Given the strength of the credit union system, there is no dire need for rapid adoption of a final risk-based capital structure."

The CCUL believes that the issuance of a supplemental rule with a comment period would be "most appropriate" and in the best interest of the credit union system. ReadMore
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