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July 24, 2014

Matz alerts CUs: Some relief is coming down the pike

Washington
ALEXANDRIA, Va. (7/24/14)--The National Credit Union Administration is planning to unveil three regulatory relief proposals in upcoming open board meetings. They will include plans to eliminate the 5% cap on a credit union's fixed assets, to modernize the member business lending (MBL) rule, and to update appraisal provisions, NCUA Chair Debbie Matz said Wednesday.

In fact, Matz said one day before the agency is expected to release its July meeting agenda, the fixed-asset plan will be on the July 31 agenda.  The proposal is intended to streamline the rules that implement the Federal Credit Union Act provisions governing the process for federal credit unions to occupy land or buildings.

"Our intent is to allow federal credit unions to manage their own fixed-asset purchases without having to seek permission or waivers from NCUA," Matz said. "When federal credit unions want to update facilities, upgrade technology or make other purchases that have no impact on safety and soundness, NCUA should not micro-manage individual business decisions."

Also on the radar for this year: a look by the NCUA board to determine how it might give greater flexibility to credit unions offering MBLs.

"At my Listening Sessions, we heard from credit union officials with innovative ideas to modernize the member business lending regulation in order to serve more small businesses," Matz said, adding, "We are working to incorporate new ideas while keeping in place appropriate safety and soundness measures."

She said look for changes to be proposed later this year.

The NCUA supports legislation that would increase the MBL cap.  The Credit Union National Association maintains that there also are steps the regulator could take to aid credit unions approaching the MBL cap of 12.25% of assets.

The agency is planning to review all aspects of the rule, including the waiver process--the federal rules that exempt certain loans from the MBL cap.

CUNA has supported these changes and urged they be addressed. Among other changes CUNA advocates: Updating Federal Credit Union Act definitions that provide exemptions from the MBL cap for credit unions that have a history of primarily making MBLs to their members; expanding provisions addressing MBL loans made for the financing of one- to four-family dwellings; and removing limitations that are not required by the statute.

Matz also said the NCUA is scheduled to update the advertising rule for federal credit unions. She added that staff is studying the latest innovations in technology, including social media, to incorporate into the new proposal.

"CUNA welcomes these changes," said Deputy General Counsel Mary Dunn Wednesday. "We have repeatedly urged the NCUA to do more to lessen the regulatory burden on all credit unions.

"We have specifically raised these and many other issues with Chairman Matz and others at the agency, and we look forward to learning more details on NCUA's efforts concerning regulatory relief for credit unions."

Matz made her remarks at the National Association of Federal Credit Unions' annual conference currently being held in Las Vegas. ReadMore

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Frank: CFPB examination threshold should be raised above $10B

Washington
WASHINGTON (7/24/14)--Former Democratic Rep. Barney Frank said he supports raising the threshold for examination by the Consumer Financial Protection Bureau to financial institutions above the current $10 billion-in-assets cutoff.

Frank, a former House Financial Services Committee chairman and co-drafter of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, said this while testifying Wednesday before that panel at a hearing examining the four years since the passage of the Dodd-Frank Act.

The Credit Union National Association advocated the same position before the committee in a regulatory relief hearing last week. The higher exemption would be important to credit unions and community banks. For those with assets below the threshold, examination for compliance with consumer financial  protection laws would remain with their prudential regulator, rather than with the Consumer Financial Protection Bureau.  For credit unions that is the National Credit Union Administration.

The former congressman from Massachusetts did not propose any specific asset level for a higher exemption, stating that any number is "arbitrary."

The role of credit unions and other community financial institutions came up several times over the course of the hearing:
  •  Rep. Gregory Meeks (D-N.Y.) said the act has given credit unions and community banks a "foundation to build upon," and that these institutions are starting to lend more, but more carefully since the act was passed;
  •  Rep. Sean Duffy (R-Wis.) said that instead of ending "too big to fail," the act has helped larger institutions and hurt credit unions and other small institutions because families and businesses are finding it harder to access credit under the weight of excessive regulations;
  •  Rep. Dennis Ross (R-Fla.) said credit unions in his district have had a more difficult time doing residential mortgages with new regulations; and
  •  Rep. Randy Hultgren (R-Ill.) said credit unions are among the industries he counts as being disproportionally affected by Dodd-Frank, but that the parts relating to them can be fixed.
ReadMore

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Sens. Shelby, Begich: RBC proposal is solution in search of problem

Washington
ALEXANDRIA, Va. (7/24/14)--Calling the National Credit Union Administration's risk-based capital proposal a solution in search of a problem, Sens. Richard Shelby (R-Ala.) and Mark Begich (D-Alaska) weighed in with letters to the agency.

Shelby, the past chair of the Senate Banking Committee, said the proposal would require Alabama credit unions to raise capital levels by approximately $129 million to remain well-capitalized, "with potentially no beneficial upside."

He also raised concerns that the proposal may exceed the authority granted by Congress in the Federal Credit Union Act, because the act only gives authority to the NCUA to establish a risk-based standard to weigh risk in circumstances where the net worth ratio does not provide adequate protection.

"The proposed rule, however, would impose a risk-based standard to be deemed well-capitalized, which is arguably beyond the scope of the Federal Credit Union Act," Shelby wrote.

Both senators noted that credit unions, along with the National Share Insurance Fund, performed properly during the financial crisis. Begich, in his letter, said credit unions "demonstrated remarkable strength and durability" during the financial crisis, and he praised credit unions for avoiding "the same risky practices as large banks," which allowed them to avoid the need for taxpayer assistance.

"Particularly in markets underserved by traditional financial institutions, as in Alaska, credit unions stepped in and filled the void that was left as credit from other institutions dried up," he wrote. "And they did so effectively and responsibly under current and existing regulations.

The letter goes on to request that the NCUA take into account the "overwhelming feedback" on its risk-based capital proposal as to not unfairly burden credit unions.

Begich, who was first elected in 2008, has been a vocal proponent for credit unions, advocating for credit unions to keep their tax status, and vowing to "twist arms" of other members of Congress to raise the member business loan cap to 27.5% of assets from the current $12.25%. ReadMore

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Banking sites' tough security being bested by hackers

Washington
WASHINGTON (7/24/14)--Threats seem to be contained to banks in Austria, Japan, Sweden and Switzerland so far, but researchers at the computer security company Trend Micro report that there is a sophisticated, multistage attack by cybercriminals that can get around two-factor authentication systems.

Two-factor authentication requires a user to enter a regular password and then a second, one-time password that has been emailed or texted to that user for that transaction. The intent of the second step is to make it harder to hack an account than stealing an online password.

Trend Micro found that hackers were able to bypass the two-factor systems at the European and Japanese banks through an attack that is launched by a phishing email that pretends to be from some popular retailer. The email offers bogus receipts that, if clicked, expose the user to malicious software. Then, when that consumer later tries to reach a real bank website, the software redirects the person to a site that is managed by the criminals ( The New York Times July 23).

Researchers at Trend Micro have given the new attack on online banking the name "Emmental." Like the Swiss cheese, they said, online banking protections may be "full of holes." ReadMore

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CFPB, FTC, 15 states sweep in on foreclosure relief scammers

Washington
WASHINGTON (7/23/14)--The Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC) and 15 states have announced sweeping actions against foreclosure relief scammers that they say used deception to prey on struggling homeowners who were facing foreclosures.

In an announcement Wednesday, the CFPB said it was filing lawsuits against three such companies that collected "more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages." The FTC said it was filing six other lawsuits. And, a joint release said, the states are taking 32 actions.

"We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure," said CFPB Director Richard Cordray. "These companies pocketed illegal fees--taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began. These practices are not only illegal, they are reprehensible."

The CFPB is seeking compensation for victims, civil fines and injunctions against the scammers.

In conjunction with its announcement of legal action, the CFPB also released an advisory to help consumers recognize the red flags of foreclosure relief scams, especially when someone is claiming to provide legal help.

Use the resource links to access the advisory and to read more on the agencies' and states' actions. ReadMore
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